![]() ![]() Once the interest attaches, the lender has rights in the collateral superior to those of unsecured creditors. There are three general requirements for attachment: (1) there must be an authenticated agreement (or the collateral must physically be in the lender’s possession), (2) the lender must have given value, and (3) the debtor must have some rights in the collateral. To create an enforceable security interest, the lender and borrower must enter into an agreement establishing the interest, and the lender must follow steps to ensure that the security interest first attaches and then is perfected. ![]() Article 9 expressly permits the debtor to give a security interest in after-acquired collateral. ![]() Five types of intangibles may serve as collateral: (1) accounts, (2) general intangibles (e.g., patents), (3) documents of title, (4) chattel paper, and (5) instruments. ![]() Article 9 lumps together all the former types of security devices, including the pledge, chattel mortgage, and conditional sale.įive types of tangible property may serve as collateral: (1) consumer goods, (2) equipment, (3) farm products, (4) inventory, and (5) fixtures. The law governing security interests in personal property is Article 9 of the UCC, which defines a security interest as an interest in personal property or fixtures that secures payment or performance of an obligation. ![]()
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