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Perfection of a Security Interest by Possession - Explained

What is Perfection by Possession?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

How does one perfect a security interest by possession of the collateral?Discussion QuestionPractice QuestionAcademic Research

How does one perfect a security interest by possession of the collateral?

Article 9 allows a secured party to perfect a security interest in goods, instruments, negotiable documents or tangible chattel paper by securing possession of the collateral. Securing possession can mean personal possession or possession by an agent. If an agent secures possession on behalf of the secured party, perfection may require the agents authenticated acknowledgement that the collateral is held on behalf of the secured party.

  • Relevant Law: 9-313

Note: The debtor or an agent of the debtor cannot also serve as an agent of the secured party for purposes of perfecting a security interest.

Next Article: Perfection of a Security Interest by Control Back to: SECURED TRANSACTIONS

Related Topics

  • Perfection of a security interest?
  • Perfecting a security interest in personal property?
  • UCC-1 Statement
  • Security interest in real property (land)?
  • Register of Deeds
  • Automatic Perfection of a security interest?
  • Purchase Money Security Interest (PMSI) in consumer goods?
  • Purchase Money Grace Period for a PMSI in non-consumer goods?
  • Continue perfection of a PMSI in non-consumer goods?
  • Temporary Automatic Perfection in Proceeds from the sale of goods?
  • How is a security interest created in Assignment of Accounts Receivable and Contract Rights?
  • Perfect a security interest by Possession of the collateral?
  • Perfect a security interest by Control of collateral?
  • Perfect a security interest by Filing a Financing Statement?
  • Authorization is required to file a financing statement?
  • Where to file a financing statement?
  • Defeasance
  • Continuation Statement

Discussion Question

Do you think the law should allow perfection of a security interest in certain types of collateral by simply taking possession of the collateral? Why or why not? Do you think this meets the objectives of requiring perfection of a security interest?

Practice Question

Tom agrees to purchase Amy's lawnmower. He agrees to pay for the mower by making equal payments over the next 6 months. They sign a security agreement granting Amy a security interest. Tom agrees to allow Amy to remain in possession of the lawnmower until the purchase price is paid. Is Amy's security interest perfected?

Academic Research


perfection of a security interest by possession possession perfection of a security interest

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