Perfection of a Security Interest by Possession - Explained
What is Perfection by Possession?
Written by J. Mance Gordon
Updated at April 19th, 2024
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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.
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