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Perfection of Security Interest by Filing Financing Statement

Cite this article as: Jason Mance Gordon, "Perfection of Security Interest by Filing Financing Statement," in The Business Professor, updated January 19, 2015, last accessed April 2, 2020, https://thebusinessprofessor.com/knowledge-base/perfection-of-security-interest-by-filing-financing-statement/.
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Perfection of a Security Interest by Filing a Financing Statement
This video explains the process for perfecting a Security Interest in Collateral by Filing a Financing Statement with the appropriate government office identifying the collateral.

Next Article: Authorization Required to File a Financing Statement

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What information is required in a “financing statement” filing?

Generally, to perfect a security interest, a secured party may file a security agreement in the appropriate government office. § 9-310(a). To be enforceable under the UCC § 9-502(a), a financing statement must contain the following information:

  • Relevant Law: § 9-520(a) requires that a financing statement meet the requirements of § 9-516(b). § 9-516 requires that the financing statement meet the following requirements.

•    Debtor’s Name – Generally this requires a first and last name. It may also require any aliases or fictitious names necessary to identify the individual;

⁃    Note: This is particularly important when the debtor is a business operating under a fictitious name.

•    Secured Party’s Name – Name of the secured party or her representative; and

•    Identifies Collateral – A description of the collateral must be sufficient to identify the collateral or indicate that the financing statement covers “all assets” or “all personal property” of the debtor.

Additionally, the financing statement must meet the following requirements:

•    Standard Form – It must be in the form authorized by the filing office.

⁃    Note: UCC §9-521(a) provides an acceptable form financing statement.

•    Filing Fee – Must include a sufficient filing fee;

•    Debtor’s Mailing Address – This requires an address where the debtor may receive notices with regard to the filing.

•    Entity Status and Information – Debtor’s status as an organization (type, jurisdiction, organizational ID); and

•    Secured Party’s Address – This requires an address where the secured party may receive notices with regard to the filing.

  • Relevant Law: If the financing statement is not authorized, it is ineffective under § 9-509(a), the secured party is obligated to file a termination statement § 9-513(a)(2) or the debtor may do so, and there is a statutory penalty of $500 to the unauthorized filer. If the collateral is as-extracted minerals, the financing statement must be filled in the jurisdiction where the mine or wellhead is located. § 9-301.

•    Discussion: Why do you think it is important to include all of the above information in a filed financing statement? How do you feel about the ability to include a description indicating “all assets” or “all personal property”?

•    Practice Question: Ervin is preparing a financing statement to secure payment of property he sold to Mandy. What information must he include in the financing statement?

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