Secured Transactions Under Article 9

Summary

The legal framework for security interests in personal property, governing lending and credit transactions.

Overview

Article 9 of the UCC governs secured transactions in personal property and fixtures. A security interest is a property interest created by agreement to secure payment or performance of an obligation. Article 9 determines how security interests are created (attachment), made effective against third parties (perfection), and prioritized among competing claimants (priority). The scope includes inventory, equipment, accounts, and virtually all types of personal property except real estate.

Attachment and Perfection

Attachment requires (1) a security agreement authenticated by the debtor, (2) value given by the secured party, and (3) the debtor having rights in the collateral. Perfection provides public notice of the security interest and determines priority against other creditors. Common perfection methods include filing a financing statement (UCC-1), possession, control (for deposit accounts and investment property), and automatic perfection for purchase-money security interests in consumer goods.