Article 9 — Secured Transactions · Section 9-301
This section addresses the jurisdictional effectiveness of security interests and the law governing the perfection and priority of secured transactions.
Source: U.C.C. § 9-301
A security interest is enforceable against the debtor with respect to collateral only if: (1) the debtor has authenticated a security agreement that provides a description of the collateral, and (2) value has been given, and (3) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party.
UCC § 9-301 outlines the requirements for a secured party to have a valid security interest in a debtor's collateral. In order to enforce this interest, the secured party must have a security agreement, provide value, and the debtor must have rights in the collateral.
An interest in personal property or fixtures which secures payment or performance of an obligation.
The property subject to a security interest.
Example 1
A bank provides a loan to a business and takes a security interest in the business's inventory. The security interest is valid as it is documented properly, value is exchanged, and the business owns the inventory.
Example 2
A car dealership takes a security interest in the vehicles it sells, ensuring that if the dealership defaults on its obligations, the lender can claim the vehicles as collateral.