Article 9 — Secured Transactions · Section 9-314
Understanding UCC § 9-314 is essential for grasping the rights and duties concerning enforcement of security interests in a debtor's collateral.
Source: U.C.C. § 9-314
A security interest is perfected if it attaches and is enforceable against the debtor and against third parties. A security interest in goods is perfected when the secured party files a financing statement or when the Secured party takes possession of the goods.
UCC § 9-314 describes the conditions under which a security interest in goods is considered perfected. A secured party can establish its legal right to a debtor's collateral by filing a financing statement or by taking physical possession of the goods.
A legal claim on collateral that secures payment or performance of an obligation.
A security interest that has been made legally enforceable against third parties.
A document filed to give notice of a security interest in personal property.
Example 1
A bank loans money to a business and takes a security interest in the business's equipment. The bank files a financing statement with the state registrar, creating a perfected security interest.
Example 2
A pawn shop lends money to an individual by taking possession of their jewelry. The pawn shop’s possession of the jewelry perfects its security interest in the collateral.