Article 9 — Secured Transactions · Section 9-315
This section outlines the rights of secured parties in relation to collateral after default, including concepts of perfection and proceeds.
Source: U.C.C. § 9-315
A security interest is a continuously perfected security interest in collateral and its proceeds, as long as the security interest is not lost or terminated.
UCC § 9-315 explains that if a secured party has a security interest in collateral, they also have an interest in any proceeds generated from that collateral. This security interest in the proceeds is automatically perfected without the need for further action.
An interest in personal property or fixtures that secures payment or performance of an obligation.
Property obtained by the sale, exchange, collection, or other disposition of collateral.
Example 1
A debtor takes out a loan secured by inventory. When the inventory is sold, the lender's security interest extends to the cash received from the sale.
Example 2
A car dealership finances the purchase of vehicles and has a security interest in those vehicles. If the dealership sells vehicles and acquires payment, the bank's security interest also covers the money received from those sales.