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There are three requirements for attachment: (1) the secured party gives value; (2) the debtor has rights in the collateral or the power to transfer rights in it to the secured party; (3) the parties have a security agreement “authenticated” (signed) by the debtor, or the creditor has possession of the collateral.

There are four primary ways in which an attached security interest may be perfected — filing, possession, control and automatic perfection. The most common method of perfecting a security interest is filing a financing statement.

Perfection can be achieved through different methods depending on the type of collateral the security interest is attached to, with the most common methods being: filing, possession, and control.

However, generally speaking, the primary ways for a secured party to perfect a security interest are: by filing a financing statement with the appropriate public office. by possessing the collateral. by "controlling" the collateral; or. it's done automatically when the security interest attaches.

The creditor with the highest priority will be repaid before others if the borrower defaults and foreclosure occurs. Three exceptions exist for filing for perfection: automatic redemption, possession, and taking control of a deposit account.

Perfection Generally. The most common example of a security interest is a mortgage on real property. In order to be enforceable against other creditors or the bankruptcy trustee a mortgage must be duly recorded.

A secured party is a person or entity in whose favor a security interest is created or provided for under a security agreement, regardless of whether an obligation to be secured is currently outstanding.

Tangible chattel paper is sometimes delivered to the assignee, and sometimes left in the hands of the assignor for collection. Subsection (a) allows the assignee to perfect its security interest by filing in the latter case. Alternatively, the assignee may perfect by taking possession.

Filing. Article 9 of the UCC provides a sample uniform financing statement that must be accepted by the local filing offices. Possession. Certain types of collateral may or must be perfected by possession. Control. The concept of control is similar to the concept of possession. Automatic Perfection.