Perfection of Security Interests Under Revised Article 9 of the UCC

Langdon Owen
July 18, 2008 — 1,914 views  
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Article 9 of the Uniform Commercial Code deals with security interests in personal property.  A key concept under Article 9 is perfection.  Utah, the state in which the author practices law, adopted Revised Article 9 which became effective July 1, 2001, the uniform effective date prescribed by the drafters of Revised Article 9.  Each of the other states also has a version of the Revised Article 9.  (In the citations below, the paragraph numbers in brackets are references to Utah's paragraph numbers, while the unbracketed paragraph labels are those of the code as nationally promulgated.)  Let's review the perfection of security interests created after that effective date.  The rules of perfection have changed considerably from the original Article 9.

Perfection. The concept of perfection is to notify third parties of the existence of the security interest in order to protect it from the claims of other creditors or transferees of the debtor. Perfection means that the security interest has attached to property of the debtor and the prescribed steps under Article 9 have been taken. The steps for perfection may be taken before attachment. 9-308. See 9-310 to 316. By taking the necessary steps, the security interest will be protected against other creditors and transferees; in particular, it will be protected against the trustee in the bankruptcy of the debtor (who is given the rights of a hypothetical lien creditor), the debtor in possession in a bankruptcy reorganization, or other creditor representative in insolvency proceedings. A perfected interest might, however, be or become subordinate to some other lien creditors or transferees under limited circumstances. See 9-317. There are several ways in which a security interest may become perfected, some of which apply to certain types of property interests under certain circumstances, but not others. It is possible, and not at all unusual, that in the life of a secured credit, the security interest in a particular item or class of property supporting the credit may, at different times, be perfected by more than one method.

Part 2 - Coming soon!

Langdon Owen


Langdon T. Owen, Jr. is a member of the law firm of Parsons Kinghorn Harris, p.c. in Salt Lake City, Utah. Mr. Owen is a transactional lawyer who practices in the areas of estate and tax planning, business and commercial transactions involving both corporate and partnership taxed enterprises (including tax, employment, and benefit issues relating to such transactions), loans and creditors' workouts, pension and profit sharing plans, health care law, probate, and real estate. He has practiced law since 1977.