How is a security interest perfected under UCC Article 9?

How is a security interest perfected under UCC Article 9?

• A. By obtaining a court judgment.
• B. By filing a financing statement with the appropriate state office, usually the secretary of state.
• C. By registering the asset with the tax authority.
• D. By executing a simple loan agreement.

Answer: (B)

Perfection under UCC Article 9 is about giving public notice of the secured party’s interest in the collateral so others know who has rights and to establish priority. The typical and most widely used way to achieve this is by filing a financing statement (UCC-1) with the appropriate state filing office, usually the secretary of state. The filing lists the debtor, the secured party, and a description of the collateral, and once filed, it publicly records the security interest and perfects it. This is the mechanism that protects the secured party against most other creditors in ordinary cases. Other methods exist for specific scenarios—possession or control can perfect certain types of collateral—but in general, filing the financing statement is the standard path. The other options—obtaining a court judgment, registering with the tax authority, or a simple loan agreement—do not perfect a security interest under Article 9.

Perfection under UCC Article 9 is about giving public notice of the secured party’s interest in the collateral so others know who has rights and to establish priority. The typical and most widely used way to achieve this is by filing a financing statement (UCC-1) with the appropriate state filing office, usually the secretary of state. The filing lists the debtor, the secured party, and a description of the collateral, and once filed, it publicly records the security interest and perfects it. This is the mechanism that protects the secured party against most other creditors in ordinary cases. Other methods exist for specific scenarios—possession or control can perfect certain types of collateral—but in general, filing the financing statement is the standard path. The other options—obtaining a court judgment, registering with the tax authority, or a simple loan agreement—do not perfect a security interest under Article 9.