Question 1

What is a security interest?

Accepted Answer

A security interest is a legal interest in personal property granted by a debtor to a creditor to secure repayment of a debt. Under UCC Article 9 (FL Chapter 679): a security interest gives the creditor the right to: take possession of the collateral if the debtor defaults, sell the collateral and apply the proceeds to the debt, and have priority over other creditors (if the interest is properly perfected). Types: purchase money security interest (PMSI: the creditor financed the purchase of the collateral), and non-purchase money (the creditor takes an interest in existing property).

Question 2

How is a security interest perfected in Florida?

Accepted Answer

Perfection (FL Chapter 679): filing (file a UCC-1 financing statement with the FL Department of State; this is the most common method for most types of collateral), possession (the creditor takes physical possession of the collateral; common for: negotiable instruments, certificated securities, and tangible chattel paper), control (the creditor establishes control over the collateral; used for: deposit accounts, electronic chattel paper, and investment property), and automatic perfection (PMSI in consumer goods is perfected automatically upon attachment; no filing needed). The financing statement is effective for 5 years and must be renewed.

Question 3

What is the priority of security interests in Florida?

Accepted Answer

Priority: first to file or perfect (the creditor who files a UCC-1 or perfects first has priority over other creditors with security interests in the same collateral), PMSI super-priority (a PMSI in inventory or equipment may have priority over an earlier-filed security interest if proper notice is given), and unperfected interests (an unperfected security interest loses to: a perfected interest, a lien creditor, and a bankruptcy trustee under Section 544). Priority disputes: are resolved by the date and method of perfection.

Security Interest

Security Interests in Florida

Creation

Perfection

Priority

Related Terms

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