What is Attachment of a security interest?
In short
A security interest attaches, becoming enforceable against the debtor, when the creditor gives value, the debtor has rights in the collateral, and there is a security agreement signed or authenticated by the debtor describing the collateral (or the creditor takes possession).
Key takeaways
- Attachment makes the interest enforceable against the debtor; perfection makes it effective against other creditors.
- A purchase-money security interest in consumer goods is perfected automatically on attachment.
- The agreement can cover after-acquired property.
Where it's tested
REG: Debtor-Creditor & Bankruptcy — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A creditor takes a purchase money security interest in equipment and files a financing statement 15 days after the debtor receives possession. An earlier creditor had already perfected a security interest covering all of the debtor's equipment. Who has priority in the new equipment?