Term
| Why is perfection important? |
|
Definition
| Perfection let's everyone (third parties) know everyone else's rights to all property, as it can be looked up in the registry system. Rights are relative and subject to priority; perfection does not grant a perfected right in goods, as they are still subject to priority through time of registration, etc... |
|
|
Term
| When does perfection occur? |
|
Definition
| Perfection occurs when there is attachment and all three steps of perfection have been satisfied (agreement, attachment, and registration). |
|
|
Term
| What are the types of perfection? |
|
Definition
| Perfection by possession, registration, control, and temporary perfection. |
|
|
Term
|
Definition
| Possession must be taken solely by the creditor to be valid; conflict of interest occurs if the creditor and receiver are the same person. If machinery is difficult to move and actual possession is not possible, the creditor must render it inoperable or make it clear that the debtor does not have rights in the good or the right to use the good in order to attain perfection (perfection by control). |
|
|
Term
| Consequences of non-perfection |
|
Definition
| If interest is not properly registered you may lose all your rights to the collateral, or be subordinate to others who also hold interests in the collateral. |
|
|
