Secured Transactions: Attachment, Perfection, and Priority
Core concepts
Personal property security law rests on three pillars: attachment, perfection, and priority. Attachment requires value given, debtor rights in the collateral, and a security agreement (often evidenced by signed writing or possession). Once attached, the security interest is enforceable against the debtor. Perfection protects against third parties and typically occurs by registration, possession, or control. Priority is generally first-to-register or first-to-perfect, with statutory super-priorities for purchase-money security interests (PMSIs), possessory liens, and certain statutory deemed trusts. A PMSI in inventory requires notice to prior registered secured parties before delivery; a PMSI in non-inventory goods perfected within the statutory window (often 15 days) beats earlier general security interests. Default remedies include repossession, disposition, and retention, each subject to notice and commercial-reasonableness rules.
Traps
- Confusing attachment with perfection. Attachment is debtor-facing; perfection is third-party-facing.
- Assuming registration alone perfects an interest in deposit accounts or investment property; control may be required.
- Forgetting PMSI super-priority conditions (notice for inventory; timing for non-inventory).
- Missing that a buyer in ordinary course takes free of a perfected security interest.
- Overlooking that proceeds remain subject to the security interest and may need separate perfection.
Worked rule of thumb
Run the A-P-P sequence: Attach (value, rights, agreement), Perfect (method appropriate to collateral), Prioritize (compare against competing interests, applying super-priority rules). Then ask whether any buyer or lessee takes free. This sequence catches most exam fact patterns.