Video: Perfecting a Security Interest

In this lesson, Nick Palazzolo, CPA, dives deep into the complexities of perfecting a security interest to safeguard a creditor's claim over property against third parties. He enthusiastically guides through the five key methods for accomplishing this: filing, taking possession, control, automatic, and temporary perfection. Nick clarifies the procedure for each method, such as submitting a UCC1 financing statement for filing and physically acquiring assets for possession. He breaks down intricate legal concepts in a way that's both comprehensive and engaging, offering examples for scenarios like a bank's control over a company's investment account or an art collector's prized painting. By the end of the lesson, Nick ensures a thorough grasp of how these methods establish and prioritize creditors' rights, making the complex world of secured transactions more approachable and understandable.

"Examprep.ai helped me pass all 4 CPA exams on the first try. I highly recommend. I especially like the feedback and ratings the software provides so I know where to focus my time."

Daniel H., CPA

"I can't recommend ExamPrep.ai enough. Nick's lessons turned concepts I struggled with into strengths. I was able to pass FAR right before other exams expired!"

Andrew K, CPA

"I just want to say thank you for the great lesson videos. I couldn't stay awake through lectures of another course. After watching all your FAR lessons I was finally able to pass!"

Alyssa M., CPA Candidate

Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

Cite this lesson

Link to this page

[[ citeExample ]]

Copy to clipboard

Copy URL to clipboard

Copy HTML to clipboard

Let's talk about perfecting a security interest now. This is hefty, it's a lot of stuff, but we're getting through it. We're having a good time while doing it. Keep it up, stretch as you need to, get an energy drink, coffee, whatever it is you need to do. Perfecting a security interest is essential for a creditor to obtain maximum priority over other parties who may have an interest in the same property. Now, this is gonna ensure that the creditor's rights are protected in case the debtor defaults on their obligations. We've got five primary methods of perfection. First, in order to perfect, you can file. Filing a financing statement, such as that UCC1 form with the appropriate public office, provides notice of the security interest to third parties. For example, a bank lends money to a business and takes a security interest in the business's equipment. The bank files a UCC1 financing statement to perfect its interest. Next up, you could also take possession of the collateral. The creditor can take physical possession of the collateral, which is common for tangible assets like vehicles or artwork. For example, a lender provides a loan to an art collector, taking a security interest in a valuable painting. The lender takes possession of the painting to perfect its interest. Next up, control. In the case of certain types of collaterals, such as investment property or deposit accounts, the creditor can perfect its interest by obtaining control over the asset. For example, a bank lends money to a company and takes a security interest in the company's investment account. The bank perfects its interest by obtaining control over the account. We've got automatic and temporary perfection. What's the difference here? Well, some security interests are perfected automatically upon attachment, such as

Unlock the full video transcript and subtitles support with a free account!

Get more from this lesson

Create an account 7-day free trial. No credit card required.

Bankruptcy, Debtors & Creditors, and Secured Transactions

Module: 3 Concepts, 46 Videos

Secured Transactions, Including the Rights, Duties and Liabilities of Debtors, Creditors and Guarantors Overview

2:55

Introduction to Secured Transactions

5:24

Debtors, Creditors, and Guarantors

3:10

Surety vs. Guarantor