Collateral Description In Security Agreement

Some courts have interpreted the reasonable identification test so that a description is sufficient to provide sufficient information to enable third parties to identify security rights in the event of an “appropriate request”. 2 Descriptions of supergeneral security rights in hedging contracts, such as “all assets of the debtor” or “all personal property of the debtor”, are not applicable. The PEA has no provisions that can excuse minor errors or omissions in the descriptions of warranties contained in security agreements. The lesson here is to use serial numbers and model numbers wisely and accurately. If the equipment can be sufficiently described without these numbers, this may be the safest procedure. However, if such numbers are necessary to distinguish the notifier`s guarantees from other guarantees which are otherwise too similar, serial numbers and/or model numbers may be required. Consider, for example, a secure party that has financed two pieces of equipment that have the same make and model as several other pieces of equipment from the same debtor. These facts were present in the above-mentioned pickle Logging case, in which the debtor owned at least two 548G skidders and at least two 648G skiers. My recommendation is, whenever the filing, whether electronically or in writing, it is important to check the confirmation of filing and make sure that what was submitted was actually included in the index, because a purely electronic submission, if the guarantees failed to appear in the index, is not clear whether it was an indexing error or some other problem. The filter can be held responsible for not having it there. So always check the registration confirmation and take all necessary steps to obtain the information contained in the registration.

In the first part of a two-part series, Kenneth Weinberg and Jennifer Howard analyze security descriptions in security agreements and funding statements. They recommend careful consideration of security descriptions so as not to be bitten. – Where the descriptions of guarantees contained in the EIP-1 funding statements relate to definitions in an underlying agreement, the underlying agreement must be attached to the funding statement. There are two different data sets that are related, but differ and require a declaration of safety in the UCC process. There is the security agreement which is the document that creates interest in security. Then there is the declaration of funding that perfects the interest of security. They have different goals. The purpose of the security agreement is to define the safeguards in the interest of safety.

The funding statement shall contain only one communication. The bank argued that the filing of the financing statement was sufficient to warn other creditors. “. The sole purpose of submitting a financing statement is to inform third party creditors that the debtor`s assets may be subject to prior security interest and that further investigations may be necessary to establish the identity of the security rights.¬†One point that comes up often is the issuance of serial numbers and model numbers for devices and other goods.