What does perfection mean in regard to security agreements?

Perfection essentially involves granting third parties notice of a security interest's role in property. Perfection may vary based on whether property is deemed personal or real.

A variety of methods can be used to obtain perfection in a security agreement. The following are among the most common:

  • Filing a financing statement
  • Possession of the collateral by the secured party or the secured party's agent
  • Control over the collateral by the secured party
  • Automatic perfection upon attachment
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