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Elaine needs $1,500 to buy textbooks and other school supplies. Kramer agrees to loan Elaine $1,500, accepting as collateral Elaine’s car. They put their agreement in writing and sign it. Elaine keeps possession of the car. What are the requirements for Kramer to have an enforceable security interest in the car? What must Kramer do to let other creditors know of his security interest in the car?

Sagot :

Anthougoidn

Answer:

1. For Kramer to have an enforceable security interest in the car, the following requirements must be met:

a. Elaine must possess the property right over the car.  

b. Kramer must give value for the security interest.  

c. Elaine must have authenticated the security agreement by describing it, or Kramer must be in possession of the collateral.

2. Kramer needs to perfect his security interest in the car by registering it with the appropriate statutory body.

Explanation:

Under UCC Article 9, four steps must be taken by Kramer to perfect the security interest in the collateral car.  They include:

a. Creating and filing a financing statement with the statutory body

b. Establishing actual possession of the car

c. Establishing control over the car by not allowing Elaine keep its possession.

d. Attaching a purchase financial security interest on the car.

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