Bar Exam Mnemonics Practice Test

Secured transactions in the Uniform Commercial Code are handled by Article 9. It governs how a security interest in personal property is created, attached to the collateral, and perfected so the lender’s claim has priority over others. The essential process involves a security agreement, attachment to the collateral, and perfection—usually by filing a financing statement (the UCC-1) in the proper state office, though some collateral can be perfected by possession or control. Once perfected, the secured party generally has priority over unperfected interests and most later creditors, with certain exceptions.

Other UCC articles cover different topics: one deals with sales of goods, another with negotiable instruments, and another with letters of credit. So the topic of secured transactions is best associated with Article 9. For example, if a lender takes a security interest in a car to secure a loan and files a financing statement, that interest is attached and perfected, giving the lender priority over other creditors.