Skip to main content

Facilitator Guide

Security Interests and Perfection

What’s covered

  • Voluntary vs. involuntary liens
  • Creating a security interest
  • Attachment under Article 9 
  • Perfection under the UCC
  • Lien priority
  • Perfection outside the UCC
  • UCC-1 financing statements
  • UCC-3 post-filing actions

Before the session

Prepare the Attendees

Send the attendees an invitation for the session. Include this link, which has the videos and exercise they’ll need to prepare.

https://www.hotshotlegal.com/discussions/security-interests-and-perfection/attendee

Prepare Yourself

Watch the videos and read the exercise so you’re familiar with the Hotshot material.

  • still frame from Security Interests and Perfection

    Course

    Security Interests and Perfection

    A look at security interests, including different types of collateral, how security interests are created through attachment, the perfection process, and lien priority. This course also includes an introduction to Article 9 of the UCC.

  • still frame from UCC Financing Statements

    Course

    UCC Financing Statements

    A look at filing under the UCC, including a close look at a UCC-1 financing statement. This course also covers extension, modification, and termination of a financing statement by filing a UCC-3.

  • Icon of a document

    Exercise

    PDF

During the session

Part 1: Knowledge Check
 
Ask attendees these questions to ensure they understand the topic:

  • What is a security interest? What are some other terms for a security interest? 
  • What’s the difference between a voluntary lien and an involuntary lien? Are secured loan transactions voluntary or involuntary?
  • Under Article 9, what are the three requirements for attachment?
  • What are the four ways to perfect a security interest under Article 9? 
  • What is the first-in-time rule? What are the exceptions to the rule?
  • With which types of assets do you need to look outside the UCC for the rules on attachment and perfection? 
  • What must be included in a financing statement for it to be considered “sufficient” under Article 9? 
  • Does the debtor need to sign a financing statement to authorize its financing? 
  • Why do lenders sometimes file a UCC-3 when they assign or transfer a loan and security interest to another lender? 
Part 2: Group Exercise
 
Lead a group discussion based on the exercise. To encourage collaboration, divide the attendees into groups to discuss the exercise, then have a representative from each group summarize their views to the larger group. Call on people to share their thoughts and ask others to respond.
 
Tip for remote sessions: use your web conferencing system’s breakout room feature to divide people into groups.
 
Part 3: War Stories and Firm Specifics
 
Share your own experiences and guidance, including:

  • Anecdotes and war stories (e.g., about a near-disaster or a tough negotiation)
  • General practice tips (dos and don’ts)
  • Firm-specific guidance and practices

After the session

To continue their learning, attendees can check out related courses in Hotshot’s Commercial Lending topic.