Review the sections on Attachment (section 16-2) and Perfection (section 16-3) in Ch. 16.

U.S. Bank has loaned $1,000,000 to ClearWater so it can purchase water purification equipment.

As part of the loan agreement, the parties sign a security agreement in which ClearWater puts up as collateral the purification equipment that it will acquire with the loan.

U.S. Bank makes the $1,000,000 loan and ClearWater purchases the equipment and obtains rights to it.

Consider what the bank needs to do to attach and perfect its security interest.

Attachment

1. What are the requirements for attachment?

2. Are they met here? How are they met (apply the facts)?

Perfection

1. What are the three methods to perfect a security interest?

2. Which method would the loan officer for U.S. Bank choose to perfect the bank's interest as a creditor?

3. What specifically needs to be done by U.S. Bank to perfect is security interest?