9203 - Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.
§ 9203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites. (a) Attachment.--A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral unless an agreement expressly postpones the time of attachment. (b) Enforceability.--Except as otherwise provided in subsections (c) through (i), a security interest is enforceable against the debtor and third parties with respect to the collateral only if all of the following apply: (1) Value has been given. (2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party. (3) One of the following conditions is met: (i) The debtor has authenticated a security agreement which provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned. (ii) The collateral is not a certificated security and is in the possession of the secured party under section 9313 (relating to when possession by or delivery to secured party perfects security interest without filing) pursuant to the debtor's security agreement. (iii) The collateral is a certificated security in registered form, and the security certificate has been delivered to the secured party under section 8301 (relating to delivery) pursuant to the debtor's security agreement. (iv) The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights or electronic documents, and the secured party has control under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), 9105 (relating to control of electronic chattel paper), 9106 (relating to control of investment property) or 9107 (relating to control of letter-of-credit right) pursuant to the debtor's security agreement. (c) Other Title 13 provisions.--Subsection (b) is subject to sections 4210 (relating to security interest of collecting bank in items, accompanying documents and proceeds), 5118 (relating to security interest of issuer or nominated person), 9110 (relating to security interests arising under Division 2 or 2A) and 9206 (relating to security interest arising in purchase or delivery of financial asset). (d) When person becomes bound by another person's security agreement.--A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this division or by contract: (1) the security agreement becomes effective to create a security interest in the person's property; or (2) the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person. (e) Effect of new debtor becoming bound.--If a new debtor becomes bound as debtor by a security agreement entered into by another person: (1) the agreement satisfies subsection (b)(3) with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and (2) another agreement is not necessary to make a security interest in the property enforceable. (f) Proceeds and supporting obligations.--The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by section 9315 (relating to secured party's rights on disposition of collateral and in proceeds) and is also attachment of a security interest in a supporting obligation for the collateral. (g) Lien securing right to payment.--The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage or other lien. (h) Security entitlement carried in securities account.--The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account. (i) Commodity contracts carried in commodity account.--The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account. (Apr. 16, 2008, P.L.57, No.13, eff. 60 days) 2008 Amendment. Act 13 amended subsec. (b)(3)(iv). Cross References. Section 9203 is referred to in sections 4210, 5118, 9102, 9109, 9110, 9317, 9508, 9703, 9704, 9709 of this title.