47-9203

47-9203. Attachment and enforceability of
security interest; proceeds; supporting obligations; formal
requisites

A. 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. Except as otherwise provided in subsections C through I of this section, a
security interest is enforceable against the debtor and third parties with respect to the
collateral only if:

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; and

3. One of the following conditions is met:

(a) The debtor has authenticated a security agreement that provides a description
of the collateral and, if the security interest covers timber to be cut, a description of
the land concerned;

(b) The collateral is not a certificated security and is in the possession of the
secured party under section 47-9313 pursuant to the debtor's security agreement;

(c) The collateral is a certificated security in registered form and the security
certificate has been delivered to the secured party under section 47-8301 pursuant to the
debtor's security agreement; or

(d) 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 47-7106, 47-9104, 47-9105, 47-9106 or 47-9107 pursuant to the
debtor's security agreement.

C. Subsection B of this section is subject to section 47-4210 on the security
interest of a collecting bank, section 47-5118 on the security interest of a
letter-of-credit issuer or nominated person, section 47-9110 on a security interest
arising under chapter 2 or 2A of this title, and section 47-9206 on security interests in
investment property.

D. A person becomes bound as debtor by a security agreement entered into by another
person if, by operation of law other than this chapter 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. If a new debtor becomes bound as debtor by a security agreement entered into by
another person:

1. The agreement satisfies subsection B, paragraph 3 of this section 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. The attachment of a security interest in collateral gives the secured party the
rights to proceeds provided by section 47-9315 and is also attachment of a security
interest in a supporting obligation for the collateral.

G. 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. 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. 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.