A security interest gives a lender rights in collateral. Whether those rights defeat competing claimants depends on steps that are technical and unforgiving.
Attachment makes the interest enforceable against the debtor: value given, the debtor has rights in the collateral, and either the debtor has authenticated a security agreement describing it or the secured party has possession or control.
Perfection makes it effective against third parties. The usual method is filing a financing statement in the correct office, which for most debtors is the state of the debtor’s location — the state of organisation for registered entities.
Description. A security agreement must reasonably identify the collateral; a financing statement may indicate all assets. Using an all-assets description in a security agreement is insufficient.
Debtor name. The financing statement must give the name on the debtor’s public organic record, exactly. A minor variance that a search under the correct name would not disclose renders the filing seriously misleading and ineffective.
Control and possession are required or preferable for deposit accounts, investment property, letter-of-credit rights and instruments.
Continuation. Filings lapse after five years unless continued within the six months before lapse. A lapsed filing is treated as never having been perfected as against purchasers for value, which can reverse priority retroactively.