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Article 9 of the Single Code of Commerce (UCC) governs the security interests of personal property. The UCC defines the scope of the article (here slightly shortened):Uniform Commercial Code, Section 9-109. A secondary debtor is „a debtor in which: (A) [the undertaking] is secondary; or b) [the person] has the right to appeal an obligation that is guaranteed by collateral against the debtor, another debtor or the property of both. Single Code of Trade, Section 9-102 (a) (71). The secondary debtor is a surety of the debt, obliged to comply if the principal debtor breaks down. Take, for example, 2 from the official commentary in Section 9-102: „Behnfeldt borrows money and gives his Miata a security interest to secure the debt. Bruno signs a negotiable note as a creator. Behnfeldt is still a debtor and debtor. As a hosting partner, Bruno is a second-rate debtor. Bruno has this status, even though it is stated in the note that his commitment is a primary obligation and that he renounces any defence of guarantee.

“ d) [If a person is bound by another person`s security agreement.] A creditor may, by an agreement between the parties or by application of the law, guarantee the ownership of the debtor after the debtor`s insolvency. The Personal Property Security Act is Section 9 of the UCC. The first step for the creditor is to attach the interest of security. This usually occurs when the debtor, in return for value (a loan or loan granted by the creditor), secures a valuable asset in which he holds a stake and authenticates a security agreement (the contract) that gives the creditor a security interest and allows the creditor to withdraw it in the event of a delay. The UCC lists different types of assets that can be guaranteed, from tangible assets (property) to assets that can only be manifested by paper (indispensable paper) to intangible assets (such as patents). Sometimes no security agreement is required, most often when the creditor takes possession of the guarantees. After the seizure, the prudent creditor will want to improve the security interest to ensure that no other creditor claims to participate in the guarantee. Perfection is generally achieved by filing a financing return in the appropriate place to inform the world of the creditor`s interests. Perfection can also be achieved through collateral (held by the secured creditor) or „control“ of certain assets (with such control that they can be sold if the debtor is late in payment).

Perfection is automatically temporary for certain objects (certified titles, instruments and tradable documents), but also on the simple link with the security interests of the purchase money on consumer goods. In this chapter, we take up the interests of security in the areas of personal property and security. In the next chapter, we will look at mortgages and non-consensual pawn fees. A security agreement may be oral if the guaranteed party (the lender) is in possession of the guarantees. If the guarantee is physically held by the borrower or if the guarantee is an intangible value (. For example, a patent, [1) of claims or a debt title), the guarantee agreement must be made in writing to comply with the fraud law. The security contract must be authenticated by the debtor, i.e. it must bear the debtor`s signature or be marked electronically.

It must provide an appropriate description of the guarantees and use words that show an intention to create an interest in securities (the right to claim repayment of the loan through stolen property). In order for the security contract to be valid, the borrower must normally have rights to the guarantees at the time the contract is implemented. If a borrower promises as collateral a car owned by a neighbour and the neighbour does not know or support this promise, the security agreement is ineffective. However, a security agreement may specify that it contains post-acquired properties.