Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
You’re likely familiar with the requirement to file a UCC-1 in order to perfect your security interest in personal property of the customer. A creditor does this in order to put the rest of the world on notice that it has a security interest in specific property. Perfection is important in determining priority of claims when you’re collecting on a bad loan. It is also important if a customer eventually files bankruptcy.
So, when is a UCC-1 insufficient to perfect your security interest? In Wisconsin, there are a number of cases in which you need to do more than simply file a UCC-1 to perfect. The easiest example is perfection on a motor vehicle. In order to perfect your interest in a car, you must have your name listed on the title. The same is true for any property that is covered by a certificate of title, such as snowmobiles, ATVs and even some trailers.
Additionally, there are specific requirements for other non-traditional security items. For example, if you take a security interest in stock certificates, in order to properly perfect, you must actually hold the certificates. A UCC-1 filing will do you no good. Moreover, Wisconsin has a list of items that can be perfected by simply taking control of the property. A UCC-1 may not even be necessary.
As you can see, there are many possible pitfalls covering perfection of security interests. You should discuss the details of any out-of-the-ordinary transactions with your attorney to ensure you are properly perfected.