The Uniform Commercial Code (UCC) is a collection of laws that govern commercial sales in the United States. Its provisions created the guidelines all states follow today in commercial transactions, making trade throughout the country streamlined and predictable. Although all states have adopted at least some of the UCC’s provisions, a few have not adopted them all. In 2013, Wisconsin adopted Article 9, the article that governs security interests in personal property and fixtures.
A security interest is a creditor’s legal claim to a piece of collateral used to obtain a loan from them. When a security interest is part of a transaction, the process is known as a secured transaction. Secured transactions are often used by businesses to obtain loans. As a business owner, you will likely be involved in one or more secured transactions. Educate yourself about the business law that surrounds these transactions to ensure that you know your rights and how to protect them during interactions with creditors.
In order to understand how security interests work within secured transactions, it is important that you understand who is who and the assets involved in these transactions.
For a creditor to become a secured party, they must assert their interest in a piece of collateral through a process known as attachment. To attach a security interest, the following three criteria must be met:
Attaching a security interest to a piece of collateral can be a complex process. When you are considering using this type of transaction to support your business, be sure to work with an experienced business lawyer who can guide you through the process and ensure that your security agreement protects your rights and interests.
Once a security interest is attached, the creditor can perfect it. This is done by filing a financing statement with the State of Wisconsin Department of Financial Institutions. When a creditor perfects a security interest, they have priority over other creditors to claim its collateral if the debtor files for bankruptcy.
When you need experienced legal advice and representation in the business arena, work with one of the experienced Appleton business lawyers from Hammett, Bellin & Oswald, LLC. Contact our office today to set up your complimentary legal consultation with us. We can answer any questions you have and guide you toward the most effective course of action for your secured transaction or any other business matter. Our team is not just familiar with state and federal business laws, but with the court systems in many Wisconsin counties, making us well-equipped to handle your unique case.