Which of the following is true about security agreements and financing statements?

Question

Quizplus · Accepted Answer

A security agreement is a contract that gives a lender a security interest in the borrower's collateral. A financing statement is a public notice that the lender has a security interest in the borrower's collateral. While they are related documents, they serve different purposes. The filing of a financing statement puts other potential creditors on notice of the lender's interest in the collateral, and is required to perfect a security interest in most cases. Therefore, the financing statement provides constructive notice to the world of the existence of the related security agreement.

Which of the Following Is True About Security Agreements and Financing