Possession of collateral by a secured party is a valid method of perfecting a security interest.

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Possession of collateral is one of the methods of perfecting a security interest under the Uniform Commercial Code (UCC). Possession can be taken by physically holding the property, such as a car or jewelry, or by holding the documentation of the property, such as the title or certificate of ownership. Once possession is taken, the secured party has a superior right over other creditors in the event of default or bankruptcy.

Possession of Collateral by a Secured Party Is a Valid