Which of the following is true of perfection by possession of collateral?
A) A creditor cannot take possession of the collateral until a financing statement is filed.
B) No financing statement has to be filed if the creditor has physical possession of the collateral.
C) A debtor cannot acquire security against the collateral without filing a financing statement.
D) A financing statement can be filed only against intangible personal property placed as collateral.

Question

Quizplus · Accepted Answer

If a creditor has physical possession of the collateral, no financing statement needs to be filed to perfect the security interest. This is known as perfection by possession of collateral. However, if the creditor does not have physical possession, a financing statement must be filed to give notice to other potential creditors and obtain priority over subsequent creditors. Additionally, perfection by possession only applies to tangible personal property, not intangible property.

Which of the Following Is True of Perfection by Possession