Darrel, Smith, Keith, and Aaron are claimants to a collateral interest. Smith and Darrel secure their interests. Aaron takes physical possession of the collateral. Keith files a financing statement some time later. Who among the four will have highest priority of claim to the collateral?
A) Darrel
B) Smith
C) Keith
D) Aaron

Question

Quizplus · Accepted Answer

Aaron's physical possession of the collateral gives him the highest priority over the others who have merely secured interests or filed financing statements. In many jurisdictions, possession is a strong form of security interest that often takes precedence.

Darrel, Smith, Keith, and Aaron Are Claimants to a Collateral