Statutes > Illinois Statutes > CHAPTER 810 COMMERCIAL CODE > 810 ILCS 5/ Uniform Commercial Code. > SubPart 2 - Perfection

SubPart 2 - Perfection


      (810 ILCS 5/Art. 9 Pt. 3 Sub. 2 heading)
SUBPART 2. PERFECTION

    (810 ILCS 5/9‑308) (from Ch. 26, par. 9‑308)
    Sec. 9‑308. When security interest or agricultural lien is perfected; continuity of perfection.
    (a) Perfection of security interest. Except as otherwise provided in this Section and Section 9‑309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Sections 9‑310 through 9‑316 have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.
    (b) Perfection of agricultural lien. An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in Section 9‑310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.
    (c) Continuous perfection; perfection by different methods. A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this Article and is later perfected by another method under this Article, without an intermediate period when it was unperfected.
    (d) Supporting obligation. Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.
    (e) Lien securing right to payment. Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.
    (f) Security entitlement carried in securities account. Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.
    (g) Commodity contract carried in commodity account. Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.
(Source: P.A. 91‑893, eff. 7‑1‑01.)

    (810 ILCS 5/9‑309) (from Ch. 26, par. 9‑309)
    Sec. 9‑309. Security interest perfected upon attachment. The following security interests are perfected when they attach:
        (1) a purchase‑money security interest in consumer
     goods, except as otherwise provided in Section 9‑311(b) with respect to consumer goods that are subject to a statute or treaty described in Section 9‑311(a);
        (2) an assignment of accounts or payment intangibles
     which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles;
        (3) a sale of a payment intangible;
        (4) a sale of a promissory note;
        (5) a security interest created by the assignment of
     a health‑care‑insurance receivable to the provider of the health‑care goods or services;
        (6) a security interest arising under Section 2‑401,
     2‑505, 2‑711(3), or 2A‑508(5), until the debtor obtains possession of the collateral;
        (7) a security interest of a collecting bank arising
     under Section 4‑210;
        (8) a security interest of an issuer or nominated
     person arising under Section 5‑118;
        (9) a security interest arising in the delivery of a
     financial asset under Section 9‑206(c);
        (10) a security interest in investment property
     created by a broker or securities intermediary;
        (11) a security interest in a commodity contract or
     a commodity account created by a commodity intermediary;
        (12) an assignment for the benefit of all creditors
     of the transferor and subsequent transfers by the assignee thereunder; and
        (13) a security interest created by an assignment of
     a beneficial interest in a decedent's estate.
(Source: P.A. 91‑893, eff. 7‑1‑01.)

    (810 ILCS 5/9‑310)(from Ch. 26, par. 9‑310)
    Sec. 9‑310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.
    (a) General rule: perfection by filing. Except as otherwise provided in subsection (b) and Section 9‑312(b), a financing statement must be filed to perfect all security interests and agricultural liens.
    (b) Exceptions: filing not necessary. The filing of a financing statement is not necessary to perfect a security interest:
        (1) that is perfected under Section 9‑308(d), (e),
     (f), or (g);
        (2) that is perfected under Section 9‑309 when it
     attaches;
        (3) in property subject to a statute, regulation, or
     treaty described in Section 9‑311(a);
        (4) in goods in possession of a bailee which is
     perfected under Section 9‑312(d)(1) or (2);
        (5) in certificated securities, documents, goods, or
     instruments which is perfected without filing, control, or possession under Section 9‑312(e), (f), or (g);
        (6) in collateral in the secured party's possession
     under Section 9‑313;
        (7) in a certificated security which is perfected by
     delivery of the security certificate to the secured party under Section 9‑313;
        (8) in deposit accounts, electronic chattel paper,
     electronic documents, investment property, letter‑of‑credit rights, or beneficial interests in Illinois land trusts which is perfected by control under Section 9‑314;
        (9) in proceeds which is perfected under Section
     9‑315; or
        (10) that is perfected under Section 9‑316.
    (c) Assignment of perfected security interest. If a secured party assigns a perfected security interest or agricultural lien, a filing under this Article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

    (810 ILCS 5/9‑311) (from Ch. 26, par. 9‑311)
    Sec. 9‑311. Perfection of security interests in property subject to certain statutes, regulations, and treaties.
    (a) Security interest subject to other law. Except as otherwise provided in subsection (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:
        (1) a statute, regulation, or treaty of the United
     States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9‑310(a);
        (2) the Illinois Vehicle Code or the Boat
     Registration and Safety Act; or
        (3) a certificate‑of‑title statute of another
     jurisdiction which provides for a security interest to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property.
    (b) Compliance with other law. Compliance with the requirements of a statute, regulation, or treaty described in subsection (a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this Article. Except as otherwise provided in subsection (d) and Sections 9‑313 and 9‑316(d) and (e) for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subsection (a) may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.
    (c) Duration and renewal of perfection. Except as otherwise provided in subsection (d) and Section 9‑316(d) and (e), duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in subsection (a) are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this Article.
    (d) Inapplicability to certain inventory. During any period in which collateral subject to a statute specified in subsection (a)(2) is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling or leasing goods of that kind, this Section does not apply to a security interest in that collateral created by that person as debtor.
(Source: P.A. 91‑893, eff. 7‑1‑01.)

    (810 ILCS 5/9‑312)(from Ch. 26, par. 9‑312)
    Sec. 9‑312. Perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter‑of‑credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.
    (a) Perfection by filing permitted. A security interest in chattel paper, negotiable documents, instruments, beneficial interests in Illinois land trusts, or investment property may be perfected by filing.
    (b) Control or possession of certain collateral. Except as otherwise provided in Section 9‑315(c) and (d) for proceeds:
        (1) a security interest in a deposit account may be
     perfected only by control under Section 9‑314;
        (2) and except as otherwise provided in Section
     9‑308(d), a security interest in a letter‑of‑credit right may be perfected only by control under Section 9‑314; and
        (3) a security interest in money may be perfected
     only by the secured party's taking possession under Section 9‑313.
    (c) Goods covered by negotiable document. While goods are in the possession of a bailee that has issued a negotiable document covering the goods:
        (1) a security interest in the goods may be
     perfected by perfecting a security interest in the document; and
        (2) a security interest perfected in the document
     has priority over any security interest that becomes perfected in the goods by another method during that time.
    (d) Goods covered by nonnegotiable document. While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:
        (1) issuance of a document in the name of the
     secured party;
        (2) the bailee's receipt of notification of the
     secured party's interest; or
        (3) filing as to the goods.
    (e) Temporary perfection: new value. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.
    (f) Temporary perfection: goods or documents made available to debtor. A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:
        (1) ultimate sale or exchange; or
        (2) loading, unloading, storing, shipping,
     transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.
    (g) Temporary perfection: delivery of security certificate or instrument to debtor. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:
        (1) ultimate sale or exchange; or
        (2) presentation, collection, enforcement, renewal,
     or registration of transfer.
    (h) Expiration of temporary perfection. After the 20‑day period specified in subsection (e), (f), or (g) expires, perfection depends upon compliance with this Article.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

    (810 ILCS 5/9‑313)(from Ch. 26, par. 9‑313)
    Sec. 9‑313. When possession by or delivery to secured party perfects security interest without filing.
    (a) Perfection by possession or delivery. Except as otherwise provided in subsection (b), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under Section 8‑301.
    (b) Goods covered by certificate of title. With respect to goods covered by a certificate of title issued by this State, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in Section 9‑316(d).
    (c) Collateral in possession of person other than debtor. With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtor's business, when:
        (1) the person in possession authenticates a record
     acknowledging that it holds possession of the collateral for the secured party's benefit; or
        (2) the person takes possession of the collateral
     after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit.
    (d) Time of perfection by possession; continuation of perfection. If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.
    (e) Time of perfection by delivery; continuation of perfection. A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Section 8‑301 and remains perfected by delivery until the debtor obtains possession of the security certificate.
    (f) Acknowledgment not required. A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.
    (g) Effectiveness of acknowledgment; no duties or confirmation. If a person acknowledges that it holds possession for the secured party's benefit:
        (1) the acknowledgment is effective under subsection
     (c) or Section 8‑301(a), even if the acknowledgment violates the rights of a debtor; and
        (2) unless the person otherwise agrees or law other
     than this Article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.
    (h) Secured party's delivery to person other than debtor. A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:
        (1) to hold possession of the collateral for the
     secured party's benefit; or
        (2) to redeliver the collateral to the secured party.
    (i) Effect of delivery under subsection (h); no duties or confirmation. A secured party does not relinquish possession, even if a delivery under subsection (h) violates the rights of a debtor. A person to which collateral is delivered under subsection (h) does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this Article otherwise provides.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

    (810 ILCS 5/9‑314)(from Ch. 26, par. 9‑314)
    Sec. 9‑314. Perfection by control.
    (a) Perfection by control. A security interest in investment property, deposit accounts, electronic chattel paper, letter‑of‑credit rights, electronic documents, or beneficial interests in Illinois land trusts may be perfected by control of the collateral under Section 7‑106, 9‑104, 9‑105, 9‑106, 9‑107, or 9‑107.1.
    (b) Specified collateral: time of perfection by control; continuation of perfection. A security interest in deposit accounts, electronic chattel paper, letter‑of‑credit rights, electronic documents, or beneficial interests in Illinois land trusts is perfected by control under Section 7‑106, 9‑104, 9‑105, 9‑107, or 9‑107.1 when the secured party obtains control and remains perfected by control only while the secured party retains control.
    (c) Investment property: time of perfection by control; continuation of perfection. A security interest in investment property is perfected by control under Section 9‑106 from the time the secured party obtains control and remains perfected by control until:
        (1) the secured party does not have control; and
        (2) one of the following occurs:
            (A) if the collateral is a certificated
         security, the debtor has or acquires possession of the security certificate;
            (B) if the collateral is an uncertificated
         security, the issuer has registered or registers the debtor as the registered owner; or
            (C) if the collateral is a security entitlement,
         the debtor is or becomes the entitlement holder.
(Source: P.A. 95‑895, eff. 1‑1‑09.)

    (810 ILCS 5/9‑315) (from Ch. 26, par. 9‑315)
    Sec. 9‑315. Secured party's rights on disposition of collateral and in proceeds.
    (a) Disposition of collateral: continuation of security interest or agricultural lien; proceeds. Except as otherwise provided in this Article and in Section 2‑403(2):
        (1) a security interest or agricultural lien
     continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and
        (2) a security interest attaches to any identifiable
     proceeds of collateral.
    (b) When commingled proceeds identifiable. Proceeds that are commingled with other property are identifiable proceeds:
        (1) if the proceeds are goods, to the extent
     provided by Section 9‑336; and
        (2) if the proceeds are not goods, to the extent
     that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this Article with respect to commingled property of the type involved.
    (c) Perfection of security interest in proceeds. A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.
    (d) Continuation of perfection. A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless:
        (1) the following conditions are satisfied:
            (A) a filed financing statement covers the
         original collateral;
            (B) the proceeds are collateral in which a
         security interest may be perfected by filing in the office in which the financing statement has been filed; and
            (C) the proceeds are not acquired with cash
         proceeds;
        (2) the proceeds are identifiable cash proceeds; or
        (3) the security interest in the proceeds is
     perfected other than under subsection (c) when the security interest attaches to the proceeds or within 20 days thereafter.
    (e) When perfected security interest in proceeds becomes unperfected. If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under subsection (d)(1) becomes unperfected at the later of:
        (1) when the effectiveness of the filed financing
     statement lapses under Section 9‑515 or is terminated under Section 9‑513; or
        (2) the 21st day after the security interest
     attaches to the proceeds.