Iowa Code 554.9203 – Attachment and enforceability of security interest — proceeds — supporting obligations — formal requisites
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Terms Used In Iowa Code 554.9203
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Contract: A legal written agreement that becomes binding when signed.
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: means individual, corporation, limited liability company, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity. See Iowa Code 4.1
- property: includes personal and real property. See Iowa Code 4.1
- Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
554.9203 Attachment and enforceability of security interest — proceeds — supporting obligations — formal requisites.
1. Attachment. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.
2. Enforceability. Except as otherwise provided in subsections 3 through 10, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
a. value has been given;
b. the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
c. one of the following conditions is met:
(1) the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
(2) the collateral is not a certificated security and is in the possession of the secured party under § 554.9313 pursuant to the debtor’s security agreement;
(3) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under § 554.8301 pursuant to the debtor’s security agreement; or
(4) the collateral is controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic chattel paper, electronic documents, electronic money, investment property, or letter-of-credit rights, and the secured party has control under § 554.7106, 554.9104, 554.9105, 554.9105A, 554.9106, 554.9107, or
554.9107A pursuant to the debtor’s security agreement.
3. Other UCC provisions. Subsection 2 is subject to § 554.4210 on the security interest of a collecting bank, § 554.5118 on the security interest of a letter-of-credit issuer or nominated person, § 554.9110 on a security interest arising under Article 2 or
13, and § 554.9206 on security interests in investment property.
4. When person becomes bound by another person’s security agreement. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this Article or by contract:
a. the security agreement becomes effective to create a security interest in the person’s property; or
b. the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
5. Effect of new debtor becoming bound. If a new debtor becomes bound as debtor by a security agreement entered into by another person:
a. the agreement satisfies subsection 2, paragraph “”c””, with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
b. another agreement is not necessary to make a security interest in the property enforceable.
6. Proceeds and supporting obligations. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by § 554.9315 and is also attachment of a security interest in a supporting obligation for the collateral.
7. Lien securing right to payment. The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
8. Security entitlement carried in securities account. The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.
9. Commodity contracts carried in commodity account. The attachment of a security
1. Attachment. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.
2. Enforceability. Except as otherwise provided in subsections 3 through 10, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
a. value has been given;
b. the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
c. one of the following conditions is met:
(1) the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
(2) the collateral is not a certificated security and is in the possession of the secured party under § 554.9313 pursuant to the debtor’s security agreement;
(3) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under § 554.8301 pursuant to the debtor’s security agreement; or
(4) the collateral is controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic chattel paper, electronic documents, electronic money, investment property, or letter-of-credit rights, and the secured party has control under § 554.7106, 554.9104, 554.9105, 554.9105A, 554.9106, 554.9107, or
554.9107A pursuant to the debtor’s security agreement.
3. Other UCC provisions. Subsection 2 is subject to § 554.4210 on the security interest of a collecting bank, § 554.5118 on the security interest of a letter-of-credit issuer or nominated person, § 554.9110 on a security interest arising under Article 2 or
13, and § 554.9206 on security interests in investment property.
4. When person becomes bound by another person’s security agreement. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this Article or by contract:
a. the security agreement becomes effective to create a security interest in the person’s property; or
b. the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
5. Effect of new debtor becoming bound. If a new debtor becomes bound as debtor by a security agreement entered into by another person:
a. the agreement satisfies subsection 2, paragraph “”c””, with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
b. another agreement is not necessary to make a security interest in the property enforceable.
6. Proceeds and supporting obligations. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by § 554.9315 and is also attachment of a security interest in a supporting obligation for the collateral.
7. Lien securing right to payment. The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
8. Security entitlement carried in securities account. The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.
9. Commodity contracts carried in commodity account. The attachment of a security
§554.9203, UNIFORM COMMERCIAL CODE 2
interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.
10. Controllable account or controllable payment intangible. The attachment of a
security interest in a controllable electronic record that evidences a controllable account or controllable payment intangible is also attachment of a security interest in the controllable account or controllable payment intangible.
2000 Acts, ch 1149, §13, 185, 187; 2007 Acts, ch 30, §45, 46, 66; 2022 Acts, ch 1117, §18, 19
Referred to in §554.4210, 554.5118, 554.9102, 554.9109, 554.9110, 554.9306A, 554.9316, 554.9317, 554.9508
Sufficiency of description, see §554.9108
Effectiveness of financing statement if new debtor bound, see §554.9508