North Dakota Code 41-09-13 – (9-203) Attachment and enforceability of security interest – Proceeds – Supporting obligations – Formal requisites
1. A security interest attaches to collateral when the security interest becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.
Terms Used In North Dakota Code 41-09-13
- 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.
- Debtor: means a natural person whose name was provided in a financing statement record as an individual debtor or one of the types of persons listed in section 41-09-76. See North Dakota Code 41-10-01
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- 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.
- paper: means any flexible material upon which it is usual to write. See North Dakota Code 1-01-27
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
- Property: includes property, real and personal. See North Dakota Code 1-01-49
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
2. Except as otherwise provided in subsections 3 through 9, 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 signed 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 section 41-09-33 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 section 41-08-27 pursuant to the debtor’s security agreement; (4) The collateral is controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, letter-of-credit rights, or uncertificated certificates of deposit, and the secured party has control under section 41-07-06, 41-09-04, 41-09-05, 41-09-05.1, 41-09-06, 41-09-07, or 41-09-07.1 pursuant to the debtor’s security agreement; or
(5) The collateral is chattel paper and the secured party has possession and control under section 41-09-34.1 pursuant to the debtor’s security agreement.
3. Subsection 2 is subject to section 41-04-22 on the security interest of a collecting bank, section 41-05-18 on the security interest of a letter-of-credit issuer or nominated person, section 41-09-10 on a security interest arising under chapter 41-02 or 41-02.1, and section 41-09-16 on security interests in investment property.
4. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this chapter 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. If a new debtor becomes bound as debtor by a security agreement entered into by another person:
a. The agreement satisfies subdivision c of subsection 2 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. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by section 41-09-35 and is also attachment of a security interest in a supporting obligation for the collateral.
7. Except as provided in section 47-19-41, 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. 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. The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.