(810 ILCS 5/Art. 9 Pt. 3 Sub. 2 heading)
SUBPART 2.
PERFECTION
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(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.)
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(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);
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(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;
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(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;
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(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;
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(7) a security interest of a collecting bank arising
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(8) a security interest of an issuer or nominated
| | person arising under Section 5-118;
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(9) a security interest arising in the delivery of a
| | financial asset under Section 9-206(c);
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(10) a security interest in investment property
| | created by a broker or securities intermediary;
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(11) a security interest in a commodity contract or a
| | commodity account created by a commodity intermediary;
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(12) an assignment for the benefit of all creditors
| | of the transferor and subsequent transfers by the assignee thereunder; and
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(13) a security interest created by an assignment of
| | a beneficial interest in a decedent's estate.
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(Source: P.A. 91-893, eff. 7-1-01.)
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(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),
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(2) that is perfected under Section 9-309 when it
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(3) in property subject to a statute, regulation, or
| | treaty described in Section 9-311(a);
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(4) in goods in possession of a bailee which is
| | perfected under Section 9-312(d)(1) or (2);
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(5) in certificated securities, documents, goods, or
| | instruments which is perfected without filing, control, or possession under Section 9-312(e), (f), or (g);
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(6) in collateral in the secured party's possession
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(7) in a certificated security which is perfected by
| | delivery of the security certificate to the secured party under Section 9-313;
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(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;
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(9) in proceeds which is perfected under Section
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(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.)
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(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);
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(2) the Illinois Vehicle Code or the Boat
| | Registration and Safety Act; or
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(3) a statute of another jurisdiction which provides
| | for a security interest to be indicated on a certificate of title as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property.
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(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. 97-1034, eff. 7-1-13.)
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(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;
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(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
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(3) a security interest in money may be perfected
| | only by the secured party's taking possession under Section 9-313.
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(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
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(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.
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(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
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(2) the bailee's receipt of notification of the
| | secured party's interest; or
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(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.
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(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.
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(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.)
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(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
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(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.
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(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
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(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.
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(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
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(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.)
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(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;
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(B) if the collateral is an uncertificated
| | security, the issuer has registered or registers the debtor as the registered owner; or
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(C) if the collateral is a security entitlement,
| | the debtor is or becomes the entitlement holder.
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(Source: P.A. 95-895, eff. 1-1-09.)
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(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
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(2) a security interest attaches to any identifiable
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(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
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(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.
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(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
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(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
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(C) the proceeds are not acquired with cash
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(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.
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(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
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(2) the 21st day after the security interest attaches
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(Source: P.A. 91-893, eff. 7-1-01.)
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(810 ILCS 5/9-315.01)
Sec. 9-315.01.
Debtor disposing of collateral and failing to pay secured
party
amount due under security agreement; penalties for violation.
(1) It is unlawful for a debtor under the terms of a security agreement
(a)
who has
no right of sale or other disposition of the collateral or (b) who has a right
of sale or other
disposition of the collateral and is to account to the secured party for the
proceeds of any
sale or other disposition of the collateral, to sell or otherwise dispose of
the collateral and
willfully and wrongfully to fail to pay the secured party the amount of said
proceeds due
under the security agreement. Failure to pay such proceeds to the secured
party within 10
days after the sale or other disposition of the collateral is prima facie
evidence of a willful
and wanton failure to pay.
(2) An individual convicted of a violation of this Section shall be guilty
of
a Class
3 felony.
(3) A corporation convicted of a violation of this Section shall be guilty
of
a
business offense and shall be fined not less than $2,000 nor more than $10,000.
(4) In the event the debtor under the terms of a security agreement is a
corporation
or a partnership, any officer, director, manager, or managerial agent of the
debtor who
violates this Section or causes the debtor to violate this Section shall be
guilty of a Class
3 felony.
(Source: P.A. 91-893, eff. 7-1-01.)
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(810 ILCS 5/9-315.02)
Sec. 9-315.02.
Disposal of collateral by debtor to persons
other than those previously disclosed to secured party - penalties for
violation - defense.
(1) Where, pursuant to Section 9-205.1, a secured party has required that
before the debtor sells or otherwise disposes of collateral in the debtor's
possession he disclose to the secured party the persons to whom he desires to
sell or otherwise dispose of such collateral, it is unlawful for the debtor to
sell or otherwise dispose of the collateral to a person other than a person so
disclosed to the secured party.
(2) An individual convicted of a violation of this Section shall be guilty
of a Class A misdemeanor.
(3) A corporation convicted of a violation of this Section shall be guilty
of a business offense and shall be fined not less than $2,000 nor more than
$10,000.
(4) In the event the debtor under the terms of a security agreement is a
corporation or a partnership, any officer, director, manager, or managerial
agent of the debtor who violates this Section or causes the debtor to violate
this Section shall be guilty of a Class A misdemeanor.
(5) It is an affirmative defense to a prosecution for the violation of this
Section that the debtor has paid to the secured party the proceeds from the
sale or other disposition of the collateral within 10 days after such sale or
disposition.
(Source: P.A. 91-893, eff. 7-1-01; 92-16, eff. 6-28-01.)
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(810 ILCS 5/9-316) (from Ch. 26, par. 9-316)
Sec. 9-316. Effect of change
in governing law.
(a) General rule: effect on perfection of change in governing
law. A security interest perfected pursuant to the law of the jurisdiction
designated
in Section 9-301(1) or 9-305(c) remains perfected until the earliest of:
(1) the time perfection would have ceased under the
| | law of that jurisdiction;
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(2) the expiration of four months after a change of
| | the debtor's location to another jurisdiction; or
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(3) the expiration of one year after a transfer of
| | collateral to a person that thereby becomes a debtor and is located in another jurisdiction.
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(b) Security interest perfected or unperfected under law of new
jurisdiction. If a security interest described in subsection (a) becomes perfected
under the law of the other jurisdiction before the earliest time or event described in
that subsection, it remains perfected thereafter. If the security interest does not
become perfected under the law of the other jurisdiction before the earliest time or
event, it becomes unperfected and is deemed never to have been perfected as
against a purchaser of the collateral for value.
(c) Possessory security interest in collateral moved to new
jurisdiction. A possessory security interest in collateral, other than goods covered
by a certificate of title and as-extracted collateral consisting of goods, remains
continuously perfected if:
(1) the collateral is located in one jurisdiction and
| | subject to a security interest perfected under the law of that jurisdiction;
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(2) thereafter the collateral is brought into another
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(3) upon entry into the other jurisdiction, the
| | security interest is perfected under the law of the other jurisdiction.
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(d) Goods covered by certificate of title from this State. Except
as otherwise provided in subsection (e), a security interest in goods covered by a
certificate of title which is perfected by any method under the law of another
jurisdiction when the goods become covered by a certificate of title from this State
remains perfected until the security interest would have become unperfected
under
the law of the other jurisdiction had the goods not become so covered.
(e) When subsection (d) security interest becomes unperfected
against purchasers. A security interest described in subsection (d) becomes
unperfected as against a purchaser of the goods for value and is deemed never
to
have been perfected as against a purchaser of the goods for value if the
applicable
requirements for perfection under Section 9-311(b) or 9-313 are not satisfied
before
the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this State; or
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(2) the expiration of four months after the goods had
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(f) Change in jurisdiction of bank, issuer, nominated person,
securities intermediary, or commodity intermediary. A security interest in
deposit accounts, letter-of-credit rights, or investment property which is perfected
under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated
person's jurisdiction, the securities intermediary's jurisdiction, or the commodity
intermediary's jurisdiction, as applicable, remains perfected until the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of that jurisdiction; or
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(2) the expiration of four months after a change of
| | the applicable jurisdiction to another jurisdiction.
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(g) Subsection (f) security interest perfected or unperfected
under law of new jurisdiction. If a security interest described in subsection
(f)
becomes perfected under the law of the other jurisdiction before the earlier of
the
time or the end of the period described in that subsection, it remains
perfected
thereafter. If the security interest does not become perfected under the law
of the
other jurisdiction before the earlier of that time or the end of that period,
it becomes
unperfected and is deemed never to have been perfected as against a purchaser
of
the collateral for value.
(h) Effect on filed financing statement of change in governing law. The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change
| | pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location.
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| (2) If a security interest perfected by a financing
| | statement that is effective under paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
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| (i) Effect of change in governing law on financing statement filed against original debtor. If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) and the new debtor is located in another jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect
| | a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d), if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor.
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| (2) A security interest perfected by the financing
| | statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
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| (Source: P.A. 97-1034, eff. 7-1-13.)
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