A purchase money security interest (PMSI) allows a security interest to automatically achieve perfection in the installation. This approach is most commonly used when real estate financing is provided at the Point of Sale. The use of PMSI is limited to hardware and sometimes new software. To qualify, the insured party must indicate a new value and that value must allow the debtor to acquire (or acquire rights). Three elements must be in place for the insured party to have a protected security interest for the guarantees: 1) the insured party must pay or give something valuable to receive security interest, 2) the debtor must hold the guarantee or have the appropriate authority over the security to pawn the guarantee and 3) the debtor must sign a guarantee contract. As soon as the three positions take office, the insured party has, quite rightly, an interest in the security of guarantees. This process is referred to as the “annex” of security interest. Assuming the first two positions are available, the insured party should have a security interest attached when the debtor signs the security agreement. Second, the insured party must “perfect” its safety interest. This means that the insured party has taken steps to ensure that no other creditor is entitled to the prior guarantee and that the insured party can benefit from the guarantee in the event of debtor insolvency or bankruptcy. While the step towards developing a securities interest is not required by law, it is often the only way for the insured party to ensure that its interest in collateral is secure to other creditors.
You can enhance your interest by simply filing a short document, a financing statement, in the state or in the local jurisdiction of the debtor. If the debtor is an individual, it is the state in which the debtor resides; if the debtor is a business, it is the state in which the business was incorporated. While the rules vary by location, a funding institution usually requires only the identification of the parties and a description of the guarantees. In most states, you can easily provide this information by filling out the UCC-1 form and submitting it to the Secretary of State`s office. You can find your state`s requirements online or by phone at your state office. Here you have the option to include one or more co-signers to ensure repayment of debts if a debtor is unable to pay some or all of the outstanding debt. For each co-signer, a separate co-signer agreement is automatically included, signed with the insured party and each notary or witness.