Trace a security interest into proceeds of a disposition
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- The tool lists the disposition, whether the secured party authorized it free of the security interest, and the identifiable proceeds. For proceeds that are not goods and have been commingled, it records the tracing method the lawyer identifies. It does not state whether a buyer takes free.
- What the lawyer must review
- UCC Sections 9-315 and 9-320. Section 9-315(a), except as otherwise provided in Article 9 and in Section 2-403(2), provides that a security interest continues in collateral notwithstanding sale, lease, license, exchange, or other disposition unless the secured party authorized the disposition free of the security interest, and that a security interest attaches to any identifiable proceeds. Proceeds that are not goods and are commingled are identifiable to the extent the secured party identifies them by a method of tracing, including equitable principles, permitted under law other than Article 9 for commingled property of that type. Section 9-320 asks a different question. Except as subsection (e) provides, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if perfected and even if the buyer knows of it. A buyer of consumer goods takes free, even if the interest is perfected, only if the buyer buys without knowledge, for value, primarily for personal, family, or household purposes, and before a financing statement is filed. The lawyer decides whether the interest continues and whether any buyer takes free.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes identifying points for review. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Check the current court or regulator requirements, prescribed form and attachments for the intended document and filing.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.