Report on Legal Opinions in Personal Property Secured Transactions
4. Attachment Opinions.

A Security Interest Opinion customarily includes an attachment or creation opinion separate from an opinion as to the perfection of the security interest. This custom is followed even where a Perfection Opinion52 is provided as part of the same opinion letter, and even though the attachment or creation of a security interest is a necessary antecedent to the Perfection Opinion.53 An attachment or creation opinion is rarely given without a corresponding Perfection Opinion.54

Although aware of arguments to the contrary,55 the Committee believes that no meaningful distinction exists between "attachment opinions" and "creation opinions" and that opinion recipients should understand the various formulations of both opinions to be equivalent. For convenience, this Report refers primarily to attachment opinions ("Attachment Opinions") and intends by that reference to include opinions formulated either in terms of the attachment or creation of a security interest.

An Attachment Opinion addresses whether the security interest created in favor of the secured party56 is enforceable against the debtor with respect to the collateral identified in the opinion in which the debtor has rights (or the power to transfer rights), i.e., that the security interest has attached to the collateral. Accordingly, an Attachment Opinion is viewed by custom as covering the following:

  • that the record57 described in the opinion is or includes a "security agreement" within the meaning of section 9102(a)(73);58
  • that value has been given for the security interest;59
  • that the requirements of section 9203(b)(3) (regarding when a security agreement is required for a security interest to become enforceable against the debtor with respect to collateral) have been satisfied;60
  • that there exists no agreement that expressly postpones the time of the attachment of the security interest;61 and
  • if the debtor has authenticated a security agreement describing the collateral, that the security agreement reasonably identifies the collateral in accordance with the requirements of section 9108.62

Under Division 9, unless specifically excluded by the security agreement, a security interest attaches automatically to (1) supporting obligations for certain types of collateral and (2) identifiable proceeds of collateral, without the need for specific language in the security agreement.63 As a result, an Attachment Opinion with respect to these types of collateral is generally understood also to constitute an opinion as to those supporting obligations and proceeds, respectively.

Section 9204 allows a security agreement to include after-acquired property,64 and, if it does and subject to certain exceptions,65 a security interest in that property attaches when the debtor acquires rights therein. Therefore, unless otherwise limited by the opinion, an Attachment Opinion also covers the attachment of the security interest to after-acquired property of the same type as specified in the granting clause.66

An Attachment Opinion, however, like all Security Interest Opinions, does not by custom address the matters covered by a Security Agreement Remedies Opinion or its antecedents.67 In addition, an Attachment Opinion is customarily understood not to cover any of the following (and no express disclaimer to this effect is required):

  • that the debtor has rights in or to any of the collateral described in the security agreement;68
  • that any specific item of property described in a security agreement falls within a particular collateral type;69
  • that a security interest attaches to after-acquired property consisting of consumer goods (other than an accession when given as additional security)70 or commercial tort claims;71 or
  • that the security interest that has attached has been perfected or has any priority in relation to any other interests.

4.1 Wording of Attachment Opinions.

The following are sample formulations of Attachment Opinions:

Alternative 1: [If the opinion letter contains a UCC Scope Limitation.] The security agreement is effective to create in favor of the secured party72 a security interest in the collateral described in the security agreement.73

Alternative 2: [If the opinion letter does not contain a UCC Scope Limitation or if it is otherwise appropriate for the opinion giver to limit further the opinion.74] The security agreement is effective to create in favor of the secured party75 a security interest in that portion of the collateral described in the security agreement that consists of (in each case as defined in the California Uniform Commercial Code) [specify collateral types76 covered by opinion: e.g., accounts, deposit accounts, general intangibles, equipment, inventory, chattel paper, investment property, negotiable documents and instruments].77

The collateral description contained in Alternative 2 is based on generic types defined in Division 9 ("collateral types"). The listing is merely illustrative; the actual collateral types used may be reduced or expanded to fit the circumstances.78

4.2 Unnecessary Qualofocations for Attachment Opinions.

4.2.1 Value

A security interest will not attach to collateral until value has been given.79 Whether value has been given is usually a factual determination not requiring special legal expertise and, thus, is ordinarily easily ascertained by the opinion giver (e.g., whether or not funds have been advanced to the debtor).80 Accordingly, it is typically unnecessary to qualify the opinion by assuming that value has been given.81

4.2.2 Accuracy or Adequacy of Description of Collateral.

If the Attachment Opinion follows Alternative 2 (i.e., referencing collateral types), then the opinion giver generally does not include a qualification relating to the accuracy or adequacy of the collateral description. In any event, an Attachment Opinion does not address whether the description of the collateral corresponds to any specific asset in which the debtor has rights. Even if the security agreement includes a description of specific items of property (for example, by referring to the serial numbers on those items), it is generally understood that the Attachment Opinion does not cover the accuracy of the description. Accordingly, no qualification in this regard is necessary.

If the opinion does not follow Alternative 2 and more broadly refers to the creation of a security interest in the "collateral described in the security agreement" or similar wording (as in the case of Alternative 1), then qualifications relating to the collateral description may be appropriate.82

4.2.3 Rights, or The Power to Transfer Rights, in The Collateral.

An effective grant of a security interest is limited to property in which the debtor has rights or has the power to transfer rights.83 An Attachment Opinion, however, is generally understood not to include an opinion that the debtor has rights in the collateral, because the existence and extent of those rights is primarily factual, and no filing or other system exists for determining rights in most personal property. By customary practice, no qualification to this effect is necessary.84

4.2.4 Effect of Restriction of The Attachment of Security Interests.

Where the collateral consists of rights arising under, or otherwise related to, third-party (including governmental) contracts, permits, instruments or the like, the grant of a security interest in the collateral may be prohibited by or otherwise contravene the terms of the collateral. In certain instances, these terms are rendered ineffective, to the extent they would otherwise impair the attachment or perfection of a security interest in the collateral, by virtue of sections 9406, 9407 and 9408.85 The protection afforded under these sections, however, is not absolute or universal. An Attachment Opinion is generally understood not to include an opinion that no third-party restrictions exist or remain effective after taking into account the effect of sections 9406, 9407 and 9408.86 If this issue is important to the opinion recipient and the circumstances otherwise warrant it, the customary practice is for the opinion recipient to request a separate non-contravention opinion relating to a specific third-party restriction.87

4.2.5 Agreement To Postpone Attachment.

Attachment may be postponed by agreement of the parties.88 The agreement to postpone under section 9203(a) may be included in any document (not only the security agreement) or may be oral.89 While opinion givers often assume that there exist no other written or oral understandings or agreements supplementing or modifying the documents reviewed, that assumption is, by custom, generally understood and need not be stated.

4.2.6 Proceeds and After-Acquired Property.

A security interest in identifiable proceeds of collateral automatically attaches when the debtor has rights in the proceeds.90 Accordingly, it is generally understood that an Attachment Opinion need not specifically mention "proceeds" or "identifiable" proceeds for the proceeds to be covered by the opinion.91 Furthermore, in most cases, there is no reason specifically to exclude proceeds from the coverage of an Attachment Opinion.92

4.2.7 Related Opinions.

If an enforceable security agreement is required for the creation of the security interest, then, unless the opinion giver providing the related Security Interest Opinion is also giving a Security Agreement Remedies Opinion regarding the security agreement, the Security Interest Opinion is generally understood to include an assumption that the agreement is enforceable.93 By customary practice, no express qualification to this effect is required.94

4.3 Considerations for Attachment Opinions.

To give an Attachment Opinion, a review of the security agreement95 -- the record96 that provides for the creation of the security interest -- is usually required. For a security interest to attach (other than by means of the possession97 or control98 of the collateral by, or the delivery99 of the collateral to, the secured party), the debtor must authenticate100 a security agreement that provides a description of the collateral.101 Where attachment occurs because collateral is in the possession or control of, or has been delivered to, the secured party, an authenticated security agreement is not required and alternative evidentiary tests exist.102

For purposes of an Attachment Opinion premised upon a security agreement:103

  • the security agreement must state a present grant of a security interest in favor of the secured party;104
  • there must be no agreement that postpones attachment of the security interest;105
  • the security interest must relate to a sufficiently described obligation of the obligor;106 and
  • the collateral must be sufficiently described.107

Endnotes

52 See infra Section 5 for the definition, and a discussion, of Perfection Opinions. Back

53 A security agreement that is enforceable against the debtor is generally required for a security interest to attach. Cal. Com. Code § 9203(b)(3)(A); see infra notes 95-96 and accompanying text. A Security Interest Opinion alone, however, does not include a Security Agreement Remedies Opinion. See supra discussion at Section 2.3 and notes 36, 42; see also supra Section 2.4 (other matters not addressed by Security Interest Opinions generally). Back

54 A creation or attachment opinion alone generally does not provide much information to an opinion recipient. For example, an attached but unperfected security interest does not survive a challenge by a trustee in bankruptcy. See Cal. Com. Code § 9317(a)(2); 11 U.S.C.A. § 544(a). A Perfection Opinion, meanwhile, addresses whether the opinion recipient has rights protected in a broader range of circumstances against third parties with claims to the collateral. Although, in certain cases, attachment of a security interest is sufficient to perfect a security interest, see, e.g., Cal. Com. Code § 9309, a creation or attachment opinion concerning that security interest does not implicitly contain an opinion that the security interest is perfected. Back

55 Some practitioners believe that a distinction exists between an "attachment opinion" and a "creation opinion." They believe that a "creation opinion" does not cover whether the security interest described in the opinion has in fact attached. They further believe that a separate opinion is required because section 9203 uses the term attachment to describe the event that makes the security interest in collateral enforceable against the debtor. In their view, an opinion as to the creation of a security interest means only that a security agreement has been authenticated and delivered and that the security agreement contains operative language that creates a security interest and a sufficient description of some collateral. Others believe that an opinion that a security agreement is effective to create a security interest covers the attachment of the security interest, because "attach" means that all the events necessary for the creation of the security interest have taken place. Still other opinion givers prefer to avoid the issue altogether and state simply that "the secured party has a security interest in the collateral." Back

56 Section 9102(a)(72) defines who is a secured party. Cal. Com. Code § 9102(a)(72). An analysis of what may be involved in satisfying those definitional requirements is beyond the scope of this Report. Back

57 "'Record' . . . means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form." Cal. Com. Code § 9102(a)(69). Back

58 "'Security agreement' means an agreement that creates or provides for a security interest." Cal. Com. Code § 9102(a)(73). See supra note 30. Back

59 Cal. Com. Code § 9203(b)(1). Back

60 Under section 9203(b), "enforceability requires the debtor's security agreement and compliance with an evidentiary requirement in the nature of a Statute of Frauds." See UCC § 9-203(b) cmt. 3. Section 9203(b)(3) requires that (a) the debtor authenticate a security agreement describing the collateral and, if the security interest covers timber to be cut, a description of the land concerned, or (b) the collateral (other than a certificated security) be in possession of the secured party pursuant to section 9313 pursuant to a security agreement (regardless of whether authenticated), or (c) the collateral be a certificated security in registered form where the certificate has been delivered to the secured party under section 8301 pursuant to a security agreement, or (d) the collateral consist of deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights subject to the control of the secured party pursuant to the security agreement. Authentication is not required for a security agreement that is not contained in a record. See Cal. Com. Code § 9102(a)(7). Back

61 Cal. Com. Code § 9203(a). Back

62 The security agreement reasonably identifies the collateral if it identifies the collateral by any of the following: (a) a specific listing; (b) a category; (c) a collateral type (other than (i) a commercial tort claim or (ii) in a consumer transaction, a security entitlement, a securities account, or a commodity account); (d) a quantity; or (e) a computational or allocational formula or procedure. Cal. Com. Code § 9108(b). Back

63 Cal. Com. Code § 9203(f). Back

64 Cal. Com. Code § 9204(a). Back

65 Cal. Com. Code § 9204(b). Back

66 An Attachment Opinion may also address whether the security interest in the collateral has also attached to: (a) if the collateral consists of a right to payment or performance secured by a security interest or other lien on personal or real property, the security interest, mortgage or other lien, Cal. Com. Code § 9203(g); (b) if the collateral consists of a securities account, the security entitlements carried in that account, Cal. Com. Code § 9203(h); and (c) if the collateral consists of a commodity account, the commodity contracts carried in that account, Cal. Com. Code § 9203(i). Back

67 See supra discussion at Section 2.3 and notes 36, 42; see also supra Section 2.4 (other matters not addressed by Security Interest Opinions generally). Back

68 The use of collateral types, see infra note 78 and accompanying text, as set forth in the sample opinion wording of Alternative 2, see infra note 76 and accompanying text, helps avoid any misunderstanding about what the opinion covers, because, except in unusual circumstances, personal property within that description in which the debtor has rights would be covered by the security agreement. Even where the opinion does not include the use of collateral types, see infra text accompanying note 73, or simply includes a listing of collateral items, the opinion does not cover the accuracy of the description of any specific item of collateral. Back

69 See infra notes 76-78 and accompanying text. An Attachment Opinion addresses whether the language in the security agreement is sufficient to create a security interest in the collateral covered by the opinion. It does not address whether the language creates a security interest in any specifically identified assets, unless the assets fall within a collateral type specifically covered by the opinion. Id. Back

70 Cal. Com. Code § 9204(b)(1). Back

71 Cal. Com. Code § 9204(b)(2). Back

72 The customary practice is for the opinion not to indicate that the security interest secures the obligations described in the security agreement; unless the opinion letter contains a specific qualification on this point, that conclusion is implicit. TriBar Report, supra note 1, Appendix A, at 1505-06, nn.336, 339. Back

73 Alternative 1 effectively mirrors the sample language set forth in the TriBar Report. TriBar Report, supra note 1, Appendix A, Opinion 2 (First Alternative), at 1505. It means that the security agreement describes at least some collateral in which a security interest may be created under Division 9, as the UCC Scope Limitation limits the opinion's coverage to such collateral. It does not, however, cover the creation of a security interest in any particular collateral or collateral type. If the opinion giver is on notice that specific collateral of significant interest to the opinion recipient does not fall within any specific collateral type that is subject to Division 9, it is appropriate for the opinion giver to consider whether it should provide the opinion. See ABA Guidelines, supra note 4, § 1.5.

In some measure, use of Alternative 1 assumes a well-drafted security agreement, i.e., a security agreement that reasonably identifies the collateral using collateral types or other descriptions of the collateral that are required by the Code. See infra notes 76, 82. The use of Alternative 1, however, could inadvertently result in an Attachment Opinion as to collateral types, such as commercial tort claims, for which a more specific collateral description is required as a predicate to the creation of a security interest. See, e.g., Cal. Com. Code § 9108(e)(1); see also infra note 82. But see supra text accompanying note 71. Accordingly, with respect to commercial tort claims, the Committee believes that, unless a Security Interest Opinion specifically addresses such collateral, the Security Interest Opinion should not be read to cover such collateral. Back

74 For example, depending on the specific facts, the creation (and perfection) of a security interest in certain collateral types may not be an important feature of the transaction. Back

75 See supra note 72. Back

76 The collateral types referenced in the opinion typically correspond to the description of personal property contained in the security agreement or those categories as to which the opinion recipient desires the opinion. Back

77 The following is an alternative and frequently-employed formulation of Alternative 2 (often used by opinion givers ostensibly to provide -- many times, at the opinion recipient's insistence -- the broadest possible coverage of collateral under Division 9):

The security agreement is effective to create in favor of the secured party a security interest in the collateral described therein to the extent a security interest in such collateral may be created under Division 9.

The TriBar Report views this alternative formulation, which is used in the absence of a UCC Scope Limitation, as synonymous with Alternative 1. TriBar Report, supra note 1, Appendix A, at 1505, n.337. The Committee notes that there may be a technical distinction between Alternative 1 and the TriBar Report's alternative formulation. The additional wording, "to the extent a security interest in such collateral may be created under Division 9," disclaims responsibility for whether any of the collateral described in the security agreement is in fact collateral covered by Division 9 (i.e., it indicates only that, if any of the collateral is subject to Division 9, a security interest in that collateral has attached). Alternative 1, however, is understood to mean that the security agreement covers at least some collateral in which a security interest may be created under Division 9. Notwithstanding this possible technical distinction, the Committee does not believe that the alternative formulation provides sufficient notice to the opinion recipient that the opinion giver intends a different meaning. Accordingly, if an opinion giver desires to disclaim an opinion that Division 9 in fact covers any of the collateral described in the security agreement, the opinion giver should do so expressly. The Committee therefore adopts the TriBar Report's interpretation that the formulation above should (in the absence of an express disclaimer) be considered synonymous with Alternative 1.

It should also be noted that, as in the case of Alternative 1, use of this alternative formulation from the TriBar Report could inadvertently result in an Attachment Opinion as to collateral types for which a more specific collateral description is required as a predicate to the creation of a security interest. See generally supra note 73 (regarding commercial tort claims). Back

78 For example, if the security agreement specifically describes a tort claim as an item of collateral, the tort claim would, by virtue of the UCC Scope Limitation, be excluded from the coverage of a Security Interest Opinion if it did not constitute a "commercial tort claim" as defined in section 9102(a)(13). See Cal. Com. Code § 9109(b)(12). If the tort claim were a commercial tort claim, then the opinion giver, by providing an unqualified Attachment Opinion as to the security interest in such collateral, informs the opinion recipient that the description of the commercial tort claim is a sufficient description to create a security interest in such claim under Division 9. See Cal. Com. Code §§ 9108(a)-(b), (e)(1); see also supra notes 68, 71 and accompanying text. But see supra note 73. Back

79 Cal. Com. Code § 9203(b)(1). For such purposes, value is given for a security interest if such security interest is acquired: (a) in return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a chargeback is provided for in the event of difficulties of collection, Cal. Com. Code § 1201(43)(a); UCC §§ 1-201(44)(a), 1-204(1) (revised); (b) as security for, or in total or partial satisfaction of, a preexisting claim, Cal. Com. Code § 1201(43)(b); UCC §§ 1-201(44)(b), 1-204(2) (revised); (c) by accepting delivery under a preexisting contract for purchase, Cal. Com. Code § 1201(43)(c); UCC §§ 1-201(44)(c), 1-204(3) (revised); or (d) in return for any consideration sufficient to support a simple contract Cal. Com. Code § 1201(43)(d); UCC §§ 1-201(44)(d), 1-204(4) (revised). Back

80 The TriBar Report states that "the question of value is straightforward. Typically, the opinion preparers can easily confirm the borrower's receipt of the loan funds or other value (such as a commitment to lend) at or before the closing." TriBar Report, supra note 1, § 3.3(b), at 1467 (footnote omitted). The TriBar Report, however, does allow an opinion giver, in the alternative, to assume (without so stating) "that the secured party has complied (or will comply) with any contractual obligation to extend credit or otherwise give value." TriBar Report, supra note 1, § 3.3(b), at 1467, n.83. Back

81 If it is unclear whether value has been given (for example, where the purported consideration consists of a discretionary commitment), it is customary practice for the opinion giver to note that uncertainty in the opinion. The following is a sample form of such a qualification:

We have assumed that value has been given for the security interest granted in the security agreement.

Alternatively, some opinion givers may prefer to include specific language in the opinion itself to indicate that value must be given. If the opinion giver, however, does not believe that value has been given, it would be appropriate for the opinion giver to decline to give the opinion. Back

82 For example, if particular items of collateral are not properly described, then it is customary practice to include a qualification excluding such items of collateral from the scope of the opinion. If the opinion giver finds circular, ambiguous or vague descriptions of collateral, or is expected to rely on possibly inadmissible parol evidence for essential terms, a specific qualification identifying the suspect description is also customary. If the description of the collateral in the security agreement consists of "all the debtor's assets" or "all of the debtor's personal property" or similar words without a further description of the collateral, the security agreement does not reasonably identify the collateral. Cal. Com. Code § 9108(c). In such an instance, it would be appropriate for the opinion giver to request that such language be modified and, absent such modification, to decline to give a Security Interest Opinion (including an Attachment Opinion). See also TriBar Report, supra note 1, § 3.3(a), at 1466-67, n.78. Back

83 For a security agreement to be enforceable against the debtor with respect to particular collateral under section 9203(a), the debtor must have rights in such collateral or the power to transfer rights in such collateral. Cal. Com. Code § 9203(b). The Code, however, does not define "rights in the collateral." Back

84 Even if a lawyer could verify that the debtor has possession of the collateral, a determination that in most circumstances cannot readily be made, possession alone does not establish rights in the collateral without resolution of other issues (for example, whether possession is a bailment). In most situations, an opinion recipient is satisfied by warranties of the debtor that the debtor has rights in the collateral. Some opinion givers qualify their opinions by stating, for example, that no opinion is intended with respect to the debtor's rights in the collateral or, alternatively, advising the opinion recipient that any decrease in the debtor's rights similarly may decrease the secured party's rights. Others simply assume that the debtor has rights in the collateral. As these matters are well-understood, these qualifications are unnecessary. Back

85 See Cal. Com. Code §§ 9406(d)-(f), 9407, 9408(a)-(c). Back

86 See generally Cal. Com. Code § 9401(a). Nevertheless, if the opinion giver believes that the opinion being provided will mislead the opinion recipient, it is appropriate for the opinion giver to consider alerting the opinion recipient to the specific facts and circumstances. Back

87 Whether it is appropriate to request such an opinion in any circumstance is beyond the scope of this Report. For guidance as to non-contravention opinions generally, see California Legal Opinions (Non-Remedies) Report, supra note 3, § V. Back

88 Cal. Com. Code § 9203(a). See, e.g., In re Dolly Madison Industries, Inc., 351 F. Supp. 1038 (ED Pa. 1972), aff'd mem. 480 F.2d 917 (3d Cir. 1973) (express deferral of attachment of security interest). Back

89 Cal. Com. Code § 9203(a). Back

90 See Cal. Com. Code §§ 9203(f), 9315(a)(2). Back

91 See UCC § 9-102(a)(12) cmt. 3a; see also Cal. Com. Code § 9102(a)(12). Back

92 See, e.g., UCC § 9-315 cmt. 3; see also Cal. Com. Code § 9315(a)(2). Back

93 See supra discussion at Section 2.3 and notes 36, 42; see also supra Section 2.4 (other matters not addressed by Security Interest Opinions generally).

Section 9203(b)(3)(A) by its terms only requires that the debtor "authenticate" (for example, sign) a "security agreement." Cal. Com. Code § 93203(b)(3)(A); see Cal. Com. Code § 9102(7). There is no express requirement in section 9203 or elsewhere in Division 9 that the security agreement be "enforceable" against the debtor. See supra note 30. Furthermore, the definition of "agreement" contained in section 1201(3) essentially means the bargain of the parties as found in their language, see infra note 95, and is to be distinguished from a "contract," Cal. Com. Code § 1201(11). Section 1201(3) further provides that "[w]hether an agreement has legal consequences is determined by the provisions of this code, if applicable, and otherwise by the law of contracts (section 1103). (Compare 'contract.')" Cal. Com. Code § 1201(3). The foregoing suggests only a "statement of the bargain" and does not seem to require that the bargain be enforceable. Yet, reading section 9203(b)(3)(A) in this way would lead to a result both quixotic and unwarranted: a security agreement that is unenforceable against the debtor might still give rise to the attachment of a security interest in the debtor's collateral. In light of the foregoing, the provisions of section 1103 (to the effect that the principles of law and equity supplement the provisions of the Code, see Cal. Com. Code §1103) and customary practice, the Committee believes section 9203(b)(3)(A) requires a security agreement that is enforceable against the debtor. This conclusion is consistent with the view of the TriBar Report. See TriBar Report, supra note 1, § 3.3(a), at 1465, text accompanying nn.66-69. Back

94 See supra notes 36, 42. Back

95 See supra note 59. The term "agreement" is defined in section 1201(3) as "the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing, usage of trade, and course of performance as provided in this code (sections 1205, 2208 and 10207)." Cal. Com. Code § 1201(3); UCC §§ 1-201(3), 1-201(b)(3)(revised). Back

96 See supra note 58. Back

97 Section 9203(b)(3)(B) provides that a security interest attaches (assuming the debtor has rights and value has been given) in collateral, other than a certificated security, that is in the possession of the secured party under section 9313 pursuant to a security agreement. Cal. Com. Code § 9203(b)(3)(B). Back

98 Section 9203(b)(3)(D) provides that a security interest attaches (assuming the debtor has rights and value has been given) in deposit accounts, electronic chattel paper, investment property or letter-of-credit rights when the secured party has control under section 9104, 9105, 9106 or 9107 pursuant to a security agreement. Cal. Com. Code § 9203(b)(3)(D). Back

99 Section 9203(b)(3)(C) provides that a security interest attaches (assuming the debtor has rights and value has been given) in collateral that is a certificated security in a registered form when the certificated security has been delivered to the secured party pursuant to a security agreement. Cal. Com. Code § 9203(b)(3)(C). Back

100 Section 9102(a)(7) defines "authenticate" to mean either to sign or to execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record. Cal. Com. Code § 9102(a)(7). See supra note 93. Back

101 Cal. Com. Code § 9203(b)(3)(A). If the security interest covers timber to be cut, a description of the land concerned is also required. Id. Back

102 See supra notes 97-99. Back

103 Where attachment is based upon a security agreement, a Securities Agreement Remedies Opinion customarily appears separately. See supra discussion at Section 2.3 and note 42. Back

104 The security agreement need not use the word "grant." A security agreement is an agreement that creates or provides for a security interest. Cal. Com. Code § 9102(a)(73). No separate granting language is necessary if the operative language in the agreement inherently creates or provides for a security agreement (for example, in the case of a lease that is characterized as a security interest or a sale of types of property that are subject to Division 9). See TriBar Report, supra note 1, § 3.3(a), at 1466, n.73. Back

105 See supra note 61 and accompanying text and Section 4.2.4. Back

106 Cal. Com. Code § 9102(a)(59) (defining "obligor"). It is customary practice for an Attachment Opinion not to state expressly that the collateral constitutes security for obligations referenced in the security agreement. See supra note 72. An Attachment Opinion is generally understood to subsume an opinion that a specific obligation is secured, because the definition of "security interest" contained in the Code includes "an interest in personal property or fixtures that secures payment or performance of an obligation." Cal. Com. Code § 1201(36)(a); UCC §§ 1-201(37), 1-201(b)(37) (revised). The term "obligation," however, is not defined in Division 1 or Division 9. If a security agreement does not expressly provide that it secures an obligation (no matter how broadly defined (for example, "all obligations at any time owing to secured party, whether under this agreement or otherwise"), then it is appropriate for the opinion giver to highlight this fact to the opinion recipient and, if the opinion recipient (or, if not the opinion recipient, the secured party) does not address this inadequacy, to decline to deliver an Attachment Opinion if the opinion giver believes that its opinion might otherwise be misleading. In any event, an Attachment Opinion is generally understood not to address whether the specified obligation is an enforceable obligation of the obligor. See TriBar Report, supra note 1, § 3.3(a), at 1466, n.74. Back

107 Section 9108 provides that a description of real or personal property is sufficient if it reasonably identifies what is described, except as provided in section 9108(c), (d), (e) or (f). Section 9108(b) expressly permits descriptions of collateral by specific listing, collateral types, quantity, computational or allocational formula or procedure, or any other method if identification of the collateral is objectively determinable. The primary exception to the ability to use general collateral descriptions in commercial transactions is commercial tort claims. Cal. Com. Code § 9108(e)(1). See supra note 73. Back


Section 5. Perfection Opinions. / Table of Contents