The drawing can easily go wrong. If collateral descriptions are poorly written in security agreements and funding statements, secured creditors may not get what they negotiated for and costly litigation may flourish. Under South Dakota law, a creditor can effectively describe the security in a financing statement by identifying the (1) specific listing; (2) category; (3) type of guarantees within the meaning of the single code of commerce; (4) quantity; (5) formula or method of calculation or attribution; or (6) to another method, provided the security can be determined objectively. SDCL 57a-9-108. A funding list describing the debtor`s “all assets” or “all personal assets” guarantee is also valid under South Dakota law. SDCL 57a-9-504. The reporting requirement is a particular type of guarantee when governed by a government legal certificate, which will most often apply to a motor vehicle and similar goods. In this case, if state law provides for perfection by deed, then do not perfect by deposit. Motor vehicles, sometimes boats and VTs will therefore be classified in this category, according to state law.
The application or characterization of interest as the security interest of the purchase money is determined by compliance with the purchasing rules of Article 9, and not necessarily if the financing report is specific to the purchase money. Even if a security statement explicitly states that it is a security interest of the purchase money, this is not necessarily the case. This, too, can only be established by investigations outside the public record. One point that appears a lot is the issuance of serial numbers and model numbers for devices and other goods. I am often asked, “Do we have to give serial numbers and model numbers?” The answer to it under section 9 is generally no. Article 9 does not require a specific description. In any case, there is no need for description. They are generally not necessary.
The same guarantees can be described in several different ways that may or may not involve serial or model numbers. The good news is that, under Article 9, the devices can be improved both at the national and district level. In accordance with Article 9, interests and security arrangements can be enhanced by filing with the central registration authority of the state in which the debtor is located.