New Zealand Legislation: Acts

7 Part 3 (Principles relating to enforceability of security interests)

• Part 3 sets out the key concepts on which the Act is based. It deals with—

  • the effectiveness of a security agreement between the parties to the agreement:

  • when a security agreement is enforceable against the parties to the security agreement and third parties (persons who are not parties to the security agreement):

  • the concept of attachment of a security interest (when a security interest comes into existence). Attachment occurs when the secured party gives value for the loan, the debtor has rights in the personal property that is used as security for the loan, and, in the case of third parties, the security agreement is enforceable against third parties:

  • the perfection of security interests. Perfection involves the concept of attachment together with 1 of the methods of achieving perfection, such as registration of a financing statement or the secured party taking possession of the collateral (personal property that is subject to a security interest). Perfection is relevant to giving a secured party priority over a third party.