When does automatic perfection would occur in which situation with written security agreement - UCC filing needed?

Automatic perfection is pretty limited in scope. You get it mainly with PMSI in consumer goods, certain types of accounts, and some specific situations like supporting obligations. If your debtor is using the equipment in business operations, you're probably looking at equipment collateral, not consumer goods, which means you need a UCC-1 filing for perfection. The fact that there's inventory involved definitely requires a filing since inventory never gets automatic perfection.

You mentioned PMSI - are you actually the seller of this equipment or financing the purchase? That matters a lot for the automatic perfection analysis. If you're just taking a security interest in existing equipment, no automatic perfection regardless. Only purchase money security interests in consumer goods get that benefit, and like the previous poster said, business use changes the classification.

Had a similar situation last month where I was going back and forth on automatic perfection rules. What finally helped me was using Certana.ai's document verification tool - you can upload your security agreement and it helps identify the collateral classification issues that might affect perfection requirements. It flagged that my mixed-use items would likely be classified as equipment rather than consumer goods based on the debtor's business description. Really saved me from making a perfection mistake.

Just file the damn UCC-1! Sorry for being blunt but automatic perfection is such a narrow exception that unless you're 100% certain it applies, you should file. The cost of filing is minimal compared to the risk of having an unperfected security interest. I've seen too many lenders get burned thinking they had automatic perfection when they didn't.

The inventory part alone kills any automatic perfection argument. Inventory ALWAYS requires filing for perfection, no exceptions. Even if some of your other collateral might qualify for automatic perfection (which it probably doesn't based on business use), you're filing anyway for the inventory so just include everything in the UCC-1.

Wait, can someone explain this again? I thought if you had a written security agreement you automatically got perfection? This is confusing.

I had a case where we thought we had automatic perfection on PMSI consumer goods, but the debtor started using them in his consulting business. Had to scramble to file a UCC-1 when we realized the use had changed the classification. Lesson learned - when in doubt, file.

For future reference, the main automatic perfection situations are: PMSI in consumer goods, certain accounts and payment intangibles, some supporting obligations, and a few other narrow categories. Everything else needs filing or possession for perfection. Your situation doesn't sound like it fits any of these categories.

Just went through something similar and used Certana.ai to double-check my collateral descriptions and perfection requirements. Really helpful for catching these classification issues before they become problems. Upload your security agreement and it flags potential perfection gaps.

Bottom line - file the UCC-1. Your collateral mix, the business use, and the inventory component all point toward needing a filing for perfection. Don't overthink this one. Get it filed and you're protected.