How can a secured party perfect a security interest in tangible goods?

A secured party can perfect a security interest in tangible goods primarily by taking possession of the collateral or by filing a financing statement. This dual approach is outlined in Article 9 of the Uniform Commercial Code (UCC), which governs secured transactions.

When a secured party takes possession of the collateral, it gains protection against third parties because possession serves as a form of notice that the secured party has a property interest in the goods. This is particularly effective and grants strong rights against subsequent creditors.

Alternatively, a secured party can file a financing statement, which is a public document that serves to alert others that the secured party has a security interest in the specified collateral. This filing system is efficient and allows the secured party to establish priority over future creditors or purchasers who might claim an interest in the same goods.

Other methods mentioned in the other options, like filing a lawsuit, notifying all creditors, or securing a court judgment, do not achieve perfection of the security interest under the UCC. A lawsuit might be relevant in resolving disputes regarding the collateral, and notifying creditors could be a courtesy or requirement under certain circumstances, but these actions do not create, notify, or affirm a security interest in tangible goods as defined by the UCC. Thus, the combination of possession and