What does a creditor typically need to maintain their security interest if the debtor sells the collateral?

To maintain a creditor's security interest when the debtor sells the collateral, consent is critical. In most secured transactions, if a debtor sells collateral that is subject to a security interest, the security interest will generally remain attached to the proceeds of that sale under Article 9 of the Uniform Commercial Code (UCC). However, in order for the creditor to continue to have a valid claim against the proceeds derived from the sale, the creditor usually requires the debtor's consent to release their security interest in the collateral sold.

Without this consent, the original security interest could be jeopardized because the creditor may not be able to enforce their claim against the collateral that is no longer in the possession of the debtor. The importance of consent can underscore the creditor’s need to ensure that they are aware of the transaction and agree to the terms under which their security interest will apply, particularly regarding the sales transaction.

In contrast, while documentation of sale, a new agreement for the new buyer, and proof of the market value may be relevant in specific contexts, they do not directly preserve or enforce the creditor's security interest in the same fundamental way that obtaining consent does. Consent is crucial in the context of modifying or acting upon the terms of a secured transaction when a sale has occurred