What is the consequence of a financing statement describing collateral more broadly than the security agreement?

When a financing statement describes collateral more broadly than the corresponding security agreement, the consequence is that the financing statement may be deemed unauthorized for the excess collateral. This is because a security agreement must provide a clear agreement between the debtor and creditor regarding what collateral is included to secure the obligation. The financing statement serves to provide public notice of that security interest.

If the financing statement includes collateral not described in the security agreement, it can lead to issues where the secured party's interest may not attach to the excess collateral. The law requires that the description in the financing statement must align with the security agreement to ensure enforceability against third parties and to provide appropriate notice. As such, creditors cannot rely on a financing statement to claim collateral that was not included in the original agreement. This limitation serves to protect the debtor from having additional assets encumbered without their consent, ensuring that the security interest represented by the financing statement corresponds to the agreed-upon collateral.