Which action does NOT extend the 20-day grace period for automatic perfection?

The action that does not extend the 20-day grace period for automatic perfection involves acquiring the proceeds through cash transactions. In secured transactions, a security interest in proceeds from the sale of collateral is automatically perfected for 20 days following the receipt of those proceeds. However, once the 20-day period expires, only certain actions can extend this period.

Acquiring proceeds through cash transactions does not extend the grace period because it represents a situation where the security interest in the cash proceeds must be actively perfected through additional steps. Unlike other options such as identifying cash proceeds or describing them in the financing statement, which provide clarity and notice to third parties, cash transactions create liquidity that may be more challenging to track for secured interests once the initial grace period elapses.

The ability to perfect through the same filing office also plays into the rules of secured transactions, allowing for a continuation of the perfected status of the security interest when done correctly. Thus, understanding the mechanics of proceeds—particularly how they change hands and are treated in regard to perfection—is essential, and cash transactions simply fall outside the parameters that extend the automatic perfection timeframe.