Which requirement allows a PMSI to be effective without further action?

A purchase-money security interest (PMSI) is a type of security interest that allows a creditor to protect its interest in a borrower’s property when the property is bought with the loan proceeds from the creditor. The key feature of a PMSI is that it can be automatically perfected without the need for further action if certain conditions are met.

When a PMSI is in consumer goods, it is automatically perfected upon attachment. This means that as soon as the security interest is created – which occurs when the debtor acquires rights in the collateral – the interest is perfected simply by virtue of its existence. This provides significant advantages to the lender because it means that they do not need to take additional steps such as filing a financing statement or taking possession of the collateral to establish their legal rights against third parties.

The option that states a PMSI in consumer goods is automatically perfected upon attachment accurately captures this critical requirement, which allows the PMSI to maintain its validity and priority without requiring any further action from the secured party. This contrasts with other types of security interests, which generally require additional steps for perfection.