Perfection of Security Interest

Definition

The legal process by which a creditor's security interest in collateral becomes enforceable against third parties, typically through registration (UCC filing, PPSA registration, or Companies House filing), possession of the collateral, or control over financial assets. Perfection establishes the creditor's priority ranking relative to other secured parties. An unperfected security interest may be valid between the parties but is vulnerable to claims from subsequent perfected creditors and a trustee in bankruptcy.