Ark. Code Ann. § 4-9-203 (2026)

Research References

Ark. L. Notes.

Schneider, Notes on Agricultural Landlord's Liens Under Revised Article 9 of the Uniform Commercial Code, 2002 Arkansas L. Notes 53.

Case Notes

In General.

For a creditor to have a perfected security interest in personal property, several requirements must be met under the pre-2001 version of this chapter: the debtor must have rights in the collateral; the debtor must sign a security agreement, which contains a description of the collateral, in favor of the secured party; and value must be given between the debtor and the secured party. Rice v. Fas Fax Corp. (In re Hot Shots Burgers & Fries, Inc.), 169 B.R. 920 (Bankr. E.D. Ark. 1994) (decision under prior law).

A financing statement, standing alone, does not create a security interest in the debtor's property under the pre-2001 version of this chapter. Rice v. Citizens First Bank (In re Cheqnet Sys.), 227 B.R. 166 (Bankr. E.D. Ark. 1998) (decision under prior law).

A note may constitute a security agreement because it grants a security interest, contains a description of the collateral, and is signed by the debtor; however, if the note is the security agreement, the bank's security is that collateral described in the note, and neither the composite document rule nor the parole evidence rule under the pre-2001 version of this chapter will apply to expand the items of collateral securing the note or to correct any error in the granting language of the security agreement. Rice v. Citizens First Bank (In re Cheqnet Sys.), 227 B.R. 166 (Bankr. E.D. Ark. 1998) (decision under prior law).

Description of Collateral.

Security agreements and financing statements establishing liens on growing crops were insufficient to identify the subject of the security agreements. Piggott State Bank v. Pollard Gin Co., 243 Ark. 159, 419 S.W.2d 120 (1967) (decision under prior law).

It made no difference that the security agreement stated the subject automobile was a Buick Electra when the automobile surrendered under the default was a Buick LeSabre. Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 473 S.W.2d 881 (1971) (decision under prior law).

This section and former § 4-9-402(1) clearly require some type of a description of the land concerned, and a description in a combined financing statement and security agreement which omitted several parcels of land, was insufficient as to the real estate not described. People's Bank v. Pioneer Food Indus., Inc., 253 Ark. 277, 486 S.W.2d 24 (1972) (decision under prior law).

Duty of Care.

Where creditor failed to satisfy the requirements of former § 4-9-203 by omitting the signature of the debtor and by not providing a sufficient description of the land on which the crops were to be grown, creditor's security interest in debtor's goods did not attach, and, as the holder of an unattached security interest, creditor could not claim or enforce any duty of care that this chapter may place on a purchaser of farm products in the ordinary course of business. Lawhon Farm Supply, Inc. v. Hayes, 316 Ark. 69, 870 S.W.2d 729 (1994) (decision under prior law).

Failure to Create Security Interest.

Possession of tractor by alleged secured party was actually held pursuant to a sale and not a pledge even though a financing statement was filed where no security agreement was executed and alleged secured party did not take possession of the tractor at the time the financing statement was executed. Gibbs v. King, 263 Ark. 338, 564 S.W.2d 515 (1978) (decision under prior law).

Under the pre-2001 version of the U.C.C., an agent may not create a valid security interest by wrongfully converting the principal's property, even if the agent's creditors acted in good faith. Pachter, Gold & Schaffer v. Yantis, 742 F. Supp. 544 (W.D. Ark. 1990) (decision under prior law).

Forged Security Agreements.

The assignee of a forged security agreement from a creditor of doubtful solvency who failed to verify the debtor's signature could not assert estoppel against the holder of a genuine security agreement because of such holder's failure to file notice of its security interest. General Elec. Credit Corp. v. Bankers Com. Corp., 244 Ark. 984, 429 S.W.2d 60 (1968) (decision under prior law).

Lien Encumbrancers.

Having failed to comply with § 27-14-801 et seq., a creditor was not a lien encumbrancer in so far as third parties were concerned under the motor vehicle registration requirements when another creditor took possession of the subject automobile. Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 473 S.W.2d 881 (1971) (decision under prior law).

Rights in Collateral.

Mere possession of a letter of credit is insufficient to establish a right to collateral upon which to base a security interest. Tradax Am., Inc. v. First Nat'l Bank, 934 F.2d 969 (8th Cir. 1991) (decision under prior law).

The fact the defendant booked the transaction as an account receivable did not make it an account receivable in law, where the defendant did not own, and could not legitimately encumber, any interest in the account, regardless of the bookkeeping procedure he chose. Tradax Am., Inc. v. First Nat'l Bank, 934 F.2d 969 (8th Cir. 1991) (decision under prior law).

Debtor had rights in the collateral under the pre-2001 version of this chapter at the time he took possession and began operating the business, and the security interest of the supplier attached even though sale to debtor was not completed until a later date. Wawak v. Affiliated Food Stores, Inc., 306 Ark. 186, 812 S.W.2d 679 (1991) (decision under prior law).

A partnership consisting of Chapter 7 debtors was the owner of the collateral used to secure debt owed to creditors and had sufficient rights in all of the collateral for the security interests to attach and become enforceable, as required by this section, at the time the security interests were granted because the debtors intended for the collateral to be owned by the partnership. In re Curtis, 363 B.R. 572 (Bankr. E.D. Ark. 2007) (decision under prior law).

Landlords' lien interest in the crop proceeds took priority over a perfected security interest that a creditor bank had in the same proceeds, regardless of when the bank's conflicting security interest was perfected. Bank of McCrory v. Morrison (In re James), 368 B.R. 800 (Bankr. E.D. Ark. 2007).

Bank's lien in stock pledged by bankruptcy debtors as security for loans was unperfected since the debtors conditionally relinquished their transfer rights, and thus the security interest could not attach to those rights and, without attachment, perfection could not be accomplished. Timberland Bancshares, Inc. v. Garrison (In re Lee), 462 B.R. 666 (Bankr. W.D. Ark. 2011).

Unperfected Title Holders.

Where a creditor was neither a lien encumbrancer, in so far as third parties are concerned, under the Motor Vehicle Registration Act, nor the holder of a perfected security interest, a “lien creditor” or a buyer in the ordinary course of business under the Uniform Commercial Code, even though it held the title its security interest did not have priority over the security interest another creditor had perfected by possession. Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 473 S.W.2d 881 (1971) (decision under prior law).

Value Given.

Where the parent corporation promised to extend credit to a bankrupt moving company's sole shareholder, who executed a security agreement in favor of the parent corporation pledging all of the assets of the bankrupt company, there was consideration sufficient under the pre-2001 version of this chapter to support a simple contract and therefore the secured interest of the assignee of the security agreement was valid, and the fact that the benefit of the security agreement accrued to the sole stockholder and not the bankrupt company did not detract from the fact that the secured party gave value for the security interest. Putnam Realty, Inc. v. Terminal Moving & Storage Co. (In re Terminal Moving & Storage Co.), 631 F.2d 547 (8th Cir. 1980) (decision under prior law).

Cited: United States v. Baptist Golden Age Home, 226 F. Supp. 892 (W.D. Ark. 1964); Hill v. State, 253 Ark. 512, 487 S.W.2d 624 (1972); Richardson v. United States, 358 F. Supp. 994 (E.D. Ark. 1973); Svestka v. First Nat'l Bank, 269 Ark. 237, 602 S.W.2d 604 (1980); Findley Mach. Co. v. Miller, 3 Ark. App. 264, 625 S.W.2d 542 (1981); Davidson v. Ark. River Valley Drain Drying Coop. (In re Glass), 26 B.R. 166 (E.D. Ark. 1982); In re Howell Enterprises, Inc., 105 B.R. 494 (Bankr. E.D. Ark. 1989); Womack v. Newman Fixture Co., 27 Ark. App. 117, 766 S.W.2d 949 (1989); Cullipher v. Lindsey Rice Mill, Inc., 730 F. Supp. 970 (W.D. Ark. 1990); In re Miller, 119 B.R. 660 (W.D. Ark. 1990); Schieffler v. First Nat'l Bank (In re Peeler), 145 B.R. 973 (Bankr. E.D. Ark. 1992); Herringer v. Mercantile Bank, 315 Ark. 218, 866 S.W.2d 390 (1993) (decisions under prior law).