Possession and Ownership: An Examination of the Scope of Article 9

defaults, he will require a higher interest rate from the debtor.' In order to reduce this uncertainty, and thereby to facilitate secured credit, the Uniform Commerical Code normally requires a creditor either to take possession of the property or to make a public filing, if he wants a security interest in his debtor's property that is effective against competing property claimants.2 This requirement, coupled with a simple "first-in-time" rule, enables a creditor who wants to lend money on a secured basis to assume that, if the property in question is in the debtor's possession and if no other creditors have filed a financing statement, his claim to that property can have priority over those of other existing and future creditors. The Code assumes that this benefit outweighs the costs imposed upon secured parties by the requirement that they take possession or file.3