California Real Estate Practice Exam

On which of the following types of business collateral would one file with the secretary of state (Sacramento) to perfect a security transaction?

1. Consumer goods

2. Growing crops

3. Trade fixtures

4. Uncut timber

The correct answer is: Consumer goods

The correct answer is consumer goods. When it comes to securing a loan or credit transaction, businesses must file a financing statement to perfect their security interest. In California, this is commonly done through the Secretary of State's office. Consumer goods, which are defined as goods used primarily for personal, family, or household purposes, require a UCC (Uniform Commercial Code) filing to establish the lender's rights to the collateral. The other options—growing crops, trade fixtures, and uncut timber—are generally not filed in the same manner with the Secretary of State. Growing crops may require a different method of perfection under the UCC, often involving local agricultural procedures rather than a state-level filing. Trade fixtures, which are fixtures added to commercial properties, are typically tied to the property itself and may involve real estate filings. Uncut timber is also treated differently under property laws and might require that the security interest be recorded based on local property rules, rather than a UCC filing with the Secretary of State.