How is a security interest affected when collateral becomes an accession?

When collateral becomes an accession, the security interest retains its perfected status as long as it was initially perfected in accordance with applicable law. Under Article 9 of the Uniform Commercial Code, which governs secured transactions, an accession is defined as goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

In this scenario, the security interest continues to exist and remains perfected without the need for additional filings, provided that the initial perfection was achieved correctly. This means that as long as the security interest was properly perfected through appropriate methods, such as filing a financing statement, taking possession, or control of the collateral, the change in the nature of the collateral to an accession does not inherently affect the perfected status of the security interest.

This approach ensures that the rights of the secured party are maintained even as the collateral changes form, which is a vital principle in secured transactions. In short, the ongoing perfected status reflects the intention of secured parties to maintain their rights despite changes in the physical nature of their collateral.