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Purchase Money Loan for Wedding Ring

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Question: 
I am processing a loan in which we are taking a purchase money security interest in a wedding ring. Does this fall under Reg AA for household goods and will a UCC-1 actually perfect the lien?
Answer: 

You will need to look to the definition of household goods at 227.12(d):

(d) Household goods means clothing, furniture, appliances, linens, china, crockery, kitchenware, and personal effects of the consumer and the consumer's dependents. The term household goods does not include:

  1. Works of art;
  2. Electronic entertainment equipment (other than one television and one radio);
  3. Items acquired as antiques; that is, items over one hundred years of age, including such items that have been repaired or renovated without changing their original form or character; and
  4. Jewelry (other than wedding rings).

You would be able to take a purchase money interest in the ring; however, will a UCC perfect your lien? Depends on what your definition of "perfect" is. It will record your lien, but the only way to "perfect" a lien in jewelry is to take possession of it.

First published on BankersOnline.com 3/7/05

First published on 03/07/2005

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