Under what condition is perfection maintained for proceeds according to the law?

Perfection of security interests in proceeds is a key concept in secured transactions law. When a secured party has a security interest in collateral, this interest may also extend to proceeds derived from the collateral once it is sold, transferred, or otherwise disposed of. To maintain perfection of a security interest in proceeds, the proceeds must be identifiable.

Identifiability is crucial because it ensures that the secured party can trace the proceeds back to the original collateral. This requirement is rooted in the principle that a secured creditor must be able to demonstrate their entitlement to the proceeds in order to maintain their priority over other creditors. As such, even if the proceeds are transformed into a different form, like cash or other property, the ability to identify them as the proceeds from the original collateral is essential for perfection to be maintained.

While the other options discuss various aspects of proceeds, they do not align with the legal requirement for maintaining perfection. For instance, proceeds do not have to be in cash, nor are they required to be non-tangible; they simply must be identifiable as having originated from the collateral originally secured. Additionally, although generally perfection does not require further documentation in some cases, this does not replace the necessity for proceeds to be identifiable to ensure that the secured interest is maintained