What is a key requirement for perfection of electronic chattel paper?

• A. Physical possession of the electronic record by the secured party.
• B. Filing in the county recorder's office.
• C. Control by the secured party over the electronic record.
• D. No action is required.

Answer: (C)

Perfection of electronic chattel paper relies on the secured party having control of the electronic record. Electronic chattel paper is a data message stored electronically that evidences both a monetary obligation and a security interest in specific goods. Possession of a physical copy isn’t applicable here because the asset is electronic. Control means the secured party has the exclusive power to enforce the record and to instruct the issuer or custodian on how the record is handled, such that the debtor cannot defeat the lien by altering the record. This control mechanism is what gives the secured party priority, rather than relying on physical possession or public-file filings alone. No action at all would not achieve perfection, since the secured party must hold or control the electronic record to secure the lien.