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UCC art 9 Secured Transactions > Attachment > Flashcards

Attachment Flashcards

1
Q

Secured Trans -Attachment - Concept

A

The creation of SI in property, occurring when the debtor agrees to the security, receives value from the secured party and obtains right in the collateral

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2
Q

Secured Trans - Attachment -Effects (4)

A

1) Establishes right of creditor against debtor or 3rd party w/knowledge
2) SA by creditor against debtor becomes enforceable
3) SA creditor get priority over unsecured/normal creditor
4) Is required for creditor to have replevin right

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3
Q

Secured Trans -Attachment- Elements (ARV)

A
  • A security agreement (SA)
  • Rights in collateral (debtor)
  • Value Given
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4
Q

Secured Trans -Attachment- ARV - A SA / reqs (3)

A

1) SA must be written and authenticated by debtor UNLESS secured party already has possession/control
2) Creditor needs to file Financing Statement
3) Collateral description (see rules for SA/FS)

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5
Q

Secured Trans -Attachment -ARV - Rights in collateral/ by whom?, no possesion situation

A
  • Debtor must have rights on collateral.
  • If not received yet, debtor must _at leas_t have legally enforceable right: i.e. warehouse receipt
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6
Q

Secured Trans -Attachment -ARV- Value Given

A
  • Creditor must take loan or deliver collateral to debtor
  • Also, binding commitment to extend credit is enough.
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7
Q

Secured Trans -Perfection - Concept

A

Validation of SI as against other creditors by any of the permitted methods

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8
Q

Secured Trans -Perfection - gral

A
  • Provides protection of SI against 3rd parties, where attachment is not enough (“attachment losses to perfection”)
  • Equals to Attachment + at least 1 perfection method PCFMT
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9
Q

Secured Trans -Perfection - 3rd party claims (3) that require perfection (attachment not enough)

A

1) More than 1 creditor with SI
2) Debtor conveyed collateral to 3rd party for value
3) Bankruptcy trustee asserting ownership in collateral

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10
Q

Secured Trans -Perfection Methods - PCFMT (5)

A

1) Possession
2) Control
3) Filing of FS*
4) Mere attachment
5) Title certificate notation

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11
Q

Secured Trans -Perfection - Possession - Gral

A
  • Possession of collateral by secured party
  • Required for $ money and provides highest perfection to collateral where transferee has greater right than transferor (i.e. negotiable instrument)
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12
Q

Secured Trans -Perfection - Possession - Examples

A
  • physical checks, promissory notes, certificates of deposit, bearer bonds, negotiable warehouse receipt, bills of landing, investment securities certificate instrument
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13
Q

Secured Trans -Perfection - Possession - Effective Date of perfection / date, prevails over…

A
  • As of date of possession
  • Prevails over later FS filing against collateral
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14
Q

Secured Trans - Perfection - Control - Gral / how to achieve it, duration

A
  • aka “constructive possession” for intangibles
  • Achieved automatically if secured party is depository, if not, it requires agreement between debtor + security party + depository
  • Perfection is valid as long as it remains
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15
Q

Secured Trans -Perfection - Control - Application (4) (intangibles)

A

1) deposit account
2) electronic chattel
3) investment property
3) letter of credit

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16
Q

Secured Trans - Perfection - Control for Depository Account - Reqs (3)

A

1) by agreement debtor/creditor/depository
2) On authenticated record
3) With instructions from secured party for the bank for the funds in the block deposit account

17
Q

Secured Trans -Perfection - Control for Electronic Chattel Paper / when, alternative

A
  • When in single unique and identifiable electronic record
  • Perfection by either control or filing
  • example: car loan agreement sold by car dealer to bank
18
Q

Secured Trans -Perfection - Control for Investment Property/ i.e., alternative

A
  • Also either by control or filing
  • example: commodity contract, stock certificate, items under UCC 8
19
Q

Secured Trans - Perfection - Control for Letter of Credit / when

A

Control only method when payee has consented to assignment of proceeds

20
Q

Secured Trans - Perfection - Filing of FS / for, constructive notice

A
  • Preferred method for intangibles (accounts receivable, commercial tort claim, “general”) and tangibles (inventory, equipment - not for cars, unless sold as inventory from retailer)
  • As constructive notice of SI vs everybody and subsequent creditors (who will usually need to do filing search)
21
Q

Secured Trans - Perfection - FS content (3) + after acquired rule (CNA)

A

1) Collateral ID - sufficient description (more liberal than SA - accepts general description)
2) Name + address of both debtor/creditor
3) Authorization by debtor (no signature required)
- No need to include “after acquired” provision (only for SA)

22
Q

Secured Trans - Perfection - FS content - Misleading Change-Mistake rule / when, remedy, i.e., rationale

A
  • When there is error on debtor’s name or seriously (not minor) misleading change on the FS that could affect subsequent creditors
  • Original creditor seeking priority must file again within 4 months
  • Relates with file search under debtor’s name by other creditors
  • i.e.: use of wrong corporate name or newly married name by debtor
23
Q

Secured Trans - Perfection - FS Filing Place / gral rule, rule for fixtures, mineral, timber, etc

A

At state central recording office of:

  • Debtor’s residence/ppal place of business
  • If mx place of business - location of CEO
  • Location of related real estate for fixtures/minerals/timber/crop
24
Q

Secured Trans -Perfection - FS Improper Filing Place Result

A
  • No perfection of SI
  • EXCEPT towards those w/actual knowledge of content
25
Q

Secured Trans - Perfection - FS Filing - Effective Date / gral rule, importace

A

Gral Rule: date of filing

  • Importante regarding priority (“first in time first in right”)
26
Q

Secured Trans - Perfection - FS Filing - Effective Date Rule for not-yet acquire rights on collateral

A

Filing does not perfect UNTIL attachment of rights over collateral

27
Q

Secured Trans - Perfection - FS Filing - Effective Date - Exception

A

PMSI 20-day grace period to file

  • w/effective date relating back to date of attachment
28
Q

Secured Trans - Perfection - FS Filing - Effective Period / duration, extension

A

5 years

  • extendable by filing continuation statement within 6 months of the end of the period.
29
Q

Secured Trans - Perfection - Filing - Consignment rules (for inventory) / when, old law vs modern, effect

A
  • When consignee merchant sales inventory goods from other (title directly from consignor to consumer)
  • Wholesale consignor wants to avoid that delivered goods in possession of consignee are subject to levy by the consignee’s other creditors
  • Old law: post sign
  • Modern Law: Consignor must file and send notification to previously perfected inventory creditors
  • Creates PMSI which overrides after-acq property clause
30
Q

Secured Trans - Perfection - Filing - Multistate transactions / applicable law, creditor’s duties and re-filing times

A

Debtor location defines filing rules for perfection - collateral location not controlling

  • If debtor moves to other state - creditor with duty to locate and new filing within 4 months (after that perfection no longer valid)
  • If collateral transferred to new debtor in new state - creditor has 1 year for new filing.
31
Q

Secured Trans - Perfection - Filing - Termination Statement / when, sanction for failure

A
  • To be filed by secured party up to 20 days after receipt of proper request by debtor
  • $500 penalty for failure
32
Q

Secured Trans - Perfection -Mere Attachment - Application (2) and purpose

A

1) PSMI on consumer goods (of any value)
2) farm machinery equipment <2.5K

Purpose: save of potential invalidation assignments which are not reasonable to require filing

33
Q

Secured Trans - Perfection -Mere Attachment - Effective date

A

Date of attachment

34
Q

Secured Trans - Perfection - Mere Attachment - Effectiveness (in relation to transferee consumer) and limits (3)

A

1) Not against BF transferee (consumer) of debtor who uses collateral for household/personal purposes (BF = for value + w/out knowledge of SI)
2) Limits creditor possibility for repossession
3) If transferee (consumer) uses for equipment/inventory, then he just takes junior interest in relation to previous perfected SI

35
Q

Secured Trans - Perfection - Title Certificate Notation / application, method

A
  • Mostly used for vehicles, motorhomes, boats, hawlers, airplanes
  • Perfection by notation in title certificate issued by govt agency
36
Q

Secured Trans - Perfection - Title Certificate Notation - Exception

A

Vehicle dealers

  • retail business where vehicle is inventory: perfection is by filing
37
Q

Secured Trans -Perfection - Priority rules for judgment creditor and bankruptcy trustee

A
  • Judgment creditor: perfects interest upon registration of judgment with county clerk (and gets lien on real estate and fixtures)
  • Bankruptcy trustee: perfects interest once petition for bankruptcy is filed in federal bk court.

UCC art 9 Secured Transactions (5 decks)

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