Attachment of Security Interest Flashcards
What is required for attachment?
1) Value given by the secured party
2) Rights in collateral held by debtor
AND
3) Security Agreement meeting 1 of the following requirements (i) authenticated security agreement that describes the collateral or (ii) secured party has possession or control of the item pursuant to an oral or unauthenticated security agmt.
What holds thieves back from attaching a security interest?
They don’t have any rights in the collateral to give.
What is a security agreement composed of?
1) Record - stored in a tangible medium
2) Authenticated by the debtor with a signature or symbol of intent
AND
3) Description of the collateral
To what does a security agreement apply?
Only that described in the security agreement or that which is under possession or control.
What is the security agreement requirement for consumer goods and commercial tort claims?
The collateral must be defined with particularity.
When are super generic descriptions such as “all the debtor’s assets” allowed?
In financing agreements but not security agreements.
What must the secured party do with regards to possessing or controlling the collateral?
1) act with reasonable care w/ regards to the collateral
2) keep the collateral identifiable
3) must relinquish the collateral once the obligation has been satisfied
AND
4) secured party may charge the debtor for reasonable expenses incurred for storing or maintaining
When will property acquired after the security agreement be collateral?
a) When there is an after-acquired property clause in the security agreement
b) When it is inventory and there is no exclusion of it
OR
c) When it is accounts
What are accession?
Goods that are physically united with other goods such that the identity of the other goods is not lost.
What is the rule for accessions?
- look to the security agreement of the good that the accession is attached to
- the security interest in an accession will continue in the accession even after it is attached.
What are co-mingled goods?
Goods that are mixed together such that their distinction is lost.
Is there a security interest in a co-mingled good?
- the security interest will be in a proportional share of the goods that get produced.
Is there a security interest in the proceeds to collateral?
Yes, if there was a security agreement validly attached to the original collateral whether or not the security agreement discusses proceeds.
What is a PMSI?
1) Goods or Software
2) The value given must allow the debtor to acquire the goods or software
AND
3) The goods or software secure the loan.
What is required for a lender PMSI?
Value loaned must be actually used by a debtor to acquire goods.
