Attachment, Perfection + Priority Flashcards

Question

Common Types of Automatic Perfection

Answer 1

1) **PMSI in consumer goods** 2) Home bank rule re: dep. accts 3) Assignment of accts/payment intangibles that are not by selves or in conjunction a sig. part of outstanding accts/payment intangibles (basically--if have sec. interest in 1 of 500 outstanding accts, so small not worth trouble to req. much) 4) Grace periods (temporary)

Answer 2

**PMSI** of **consumer goods** = **auto perfect** on **attachment** **Permanent** attachment--no need to file, renew **Exception**: **motor vehicle** or **fixture** ONLY if *consumer* goods N/A if **vehicle

Answer 3

Priority to **first interest** to **attach** First in time, first in right

Answer 4

**Perfected interest** wins--has priority even if attach later

Answer 5

First to **file** OR **perfect** (whichever **first, w/out gaps) File ≠ perfect File but don't attach/sign agreement till after 2d sec. interest perfect--> still win b/cause *filed first* Exception--if **instrument** OR **chattel paper** AND **perfection by possession**--priority over int perfected by filing, even if didn't file/filed later

Answer 6

If perfect by **possession** = have priority over party who perfected by filing (even if didn't file/filed later)

Answer 7

**Perfected PMSI wins** over other security interests IF **PMSI perfected** when **debtor gets possession of collat** OR **w/in 20 days after** "Second in time, first in right" Exception: **inventory PMSI** requires extra steps

Answer 8

PMSI Inventory = get **priority over earlier s.i.** ONLY IF 1) **PMSI party notifies 1st party** in **authenticated (in writing AND signed) notice** that **expect to obtain PMSI** AND 2) **PMSI perfected at time debtor gets possession**--no grace period

Answer 9

Creditor that has acquired interest in prop by attachment, levy, etc, or is bankruptcy trustee For bar--once **get judgement + get sheriff, etc. to grab stuff** => lien creditor, do priority analysis

Answer 10

Generally--still 1st in time, 1st in rt **Secured party** has **priority** IF 1) **Perfects before** OR 2) **Files** + **evinces sec. agreement before** (i.e.--signed sec. agreement or possession or control, + file = priority)

Answer 11

If PMSI **perfected w/in 20 days** after debtor receives collateral => take priority over intervening lien creditor

Answer 12

Goods that are **physically united w/ other goods** in such a matter that the **ID of the original is not lost** Ex. custom bicycle seat = accession to bike attached to, engine is accession to car, etc. Security interest remains attached to accession, b/cause IDable

Answer 13

Goods that are **physically united w/ other goods** in such a manner that **ID of original lost** Ex. flour used to make cake--flour no longer sep + IDable No interest in orig. once commingled-- but **interest in resulting product** (ex. cake made from flour) **Multiple interests** in **comm. good** = **rank equally** in **prop to value of collat** at **time b/came commingled** Ex. A flour interest, B egg interest-- tie re: priority, but if eggs 2x as $$, get 2:1 proportion of cake

Answer 14

Generally-- same analysis Exception = **accession subordinate to whole** IF whole perfected by cert of title (i.e. **motor vehicle**) Have s. interest in car + in engine--> **vehicle** has **first dibs over whole item**

Answer 15

Bank 1 interest in flour, Bank 2 interest in eggs (both commingled goods)--> **tie** re: priority, but rank **in proportion to value at time commingled** (ex. if eggs 2x more $$ than flour--eggs get interest in cake 2:1) Bank 1 interest in flour, Bank 2 interest in baked goods (interest in commingled vs. interest in resulting product) = **first in time or PMSI**

Answer 16

Buyer takes **subject to sec. interest** UNLESS 1) **Sec. party authorizes** sale free of interest OR 2) **Buyer In the Ordinary Course of Business** (BIOCOB) OR 2) **Consumer-to-Consumer/"Garage Sale" Exception** OR 3) **Buyer of Chattel Paper** IF a) BIOCOB; + b) gives value + takes poss/control; + c) no sign on paper assigned to other party

Answer 17

**Buyer in the ordinary course of business** 1) Buys goods in **good faith** AND 2) Buys **w/out knowing sale violates rts** of another AND 3) In **ord course of business** AND 4) From **person in bus of selling goods of that kind** = Take **free of any sec. interest** (int *doesn't survive sale*) NOT BIOCOB if **one-off**, not what seller usually sells OK if **know interest exists,**-- just **can't know *violating* interest**

Answer 18

1) **Buys goods** for **personal, family or household use** 2) From **someone who used goods for that purpose** 3) **For value** 4) **Without knowledge of sec interest** (vs. BIOCOB--just can't know *violation*) 5) **Before financing statement filed** = Take **free of sec. interest** DO NOT need filing to **perfect** PMSI DO NEED filing to **avoid garage sale exception** (even if PMSI)

Answer 19

BIOCOB--CAN know security **interest exists,** CAN'T know **violating interest** (ex. acting in violation of clause in agreement) Garage Sale Exception--**can't know any interest exists at all**--know = N/A

Answer 20

**Buyer** of chattel paper has **priority** IF 1) **good faith** + **ordinary course of business** AND 2) **Gives value** AND **takes possession/control** of chattel paper AND 3) **No indication on paper** that assigned to other party

Answer 21

MUST file **fixture filing** No fixture filing = never priority Same gen rules as others: **prior rec mortgage has priority** UNLESS **PMSI** AND **perfected** by fixture filing **before goods become fixtures (installed)** OR **w/in 20 days after** Fixture priority => have right to **remove from prop** on **debtor's default**

Attachment, Perfection + Priority Flashcards

(45 cards)