Business Law- Security Interests Flashcards
What are the requirements for a security agreement?
1) Writing or record, has to be SIGNED BY DEBTOR
2) Description of the collateral- has to be reasonably identifiable
3) Possession or Control
4) Interest in the collateral (when the goods are identified, inventory has to be set aside for that debtor, with the carrier)
5) Has to have a debt
How do you perfect your security interest?
1) Filing the statement
2) Possession
3) Automatic
4) Temporary
Where are filings of perfected interest filed?
Central location except real property
How long is the period of perfection?
5 years
What is the BEST type of perfection?
Possession
When a debtor takes collateral to another state, how long does the creditor have to file in the new state?
4-months
21-days on negotiable instruments
What is automatic perfection or PMSI (purchase money Security interest)
PMSI: When a creditor advances money for purchase of the collateral (buy from RC Willey, buying for personal for home use, and RC Willey credits you to buy)
It is as good as IF you file, but you DON’T HAVE TO FILE.
In Secured VS Secured, who has priority?
Whoever is secured to attached
Secured VS Unsecured, who has priority?
Secured Party
Perfected Secured party VS secured party, who has priority?
Perfected Secured Party
Perfected Secured Party VS Perfected Secured Party
Party who filed First
Perfected Secured Party VS Lienor
Party who filed (financing statement or lien) first
PMSI in Fixtures VS Perfected Secured Party?
PMSI creditor if perfected before annexation or within 20 days after annexation
PMSI in Equipment VS Perfected Secured Party
PMSI if perfected within 20 days after delivery
PMSI in Inventory VS Perfected Secured Party
PMSI if perfected before delivery AND if perfected secured party gives notice to other secured creditors before delivery
PMSI in Consumer Goods VS Buyer
Buyer unless perfection is by filing before purchase (if they sell the product, the buyer is perfected)
Perfected secured party VS buyer?
Buyer in ordinary course of business even with knowledge
What are the rules on the Right of Release?
Termination statement must be filed within 30 days of the final payment or 20 days of request from debtor
What are the remedies for creditors when debtors do not pay?
File a suit
Self-help: No court proceeding required for repossession
What are the 60% rule (Important)
Creditor must sell collateral if debtor has paid 60% of the CASH PRICE of collateral (not the amount of the debt)
