Business Law- Security Interests

Question 1

What are the requirements for a security agreement?

Answer 1

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

Question 2

How do you perfect your security interest?

Answer 2

1) Filing the statement
2) Possession
3) Automatic
4) Temporary

Question 3

Where are filings of perfected interest filed?

Answer 3

Central location except real property

Question 4

How long is the period of perfection?

Answer 4

5 years

Question 5

What is the BEST type of perfection?

Answer 5

Possession

Question 6

When a debtor takes collateral to another state, how long does the creditor have to file in the new state?

Answer 6

4-months

21-days on negotiable instruments

Question 7

What is automatic perfection or PMSI (purchase money Security interest)

Answer 7

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.

Question 8

In Secured VS Secured, who has priority?

Answer 8

Whoever is secured to attached

Question 9

Secured VS Unsecured, who has priority?

Answer 9

Secured Party

Question 10

Perfected Secured party VS secured party, who has priority?

Answer 10

Perfected Secured Party

Question 11

Perfected Secured Party VS Perfected Secured Party

Answer 11

Party who filed First

Question 12

Perfected Secured Party VS Lienor

Answer 12

Party who filed (financing statement or lien) first

Question 13

PMSI in Fixtures VS Perfected Secured Party?

Answer 13

PMSI creditor if perfected before annexation or within 20 days after annexation

Question 14

PMSI in Equipment VS Perfected Secured Party

Answer 14

PMSI if perfected within 20 days after delivery

Question 15

PMSI in Inventory VS Perfected Secured Party

Answer 15

PMSI if perfected before delivery AND if perfected secured party gives notice to other secured creditors before delivery

Question 16

PMSI in Consumer Goods VS Buyer

Answer 16

Buyer unless perfection is by filing before purchase (if they sell the product, the buyer is perfected)

Question 17

Perfected secured party VS buyer?

Answer 17

Buyer in ordinary course of business even with knowledge

Question 18

What are the rules on the Right of Release?

Answer 18

Termination statement must be filed within 30 days of the final payment or 20 days of request from debtor

Question 19

What are the remedies for creditors when debtors do not pay?

Answer 19

File a suit

Self-help: No court proceeding required for repossession

Question 20

What are the 60% rule (Important)

Answer 20

Creditor must sell collateral if debtor has paid 60% of the CASH PRICE of collateral (not the amount of the debt)