Ch 30 Secured Transactions

Question 1

When the payment of a debt is guaranteed or secured by personal property owned or held by the debtor, the transaction becomes known as a what?

Answer 1

Secured transaction

Question 2

Which article of the UCC governs secured transactions in personal property?

Answer 2

Article 9

Question 3

What does personal property include?

Answer 3

• Accounts
• Agricultural liens
• Chattel paper
• Commercial assignments or $1,000 or more
• Fixtures
• Instruments
• Other types of intangible property (e.g. patents)

Question 4

What is chattel paper?

Answer 4

• Personal property

- Any documents or records evidencing a debt secured by personal property

Question 5

What is a fixture?

Answer 5

• Certain property that is attached to land

Question 6

Does Article 9 cover creditor tools such as liens and mortgages on real property?

Answer 6

NO

Question 7

Define secured party.

Answer 7

Any creditor who has a security interest in the debtor’s collateral

Question 8

Define debtor

Answer 8

The party who owes payment or other performance of a secured obligation

Question 9

Define security interest

Answer 9

The interest in the collateral that secures payment or performance of an obligation

Question 10

Define security agreement

Answer 10

An agreement that creates or provides for a security interest

Question 11

Define collateral

Answer 11

The subject of the security interest

Question 12

Define financing statement

Answer 12

• a.k.a. UCC-1 form

- the instrument normally filed to give public notice to third parties of the secured party’s security interest

Question 13

What are the two main concerns of the creditor if the debtor defaults?

Answer 13

(1) Can the debt be satisfied through the possession and (usually) sale of the collateral?
(2) Will the creditor have priority over any other creditors or buyers who may have rights in the same collateral?

Question 14

How are the two main concerns of the creditor if the debtor defaults met?

Answer 14

Through creation and perfection of a security interest

Question 15

What are the three basic requirements to be met for a creditor to have an enforceable security interest?

Answer 15

(1) Written or authenticated security agreement
(2) Secured party must give debtor something of value
(3) The debtor must have rights in the collateral

Question 16

What does an attachment give the creditor?

Answer 16

An enforceable security interest in the collateral

Question 17

When the collateral is not in the possession of the secured party, the security agreement must be in what form?

Answer 17

Either written or authenticated (and it must describe the collateral)

Question 18

Unless an amendment to the financing statement is filed within a four-month period following changes in the debtor’s name, collateral acquired by the debtor after the period is what?

Answer 18

Unperfected

Question 19

How can you perfect a security interest without filing a financing statement?

Answer 19

1) Transfer collateral into possession of the secured party

2) Perfected on attachment

Question 20

What are two of the most common security interests that are perfected on attachment?

Answer 20

1) Purchase-money security interest in consumer goods

2) Assignment of a beneficial interest in a estate of a deceased person

Question 21

What are the two general categories of collateral?

Answer 21

1) Tangible collateral

2) Intangible collateral

Question 22

Under the UCC, 14 types of security interests are perfected automatically at the time they are created. What is the most common?

Answer 22

PMSI (or purchase-money security interest in consumer goods, which are items bought primarily for personal, family, or household purposes)