Collateral Flashcards
What is a Secured Transaction?
It generally refers to a loan of money in a business deal, which includes a “security interest” in collateral, in which if the borrower doesn’t repay the loan, the lender may grab the assets and create value to pay off the debt.
What types of collateral are there?
Inventory and equipment
What is inventory?
goods held by a business for sale/lease and any raw or consumable materials
What is equipment?
catch-all category, any tangible thing owned by a business not within another category
What are consumer goods?
tangible goods used for OR bought for use primarily for personal, family, or household use. Focus on primary intended use either at present or at purchase.
What is a fixture?
Any movable things that is so incorporated into/affixed to an immovable that it becomes part of the realty under property law. (heaters, lights, etc)
What is “as-extracted” collateral?
Rights in oil and gas and other minerals reserved before extraction, so that the security interest will attach to the oil etc.
What is an account? when is it created?
Account is a right to collect on a promise to pay the debtor later on a monetary obligation after sale or lease of a non-land related thing.
Any time a thing is sold/leased in exchange for a promise to pay, an account is created
What is a deposit account?
Bank account, or rather a bank’s promise to give you back money you put in.
What is an instrument?
A promise to pay MEMORIALIZED in a note or certificate of deposit.
What is chattel paper?
Paper that represents both a promise to pay and a property right.
What are two common examples of chattel paper?
- ANy lease of a moveable (right to collect future rent + reversionary right) and
- retail installment agreement, RISA, promissory note + security agreement
Note: car sale: bank gets security interest in installment payments + ability to grab car if no payment.
What are examples of Investment property?
Stocks/bonds, certified/uncertified, securities accounts
What are general intangible assets?
Other intangible rights not otherwise categorized, including rights in intellectual property (copyrights, trademarks, patents) business goodwill-ability to do business under name, usually not exclusively given for SI.
