Debtor Grants PMSI

Question 1

Purchase Money Security Interest

Answer 1

Value given that enables debtor to buy the collateral.

Question 2

Seller v. Lender PMSI

Answer 2

Seller - secured party sells debtor collateral ON CREDIT taking back a PMSI in unpaid purchase price.

Lender - Makes loan in order to permit the debtor to acquire collateral, loan must have been so used.

Question 3

Common Issues in PMSI

Answer 3

Did Financial Seller Actual Obtain A security Interest? Did Financial lender loan intended for and actually used for purchase price of collateral?

Question 4

Did Financial Seller Actually Obtain A Security Interest

Answer 4

Debtor MUST FIRST sign a security agreement (not promissory note) granting security interest in seller.

Question 5

Financing Lender Loan Intended For and Actually Used for Purchase of Collateral?

Answer 5

Loan must be made FOR PURPOSE of acquiring collateral and LOAN FUNDS MUST BE USED FOR ACQUIRING COLLATERAL.