Flash Cards for Bar Courses - Secured Transactions
Goods
Include all things which are movable at the time the SI attaqches.
- Consumer Goods - primarily for personal, family, or househodle purposes
- Equipment - use or bought for business. ALSO the default type of good
- Farm Products - crops or livestock or suppl;ies used or produced in farminig operations or products of crops or livestock in their unmanufactured state. In the possession of a farmer
- Inventory - held for sale or lease, goods that are furnished under a service K, and materials used or consumed in a business in a short period of time.
Intangible or semi-intalngible collateral
Instruments- piecxes of paper representing the right to be paid money, like promissory notes, drafrts, and cert. of deposits
Documents- represents the right to recieve goods
Chattel Paper - a record which evidence both (1) a monetary obligation, and (2) a SI in or a lease of specific goods.
Investment Property - items such as stocks, bonds, mutual funds, and brokerage acctounts containing such items
Accounts- includes a right to payment for propery sold or servidces rendered
Deposit accts- accft maintained w/ a bank and is must be nonconsumer (or a business acct)
Commercial Tort Claims- tort claim where (1) the claimant is an org., or (2) the claimaint is an individual, the claim arose out of the claimant’s business or profession, and the claim does not incluide damages for personal injury or the death of an individual
General Intangiblkes - any personal property not cominng w/in the scope of other definitions, such as patent and trademark rights, copyrights, and goodwill.
Attachement
3 req.
1) Parties must agree to create a SI, evidenced by creditor taking POSSESSION or colalteral, an AUTHENTICATED SECURITY AGREEMENT, or creditor takes CONTROL of nonconsumer deposit accts, electronic chattel paper, and investment property
2) VALUE must be given to secured party
3) debtor must have RIGHTS in the COLLATERAL
Security Agreement req.
- must be WRITTEN and an INTENT to create an SI
- must be AUTHENTICATED (signed or any symbol by debtor)
- DESCRIPTION OF COLLATERAL (must REASONABLY IDENTIFY collateral) – NO SUPERGENERIC
Proceeds
SI in collateral auto attaches to identifiable proceeds…
In case of cominggled cash proceeds, use the lowest intermediate rule… you look at the bank acct starting at the time the proceeds are deposited and ending at the time you are applying the rule. The lowest balance during that time period is the securted party’s indentifiable proceeds
Auto perfection – PMSI in consumer goods
PMSI in consumer goods is perfected as soon as it attaches. NO NEED FOR FILING W/in 20 days!!!
**But a SI in a car can only be perfected by notation on the vehicles cert. of title
Perfection by possession
SI can be perfected by taking possession of the collateral… perfected at the moment of possession and remains perfected as long as possession is retained
Perfection by control
Can perfect by taking control of investment property, business deposit accts, electronic chattel paper… can only perfect business deposit accts by taking control
Business deposti acct:
- by putting SP’s name on acct
- authenticated records w/ the debtor and the bnanlk in which acct is maintained that the bank will comply w/ the Sp’s orders
Car Dealer perfection of cars
Vehicles held in inventory for sale or lease are perfectretd by filing a financing statemetn under the ordinary code rules. Perfect by filing
Items needed in a record or financing statement
- Debtor’s name and mailing address - name on DL OR individuals name OR entitty name – NOT TRADE NAME
- SP’s name and mailing address -
- description of collateral – Supergeneric OK
Debtor name chane
if name of debtor changes, the financing statemetn is effective only against collateral acquired BEFORE the name change and w/in 4 months after.
Debtor’s authorization of filing a financing statement
Debtor muyst authorize the filing in any signed writing. Debtor auto authorizes the financing statements if debtor authenticates the financing staemetn or authenticartes a security agreement
Place of filing a financing statement
- General Rule: in the office of the SOS of the state where the debtor has their principal residence (corp. = state where organized)
- ## fixture: in the cty where the real property is
Relocation of Debtor
If debtor moves from one state to another, the SI will become unperfected 4 months after teh debtor’s move, unless the SP files a fianncig statement in the new jurisdiction b4 the 4 month period is up.
Continuation statments
Financing statement is valid for 5 years – the continuation statemetn can only be filed within 6 months b4 the lapse of the filed statement
Temporary perfection
Sp auto perfects SI in any proceeds of collateral for 20 days after receipts of the proceeds… And beyond 20 days if:
- proceeds are identifiable cash
- Si in the original collateral was perfected by filing a financing statement filed in the same place as the financing statement of the og collateral (same office rule)
- The SI is perfected w/in 20 days
Priorities: SP v. SP
First to file or perfect
Priorities: unsecured party v. unsecured party
first to attach has priority
Priorities: SP v. Unsecured party
a perfected sp generally prevails
Priorities: PMSI superpriority
PMSI is superior to prior perfected SI’s in the same colleral if:
- Goods other than inventory & livestock: PMSI has priority if the interest is perfected b4 20 days after debtor recieves possession of goods
- Inventory or livestock: PMSI has priority if it is perfected at the itme the debtor gets possession, other SPs get notification (authenticated), and notification is good for 5 years
- consignor: has PMSI in consigned goods considered in inventory.
- Conflicting PMSI: seller has priority over lender, or first to file or perfect wins
Priorities: Control
A SI perfected by control has priority over a SI perfected by any other method
- and for business deposit accts: putting name on acct has priority is superior or bank that has the acct has priority
Priorities: SP v. Buyer or Leasee
Buyer generally takes something wiuthy SI on it EXCEPT:
- Authorized sales: sale authorized by SP to take free of SI
- Buyer in the Ordinary Course (BIOC): takes freew of a nonpossessory SI in the goods created by buyer’s seller
- Consumer to COnsumer sales: buyer takes free of a perfected SI
Priorities: SP v. Judicial lied creditor
Lien creditor prevails over SP ifg the lien creditor becomes before the SI is perfected. If perfected before, then SI wins.
- Lien creditor becomes a lien credioty at the time of the levy
PMSI files within 20 day still has priority over a lien creditor
Priorities: SP v. Holder of possessory lien
Like a mechanics lien,,, a lien imposed by other who supply goods or services.
- Has priority over SI as long as the goods or services were provided in the ordinary course of business and the collateral remains in the lien holder’s possession.
