Florida Secured Transactions

Question 1

Definition of secured transaction:

Answer 1

A transaction intended to create a security interest in personal property or fixtures.

(Generally involves a sale on credit or a loan in which the seller or the lender obtains a lien on some or all of the debtor’s property as security for payment).

Question 2

What should you look out for to identify a secured transaction question?

Answer 2

1. Credit transaction (sale on credit or loan) and

2. An agreement that creates a lien in favor of the creditor in the debtor’s personal property to secure the debt.

Question 3

T/F: Secured transactions law relates to real property?

Answer 3

False – personal property is used to secure the debt.

Question 4

Hilda ____ borrows $20,000 from First Bank ______ to buy some additional inventory for her retail hat shop. First Bank and Hilda execute a document _____ that grants to First Bank a lien _____ on the hats being purchased and in addition on all other inventory _____ now owned or hereafter acquired by Hilda ______ to secure this loan and any future indebtedness of Hilda to First Bank ______. First Bank also files a form ______ in the public records that indicates that First Bank has a lien on HIlda’s inventory.

Answer 4

Hilda = debtor
First Bank = secured creditor
document= security agreement
lien = security interest
all other inventory = collateral
after acquired property clause
future advance clause
form = financing statement

Question 5

Debtor definition:

Answer 5

The person who owes payment or performance of the obligation secured.

Question 6

Secured party definition:

Answer 6

A lender, seller, or other person in whose favor there is a security interest

Question 7

Security agreement definition:

Answer 7

The agreement between the debtor and the secured party that creates the security interest

Question 8

Security interest definition

Answer 8

an interest in personal property or fixtures that secures paymnet or performance of an obligation

Question 9

collateral definition:

Answer 9

the property subject to a secuirty interest

Question 10

Puchase Money Security Interest Definition:

Answer 10

Two types:

1. secured party sells debtor collateral on credit and retains a security interest or
2. an enabling loan (a loan to a debtor that enables the debtor to buy collateral).

• The credit or loan proceeds must actually be used to acquire the collateral.

Question 11

T/F: IN order to be a proper puchase money security interest, the credit or loan proceeds must actually be used to acquire the collateral?

Answer 11

True!

Question 12

What are three situations that don’t destroy an initial PMSI?

Answer 12

1. The PMSI also secures an obligation that is not puchase money: Lender lends debtor money to puchase a machine and takes a PMSI in that machine. 3 months later, lender loans debtor additional funds secured by the machine. Initial PMSI still valid.
2. Nonpurchase money collateral also secures the puchase money obligation: Lender loans debtor money. Loan is secured both by collateral to be purchased by the debtor using the loan proceeds and by collateral already owned by the debtor.
3. PM obligation has been renewed, refinanced, consolidated, or restructured: Lender loans debtor money to purchase a machine. Several months later, loan is refinanced. Still PMSI.

Question 13

After-acquired property clause definition:

Answer 13

Clause in security agreement that allows a secred party to obtain a security interest not only in debtor’s present property, but also in property that the debtor will obtain in the future.

Question 14

What is a future advance clause?

Answer 14

A clause in a security agreement that allows the secured party to make future loans to the debtor and to secure those future advances in the present security agreement. New security agreement is not needed when a future advance is made.

Question 15

What is attachment?

Answer 15

The steps legally required to give the secured party a security interest in the collateral that is effective as against the debtor.

Question 16

What is perfection?

Answer 16

Those steps legally required to give the secured party an interest in the collateral that is effective as against the world.

Question 17

What is a financing statement?

Answer 17

Document generally used to provide public notice of the security interest, and so to perfect the security interest.

Question 18

What are the two broad types of collateral?

Answer 18

1. Goods (4 types)

2. Semi-intangible and intangible property (8 types)

Question 19

What are classifications are included under “goods” in types of collateral?

Answer 19

1. consumer goods
2. equipment
3. farm products
4. inventory

*In classifying the collateral, look to see how the debtor is using the collateral.

Question 20

What is the definition of “goods” as a type of collateral?

Answer 20

Includes all things which are movable “at the time the security interest attaches” and include the unborn young of animals and growing crops. Also includes fixtures.

Question 21

Definition of consumer goods:

Answer 21

Type of good used or bought for use primarily for personal, family, or household purposes.

Question 22

What is equipment?

Answer 22

Used or bought for use primarily in business.

(type of good).

Question 23

What are farm products?

Answer 23

Type of goods collateral - Crops or livestock or supplies used or produced in farming operations or products of crops of livestock in their unmanufactered states (such as ginned cotton, wool-clip, maple syrup, milk, and eggs) if they are in the possession of a debtor engaged in farming operations.

Question 24

What is inventory?

Answer 24

Type of goods collateral - held by a person who holds them for sale or lease or to be furnished under serivce contracts; materials used or consumed in a business in a short period of time.

Question 25

What classification of collateral?

1. Guitar for chanukah present for son?
2. Guitar purchased by musician for use on tour?
3. Milk in the hands of farmer?
4. Milk in the grocery store?
5. Milk in hands of grocery store’s customer for family?
6. Automobiles held by local care rental agency?
7. Pencils & stationery used by Sears in credit offices?

Answer 25

1. consumer goods
2. equipment
3. farm product
4. inventory
5. consumer goods
6. inventory
7. inventory because used in business in a short time

Question 26

What are the 8 types of semi-intangible and intangible collateral (property)?

Answer 26

1. instruments
2. documents
3. chattel paper
4. investment property
5. accounts
6. deposit accounts
7. commercial tort claims
8. general intangibles

Question 27

What are instruments?

intanglible property/ collateral

Answer 27

Negotiable instruments and any other writing that evidences a right to the payment of a monetary obligation, and which are, in the ordinary course of business, transferred by delivery with any necessary indorsement or assignment (not investment property).

Question 28

What are documents?

intanglible property/ collateral

Answer 28

A document that, in the ordinary course of business, is treated as evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers (e.g. bill of lading, warehouse receipt).

Question 29

What is chattel paper?

intanglible property/ collateral

Answer 29

A record or records that evidence both a monetary obligation and a security interest in or a lease of specific goods. A record is information that is stored in iether a tangibel medium (written on paper) or an intangible medium (e-stored). Chattel paper that is stored in an e-medium is also called electronic chattel paper.

Question 30

What is investment property?

intanglible property/ collateral

Answer 30

Includes items such as stocks, bonds, mutual funds, and brokerage accounts containing such items.

Question 31

What are accounts?

intanglible property/ collateral

Answer 31

A right to payment (not evidenced by an instrument or chattel paper) (1) for goods , or (2) for services, (3) for real property, (4) policy of insurance issued or to be issued, (5) for a secondary obligation incurred or to be incurred, (6) for energy provided or to be provided, (7) for th euse or hire of a vessel, (8) arising out of the use of a credit card, or (9) lottery winnings.

Health care insurance receivables are included.

A Contractual obligation arising from a loan of money is not an account - it is a general intangible.

E.g., I’m a lawn care specialist and I have 10 accounts that each pay me $20/week for my work. Those accounts & the money coming in from them can be collateral.

Question 32

What are deposit accounts?

intanglible property/ collateral

Answer 32

A demand, time, savings, passbook, or similar account maintained with a bank. Article 9 now generally applies to deposit accounts as original colalterala nd deposit accounts that are claimed as proceeds of other collateral.

Question 33

What is the exception to the general rule unde Article 9 that deposit accounts can serve as collateral?

Answer 33

Consumer Transactions: Article 9 does not apply to an assignment of a deposit account in a consumer trnasaction.

E.g., I can’t go to a store really really wanting a T.V. and giving the store a security interest in my savings account in order to get the TV right then and there.

Question 34

What is a commercial tort claim?

intanglible property/ collateral

Answer 34

A claim arising in tort with respect to which the claimant is an organization (e.g. partnership or corporation) or where the claimant is an individual and the claim arose in the claimant’s business or profession and does not include damages for personal injury or th death of an individual.

Can be used as collateral.

Question 35

What are general intangibles?

intanglible property/ collateral

Answer 35

Any personal property not coming within the scope of the other definitions (e.g. software, patent and trademark rights, copyrights, and goodwill).

A general intangible under which the account debtor’s principal obligation is a monetary obligation is a payment intangible.

Question 36

How to classify the following items of collateral?

1. promissory note?
2. stock in GM?
3. recipt given to a farmer by silo operator when the farmer stored her grain there?
4. a written contract in which a car buyer purchasin gon credit promises to pay the dealership for the car and grants the dealership a secuirty interest in the car?
5. Big T sells tires on credit. What are ist customers’ obligations?
6. Checking account at your bank?
7. right to sue a corporation for wooing away a trusted ee?
8. claim arising in tort that has been settled and reduced to a contractual obligation to pay?

Answer 36

1. instrument
2. investment property
3. document
4. chattel paper
5. account
6. deposit account
7. commercial tort claim
8. settled = general intangible/ payment intangible

Question 37

What are the 5 situations in which Article 9 applies?

Answer 37

1. Any transaction, regardless of its form, that creates a security interst in personal property or fixtures by contract.
2. An agricultural lien
3. A sale of accounts, chattel paper, payment intangibles, or promissory notes (unless the sale is for the purposes of collection only, or the sale is part of the sale of a business).
4. Most consignments
5. A secured sale disguised as a lease

**Look out for these. Occasionally the bar examiners disguise a secured transaction question.

Question 38

Has a security interest been created? Is Article 9 applied?

S sells B a piece of machinery for $50,000, with the purchase price to be paid in 48 equal monthly payments. The sales agreement provides that S retains title to the machinery until paymnet of th full purchase price, and that upon any default by B, S has the right to retake the machinery, and to hold and dispose of the machinery an d collect expenses, as well as any deficiency owed by B.

Answer 38

Yes, security interest has been created that is governed by Article 9. Bar exam won’t always come out and say it.

Question 39

Governed by Article 9?

The state has enacted a statute giving unpaid farmers whohave delivered their crops to a middleman a lien on the inventory of the middleman.

Answer 39

While the legislature created the lien (not Article 9), Article 9 does regulate some of the legal issues that arise (e.g. where to perfect, some priority issues).

(Ex. of agricultural lien)

Question 40

Governed by Article 9?
To raise money, Acme Manufacturing sold all of its accounts to Friendly Finance, which notified the customers that payments should be made directly to Friendly.

Answer 40

Yes. This is an an outright sale, not a loan from Friendly to Acme with the accounts put up as collateral.

Question 41

Article 9 applies to consignments where:

Answer 41

1. the consigned goods are worth more than $1000
2. the consignor did not use the goods as consumer goods (consignment of your old clothes, not gov by 9)
3. the consignee deals in goods of the kind under a name other than the consignor’s
4. the consignee is not an auctioneer
   5 the consignee is not generlaly known by her creditors to be substantially engaged in selling the goods of others.

Question 42

Governed by ARticle 9?

Elvis, a music promoter, delivers CDs worth $1500 by a band to CD Barn to be sold on consignment. If not sold, CD Barn can return the CDS to Elvis.

Answer 42

Yes - unless CD Barn is generally known by its creditors to be substantially engaged in selling the goods of others, Elvis must comply with the provisions of Article 9 to protect his interest in the CDs against creditors of CD Barn.

Question 43

Governed by Article 9?

Machines, Inc. leases a duplicating machine to Print Shop. The parties execute a 5-year lease. At the end of the lease, the Print Shop has to option to become the owner of the machine for $1.

Answer 43

Yes – this is a sale disguised as a lease and is governed by Article 9.

Question 44

Governed by Article 9?

Machines, Inc. leases a duplicating machine to Print Shop. The parties execute a 5-year lease. At the end of the lease, the Print Shop is bound to purchase the machine.

Answer 44

Yes – this is a sale disguised as a lease and is governed by Article 9.

Question 45

Governed by Article 9?

Machines, Inc. leases a duplicating machine to Print Shop. The parties execute a 10-year lease. The duplicating machine has an economic life of 10years.

Answer 45

Yes – this is a sale disguised as a lease and is governed by Article 9.

Question 46

How is attachment achieved?

Answer 46

1. Through an authenticated security agreement. Unless the collateral is in the possession or control of the secured party pursuant to an agreement, a written (or e-stored) security agreement is required.
2. Secured Party must have given value (pre-existing debt can be value)
3. Debtor must have rights in the collateral (ok if grandpa says you can use his stock as collateral).

Question 47

If the collateral is in the possession or control of the secured party pursuant to an agreement, is there attachment?

Answer 47

Yes, likely don’t need written agreement if possession or control with secured party. (not often)

Question 48

Attachment forms a security interest and binds whom?

Answer 48

The debtor and the secured party only. (No third parties).

Question 49

What is needed in a valid security agreement?

Answer 49

1. Written/ e-stored
2. show intent to create a security interest
3. authenticated by debtor (must be signed or marked electronically with the present intent to identify the authenticating person and adopt the agreement).
4. must contain a description of the collateral (must reasonably identify the collateral – general category e.g. equipment, account, is ok).

Question 50

T/F: The debt secured may include future advances?

Answer 50

Yes with future advance clause in the security agreement.

Question 51

Debtor borrows $10,000 from Bank to purchase some equipment. D signs a security agreement using the equipment as collateral for this loan and “all other obligations now or hereafter owed to Bank.” He later gets a credit card from the Bank and when he fails to pay it, the Bank takes his equipment. OK?

Answer 51

It depends. Debt can be secured by future advances, but here need to determine whether it was the intent of the parties to include credit card obligations in the security agreement. * Look at the sophistication of the parties. If sophisticated and includes this language, then definitely.

Question 52

Can property secured include after-acquired property?

Answer 52

Yes. With two exceptions:
1. A security interest does not attach under an after-acquired property clause to CONSUMER GOODS unless the debtor acquires rights in them within 10 days after the secured party gives value.

2. An after-acquired property clause is ineffective as to commercial tort claims.

Question 53

Is an after-acquired property clause ever presumed?

Answer 53

Often yes with inventory and accounts that turn over rapidly.

Question 54

What are the 2 exceptions to the general allowance for after-acquired property clauses?

Answer 54

1. A security interest does not attach under an after-acquired property clause to CONSUMER GOODS unless the debtor acquires rights in them within 10 days after the secured party gives value.
2. An after-acquired property clause is ineffective as to commercial tort claims.

Question 55

What are considered proceeds?

Answer 55

Includes whatever is received upon the sale, exchange, collection, or other disposition of collateral or proceeds (includes second generation proceeds).

Must be identifiable.

Question 56

T/F: Unless otherwise agreed upon, a security agreement gives the secured party a right to proceeds?

Answer 56

True. A security interest automatically attaches to identifiable proceeds.

Question 57

First bank has a security interest in Hilda’s inventory. Hilda sells some inventory on credit. Does First Bank’s security interest reach the accounts resulitng from such sales?

Answer 57

Yes. A security interest automatically attaches to identifiable proceeds.

Question 58

Hilda sells some inventory for $3000 and deposits the cash in her bank account. Does First Bank’s security interest in her inventory reach the money?

Answer 58

It depends. If it is still identifiable, then yes. It might be commingled though.

Question 59

Hilda sells some inventory for $3000 and deposits the cash in her bank account. Does First Bank’s security interest in her inventory reach the money if the account never drops below $4000?

Answer 59

Yes. According to the last out theory, the proceeds are the last to leave the account, so the $3000 is still identifiable.

Question 60

Hilda sells some inventory for $3000 and deposits the cash in her bank account. Does First Bank’s security interest in her inventory reach the money if the account now has $5000, but shortly after the deposit of the $3000 cash proceeds only had $1000 balance?

Answer 60

Only $1000 is proceeds. If $3000, all $3000 is proceeds, but once it drops below $3000, it doesn’t go back up.

Question 61

Sarah grants Finance Company a security in her accounts receivables. One of these accounts has a surety, who promised Sarah that she would pay the account if the account debtor did not. Does Finance Company’s security interest attach?

Answer 61

Yes. The security interest automatically attaches to the supporting obligation for the collateral.

Question 62

What is perfection?

Answer 62

Perfection deals primarily with rights as between the secured party and third parties. Perfection is NOT necessary to create a valid, enforceable security interest as between the debtor and the secured party.

Question 63

What are the 5 methods of perfection?

Answer 63

1. Automatic perfection
2. Possession of collateral by a secured party.
3. Perfection by control
4. Notation of lien on certificate of title
5. Filing a financing statement

Question 64

What are the circumstances under which automatic perfection occurs?

Answer 64

1. Purchase money security interest in consumer goods.*
2. Assignment of certain accounts or payment intangibles.
3. A sale of a payment intangible or a promissory note
4. Security interest created by the assignment of a health-care insurance receivable to a provider of the health care goods or services.
5. certain security interests in investment property
6. supporting obligations
7. temporary automatic perfection

Question 65

What is the most common/ most important instance of automatic perfection?

Answer 65

Purchase money security interest in CONSUMER GOODS.

D borrows money from S Loan Company to buy a new dining room set for her home. S obtains a security interest in the dining room set. The security interest is automatically perfected. (automobile is different).

Question 66

When are certain accounts or payment intangibles automatically perfected?

Answer 66

When the addignment (in conjunction with other assignments to the same addignee) does not transfer a significant part of the outstanding accounts or payment of the assignor.

Question 67

What two tests are used to determine whether a significant part of the outstanding accounts or payment intangibles of the assignor are being assigned?

Answer 67

1. Casual and isolated test: no need to file as assignments, those “which no one would think of filing.” Any person who regularly takes assignments of the debtor’s accounts or general intangibles should file.
2. Percentage test: What percentage of the total accounts of the assignor was assigned and whether that percentage constitutes a signficant part of the whole

Question 68

Why does the sale of a payment intangible or a promissory note automatically perfect?

Answer 68

Bansk and other parties did not want to be required to take any action to perfect in “loan participation” (bank with a large oan sells off parts of that loan to third parties) or “mortgage warehousing” (bank might extend a line of credit to a commercial mortgagee).

Question 69

T/F: A security interest created by the assignment of a health care insurance receivable to the provider of the health care goods or services automatically perfects?

Answer 69

True: When an indivual assigns a right to payment under an insurance policy to the person who provided health care goods or services, the provider has no ned to file a financing statement against the individual.

Question 70

T/F: Certain security interests in investment property automatically perfect?

Answer 70

True: E.G. if debtor purchases assets through a securities intermediary and has not paid, the securities intermediary has an automatically perfected security interest to secure teh purchase price.

Question 71

T/F: Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

Answer 71

True. This is an example of automatic perfection.

Question 72

T/F: A security interest in certified securities, negotiable documents, or instruments is automatically perfected without filing or the taking of possession for a period of 20 days from the time it attaches, so long as the security intrest arises for new value given under an authenticated security agreement.

Answer 72

True: This is an example of automatic perfection : Temporary automatic perfection

E.g., D grants B a security interest in a promissor note (an instrument), and Bank loans Debtor $20,000. If there is an authenticated security agreement, Bank’s security interest is perfected for 20 days. If, by the endof hte 20 days, Bank has not filed or taken possession of the not, its security interest becomes unperfected.

Question 73

How does possession work as a method of perfection? Is there an exception to the general rule?

Answer 73

A secured party may perfect a security interest in most types of collateral simply by taking possession of the collateral. The security interest is perfected from the moment of possession without relation back to the time of attachment. Generally, perfection continues only so long as possession is retained.

E.g. B takes a security interest in D’s stamp collection and perfects by possession. B returns the collection to D so that he can shot it to some of his friends. When b gives up possession, it becomes unperfected. (If B had filed a financing statement before giving up possession, it would have remained perfected.)

Exception: A secured party may make available to the debtor on a temporary basis an instrument, negotiable document, certificated security, or goods not covered by a negotiable document that are in the possession of a bailee (e.g. for sale, exchange, or presentation) and will remain perfected for 20 days, after which time the secured party will become unperfected unless it again takes possession or files a financing statement.

Question 74

What is the exception to the general rule that giving up possession ruins perfection by possession?

Answer 74

Exception: A secured party may make available to the debtor on a temporary basis an instrument, negotiable document, certificated security, or goods not covered by a negotiable document that are in the possession of a bailee (e.g. for sale, exchange, or presentation) and will remain perfected for 20 days, after which time the secured party will become unperfected unless it again takes possession or files a financing statement.

Question 75

T/F: A security interest in accounts, certificate of title goods, deposit accounts, nonnegotiable documents, electronic chattel paper, and general intangibles can be perfected by possession.

Answer 75

False! They cannot be perfected by possession.

Question 76

Which security interests can be perfected by control?

Answer 76

Security interests in investment property, nonconsumer deposit accounts, and electronic chattel apper may be perfected by control.

Question 77

What is the only way to perfect security interests in nonconsumer deposit accounts?

Answer 77

Control.

The bank in which a nonconsumer deposit account is maintained automatically has control over the deposit account.

E.g., Acme, Inc. grants a security interest in its deposit account to First Bank, where the deposit account is maintained. First Bank has control over the deposit account.

Question 78

When is an investmnet property under control and thus perfected?

Answer 78

A secured party has control of an item of investment property when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.

Question 79

How can one exercise control over (1) certified securities, (2) uncertified securities, and (3) securities accounts?

Answer 79

1. If the security is represented by a certificate, the secured party who wants to perfect by control must take possession of the certificate. If the certificate is not in bearer form (if it is payable to a specific perfson rather than to the bearer), it also must be indorsed to the secured party.
2. If no certificate, must have the owner notify the issuer to (1) re-register the stock in the name of the secured party or (2) agree to follow the secured party’s instructions without further consent of the owner.
3. Securities accounts may be perfected by control by having the owner contact the broker or mutual fund company and instructing the intermediary that the secured party has the owner’s rights in the account or that the intermediary should comply with the secured party’s orders without further consent of the owner.

Question 80

If secured party attempting to perfect an interest in a nonconsumer deposit account is not the Bank where the account is held, how can the secured party obtain control in order to perfect?

Answer 80

The secured party can either

1. put the deposit account in the secured party’s name; or
2. agreeing in an authenticated record with the debtor and the bank in which the deposit account is maintained that the bank will follow the secured party’s orders without further consent by the debtor.

• If Bank is the secured party, automatic control.

Question 81

A secured party has control over chattel paper if _____, and ______, and ________.

Answer 81

1. a single, authoritative copy o f the record exists, and
2. this authoritative copy identifies the secured party as the assignee of the record or records, and
3. the authoritative copy is communicated and maintained by the secured party or its designated custodian.

Question 82

When is a notation of lien on certificate of title used to perfect?

Answer 82

This is the only way to perfect a security interest in a motor vehicle required to be titled under state law. Must note the lien on the certificate of title unless the debtor is holding the motor vehicle for inventory for sale or lease. (So dealership doesn’t have to do this - that’s inventory).

Question 83

What security interests can be perfected through filing a financing statement?

Answer 83

All security interests/ kinds of collateral except deposit accounts and money (but if the deposit accounts or money are claimed as proceeds of other collateral, a filing as to the original collateral perfects a security interest in the deposit accounts or money).

Question 84

What is the only way a deposit account or money can be secured by filing a financing statement and not control?

Answer 84

If the deposit accounts or money are claimed as proceeds of other collateral, a filing as to the original collateral perfects a security interest in the deposit accounts or money.

Question 85

What is the standard required for filing a financing statement to perfect?

Answer 85

Notice filing: The filing must contain enough information to put people on notice that they need to find out more information.

People don’t want to put too much into the public record for privacy reasons and that’s ok, but need to put others on notice that they need to look into what’s going on.

Question 86

What is required in the contents of the filing statement?

Answer 86

1. Debtor’s Name
2. Description of collateral
3. Secured party’s name
4. (Real property: description of realty and notice of intent to file in real property records).
5. Debtor authorization (no signature required. Debtor automatically authorizes the financing statement if she authenticates a security agreement covering the same collateral).

*The authenticated security agreement itself may be filed, but must contain all of the elements above.

Question 87

If the debtor is an individual, what name should be given on the financing statement?

Answer 87

Name on the debtor’s driver’s license, if the license has not expired and the license was issued by the state in which the debtor is located. If debtor doesn’t have such a license, then use the individual name of the debtor (not defined in Art. 9) or the debtor’s surname and first personal name.

Question 88

If the debtor is a corporation or other registered organization, what name should be used on the financing statement?

Answer 88

Use the name stated to be the debtor’s name in the document filed or issued by the state to form the registered organization (not the name in the electronic database). If teh debtor is a partnership, the partnership name should be given (or the names of the partners if it has no pship name).

Question 89

T/F: For filing a financing statement, you should use the trade name?

Answer 89

False. Just use the individual name.

E.g., Dan Sox is operating under the trade name of Babalu’s Bagels. Just use Dan Sox, not Babalu’s Bagels.

Question 90

T/F: Even if there is a mistake in the name of the debtor on the financing statement, perfection will be complete.

Answer 90

It depends. The financing statement is still effective so long as the mistake is not seriously misleading. Tricky with computers these days – type into the database and nothing comes up because of misspelling – could be a big error.

Question 91

If the filing officer makes a mistake by filing the financing statement so that the index shows the secured party as the debtor, is it still effective?

Answer 91

Yes. You are not responsible for filing errors if you gave them the right information.