lesson 14

Question 1

secured transactions are about

Answer 1

loans, collateral, and how the lender protects his loan

Question 2

the loans relating to secured transactions involve

Answer 2

personal property as collateral

Question 3

deeds of trust involve

Answer 3

real property as collateral

Question 4

if collateral is land, house, building, or real property

Answer 4

loan is secured by deed of trust

Question 5

if collateral is car, machine, inventory

Answer 5

loan is secured by security agreement

Question 6

security interest

Answer 6

an interest or right to personal property/fixtures that secures the performance of some obligation

Question 7

security interest example

Answer 7

Amy purchases a car, dealership agrees to give her a loan. Even though she drives away with a car, before she does, she will sign a security agreement establishing that the dealership retains a security interest in the car and has certain rights if Amy doesn’t pay, like repossession

Question 8

secured party

Answer 8

the person or entity that holds the security interest

Question 9

debtor or obligor

Answer 9

person that borrows money and grants security interest in property

Question 10

collateral

Answer 10

personal property that is subject to security interest

Question 11

fixtures

Answer 11

personal property that has been attached to real estate (heat pump, elevator)

Question 12

security agreement

Answer 12

debtor gives a security interest to the secured party (lender) to protect secured party’s rights in collateral

Question 13

perfection

Answer 13

series of steps secured party must make to protect its rights to the collateral against others

Question 14

financing statement

Answer 14

document that the secured party files that gives notice to general public that there is a security interest in the collateral

Question 15

recording

Answer 15

refers to the secured party having the security agreement or financing statement registered or filed with the court

Question 16

default

Answer 16

situation in which the debtor fails to pay or abide by any term of the security agreement

Question 17

repossession

Answer 17

when debtor is in default, secured party has the right to take the collateral

Question 18

personal property that can be used as collateral

Answer 18

stock certificates, checks, titles (for a car or boat), accounts receivable, tort claims, software, other goods (consumer goods, farm products, inventory)

Question 19

Requirements for a lender or party to attach a security interest

Answer 19

1. there must be a security agreement
2. the debtor has authenticated the agreement OR lender has possession of collateral
3. secured party has given value to obtain agreement
4. debtor has rights in the collateral

Question 20

a security agreement must include

Answer 20

name of the parties, collateral involved with specificity (serial number, etc), price, monthly payments, interest rate, grant security interest to seller, provide repossession for breach

Question 21

if debtor signs agreement, ______. if not, lender _______

Answer 21

he authenticates, he possesses

Question 22

ordinarily debtor has purchased collateral, so

Answer 22

they have rights to it

Question 23

attachment means that

Answer 23

the secured party will have remedies (primarily repossession) against debtor
- essentially attachment gives rights against debtor

Question 24

in order to put yourself in the best position against others, you want to

Answer 24

perfect a security interest

Question 25

perfection

Answer 25

involves taking certain actions/giving notice to others who may potentially acquire an interest in collateral