MEE - Secured Transactions

Question 1

Which article of the UCC governs security interests and provide the rules of priorities?

Answer 1

Article 9 of UCC

Question 2

Attachment in a Security interest:

Answer 2

Attachment gives the creditor Rights against the debtor in the collateral.
To attach a security interest:
1. Either:
-Debtor must authenticate a Security Agreement granting the creditor a SI in collateral that describes the collateral or
-Creditor must take possession or control of the collateral.
2. Creditor must give value
3. Debtor must have rights in the collateral

Question 3

To obtain rights against another claimant to a debtor’s collateral, the creditor must also:

Answer 3

Perfect the security interest.

Question 4

A creditor can perfect its security interest by:

Answer 4

1. filing in the property public office, a financing statement that is authorized by the debtor in an authenticated record OR
2. taking possession

Question 5

A creditor can perfect its security interest by:
1. filing in the property public office, a financing statement that is authorized by the debtor in an authenticated record OR
2. taking possession
PMSI perfection Exception:

Answer 5

A PMSI (purchase money security interest) in CONSUMER GOODS is automatically perfected upon attachment 
(Attachment= authenticated agreement + creditor gives value + of debtor's right on the collateral).

Question 6

A PMSI (purchase money security interest) in Consumer Goods is created when:

Answer 6

1. Creditor
2. Advances credit OR provides the funds needed
3. to make a purchase possible and
4. takes a SI in the goods purchased.

Question 7

Consumer goods are goods that:

Answer 7

are used or bought primarily for personal, family or household purposes.

Question 8

Equipment goods are:

Answer 8

Goods that are NOT consumer goods, inventory or farm products.
Generally, goods used primarily in a business are equipment.

Question 9

If a debtor ask for credit for a good that was going to be use for as consumer goods but after the credit was given it change her mind and uses the product as equipment.
Which intended use will govern?

Answer 9

Debtor’s original intended use of collateral governs the collateral’s classification from the debtor.

Question 10

Priority over:

Perfected SI v. perfected SI

Answer 10

The first secured party to file of perfect has priority

Question 11

Usually, states request perfection over SI in a vehicle by:

Answer 11

notation of the security interest in the title.

So, if is not in the title, the SI would not be considered perfected.

Question 12

Accessions are:

Answer 12

Goods that are physically united with other goods in such a manner that the identity of the original good is not lost.

Question 13

If an accession becomes part of a bigger good that is subject to a SI, who has priority over the whole good? (the bigger good + the accession)

Answer 13

If both perfected;
The SI in the whole has priority over the SI of the accession.
(the SI should notate the big good + any installed accessories)

Question 14

The creditor of a PMSI (any type of good) would have priority over conflicting SI if:

Answer 14

the PMSI is perfected when the debtor received possession of the goods (or within 20 days thereafter)
It will have super priority

Question 15

A Purchase money security interest is created when

Answer 15

1. The creditor sold the good to the debtor on credit retaining a SI in the goods for all or part of the purchase price OR
2. the creditor advanced the funds that are used by the Debtor to buy the goods.