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NY Sec Trans/Comm Paper > NY UCC Art 9 > Flashcards

NY UCC Art 9 Flashcards

1
Q

Creditor attains perfection by?

A

placing the world on record notice of its existence (RECORD or CONSTRUCTIVE NOTICE)

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2
Q

Perfection priority based on?

A

1st in time to perfect, 1st in right

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3
Q

In event of default, Art 9 has?

A

Statutory and judicial remedies

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4
Q

Scope of NY UCC Art 9?

A

Consensual security interests in personalty and fixtures

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5
Q

If collateral is R/E apply? IF collateral is personalty or fixtures apply?

A

R/E = apply law of mortgages. Apply NY UCC Art. 9 for personalty or fixtures ON THE NY STATE SECTION.

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6
Q

Def of personalty?

A

Goods

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7
Q

Does UCC Art 9 apply to statutory or mechanics liens?

A

No, only to CONSENSUAL COLLATERALIZATIONS.

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8
Q

Test for classifying tangible collateral?

A

Primary use in the hands of the debtor (and NOT R/E).

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9
Q

Three reqs for attachment of security interest (making it enforceable): VCR

A
  1. VALUE given by creditor
  2. CONTRACT signed by debtor identifying security interest and collateral (unless secured party is in possession)
  3. RIGHTS in collateral belong to debtor
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10
Q

Three ways to attain perfection:

A
  1. secured p takes possession of collateral
  2. perfection is AUTOMATIC for PMSIs in consumer goods (purch money sec int)
  3. Secured party files notice in public records = constructive notice. File UCC-1 with SOS. NB: File in county not SOS for timber, minerals or fixtures.
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11
Q

Creditor order of priority (1-6)

A

(1) Buyer in Ordinary Course [BIOC]
(2) Perfected Attached Creditor [PAC]
(3) Lien Creditor [LC]
(4) Non-Ordinary Course Buyer [NOCie]
(5) Attached Unperfected Creditor [AUPie]
(6) General Unsecured Creditor [GUC]

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12
Q

PMSI means?

A

Purch money sec int: A security interest that enables the debtor to purchase the goods. UCC favorite—gets priority over  AACF = A secured creditor who takes as collateral a security interest “in all of Debtor’s [business equipment, inventory, etc.], whether now held or hereafter acquired.” Floating lien.

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13
Q

Is “default” defined in Art. 9?

A

No, it’s in the K.

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14
Q

Is self-help repo by secured creditor allowed? EXCEPTION?

A

Yes, but cannot breach the peace. CANNOT PROVOKE or impersonate the law (or misuse the color of law). EXCEPTION: Cannot repossess collateral in a debtors HOME unless you get voluntary consent at the time.

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15
Q

What is writ of replevin?

A

Secured party gets jud writ for sheriff to obtain collateral

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16
Q

Strict foreclosure def?

A

Sec party retains collateral in full satisfaction of debt.

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17
Q

How does secured party strictly foreclose on consumer goods?

A
  1. written proposal to retain collateral in satisfaction of debt - send to debtor and any guarantor.
  2. If ANY notified party objects w/in 20 days (no reason reqd), strict foreclosure NOT allowed and collateral must then be sold.
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18
Q

Reqs for sale of collateral?

A

Must be COMMERCIALLY REASONABLE, with notice sent to: debtor and Guarantors (for consumer goods). When not consumer goods, notice to debtor, other sec parties who’ve informed sec party, perfected creditors, and Guarantors.

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19
Q

Public sale of collateral requires what info in notice? May secured party buy at the sale?

A

Time and place of sale. Secured party may buy.

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20
Q

Private sale of collateral requires what info in notice? May secured party buy at sale?

A

Notice must state time AFTER WHICH sale will be made. Absent external market checks, secured party may NOT buy collateral.

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21
Q

Notice of sale of collateral in nonconsumer transaction is reasonable if sent in what time?

A

At least 10 days in advance.

22
Q

When/how do you pursue action for deficiency judgment?

A

After collateral is sold and there’s still outstanding debt balance, secured party may sue for deficiency judgment.

23
Q

Debtors right of redemption of collateral normally? With acceleration clause in contract?

A

Normally debtor must pay what’s owed + creditor’s reasonable expenses (incl attorney’s fees). If security agreement has acceleration clause, debtor must pay off ENTIRE DEBT to redeem + interest and expeses.

24
Q

When is debtor’s right to redeem collateral cut off? 2 situations.

A

Once secured party has either (1) completed strict foreclosure or (2) resold collateral.

25
Q

What is the connection between a financing statement and attachment?

A

Nothing! If financing statement is necessary for perfection, nonattachment. Attachment only requires VCR: value given by creditor, contract between the parties, rights of the debtor in collateral.

26
Q

For attachment, you must have VCR:

A

VCR: value given by creditor, contract between the parties, rights of the debtor in collateral.

27
Q

What must the secured creditor due to strictly foreclose on on consumer goods?

A
  1. written proposal to retain collateral in satisfaction of debt - send to debtor, other secured parties of collateral, perfected creditors, and Guarantors.
  2. If ANY notified party objects w/in 20 days (no reason reqd), strict foreclosure NOT allowed and collateral must then be sold.
28
Q

What is the definition of consumer goods?

A

Items used for personal or familial purposes

29
Q

What is the definition of equipment?

A

Items used in business

30
Q

What is the definition of inventory?

A

Goods held for sale or lease

31
Q

What is the definition of farm products?

A

Crops, livestock and supplies used in farming

32
Q

What is the definition of fixtures

A

Items annexed to Realty, like lighting fixtures, sprinkler systems, furnaces

33
Q

What are intangibles and semi-tangibles that can service collateral? Give examples.

A

Intellectual property, stocks, bonds, mutual funds, accounts (bank accounts, investment accounts, etc.), proceeds (such as accounts receivable), notes, and drafts.

34
Q

Attachment means of the security interest is___

A

Enforceable.

35
Q

What is required of a contract that is a security agreement? (2 requirements)

A
  1. It must be signed (authenticated), and

2. It must REASONABLY IDENTIFY COLLATERAL

36
Q

Was a floating lien? Is enforceable?

A

A floating lien is also known as an “after acquired collateral clause” – they are enforceable.

37
Q

Perfection is best understood as___

A

Publicity! It puts the world on record and constructive notice

38
Q

If you take possession you need to file something to attain perfection? If you want someone’s money to make a purchase and take a security interest in the item purchased, you need to file something to attain perfection?

A

No PMSIs and possession both have automatic perfection.

39
Q

What did degree of description is required for a UCC 1? What is a UCC 1?

A

It simply identifies the secured goods. It is a financing statement stating the debtor’s name and address, the creditor’s name and address, and a description of the collateral

40
Q

Where is a financing statement filed? (Not for minerals, timber, fixtures)

A

It is filed with the secretary of the state in the STATE OF INCORPORATION (or formation)

41
Q

What is a BIOC? What is a PAC?

A

A BIOC is a buyer in the ordinary course. He has top priority.
A PAC is a perfected, attached creditor: he is ahead of everyone except a preceding PAC, certain PMSI holders, and the BIOC

42
Q

What is an LC? What is a NOIC?

A

A lien creditor. He comes in behind PACs and BIOCs.

A non-ordinary course buyer, behind LCs, PACs, and BIOCs.

43
Q

What is an AUP? What is a GUC?

A

AUP is attached, unperfected creditor (behind NOICs, LCs, PACs, and BIOCs)
GUC = gen unsec cred = dead last

44
Q

For purposes of article 9, may you file at the onset of negotiations for a loan? If so, is there a relation back to that date if you eventually complete the negotiation?

A

Yes, for example if I start negotiations on February 1 and file my interest, even if negotiations don’t conclude until June, my date of priority will go back to February 1. RELATION BACK

45
Q

For a PMSI-holder in equipment, how long do you have to file before a floating lienholder takes priority?

A

For equipment, 20 days from the date of possession by the borrower

46
Q

When the collateral is inventory, when must a PMSI-holder file their interest in order to take priority over a floating lien?

A

For inventory, you must file before the debtor takes possession and notify the senior floating lienholder

47
Q

With self-help repossession in the case of default, you must not breach the peace. Even if a fight does not actually break out, you have breach the peace if?

A

If you did something provocative or likely to cause violence. ANY PROTEST by the debtor, however mild, constitute a breach of the peace. Also, if you use the color of law (pretending to be a cop) you are taking it by constructive force and have breach the peace.

48
Q

What is the 60% rule for consumer goods?

A

If collateral and consumer goods has been paid 60%, strict foreclosure is not allowed. Instead, the secured party must sell the collateral within 90 days

49
Q

Chronologically, what happens 1st attachment or perfection?

A

Attachment must be before or simultaneous with perfection.

50
Q

____ can satisfy the requirements for attachment and perfection.

A

Possession. It may be the last thing needed for attachment, an attachment plus possession equals perfection

NY Sec Trans/Comm Paper (2 decks)

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