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Secured Transactions > Perfection > Flashcards

Perfection Flashcards

1
Q

What are the ways an SI can be perfected?

A
  1. Filing a financing statement
  2. Possession
  3. Control
  4. Automatic perfection
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2
Q

What is the purpose of a filing statement?

A

Gives interested parties notice of the existence of the SI, and perfects

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3
Q

What security interests cannot be perfected by a financing statement?

A

Deposit accounts, money, or letter-of-credit rights

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4
Q

What is necessary for a valid financing statement?

A
  1. Proper filing with essential elements

2. Authorization by the debtor

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5
Q

If collateral relates to real property, what must you also show?

A
  1. SA covers this collateral
  2. Note that it will be filed in record office
  3. Describe the related real property
  4. Name record owner of real property, if not debtor
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6
Q

What should you, but need not, include in a filing?

A

Address for both parties and indicate whether the debtor is an individual or a corporation

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7
Q

What essential elements are required for a properly filed financing statement?

A
  1. Name of debtor
  2. Name of the secured party
  3. Description of the collateral
  4. Correct filing office
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8
Q

When is a filing statement authorized?

A

Authentication of an SA automatically authorizes the financing statement, otherwise with a signature

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9
Q

If someone fails to authorize a filing statement, what can happen?

A

The secured party may be liable in actual or statutory damages

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10
Q

When do errors in a filing statement prevent perfection?

A

Only when they are seriously misleading.

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11
Q

When is an error in a debtor’s name not seriously misleading?

A

When a search would uncover the error

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12
Q

When does a financing statement lapse and render the SI unperfected?

A

After five years, or when a termination statement ends the financing statement

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13
Q

Can a debtor’s trade name be used in the filing statement?

A

It is insufficient by itself

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14
Q

Who can file a financing statement?

A

Anyone

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15
Q

For collateral related to real property, where must a financing statement be filed?

A

The recorder’s office

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16
Q

For collateral that is not related to real property, where must it be filed?

A

The secretary of state of the state of the debtor’s location

17
Q

Where is the debtor’s location?

A
  1. Individual = principal residence
  2. Nonregistered org (P) - place of biz; if more than one, CEO
  3. Registered org - incorporation
18
Q

What is the effective date of filing?

A

Upon delivery to the filing office and tender of the filing fee

19
Q

If the filing office refuses to accept, what happens?

A

If justified, it is treated as having not been filed

If unjustified, it is treated as having been filed, and is effective except against subsequent purchasers who rely on the absence of the record

20
Q

Does a continuation statement require the debtor’s signature?

A

No

21
Q

If a filing office indexes the statement incorrectly, does it affect the effectiveness of the statement?

A

No

22
Q

What is the effective date of an amendment to a financing statement?

A

From the date of filing

23
Q

Does an amendment to a financing statement extend the period of effectiveness?

A

No

24
Q

What is the only method of perfect for a deposit account?

A

Control

25
Q

How are PMSI in consumer goods perfected?

A

Automatically upon attachment.

Note: other PMSIs require financing statements

26
Q

If the debtor’s legal name changes and becomes seriously misleading, how long does the secured party have to file an amendment?

A

4 months

27
Q

If a debtor moves out of state, for how long will a financing statement remain perfected?

A

4 months

28
Q

If a debtor moves out of state, how can the secured party stay continuously perfected?

A

Refile in the new state within the four month window

29
Q

If the debtor moves out of state with the collateral, must the secured party refile?

A

No

30
Q

If the collateral moves to a debtor in another state, how long does the secured party have to refile?

A

One year

31
Q

What is the effect of a lapse on perfection?

A

It ceases to be perfected

32
Q

When are proceeds perfected?

A

If the SI in the original collateral was perfected, the proceeds perfect for 20 days from attachment.

If the FS was broad enough to cover proceeds, they are perfected indefinitely

33
Q

What is the Cash Proceeds Rule?

A

Perfection continues if cash proceeds are identifiable

34
Q

What is the Same Office Rule?

A

A perfected SI continues as to proceeds when:

(1) the FS covers the original collateral,
(2) the proceeds are collateral that would be filed in the same office, and
(3) proceeds are not acquired with cash proceeds

35
Q

When can a transferee take collateral free of a security interest?

A
  1. Consumer buyer, or

2. Buyer in the ordinary course of business (BOCB)

Secured Transactions (5 decks)

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