Priorities Flashcards
Who are the 4 different types of claimants?
- Creditors;
- Transferees;
- Buyers; and
- Other secured parties
What are an unsecured creditor’s rights to a claim?
Claim and judgments but no lien or collateral over an SI
What are a transferee’s rights to a claim?
Obtain full title to collateral
What happens in the transfer of the SI in transferee v. secured party with an SI?
Transferee takes SI unless the secured party authorized the transfer free from the SI
What happens in a transfer of the SI in buyer’s rights v. unperfected SI?
Buyer takes collateral free of SI if the buyer gave value and receives delivery without knowledge of the SI
What happens in a transfer of the SI in buyer’s rights v. perfected SI?
Buyer takes collateral subject to the SI
Does a buyer in the ordinary course of business take an SI through transfer?
Not where the buyer:
- buys goods with new value (not farm products);
- in the ordinary course;
- from a seller in the business of selling goods of that kind;
- in good faith; and
- without actual knowledge that the sale violates another’s rights in the goods
How does Michigan view Article 9’s requirement that a buyer in the ordinary course of business doesn’t buy goods that are farm products?
Michigan rejects this view and instead, requires a secured party to:
- make a list of potential buyers;
- notify all buyers of its security interest;
- prohibits buyer from selling to anyone not on the list;
- requires buyer to pay by instrument made payable to debtor AND secured party jointly; and
- provides criminal penalties for failure to comply otherwise.
Does a consumer buyer take free of a transferred SI?
Yes, unless a secured party has filed a financing statement covering the goods
Does the buyer of a negotiable instrument take free of an SI through tansfer?
Yes
Does a buyer without knowledge of a prior SI take goods free of that SI?
Yes
Who has priority in Perfected SI v. Perfected SI?
First to file
Who has priority in Perfected SI v. unperfected SI?
perfected SI
Who has priority in unperfected SI v. unperfected SI?
First to attach
Who has priority in PMSI v. non-PMSI?
PMSI
Who has priority in a SI in fixtures v. real property interest?
SI in fixtures
Who has priority in Perfect SI in fixtures v. subsequent judicial lien?
Perfected SI in fixtures
Who has priority in SI in fixtures v. prior construction mortgage?
Prior construction mortgage if recorded before the goods became fixtures
Who wins in priority concerning proceeds?
First to file or perfect
