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Secured Transactions > Prototypical Secured Transactions > Flashcards

Prototypical Secured Transactions Flashcards

1
Q

Benefits of Personal Guarantees

A

guarantor can pay the debts that the debtor fails to pay. Ensures lender will have cooperation of owners of businesses because either way they are on the hook

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2
Q

You are ‘out of trust’ if you are

A

lying about the status of collateral

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3
Q

Perfection

A

an action that varies based on type of collateral that legally gives world notice of party’s interest in collateral

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4
Q

Priority

A

legal conclusion that a particular claim to collateral is better than others

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5
Q

FS requirements for effective FS

A

name of debtor (cannot be seriously misleading), secured party name, indication of collateral (can be supergeneric)

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6
Q

Where do you file a FS

A

SOS UCC filing system

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7
Q

Who can file a FS

A

authorized parties only - if DR authorizes SA, cr has authority to automatically file. Otherwise, dr is the authorizing party

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8
Q

Possession (mandatory and permissible)

A

Mandatory for money. Permissible for documentary collateral/tangible property

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9
Q

Control (mandatory and permissible)

A

Mandatory for deposit accounts. Permissible for investment property

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10
Q

Control rules for deposit accounts

A

secured party is the bank with the account, secured party and dr enter into control agreement, or add secured party to bank account as co-holder

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11
Q

Control rules for certificated and direct investments

A

dr must deliver certificate to cr and endorsement or cr name goes on certificate

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12
Q

Control rules for uncertificated and direct investments

A

deliver/re-register name on the books for the security

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13
Q

Control rules for indirectly owned investments

A

If broker is secured party, automatic control. Create a control ag bw broker, secured party, debtor. Or list secured party on broker’s account.

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14
Q

Automatic Perfection

A

PMSI - the loan that the SI secures must be used to buy the collateral

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15
Q

Perfection outside of the UCC (mandatory, permissible)

A

Mandatory for cars and planes. Permissible for IP filing.

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16
Q

3 items required for filing to be accepted by filing office

A

secured cr mailing address, debtor mailing address, indication of whether dr is individual or organization

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17
Q

If the FS requirements are incorrect, what happens?

A

No matter what it is ineffective.

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18
Q

If the FS requirements and filing office requirements are accurate, what happens if it is accepted?

A

Fully effective

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19
Q

If the FS requirements and filing office requirements are accurate, what happens if it is denied?

A

considered filed and effective against lien creditors, but not secured parties and purchasers with reliance

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20
Q

If the secured cr address is wrong and it is accepted by FO

A

Fully effective

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21
Q

If the secured cr address is wrong and it is denied by FO

A

Ineffective, it was wrong and not filed

22
Q

If the debtor info (debtor mailing address, indication of whether dr is individual or organization) is incorrect and accepted, what happens?

A

effective for lien creditors, but not secured party and purchasers with reliance

23
Q

If the debtor info (debtor mailing address, indication of whether dr is individual or organization) is incorrect and denied, what happens?

A

ineffective, it was wrong and not filed

24
Q

How can you perfect goods

A

filing or possession

25
Q

How can you perfect chattel paper, tangible

A

filing or possession

26
Q

How can you perfect instruments

A

Filing or possession (possession preferred)

27
Q

How can you perfect deposit accounts

A

control

28
Q

How can you perfect electronic chattel paper

A

filing or control

29
Q

How can you perfect money

A

possession

30
Q

How can you perfect certificated security

A

filing or possession or control (control preferred)

31
Q

How can you perfect uncertificated security

A

Filing or control (control preferred)

32
Q

How can you perfect general intangibles

A

Filing

33
Q

What are the ways to perfect SI in fixtures?

A

Filing a UCC FS or a Fixture Filing or PMSI

34
Q

Fixture filing requirements

A

name of debtor (cannot be seriously misleading), secured party name, indication of collateral (can be super generic), state that it covers fixtures, describe RE, name of who owns RE. File with land records

35
Q

Fixture PMSI requirements

A

cr has to perfect SI before fixture becomes affixed or within 20 days after being affixed (cannot defeat construction PMSI though)

36
Q

Does the RE recording system ever delete documents?

A

No, only adds them

37
Q

Does the UCC system allow documents to be removed? How?

A

Yes - There is automatic termination at 5 years, and 1 year after this it must be destroyed. You can also file a termination statement or amend the initial FS

38
Q

What happens to priority when lapse occurs?

A

you are treated as though you were never perfected, but you still have perfection against lien creditors who filed after you. The collateral is still attached.

39
Q

When do you have to file a continuation statement?

A

During the last 6 months if you want to prevent lapse.

40
Q

If a secured party files a continuance rather than an entirely new FS, what happens to their priority?

A

This is the only way to keep their initial priority.

41
Q

What happens if a dr changes their name and the FS is now seriously misleading?

A

FS is effective as to existing collateral and any new collateral for next 4 months. FS isnt effective for collateral after 4 months. If cr files amendment within 4 month window, they keep priority.

42
Q

What happens if a new debtor is substituted for the other debtor?

A

New dr is bound by SA and original FS is good to perfect SI. If new debtor has name that makes FS seriously misleading, apply 4 month rule. Secured CR needs to file an entirely new FS to keep priority.

43
Q

Type 1 Changes affecting description of collateral

A

changes in use of collateral, dont make the FS seriously misleading

44
Q

Type 2 Changes affecting description of collateral

A

changes in the way the collateral needs to be perfected, secured cr becomes unperfected

45
Q

Type 0 changes in barters

A

The proceeds recd by dr fall within description already filed. SI is still perfected.

46
Q

Type 1 changes in barters

A

exchanging collateral for noncash proceeds and those proceeds arent covered by description in FS but doesnt change perfection method. SI is still perfected, no action.

47
Q

Type 2 changes in barters

A

Exchanging collateral for noncash proceeds and the proceeds required a different perfection method. Sec Cr has to file new FS in 20 days from time DR receives possession

48
Q

Collateral to cash proceeds

A

continuous and perpetual perfection in identifiable cash proceeds

49
Q

Collateral to cash to noncash - type 0

A

SI still perfected no action necessary

50
Q

Collateral to cash to noncash - type 1

A

Sec Cr has to file new FS in 20 days from time DR receives possession

51
Q

Collateral to cash to noncash - type 2

A

Sec Cr has to file new FS in 20 days from time DR receives possession

52
Q

When the debtor changes location, what does the SC have to do to maintain perfection?

A

they have 4 months to perfect a new SI in the new location. If they file after 4 months, they are deemed always unperfected against all but lien cr. If they never fix it, they are deemed unperfected against all

Secured Transactions (5 decks)

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