R7-M6 Secured Transactions Flashcards
1
Q
what conditions does purchased money security interest (PMSI) creditor exist?
A
- the creditor sells the collateral on credit, retaining a security interest. ex: I buy an item on credit from a store and sign an agreement. that gives the store a security interest in the item.
- the creditor advanced funds used by the debtor to purchase the collateral. ex: I go to the bank to borrow money to buy a specific item and sign an agreement. this gives the bank a security
- there is no PMSI if I want to borrow money from a bank and give the bank a security interest in item I already own
2
Q
what create an attachment of the security interest for creditor?
A
- agreement: writing of any kind or oral if the secured party takes possession of the collateral (pledge)
- lend money/sell on credit
- debtor has rights to collateral (pass)
3
Q
what transactions are not in scope of article 9 as secured transactions?
A
interest in land (mortgages), wages claims, statutory liens (mechanic’s liens), and sale of chattel paper as part of sale of a business out of which it arose
4
Q
what are the 5 methods the creditors can do to protect themselves from 3rd parties or maximum priority?
A
- filing: a financing statement
- taking possession of the collateral: only tangible
- control: investment property such as securities
- automatic perfection: consumer goods/personal use property. other goods must be filed to be valid
- temporary perfection:
+ creditors have 20 days of the new item as collateral is I sold the old item was used as collateral
+ creditors have 4 months to perfect in the new state if debtors take the collateral and moved to new state from old state.
5
Q
what is a financing statement generally must contain?
A
- name and mailing address of the debtor and secured party
- indication of type of collateral such as description of real property if used as collateral or debtor’s inventory and equipment
- debtor’s authentication (signature)
