Sec Interest

Question 1

To have an “attached”, enforceable security interest between the contracting parties requires three elements: _____

Answer 1

CAR:
C – (UCC 9-203) The creditor must give CONSIDERATION (value) e.g. sell on credit
or make a loan to the debtor or a binding contract to do so which is sufficient
consideration;
A – The debtor must AUTHENTICATE the security agreement either by taking
possession of the collateral, or by executing a security agreement or other writing
specifically describing the collateral; and
R – The debtor must have RIGHTS to the collateral. UCC §9-203. E.g., goods that
have been delivered to a debtor, but ordered or undelivered goods do not give the debtor rights to such goods.

Question 2

“Perfection” establishes a creditor’s priority over other creditors in the debtor’s described collateral. A creditor perfects by: _____

Answer 2

F-TIP:
F – Filing a FINANCING STATEMENT
T – Noting the lien on the document of TITLE;
I – For INVESTMENT Properties, by taking control;
P – POSSESSORY security interest

Question 3

A creditor’s security interest can attach to three (3) different types of ____ personal property:

Answer 3

PIG
P – Commercial PAPER, such as negotiable notes, a chattel lease note, corporate or government bonds, or corporate shares of stock.
I – INTANGIBLE PROPERTY such as patent rights, domain names, contract rights (e.g. a breach of contract claim), a commercial tort claim, bank accounts, stock brokerage accounts or accounts receivable (e.g. a hospital or doctor’s healthcare insurance receivables, a merchant’s account receivables from credit card companies) are all perfected by filing a financing statement with the secretary of state.
G – GOODS which have five mutually exclusive categories, i.e., the secured goods can only fit into one of the following FIFE-C categories.

Question 4

“Goods” have five mutually exclusive categories: _____

Answer 4

FIFE C:
F – FIXTURES which are goods attached to realty.
I – INVENTORY held for sale or lease as well as the raw materials used to make
inventory.
F – FARM PRODUCTS
E – EQUIPMENT used in a business
C – CONSUMER GOODS used for personal, family, or household purposes.