Secured 2 Flashcards
Attachment
A security interest that is enforceable against the debtor with respect to the collateral is said to have “attached” to the collateral. In order for the security interest to be enforceable against the debtor, three conditions must coexist: (i) value has been given by the secured party, (ii) the debtor has rights in the collateral, and (iii) the debtor has authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral pursuant to a security agreement.
Perfection/PMSI
Perfection of a security interest generally gives the secured party superior rights in the collateral to an unperfected secured party. A security interest is perfected upon attachment of that interest and compliance with one of the methods of perfection. A secured party can perfect a security interest by (i) filing a financing statement, (ii) possessing the collateral, (iii) controlling the collateral, or (iv) automatically perfecting. However, a purchase-money security interest (PMSI) is a special type of security interest that may be accorded special rules with respect to attachment and priority. A PMSI in goods exists when (i) a secured party gives value to the debtor in order to enable the debtor to acquire rights in or use of the goods, and the value given is used for that purpose; or (ii) a secured party sells goods to the debtor and the debtor incurs an obligation to pay the security party all or part of the purchase price. A PMSI in consumer goods is automatically perfected upon attachment; no filing is required.
Perfection
Perfection of a security interest generally gives the secured party superior rights in the collateral to an unperfected secured party. A security interest is perfected upon attachment of that interest and compliance with one of the methods of perfection. There are four ways by which a secured party can perfect a security interest: (i) filing a financing statement, (ii) possessing the collateral, (iii) controlling the collateral, or (iv) automatically perfecting.
BOCB
A buyer in the ordinary course of business (BOCB) takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. A BOCB is a person who buys goods in the ordinary course of business from a merchant who is in the business of selling goods of that kind in good faith and without knowledge that the sale violates the rights of another in the same goods.
Default
Upon default, a secured party is required to use judicial process to obtain possession of the collateral unless possession can be obtained without breach of the peace. The secured party may then sell the collateral or retain the collateral in full or partial satisfaction of the debt. Only full satisfaction applies to consumer goods. In addition, the secured party may pursue any course of action to which the debtor and obligor have agreed.
Priorities
When there are two or more perfected secured parties with rights in the same collateral, the first to file or perfect has priority. A PMSI in goods other than inventory or livestock prevails over all other security interests in the collateral, even if they were previously perfected, if the secured party perfects before or within 20 days after the debtor receives possession of the collateral.
Security interest
an interest in personal property or fixtures which secures payment or performance of an obligation.
Right to repossess
secured party may retake property (repossess it) as a matter of self help and without judicial involvement (so long as there is not a breach of the peace).
Right to sell repossessed property
a secured creditor may sell the repossessed property or retain it in satisfaction of the debt and may do either as a matter of self help (without judicial involvement).
Types of property can have security interest in
Personal property/fixtures;
a sale of accounts, chattel paper, payment intangibles, or promissory notes;
Agricultural lien;
standing timber to be cut and removed;
Goods
Goods” means all things that are moveable when a security interest attaches. The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing or to be grown, even if the crops are produced on trees, vines or bushes, and (v) manufactured homes. The term also includes a computer program
Consumer goods
primarily used for personal, familial, or household purposes
Account =
account” means a right to payment of a monetary obligation
Chattel Paper
Chattel paper” means a record or records that evidence both a monetary obligation and a security interest
Deposit account
Deposit account” means a demand, time, savings, passbook, or similar account maintained with a bank.
