secured T

Question 1

general

Answer 1

Art. 9 Secured Transaction Blurb:
Because ______ gave a loan secured by something other than real estate, the rights of
_____ will be governed by Article 9 of the Uniform Commercial Code, Secured
Transactions, as there is a Financing Agreement secured by the collateral of the ______
(personal property, fixtures, accounts, etc.)
Attachment Blurb:
Under Article 9 of the Uniform Commercial Code, Secured Transactions law, an
Attachment of the security interest requires 1) and agreement (financing agreement)
between the parties 2) Value given, and 3 the Debtor retains rights in the collateral.
Security Agreement:
Under Article 9 of the Uniform Commercial Code a valid security agreement must be 1)
signed by both the creditor and the buyer, 2) contain a description of the collateral, and
3) specify the intent to create a the security interest.
Perfection Blurb:
Under Article 9 of the Uniform Commercial Code, Secured Transactions law
________ must also Perfect their interest, then their rights will be protected, under
UCC Art 9. Perfection may be by a) filing the security agreement at the secretary of
state’s office (or proper state agency) b) possession of the collateral, c) automatic for a
PMSI in consumer good and d) temporary perfection for 20 days commencing with the
collateral is delivered to the debtor for PMSI in non-consumer goods.
Priority
General Rule – Perfected over unperfected, if both are perfected, usually first to file first
in right, if not perfected first to attach.
Exception
PMSI – consumer goods sold on credit

“Because ______ gave a loan secured by something other than real estate, the rights of
_____ will be governed by UCC Art 9, Secured Transactions, as there is a Financing
Agreement secured by the collateral of the ______ (personal property, fixtures,
accounts, etc.)
If there was Attachment of the security interest, that is 1) and agreement 2) Value given,
and 3 the Debtor has rights in the collateral. “________ must also Perfect their interest, then their rights will be protected, under UCC Art 9. Perfection may be by a) filing b)
possession of the collateral or c) automatic for a PMSI.”

Question 2

my outline

Answer 2

Attachment, perfection & priority

1.attachment=debtor authenticate security agreement(sign) and creditor gives value (credit/money) & debtor has rights in collateral (ownership/control/possession) signed a security agreement & took further actions
Security agreement, cc &value d rights/possession

2.perfection=possession or filing authorized financing statement describing the item, name and mailing address of both parties(seller and debtor), description of collateral , filed in appropriate public office (is secretary office unless real estate)

TIP: EXPCEPTION TO ATTACHMENT and PERfeCTION
1. ( only PMSI in Collateral items automatic attach and dont need perfection steps) equipment has up until 20 days.
2. name cant be ineffective if misleading …if corp name on statement must be the same as name on public record with state cant be a trade nameUNLESS a search would still bring up debtors financing statement the not misleading
there’s a valid statement and filed it

3. Priority(who attached and perfected first before the debtor defaults to one of the creditors )= the right to the foreclosure process begins and creditor must give notice to the other creditors or their rights cant be extingished
4. ESCAPE Sellers CREDITOR GETTING POSSESSION OF A ITEM
   *a buyer usually take goods subject to all security interest in the item (from seller and seller’s creditors) unless:
   - buyer is a Bioc that don’t know of sellers security interest/loan to another person who violated a security agreement-.

-The bioc (buyers in the ordinary course of business), must have taken a loan out on a item in the store that is in the sellers ordinary course of business
if all is satisfied, the buyer will not be subject to the sellers loan/security interest to who ever seller got a loan from UNLESS buyer had notice (actual, contructive or implied) of the security interest (financial statement)
Ie. a buyer who takes possession of a item from a store or person selling a item and don’t know that the item has a security interest on it …. dont have to give the item up to the sellers loan person that the seller owe a loan to ….The rights also transfer to the next person they give the item to that dont know of the security interest on the item.

5. action sales
   a buyer who buys an item from the auction sale after the secured party sales the collateral from debtor default (ie. Item is sold at the auction all creditors with security interests/agreements that are not senior (pmsi aka morgages) are estingished and cant come after you.

• buyer can also be the debtor who buys the item at the auction unless the debtor has bad faith
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A. Perfection in items
Debtor signed a security agreement and have possession
(don’t matter for automatic perfections
- pmsi’s, and consumer goods auto (pmsi in equipment has up to 20 days to get possession to be perfected)
-cars must be on title
-A small scale assignment of an account or payment intangible (that’s not a part of the account)

-ACCOUNTS
dont have rights in accounts unless
UNLESS::
-give the secured party control over the account (must have the account at the creditors bank or put your account in the secured party name and on record that debtor will comply with the secured party orders regarding the account without further consent from the debtor.
(would see this when creditor say interest in… ie inventory or after aquired items etc)

For what use/ what category?
* Collateral is categorized on the primary use to which the debtor puts it at the time of attachment (dont matter what debt use it for after)
-Consumer good- for home use, personal family …It’s a good for personal use
-Equipment- things used for business to run
-inventory- goods held for sale or used to make things for sale, or lease for business to sell and profit (ie. Installment k’s or item for sell in store)
-farm products live stock …
(pmsi in equipment has up to 20 days to get possession to be perfected)

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Who is subject to security interests
creditor who put After acquired- have priority over other creditors to any items buyer gets after their loan However, that creditor must have perfecteed …because If another creditor perfect in the accession them …they arre not priority in the after acquired thing….CANT BE PRIORITY in afteracquired things to a creditor who have pmsi

Accessions-goods physically united with other goods so identity is not lost ..only have interest in the accession UNLESS the accession is joined to a whole and the whole has a security interest….then that whole interest takes over the accession interest

Leasing agreements aka installment contracts- are not governed by art9 ucc rules(attachment and perfection rules)unless really is a security interest. to be a security interest creditor must attempt to keep title until paid in full such as 1) the rental obligation is not terminable, 2) lesser can recover if leaser fails to pay 3) leaser have an option to buy the item at the end of the lease for no or nominal consideration.

-Co Signment (co signor is debtor)
Co signee- is shop
Co signment- considered inventory if the item is something the consignee(merchant) normally sell (sioc) which would then allow co signees creditors allowed to take. make them subject to ART. 9
EXCEPTION - cosignor (buyer) goods do not become co signees creditor’s because protected by ART 9 if cosignor;
- Cosigned goods are worth 1,000 or more
- Co signor did not use goods for personal, family, or household purposes
- Consignee/merchant=
- Deals with goods of that kind and
- Is not an auctioneer and
- Is not generally known by creditors to be substantially engaged in selling goods of others

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Priority
-Pmsi’s
-Account holders on deposit/demand accounts
-Perfected security interests filed first over judgement liens filed after
-order of financial statement/perfection filed
*priority **
-Perfected vs un perfected
-Pmsi over over a perfected seller on after acquired
*Equips that became a pmsi right away or within 20days
-Perfected in whole over accession (acession lost their identity)

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Debtors rights, remedies and liability
-was the secured party actions after default proper ucc art 9

-Reposs: creditor has a right to repo if 1) first, attachment and perfection is correctly done 2) debtor defaults 3)repo process must not disturb the peace (can be self help)

Disturb the peace: debtor protest (original debtor not anyone else) with more than just words… physical action too *say possibly *

-Waiver of redemption in agreement not proper: debtor has a right to redeem after default ..the right can only be waived after the default not before even if debtor signed a agreement …however creditor can deny payment if not total amount

-acceleration clauses in agreement are proper (creditor can collect total balance due) so if debtor offers to pay only the missed payments creditor can deny and ask for the entire amount

-liability- creditor can be liable for any damages debtor suffered by creditors reprossion if creditor violated any of the Art 9 rules. However, creditor can use a defense and show that debtor may have caused it’s damages because didn’t do something is was obligated to do like mitigate damages.

-Mitagate damages -debtor has a responsibility to try to avoid whatever harm it will suffer ie. Bid at the auction sale if clearly have the money.

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Proceeds of sale
use to be first in time, first in right now…
1. have to pay Expenses of the action sale, lawyers, fees
2.then it’s by priority. senior,
Junior interests HOWEVER once secure party sales the collateral after debtor default (ie. Item is sold at the auction all other creditors interests/agreements are done. dont matter if debtor buys the item at the auction unless the debtor has bad faith ……
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