Secured Trans.

Question 1

Buyer v. Perfected Security Interest

Answer 1

As a general rule, the buyer of collateral subject to a perfected security interest takes the collateral subject to the security interest, unless the secured party authorizes the sale free and clear of the security interest

Question 2

Buyer in the Ordinary Course of Business Exception to Buyer v. Perfected Security Interest

Answer 2

BIOCB takes free of a security interest created by the buyer’s seller even if that security interest is perfected and even if the buyer knows of the existence of the security interest if:

the buyer buys goods from a merchant; in the ordinary course of business; the buyer acts in good faith and without actual knowledge that the sale violates the rights of others in the same goods; the merchant is engaged in the business of selling goods of this kind and is not a pawn broker.

Question 3

PMSI Super-Priority in Proceeds

Answer 3

If a PMSI has priority over a competing security interest in INVENTORY, then the priority will only extend to proceeds that are cash down payments for the goods sold.

Question 4

Fixtures v. Real Property Interest

Answer 4

As a general rule, a security interest in fixtures has priority over an interest in the real property with which the fixtures are associated if the security interest in fixtures is perfected by a fixture filing BEFORE THE REAL PROPERTY INTEREST IS RECORDED.

Question 5

Order of Application of Cash Proceeds of a Disposition

Answer 5

Reasonable expenses for collection and enforcement; debt of the foreclosing party; subordinate security interests; surplus to the debtor.

Question 6

Collateral Perfected by Possession

Answer 6

Deposit Accounts
Money
Tangible Chattel Paper

Question 7

Collateral Perfected by Control

Answer 7

Electronic Chattel Paper
Investment Property
Letter of Credit Rights

Question 8

Priority Rules for PMSI

Answer 8

A PMSI in goods other than inventory will prevail over all other security interests in the collateral if the secured party perfects within 20 days of the debtor receiving possession of the collateral.

If there are two or more competing PMSIs, the first to file or perfect rule generally governs priority.

A PMSI in consumer goods takes priority over all other security interests, no matter when they are perfected.

Question 9

Safe Harbors to Determine if Disposition is Commercially Reasonable

Answer 9

The collateral was sold in conformity with the reasonable commercial practices of dealers of that type of collateral.

The collateral was sold at the price current in a recognized market at the time of the disposition.

The collateral was sold in the usual manner on a recognized market.