Secured Transaction

Question 1

Security Interest exist when

Answer 1

(1) value is given
(2) the debtor has rights in collateral or power to transfer rights,
(3) and the debtor authenticated a security agreement that provides a description of the collateral OR the secured party must have taken possession of the collateral

Question 2

Proper Description of Collateral

Answer 2

An identification of collateral is sufficient when it is identified by a category or a type of collateral defined in the UCC.

A description as “all the debtor’s assets” does not reasonably identify the collateral

Question 3

Perfection of security interest

Answer 3

A security interests in goods is perfected

(1) if it has attached
(2) AND either a financing statement has been filed or the secured party takes possession of the collateral

A security interests attaches when it becomes enforceable

Question 4

Priority

Answer 4

A perfected security interest has priority over an unperfected security interest in the same item of collateral.

Between multiple perfected creditors, the first to file obtains priority.

Question 5

Subject to Judicial Lien

Answer 5

A security interest is effective against creditors. However, an unperfected security interests is subordinate to a judicial lien in the same asset.

Question 6

Purchase Money Security interest in collateral other than inventory

Answer 6

A purchase money security interest in collateral other than inventory has priority over a non-one if
(1) it was perfected when the purchaser received possession of the collateral or within 20 days after.

Question 7

Transaction in the form of a lease

Answer 7

creates a security interest

(1) if the lesee’s obligation to pay is not subject to termination by the lessee AND
(2) the lessee has the option to become the owner of the goods for no additional consideration,