Secured Transaction

Question 1

UCC Article 9

Answer 1

Article 9 of the Ucc applies when a creditor retains a security interest in a debtors personal property or fixtures.

Question 2

Security Interest

Answer 2

A security interest occurs when the debtor uses collateral to secure a loan from a creditor who has the ability to foreclose on the collateral and sell the property to satisfy the debt.

Question 3

Lease

Answer 3

A transaction will be considered a security interest as opposed to a lease if the rental obligation is not terminable by the lessee and at the end of the lease, the lessee has an option to purchase the goods for no or nominal consideration.

Question 4

Collateral

Answer 4

Collateral refers to the property in which the security interest is created. It also extends to the proceeds that can be identified from the property. The collateral could be goods, consumer goods, inventory, equipment, accounts, and proceeds from the collateral.

Question 5

• Goods

Answer 5

Goods refers to all the moveable property that is available when the security interest attaches

Question 6

• Consumer Goods:

Answer 6

Consumer goods refers to the property that is mainly for personal, family, or household use

Question 7

• Inventory:

Answer 7

Inventory includes the goods that an individual has for sale or lease.

Question 8

• Accounts:

Answer 8

A security interest in a debtor’s account gives the creditor the right to possess any property that has been or yet to be paid. The creditor can also receive payment directly from the person who owns debtor.

Question 9

• Equipment

Answer 9

goods that are used or bought for the use of a business.

Question 10

• After acquired property clause

Answer 10

A security interest that not only on the present property butt also in property that the person will obtain in the future.

Question 11

• Proceeds of the collateral

Answer 11

Whatever is received upon the sale, exchange, collection, or other disposition of collateral or proceeds.

Question 12

Attachment:

Answer 12

Under Article 9, attachment occurs when there is a valid security agreement, the debtor has more than mere possession of the collateral, and the creditor extends value for the collateral.

Question 13

Security agreement

Answer 13

A valid SA requires a document signed by the debtor, which identifies the SP and the debtor, and sufficiently describes the collateral

Question 14

• Buyer in the ordinary course

Answer 14

when a person buys a good from a person, without knowledge of another person’s interest in the good, from a person who regularly sell these goods and the sale was in the ordinary course of business.

Question 15

Perfection:

Answer 15

Generally, there are three different methods in which a security interest may be perfected: 1. Filing of a financing statement or security agreement with the state; 2. Taking possession of the items, 3. Control

Question 16

Priority

Answer 16

Generally, a perfected security interest has priority over a conflicting unperfected security interest in the same collateral

Question 17

Fixture

Answer 17

goods that have become so related to real property that an interest in them arises under real property.

Question 18

• Fixture filing

Answer 18

In order to perfect a fixture, a fixture filing must be made in the office where a mortgage on the real estate would be filed.

Question 19

PMSI:

Answer 19

In some situations, a security interest is automatically perfected upon attachment. The most common is a PMSI in consumer goods.

Question 20

Accessions

Answer 20

Accessions are goods that are physically united with other goods in such a manner that the identity of the original goods are not lost.

Question 21

Repossession

Answer 21

After default, a secured party may: 1) take possession; and 2) without removal, render equipment unusable and dispose of collateral on a debtor’s premises.

Question 22

Rights of account debtors:

Answer 22

A secured party has the right to collect a debt directly from account debtor. - Once the account debtor receives notification of an assignment, the debtor can no longer discharge by payments to assignor (the original creditor).