Secured Transaction Flashcards
purchase money security interest (PMSI)
seller-financed: creditor sells the goods to debtor on credit and takes a security interest on the goods
lender-financed: creditor advances funds for the purchase of certain goods, goods are actually purchased with funds, and lender takes security interest on the goods
Types of collateral
Accounts; inventory; equipment; consumer good
Accounts
A right to payment of a monetary obligation (ex. account receivables)
Inventory
Goods held for sale/lease; raw materials
equipment
goods other than inventory, farm product or consumer good; catch-all classification
consumer good
goods purchased primarily for personal, family, or household purposes
attachment of security interest
(1) value given by secured party (2) rights to the collateral (3) either a) security agreement b) possession of collateral c) control
Security agreement requirement
(1) a reasonable description of collateral obtaining security interest in (2) signed by debtor
After-acquired property
security interest attaches to after acquired property if agreement says so, or if it’s revolving inventory
General perfection method
attachment + filing financing statement with secretary of state OR taking possession/control of collateral
finance statement requirement
(1) name & address of debtor (2) name and address of secured party (3) description of collateral - good for 5 years, must be refiled within 6 months preceding expiration
Automatic perfection
PMSI in consumer goods
Priority of Perfected interest vs unperfected interest
perfected interest has priority over conflicting unperfected interest
priority of unperfected interest vs unperfected interest
the first to attach will prevail
priority of perfected interest vs perfected interest
first to file or perfect (whichever comes first)
