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Secured Transactions > Secured Transaction > Flashcards

Secured Transaction Flashcards

1
Q

Definition of secured transaction

A

Transaction intended to create a security interest in personal property or fixtures.

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2
Q

Debtor

A

Person who owes payment or performance of the obligation secured.

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3
Q

Secured party

A

A lender, seller or other person in whose favor there is a security

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4
Q

Security agreement

A

Agreement between the debtor and the secured party that creates a security interest.

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5
Q

Security interest

A

An interest in personal property or fixtures which secures payment or performance of an obligation.

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6
Q

Collateral

A

Property subject to a security interest.

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7
Q

Purchase money security interest

A

1) security party cells that are collateral on credit and retains a security interest
2) an enabling loan, a loan to a debtor that enables the debtor to buy collateral (Loan proceeds must actually be used to acquire the collateral)

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8
Q

PMSI in non-consumer goods

A

Security interests and non-consumer goods does not lose its status as a purchase money security interest if the purchase money obligation also secures an obligation that is not purchase money: non-purchase money collateral also secures the purchase money obligation: or the purchase money obligation has been renewed, refinance, consolidated for restructured.

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9
Q

After acquired property clause

A

A clause that allows a party to obtain a security interests not only debtor’s present property but also property that the debtor will obtain in the future.

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10
Q

Future advance clause

A

Clause that makes a security agreement apply to not only this loan but any future loans made to the debtor.

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11
Q

Attachment

A

Deals with those steps legally required to get the secured party a security interest in the collateral that is effective as against the debtor.

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12
Q

Perfection

A

Deals with those steps legally required to give the secured party an interest in the collateral that is effective as against the world.

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13
Q

Financing statement

A

Document generally used to provide public notice of the security interest, and so perfect the security interest.

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14
Q

Goods

A

Includes all things which are movable at the time the security interest attaches, and include the unborn young of animals and growing crops.

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15
Q

Consumer goods

A

Goods used or bought for use primarily for personal, family or household purposes.

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16
Q

Equipment

A

Goods bought or used for use primarily in business

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17
Q

Farm products

A

Crops or livestock or supplies used or produced in farming operations or products of crops and livestock in their unmanufactured states if they are in the possession of a debtor engaged in farming operations

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18
Q

Inventory

A

Held by a person who holds them for sale or lease or to be furnished under service contracts, materials used or consumed in a business

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19
Q

Instruments

A

Negotiable instruments and any other writing which evidences a right to the payment of a monetary obligation and which are in ordinary course of business transferred by delivery with any necessary endorsement or assignment

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20
Q

Documents

A

Document which in the regular course of business is treated as evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers

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21
Q

Chattel paper

A

A record or records which evidence both a monetary obligation and a security interest in or a lease of specific goods.

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22
Q

Investment property

A

Includes items such as stocks, bonds, mutual funds, and brokerage accounts containing such items

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23
Q

Accounts

A

Right to payment not evidenced by an instrument or chattel paper for goods, for services, for real property, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel, arising out of the use of the credit card, or as lottery winnings. Health care insurance receivables are included.

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24
Q

Deposit accounts

A

A demand, time, savings, passbook, or similar account maintained with the bank.

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25
Q

Commercial tort claims

A

A claim arising in tort with respect to which the claimant as an organization, or the claimant as an individual and the claim arose in the claimant’s business or profession and does not include damages for personal injury or the death of an individual.

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26
Q

General intangibles

A

Any personal property not coming within the scope of the other definitions.

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27
Q

Scope of article 9

A

Article 9 applies to any transaction regardless of its form that creates a security interest and personal property or fixtures by contract: any agricultural lien: a sale of accounts, chattel paper, payment intangibles, or promissory notes: consignments: secured sale disguised as a lease

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28
Q

Authenticated security agreement

A

Unless the collateral is in the possession or control of the secured party pursuant to an agreement, a written or electronically stored security agreement is required.

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29
Q

Form of the security agreement

A

1) the security agreement must show an intent to create a security interest.
2) security agreement must be signed or marked electronically with the present intent to identify the authenticating person and adopt the agreement
3) security agreement must reasonably identify the collateral meaning that it make possible the identification of the thing described.

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30
Q

Value by the secured party

A

Secured party must have given value for the security interest usually takes the form of extending credit or a pre-existing debt.

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31
Q

Debtor rights in the collateral

A

Ownership interest and or the right to obtain possession of the collateral qualifies as right in the collateral. There also is rights in the collateral where the property belongs to someone else has authorized the debtor to put it up as collateral.

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32
Q

Exception for after acquired property

A

1) Security interest does not attach under an after acquired property clause to consumer goods unless the debtor acquires rights in them within 10 days after the secured party gives value.
2) After acquired property clauses ineffective as to commercial tort claims.

33
Q

Proceeds

A

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

34
Q

Proceeds and attachment

A

Unless otherwise agreed, security agreement gives the secured party a right to proceeds.

Proceed dollars are the last dollars to leave a bank account.

35
Q

Perfection

A

Deals primarily with rights as between the secured party and third-party not the rights between a debtor and the secured party.

36
Q

Perfection of a purchase money security interest in consumer goods

A

This type of security interest is perfected when it has attached.

37
Q

Perfection of assignment of certain accounts or payment intangibles

A

An assignment of accounts or payment intangibles that does not in conjunction with other assignments to the same assignee transfer a significant part of the outstanding accounts or payment intangibles of the assignor is automatically perfected.

38
Q

Perfection of a sale of a payment intangible or a promissory note

A

A sale of a payment intangible or a promissory note is automatically perfected

39
Q

Perfection of a health care insurance receivable

A

A security interest created by the assignment of a healthcare insurance receivable to the provider of the healthcare goods or services is automatically perfected.

40
Q

Perfection in some investment property

A

If debtor purchases assets through security intermediary and has not paid, the securities intermediary has an automatically perfected security interest to secure the purchase price

41
Q

Temporary automatic perfection

A

A security interest in certificated securities, negotiable documents, or instruments is automatically perfected without filing or the taking of possession for a period of 20 days from the time it attaches so long as the security interest arises for new value given under an authenticated security agreement

42
Q

Perfection by possession

A

A secured party may perfect a security interest in most types of collateral simply by taking possession of the collateral.

43
Q

Exception for perfection by possession

A

Secured party may make available to the debtor on a temporary basis in instrument, negotiable document, certificated security, or goods not covered by negotiable document that are in the possession of the bailee and will remain perfected for 20 days after which time the secured party will become on perfected unless again takes possession or files a financing statement.

44
Q

When a security interest cannot be perfected by possession

A

Security interests in accounts, certificate of title goods, deposit accounts, nonnegotiable documents, electronic chattel paper, and general intangibles cannot be perfected by possession.

45
Q

Perfection by control

A

security interest in investment property, non-consumer deposit accounts and electronic chattel paper may be perfected by control.

Control is the only way to perfect non-consumer deposit accounts.

46
Q

When a party has control of investment property

A

Secured party has control of an item of investment property when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.

47
Q

When a party has control of non-consumer deposit accounts

A

1) bank in which non-consumer deposit account is maintained automatically has control over the deposit account.

If secured party is not such a bank you can obtain control over the deposit account by either putting a deposit account in the secured party’s name or agreeing in an authenticated record with the debtor and the bank in which the deposit account is maintained that the bank will follow the secured party’s orders without further consent by the debtor

48
Q

How a party takes control of electronic chattel paper

A

Secured party has control over chattel paper if a single authoritative copy of the record or record exist and the authoritative copy identifies the secured party as the assignee of the record or records and the authoritative copy is communicated and maintained by the secured party or its designated custodian

49
Q

Perfection of goods covered by certificate of title

A

Only way to perfect a security interest in a motor vehicle required to be titled under state law is by noting the lien on the certificate of title unless the debtor is holding the motor vehicle as inventory for sale or lease.

50
Q

Perfection by filing

A

A security interest may be perfected by filing as to all kinds of collateral except deposit accounts and money

51
Q

Notice filing system

A

To be perfected simply must provide enough information to put people on notice that they need to find out more about the transaction.

52
Q

Contents of financing statement

A

1) debtor’s name
2) description of collateral
3) secured party’s name
4) if real estate must also describe the reality
5) authorization of the filing by the debtor

53
Q

Change of a debtor’s name

A

If a debtor changes it’s name a filed financing statement is effective to perfect a security interest in collateral acquired by the debtor before or within four months after the change.

54
Q

How must the collateral be described in the financing statement

A

Generic descriptions are allowed and super generic descriptions reasonably identify the collateral any financing statement but not in the security agreement.

55
Q

Where to file in multiple state transactions

A

Generally file with the debtor is located.

When registered organization debtor is located where is organized.

Unregistered organization look where the business is located if there is more than one state choose site of chief executive office.

56
Q

How long is a financing statement good for

A

Financing statement is effective for five years from the date of filing and it can be extended by filing a continuation statement.

57
Q

Termination of a filing statement

A

When there’s no outstanding obligation of the debtor the secured party upon receiving an authenticated demand by the debtor must within 20 days provide the debtor was a termination statement to the effect that the secured party no longer claims a security interest under the financing statement.

If the financing statement covers consumer goods within one month after there is no outstanding obligation termination statement must be filed by the secured party.

58
Q

Perfection as to proceeds

A

If the secured party has a perfected security interest in collateral a secured party automatically has a perfected security interest in whatever proceeds the debtor receives in exchange for that collateral for 20 days.

59
Q

Exception to 20 day rule for perfection of proceeds

A

Proceeds are identified will cash proceeds.

Security interest in the original collateral was perfected by filing a financing statement is security interest in the type of collateral constituting proceeds would be filed in the same place as the financing statement for the original collateral and the proceeds were not purchased with cash proceeds of the collateral.

60
Q

General priority rule

A

First to file or perfect has priority.

61
Q

Priority of a purchase money security interest in goods other than inventory

A

Purchase money security interest in going such goods has priority over conflicting security interest in the same goods or proceed with the purchase money security interest is perfected at the time the debtor receipt possession of the collateral or within 20 days thereafter.

62
Q

Priority of a Purchase money security interest in inventory

A

A purchase money security interest in inventory or livestock has priority over a conflicting security interest in the same inventory or livestock it before the debtor receives possession of the inventory or livestock secured party profess and sends an authenticated notification to holders of previously filed conflicting security interest in the collateral.

63
Q

Conflicting purchase money security interest

A

Seller who has a purchase money security interest has priority over secured party was a purchase money security interest in the same collateral as a lender.

64
Q

Special priority rules for investment property

A

1) security interest perfected by control has priority over security interest perfected by any other method.
2) conflicting security interest Etra perfected by control they rank according to the time of obtaining control
3) security interest granted to a Debtor’s intermediary has priority over a security interest granted by the debtor to another secured party

65
Q

Special priority rules for deposit account

A

A security interest perfected by control of a priority over security interests affected by any other method.

A security party who obtains control by putting a deposit account in its own name has priority over all other secured parties with control.

66
Q

Priority for authorized sales

A

If a sale is authorized buyer takes free of the security interest. Authorization maybe express or it may be applied for the type of sale or from the seller’s conduct.

67
Q

Priority for unauthorized sales

A

Buyer in the ordinary course of business takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.

68
Q

Priority of buyers not in the ordinary course of business

A

Buyers not in the ordinary course of business take subject to perfected security interest. They take free from unperfected security interest unless they know of the security interest.

69
Q

Special rules for consumer to consumer sales

A

The case of consumer goods a buyer takes free of a security interest even though it is perfect and the bodies without knowledge of the security interest for value and for his own personal, family, or household purposes unless prior to the purchase the secured party has filed a financing statement covering such goods.

70
Q

Priority over judicial lien creditor

A

If the security interest is perfected before the sheriff levies, the security interest has priority.

If the levy precedes perfection of the security interest the judicial lien has priority.

71
Q

Priority over statutory lien claimants

A

Statutory lien has priority over a previously perfected interest.

72
Q

Self-help repossession in case of default

A

After default secured party is entitled to take possession of the collateral without judicial process if this can be done without breach of the peace.

73
Q

Retention of collateral after default

A

Secured party may propose retaining the collateral in full or partial satisfaction of the debt it must send its proposal to any other secured party from whom the foreclosing party has received notice of a claim to the collateral and any other secured party who has perfected a security interest in the collateral in the debtor’s consent.

74
Q

Resale of collateral

A

Secured party may sell or lease the collateral and condition if it provides reasonable notice that is authenticated by the secured party to the debtor and 10 the other secure parties wouldn’t notify the secured party of their interest Orval had perfected by filing a financing statement.

Notice has to be sent within a reasonable time before the sale and it has to contain a description of the debtor and secured party description of the collateral.

75
Q

Secured party’s rights after the sale

A

Secured party has a right to deficiency if the sale is not sufficient as long as they comply with the resale requirements.

76
Q

Perfection of a fixture

A

Perfection made me be made with respect to a fixture in the same manner as if the collateral would not be fixture. Fixture filing is necessary to obtain priority over certain real estate interest.

77
Q

Fixture filing

A

Must be made in the office where a mortgage on real estate would be filed.

78
Q

Priority of a fixture filing over subsequent real estate interest

A

Security interest fixtures has priority over any real estate interest that arises subsequent to the perfection of the security interest by fixture filing.

79
Q

Secured party versus prior real estate interests priority

A

Hey prior real estate interest of this properly recorded has priority over security interests that subsequently arises.

Secured Transactions (1 decks)

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