Secured Transactions

Question 1

Attachment and when it occurs

Answer 1

Attachment is the process by which the security interest is created. A SI is created by a contract between the debtor and the secured party. The secured interest attaches when the SP gives value; the debtor has rights in the collateral; and the debtor has authenticated a SA that sufficiently describes the collateral.

Question 2

Requirements of a Security Agreement

Answer 2

A security agreement must be in writing, be authenticated (signed by Debtor), contain a granting clause, and contain a description of the collateral. The description of the collateral is sufficient if it reasonably identifies what is described.

Question 3

After-Acquired Collateral

Answer 3

SI attaches to AAC if the agreement contains an express AAC clause but there are two exceptions. An interest in an inventory or AR auto creates SI in AAC. A SA cant cover AA consumer goods unless the debtor acquires rts in the goods within 10 days of the SP giving value.

Question 4

Perfection: Filing

Answer 4

FIling a Financing Statement is the most common way to perfect an SI. If collateral is a fixture, have to file a FA at the city clerk’s office in the city where the land to which the fixture is attached is located. All other collateral has to be filed at SOS in the jd where the debtor is located. If the debtor is an individual: principal residence. if nonregistered org – located at its place or business (CRO). if registered org (corp): state of inc, org.

The purpose of the financing statement is to provide notice that there’s an SI in the collateral described.

Question 5

Perfection: Possession

Answer 5

An SI is perfected if the SP, or a third-party authorized by SP, takes possession of the collateral. Applies only

Question 6

Perfection: Possession

Answer 6

An SI is perfected if the SP, or a third-party authorized by SP, takes possession of the collateral. Applies only if the collateral is (1) tangible negotiable docs, 2 goods, 3 instruments, 4 money, or 5 tangible chattel paper

Question 7

Perfection: Control

Answer 7

An SI is perfected if the SP takes control of the collateral. Applies only if the collateral is 1 an investment security, 2 rts to a letter of credit, 3 a deposit account or 4 an electronic chattel paper

Question 8

Priority

Answer 8

priority states that first in time is first in right.

if there is a conflict between an un SI vs. un SI – first SI to attach.
p SI vs un SI – p SI priority
p si vs p si – first to file or perfect