Secured Transactions Flashcards
Secured transactions are statutory contracts, covered by UCC Article ___
Nine.
A creditor must take two steps to gain the full protections of secured transaction law: ______ and ________.
Attach and perfect
____________ a security interest means creating a valid security interest in collateral.
Attaching
A valid security agreement is usually written, and it must (i) __________ the collateral, the parties must exchange (ii) __________, and the decor must have (iii) _________ in the collateral. The security agreement is effective as soon as the last trait takes effect.
(i) describe; (ii) value; (iii) rights
There are exceptions where a security interest can attach without a written agreement. Those exceptions are: ________ and ________.
Possession and Control
Most security interests are perfected when the holder of the (i) _______ _______ files a (ii) ___________ _________ at a central state office.
(i) security interest; (ii) financing statement
Security interests in motor vehicles can be perfected only by a (i) ________ of the security interest on the vehicle’s (ii) _______, usually recorded at the county clerk’s office.
(i) notation; (ii) title
Security interest in land (e.g., fixtures, timber) must be perfected with a filing statement in the (i) _______ where the land is located.
(i) county
In general, security interests can generally be perfected by (i) __________ by the secured party, or for some intangibles, (ii) ______
(i) possession; (ii) control
Purchase money security interests in consumer goods are (i) _________ perfected.
(i) automatically
Rules of priority in secured interest: (i) _______ have priority over un-perfected; (ii) between two perfected interests, the _____ to _______ or perfect has priority, (iii) ____’s have priority over non-_____, (iv) perfected security interests have priority over creditors in __________, (v) a buyer in the ordinary course of business takes goods free from any security interest.
(i) perfected; (ii) first to file; (iii) PMSI’s; (iv) bankruptcy
(i) ______________ goods are good used, or bought for use, for personal or household purposes.
(i) consumer
(i) __________ are goods used, or bought for use, for sale or lease and supplies/materials quickly used up in a business.
(i) inventory
(i) ____________ are goods used, or bought for use, for business purposes.
(i) equipment
(i) ______ ______ are goods used, or bought for use, by a farmer, including equipment, machinery, crops, and livestock.
(i) Farm products
(i) _________ __________ are commercial bank accounts.
(i) deposit accounts
A (i) ________ arises when the lender loans money to the borrowers specifically for the buyer to purchase certain goods, and the lender takes a security interest in those goods.
(i) PMSI
If a borrower defaults on a loan covered by a security interest, the security party has a (i) _______ to ________ the collateral, or to peacefully (ii) _________ the collateral, or they can file an action for the court to hold a (iii) ________ sale.
(i) right to sell; (ii) repossess; (iii) public
Secured transactions are not only contractual security interests, but also include (i) the sales of ______, _______ paper, _________ intangibles, and _______ notes, (ii) commercial _______ of goods worth a total of $1,000 or more to merchants who are not generally known to be consignors, (iii) ______ liens, and (iv) ______ intended to serve as security arrangements (but not real ________), and (v) a seller’ retention of ______ to delivered goods.
(i) accounts, chattel, payment, promissory; (ii) consignments, (iii) agricultural; (iv) leases; (v) title
Other than fixtures, UCC Article 9 does not apply to loans in (i) ______
Land
(i) _____ are notes, drafts, checks, and certificates of deposit
(i) instruments
(i) ________ are bills of lading and warehouse receipts
(i) documents
(i) _________ paper (written or electronic) is a monetary obligation and a security interest in, or lease of, goods, such as a promissory note and a written security agreement. This is like a derivative security interest – imagine a car dealership using all of its security agreements with customers to get its own loan.
(i) chattel.
(i) ______ are right to payment for goods and services.
(i) accounts
(i) _______ _____ are non consumer bank accounts
(i) deposit accounts
(i) ___________ property includes stocks, bonds, mutual funds, brokerage funds, etc.
(i) investment property
(i) _________ ______ claims are claims filed by organizations, resulting from business activity (not personal injury)
(i) commercial tort
(i) general ___________- is everything that does not fit in another definition, and also includes IP, including copyrights, goodwill, and software
(i) intangibles
(i) ______ include whatever is received upon the sale, exchange, collection, or other disposition of collateral. It includes (ii) _______ payable by reason of loss or damage to the collateral (unless it was payable to someone other than the debtor or secured party).
(i) proceeds; (ii) insurance
There are three requirements to attach, which must coexist: (i) the parties must _____ to _____ a security interest, as evidenced by either a (ii) signed _______ that describes the collateral, or (iii) ____ or ___ of collateral, and (iv) ______ being exchanged, and that the debtor has (v) ______ in the collateral.
(i) agree to create; (ii) writing; (iii) possession or control; (iv) value; (v) rights
A secured party can obtain control over the following types of collateral: (i) _______ accounts; (ii) ________ _______ paper, and (iii) _________ property.
(i) deposit; (ii) electric chattel; (iii) investment
A bank that maintains a non consumer deposit account automatically has (i) ______ over the deposit account. If the secured party is not a bank, it can obtain control by either (ii) putting the account in the ______ _______’s name, or (iii) agreeing in a record with the bank and secured party that the bank will _________ with the secured party’s (iv) _________.
(i) automatic; (ii) secured party’s; (iii) comply; (iv) orders
A secured party takes control of investment property in (i) _____ form. If the investment is registered, the secured party takes possession and the certificate must be (ii) _____ to the secured party.
(i) bearer; (ii) endorsed
In the case of commingled cash proceeds, a court will look at a bank account starting at the time the proceeds are deposited, and the (i) _____ balance during the period is the secured party’s identifiable proceeds.
(i) lowest
There are five methods of perfection: (i) _______; (ii) _______ of collateral; (iii) ______ of collateral; (iv) ______ perfection; and (v) temporary perfection
(i) filing; (ii) possession; (iii) control; (iv) automatic; (v) temporary
A security cannot perfect until it has (i) _______.
Attached
A financing statement must include the debtor’s (i) _____ and ________, the secured party’s (ii) _______ and ______, (iii) an _______ of the collateral covered by the financing statement
(i) name and address; (ii) name and address; (iii) indication
For the debtor’s name, the proper name (if an individual) is the name on the ________ ________’s ________.
Unexpired driver’s license
A financing statement will be invalid if the debtor’s name is (i) ________ _________
(i) seriously misleading
Whereas an authenticated security agreement requires a description of the specific collateral covered, a financing statement may be (i) __________
supergeneric
The debtor must authenticate a filing statement, which may be done directly on the financing statement, or on the (i) _________ ________.
(i) security agreement
A financing statement is effective for (i) ______ years, and renewals must be filed within (ii) _____ months (not earlier, not later) of the end of the period. The debtor’s authorization is not required for a renewal.
(i) five; (ii) six
A security interest in (i) ______ from the original collateral is perfected for (ii) ______ days, but thereafter, the secured party must refile to keep the collateral perfected.
(i) proceeds; (ii) twenty
Among conflicting PMSIs, a (i) _____ has priority over the same collateral from a (ii) ________
(i) seller; (ii) lender
Equipment PMSIs must be perfected within (i) ______ days after the debate receives possession to be valid.
(i) 20
Inventory and Livestock PMSIs have priority if they were (i) perfected when the debtor got _________ (no filing subsequent to delivery) and any secured party who has perfected his interest in the same inventory receives (ii) ______ ______ of the PMSI before the debtor takes possession.
(i) possession; (ii) written notice
In general, (i) _____ ______ purchasers in the ordinary course, who take possession in (ii) _____ _______ and without (iii) _________ of other claims have higher priority than secured parties.
(i) bona fide; (ii) good faith; (iii) knowledge
(i) ________ are goods that become so attached to really property that an interest in them arises under real property law. (ii) _____ are goods that are physically united with other goods in such manager that identity of the original goods is not (iii) ______.
(i) fixtures; (ii) accessions; (iii) lost
In a contest between a secured interest in a fixture and a interest in the real property, the first to (i) ______ a (ii) ______ filing or record its real property interest prevails. An exception is that a PMSI secured for a fixture has (iii) ____ days after affixation to file, and will have priority over any prior real property interest (except a construction mortgage).
(i) file; (ii) fixture; (iii) 20
If an accession becomes part of a (i) _______ that is perfected by notation on a certificate of tile, the security interesting the whole has priority.
(i) whole
If a secured party has priority in a fixture / accession, upon default, he may (i) _____ the fixture / accession from the real property or goods, but he must (ii) ____ the owner (if not the debtor) for the cost of any repairs of physical injury caused by the removal
(i) removal; (ii) reimburse
A secured interest in (i) ______ on a farm always has priority over a real property interest.
(i) crops
A bona fide purchaser generally has a superior interest in property to an (i) ___________ security interest, if the buyer gains possession (ii) ______ _______ of the 3d party security interest. The bona fide purchaser must give value, and receive delivery of the collateral.
(i) unperfected; (ii) without knowledge
The PMSI secured party has a (i) ____ day grace period to file, even against bona fide purchasers.
20
A bona fide purchaser may still have priority over a (i) _______ security interest, if the secured party (ii) ______, if the purchaser bought the good in the (iii) ______ course of __________ (without knowledge of the security interest), if it’s a (iv) ________ purchasing from a __________, and a buyer not in the ordinary course still has priority over future advances or commitments by a secured party.
(i) perfected; (ii) consented; (iii) ordinary course of business; (iv) consumer from a consumer
A lienholder has (i) ________ over an unperfected secured party, though there is a 20 day PMSI grace period.
priority
In general, a perfected security interest has (i) _______ over a judicial lien, unless it’s a future advance.
priority
If a mechanic or artisan provided services in ordinary course and has possession, they have superior (i) ______ to others.
priority
On default, the secured party can (i) ______, (ii) to exercise _________ on non-goods collateral and seek direct payment; (iii) to take _________ (even without judicial process) if it can be done (iv) ________, or ask the court for a (v) _______ sale.
(i) sue; (ii) control; (iii) possession; (iv) peacefully; (v) public
If a secured party takes control on default and sells the property, the sale must be reasonable. It should be (i) __________ to the public, (ii) to a wide __________ (the sort of people who would normally buy), the collateral should be in good (iii) _______, and the sale should be (iv) ________ and convenient.
(i) advertised; (ii) market; (iii) repair; (iv) public
If the debtor has paid 60% of the cash price on a PMSI on consumer goods or a consumer loan, the secure party must dispose of the collateral with (i) _____ days
90.
In non-consumer settings, if the secured party takes possession, the debtor has (i) ______ days to object and force a sale
(i) 20
Until the secured party sells the collateral (or retains it by process), the debit has a right to (i) ______ by playing all the obligation plus reasonable expenses.
(i) redeem
In general, the law of the state where the debtor is located governs (i) __________. The exception is that fixtures and timbers are (ii) __ _____, goods covered by title are subject to the law of the (iii) _________ state, and deposit accounts are governed by the law of the sate where the bank has its (iv) _______ ______ office.
(i) perfection; (ii) in rem; (iii) issuing; (iv) chief executive
If a debtor moves collateral to a new state, the prior perfection will hold for (i) _______ months.
(i) four
If the debtor sells collateral to a buyer in a new state, the prior perfection will remain for (i) _______ months.
(i) twelve
For an (i) _______, if it is moved out of state, the perfection lasts as long as it would have lasted under the original title notation
(i) automobile
