Secured Transactions Flashcards
What does attachment do?
Attachment gives the creditor rights against the debtor in the collateral.
How does a security interest attach?
Attachment gives the creditor rights against the debtor in the collateral. To attach a security interest: (i) either the debtor signs a valid security agreement giving the creditor a security interest in the collateral that describes the collateral or the principal must take possession or control of the collateral, (ii) the creditor gives value, and (iii) the debtor must have rights in the collateral.
How should a secured party obtain rights against another secured party in a debtor’s collateral?
To obtain rights against another claimant to a debtor’s collateral, a secured party must perfect its security interest.
How would a creditor perfect a security interest in goods?
A creditor can perfect a security interest in goods by (i) filing, in the proper public office, a financing statement that is authorized by the debtor in an authenticated record, or (ii) by taking possession.
How is a purchase money security interest created?
A PMSI is created when a creditor advances credit or provides the funds necessary to make a purchase possible and takes a security interest in the goods purchased.
How is a PMSI in consumer goods perfected?
A PMSI in consumer goods in automatically perfected upon attachment. Consumer goods are goods that are used or bought primarily for personal, family, or household purposes.
What are consumer goods?
Consumer goods are goods that are used or bought primarily for personal, family, or household purposes.
What is equipment?
Goods that are not inventory, consumer goods, or farm products are equipment.
Between two perfected security interests, which takes priority?
Between two perfected security interests, the first secured party to file or perfect takes priority.
Original Use Test
Under the original use test, a debtor’s original intended use of collateral governs the collateral’s classification.
Priority for a perfected security interest versus an unperfected security interest.
A perfected security interest prevails over an unperfected security interest in the same collateral.
First sentence in every secured transactions essay
Uniform Commercial Code Article 9 governs secured transactions, which
A non consumer deposit account can only be perfected by ____.
A deposit account can only be perfected by control. The bank in which the non consumer deposit account is maintained automatically has control over the deposit account.
Which takes priority – a prior perfected security interest or a judicial lien?
A prior perfected security interest in collateral takes priority over a judicial lien.
Debtor’s right to redeem collateral. Can the right be waived?
A debtor has a right to redeem collateral after a default. The right to redeem collateral can be waived, but only after there has been a default. If there is a waiver to a right to collateral before a default, the waiver is invalid.
