Secured Transactions Flashcards
Goods Elements
Tangible
Movable
Personal property
Types of Goods
and which is default
Consumer goods
Equipment
Farm products
Inventory
Types of Semi-Intangibles/Intangibles
and which is default
General intangibles - IP, copyright
Instruments - checks and notes
Documents - BoL or warehouse receipt
Chattel paper - promise to pay w/ sec. interest
Records
Investment property - stocks/bonds
Accounts - right to payment for services rendered
Deposit accounts - bank accounts
Commercial tort claims - right to sue
Article 9 Scope
Transaction creating security interest in personal property or fixtures
Agricultural liens
Consignments
Secured sales, disguised as leases
Sale vs. Lease
At the time of the transaction was the lessee due to return the property with remaining MEANINGFUL ECONOMIC VALUE?
Attachment & Perfection
PIG FATT
Attachment (all 3):
Possessed by debtor (legal title)
Interest created (security agreement)
Given value
Perfection (any 1 of 4): Filing financing statement Automatic (PMSI in consumer goods) Take possession/control Title notation
Security Agreement Requirements
- Possession + Oral agreement
- Control
- Written Agreement:
- Record + intent
- Authentication by debtor
- Reasonably identify collateral
After Acquired Property
- May include what?
- Attaches how?
May include future advances, after-acquired property, proceeds from sale or disposition.
SI automatically attaches to identifiable proceeds of collateral
*Ct. may imply AAP Cl. if collateral is of the type that is rapidly depleted and replenished
Lowest Intermediate Balance Test
When cash proceeds are commingled in a deposit account, the SI attaches to the extent of the lowest account balance after proceeds are deposited.
Perfection Methods
FATT
*Attachment* and any of: Financing statement Automatic Take possession/control Title notation
Special Perfection Rules
- Inventory
- Title statute
- Money
- Non-consumer deposit account (aka business bank acct.)
Inv. - only by financing statement
Title Stat. - only by notation on title
Money - only by possession
NCDA - only by control
Financing Statement Requirements
- Name of debtor (from ID, no trade name)
- Description of collateral
- Name of secured party
- Debtor authorize filing (i.e. signing financing statement in same collateral or separate authorization)
- Publicly filed with FL Secured Transaction Registry
Refiled every 5 years, within 6 months of expiration
Jurisdiction after:
- Debtor moves
- Collateral moves
- Debtor changes name
Debtor move - 4 months to refile
Collateral move - 1 year to refile
Debtor name change - effective for all property gained up to 4 months after change
Effect of Filing Errors
SP not liable for agency errors
Otherwise error must not be SERIOUSLY MISLEADING – Would someone find the right record if searching using the erroneous information?
Proceed Perfection
Automatic for 20 days \+ Continues if: 1. Identifiable, 2. Same Office Rule met, and 3. Amendment to financing statement
Basic Priority Rules
One party perfected: Perfection wins
Both parties perfected: First to file/perfect/levy (if lien-holder)
Both parties unperfected: First to attach
Priority:
Special Rules for PMSI
- Superpriority over NON-LIVESTOCK/EQUIPMENT if perfected within 20 days.
- Superpriority in INVENTORY if, BEFORE BUYER RECEIVES POSSESSION,
- the secured party perfected,
- authorized notice sent to other holders, and
- notice is received by other holders within 5 years of debtor’s possession - Seller beats financer PMSIs
Priority:
Special Rules of Deposit Accounts
Best to Worst:
- Account in SP’s name
- Bank maintaining account
- Control agreement
Priority:
Special Rules for Subsequent Purchasers
Buyer has priority if:
- Sale authorized by SP either:
- Expressly
- Impliedly, or
- Inventory sold to consumer (unless prohibited by agreement) - Buyer in Ordinary Course
- Free from seller-created obligation - Garage Sale Rule
- No knowledge of sec. int.
- Pays value
- For personal/family/home use
- No financing statement filed
Buyer In Ordinary Course (BIOC)
- Good faith
- W/o knowledge of prohibited sale
- From a regular business transaction with a seller of goods of that kind
Priority:
Special Rules for Lien-Holders
- PMSI filed within 20 days of debtor possession wins
- Statutory lien-holder in possession wins
- Judicial lien-holder wins over future advance if FA was made more than 45 days of lien, unless FA was made without knowledge of lien
Resale Rules
- Notice given at least 10 days prior to sale to all parties with an interest in property
- Sale must be commercially reasonable in every aspect
- Proceeds are delivered to:
- Foreclosing party, then
- Junior creditors, then
- Debtor if surplus remains - Deficiency judgment may be executed against debtor’s non-exempt assets
What is an accession?
Goods physically united with others (not realty), so as to lose their individual character.
Examples: Tires on a car, Specialty attachments to tools
Subordinate to security interest in the whole of the property.
