Secured Transactions

Question 1

What types of transaction does Article 9 apply to?

Answer 1

1. Contractual Security Interests (Personal Property or Fixtures)
2. Sales of accounts, chattel paper, payment intangibles, and promissory notes
3. Commercial CONSIGNMENTS
4. Agricultural Liens
5. Leases intended to serve as security arrangements

Question 2

In VA, what’s the rule re SELLERS OF CONSUMER GOODS?

Answer 2

a SELLER of consumer goods (other than automobiles) may take a security interest ONLY IN THE CONSUMER GOODS BEING SOLD

Means they can’t take int in goods already owned or owned in the future.

Exception: Open-end credit plan

Question 3

What are the types of tangible collateral or goods?

Answer 3

1. Consumer Goods
2. Inventory
3. Farm products
4. Equipment

Question 4

What are the req’ts to create a security interest?

Answer 4

Secured party must:

1. give VALUE
2. D’or must have sufficient RIGHTS in the collateral
3. parties AGREE TO CREATE security interest, as evidenced by 1. creditor must either POSSESS THE COLLATERAL pursuant to AGREEMENT (pledge) or D’or must have authenticated a security agreement

Question 5

What is the effect of an after-acquired security interest clause?

Answer 5

Extends security interest to ALL CURRENT AND FUTURE INVENTORY

Generally valid in VA

Question 6

When does an after-acquired security interest clause expire w/ respect to CONSUMER GOODS?

Answer 6

10 days after Cr’or has given value

Question 7

How can a creditor PERFECT its security interest?

Answer 7

By FILING a FINANCING STATEMENT

Taking POSSESSION of collateral

Taking CONTROL of collateral

AUTOMATIC perfection (PMSI)

TEMPORARY perfection (after D’or receives proceeds from sale of collateral)

Question 8

How can Cr’or perfect security interest when DEBTOR is a corporation organized under VA law?

Answer 8

by FILING FINANCING STMT w/ STATE CORPORATION COMM’N

Question 9

When 2 parties have perfected S/I’s, who has priority?

Answer 9

First one to:

1. PERFECT, or
2. FILE A VALID FINANCING STMT

Question 10

When does PMSI have super-priority?

Answer 10

When it’s PERFECTED and in GOODS OTHER THAN INVENTORY OR LIVESTOCK

Question 11

When will PMSI D’or have super-priority re inventory?

Answer 11

Must, before giving possession of inventory to D’or,

1. Send WRITTEN NOTICE to other security interest holders, and
2. take steps to assure its PMSI will be perfected AT THE TIME D’or receives possession

Question 12

When can a creditor’s security interest be automatically perfected?

Answer 12

When they have PMSI in CONSUMER GOOD

Question 13

Can Cr’or w/ S/I in inventory recover a good sold from the D’or’s inventory (in normal course of business) from a buyer that knew about a financing stmt?

Answer 13

No, as long as she’s a buyer in the ordinary course of business

Question 14

Can Cr’or w/ S/I in inventory recover a good from the D’or’s inventory (in normal course of business) that was given as a gift to someone else?

Answer 14

Yes. As a donee of an inter vivos gift, he gave NO CDN and isn’t a BUYER. Also rec’d outside normal course of business.

Question 15

With a loan, what counts as VALUE given?

Answer 15

When bank promises to make loan, counts as value

Question 16

How does mechanic’s lien work?

Answer 16

Mechanic that has the equipment can hold and has priority lien up to $1000 and is entitled to amount remaining after other liens satisfied.

Question 17

What’s the difference between ATTACHMENT and PERFECTION?

Answer 17

ATTACHMENT establishes SEC’d party’s rights AGAINST D’OR.

PERFECTION establishes SEC’d party’s rights against 3RD PARTIES

Question 18

Can a FIXTURE be security?

Answer 18

Yes

Question 19

Is a security interest in real estate valid?

Answer 19

Not under UCC article 9 (but fixtures can be)

Question 20

Where and what document must be filed to perfect lien?

Answer 20

A FINANCING STMT w/ the STATE CORPORATION COMM’N

Question 21

Must a PMSI be perfected to have superpriority?

Answer 21

Yes