Secured Transactions Flashcards
What are the two ways a purchase money security interest can arise?
1) Seller-Financed PMSI
2) Financer-financed PMSI
What is seller financed PMSI?
The secured party sells the goods to the debtor on credit and retains a security interest in the goods sold
What is financer-financed PMSI?
Loan to purchase collateral, loan used to acquire collateral, creditor takes security interest in that collateral
Are after acquired property clauses permissible?
Yes
What is attachment?
When security interest has been created (effective only against debtor)
Who is perfection effective against?
The world because this is public notice of the security interest
What are the 4 types of goods?
1) Consumer goods
2) Equipment
3) Farm products
4) Inventory
What are consumer goods?
Goods used or bought primarily for personal, family, or household purposes
What is equipment?
Goods that are used or bought for use in a business. This is also a fall-back provision if can’t be classified as any other type of good
What are farm products?
Crops or livestock or supplies used or produced in farming operations
What is inventory?
Goods held for sale or lease, goods that are to be furnished under service contracts, and materials used or consumed in a business in a short period of time
What are the 3 requirements for attachment?
1) Parties must agree to create a security interest
2) Value must be given by secured party; and
3) Debtor must have rights in collateral
How to show agreement to create a security interest?
1) Creditor taking possession of collateral;
2) Authenticated security agreement; or
3) Creditor taking control
Is past consideration okay to create an attachment?
Yes
After-acquired property clause must be _____
explicit
When will security interest automatically attach even w/o an after-acquired property clause?
When collateral is of the type that’s rapidly depted, like accounts and inventory
What are the 5 methods of perfection?
1) Filing
2) Taking possession of the collateral
3) Control
4) Automatic perfection
5) Temporary perfection
What is the only way to perfect a security interest in a motor vehicle?
By notation on the vehicle’s certificate of title issued by the state
What is the only way cash and deposit accounts are perfected?
By possession
What is required for a financing statement to be effective?
Debtor must authorize the filing in any signed writing
Where must filing generally take place?
Florida Secured Transaction Registry
Where to file real estate related financing statements?
Office of the circuit court
What law governs perfection of the security interest?
The law of the state where the debtor is located
How long is financing statement valid for?
5 years (file a continuation statement within the last 6 months to extend beyond)
Who gets priority is secured v. secured?
Whichever party was the first to either file or perfect
Who gets priority between unperfected secured parties?
Whoever attached first
