secured transactions Flashcards
PMSI!!!!
purchase money secured interest
- secured party sells goods and takes sec interest in them OR
- creditor loans money for a purchase AND takes interest in that purchase (must use actual funds given)
after acquired property clause
in a security agreement, a secured party takes interest in some yet to be attained property of the debtor
future advance clause
allows the secured party to attach sec interest for future loans given to the creditor on existing (or future if after acquired clause) property
perfection and attachment
attachment: secured interest is associated to collateral
perfection: all third parties on notice of attachment (important for priority)
types of tangible goods (otherwise referred to as goods)
consumer goods: goods used or bought for personal family or household use
equipment: goods that are used or bought for use in
a business. Note: This is also the default category for
goods.
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
farm products: requires farmer. farm stuff; crops/livestock/supplies
intangible goods
instruments: promissory notes, cert of deposit, drafts
documents: right to recieve goods, not payment
chattel paper
investment property: stocks, bonds, mutual fund
accounts: right to payment for property sold/services rendered (ppl owe debtor money)
deposit accounts: business deposit accounts
commercial tort claim
general intangible: everything else; patents, copyright, trademark, goodwill
requirements for attachment
- must enter into security agreement
1. creditor takes possession of collateral
2. authenticated security agreement
3. creditor takes control of intangible - value given BY the secured party
- debtor has rights in the collateral
authenticated security agreement
- evidenced by a record
- -written or ESI
- -shows intent to enter agreement
- agreement authenticated
- -usually means signed by debtor
- -MUST describe collateral
- no supergeneric terms, but general terms of class of goods works
what value is sufficient for a security agreement
- any consideration, even past
when does attachment occur
ONLY when all three elements met, meaning until last one is realized no attachment
when can a creditor attach to future collateral
with an express after acquire property clause
with repidly depleted and replneished collatral
do after acquired property clauses apply to consumer goods?
NO unless creditor acquires 10 days after giving value
proceeds
WHATEVER is gained in exchange, sale, collection or other disposition of collatera so long as it is IDENTIFIABLE
comingled cash rule
lowest balance rule:
take the lowest balance of account where proceeds deposited so long as not larger than initial value of proceeds
five methods of perfection
filing* taking possession of collateral control of collateral auto perfection temp perfection
can a security interest be perfected before attachment
NO, BUT can be filed for perfection, giving earlier priority, then maintains that date even if not perfected yet
What automatically perfects upon attachment?
PMSI in consumer goods! ONLY consumer goods
except motor vehciles and fixtures (stuff attached to real property)
perfection by possession
ONLY tangible goods
perfects at time of actual possession
perfection by control
investment property, electronic chattel paper, deposit accounts (only can by control)
control of NONCONSUMER deposit accounts
- name on account (first priority)
- creditor bank with whom debtor has account (enters into agreement)
- another bank, debtor, and deposit bank enter agreement
how to perfect motor vehicle
novation on certificate of title (a place on title dentoes it)
finance statement
how to perfect by filing
reqs for a filing statement
debtors name/mailing address
- secured party name/mailing address
- description of the collateral (supergeneric OK)
- auth by debtor
what name is used for debtor
un expired license
if no licnse, individual name or personal name
can a mistake be made on a debtors name in a finance statement
yes, so long as not seriously misleading
if name change, then finance statement still good until 4 months after
does a finance statement need to mention/describe after acq collateral:
no
is any error in sec party potentially misleading
no, only seriously misleading in debtor name
msut a debtor auth a finance statement
yes with a signed writing
signed sec agreement sufficient
what state law governs perfection
where the debtor is located
where is a debtor located when they are an UNREGISTERED org
where there principle palce of buienss,
if registered, then palce of registration
what if a debtor moves to antoher state
then 4 months stays perfected, then unperfect
what is collateral is transferred?
1 year from date of transfer, than imperfect collateral
how long is a financing statement good for
5 years
continuation statment
filed to renew finance statement
within 6 months of expiration (not sooner!)
renews fo r5 years
termination statement
if debtor all paid up, secured party must, only on demand of debtor, file term statement within 20 days, or give to debtor
perfection for proceeds
auto for 20 days. auto after IF
-proceeds are IDENTIFIABLE cash
OR
-financing statement filed for original collateral, not purchased by cash, exchanged collateral would be filed in same place as original (usually the case), essentially an inventory sway
what if a debtor changes the use of collateral
nothing changes, creditor still has perfected interest in collatera
what steps do you take to determine priority
determine the creditors resepctive status
determine the priority rule
determine filing date OR date of perfection, whichever is earlier
who has priority when a secured party vs secured party
whoever files or perfects first
-check for PMSI, since auto perfects
-check for super early filing date
check for proper finance filing
UPSC vs UPSC
first to attach
PSC vs UPSC
PSC wins always
PMSI vs secured creditor
PMSI IF!!!
- interest perfects (which means security interest attaches) within 20 days of debtor receiving goods
- must be consumer goods or equipment
PMSI vs secured creditor and goods are inventory or licvestock (farm stuff)
PMSI if
-interest perfects (attaches) by the time the debtor possess goods
AND
any secured party receives notice BEFORE debtor take possession of property
PMSI vs PMSI
seller PMSI wins over financer-financed PMSI
Seller: sells good and takes interest in sold good
financer: gives money, money used to purchase good, interest taken in good
secured interest perfected by control VS ANY other (including PMSI)
secured interest by control
you know the prioprity rules for conflicting control interest perfected secured parties
yes i do
1
2
3
secured interest vs buyer
secured interest stay on item EXCEPT
- sale was authorized by the secured party (express or implied)
- BIOC: only takes free of the IMMEDIATE sellers interest, NOT any prior interests
- unknown unperfected security interest
buyer in the ordinary course
BIOC
- good faith buyer
- without knowledge sale vioaltes rights of another
- in ordinary course of business from seller in the business of selling good of the kind purchased
consumer to consumer sales exception for secured interest vs buyer
buyer takes free of interest if
- no knowledge
- for value
- buyers personal/family.household use (consumer good)
- before a fiancing statement filed
PSC vs judicial lienholder
PSC
note the perfection date, must precede when sherrif seizes the collateral (levy date)
UPSC vs jud lienholder
lienholder
PMSI vs j lienholder
IF PMSI hasnt attached yet or is not a consumer good, then has 20 grace period after debtor receives the collateral to perfect
secured party vs article 2 claimant
article 2 claimant IF they have possession
ultimate order of priority
- BIOC
- Holder in due course (article 2)
- transferee of money in deposit account (control)
- control of chattel paper/instruments
- PMSI
- perfected sec interest
- first to file perfects
- first to attach unperfects
- purchaser for collateral without notice of unperfected sec int
- unperfect sec int
- debtor
can a creditor self help
yes, but no breach of peace
breach of peace: any conduct that has potential to lead ot violence
- breaking and entering
- -less likely if commercial
can a creditor whose debtor has defaulted render collateral unusable
yes
strict foreclosure
keep collateral forever
must notify other secured interest holders you have notice from or have filed finance statement
notify debtor and he must consent in auth record
foreclosrue sale
discharged juniro lien, superior lein sticks with it
what must a foreclosure sale be !!!!
commercially reasonable
take good price or close to it
is a secured party laiblie if they break code rules
yes, remember for commercially reasonable ruyle
ascension
stuff permanenty fixed to collateral
when attached collateral perfects, ascension perfects
