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Constitution Law Bar Prep > secured transactions > Flashcards

secured transactions Flashcards

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1
Q

PMSI!!!!

A

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)
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2
Q

after acquired property clause

A

in a security agreement, a secured party takes interest in some yet to be attained property of the debtor

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3
Q

future advance clause

A

allows the secured party to attach sec interest for future loans given to the creditor on existing (or future if after acquired clause) property

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4
Q

perfection and attachment

A

attachment: secured interest is associated to collateral
perfection: all third parties on notice of attachment (important for priority)

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5
Q

types of tangible goods (otherwise referred to as goods)

A

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

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6
Q

intangible goods

A

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

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7
Q

requirements for attachment

A
  • 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
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8
Q

authenticated security agreement

A
  • 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
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9
Q

what value is sufficient for a security agreement

A
  • any consideration, even past
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10
Q

when does attachment occur

A

ONLY when all three elements met, meaning until last one is realized no attachment

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11
Q

when can a creditor attach to future collateral

A

with an express after acquire property clause

with repidly depleted and replneished collatral

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12
Q

do after acquired property clauses apply to consumer goods?

A

NO unless creditor acquires 10 days after giving value

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13
Q

proceeds

A

WHATEVER is gained in exchange, sale, collection or other disposition of collatera so long as it is IDENTIFIABLE

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14
Q

comingled cash rule

A

lowest balance rule:

take the lowest balance of account where proceeds deposited so long as not larger than initial value of proceeds

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15
Q

five methods of perfection

A 
filing*
taking possession of collateral
control of collateral
auto perfection
temp perfection
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16
Q

can a security interest be perfected before attachment

A

NO, BUT can be filed for perfection, giving earlier priority, then maintains that date even if not perfected yet

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17
Q

What automatically perfects upon attachment?

A

PMSI in consumer goods! ONLY consumer goods

except motor vehciles and fixtures (stuff attached to real property)

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18
Q

perfection by possession

A

ONLY tangible goods

perfects at time of actual possession

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19
Q

perfection by control

A

investment property, electronic chattel paper, deposit accounts (only can by control)

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20
Q

control of NONCONSUMER deposit accounts

A
  1. name on account (first priority)
  2. creditor bank with whom debtor has account (enters into agreement)
  3. another bank, debtor, and deposit bank enter agreement
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21
Q

how to perfect motor vehicle

A

novation on certificate of title (a place on title dentoes it)

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22
Q

finance statement

A

how to perfect by filing

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23
Q

reqs for a filing statement

A

debtors name/mailing address

  • secured party name/mailing address
  • description of the collateral (supergeneric OK)
  • auth by debtor
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24
Q

what name is used for debtor

A

un expired license

if no licnse, individual name or personal name

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25
Q

can a mistake be made on a debtors name in a finance statement

A

yes, so long as not seriously misleading

if name change, then finance statement still good until 4 months after

26
Q

does a finance statement need to mention/describe after acq collateral:

A

no

27
Q

is any error in sec party potentially misleading

A

no, only seriously misleading in debtor name

28
Q

msut a debtor auth a finance statement

A

yes with a signed writing

signed sec agreement sufficient

29
Q

what state law governs perfection

A

where the debtor is located

30
Q

where is a debtor located when they are an UNREGISTERED org

A

where there principle palce of buienss,

if registered, then palce of registration

31
Q

what if a debtor moves to antoher state

A

then 4 months stays perfected, then unperfect

32
Q

what is collateral is transferred?

A

1 year from date of transfer, than imperfect collateral

33
Q

how long is a financing statement good for

A

5 years

34
Q

continuation statment

A

filed to renew finance statement
within 6 months of expiration (not sooner!)
renews fo r5 years

35
Q

termination statement

A

if debtor all paid up, secured party must, only on demand of debtor, file term statement within 20 days, or give to debtor

36
Q

perfection for proceeds

A

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

37
Q

what if a debtor changes the use of collateral

A

nothing changes, creditor still has perfected interest in collatera

38
Q

what steps do you take to determine priority

A

determine the creditors resepctive status

determine the priority rule

determine filing date OR date of perfection, whichever is earlier

39
Q

who has priority when a secured party vs secured party

A

whoever files or perfects first
-check for PMSI, since auto perfects
-check for super early filing date
check for proper finance filing

40
Q

UPSC vs UPSC

A

first to attach

41
Q

PSC vs UPSC

A

PSC wins always

42
Q

PMSI vs secured creditor

A

PMSI IF!!!

  • interest perfects (which means security interest attaches) within 20 days of debtor receiving goods
  • must be consumer goods or equipment
43
Q

PMSI vs secured creditor and goods are inventory or licvestock (farm stuff)

A

PMSI if
-interest perfects (attaches) by the time the debtor possess goods
AND
any secured party receives notice BEFORE debtor take possession of property

44
Q

PMSI vs PMSI

A

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

45
Q

secured interest perfected by control VS ANY other (including PMSI)

A

secured interest by control

46
Q

you know the prioprity rules for conflicting control interest perfected secured parties

A

yes i do

1
2
3

47
Q

secured interest vs buyer

A

secured interest stay on item EXCEPT

  1. sale was authorized by the secured party (express or implied)
  2. BIOC: only takes free of the IMMEDIATE sellers interest, NOT any prior interests
  3. unknown unperfected security interest
48
Q

buyer in the ordinary course

A

BIOC

  1. good faith buyer
  2. without knowledge sale vioaltes rights of another
  3. in ordinary course of business from seller in the business of selling good of the kind purchased
49
Q

consumer to consumer sales exception for secured interest vs buyer

A

buyer takes free of interest if

  1. no knowledge
  2. for value
  3. buyers personal/family.household use (consumer good)
  4. before a fiancing statement filed
50
Q

PSC vs judicial lienholder

A

PSC

note the perfection date, must precede when sherrif seizes the collateral (levy date)

51
Q

UPSC vs jud lienholder

A

lienholder

52
Q

PMSI vs j lienholder

A

IF PMSI hasnt attached yet or is not a consumer good, then has 20 grace period after debtor receives the collateral to perfect

53
Q

secured party vs article 2 claimant

A

article 2 claimant IF they have possession

54
Q

ultimate order of priority

A
  1. BIOC
  2. Holder in due course (article 2)
  3. transferee of money in deposit account (control)
  4. control of chattel paper/instruments
  5. PMSI
  6. perfected sec interest
  7. first to file perfects
  8. first to attach unperfects
  9. purchaser for collateral without notice of unperfected sec int
  10. unperfect sec int
  11. debtor
55
Q

can a creditor self help

A

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
56
Q

can a creditor whose debtor has defaulted render collateral unusable

A

yes

57
Q

strict foreclosure

A

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

58
Q

foreclosrue sale

A

discharged juniro lien, superior lein sticks with it

59
Q

what must a foreclosure sale be !!!!

A

commercially reasonable

take good price or close to it

60
Q

is a secured party laiblie if they break code rules

A

yes, remember for commercially reasonable ruyle

61
Q

ascension

A

stuff permanenty fixed to collateral

when attached collateral perfects, ascension perfects

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