Secured transactions

Question 1

When does a security interest attach?

Answer 1

When value is exchanged from creditor to debtor.

There is a properly executed written security agreement, and

when the debtor has rights in the collateral offered as security for the creditor’s loan.

Question 2

When can seller pass title?

Answer 2

to the extent that he/she themselves has title.

Question 3

What must happen for an SI to be valid?

Answer 3

Attachment

Question 4

What are the two kinds of Purchase Money security interests?

Answer 4

1. Secured party sells debtor collateral on credit and retains a SI in the item sold.
2. A loan to a debtor for the purpose of enabling the debt to buy specific collateral, which is used bt the debtor to acquire the specific collateral, and the creditor takes a SI in that collateral.

Question 5

What is the definition of goods under Secured transactions?

Answer 5

all things which are movable at the time the SI attaches and inlace the unborn young of animals and growing crops. Also includes fixtures.

Question 6

What are the four classifications of goods under secured transactions?

Answer 6

consumers goods
equipement
farm products
Inventory

Question 7

What are consumer goods under secured transactions?

Answer 7

used or brought for use primarily for personal, family or household purposes.

Question 8

What is the definition of equipment for secured transactions

Answer 8

used or bought for use in business

The default category for goods

Question 9

What is the definition for farm products under secured transactions

Answer 9

crops or livestock or supplies used or produced in farming operations or products of crops or livestock in their unmanufactured states.

Question 10

What is the definition for inventory under secured transactions?

Answer 10

Held by a person who holds them for sale or lease or to be furnished under service contracts; materials used or consumed in a business in a short period of time.

Question 11

What are the elements fo a valid security agreement?

Answer 11

in writing
with intent to create an SI
authentications by the debtor
a description of the collateral

Question 12

What are the 5 methods of perfection

Answer 12

Automatic perfection
Possession of collateral by secured party
by control
notation of lien on certificate of title
filing a financing statement

Question 13

What is the most common situation when a SI is automatically perfected?

Answer 13

PMSI in consumer goods - affects upon attachment

Question 14

What are the contents of a financing statement?

Answer 14

Debtor’s name
Description of collateral
secured party’s name

Question 15

What is the general rule for priority as between two secured parties?

Answer 15

The first to file or perfect, whichever occurs first, has priority.

Question 16

What is the special rule for perfection for PMSI in goods other than inventory or livestock?

Answer 16

A PMSI in goods has priority over conflicting SI in the same good or its identifiable proceeds if the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days thereafter.