secured transactions Flashcards
consumer goods
goods used primarily for personal, family, household purposes
equipment
goods (for business) other than consumer goods, inventory, farm products
inventory
goods for sale or lease to others in the ordinary course of business, or raw materials, work in process, or materials used or consumed in business
accessions
goods physically united with other goods while retaining separate identity
farm products
goods used for or produced by farming operation, except uncut timber
intangibles
include intellectual property, financial instruments (e.g., stocks, bonds, cash proceeds), accounts (right to payment), promissory note / chattel paper (record of monetary obligation and security interest in or lease of specific goods)
purchase money security interest
interest that arises where a secured party advances money or credit to enable the debtor to purchase the collateral itself (i.e., seller finances the sale)
valid security interest in collateral requires
1) attachment to collateral
2) perfection of the interest
attachment rqeuires
1) security agreement
2) value
3) rights to collateral
security agreement for attachment means
Debtor must authenticate security agreement granting the creditor a security interest in collateral + reasonably identify collateral
exception for security agreement (attachment
creditor in possession, after acquired property (but not consumer goods unless debit acquired rights within 10 days)
perfection
- auto perfection
- filing of notice
- possession
- control
automatic perfection happens when?
1) PMSI for consumer goods
2) non consumer deposit accounts
3) small scale assignment of account receivable
filing notice – financing statement should include
debtor’s address and correct name (as long as findable it should be ok)
possession perfection is effective when?
upon and for the duration of possession
NOT applicable for intangible goods
perfection of security interest in proceeds
remains automatically and temporarily perfected for 20 days from when debtor receives the proceeds
security interest in proceeds may be effective beyond the 20 days if:
- cash proceeds
- financing statement in the same office
- perfected within 20 days
when reperfection is needed
lapse
debtor or collateral moves out of state
lapse
A perfected security interest lasts 5 years. Perfected secured party must file a continuation statement within six months before the expiration of the 5-year period. Otherwise, the perfection lapses, and the perfection procedure must be repeated
Debtor or collateral moves out of state
Perfection continues in the other jurisdiction for 4 months (debtor) or 1 year (collateral), respectively. Perfection is continuous from the original perfection date if the security interest is reperfected (e.g., financing statement filed) in the new jurisdiction within the 4 months or 1 year, respectively
BIOC takes
free of a security interest held by a secured creditor in the inventory (priority over the creditor)
requirements to be a BIOC
- buys in good faith
- without knowledge that sale violates rights of another party
- In the ordinary course from a person int he business of selling goods of that kind
perfected, unperfected, prior perfected, liens, unperfected vs unperfected
first filed perfect > next filed perfect > unperfected
prior perfected > liens
first unperfected to attach > next unperfected to attach
exception to general priorities line up
1) accession vs whole: whole > accession
2) after-acquired equipment vs PMSI in same equipment: PMSI goes first
3) mortgage interest vs security interest in fixture: creditor with interest in fixture must perfect in 20 days or holder of mortgage interest will prevail
