Secured Transactions Flashcards
Article 9 UCC
Applies to any transaction intended to create a security interest in personal property or fixtures
A security interest gives a creditor the right to sell a debtors property to satisfy a debt
Parties of Article 9
Secured party: is the creditor with the security interest
Debtor: party with the ownership interest in the persona obligation
Obligor: party held responsible for the underlying obligation (generally also the debtor but also could be a guarantor)
Collateral
The property in which a security interest is created
Types of Collateral
Goods: all things that are movable
Consumer Goods: goods that are used mainly for personal, family or household purposes
Inventory: goods that are kept by person for sale or lease
Accounts: security interest in debtor’s accounts
Attachement
How a security interest is created
Security interest attaches to collateral when it become enforceable against the debtor
Requirements:
1. secured party extends value to the debtor
2. the debtor has rights in the collateral or the power to transfer rights to the secured party AND
3. a UCC 9-203(b)(3) condition is met
-usually satisfied by authentication of a security agreement r when party takes possession or control
Authentication
requires debtor to authenticate the agreement by providing the secured party with a reasonable description of the collateral in writing
-then signature, thumb print etc are all enough as long as the debtor possessed the intent to authenticate the writing
Perfection
Once the security interest attaches then it is enforceable
If the security interest does NOT attach then it cannot be perfected
Methods for SI to be perfected:
1. Filing: the filing of a financing statement or the security agreement with the state
-must have the debtors name, the secured party’s name, an adequate description of the collateral AND the filing fee
- Taking possession
- automatic perfection:
-
Priority Rules
-perfected security interest has priority over a conflicting unperfected SI in same collateral
-multiple perfected creditors: first to file obtains priority
-if collateral that cannot be filed–the first to perfect
Lein creditors:
basically same status as perfected secured creditors