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Bar II > Secured Transactions > Flashcards

Secured Transactions Flashcards

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1
Q

perfect sp v. perfect sp

A

FTFOP

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2
Q

perfect sp v. unperfected sp

A

perfected

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3
Q

unperfected sp v. unperfected sp

A

first to attach

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4
Q

sp v. judicial lien

A

whichever arose first - perfection or lien

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5
Q

sp v. buyer

A

buyer buys with interest attached unless exception applies

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6
Q

types of tangibles

A

consumer goods
equipment
farm products
inventory
accessions
commingled

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7
Q

types of intangibles

A

chattel paper
investment property (stocks)
accounts receivable
deposit accounts

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8
Q

secured interst in fixtures v. real property interest

A

SI in fixtures has priority if filed before real property interest is recorded

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9
Q

perfected SI in fixtures v. judicial lien

A

perfected SI wins

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10
Q

PMSI in fixtures v. prior real property interst

A

PMSI wins if filed before goods became fixtures or within 20 days

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11
Q

SI in fixtures v. prior construction mortgage

A

construction mortgage wins if filed before goods became fixtures

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12
Q

requirements for attachment

A

-security agreement
-value given
-debtor has rights

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13
Q

security interest can cover

A
  • future advances (clause)
  • after acquired (don’t need clause for this if its inventory)
  • proceeds (automatic)
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14
Q

requirements for perfection

A

attachment and one of the five:

  1. filing
  2. certificate of title
  3. possession
  4. control
  5. automatic PMSI - consumer goods
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15
Q

required info for financing statement

A

debtor’s name
description of collateral
secured party’s name

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16
Q

majority rule for debtor’s name

A

if debtor has valid driver license where the financing statement is going to be filed, use that name exactly

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17
Q

test for if debtor’s name is ok

A

standard search finds it

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18
Q

how to maintain perfection through expiration

A

FS is good for 5 years, file new one within 6 months of end and get another 5 years

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19
Q

how to maintain perfection through name change

A

SP is still perfected for 4 months. amend within 4 months and stay perfect

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20
Q

how to maintain perfection through collateral use change

A

SP doesn’t have to do anything

21
Q

how to maintain perfection through debtor moving out of state

A

SP has until financing statement expires or 4 months to file new financing statement in new jurisdiction - whichever is sooner

22
Q

how to maintain perfection through collateral moving out of state to new debtor

A

creditor has one year to file financing statement in new jurisdiction

23
Q

how to maintain perfection in proceeds

A

AUTOMATIC for 20 days

then, must amend FS unless
- identifiable cash proceeds
- same office rule

or, just perfect again

24
Q

when does same office rule apply

A

SI was perfected by filing FS and
new FS would be filed in same office and
proceeds were not purchased with cash

25
Q

choice of law for perfection

A

debtor is individual: file where debtor is located
debtor is registered org: file where organized

debtor is unregistered org
with one place of business: file at place of business
with multiple places of business: file at CEO

26
Q

special PMSI rule for SP v. lien creditor

A

if sp files on a psi within 20 days of debtor getting possession of the collateral, SP still takes priority over LC who shows up between time of attachment and SP filing

27
Q

sp v. lc rule for future advances

A

future advance by SP will take priority over LC if

-made without knowledge of lien
- within 45 days of lien arising
- pursuant to commitment entered into without knowledge of the lien

28
Q

PMSI super priority rule for goods other than inventory and livestock

A

PMSI in goods other than inventory or livestock has priority over conflicting security interest in same goods or proceeds IF

PMSI is perfected at time debtor receives possession of the collateral or within 20 days after

29
Q

PSMI super priority rule for inventory

A

PMSI in inventory has to be perfected at time debtor gets possession of inventory

creditor must send authenticated notice to holders of previously filed security interests in the inventory

if both are met, have super priority

30
Q

if no perfection, buyer takes free if buyer

A
  1. gives value and receives delivery
  2. without knowledge of the SI and
  3. before SI is perfected
31
Q

does buyer take free if SP had incorrect info on FS

A

yes if buyer reasonably relied on it

32
Q

general rule for buying

A

if you buy with a security interest on it, you take it home with security interest on it

33
Q

exceptions to general rule about buying and taking the security interest

A

authorized sale exception
unauthorized sale exception - BIOCOB

34
Q

rule for BIOCOB

A

BIOCOB takes free of security interest created by his seller even though
1. buyer knows SI is perfected and
2. buyer knows off its existence

if buyer’s seller was a BIOCOB, then buyer is protected via shelter rule

35
Q

definition of BIOCOB

A
  • buys in good faith
  • without knowledge that the sale violates rights of SP
  • buys in ordinary course from someone who works in that biz
36
Q

garage sale rule

A

buyer will take free of perfected SI if buyer
- buys without knowledge of SI
- buys for value and
- buys for own personal family household purpose

SP can defeat this by simply filing a FS

37
Q

options for repossession

A
  • self help
  • judicial action
    -foreclosure
38
Q

what can SP not do for self help

A

no breach of peace - no violence or potential for violence

presence of debtor + verbal objection = breach

simple trespass is ok - night is right

commercial premise less likely to be problem

39
Q

standard for foreclosure sales

A

commercial reasonableness

sold in manner something of that kind would normally be sold in

40
Q

notice requirement for foreclosure sale

A

must provide notice to debtor and any other interested parties at least 10 days before

consumer goods - must send notice as to any deficiency or surplus of sale

41
Q

exceptions to notice requirement for foreclosure sale

A

collateral is perishable/ threatens to decline rapidly
collateral is of type customarily sold on recognized market
person has waived rights

42
Q

when can SP buy collateral himself

A

public sale - ok

private sale - if collateral is a type customarily sold in recognized market or is type where there are widely distributed price quotations

43
Q

effect of sale on security interest

A

rids collateral of foreclosing SP’s interest and any subordinate

any superior interests survive

44
Q

hierarchy of where foreclosure money goes

A

expenses of repo and sale
foreclosing SP’s debt
subordinate SP’s debts in order of priority
surplus to debtor

45
Q

requirements for strict foreclosure

A

SP c an keep property to fully or partially satisfy debt if

  1. debtor consents by agreeing or failure to make written objection within 20 days
  2. SP sends written notice of intent to keep collateral
  3. none of the notified parties object within 20 days

exception: no partial strict foreclosure in consumer transactions
exception: 60% rule

46
Q

what is the consumer goods 60% rule

A

if debtor has paid at least 60% of cash price for a PMSI or for the loan, SP must sell the collateral within 90 days after repo (can’t keep it)

unless debtor waives right after default

47
Q

SP’s liability for failure to comply with repo rules

A
  1. actual damages
  2. consumer goods - at least 10% of cash price + amount equal to all interest charges to be paid over life of loan
  3. possible loss of deficiency judgement
48
Q
A

Bar II (16 decks)

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