Secured Transactions Flashcards
perfect sp v. perfect sp
FTFOP
perfect sp v. unperfected sp
perfected
unperfected sp v. unperfected sp
first to attach
sp v. judicial lien
whichever arose first - perfection or lien
sp v. buyer
buyer buys with interest attached unless exception applies
types of tangibles
consumer goods
equipment
farm products
inventory
accessions
commingled
types of intangibles
chattel paper
investment property (stocks)
accounts receivable
deposit accounts
secured interst in fixtures v. real property interest
SI in fixtures has priority if filed before real property interest is recorded
perfected SI in fixtures v. judicial lien
perfected SI wins
PMSI in fixtures v. prior real property interst
PMSI wins if filed before goods became fixtures or within 20 days
SI in fixtures v. prior construction mortgage
construction mortgage wins if filed before goods became fixtures
requirements for attachment
-security agreement
-value given
-debtor has rights
security interest can cover
- future advances (clause)
- after acquired (don’t need clause for this if its inventory)
- proceeds (automatic)
requirements for perfection
attachment and one of the five:
- filing
- certificate of title
- possession
- control
- automatic PMSI - consumer goods
required info for financing statement
debtor’s name
description of collateral
secured party’s name
majority rule for debtor’s name
if debtor has valid driver license where the financing statement is going to be filed, use that name exactly
test for if debtor’s name is ok
standard search finds it
how to maintain perfection through expiration
FS is good for 5 years, file new one within 6 months of end and get another 5 years
how to maintain perfection through name change
SP is still perfected for 4 months. amend within 4 months and stay perfect
how to maintain perfection through collateral use change
SP doesn’t have to do anything
how to maintain perfection through debtor moving out of state
SP has until financing statement expires or 4 months to file new financing statement in new jurisdiction - whichever is sooner
how to maintain perfection through collateral moving out of state to new debtor
creditor has one year to file financing statement in new jurisdiction
how to maintain perfection in proceeds
AUTOMATIC for 20 days
then, must amend FS unless
- identifiable cash proceeds
- same office rule
or, just perfect again
when does same office rule apply
SI was perfected by filing FS and
new FS would be filed in same office and
proceeds were not purchased with cash
choice of law for perfection
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
special PMSI rule for SP v. lien creditor
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
sp v. lc rule for future advances
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
PMSI super priority rule for goods other than inventory and livestock
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
PSMI super priority rule for inventory
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
if no perfection, buyer takes free if buyer
- gives value and receives delivery
- without knowledge of the SI and
- before SI is perfected
does buyer take free if SP had incorrect info on FS
yes if buyer reasonably relied on it
general rule for buying
if you buy with a security interest on it, you take it home with security interest on it
exceptions to general rule about buying and taking the security interest
authorized sale exception
unauthorized sale exception - BIOCOB
rule for BIOCOB
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
definition of BIOCOB
- buys in good faith
- without knowledge that the sale violates rights of SP
- buys in ordinary course from someone who works in that biz
garage sale rule
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
options for repossession
- self help
- judicial action
-foreclosure
what can SP not do for self help
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
standard for foreclosure sales
commercial reasonableness
sold in manner something of that kind would normally be sold in
notice requirement for foreclosure sale
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
exceptions to notice requirement for foreclosure sale
collateral is perishable/ threatens to decline rapidly
collateral is of type customarily sold on recognized market
person has waived rights
when can SP buy collateral himself
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
effect of sale on security interest
rids collateral of foreclosing SP’s interest and any subordinate
any superior interests survive
hierarchy of where foreclosure money goes
expenses of repo and sale
foreclosing SP’s debt
subordinate SP’s debts in order of priority
surplus to debtor
requirements for strict foreclosure
SP c an keep property to fully or partially satisfy debt if
- debtor consents by agreeing or failure to make written objection within 20 days
- SP sends written notice of intent to keep collateral
- none of the notified parties object within 20 days
exception: no partial strict foreclosure in consumer transactions
exception: 60% rule
what is the consumer goods 60% rule
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
SP’s liability for failure to comply with repo rules
- actual damages
- consumer goods - at least 10% of cash price + amount equal to all interest charges to be paid over life of loan
- possible loss of deficiency judgement
