Secured Transactions Flashcards
a sale of accounts is governed by
ucc article 9 even tho its mot one in which prop secures an obligation
since article 9 governs a sale of accounts, 3 factors for security interest still apply
under UCC §9-203(b) a security interest is enforceable if 3 criteria are satisfied
1) value has been given,
2) debtor had rights in the property, and
3) authenticated security agreement described the collateral + signed by debtor
security interest attaches when
it becomes enforceable unless the time of attachment has been postponed by agreement
an enforceable security interest becomes perfected when
it properly lists the debtor, indicates the collateral, and was filed in the appropriate filing office
or possession of the collateral by the secured party
sufficient description of collateral (UCC §9-108(a))
- reasonably identifies what is described
- a description that identifies the collateral by category or by a type of collateral defined in the UCC reasonably identifies the collateral
insufficient description of collateral
“all of debtor’s assets”
“all personal property owned by company”
dont reasonably ID the collateral
Perfection through possession
perfected when secured party takes possession of the goods
UCC § 9-309(1) - a security interest is automatically perfected upon attachment if
goods are “consumer goods” and,
the security interest is a purchase-money security interest.
Security interest perfected before judgment creditor lien
a security interest is subordinate to the rights of a person who became a lien creditor before the security interest was perfected
an unperfected security interest is subordinate to a judicial lien in
the same asset
Unperfected security is subordinate to
a perfected security interest in the same property
Priority of perfected security interest
Priority between competing perfected security interests is generally determined by the “first to file or perfect” rule
unperfected vs. unperfected interest
first in time first in right controls
A purchase-money security interest is an interest that
secures a debt that was incurred in order to enable the debtor to acquire rights in or the use of the collateral.
retained by the seller to secure buyer’s obligation to pay remainder of purchase price
PMSI in consumer goods perfects automatically
purchase-money security interest in collateral has priority over a
competing non-purchase-money security interest (even if it was perfected before the purchase-money security interest) if the purchase-money interest was perfected when the purchaser received possession of the collateral or within 20 days thereafter
equipment is defined under article 9 of UCC
referring to goods other than inventory, farm products, or consumer
goods that are used in the business but not inventory
goods = all things that are movable when a security interest attaches
and fixtures.
consumer goods
are bought for use primarily for personal, family, or household purposes
UCC § 9-406(a), an account debtor with respect to assigned accounts is entitled to discharge its obligation by
paying the assignor only until the account debtor receives notice of the assignment to the assignee, authenticated by either the assignor or the assignee, directing the account debtor to make payment to the assignee.
Once such a notice has been received, the account debtor is entitled to discharge only by paying the assignee.
Following a debtor’s default, if the collateral is “equipment,” a secured party may
leave the equipment in place and render it unusable
A secured party’s disposition of collateral after a debtor’s default transfers
the debtor’s rights in the collateral to any transferee for value, and also discharges the secured party’s interest
in the collateral and “any subordinate security interest
Secured party disposal of secured property
After default by the debtor, a secured party may dispose of the collateral. UCC § 9-610(a).
If it does so, the proceeds of that disposition will be applied first to the expenses of that process and then to the satisfaction of the debtor’s obligation to the secured party. UCC § 9-615(a).
Before disposing of the collateral, however, the secured party must send the debtor a “reasonable authenticated notification of disposition.” UCC § 9-611(b).
The only exception to this notification requirement is if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.
A security interest in fixtures, even if perfected, is ordinarily subordinate to
a conflicting interest of an encumbrancer of the related real property
exceptions to a security interest in fixtures ordinarily being subordinate to encumberance of real property
priority of a purchase-money security interest in fixtures as against an encumbrancer of the related real property
a fixture filing for this exception ^ must provide
a description of the real property to which the collateral is related, and
must be filed in the office in which a mortgage on the related real estate would be filed, not in the state’s central filing office