Secured Transactions

Question 1

what is attachment? how does it work?

Answer 1

creating a valid security interest in collateral. need:
1. agreement
2. value by creditor
3. debtor right in collateral

note: can also get SI to attach if no agreement through
1. possession & control

Question 2

what kind of SI can be attached by control

Answer 2

usually bank loans

Question 3

what is perfection

Answer 3

holder of SI puts the world on notice that SI exists; will have superior rights

Question 4

how is SI perfected

Answer 4

1. filing statement at central filing location
2. possession
3. control
4. automatic
5. temporary

Question 5

inventory

Answer 5

goods had for sale or lease and supplies/materials quickly used up in business

Question 6

special perfection rules

Answer 6

1. vehicles - perfected by notation on title (dealers exception = perfect by filing)
2. things attached to land - perfected with filing statement that describe land and filed in county where land located
3. most things can be perfected by possession
4. business deposit accounts must be perfected by control
5. PMSI in consumer good automatically perfected

Question 7

consumer good

Answer 7

good used or bought for personal or household purposes

Question 8

equipment

Answer 8

used for businesses; catch all

Question 9

farm products

Answer 9

farming stuff for farmers

Question 10

instruments

Answer 10

paper representing right to be paid

Question 11

What is seller PMSI? Creditor PMSI

Answer 11

seller - sale + SI in item

creditor - loan for item + used + SI in item

Question 12

documents

Answer 12

right to receive goods (receipts)

Question 13

accounts

Answer 13

right to payment for property sold or services (accounts receivable)

Question 14

elements of written security agreement

Answer 14

1. record
2. signed by debtor
3. describing collateral (reasonably identify)

Question 15

temporary perfection of proceeds

Answer 15

secured party will automatically take proceeds for 20 days

Question 16

priority in proceeds

Answer 16

perfected SI in proceeds have same date of priority as original collateral

Question 17

what happens to perfection if debtor moves or changes name

Answer 17

effective within 4 months, after need to refile

Question 18

perfection by possession

Answer 18

perfected moment of possession and continues as long as retained

must be tangible

Question 19

What is needed to perfect upon filing financial statement

Answer 19

secured name

debtors (license or registered org name NOT trade name) and

description of the collateral (can be generic)

Question 20

will minor error affect filing statement

Answer 20

no but if would not be discovered
in a filing office search -> major error and no perfection

note. error by filing office does not impact

Question 21

how can secured take control to perfect

Answer 21

bank auto has control over deposit account

if not bank, put in name or control agreement

Question 22

how long does perfection last

Answer 22

every 5 years need to file a continuation statement

Question 23

need secured party file termination statement

Answer 23

not unless on demand of debtor, then 20 days

if consumer goods, must file within 1 month

Question 24

perfected secured v perfected secured

Answer 24

first to file or perfect wins

Question 25

buyer in the ordinary course of business

Answer 25

good faith, without knowledge that sale violates rights of another person, and seller is in the business of selling goods of the kind purchased

Question 26

pmsi v pmsi

Answer 26

seller pmsi over lender pmsi; otherwise first file or perfect

Question 27

pmsi v non-pmsi

Answer 27

pmsi wins

Question 28

perfected secured vs perfected unsecured

Answer 28

perfected secured

Question 29

perfected security v other creditors

Answer 29

perfected security wins

Question 30

consumer to consumer exception in sale of goods (garage sale exception)

Answer 30

buyer takes free of SI even if perfected if buyer buys
without knowdlege
for value
for personal use
before filing statement

Question 31

secured party v buyer

if authorized? not authorized but in the ordinary course of business?

Answer 31

if authorize -> free of SI
- implied authorization by quick selling goods

if no authorize -> buyer in ordinary course of business takes free of nonposessory SI in goods created by buyer’s seller

TEST: authorization? BIOC? If no -> secured party wins

Question 32

secured party v. statutory lien

Answer 32

statutory lien wins if has goods

Question 33

secured party v. judicial lien

Answer 33

first in time (levy v. perfection)

Question 34

accession

Answer 34

goods physically united with another but identifiable

perfection upon attachment to the thing
priority follows general rules
exception: accession < whole vehicle

Question 35

fixture. How perfected?

Answer 35

good so related to real property that interest in real property

perfected by filing in county

perfected fixture interest>perfected real estate interest

Question 36

rights on default

Answer 36

Si can sell collateral use use funds to pay sale if every part of sale is reasonable (notice, timeliness, price)

OR

can self-help as long as no breach of peace (physical presence + objection is enough)

Question 37

when does PMSI take super priority

Answer 37

goods in things not inventory: priority if perfected before or within 20 days after received

goods in inventory: priority if perfected at time debtor gets possession and authenticated notification to other secured parties of the PMSIw

Question 38

what form of perfection is supreme

Answer 38

control has priority

best - co-owner -> maintain deposit account -> control agreement

Question 39

how to know what collateral is when commingled

Answer 39

Lowest intermediate balance rule

time b/w collateral deposited and now

Question 40

what is needed for strict foreclosure (maintain collateral for debt)

Answer 40

secured party must send proposal to secured parties

debtors consent

if no permission -> sale

Question 41

does debtor have right to redeem

Answer 41

yes, may redeem under acceleration clause and tender full balance