Secured Transactions

Question 1

What is a PMSI?

Answer 1

Purchase Money Security Interest

A PMSI allows a lender to have priority over other security interests in certain goods.

Question 2

Under what conditions does a PMSI in inventory have priority?

Answer 2

A PMSI in inventory has priority only if:
* The PMSI is perfected by the time the debtor receives possession of the collateral.
* The purchase-money secured party sends an authenticated notification of the PMSI to the holder of any conflicting security interest before the debtor receives possession of the collateral.

Perfection refers to the legal process that makes a security interest enforceable against third parties.

Question 3

Fill in the blank: A PMSI has priority over other security interests in the same goods, while a PMSI in inventory has priority only if it is perfected by the time the debtor receives possession of the _______.

Answer 3

collateral

This emphasizes the importance of timing and notification in securing priority.

Question 4

True or False: A PMSI in inventory automatically has priority over conflicting security interests.

Answer 4

False

A PMSI in inventory requires specific conditions to establish priority.

Question 5

What must a purchase-money secured party do to establish priority for a PMSI in inventory?

Answer 5

Send an authenticated notification of the PMSI to the holder of any conflicting security interest before the debtor receives possession of the collateral.

This notification is crucial for ensuring that other secured parties are aware of the PMSI.

Question 6

What is a PMSI?

Answer 6

Purchase Money Security Interest

A PMSI is a special type of security interest that enables a lender to have priority over other creditors when the debtor uses the loan to purchase specific collateral.

Question 7

In what type of goods does a PMSI prevail over other security interests?

Answer 7

Goods other than inventory or livestock

This means that a PMSI can secure interests in tangible personal property that is not classified as inventory or livestock.

Question 8

What condition allows a PMSI to prevail over other perfected security interests?

Answer 8

Secured party perfects before or within 20 days after the debtor receives possession of the collateral

Perfection refers to the legal process that makes a security interest enforceable against third parties.

Question 9

True or False: A PMSI can only prevail over security interests that are perfected after the PMSI is established.

Answer 9

False

A PMSI can prevail over all other security interests, even those that were perfected earlier, under the specified conditions.