Secured Transactions Flashcards
What doesn’t Article 9 apply to?
Statutory leans, mechanic’s leans, tax liens
Types of tangible personal property
Consumer goods
Farm products (must be farmer)
Inventory - held for sale or lease, or consumed
Equipment (residual category)
Types of intangible personal property
Account - right to payment arising out of transaction
instrument - negotiable note or check.
chattel paper.
savings and checkings account (does not include consumer accounts).
documents - title, bills of lading, warehouse receipts.
investment property
commercial tort claims (BUT NOT individual claims involving personal injury).
General intangibles (residual) - goodwill, etc.
Three attachment events
(1) Value: can include antecedent debt.
(2) Debtor has rights to collateral.
(3) Article 9 statute of frauds
- evidence grant, debtor authenticates
- describe collateral for third party identification (commercial tort claims and consumer goods need to be specific).
- EXCEPTION: possession persuant to security agreement.
After-acquired collateral
NOT for commercial tort claims
ONLY for those consumer goods acquired within 10 days of secured party giving value.
Attachment to proceeds
Attachment is automatic for identifiable proceeds.
Perfection by filing.
NOT allowed for deposit account collateral.
Central filing, Secretary of State.
Where to file: where debtor is located.
- individual: principal residence.
- corporation: state of incorporation.
- unregistered org: executive office.
Contents of financing statement
(1) debtor’s name: if error, presumption is that error is misleading.
- for after-acquired collateral ONLY, must refile within 4 months of name change.
(2) name of secured party
(3) type of collateral: description can be super-general.
(4) debtor authorization.
- authenticated security agreement = automatic authorization.
- real or digital signature okay.
Refiling requirements for financing statement
5 year lifespan.
MUST file continuation statement within 6 month before the 5 year deadline, to extend another 5 years.
If debtor relocates to new state, must refile within 4 months.
If collateral is sold, then must re-file ONLY IF new owner is in another state.
lien notation on certificate of title
If goods (e.g. automobile) under certificate of title statute, ONLY way to perfect is by notation on certificate of title. -EXCEPTION: regular seller of goods (e.g., inventory of automobile retailer)
Perfection by possession
NOT for accounts, commercial tort claim, general intangible, or deposit account.
MAY perfect through possession by a third party.
Perfection by control
Ways to get control:
(1) bank and secured party and debtor agree in authenticated writing;
(2) put account in secured party’s name.
if bank = secured party, control is automatic.
Automatic perfection
(1) PMSI in consumer goods
(2) Proceeds: traceable and identifiable.
- -for non-cash proceeds, attachment is not automatic beyond 20 days unless the “same office” rule applies.
Determining priority
(1) has the party’s interest attached?
(2) As between two unperfected, first to attach wins.
(3) As between perfected and unperfected, perfected wins.
(4) As between two perfected, the first to file or perfect wins.
EXCEPTIONS:
(1) PMSI in equipment: seller of after-acquired collateral gets priority if filed within 20 days of sale.
(2) PMSI in inventory: seller of after-acquired collateral gets priority if perfected before delivery and notification to prior secured party.
Buyer in ordinary course of business
(1) purchaser of goods
(2) from someone who is in the business of selling those types of goods
(3) with no knowledge that sale violates secured party rights
EXCEPTIONS:
- if security interest was not created by the seller, then no BOCB status.
- if secured party authorization, anyone gets free and clear.
- “garage sale”: consumer goods in possession of seller sold to buyer are free and clear as long as buyer had no knowledge of the interest and the secured party has not filed financing statement.
