Secured Transactions Flashcards

1
Q

What are Secured Transaction Attachments?

A

When a security interest is legally enforceable
o Secured interest must be supported by consideration given
o Debtor must actually own the rights to the collateral or have possession
o Secured interest must be recorded

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2
Q

What is Perfection of Interest?

A
  1. Gets higher priority over others claiming rights to collateral after the perfection takes place
  2. Attachment must take place first before Perfection
  3. Perfection occurs by:
    o Filing Financing Statement
    o Possessing the Collateral
  4. Automatically Perfected when
    o Store sells a consumer good on credit
    Store retains security interest
    o A bank finances the purchase of a consumer good
    Bank retains security interest
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3
Q

What are Priority Rules?

A

o If two parties are perfected, then the first one to file wins
o If neither party is perfected, then the first one to attach wins

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4
Q

What are Creditors holding a lien?

A
  1. Holds priority over claims to collateral vs. unperfected security interests
  2. Beats perfected security interests filed after lien attachment
    o Exception: Purchase money security interest, which has a 10 day grace period to be filed
  3. Buyers purchasing in the ordinary course of business are immune from security interests held by merchants
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