Secured Transactions Flashcards
SCOPE
Consignments
- Over $1,000
- Anything OTHER THAN personal, family, household use
- UNLESS it’s obviously just a consignment store—“Joe’s Consignment Goods” “Betsy’s Consignment Furniture Store”
CLASSIFICATION
Equipment vs Inventory
CLASSIFICATION
Equipment vs Inventory
- BOTH BUSINESS only
- Inventory is consumed (pencils, paper, raw materials) or sold
- Equipment is something you use over and over again for the business
ATTACHMENT
ATTACHMENT
VCR
- Value
- Contract (security agreement)
- Rights to the CL (debtor)
ATTACHMENT
How to prove you have a security agreement
ATTACHMENT
How to prove you have a security agreement
- POSSESSION:
- Can be oral ONLY IF coupled with POSSESSION (pledge)
- RECORD:
- Written/electronic
- Reasonably identify CL (stricter than the FS)
- Can just say a category (“equipment”), EXCEPT for consumer goods
- Debtor
- CONTROL
- Intangibles
Attach in after-acquired property (CONSUMER GOODS):
After-acquired property
- IF CONSUMER GOODS—only if acquired within 10 days
PERFECTION
Possession:
PERFECTION
Possession
- Anything tangible
- Must be CONTINUOUS
PERFECTION
Financing statement
- Can’t be:
- Duration =
- Names of CR and DR:
- Termination statement:
Financing statement
- Can’t be seriously misleading
- Duration = 5 yrs
- EXCEPT fixtures = until mortgage is released/satisfied
- Update ONLY w/in 6 months of expiration
- Names of CR and DR
- DR name MUST MATCH public records (trade okay only if it would turn up in a search of the real name)
- Termination statement
- Do it quick—within one month
- IF CONSUMER GOODS—CR’s responsibility
- IF NON-CONSUMER—DR’s responsibility
PERFECTION
Automatic PERMANENT perfection:
Automatic PERMANENT perfection
- PMSI consumer goods
- Sale of PN
PERFECTION
Automatic TEMPORARY perfection:
Automatic TEMPORARY perfection
- Proceeds—20 days
- New value for Instruments, negotiables, securities—20 days
PERFECTION
- PMSI *
Must be perfected by when?
- GOODS:
- CONSUMER GOODS:
- INVENTORY:
- PMSI*
- Must be perfected by the time DR receives the goods
- GOODS:
- 20 day GRACE PERIOD
- CONSUMER GOODS:
- Automatic perfection
- INVENTORY:
- E.g. Bank1 takes SI in DR’s “inventory” and files.Then Supplier takes PMSI in some new inventory delivered to the DR. Bank1 already has a perfected SI in “inventory” so this would be covered. Supplier can prevail over the earlier-filed Bank1 by:
- Perfecting BEFORE the DR receives the goods (i.e. there’s no grace period—must file first)
- Giving NOTICE to CR’s who already have a SI in the DR’s “inventory”
PERFECTION
How to perfect (by CL):
- AR
- Goods
- Dep accts
- Instruments (PNs)
- Inventory
- Investment property
How to perfect (by CL):
- AR
- ONLY by filing
- Goods
- Possession
- Filing
- Dep accts
- ONLY by control
- Instruments (PNs)
- Filing
- Inventory
- Filing
- Possession
- Investment property
- ONLY control
PRIORITY
BFP who receives delivery
BIOC
BFP garage sale
Donee (gift)
BFP who receives delivery
- SP has to be PERFECTED to win
- Can perfect LATE if a PMSI within the 20-day grace period
BIOC
- BIOC = ordinary purchase, without knowledge that the sale violates SI (can know there is one, just not that your purchase violates it).
- Prevails over PERFECTED
- UNLESS CR perfected by POSSESSION (they got there first)
BFP garage sale
- Consumer goods for seller AND buyer
- Prevails over PERFECTED
- UNLESS CR perfected by POSSESSION (they got there first)
- UNLESS PMSI + FS
Donee
- Takes SUBJECT TO the SI
- So a perfected/unperfected CR still has priority
FIXTURES
When do the following SI’s prevail over the SI in REAL ESTATE?
- SI in the building goods
- SI in FIXTURES
- PMSI in FIXTURES
FIXTURES
When does the fixture SP prevail over the RE SP?
SI in the building goods
- NEVER — subsumed by the real estate SI when construction complete.
SI in FIXTURES
- First to record/perfect wins (have to beat the mortgagor)
- Perfect by filing a FIXTURE FILING
- Describes the RP
- Filed in same office as mortgage will be recorded
PMSI in FIXTURES
- Perfect w/in 20 days of INSTALLATION and you beat the mortgagor
- UNLESS competing IS is a construction mortgage (loan that enabled the whole building process to begin)
REPOSSESSION
Foreclosure sale
- NOTICE
- Commercially reasonable
REPOSSESSION
Don’t breach the peace
- CR cannot delegate—strictly liable for repo man’s wrongs
Foreclosure sale
- NOTICE
- To DR
- If CONSUMER GOODS: explain deficiency
- UNLESS waived AFTER default
- To other CRs
- Notice NOT NEEDED if stuff that needs to be sold immediately to preserve their value
- TIMING: Reasonable time before sale (10+ days if non-consumer)
- To DR
- Commercially reasonable
- BOP on CR
- CR can buy only if public sale
FORECLOSURE
CR liability for not comm rzbl sale
CR liability for not comm rzbl sale
- Actual damages
- Consumer goods
- CANNOT RECOVER DEFICIENCY
- CR has to repay the interest
- Penalty—10% of the principal
- Non-consumer goods
- Rebuttable presumption that there’s no deficiency left
