Secured Transactions Flashcards
Article 9 applies to:
consensual security interest in personalty or fixtures
Determining the tangible collateral depends on?
primary use of collateral in hands of debtors
Attachment means that the security interest is _____.
enforceable
Requirements for attachment.
1) Value must be given by creditor
2) contract - security agreement
3) rights
Is a contract required for a security transaction when the secured party is in possession of collateral?
No - only when debtor retains possession of collateral
What is required for the security agreement?
1) authenticated by debtor (signed/electrically marked); and
2) reasonable identified collateral
After acquired collateral clauses are _____.
enforceable.
allows lender’s lien to float
Proper perfection helps the secured party be protected from?
competing creditors
How to attain perfection?
1) secured party’s taking possession of the collateral
2) PMSI automatic for consumer goods
3) secured party files notice (record or constructive notice) - by filing the security agreement or a financing statement
What is a purchase money security interest?
automatically attaches to consumer goods upon attachment.
What must be included with financing statement?
1) debtor’s name and address
2) creditor’s name and address; and
3) description of collateral
Where is the financing statement filed in VA?
State corporation commission - filing done centrally
individual (principal residence)
corporation (where it is organized)
Attached unperfected creditor is?
creditor who creates an enforceable security interest, it attached but not perfected due to an error
Order of priority for security agreement?
1) buyer in ordinary course
2) perfected attached creditor
3) lien creditor - judicial lien
4) non-ordinary course buyer
5) attached unperfected creditor
6) general unsecured creditor
1) buyer in ordinary course
2) perfected attached creditor
3) ________
4) non-ordinary course buyer
5) ________
6) general unsecured creditor
3) lien creditor - judicial lien
5) attached unperfected creditor
Attached unperfected creditor’s interest is enforced against ____.
1) debtor; and
2) any subsequent attached unperfected creditor or general unsecured creditor
To determine priority between perfected attached creditors?
Priority to first to file; can file at onset of loan negotiations and priority will related back to early filing if secured agreement is attached.
Determining priority between after-acquired collateral financier and subsequent holder of a purchase money security interest (PMSI) requires?
a) consumer goods - PMSI
b) equipment - PMSI, if filed properly within 20 days of debtor taking possession
c) inventory - PMSI if filed properly when debtor takes possession and PMSI notifies earlier after-acquired collateral financier
Determining priority between perfected attached creditor and buyer in ordinary course?
Buyer in ordinary course
If a debtor is default under the security agreement, what can the creditor do?
1) self-help repossession (not made over any protest of debtor)
2) repossession by judicial writ of attachment (Sheriff)
Once the creditor repossesses the collateral, what can creditor do?
1) strict foreclosure - retain collateral in full satisfaction of debt
2) sale of the collateral (public or private)
3) action for a deficiency judgment
Once a creditor repossess and strictly forecloses the collateral, what must the creditor do to give notice?
- consumer goods - written notice to debtor and secondary obligators (surety)
- property other than consumer goods - written notice to debtor and other creditors who have told foreclosing creditor of their security interest including perfected attached creditors
Is foreclosure available to a creditor when the collateral is consumer goods and debtor has paid at least 60% of loan?
strict foreclosure is not allowed
must sell collateral within 90 days or be liable in conversion
Is foreclosure available to a creditor when the collateral is consumer goods and debtor has paid at least 60% of purchase price for a PMSI?
strict foreclosure is not allowed
- secured party must sale collateral within 90 days or be liable in conversion
