Secured Transactions Flashcards
Article 9 of the UCC
When dealing with purchasers of chattle papers, what does “new value” mean?
“New value” means that the purchaser must give new consideration, such as cash or credit, to the transferor. Therefore, parties who take the chattel paper as payment for a debt, or as proceeds of other collateral, are excluded.
What is the priority between a security interest in fixtures versus a real property interest?
Generally, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor. However, a security interest in fixtures has priority over an interest in the real property with which the fixtures are associated if the security interest in fixtures is perfected by a fixture filing before the real property interest is recorded.
What is “acceptance of collateral”?
In lieu of disposing of the collateral, the secured party may usually accept the collateral in full or partial satisfaction of the obligation secured by the collateral.
What is the treatment of a disposition deficiency?
If, after the required payments and applications of proceeds have been made, there is a deficiency, then the obligor generally is liable for the deficiency.
What procedure should be followed if a debtor changes his, her, or its legal name?
If the debtor changes its name and the filed financing statement consequently becomes seriously misleading, then the secured party has four months in which to file an amendment to the financing statement reflecting the new name. Should the secured party fail to act within this four-month window, collateral acquired by the debtor after the four-month period is not covered by the financing statement. If a new debtor becomes bound by a security agreement, and the difference between the name of the original debtor and the name of the new debtor causes the financing statement to be seriously misleading, then the secured party has a similar four-month window in which to act.
What is the time limitation to redeem collateral used to satisfy their secured debt?
Redemption cannot occur if the secured party has disposed of the collateral or entered into a contract for its disposition, accepted the collateral in full or partial satisfaction of the obligation secured by the collateral, or collected on the collateral.
What is the special rule regarding PMSI in fixtures?
A PMSI in fixtures has priority over a prior interest in the real property with which the fixtures are associated when: i) The debtor has an interest of record in the real property (e.g., is an owner) or is in possession of the real property (e.g., is a lessee); and ii) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.
What priority is a PMSI in goods other than inventory or livestock given?
A PMSI in goods other than inventory or livestock prevails over all other security interests in the collateral, even if they were previously perfected, if the secured party perfects before or within 20 days after the debtor receives possession of the collateral.
In a consumer transaction, may a secured party accept collateral for full or partial satisfaction?
In a consumer transaction, a secured party can accept the collateral only in full satisfaction of the obligation; an acceptance in partial satisfaction of the obligation is not allowed. Any attempted acceptance in partial satisfaction is void.
May a person amend a financing statement?
A person may amend a financing statement, such as by adding or deleting collateral covered by the statement. The amendment is generally effective as to the added item only from the date of the amendment. An amendment does not extend the period of effectiveness of the financing statement.
Under Georgia law, what is an oral objections affect on the “breach of the peace”?
The unequivocal oral protest of a defaulting debtor is a sufficient objection to render subsequent seizure an unlawful breach of the peace.
What is the effect of after-acquired property and future advances on financing statement collateral?
A financing statement may be effective to cover after-acquired property if such property falls within the collateral described, whether after-acquired property is mentioned as such in the financing statement or even contemplated by the parties at the time that the financing statement was authorized. Similar treatment is accorded to future advances.
What is the right to use or operate collateral?
The secured party may use or operate collateral for the purpose of preserving the collateral or its value. In addition, use or operation with respect to collateral that is not consumer goods may be in the manner and to the extent agreed to by the debtor.
What is the effect of an account debtor?
Upon receipt of notification, the account debtor may discharge her obligation only by paying the assignee; a payment made to the assignor does not discharge the account debtor’s obligation. Against the assignee, the account debtor may raise, unless waived, claims and defenses that arise from the transaction with the assignor who created the account, even those that accrue after the account debtor is notified of the assignment.
How are proceeds in fixtures handled?
Generally, the basic rules (e.g., first-to-file-or-perfect) govern priority if there are conflicting security interests and at least one of those interests is claimed as proceeds. Moreover, the filing or perfection date for the original collateral is treated as the filing or perfection date for the proceeds. UCC § 9-322(b)(1). This rule controls, even when the security interest in inventory is a PMSI, because the super-priority of a PMSI in inventory does not extend to proceeds that are not cash.
Who is entitled to file a financing statement?
Although the secured party or a representative of the secured party usually files the financing statement, any person may do so. The signature of the filing party is not required.
Under Georgia law, what does the PMSIs in livestock “notification” requirement require?
Notification is required only when the previously perfected security interest has been perfected by filing. When the PMSI is in livestock, the notification that must be sent to the holder of any conflicting security interests is effective only for six months
What is the general rules regarding what transactions follow Article 9 processes?
Article 9 governs a transaction that creates, by agreement, a security interest in personal property or a fixture. In addition, a lease, consignment, agricultural lien, and even a purchase of personal property may be subject to Article 9. Also, a real-property transaction can produce an obligation, such as the promissory note secured by a mortgage, that can be the subject of an Article 9 security interest.
What is the treatment of a disposition surplus?
If, after the required payments and applications of proceeds have been made, there is a surplus, the secured party generally must pay the surplus to the debtor.
What are “chattel paper”?
“Chattel paper” consists of one or more records that evidence both (i) a monetary obligation (e.g., a negotiable note) and (ii) a security interest in specific goods (e.g., a security agreement) or a lease of specific goods.
Generally, when does a security interest “attach”?
For the security interest to be enforceable against the debtor, three conditions must coexist: i) Value has been given by the secured party; ii) The debtor has rights in the collateral; and iii) The debtor has authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral pursuant to a security agreement.
What is the only manner that deposit accounts or letter-of-credit rights may be perfected?
By control.
What additional information must a notice for a consumer goods transaction include?
In addition to the above requirements for a non-consumer goods transaction, proper notice in a consumer goods transaction must also include: i) A description of any liability for a deficiency of the person to whom the notification is sent; ii) The telephone number from which the redemption amount is available; and iii) The telephone number or mailing address from which additional information concerning the disposition and secured obligation is available.
What is a security interest general an interest in?
A security interest is generally an interest in personal property or fixtures that secures payment or performance of an obligation.
Who is entitled to notice?
Notification of disposition is required to be sent to (i) the debtor, (ii) any secondary obligor, and, in the case of non-consumer goods, (iii) any other secured party or lien holder who held a security interest that was perfected by filing or pursuant to a statute, and (iv) any other party from whom the secured party has received authenticated notice of a claim or interest in the collateral.
What is the limitation on taking possession of collateral under default?
A secured party is required to use judicial process (e.g., a replevin action) to obtain possession of the collateral unless possession can be obtained without breach of the peace.
What is the treatment of sales of accounts, chattel paper, payment intangibles, or promissory notes?
When the underlying transaction is the sale of accounts, chattel paper, payment intangibles, or promissory notes, then the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.
What is the effect of a low disposition price?
A low price may trigger careful scrutiny by the court of the disposition and its reasonableness.
What is the “safe harbor” rule regarding debtor identification on financing statements?
Under the “safe harbor” rule, adopted by only a few jurisdictions, the financing statement may include the debtor’s “individual name” (which the UCC does not define), the name on the debtor’s driver’s license, or the debtor’s surname and first personal name.
What is the effect of an error in the secured party’s name on a financing statement?
An error in the name of the secured party on a financing statement is usually not seriously misleading and does not affect the perfection of the security interest because the filing system is not geared to a search based on the secured party’s name. Nevertheless, the secured party who files a financing statement with such an error may be subject to estoppel in favor of a holder of a conflicting claim in the collateral.
When are proceeds entitled to automatic continuous perfection?
1) Cash Proceeds 2) “Same Office”
When may a secured party purchase the disposed collateral?
A secured party may purchase the collateral at a public sale, but she cannot do so at a private sale unless the collateral is of a kind that is customarily sold on a recognized market (e.g., the New York Stock Exchange) or the subject of widely distributed standard price quotations. A secured party cannot purchase the collateral at a private sale when the prices are individually negotiated or when items are not fungible in a recognized market.
What is the effect of an error in the debtor’s name on a financing statement?
A financing statement that fails to accurately contain the debtor’s name is seriously misleading and therefore not effective to perfect the security interest. Nevertheless, when a standard search of the filing office records under the debtor’s correct name would disclose such a financing statement, the erroneous name does not make the financing statement seriously misleading.
Under Georgia law, what priority does a mechanic’s lien on farm machinery or equipment possess?
Under Georgia law, a mechanic’s lien on farm machinery or equipment will have priority over any perfected security interest covering that collateral, unless the perfected party filed a financing statement and the financing statement describes the particular piece of farm machinery or equipment that the perfected security interest applies to.
How is a security interest in proceeds perfected?
A security interest in proceeds enjoys temporary perfection and may also be entitled to indefinite automatic perfection. This perfection occurs even though the financing statement does not specifically mention proceeds.
Under Georgia law, what is the length of perfection associated with filing.
In Georgia, the financing statement is effective for five years or until the 20th day after any earlier maturity date required to be specified on the financing statement.
What is the objection period for secondary obligors when a secured party seeks to accept the collateral for full or partial satisfaction?
A secured party wishing to accept collateral in partial satisfaction must also send its proposal to any secondary obligor. An objection to the acceptance by a person to whom notification was sent is effective if it is received by the secured party within 20 days from the date that the notification was sent to that party.
What is an “agricultural lien”?
An “agricultural lien” is an interest in farm products (e.g., crops, livestock) that secures payment or performance of an obligation for either (i) goods or services furnished with respect to the debtor’s farming operation (e.g., livestock feed sold to a cattle rancher) or (ii) rent on real property leased by a debtor in connection with a farming operation.
Under Georgia law, what does the PMSIs in inventory “notification” requirement require?
Notification is required only when the previously perfected security interest has been perfected by filing. Notification is good for a five-year period and may be renewed.
What name is used for “registered organizations”?
When the debtor is a registered organization, the debtor’s name for purposes of the financing statement must be the name shown on public organic records. A public organic record includes the articles of incorporation or equivalent formation records filed to create a business entity, the record initially filed by a business trust, legislation that creates an organization, or a government-issued charter that forms an organization.
Under Georgia law, where should a person file a financing statement unrelated to real property?
For all collateral not related to real property, the financing statement, including one covering collateral of transmitting utilities, should be filed with the office of the clerk of the superior court of any county of Georgia (not with the secretary of state).
What is the general rule regarding cross-collateralization of PMSIs in inventory?
If inventory subject to a PMSI secures not only its own price or enabling loan but also the price or enabling loan of other purchase-money inventory, then the security interest in the inventory is a PMSI not only to the extent that the inventory secures its own price but also the price of the other inventory.
What types of collateral are associated with PMSIs?
A PMSI may exist only with respect to two types of collateral—goods (including fixtures) and software.
In what circumstances is collateral automatically perfected?
i) The casual or isolated assignment of accounts or payment intangibles that does not transfer a significant part of the assignor’s outstanding accounts or payment intangibles; ii) Sale of a payment intangible or promissory note; and iii) PMSI in consumer goods.
What is required within a security agreement?
For a security interest to attach to collateral, there must be a security agreement. In addition, the secured party must satisfy the Article 9 Statute of Frauds. This means that the security agreement must be established by the debtor’s authentication of the agreement, or the secured party’s possession or control of the collateral.
What is the general notice requirement for a disposition of collateral?
A secured party is generally required to send an authenticated notification of disposition. The notification is required to be reasonable as to its content, the manner in which it is sent, and its timeliness.
Must you file for collateral proceeds of non-filing collateral?
If the proceeds of non-filing collateral are filing collateral and the security interest in the non-filing collateral has been perfected by a method other than filing, then priority among conflicting perfected interests in the filing collateral is determined by the time of filing of a financing statement that covers the collateral.
What is the affect of a lapse between a perfected security interest versus another perfected security interest?
When there has been filing or perfection by a secured party, a lapse (i.e., a subsequent period in which there is neither filing nor perfection by that secured party) restarts the clock for that secured party; the date of perfection for that secured party is the earlier of the date of filing or perfection that occurs after the lapse.
What is the term for debtor interstate movement automatic temporary perfection?
If a debtor moves to another state, a perfected security interest remains perfected for four months after the debtor’s change in location, unless perfection would have ceased earlier under the law of the debtor’s former state. This four-month grace period also applies to collateral the debtor acquires after the debtor moves, i.e., the filer has perfection for four months in collateral acquired post-move.
What is the priority of proceeds from a PMSI in livestock?
The rule for proceeds from a PMSI in inventory generally applies to proceeds from livestock in which a PMSI is held. In addition, priority extends to identifiable products in their unmanufactured states (e.g., raw milk) in which a security interest is perfected.
What is the general rule regarding default?
A security agreement is a contract. Contract law therefore determines the enforceability of any terms in a security agreement.
When do “consignments” fall within Article 9?
. In order for a consignment to be subject to Article 9, the following requirements must be met: i) A person (i.e., the consignor) must deliver goods to a merchant for the merchant to sell; ii) The merchant (i.e., the consignee) must: a) Deal in goods of that kind, b) Not operate under the name of the consignor, c) Not be generally known by its creditors to be substantially engaged in selling the goods of others, and d) Not be an auctioneer; iii) With respect to each delivery, the value of the goods delivered must be at least $1,000 at the time of the delivery; and iv) The goods must not be consumer goods immediately before the delivery.
What are “commercial tort claims”?
“Commercial tort claims” include tort claims possessed by an organization, or by an individual that arose in the course of the individual’s business. Excluded are tort claims by an individual for personal injury or death.
What is the rule regarding a buyer in the ordinary course of business who purchases collateral?
A buyer in the ordinary course of business (BOCB) takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.
How is price determined in a disposition?
Article 9 does not mandate a specific price that must be obtained by the secured party in disposing of the collateral. The mere fact that a higher price could have been obtained by disposing of the collateral in a different manner or at a different time does not establish that the disposition was not commercially reasonable.
What is the effect of a filing office incorrectly indexing a financing statement?
The effect of the filing office’s incorrect indexing of a financing statement does not affect the effectiveness of the filed financing statement. The risk of a filing-office error rests on those who search the files rather than on those who file a financing statement.
How are deposit accounts perfected?
A security interest in a deposit account can be perfected only by control. A secured party has control of a deposit account if: i) The secured party is the bank with which the deposit account is maintained; ii) The bank, secured party, and debtor agreed in writing to follow the instructions of the secured party; or iii) The secured party becomes the bank’s customer with respect to the deposit account.
What purchases are under Article 9?
Subject to several exceptions, the sale of accounts, chattel paper, payment intangibles, and promissory notes is subject to Article 9. Such transactions, however, are not subject to Article 9 if the sale is part of a sale of the business out of which they arose. In addition, the following assignments are not subject to Article 9: i) The assignment of accounts, chattel paper, payment intangibles, or promissory notes for the purposes of collection only; ii) The assignment of a single account, payment intangible, or promissory note in full or partial satisfaction of a preexisting indebtedness; and iii) The assignment of a right to payment under a contract to an assignee who is also obligated to perform under the contract.
What are “general intangibles”?
“General intangibles” is the residual category of personal property that is not included in other types of collateral. Included among items that are general intangibles are copyrights, things in action (e.g., legal claims), payment intangibles (i.e., a general intangible under which the account debtor’s principal obligation is a monetary obligation), and software-not-part-of-goods.
How should a debtor redeem collateral used to satisfy their secured debt?
To effect a redemption, the redeemer must fulfill all obligations secured by the collateral (e.g., payment of monetary obligations currently due, including obligations resulting from the default) and reasonable expenses, including attorney’s fees, incurred by the secured party in retaking the collateral or preparing for its disposition. If the security agreement contains an acceleration clause, then the redeemer must tender the entire balance of the secured obligation.
What warranties exist at a disposition of collateral?
A disposition of collateral includes warranties of title, possession, and quiet enjoyment that generally accompany the disposition of property of the same type as the collateral. These warranties may be disclaimed or modified.
What additional information should financing statement include?
i) Contain the addresses of both the debtor and the secured party; and ii) Identify whether the debtor is an individual or organization.
What are the steps surrounding determining claimant priority?
The determination of priority involves two steps: i) Identify the status of each claimant; and ii) Apply the appropriate priority rule. A common error is the failure to properly characterize the status of the competing parties.
When does a buyer not in the ordinary course of business take collateral free of a security interest?
A buyer not in the ordinary course takes free of a security interest to the extent that she secures an advance made after the earlier of: i) The time the secured party acquires knowledge of the buyer’s purchase; or ii) 45 days after purchase.
Under what circumstances may a mortgage serve as the financing statement?
With respect to collateral related to real property, a mortgage may serve as a financing statement, provided it contains the necessary information. A mortgage is effective as of the date of its recording.
What is the only manner that money may be perfected?
By Possession.
What is the purpose of filing?
Filing is the most common method of perfection. The primary objective of filing is to give interested parties notice of the existence of the security interest.
What is the treatment of notice in a consumer goods transaction?
In a consumer goods transaction, a secured party must send an explanatory notice to the debtor detailing the deficiency and/or surplus and the basis on which it was calculated. This explanation, which must be in writing, can be demanded by the debtor or consumer obligor, in which case the secured party has 14 days after receipt of the demand in which to send the explanation or, in the case of a deficiency, a waiver of the secured party’s right to the deficiency. A secured party who fails to send such a notice may be liable for any loss caused, plus $500.
How does knowledge of another secured interest affect priority?
A secured party’s knowledge of another security interest in the same collateral does not affect the secured party’s priority.
What is “accession”?
Accessions are goods that are physically united with other goods in such a manner that the identity of the original goods is not lost, such as memory installed in a computer, or tires installed on a car. A security interest that is created in collateral that becomes an accession is not lost due to the collateral becoming an accession. Moreover, a security interest can be created in collateral that is an accession.
What is a “letter-of-credit right”?
A “letter-of-credit right” is a right to payment or performance under a letter of credit, even though the beneficiary has not demanded—nor is the time ripe for —payment or performance.
What are transactions in the form of a lease follow Article 9?
A transaction in the form of a lease is treated as creating a security interest if the lessee must pay consideration to the lessor for the right to possess and use the goods for the term of the lease, the payment obligation cannot be terminated by the lessee, and one of the following four conditions is also met: i) The original term of the lease is equal to or greater than the remaining economic life of the goods; ii) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become owner of the goods; iii) The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or iv) The lessee has an option to become the owner of the goods, for no additional consideration or nominal additional consideration, upon completion of the lease agreement.
Under what circumstances is collateral automatically temporarily perfected?
1) If new value is given under an authenticated security agreement; 2) If the secured party makes the collateral available to the debtor for the purpose of selling or exchanging the collateral; 3) When collateral or a debtor moves from one state to another state.
What are “goods”?
“Goods” encompasses anything that is “moveable at the time that a security interest attaches.” Also included within the definition of goods are (i) fixtures, (ii) standing timber that is to be cut and removed pursuant to a contract, (iii)unborn animals, (iv) growing or unharvested grown crops, including crops produced on trees (e.g., apples), vines (e.g., grapes), or bushes (e.g., blueberries), and (v) manufactured homes.
How is the time of disposition determined?
Article 9 does not mandate a specific time in which a disposition must occur. Instead, circumstances may dictate that the collateral is held due to the collapse of a market for the collateral, or the collateral that is comprised of a large number of a specific items be sold over time in parcels rather than immediately in bulk in order not to depress the market.
How should a financing statement address proceeds?
A financing statement need not make specific reference to proceeds in order for a security interest in proceeds to be perfected.
How are PMSIs in other types of goods perfected?
PMSI in other types of goods (e.g., inventory, equipment) or in automobiles is not automatically perfected.
What are “electronic chattel paper”? “Tangible chattel paper”?
If the record is stored electronically, then the chattel paper is known as “electronic chattel paper.” If the record is maintained on paper or another tangible medium, then the chattel paper is referred to as “tangible chattel paper.”
What is the “duty of reasonable care”?
The secured party in possession of collateral has the duty of reasonable care with respect to custody and preservation of the collateral. The duty of care cannot be circumvented by an agreement between the debtor and the secured party, but the parties can determine the standards for judging such care; such standards must be reasonable.
Who is a “consumer buyer”?
A consumer buyer is a person who: i) Buys consumer goods for value; ii) For his own personal, family, or household use; iii) From a consumer seller; and iv) Without knowledge of the security interest.
When are proceeds entitled to automatic temporary perfection?
If the security interest in the original collateral is perfected, then a security interest in proceeds is temporarily perfected for 20 days from the time it attaches.
Who are “statutory or common-law lien creditors”?
A statutory or common-law lien creditor is a creditor who obtains a possessory lien on the property of another by operation of a statute or common-law rule. Unlike an Article 9 security interest, these are nonconsensual liens.
What types of collateral are subject to the rule regarding delivery of collateral to the debtor automatic temporary perfection?
Collateral subject to this rule includes certificated securities, negotiable documents, instruments, and goods in the possession of a bailee and for which a negotiable document has not been issued.
What is the priority of proceeds from a PMSI in inventory regarding proceeds consisting of accounts or chattel paper?
The priority of a PMSI in inventory generally does not extend to proceeds consisting of accounts or chattel paper. The priority can, however, extend to proceeds consisting of either chattel paper (as well as chattel paper proceeds) or instruments if the purchase-money secured party otherwise satisfies the requirements for securing a priority (e.g., takes possession of the chattel paper or instruments).
What is the priority between a PMSI versus another PMSI?
If there are two or more competing PMSIs, then the first-to-file-or-perfect rule generally governs priority.
What is the term for new value automatic temporary perfection?
If new value is given under an authenticated security agreement, a security interest in certificated securities, negotiable documents, or instruments is automatically perfected for 20 days from the time it attaches without filing or the taking of possession.
What are the basic remedies for a secured party’s failure to comply with Article 9?
1) Injunction relief 2) Actual damages 3) Conversion Action
Who is a “general creditor”?
A general creditor is one who has a claim, including a judgment, but who has no lien or security interest with respect to the property in question (i.e., the collateral).
When do you classify goods?
Generally, goods are classified when the security interest attaches.
What is required for a statutory or common-law lien creditor to have priority over a secured creditor?
A statutory or common-law lien has priority over a security interest, including a perfected security interest, in goods, provided: i) The effectiveness of the lien depends on the lien holder’s possession of the goods; and ii) The lien secures payment or performance of an obligation for services or materials furnished with respect to goods by the lien holder in the ordinary course of that person’s business (e.g., supplier’s lien, mechanic’s lien).
What is the debtors notification rights?
When there is not an outstanding secured obligation and the secured party is not committed to make advances or otherwise give value, the debtor can demand that the secured party notify account debtors (i.e., persons obligated to the debtor on an account, chattel paper, or general intangible) that they are no longer required to make payments to the secured party. The secured party must send the notification within 10 days after receiving an authenticated demand by the debtor.
What are the requirements for a buyer of a negotiable instrument or document?
The buyer of a negotiable instrument who qualifies as a holder in due course under Article 3, the buyer of a negotiable document of title that has been duly negotiated under Article 7, and a protected purchaser of a security under Article 8 may take free of a perfected security interest in the instrument, document of title, or security.
Under Georgia law, what is the description requirement for mechanic’s liens on farm machinery or equipment?
A description of the farm machinery or equipment is sufficient if it reasonably identifies the collateral. A mistake in the description will not invalidate the description if it provides a key to identifying the farm machinery or equipment.
Under Article 9, what is software?
Software embedded in goods, such as a diagnostic computer program contained in an automobile, is treated as part of the goods in which it is embedded. Software that is not embedded in goods, such as software sold in a separate box at a retail store, is treated as a “general intangible.”
What is required on a financing statement?
i) The debtor’s name; ii) The name of the secured party or a representative of the secured party; and iii) The collateral covered by the financing statement. This “bare bones” information is intended to provide a person, such as a potential creditor of the debtor, with enough information to make further inquiries of the debtor or secured party as to the existence and terms of a security interest.
Who is an obligor?
An obligor is a person who must pay (or otherwise perform) with respect to the obligation that is secured by a security interest in the collateral.
What are the special rules regarding default of a security interest covering fixtures?
When a security agreement covers fixtures, a secured party may proceed as to the fixtures in accord with the rights and remedies with respect to the real property. When a secured party’s security interest has priority over owners and individuals who encumber real property, that secured party may remove the fixture from the real property. With respect to an owner or encumbrancer who is not the debtor, the secured party is liable for the cost of repairing any physical object damaged by the removal but not for any reduction in the value of the real property due to the removal.
What may a secured party do to collateral ceased through default?
After default, a secured party may sell, lease, license, or otherwise dispose of all or any of the collateral. Within limits, the secured party may keep the collateral (strict foreclosure) in full or partial satisfaction of the obligation.
Does a transferee of money or funds take the collateral free of the security interest?
A transferee of money usually takes the money free of a security interest. Similarly, a transferee of funds from a bank deposit account usually takes the funds free of a security interest in the deposit account. Note that a debtor is not treated as a transferee. A transferee is not entitled to this favorable treatment if the transferee acts in collusion with the debtor in violating the rights of the secured party.
Are there redemption rights to collateral?
A debtor, secondary obligor, or any other secured party has the right to redeem collateral.
What is the rule regarding “consumer” buyers?
A consumer buyer of consumer goods takes free of a security interest, even if perfected, unless prior to the purchase, the secured party filed a financing statement covering the goods. This is often referred to as the “garage sale” rule, because that type of sale would qualify.
When is a conversion action appropriate?
If a secured party improperly repossesses collateral, then the debtor may be able to pursue a conversion action under tort law, rather than under the UCC.
What is “collateral”?
Property subject to a security interest is called “collateral.” Such property may be tangible or intangible. The characterization of collateral as, for example, inventory or a deposit account can affect the validity of a security interest, the way in which a security interest can be perfected, and the rights of a third party in the collateral, such as a buyer of collateral.
What is a “record” when referring to a security agreement?
The agreement must be in a tangible medium (e.g., a writing on paper) or in another medium, such as electronic, that can be retrieved in a perceivable form.
