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MEE > Secured Transactions > Flashcards

Secured Transactions Flashcards

1
Q

What are goods?

A

Movable tangible property (at the time that a security interest attaches)

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2
Q

What are rights to payment?

A

Instruments, chattel paper, accounts, payment intangibles

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3
Q

What is attachment? What are the necessary conditions?

A

An arrangement linking a debt to collateral, upon attachment interest becomes enforceable.

1) value has been given by secured party
2) debtor has rights in the collateral
3) debtor has authenticated security agreement that describes the collateral, or the secured party has possession or control

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4
Q

What is required in a security agreement?

A

Identify collateral, shows inten tof debtor to be bound, and is in a tangible medium

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5
Q

What are accessions?

A

Goods that are united with another good but are identifiable. The security interest continuous in the accession.

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6
Q

What are commingled goods?

A

A good that is united but the identity of the good is lost. The security interest attaches to the larger good. (E.g., flour and eggs –> cookies)

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7
Q

What are proceeds?

A

1) whatever is acquired upon the sale, lease license, exchange or other disposition of the collateral
2) whatever is collected on, or distributed on account of, collateral
3) rights arising out of collateral
4) claims arising out of the loss or damage to the collateral

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8
Q

Perfection can occur by?

A

Filing, possession/control, automatic perfection, or alternate perfection systems (like for car registration)

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9
Q

Filing a financing statement can perfect all interests except those in?

A

Deposit accounts, cars, money, and letters of credit

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10
Q

Where must a financing statement be filed to perfect an interest?

A

For everything except interests in real property, filing is in the central filing office where the DEBTOR is located. This is the state of incorporation for a corporation or the principal residence of individuals.

For real property interests, it is filed in the county where toe property is located.

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11
Q

Financing statements require what information to perfect an interest?

A

The names of the parties, the description of the collateral and if it is for real property, name of the record owner and describe the property.

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12
Q

What information is non essential to perfect but will cause the financing statement to be refused at the office?

A

Addresses of the parties and an indication of whether the debtor is an individual or a corporation.

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13
Q

A mistake in a financing statement will only affect perfection if it is?

A

Seriously misleading.

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14
Q

Financing statements lapse after ___ years but may be continued within ___ months before lapsing.

A

Five, Six.

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15
Q

A security interest in money can only be perfected by?

A

Possession

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16
Q

Interests in deposit accounts and letter of credit rights can only be perfected by _________?

A

Control

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17
Q

A PMSI in ____ will automatically perfect.

A

Consumer goods.

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18
Q

Priority between Perfected int v. perfected int? (Non-PMSI)

A

First in time to file OR perfect

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19
Q

Priority between perfected v unperfected? (Non-PMSI)

A

Perfected wins

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20
Q

Priority between two unperfected? (Non-PMSI)

A

first to attach or become effective

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21
Q

Perfected v Lien creditor?

A

Perfected wins

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22
Q

Unperfected v lien creditor?

A

Lien creditor wins unless the secured party has already filed a financing statement, the debtor has authenticated the security agreement, and the secured party hasnt given value yet.

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23
Q

Sec int v statutory lien

A

Statutory lien wins if the lien 1) is effective based on possession of the goods, and the lien is for payment or performance of an obligation furnished in the ordinary course of business.

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24
Q

Sec party v sec party over future advances?

A

First to file or perfect

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25
Q

A buyer takes subject to a perfected security interest unless?

A

The secured party authorizes the sale is free and clear, the buyer is in the ordinary course of business, or it is a consumer to consumer buyer.

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26
Q

What is a buyer in the ordinary course of business?

A

A buyer who buys goods from a merchant, in the ordinary course of that business, in good faith and without notice of the security interest.

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27
Q

What is a consumer to consumer buyer?

A

Buyer buys consumer goods, for their own consumer use, froma consumer seller, without knowledge of the security interest. (This does not apply if there is a financing statement covering the goods).

28
Q

A buyer takes subject to an unperfected interest unless?

A

The buyer gives value, receives the collateral, and doesnt know of the interest.

29
Q

PMSI v lien creditors

A

Same as usual, if perfected PMSI if unperfected lien creditors, but a 20 day grace period to perfect where the interest is considered perfected.

30
Q

PMSI v sec interests

A

PMSI in goods other than inventory take priority over all other interests no matter whne perfected if perfected within 20 days (otherwise its first in time to file or perfect).

31
Q

PMSI in inventory has priority over all other interests in that inventory when?

A

If the PMSI is perfected before delivery and the holder sends an authenticated notification to the other secured parties.

32
Q

PMSI v PMSI

A

Seller beats lender, otherwise apply the first to file or perfect rule.

33
Q

Are leases never governed by UCC art 9?

A

No, only true leases. Look to whether the “lease” is actually a secured transaction.

34
Q

How are proceeds distributed after disposition?

A

1) reasonable expenses for collection/enforcement, 2)pay the debt to the foreclosing party, 3)pay subordinate interest if there is a formal demand, 4) return the surplus to the debtor. Senior security interests survive in the collateral!

35
Q

In order for a UCC Article 9 security interest to be created, there must be __________.

A

a consensual security agreement

36
Q

What is collateral?

A

property subject to a security interest

37
Q

How can value be given?

A

1) consideration
2) extending credit
3) accepting delivery
4) in satisfaction of, or as security for, part or all of a preexisting claim

38
Q

The satisfy the requirement for an authenticated record, the security agreement must

A

1) be in a record
2) contain a description of the collateral
3) be authenticated by the debtor (signature or other symbol of intent)

39
Q

A security interest in collateral ______________ to identifiable proceeds.

A

automatically attaches

40
Q

The description requirements for a financing statement are _______ stringent than the requirements for a security agreement.

A

more

41
Q

Can deposit accounts be perfected by possession?

A

no

42
Q

Can negotiable instruments be perfected by control?

A

no

43
Q

As soon as a security interest in a PMSI in __________ attaches it is automatically perfected.

A

consumer goods

44
Q

When the debtor moves to another state, the secured party has a __________ window in which to re-file; when the collateral is transferred to a new debtor in a new state, the secured party has __________ in which to re-file.

A

four months / one year

45
Q

A secured party has control of a deposit account if:

A

1) the secured party is the bank with which the account is maintained
2) the bank, secured party, and debtor agree in writing to follow the instructions of the secured party
OR
3) the secured party becomes the bank’s customer with respect to the deposit account

46
Q

Automatic perfection upon attachment occurs:

A

1) PMSI in consumer goods
2) 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
3) sale of a payment intangible or promissory note

47
Q

A security interest is perfected upon

A

1) attachment of that interest
AND
2) compliance with one of the methods of perfection

48
Q

If the security interest in the original collateral is perfected, then a security interest in proceeds is _________________.

A

temporarily perfected for 20 days

49
Q

A security interest in proceeds may continue to be perfected beyond the 20-day period if:

A

1) perfection pursuant to financing statement
2) cash proceeds
3) same office

50
Q

A security interest in proceeds may continue indefinitely when (same office):

A

1) the financing statement covers the original collateral;
2) the proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed;
AND
3) the proceeds are not acquired with cash proceeds

51
Q

If the proceeds are identifiable cash proceeds and the security interest in the original collateral is perfected, the perfected security interest in the proceeds continues __________.

A

indefinitely

52
Q

The “filed but unattached” security interest exception applies with regard to a contest between __________.

A

a judicial lien creditor and the holder of an unperfected security interest

53
Q

A buyer takes free of an unperfected interest in the same collateral if the buyer:

A

1) gives value
AND
2) receives delivery
3) without knowledge of the existing security interest

54
Q

Buyer in the ordinary course of business

A

1) buys goods
2) in the ordinary course of business
3) from a merchant who is in the business of selling goods of that kind
4) in good faith
AND
5) without knowledge that the sale violates the rights of another
NOTE: pawnbrokers are NOT BOCBs

55
Q

Consumer buyer (garage sale rule)

A

1) buys consumer goods for value
2) for his own personal, family or household use,
3) from a consumer seller
4) without knowledge of the security interest

56
Q

A consumer buyer of consumer goods _______________ of a security interest, even if perfected, unless prior to the purchase, the secured party filed a financing statement covering the goods.

A

takes free

57
Q

A transferee of money usually takes the money _____________ a security interest.

A

free of (unless the transferee acts in collusion with the debtor in violating the rights of the secured party)

58
Q

As a general rule, the buyer of collateral subject to a perfected security interest takes the collateral __________.

A

subject to the security interest, unless the secured party authorizes the sale free and clear of the security interest

59
Q

If a PMSI in consumer goods is not filed, and the consumer buyer does not know of the PMSI, then __________________________.

A

he will take it free of the security interest

60
Q

In general, if there are two or more competing PMSIs, then _____________________ governs priority.

A

the first-to-file-or-perfect rule

61
Q

A PMSI in goods other than inventory or livestock prevails over ___________________, even if they were previously perfected, if the security interest is perfected before or within _____ days after the debtor receives possession of the collateral.

A

all other security interests in the collateral / 20

62
Q

Security interest in fixtures versus real property interest

A

Generally, SI in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor

63
Q

Construction mortgage versus PMSI

A

Construction mortgage has priority over a subsequent security interest in a fixture, including a PMSI in a fixture

64
Q

If the security agreement does not reference after-acquired property, the security interest generally ________________________.

A

only attaches to the collateral that exists at the time the agreement is executed

65
Q

A PMSI in consumer goods __________________, no matter when they are perfected.

A

takes priority over all other security interests

66
Q

The determination of whether a lease is actually a secured transaction is made ____________________.

A

on a case-by-case basis

67
Q

What is the correct order for application of cash proceeds of a disposition?

A

1) Reasonable expenses for collection and enforcement
2) debt of the foreclosing party
3) subordinate security interests
4) surplus to the debtor

MEE (7 decks)

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