Secured Transactions Flashcards
Preamble
TX variety of UCC 9 governs security interest in collateral, including personal property, fixtures, agricultural liens, and certain intangibles. The law of secured transactions protects debtors when the two have ongoing mutual financial responsibilities.
How do you Accomplish Perfection
- possession
- control
- filing
- mere attachment
- title certificate
Tangible Collateral Categories
- inventory
- equipment
- consumer goods
- farm products
Attachment Req
- SA
- debtor has rights in collateral
- creditor gives value
Purchase Money Security Interest (PMSI)
- creditors who have PMSI are afforded special right to perfect by mere attachment for consumer goods
- creditors are given a 20 day grace period to file for non-inventory collateral
- date then relates back to attachment date
Types of Collateral
- goods
- intangibles and semi-intangibles
- proceeds
When Possession Qualifies as Perfection
- all classes of collateral except
- general intangibles
- accounts
- non-consumer deposit accounts
- non-negotiable docs
- e-chattel paper
Who has Priority (Unperfected v. Unperfected)
1st to attach
Who has Priority (Perfected v. Unperfected)
Perfected
Who has Priority (Perfected v. Perfected)
1st to file or perfect
Secured Parties that have Control
- SP w/ control have priority
2. more than one controls, then first to acquire control
Factors Considered when Determining Reasonableness of Repossession Sale
- effort to maintain best price
- sufficiency of advertising
- cleaning or repairs needed
- time and please convenience,
- whether public
List Intangible & Semi-Intangible Collateral
- instruments
- documents
- chattel paper
- accounts
- deposit accounts
- investment property
- commercial tort claims
- general intangibles
Way Security Interest Created (Attachment)
- value given to secured party
- contract + reasonable description of collateral/property
- debtor must have rights in collateral
Way Perfection Occurs
- attachment + act of perfection
- filing financing statement
- taking possession
- taking control
- automatic perfection
- temporary perfection
Unperfected vs. Judicial Lien Creditor (Winner)
who becomes JLC before other party perfects wins
Perfected vs. JLC
first in time, first in right
Hierarchy of Collateral Interest
- BIOC, HIDCs, and like (prevail over)
- PMSI holders w/ superiority (prevail over)
- perfected secured creditor:
perf vs. perf: 1st to file or perfect
lien creditors:
perf vs. LC: 1st to perf SI or attach lien (prevail over) - unperf secured cred: 1st to attach wins (prevail over)
- debtor and general unsecured creditors
How is a SI Created
- value
- contract
- rights
When Default on SA - Rights Creditor Has
- repossess prop
- w/out breach of peace
- w/out any specific process
- giving notice
- or judicial process
- can sell property at pub/private sale
- sure to collect deficiency
When Control is Effective Perfection
- non-consumer deposit accounts
- e-chattel paper
- investment property
When Perfection is Automatic
- PMSI
- small scale assignments of accounts
- sales of payment intangibles and promissory notes
- beneficial interest in dependents estate
- certain investment property
Unperfected Secured Party vs. Buyer/Lessee
- unperfected party will lose if B takes w/out knowledge of SI
- gives value
- receives delivery
- exception SMSI grace period
Perfected Secured Party vs. Buyer/Lessee
- perfected party will win
2. exception BIOC
When Secured Party Fails to Comply w/ Default Code Req
- liable for actual damages
- minimum 10% cash price of goods + amount equal to all interest charges be paid over life of loan (consumer)
- loss default judgment remedy
When Financing Statement be Removed
- underlying obligation extinguished
- w/in 20 days of notice or 1 mo of satisfaction
- debtors request (non consumer)
4 Types of Tangible Collateral
- consumer goods
- equipment
- inventory
- farm products
Contents of Financing Statement
- filed w/ SOS
- debtors name and addy
- creditors name and addy
- indication of collateral
- description of real property
