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Critical Pass > Secured Transactions > Flashcards

Secured Transactions Flashcards

1
Q

Security Interest

A

An interest in personal property or fixtures that secures payment or performance of an obligation

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2
Q

Article 9 governs transactions that

A

regardless of form, create a security interest in personal

property or fixtures by contract; rights to payment; agriculture liens

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3
Q

Treat these Rights to Payments as Secured Transactions

A 
C-PAP
Chattel paper
Promissory Notes
Accounts
Payment Intangibles

Why? To facilitate public notice of these sales

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4
Q

Goods Types

A

Moveable; fixtures; unborn animals

  1. Consumer goods
  2. Farm Products
  3. Inventory
  4. Equipment
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5
Q

Rights to Payment Types

A
  1. Instruments (promissory notes, checks)
  2. Chattel paper (record w/ 2 parts: $ obligation AND SI or a lease)
  3. Accounts (rights to $ for goods sold, leased, licensed, or services rendered; accounts receivable; insurance policy payout)
  4. Payment Intangibles (catch-all)
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6
Q

Chattel Paper

A

Record w/ 2 parts: $ obligation AND SI or a lease

Exs:
A loan AND granting an SI = chattel paper
A lease AND granting SI = chattel paper

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7
Q

Other Types of SIs

A 
Documents (docs of title; bill of lading)
Investment properties (securities)
Deposit Accounts
Commercial Tort Claims
Letter of credit rights
General intangibles
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8
Q

Attachment

A
  1. Value Given
  2. Rights in Collateral
  3. Security Agreement (authenticated record OR possession/control)
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9
Q

Authenticated Record

A

These are RAD

  1. a Record (stored in TANGIBLE medium)
  2. Authenticated by debtor (sig or symbol; intent to be bound)
  3. Describe the collateral to REASONABLY IDENTIFY it (can use art 9 category; no super-generics)
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10
Q

Super Generic

A

NOT sufficient for an authenticated record
such as “all of the debtor’s assets” or “all of the debtor’s personal property” does not reasonably identify the collateral for attachment.

Note: will be sufficient for a UCC-1 filing to perfect

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11
Q

After acquired Property

A

A security interest may apply to collateral the debtor acquires in the future

! Consumer Goods: After acquired clause is NOT effective for consumer goods, UNLESS debtor acquires them within 10 days after the secured party gives value

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12
Q

Proceeds

A

A security interest in collateral AUTO attaches to identifiable proceeds from the sale, exchange, or other disposition of collateral.

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13
Q

Accessions

A

Identity of combined goods aren’t lost = attached security interest.

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14
Q

Purchase Money Security Agreement (PMSI)

A

Gives lender security interest in goods that have been purchased w/ funds borrowed from them or purchased on credit
Exists w/ goods and fixtures
Consumer Goods– AUTO perfects

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15
Q

Perfection

A

Perfection is necessary for party to have a right in the collateral that is superior to others rights.

Perfection = Attachment + compliance with a method of perfection

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16
Q

Methods of Perfection

A 
Filing a financing statement 
Possession of collateral 
Control of collateral 
Automatic perfection 
Statutory perfection (like titles for cars)
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17
Q

Filing a Financing Statement:

A

Debtors name
Name of secured party
Description Collateral (can be general)

Effective for 5 years
Must file continuation statement (need to go 6 months prior to expiration)

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18
Q

Weird Rules re: Financing Statements

A

Debtors Name:
(1) if Individual- name on driver’s license or state ID (most states) or legal name (minority)
(2) if Corp: Registered organization- name on public records
Change of name: must amend within 4 months

**its OKAY to have an error in secured party name (b/c wont result in notice problem)

If name is seriously misleading — NOT perfected

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19
Q

Filing Location: Real Property

A

Real property– where the property is located

20
Q

Filing Location: Collateral

A

Collateral– state of the DEBTOR’s location

Individual– debtor’s principal residence
Non Registered organization– maintains its place of business, if more than one, chief executive office
Registered- where it is organized

21
Q

Automatic Perfection:

A

PMSI in consumer goods

Proceeds if covered in SI

Cash proceeds

Same Office Rule (Does NOT apply w/ cash proceeds)

22
Q

Temporary Auto-Perfection

A

20 days from attachment – New value under an authenticated SA for a SI in certificated securities, negotiable documents, or instruments

20 days from attachment – proceeds if SI perfected

20 days – Delivery of collateral to debtor

4 months – Movement of DEBTOR to another state

1 year — Interstate movement of COLLATERAL to debtor in another state re: perfected SI

23
Q

Proceeds

A

Temporary perfection:
If SI in original collateral perfected, SI in proceeds perfected for 20 days from attachment

Automatic perfection (indefinite)
Pursuant to financing statement- broad enough to cover proceeds then its OK
Cash proceeds
Same office (Does NOT apply w/ cash proceeds)

24
Q

Statutory or common-law lien creditor

A

Possessory lien > SI; if the lien secured payment for the goods furnished in the ordinary course of business

25
Q

Unsecured General Lien Creditor

A

General Creditor (unsecured)- has a claim, including judgment but no lien on or SI in collateral

SI will ALWAYS prevail over general creditor

26
Q

Judicial Lien Creditors Priority

A

Judicial lien creditor > unsecured security interest

Judicial lien creditor < secured interest

27
Q

Transferee v. secured party w/ SI

A

SI continues in collateral (aka buyer takes SUBJECT TO)

UNLESS: secured party authorized the transfer free of the SI

28
Q

Buyers rights v. unperfected SI

A

Buyer takes collateral FREE OF the SI IF the buyer:

(1) gives value
(2) receives delivery and
(3) without knowledge of SI

29
Q

Buyers rights v. perfected Si

A

Buyer generally takes collateral SUBJECT TO the SI

30
Q

Buyer in the ordinary course of business

A

BOCB takes FREE OF any SI in the goods given by the buyers seller

(1) Buy goods in the ordinary course
(2) for value
(3) from seller in the business of selling goods of that kind
(4) in good faith
(5) without actual knowledge that the sale VIOLATES another’s rights in the goods**

31
Q

Consumer Buyer:

A

A consumer buyer takes FREE OF any SI in consumer goods UNLESS a secured party has filed a financing statement covering the goods

(1) Buys consumer goods for his own personal use
(2) from a consumer seller,
(3) for value
(4) without knowledge or record notice of the SI

32
Q

Perfected SI
v.
Perfected SI

A

first to file or perfect has priority

a lapse in filing or perfection restarts the clock

33
Q

Perfected SI
v.
Unperfected SI

A

a perfected SI has priority over an unperfected interest

34
Q

Unperfected SI
v.
Unperfected SI

A

the first to attach has priority

35
Q

PMSI
v.
Non-PMSI

A

PMSI will have priority

36
Q

PMSI in goods other than inventory or livestock
v.
Any SI

A

PMSI has priority IF perfected BEFORE OR WITHIN 20 days after the debtor receives possession of the collateral

37
Q

PMSI in inventory or livestock
v.
Any PMSI

A

PMSI has priority IF:

(1) PERFECTED @ time the debtor receives possession of the collateral, and
(2) PMSI party sends an authenticated NOTICE of the PMSI to the holder of any conflicting SI BEFORE the debtor receives possession of the collateral.

Debtor receives possession of collateral + notice of PMSI to other conflicting SI

38
Q

Perfected PMSI
v.
Perfected PMSI

A

first to file or perfect has priority

Exception: a Seller with a PMSI > lender with a PMSI

39
Q

Seller with a PMSI
vs.
Lender with a PMSI

A

Seller with a PMSI > lender with a PMSI

40
Q

Proceeds from PMSI in goods

A

a priority of a PMSI in goods generally extends to the proceeds of the original collateral if SI is perfected when the debtor receives possession of the collateral OR within 20 days after.

41
Q

SI in fixtures
vs
Real property interest-

A

a SI in fixtures > real property with which the fixtures are associated IF the SI in fixtures is perfected by a fixture filing BEFORE the real property interest RECORDED

42
Q

Perfected SI in fixtures
vs
Subsequent judicial lien

A

Perfected SI in fixtures > subsequent judicial lien

43
Q

PMSI in Fixtures
vs
Prior real property interest

A

PMSI in fixtures > property interest; IF fixture filing BEFORE goods BECAME fixtures OR within 20 days

44
Q

SI in fixtures
vs
Prior construction mortgage

A

construction mortgage > SI in fixtures; IF recorded BEFORE goods BECAME fixtures

45
Q

Proceeds Filing Date

A

The filing or perfection date for the original collateral is the filing/ perfection date for the proceeds

46
Q

Proceeds

A

Proceeds for non-filing collateral– priority of the OG collateral generally continues in the proceeds IF:

(1) the SI in the proceeds is perfected and
(2) the proceeds are either (a) cash proceeds OR (b) proceeds of same type of collateral

47
Q

Solving SI Issues

A

A SA is a contract; contract law determines enforceability of any terms in a SA

Critical Pass (15 decks)

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