Secured Transactions

Question 1

Security Interest

Answer 1

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

Question 2

Parites

Answer 2

Secured Party is person whose favor the SI is created under the security agreement. the creditor generally. the loaner of money,

Obligor is the person who must pay with respect to the obligation that is secured by the SI.

Debtor is some other third party with interest in the collateral. usually the obligor but doesn’t have to be.

Question 3

Collaretal

Answer 3

Property subject to the SI

Tangible or other? hard to say what the fuck this all is.

Question 4

Eligible transactions?

Answer 4

General rule is Art 9 governs a trans that created an SI in personal prop or a fixture.

Leases covered, consignments can be, ag liens

Liens, purchases, and real prop trans are not generally under Art 9.

Real prop trans however can still be SI even tho is not under Article 9.

Question 5

Generally, a secured transaction

Answer 5

Under 9 of the UCC. Debtor and a creditor. Debtor makes a purchase on credit and gives creditor a security interest in specific property (collateral) to assure the creditor as a secured party in the collateral. Such as the right to seize and sell the property to satisfy the outstanding debt. To enjoy this protection, the creditor must adhere to specific reqs (attachment, perfection) and is subject to special restrictions in the timing and exercise of those rights.

Articule 9 governs a trans that creates by agreement an SI in personal property or a fixture.

Question 6

Attachment

Answer 6

enforceable means the collateral has attached. SI with attached collateral.

requirements for attachment (1) are value given by secured party, (2) debtor has rights in the collateral, and (3) the debtor has authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral.

SI only attaches to what rights the debtor has in the collateral.

Question 7

Security agreement

Answer 7

must satisfy art 9 of the SOF. Authenticated record can satisfy, must be in a record, contain a description of the collat, and be authenticated by the debtor. This can be done by possession of collateral or control as well as authenticated record.

After acquired collateral can count BUT not consumer goods unless those are gained within 10 days after given value. Also not commercial tort claim.

Question 8

Rights and duties of secured party

Answer 8

if in control or possession, duty of care, keep collat IDed, duty to relinquish. BUT debtor is risk of loss or damage, which sucks. Right to charge for rsbl expenses and right to hold proceeds.

Also assignment, but i don’t get that lol.

Question 9

PMSI (Purchase-money security interest)

Answer 9

in goods when D buys goods with the value given or when the loan is the goods on credit from the SP.

Also can be in software but I don’t really get that.

Question 10

Accessions and Commingled goods

Answer 10

Accessions are where you can still the goods apart but they are united physically with other goods. That’s fine, SI is ok.

But commingled goods means they are united such that their Id is lost. Cannot SI in commingled goods. IF after SI, become commingled, then SI to the resulting mass.

Question 11

Perfection of SI

Answer 11

perfected upon attachment of that interest and compliance with perfection method. Creates superior rights in collatera. Methods are filing, possession, control, and autmatic perfection.

Question 12

Filing a financing statement as way to perfect security interest

Answer 12

Works for any SI except deposit account, money, or letter of credit rights.

Need a financing statement. Financing statement needs D’s name, SP’s name, and a description of collateral. It is a notice filing.

Alts are security agreement or mortgage.

Debotr’s name on ID or DL. trade name not enough alone. can be org name on public records. if change in name, have 4 months to fix it. Error in name is not effective if D’s. Error in SP’s name not as big of a deal.

Description of collateral can be generic.

D’s authorization needed but not a high standard. Need not sign. can be presumed.

Filled where prop located (if real prop) or where D is or the org is registered or organized.

Effective on date of filing, effectiveness not changed by filing office error.

Length is 5 years, can get continuation for 5 more yeas. Can amend or terminate.

Question 13

Perfect security interest via possession or control

Answer 13

Lots of things can be perfected by possession.

Control is used for fewer things. Generally the only way to perfect letter of credit rights or deposit account.

Question 14

Automatic perfection

Answer 14

I don’t care about this stuff, hopefully the lectures clarify it all.

Question 15

Vehicles and PErfection

Answer 15

filing is not sufficient if a statute requires a notation of the SI on the certificate of title. That’s handled under another statute.

Question 16

Priorities

Answer 16

General creditor (without SI) always loses to SI.

Generally, a perfected SI is above judicial lien but a jud lien is above an unperfected SI. Some exception for PMSI and advances?

Possessory lien has priority over any SI.

Transferee is subject to SI unless waived. Buyer of unperfected SI has priority if value, recieves it, without knowledge of SI. Perfected SI beats out buyer.

Buyer in ordinary course of business takes free of any SI.

Consumer buyer does the same generally as BOCB.

Same with purchaser of chattel paper.

same with buyer of neg instrument or document.

Future advances are confusing for me.

Article 2 SI has priority over Article 9 SI.

Transferee of money or funds wins out.

Clean certificate of title wins out.

Question 17

Priorities among secured parties

Answer 17

First in perfect wins and first in attachment wins if neither perfected.

PMSI wins over non-PMSI. first to file wins if perfected PMSI vs perfected PMSI except that a seller with PMSI wins over lender with PMSI. Some other weird rules here for goods and livestock that i don’t get.

Question 18

Fixtures and Proceeds and Other Priorities

Answer 18

Fixture filing wins over rp IF fixture filing before rp recorded.

Perfected SI fixture over jud lien.

Proceeds, first to file or perfect rule applies. Same for future advances.

Question 19

Default Generally

Answer 19

Basically these are ks, so default is left up to the parties and the agreement.

Once default occurs, secured party can seek possession and sell it or retain it. or sue for a judgment based on the obligation.

Ignoring default may be a waiver. Can remove fixtures and accession property. Not required to give notice of default.

Question 20

Overview

Answer 20

Attachment
Perfection
Priorities
Default

Question 21

Disposition of collateral

Answer 21

must be commercially rsbl. the action of distributing or transferring property or money . Bunch of things on the price, time, type, and notice of disposition. NOtice is generally required to D, obligor, any other secured party or lien holder and any party notified SP of claim or interest. At least 10 days before disposition for the notice.

Debtor generally is entitled to surplus of proceeds from disposition and is liable for any deficiency. Not the case for all tho.

Question 22

Acceptance of Collateral (Strict foreclosure)

Answer 22

Lot here I don’t get. Something about full satisfaction of obligation. and partial satisfaction and notification and special rules for consumer debtors.

Question 23

Redemption of Collateral

Answer 23

Not permitted after disposition or foreclosure. Waiver only by default and authenticated agreement.

Question 24

Remedies for secured party’s failure to comply

Answer 24

injunction. actual damages. Something about consumer goods min statutory damages.

Limits on deficiency for failure to comply with Art 9 available for both commercial and consumer transactions.

Conversion action for the improper possession of the collateral.

Question 25

General For Exam

Answer 25

Generally, a security interest that is enforceable against the debtor is said to have “attached” to the collateral. Attachment requires that: (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.`

Perfection of a security interest is generally necessary for the secured party to have rights in the collateral that are superior to any rights claimed by third parties. A security interest in goods can be perfected by filing a financing statement.

A PMSI in goods exists when a secured party sold goods to the debtor, and the debtor incurs an obligation to pay the secured party all or part of the purchase price. A PMSI in consumer goods is automatically perfected upon attachment. Consumer goods are those goods acquired primarily for personal, family, or household purposes.

Question 26

BOCB and Garage Sale

Answer 26

A buyer of collateral subject to a perfected security interest generally takes the collateral subject to that interest. However, 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. A BOCB is a person who: (i) buys goods; (ii) in the ordinary course of business; (iii) from a merchant who is in the business of selling goods of that kind; (iv) in good faith; and (v) without knowledge that the sale violates the rights of another in the same goods. In order to qualify as a buyer, the purchaser must give new value, which in addition to paying cash for the goods includes purchasing the goods on credit.

A buyer of collateral subject to a perfected security interest generally takes the collateral subject to that interest. However, 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. 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. This is often referred to as the “garage sale” rule.

Question 27

Proceeds for Exam

Answer 27

A security interest in collateral automatically attaches to identifiable proceeds. Proceeds include whatever is acquired upon the sale of collateral. If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected, the perfected security interest in the proceeds continues indefinitely.