Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Secured Transactions > Secured Transactions > Flashcards

Secured Transactions Flashcards

1
Q

What is a secured transaction?

A

Transacted intended to create a security interest in personal property or fixtures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

2 aspects of a secured transaction

A
  1. sale on credit or a loan

2. agreement that creates a loan in favor of the creditor on the debtor’s property to secure the debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Who is the debtor?

A

The person who owes payment or performance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Who is the secured party?

A

The lender or seller who has a security interest in its favor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Security agreement

A

Agreement that creates the security interest entered into b/w debtor and secured party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Security interest

A

The interest that the secured party holds in PERSONAL PROPERTY or FIXTURES.

It secures payment or performance of the debtor’s obligation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Collateral

A

The property subject to the security interest

Ex: inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Purchase money security interest (2 types)

A
  1. secured party sells debtor goods (collateral) on credit and retains a security interest in that collateral
  2. secured party provides the purchase money (a loan) so that the debtor can buy collateral
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Will refinancing the purchase money security interest destroy PMSI status?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What if a lender loans a debtor money and this is secured by (1) collateral the debtor already has AND (2) collateral to be purchased with the loan proceeds? What is there a PMSI on?

A

There is a PMSI on the collateral that is purchased with the loan proceeds.

No PMSI on the goods already in existence. (normal security interest on the goods already in existence)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What if a lender loans debtor money to purchase collateral and takes a security interest in the collateral and then later lender lends more money secured by the same collateral?

A

New loan does not destroy PMSI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is an after-acquired property clause?

A

This is a clause included in security agreements that gives the lender the right to a security interest in property that the debtor obtains IN THE FUTURE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a future advance clause?

A

It is a clause that can be included in a security agreement so that a new security agreement does NOT have to be entered into every time the secured party lends the debtor money.

*provides for future advances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the steps called to legally give the secured party a security interest in the collateral AGAINST THE DEBTOR?

A

Attachment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the steps called to legally give the secured party a security interest in the collateral AGAINST THE WORLD?

A

Perfection

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a financing statement?

A

It is an example of perfecting your security interest.

A financing statement is a document that provides PUBLIC NOTICE of the security interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the two categories of collateral?

A
  1. goods

2. semi-intangible and intangible property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Definition of goods

A

Movable at the time the security interest attaches (includes crops, animals, unborn animals, fixtures)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the different categories of goods that can be used for collateral?

A
  1. consumer goods
  2. equipment
  3. farm products
  4. inventory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How do you determine what category the good is?

A

You have to look at how the DEBTOR is using the collateral good.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a consumer good?

A

Debtor uses or bought for use primarily for personal, family, or household purposes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is equipment?

A

Debtor uses or bought for use primarily in business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is farm products?

A

Crops
Livestock
supplies used or produced in farming operations
Products of crops or livestock (cotton, maple syrup, milk and eggs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is inventory?

A

Held by debtor who holds them for sale or lease or to be furnished under service contracts

*includes materials used or consumed by business in a short period of time (paper clips, paper, pencils)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are the types of semi-intangible and intangible property that can be used for collateral?

A
  • instruments
  • documents
  • chattel paper
  • investment property
  • accounts
  • deposit accounts
  • commercial tort claims
  • general intangibles
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Instruments that are considered collateral

A

negotiable instruments (promissory notes)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Documents that are considered collateral

A

document that is used in the ordinary course of business and is treated as evidence that the person with the document has the right to receive, hold, and dispose of the document and the goods

Ex: warehouse receipt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Chattel paper

A

A writing that evidences both a monetary obligation and a security interest in or a lease of specific goods

Ex: negotiable instrument coupled with a security interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Investment property

A

Includes stocks, bonds, mutual funds, brokerage accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Accounts as collateral

A

A right to payment for:

  • goods
  • services
  • for real property
  • health care insurance receivables

Right to payment when no promissory note exists

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Deposit accounts

A

Savings account or other similar account maintained with a bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What happens if a consumer enters into a security agreement that lists the consumer’s savings account as collateral?

A

This is not subject to Article 9

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Commercial tort claims

A

You can use your lawsuit as collateral in the event that you get proceeds from it.

*can’t use it if it is for personal injury or the death of an individual

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

General intangibles

A

Types of personal property that don’t fall under any of the other definitions.

Ex: software, patents, goodwill
- includes a contractual obligation arising from a loan of money (your right to receive money from someone else stemming from a loan)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What does article 9 apply to?

A
  1. security interests in personal property or fixtures (regardless of its form)
  2. agricultural lien
  3. an outright sale of accounts, chattel paper, etc for the purpose of obtaining financing (raising money)
  4. most consignments are subject to Art. 9
  5. a secured sale disguised as a lease
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

When does a consignment store trigger Art. 9?

A
  1. consigned goods are worth more than $1000 AND
  2. person selling the consigned goods deals in the goods of the kind sole under a name other than the consignor AND
  3. person selling the consigned goods is not an auctioneer AND
  4. creditors do not know that person selling consigned goods is substantially engaged in selling goods of others AND
  5. person who gave the consignee the goods to sell did not use the goods as consumer goods
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

So what if the consigned goods do trigger Art. 9?

A

The person who gave the consignee the goods to sell should make sure he complies with Art. 9 so that those goods can’t be reached by the consignee’s creditors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Is a true lease outside the scope of Art. 9?

A

Yes. But you have to look out for disguised secured sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What is a disguised secured sale?

A
  1. At the end of lease period, lessee becomes owner for little or no consideration (can purchase for $1)
    OR
  2. Lessee is bound to purchase the goods at the end of the lease or must renew until the economic life of the goods is over
    OR
  3. The lease is for the entire economic life of the leased goods
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Can the security agreement be oral?

A

Only if the secured party has possession or control of the collateral. OTHERWISE it MUST be in writing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What must be contained in a security agreement?

A
  1. INTENT to create a security interest
  2. agreement must be AUTHENTICATED by the debtor
  3. agreement must contain a DESCRIPTION of the collateral
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What type of description is required of the collateral?

A

It must reasonably identify the collateral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What must secured party have given to get a security interest?

A

Secured party must have given value

  • sells goods on credit
  • pre-existing debt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What does it mean that the debtor must have rights in collateral?

A

He must have an ownership interest or right to obtain possession OR if someone else has given him permission to use the thing as collateral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

When will an after-acquired clause not attach? (REMEMBER: protection of unsophisticated consumers)

A
  1. commercial tort claims

2. consumer goods UNLESS the debtor acquires rights in them w/in 10 days after secured party has given value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Does a security agreement automatically give the secured party the right to proceeds from collateral?

A

YES. (as long as you can identify the proceeds)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Types of proceeds from collateral

A
  1. sale of collateral

2. insurance proceeds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What if a debtor deposits proceeds from a collateral sale in his bank account?

A

Secured party’s security interest can reach this money if the money is still in there.

Once the proceed dollars are gone, you can’t get them back even if account goes back up.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What if debtor deposits $5000 in proceeds into his bank account and his account has $6000? Down to $2000?

A

The proceeds are the last money out. When there is $6000 you can get all proceeds out.

When down to $2,000, secured party can only reach that 2000.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What if an item of collateral also has a supporting obligation?

A

Secured party automatically gets a security interest in the supporting obligation.

Ex: Collateral is accounts receivables and there is a surety who promised to pay if person who owed the accounts receivables doesn’t pay. Surety automatically attaches.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

When you create a valid Art. 9 security interest, what happens?

A

Attachment - secured party has a valid, enforceable security interest against the debtor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Ways that a secured party can perfect his security interest against 3rd parties (the world!)

4 possible methods

A
  1. automatic
  2. possession of the collateral by secured party
  3. control
  4. filing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

Automatic perfection: under what circumstances is no additional step needed to perfect?

A
  • ***1. purchase money security interest in consumer goods (PMSI)
    2. assignment of certain accounts or payment intangibles (if only small portion of total account)
    3. sale of a payment intangible or a promissory note 4. when a patient assigns right to payment of health care insurance receivable to the health care provider
    5. supporting obligations when the security interest has been perfected
    6. temporary automatic perfection for negotiable documents for 20 days
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

What happens if the secured party gives up right to possession of the collateral?

A

Becomes un-perfected (unless secured party perfected in some other way)

Exception: some collateral can remain secured for 20 days while debtor has it if the debtor needs it for business reasons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Perfection by control: what collateral can be perfected by control

A
  1. investment property
  2. nonconsumer deposit accounts
  3. electronic chattel paper
56
Q

How does a secured party CONTROL investment property?

A

Secured party takes whatever steps are necessary to be able to sell the investment property w/o further action from the debtor.

57
Q

How does a secured party CONTROL certificated securities?

A

If the security has a certificate, secured party must take POSSESSION of the certificate.

To take possession, must get ENDORSEMENT if it is payable to a specific person.

58
Q

How does a secured party CONTROL uncertificated securities?

A

If security does not have a certificate, secured party must have the owner notify the issuer to either:

  1. re-register the stock in the name of the secured party OR
  2. agree to follow the secured party’s INSTRUCTIONS without further consent by the owner.
59
Q

How does a secured party CONTROL securities accounts?

A

Secured party must have the owner of the account contact the broker or mutual fund company and INSTRUCT the intermediary that:

  1. secured party has the owner’s rights in the account OR
  2. intermediary should comply with the secured party’s orders WITHOUT further consent from the owner
60
Q

How does a secured party CONTROL a nonconsumer deposit account?

A
  1. if the nonconsumer bank account is maintained by the secured party (bank) - secured party automatically has control
  2. if the secured party is not such a bank, secured party can obtain control over the deposit account by:
    - putting the deposit account in secured party’s name OR
    - agreeing in an authenticated record with the debtor and the bank where the account is maintained that the bank will now follow the secured party’s orders without further consent by the debtor
61
Q

How does a secured party CONTROL electronic chattel paper?

A
  1. there is only one authoritative copy of the record
  2. the authoritative copy identifies the secured party as the assignee of the record
  3. the authoritative copy is communicated and maintained by the secured party
62
Q

How do you perfect a security interest on a car?

A

Note the lien on the car’s certificate of title

63
Q

Perfecting by filing a financing statement: secured party can do this for all types of collateral except _____?

A

deposit accounts and money

64
Q

What should you do when filing a financing statement?

A
  1. notice filing: make sure the statement provides enough info to put people on notice they need to find out more
  2. contents: debtor’s name, description of collateral, secured party’s name, describe the realty interests (if applicable)
65
Q

How are financing statements indexed?

A

By the debtor’s name

66
Q

If the debtor is an individual: what name should be given for the index for the financing statement?

A

Name on driver’s license

67
Q

If the debtor is a corporation: what name should be given for the index for the financing statement?

A

Name on the articles of incorporation filed with state

68
Q

What happens if the debtor’s name is spelled wrong?

A

It will remain perfected as long as it is NOT seriously misleading.

69
Q

Is the secured party responsible for filing errors?

A

NO

70
Q

Are generic statements okay in a financing statement? In a security agreement?

A

Ok in financing statement

Supergeneric not ok in security agreement (ex: “all assets”)

71
Q

What if a financing statement and its underlying security interest involves realty interests (timber, fixtures, minerals)?

A

financing statement must:

  1. describe the real estate AND
  2. indicate that it is to be filed in the real property records
72
Q

What if lawyer for the secured party messes up and doesn’t file a financing statement - can a security agreement be filed?

A

Yes - an authenticated security agreement can be filed if it contains all of the elements that are required in a financing statement.

73
Q

Where does the secured party file the financing statement?

A

In superior court of any county EXCEPT
- fixtures or collateral that deals with land: file in the REAL ESTATE RECORDS in the county in which the subject land is located

74
Q

What if secured party is in different state from debtor?

A

File in state where debtor is located

75
Q

What if the debtor moves after you properly filed your financing statement?

A
  • secured party is secured for 4 months after debtor moves to the new state then is unperfected unless secured party files in new state (deemed to have never been perfected)
76
Q

How long is a financing statement effective?

A

5 years from the date of filing (can be extended)

77
Q

What happens when the secured obligation is paid off? What must secured party do?

A

consumer goods: secured party must file a termination statement w/in one month with each filing officer with whom the financing statement was filed

nonconsumer goods: secured party must file a termination statement to the file office or send a termination statement to the debtor within 90 days

*in both situations above, must file w/in 20 days if debtor sends an authenticated demand to the secured party

78
Q

What if a secured party has a perfected security interest in collateral and the debtor sells – how long are the proceeds perfected? How can they remain perfected?

A

Perfected for 20 days

To remain perfected, the secured party must take new action unless:

  1. the proceeds are identifiable cash proceeds OR
  2. proceeds were not purchased with cash proceeds and original collateral had financing statement (same office rule)
79
Q

What is it called when third party and secured party are both claiming the same collateral?

A

Priority dispute

80
Q

Who might the third party claiming the collateral be?

A
  1. creditor who has obtained judgment against debtor
  2. purchaser of the collateral
  3. another secured party
81
Q

What is the general rule when there is a secured party vs. secured party?

A

First to file OR perfect has priority.

*watch out for PMSIs (automatically perfected)

82
Q

Special rule for PMSIs in goods other than inventory or livestock (PMSI vs. conflicting security interest)

A

PMSI will win if perfected at the time the debtor received possession or within 20 days

*remember: only PMSIs in consumer goods are automatically perfected

83
Q

Will a perfected PMSI (in goods other than inventory or livestock) within 20 days win out over an “after acquired clause” in an earlier security agreement between debtor and third party?

A

Yes.

84
Q

What about PMSIs in inventory or livestock: how can a secured party win out over conflicting security interest in same inventory or livestock?

A

BEFORE debtor receives possession of the inventory or livestock:

  1. perfects AND
  2. sends an authenticated notification to holders of previously filed conflicting security interests in the collateral
85
Q

How long is the authenticated notification to the conflicting security holder good for:

  • deliveries of inventory?
  • deliveries of livestock?
A

inventory: notification is effective for 5 years
livestock: notification is effective for 6 months

86
Q

PMSI in crops: special rule

A

If a secured party gives new value w/in 3 months of planting of new crops to enable a debtor to grow crops has priority over perfected security interests covering obligations from more than 6 months being planting.

87
Q

Seller with PMSI vs. lender with PMSI: who has priority?

A

Seller has priority even if they both file w/in 20 days to perfect

88
Q

What is the best method of perfection for investment property?

A

Control. It has priority over any other method.

89
Q

What if a debtor grants a security interest to debtor’s intermediary and another secured party with the collateral being investment property: who has priority?

A

Intermediary has priority

90
Q

What if one secured party perfects security interest in a deposit account through control and the other claims proceeds located in account?

A

Control will have priority

91
Q

What is the ultimate form of control of deposit account that would beat out all other control?

A

Secured party has the deposit account in its own name

Second best: secured party that is a bank that maintains the account

92
Q

What if there is a security interest in the deposit account funds, but debtor writes a check to a transferee?

A

Transferee takes free of any secured claim unless he acted in collusion.

93
Q

Who does a purchaser of chattel paper have priority over if the purchaser purchased in good faith for value?

A

Priority over:

  1. a security interest in chattel paper that arises merely as proceeds of inventory AND
  2. any other security interest in the chattel paper (as long as purchaser was unaware that purchase violated the secured party’s rights)
94
Q

Who does a purchaser of an instrument have priority over if the purchaser purchased in good faith for value?

A

Priority over perfected security interest if purchaser:

  • gives value
  • good faith possession
  • no knowledge that the purchase violated the secured party’s rights
95
Q

When does a buyer of collateral take free of a security interest?

A

When the sale is authorized (can be implied)

96
Q

Unauthorized sales: general rule

A

A buyer in the ordinary course of business takes FREE of a security interest even though the security interest is perfected and even though buyer KNOWS of its existence
*buyer can’t know the sale is a violation of the security agreement though

97
Q

Buyer in ordinary course

A

Look at the seller: does the seller usually sell this stuff and does he usually sell it in this manner?

98
Q

What if not a buyer in the ordinary course?

A

They take subject to a perfected security interest. They take FREE of unperfected security interests unless they knew about them.

99
Q

Special rule: consumer to consumer sales (garage sale exception)

A

Buyer takes free of a security interest even if perfected if:
1. he buys without knowledge of the security interest
2. he buys for value
3. buys for his own personal or household use
UNLESS secured party filed a financing statement.

100
Q

Special rule: PMSI v. Buyer not in ordinary course

A

If secured party with respect to a PMSI files w/in 20 days after the debtor receives possession of the collateral, the secured party has priority over the rights a buyer not in the ordinary course

101
Q

When is a judgment lien perfected?

A

When judgment is recorded

102
Q

Secured party vs. judicial lien creditor: who has priority

A

If secured party files or perfects before the judgment lien is recorded, then the secured party has priority.

103
Q

PMSI vs. judgement lien creditor: special rule

A

If PMSI is enters into a PMSI and then files within 20 days, it doesn’t matter if a judgment lien has been recorded during that 20 days. PMSI will have priority.

104
Q

Who has priority b/w a mechanic who does repairs on the car and the secured party?

A

Secured party has priority

GA: minority rule

105
Q

Default: how is it defined

A
  1. in the security agreement

2. look for late or missed payments

106
Q

When can you use self-help repossession?

A

Ok as long as you don’t breach the peace.

107
Q

What happens if you breach the peace during repossession?

A

Could be liable for conversion, trespass, assault

Could be liable for actual and punitive damages

108
Q

What constitutes a breach of peace?

A

Look for acts likely to lead to violence

  • unauthorized entry into a home
  • constructive or actual force
109
Q

Breach of peace: when is it less likely

A

When it’s a business premises

110
Q

What if self help is unavailable?

A

Security party can use judicial process (replevin)

111
Q

Secured party wants to retains collateral upon default- what must secured party do?

A

Send proposal to:

  1. any other secured party from whom the foreclosing party has received notice of a claim to the collateral AND
  2. any other secured party who has perfected a security interest in the collateral by filing a financing statement or noting on a certificate of title

AND obtain consent from debtor

112
Q

What if a secured party objects to foreclosing party keeping the collateral?

A

Must be disposed of by sale.

113
Q

How does a debtor consent to a secured party keeping collateral upon default?

A
  1. agreeing in an authenticated record OR

2. failing to make an authenticated objection w/in 20 days after notice

114
Q

When can a secured party keep collateral in a consumer transaction?

A

Only in full satisfaction of the debt

115
Q

What are the requirements for a resale of collateral by a secured party?

A
  1. reasonable notification
  2. commercially reasonable sale
    - must comply with resale requirements
116
Q

What does it mean to hold a commercially reasonable sale?

A

Time, place, manner, and terms must be commercially reasonable.

117
Q

Can the secured party buy the collateral at a public sale? Private sale?

A

Yes @ public sale.

At private sale: secured party may buy only if there is a set price and market for the collateral.

118
Q

If resale requirements are satisfied and the sale of the collateral doesn’t satisfy the debt, what can secured party do?

A

It has a right to sue for the deficiency.

Debtor is entitled to any surplus

119
Q

What if secured party does not comply with resale requirements - is secured party entitled to deficiency? Does debtor have any rights?

A

Rebuttable presumption of NO right to deficiency

Secured party is liable for actual damages.

120
Q

If collateral is resold, what happens to security interest and subordinate security interests?

A

Discharged. Purchaser takes subject to superior security interests.

121
Q

reasonable notification must be given to whom before a resale of collateral?

A

must be authenticated (in writing)
notice given to:
1. debtor
2. any sureties
3. any other secured parties who have notified the secured party of their interests (except consumer goods)
4. any secured parties with a perfected interest done through filing or making notification on title

122
Q

Timeliness of the notice

A

Reasonable time before the sale

Nonconsumer: 10+ days is reasonable

123
Q

Nonconsumer transactions: what should the notice contain?

A
  1. description of the debtor and secured party
  2. description of the collateral
  3. method of sale
  4. statement that debtor is entitled to an accounting
  5. time and place of public sale OR time after which a private sale will be made
124
Q

Consumer transactions: what should notice contain

A
  1. description of the debtor and secured party
  2. description of the collateral
  3. method of sale
  4. statement that debtor is entitled to an accounting
  5. time and place of public sale OR time after which a private sale will be made

+ description of the recipient’s liability for a deficiency
+ phone number to discover cost to redeem collateral
+ phone number to get more info about the sale

125
Q

Debtor’s right to redeem

A

Debtor can redeem any time before collateral is sold or contract entered into for its sale

126
Q

How does debtor redeem?

A

Must tender fulfillment of all obligations (usually entire balance b/c of acceleration clauses)

127
Q

Fixture: definition

A

Personalty attached to real estate with the INTENT that it become part of the real estate (built in appliances, AC)

128
Q

Where must a fixture filing be made?

A

office where a mortgage on the real estate would be filed

129
Q

What must a fixture filing contain?

A
  1. identify the real estate
  2. name of the owner
  3. FINANCING STATEMENT REQUIREMENTS
130
Q

Why is a fixture filing necessary?

A

To obtain priority over certain real estate interests.

131
Q

Repossessing a fixture

A

Economic impact is irrelevant

If house is damaged when you remove, must pay for damage

132
Q

Security interest vs. subsequent real estate interest

A

If security interest is perfected first through fixture filing it has priority.

133
Q

General rule: prior real estate interest vs. subsequent security interest

A

General rule: real estate interest has priority

Exception: PMSI has priority if filed within 20 days of goods becoming fixtures

134
Q

Construction mortgage vs. subsequent PMSI

A

construction mortgage has priority even if PMSI is perfected w/in 20 days

135
Q

When is fixture filing unnecessary?

A

Readily movable factor office machines or equipment that is not primarily used or leased for use in operation of real estate or replacements of domestic appliances

136
Q

Accessions

A

When personal property becomes attached to other personal property

Tires on a car

137
Q

What happens if a security interest is perfected when the collateral becomes an accession?

A

Security interest remains perfected in the collateral.

Secured Transactions (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions