Secured_Transactions Flashcards

1
Q

When does a security interest attach?

PIG

A

When 3 conditions occures PIG - enforce against Debtor

  • Debtor must actually own the rights to the collateral or have Possession
  • Secured Interest much be created:
    • signed security agreement or
    • take possession
  • Secured party** Gives** value
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the characteristics of perfection of interest in a secured transaction?

A
  • Gets higher priority over others claiming rights to collateral after the perfection takes place
  • Attachment must take place BEFORE perfection
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How does perfection occur in a secured transaction?

FAT

A

Perfection occurs when the secured interest has **attached AND 1 of the following FAT **

  • By filing a Financing statement - renew every 5 years- description of property - name creditor and debtor - signature of debtor
  • Automatic perfection - PMSI in consumer goods - except debtor sell the consumer good to another consumer - need to file in 20 days of attachment / 4 months
  • By Taking possession the collateral - pawnbroker (best way to perfect)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Purchase Money Security Interest - PMSI-

A
  • A PMSI is a security interest that can have super priority. It arises when
    • Store sells a consumer good on credit - Store retains security interest
    • A bank finances the purchase of a consumer good - Bank retains security interest
  • PMSI in noninventory good - MUST perfect within 20 days of debtor possession of collateral
  • PMSI in inventory good - MUST perfect and give notice to other perfected interest **prior to debtor receiving inventory **
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the priority rules for payment in a secured transaction?

A
  1. Buyer in the ordinary course of business - inventory rule
  2. Holder of the statutory lien (mechanic lien) depending on state statute
  3. PMSI when attached and perfected simultaneously
  4. Perfected secured creditor - by filling
  5. Other perfected interests or judicial liens (court order/garnish wages)
  6. Unperfected secured creditor
  7. Debtor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the advantages of a creditor holding a lien in a secured transaction?

A
  • Creditor holds priority over claims to collateral vs. unperfected security interests
  • Beats perfected security interests filed after lien attachment Exceptions: Purchase money security interest; which has a 10 day grace period to be filed
  • Buyers purchasing in the ordinary course of business are immune from security interests held by merchants
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Secured Transactions

A

**An agreement where a creditor receives additional assurance of payment by debtor who provide collateral in which the creditor obtains interest **

NO real property

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

Types of collateral

A
  • Goods - consumer goods, equipment, inventory
  • Indipensible paper
  • intangibles
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Security Agreement

A
  • Agreemtn between the debtor and creditor that gives the creditor a security interest in the debtor’s collateral
  • Requirements:
    • in writting except when creditor has physical possession of collateral
    • signed by the creditor
    • **a description of the collateral **
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Right of parties upon default

A
  • Debtor can excercise right of redemption by paying off loan
  • **Secure party must sell the collateral if debtor paid > 60% of the debt **
  • Secure party may obtain a deficiency judgement for the amount still owed after proceed of sale paid the expense of repossesion sale and part of debt owed
  • A good faith purcharser for value at privte sale will take the property free from any security interest or subordinate liens in a property, BUT remains subject to security interest which are senior to that being discharged at the sale
How well did you know this?
1
Not at all
2
3
4
5
Perfectly