Securities (Delaware)

Question 1

Introduction: Secured Transaction + Characteristics

Answer 1

A secured transaction is a transaction intended to create a security interest in personal property or fixtures.

These include (1) a credit transaction, and (2) an agreement that creates a lien on personal property.

Question 2

Introduction: Credit Sale

Answer 2

A sale where the buyer does not pay the full purchase price at the time of the sale

Question 3

Introduction: Terminology - Debtor + Secured Party (Creditor)

Answer 3

Debtor - The person who OWES payment

Secured Party (Creditor) - A lender, seller, or other person in whose favor there is a security interest.

Question 4

Introduction: Collateral

Answer 4

The property subject to a security interest

Question 5

***Introduction: Purchase Money Security Interest + Ways In Which This Arises

Answer 5

A PMSI is a special type of security interest in goods. This arises in TWO WAYS:

1) The secured party SELLS THE GOODS to the debtor on credit (CREDIT SALE) and retains a security interest in the goods sold, or
2) A LOAN to the debtor used to acquire specific collateral which is used to purchase the collateral, and the creditor takes a security interest in that collateral

Question 6

***Introduction: Attachment

Answer 6

The security interest has been created, a creditor is NOT SECURED UNTIL ATTACHMENT

Question 7

Introduction: Perfection + Financing Statement

Answer 7

Gives the creditor rights against ALL OTHER CREDITORS, and is the process of giving PUBLIC NOTICE of the security interest to the world

Financing Statement - Used to provide public notice of the security interest

Question 8

Types of Collateral: Goods + Determining Which Category + Types of Goods

Answer 8

All things movable at the time the security interest attaches (includes unborn animals, growing crops, and fixtures)

The category into which good is placed depends on HOW THE DEBTOR USES the collateral

Types of goods (ICE-F):

1) Consumer goods - personal, family, or household purchases
2) Equipment - used for business (DEFAULT CATEGORY for anything that doesn’t fit into the other 3)
3) Farm Products - crops or livestock or supplies used or produced in farming
4) Inventory - goods held for sale or lease, furnished under service contracts, and materials used in a business for a short period of time

Question 9

Types of Collateral: Intangible or Semi-Tangible Collateral Categories + Determining Which Category

Answer 9

The category will depend on THE NATURE OF THE COLLATERAL (as opposed to use for goods). The categories are as follows:

1) Instruments - pieces of paper representing the right to be paid money (e.g., promissory notes)
2) Documents - a document with the right to receive goods (e.g., warehouse receipt)
3) Chattel Paper - A record or records which evidence both MONETARY obligation and SECURITY INTEREST in a specific good
4) Investment Property - Includes stocks, bonds, and mutual funds
5) Accounts - a right to payment for property sold or services rendered
6) Deposit Accounts - bank account (non-consumer)
7) Commercial Tort Claims - claimant is an ORGANIZATION or AN INDIVIDUAL, WHERE THE CLAIM AROSE FROM THE BUSINESS
8) General Intangibles - All other personal property not within the scope of other definitions (e.g., patents, trademarks, etc.)

Question 10

Scope of Article 9: Transactions that Apply

Answer 10

Article 9 applies to the following transactions:

• 1) Security interests in PERSONAL PROPERTY,
• 2) Secured sale DISGUISED AS A LEASE,
  3) Seller retains title to good after deliver until buyer pays up,
  4) Nonpossessory liens on farms,
  5) Sales of accounts, chattel papers, payment intangibles, and promissory notes, and
  6) Commercial consignment of goods

Question 11

Attachment: Requirements for Attachment + Past Consideration

Answer 11

A security interest does not become enforceable until it has attached, the following three requirements for attachment must coexist:

1) The parties must AGREE TO CREATE the security interest,
2) VALUE must be given (past consideration is OK), and
3) the debtor must have RIGHTS in the collateral (not to be confused with title)

Question 12

***Attachment: Requirements for a Written Security Agreement + Supergeneric Descriptions

Answer 12

The agreement must:
(1) be EVIDENCED BY A RECORD (written or electronically stored) and must show AN INTENT TO CREATE A SECURITY INTEREST (no magic language necessary)

(2) The agreement must be AUTHENTICATED (signed) by debtor, and
(3) The agreement must contain a DESCRIPTION THAT REASONABLY IDENTIFIES THE COLLATERAL

Supergeneric descriptions are NOT permitted (e.g., “all of the debtor’s personal property”)

Question 13

Attachment: Oral Security Agreements (Pledge)

Answer 13

A security agreement MAY BE ORAL if the collateral is in the POSSESSION OF THE CREDITOR (very rare because usually debtor uses the collateral)

Question 14

Scope of the Security Interest: Future Advances

Answer 14

A security agreement may provide that the collateral will serve as security for FUTURE CREDITS TO DEBTOR

Question 15

***Scope of the Security Interest: After-Acquired Property + Exception

Answer 15

The security interest will attach to the property as soon as the debtor acquires an interest in the collateral at ANY TIME IN THE FUTURE (without this specific clause, the secured party’s interest ONLY reaches the debtors collateral at the time the agreement is signed)

Exception: A security interest will attach AUTOMATICALLY to collateral of a type that’s rapidly depleted and replenished (e.g., inventory) OR to IDENTIFIABLE PROCEEDS (consumer goods unless debtor acquires rights in the goods within 10 days after creditor gives value OR commercial tort claims)

Question 16

***Scope of the Security Interest: Proceeds

Answer 16

A security interest AUTOMATICALLY attaches to IDENTIFIABLE PROCEEDS, which include whatever is received upon the sale, exchange, or collection of collateral or proceeds.

Question 17

Scope of the Security Interest: Proceeds - Commingled Cash Proceeds (Lowest Intermediate Balance Rule)

Answer 17

If the proceeds are commingled, the identifiable proceeds can be traced using the LOWEST INTERMEDIATE BALANCE, meaning you look at the bank account starting at the time the proceeds are deposited and ending at the time your applying the test. The lowest balance during that time period is the secured party’s identifiable proceeds (the amount cannot exceed the value of the cash proceeds originally deposited)

Question 18

Scope of the Security Interest: Supporting Obligations (Surety)

Answer 18

The attachment of a security interest in accounts, chattel paper, documents, general intangibles, instruments, and investment property AUTOMATICALLY EXTENDS to a supporting obligation (e.g., a surety) for that collateral

Question 19

Perfection: Timing

Answer 19

A security interest is NOT ENFORCEABLE until it has ATTACHED to the collateral. A creditor can take all the steps for perfection prior to attachment, in which case perfection will occur upon attachment.

Question 20

Methods of Perfection: Automatic Perfection

Answer 20

A security interest is AUTOMATICALLY PERFECTED, most commonly for PMSI in CONSUMER GOODS (except cars and trucks - see below)

Question 21

Perfection In General

Answer 21

Maximizes secured party’s rights in the collateral as AGAINST THIRD PARTIES

Question 22

Perfection: Methods

Answer 22

1) Filing of a FINANCING STATEMENT describing collateral,
2) TAKING POSSESSION of the collateral
3) TAKING CONTROL of the collateral,
4) AUTOMATIC PERFECTION (PSMI of consumer goods), and
5) TEMPORARY PERFECTION (e.g., security interests in proceeds received from the sale of collateral)

Question 23

Methods of Perfection: Taking Possession of Collateral + Timing + Collateral in the Hands of Bailee

Answer 23

Security interests in most types of collateral can be perfected simply by taking PHYSICAL possession of the collateral (i.e., goods) (therefore intangible goods cannot be perfected in this way)

Timing - From the moment of actual possession and continues as long as possession is retained.

Bailee - Where the collateral is in the hands of the bailee, the secured party is deemed to be in possession from the moment the bailee authenticates a record acknowledging it is holding the collateral

Question 24

Methods of Perfection: Perfection by Control

Answer 24

Security interests in investment property, nonconsumer accounts, and electronic chattel paper may be perfected by “control”

Question 25

Methods of Perfection: Perfection by Control - Methods of Obtaining Control

Answer 25

1) Nonconsumer deposit accounts - the bank that maintains the nonconsumer bank account has AUTOMATIC control over it. If not such bank, it may obtain control by either: (i) putting the deposit account in the secured party’s name, or (ii) CONTROL AGREEMENT (agreement between banks and debtor that bank has control over bank account without debtor’s consent)
2) Investment Property - A secured party has control over investment party when it can have the property SOLD WITHOUT FURTHER ACTION from the owner.
3) Electronic Chattel Paper - A secured party has control over electronic chattel paper when it can show the transfer of interests in chattel paper RELIABLY ESTABLISHES the secured party as assignee.

Question 26

Methods of Perfection: Notation on the Certificate of Title + Exception

Answer 26

Security interests in MOTOR VEHICLES can only be perfected by NOTATION ON THE CERTIFICATE OF TITLE

Exception: If the debtor is holding a car or truck as INVENTORY, then a secured party must perfect by filing a FINANCING STATEMENT against inventory

Question 27

***Methods of Perfection: Perfection By Filing

Answer 27

A secured party may obtain perfection by filing a FINANCING STATEMENT, which must contain:

1) the DEBTOR’S NAME AND ADDRESS,
2) the SECURED PARTY’S NAME AND ADDRESS, and
3) A DESCRIPTION OF THE COLLATERAL

Question 28

Methods of Perfection: Perfection By Filing - Effect of Error in Debtor’s Name + Errors By Filing Office

Answer 28

MINOR ERRORS in the debtor’s name won’t invalidate a financing statement, but SERIOUSLY MISLEADING ERRORS will.

The failure of the filing office to correctly index a financing statement DOES NOT IMPACT ITS EFFECTIVENESS

Question 29

Methods of Perfection: Perfection By Filing - Debtor Name Change

Answer 29

If the debtor changes his name and becomes seriously misleading, the financing statement is effective ONLY AGAINST COLLATERAL BEFORE THE NAME BECAME INSUFFICIENT and within 4 MONTHS AFTER.

Question 30

Methods of Perfection: Perfection By Filing - Description of Collateral

Answer 30

The description of the collateral in a financing statement is SUFFICIENT if it REASONABLY IDENTIFIES the collateral AND EVEN IF it contains a SUPERGENERIC DESCRIPTION (this is unlike the requirements for an authenticated security agreement)

Question 31

Methods of Perfection: Perfection By Filing - Error in Secured Party’s Name

Answer 31

An error in the secured party’s name WILL NOT make the financing statement seriously misleading.

Question 32

Methods of Perfection: Perfection By Filing - Real Property

Answer 32

If the financing statement covers real property related collateral MUST ALSO including the following:
1) a DESCRIPTION OF THE REAL PROPERTY, 2) the NAME of the record owner, and 3) an indication that is to be filed in the REAL PROPERTY RECORDS

Question 33

Methods of Perfection: Perfection By Filing - Authorizing the Filing

Answer 33

The debtor must AUTHORIZE the filing in ANY SIGNED WRITING before or after it is filed. The debtor AUTOMATICALLY authorizes the creditor to file if the debtor AUTHENTICATES THE FINANCING STATEMENT OR A SECURITY AGREEMENT covering the same collateral as the financing statement (the SECURITY AGREEMENT may be filed as the financing statement if the parties desire)

Question 34

Methods of Perfection: Perfection By Filing - Place of Filing + Exception for Timber, Minerals, and Fixtures

Answer 34

In Delaware, the financing statement is filed with the Delaware’s Secretary of State. However, collateral that is timber, minerals, or fixtures, it must be filed LOCALLY (the filing is in the COUNTY WHERE A MORTGAGE ON REAL ESTATE IS FILED)

Question 35

Perfection: Which State’s Law Governs Perfection?

Answer 35

The law of the state WHERE DEBTOR IS LOCATED

1) for individuals that is their PRINCIPAL PLACE OF RESIDENCE
2) for registered organizations (LLC) that is THE STATE UNDER WHOSE LAWS IT IS ORGANIZED
3) for unregistered organizations that is the PLACE OF BUSINESS if only one, or where the CEO is located if multiple PPBs

Question 36

Perfection: Laws Governing Perfection - Debtor Moves After Filing Statement + Collateral Moves After Filing Statement

Answer 36

If the debtor moves ACROSS STATE LINES after filing, the secured party has 4 MONTHS to refile in the new state

If the collateral moves, the secured party has UP TO ONE YEAR to refile in the new state.

Question 37

Perfection: Filing Statement - Lifespan + Continuation Statements

Answer 37

A filing statement lasts for 5 YEARS. It can be prolonged by filing a CONTINUATION STATEMENT to be valid for another 5 years, but MUST BE FILED WITHIN 6 MONTHS before the lapse of the filed statement. (Debtor not required to authorize)

Question 38

Perfection: Filing Statement - Termination Statement + Consumer Goods

Answer 38

Generally, a secured party is NOT OBLIGATED to terminate a financing statement. However, upon receiving an AUTHENTICATED DEMAND by the debtor, the secured party must provide the debtor with a termination statement WITHIN 20 DAYS

For consumer goods, the secured party must file the termination statement WITHIN 1 MONTH after there is no obligation or commitment, or within 20 days after receiving authenticated demand from debtor.

Question 39

Perfection: Methods of Perfection - Temporary Perfection for Proceeds

Answer 39

If a secured party has a perfected security interest in collateral, the secured party AUTOMATICALLY has a perfected security interest in any proceeds of the collateral 20 DAYS after receipt of the proceeds.

To be perfected BEYOND 20 DAYS, one of the following must occur:

1) The PROCEEDS ARE IDENTIFIABLE CASH PROCEEDS,
2) SAME OFFICE RULE - The security interest in the original collateral was PERFECTED BY FILING a financing statement, a security interest in the type of collateral would be FILED IN THE SAME PLACE, and the proceeds were not purchased, or
3) The security interest in the proceeds is perfected within the 20-day period

Question 40

Perfection: Methods of Perfection - Temporary Perfection for Instruments, Negotiable Documents, and Certified Securities

Answer 40

Where NEW VALUE is given under an authenticated security agreement for instruments, negotiable documents, or certificated securities, PERFECTION IS VALID FOR 20 DAYS AFTER ATTACHMENT, neither filing nor possession is necessary.

Question 41

Perfection: Temporary Perfection - Delivery of Collateral to Debtor for Disposition

Answer 41

Where the creditor who has perfected their security interest by possession delivers instruments, negotiable documents, certified securities, or goods in the possession of a bailee to the debtor for disposition, PERFECTION IS VALID FOR 20 DAYS, after which the creditor must REPERFECT or lose perfection

Question 42

Perfection: Change in Use of Collateral

Answer 42

If debtor changes its use of the collateral, the filed financing statement REMAINS EFFECTIVE, the secured creditor has NO DUTY to monitor the collateral or to amend the financing statement, EVEN IF THEY KNOW ITS MISLEADING

Question 43

***Priorities: Priority Between Perfected Secured Parties

Answer 43

When there are conflicting PERFECTED SECURED INTERESTS in the same collateral, priority goes to whichever party was FIRST TO FILE OR PERFECT - whichever is EARLIER.

Question 44

Priorities: Priority Between Unperfected Secured Parties

Answer 44

When two unperfected security interests conflict, the first to ATTACH has priority.

Question 45

Priorities: Priority Between Unperfected and Perfected Secured Parties

Answer 45

A perfected security interest PREVAILS OVER unperfected security interest

Question 46

Priorities: Superpriority

Answer 46

Generally, a PSMI enjoys SUPERPRIORITY, they are superior to PRIOR perfected security interests in the same collateral

Question 47

Priorities: Superpriority - PMSI In Goods Other than Inventory and Livestock

Answer 47

A PMSI in goods other than inventory and livestock (i.e., equipment) has priority over conflicting interests IF PERFECTED BEFORE OR WITHIN 20 DAYS after debtor RECEIVES GOODS

Question 48

Priorities: Superpriority - PMSI In Inventory and Livestock

Answer 48

A PMSI in inventory or livestock has priority over conflicting interests if BEFORE DEBTOR RECEIVES, the it is PERFECTED, and any secured party who has already filed their security interest receives AUTHENTICATED NOTIFICATION (effective for 5 years)

Question 49

Priorities: Superpriority - Consignor Has PSMI In Inventory

Answer 49

A consignor can acquire PMSI superpriority in consigned goods if the consignor complies with the above requirements for gaining PMSI superpriority in inventory (perfected at the time debtor possesses + authenticated notification to other interests)

Question 50

Priorities: Superpriority - Conflicting PMSIs

Answer 50

If more than one party has PMSI superpriority, the SELLER has priority over a LENDER, otherwise the FIRST SECURED PMSI TO FILE OR PERFECT PREVAILS

Question 51

Priorities: Rules for Conflicting Security Interests in Investment Property

Answer 51

The security interest WITH CONTROL prevails over other interests, if both control they rank ACCORDING TO TIME OF OBTAINING CONTROL

Question 52

Priorities: Rules for Conflicting Security Interests in Deposit Accounts

Answer 52

A security interest in a deposit account that is PERFECTED BY CONTROL ranks in the following order:

1) Bank is a NAMED PARTY on the account,
2) Bank account is at the bank of the secured creditor, and
3) Control agreement

Question 53

Priorities: Secured Creditor v. Buyer or Transferee + Exceptions

Answer 53

When a buyer buys or leases something with a security interest on it, the security interest STAYS ON THE ITEM, unless one of the following situations applies:

1) Authorized Sale - if authorized by the secured party free of the security interest (express or implied)
2) Unauthorized Sale - buyer in the ordinary course of business (BIOC) takes free of nonpossessory security interest in the goods created by the BUYER’S SELLER OR LESSEE

Question 54

Priorities: Secured Creditor v. Buyer or Transferee - Buyer in the Ordinary Course Definition + Buyers Not In the Ordinary Course of Business

Answer 54

A BIOC is one who buys: (i) in GOOD FAITH, (ii) WITHOUT KNOWLEDGE it violates anyone’s rights, and (iii) SELLER IS IN THE BUSINESS of goods of the kind purchased

Not In Ordinary Course - Buyer or lessee NOT in the ordinary course of business:

1) take subject to PERFECTED security interests, and
2) take free from UNPERFECTED security interests UNLESS THEY KNOW of the security interest when they give value or take delivery

Question 55

Priorities: Consumer to Consumer Sales (Garage Sale Rule)

Answer 55

Buyer takes FREE of security interest if he buys: (i) WITHOUT KNOWLEDGE, (ii) FOR VALUE, (iii) for buyer’s own personal use, and (iv) BEFORE a financing statement has been filed

Question 56

Priorities: Secured Party v. Holder In Due Course

Answer 56

A HIDC of a NEGOTIABLE INSTRUMENT has PRIORITY over a security interest in the negotiable instrument.

Question 57

Priorities: Secured Party v. Judicial Lien Creditor + PMSI Grace Period Exception

Answer 57

The first one to occur wins: levy of a judicial lien by judgment of the court (by sheriff) OR perfection or filing of the security interest by the secured creditor

PMSI Grace Period Exception: If the secured party files a financing statement with respect to a PMSI WITHIN 20 DAYS after the debtor receives the collateral, the secured party will have PRIORITY over a judicial lien arising between the time the security interest attaches and the time of filing.

Question 58

Priorities: Secured Party v. Statutory Lien Claimant

Answer 58

Statutory liens beat perfected security interest IF the goods or services were provided in the ordinary course of business AND the collateral remains in the lien holder’s possession

Question 59

Default: Self-Help Repossession + What Happens If The Peace Is Breached

Answer 59

After default, the secured party is entitled to take possession of the collateral WITHOUT JUDICIAL PROCESS if it can be done WITHOUT THE BREACH OF PEACE

If the party breaches the peace, the secured party losses the authorization to repossess and may be liable for conversion

Question 60

Default: Self-Help Repossession - Definition of Breach of Peace + Trespass + Rendering Unusable

Answer 60

Any potential to lead to violence or breaking of the law, generally physical presence by the debtor PLUS verbal objection by the debtor is enough to create a breach of the peace

Trespass of a residence is PROBABLY breach of peace, but commercial trespass IS NOT. Simple trespass is NOT a breach of the peace

If the property is bulky, the creditor can render it unusable (e.g., take keys away)

Question 61

Default: Self-Help - Accounts

Answer 61

If the debtor defaults, the creditor can send notice to other people owing debtor money to send money to creditor

Question 62

Default: Strict Foreclosure + Exceptions

Answer 62

After default and repossession, the secured party MAY RETAIN THE COLLATERAL in full or partial satisfaction of the debt if: (i) it it notifies any other creditor that has a lien in that same collateral AND (ii) it receives DEBTOR’S CONSENT

Exceptions:

1) No partial strict foreclosure in consumer transactions (creditor cannot keep property and seek rest of money)
2) If debtor has paid 60% of the cash price on a PMSI of consumer goods, the secured party MUST DISPOSE of the collateral within 90 days after repossession

Question 63

Default: Resale of Collateral

Answer 63

After default, the secured party may sell, lease, or otherwise dispose of the collateral by either private or public auction. This DISCHARGES the security interest under which the sale is being made and ALL SUBORDINATE INTERESTS (superior security interests remain)

Question 64

Default: Resale of Collateral - Reasonable Notification Required + Timeliness + Contents (Public v. Private Sales)

Answer 64

REASONABLE NOTICE that is AUTHENTICATED by the secured party must be given to the debtor and any sureties on the debt.

The notice must be sent within a REASONABLE TIME before sale

The content for public sales = notice of the time and place of sale is required

The content for private sales = notice of the time after which the sale will occur must be given

Question 65

Default: Resale of Collateral - Sale Must Be Commercially Reasonable

Answer 65

Every aspect of the sale MUST BE COMMERCIALLY REASONABLE

Question 66

Default: Resale of Collateral - Secured Party Purchasing Collateral

Answer 66

The secured party may buy the collateral at any public sale but MAY BUY at a private sale ONLY IF the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations

Question 67

Default: Resale of Collateral - Proceeds of the Sale + Deficiency Judgment

Answer 67

The money from a foreclosure sale goes as follows:

1) to repay the costs of repossession and sale,
2) to pay off the debt of the foreclosing creditor, and
3) to pay off the debt of the creditors with lower priority

Deficiency Judgment - If the collateral when sold doesn’t bring in enough to pay the expenses of the sale and the secured party’s debt, the secured MAY RECOVER FROM THE DEBTOR

Question 68

Default: Resale of Collateral - Failure to Comply with Code Rules (Penalties for Not Commercially Reasonable Sales)

Answer 68

A secured party is liable:

1) For ACTUAL DAMAGES,
2) There is a MINIMUM STATUTORY PENALTY for consumer goods, and
3) It can AFFECT the creditor’s DEFICIENCY JUDGMENT (consumer goods = lose deficiency, nonconsumer goods = presumption of loss of deficiency)

Question 69

Default: Debtor’s Right To Redeem + Acceleration Clause

Answer 69

Any time BEFORE collateral has been resold, the debtor may redeem by purchasing for ALL obligations secured by the collateral.

If acceleration clause is present, debtor must pay FULL PRICE

Question 70

Fixtures

Answer 70

Goods that have become so related to real property that an interest in them arises.

Question 71

Fixtures: Perfection + Additional Filing Requirement + Filing

Answer 71

A FIXTURE FILING must be made in the office where a mortgage on the real estate would be filed. In addition to the filing requirements of a financing statement (addresses + description), it must REASONABLY IDENTIFY THE REAL ESTATE and must show the name of the owner

Filed in the COUNTY where the fixtures are located (not secretary of state, unlike security filings)

Question 72

Fixtures: Rights on Default

Answer 72

The holder of security interest may REMOVE the fixture from real property, if the debtor doesn’t own the real property the creditor must reimburse the owner for the cost to repair damage

Question 73

Fixtures: Priority - Secured Party v. Subsequent Real Estate Interest + Secured Party v. Prior Real Estate Interest (And Exception) + Construction Mortgages

Answer 73

Security interest in fixtures HAS PRIORITY OVER any real estate interest that is recorded subsequent to the perfection of the security interest by fixture filing.

Prior real estate interest that is properly recorded HAS PRIORITY OVER a previous secured interest UNLESS a PMSI takes priority if it’s perfected by a fixture filing within 20 days after the good becomes fixtures)

Construction mortgages BEAT EVERYTHING (PMSI and Real Estate Interests)

Question 74

Fixtures: When Fixture Filings are Unecessary

Answer 74

A secured party need not fixture file as to READILY REMOVABLE (1) factory or office machines, (2) equipment not primarily used in the operation of real estate, or (3) replacements of domestic appliances

Question 75

Accessions

Answer 75

Accessions are goods that are physically united with other goods in such a manner that the identity of the original goods is NOT LOST (e.g., tires on a car)

Question 76

Accessions: Perfection

Answer 76

If a security interest is perfected when the collateral becomes an accession, the security interest REMAINS PERFECTED in the collateral

Question 77

Accessions: Priority + Vehicles

Answer 77

General priority rules still apply, EXCEPT a security interest in an accession is subordinate to a security interest in A WHOLE which is perfected by compliance with the requirements of a certificate of title statute (e.g. vehicles)

Question 78

Accessions: Removal and Reimbursement For Physical Injury to the Whole

Answer 78

A secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole