Security Interest

Question 1

Purchase Money Security Interest (PMSI)

Answer 1

2 kinds

1. Secured party sells debtor collateral on credit and retains a security interest in the item sold.
   - or-
2. A loan to a debtor that enables debtor to buy specific collateral, and creditor takes a security interest in that specific collateral

Note: Credit or loan must ACTUALLY be used to acquire the collateral

Question 2

Scope of Security Interest

Answer 2

1. Debt secured may include future advances
2. Property secured may include after-acquired property
3. Property secured generally includes proceeds of collateral (upon sale, exchange, collection, or other disposition of collateral or proceeds)
4. Attachment of a security interest in collateral is also an attachment in a supporting obligation for that collateral (ex. a surety)

Question 3

Non-purchase money security interest

Answer 3

a debt is secured by property you already owned when you made the loan.

Question 4

Secured party vs. statutory lien claimants

Answer 4

Statutory lien wins even against a perfected security interest. (e.g. a mechanics lien)