Virginia Secured Transactions Flashcards
Qualifications for a buyer in the ordinary course of business to take goods free of security interests
To qualify, a buyer must: 1) purchase goods; 2) from a merchant; 3) in the business of selling goods of that kind; 4) in good faith; 5) without knowledge that the sale violates creditor’s security interest
Treatment of buyer of purchased goods with a security interest held by creditor on seller’s inventory
Even if perfected, a buyer of goods in the ordinary course of business generally takes free of this
What is the order of payment from a public auction proceeds?
For a repossession action where this occurs, proceeds go to 1) payment and collection of enforcement expenses, then to 2) the secured party to satisfy the outstanding obligation
To whom should surplus proceeds from a public auction be distributed?
The debtor is entitled to these proceeds from public auction
Who is liable for a deficiency from a public auction?
A debtor remains liable for this result of a public auction
How long is a judgement obtained by a creditor enforceable?
This is valid and may be enforced by the circuit court for a term of 20 years from the date received, and if unpaid, may be extended an additional 20 years by Motion upon good cause shown
When a creditor has a security interest in a deposit account, a creditor may perfect its security interest by doing this:
Only by taking control of the account may a creditor be able to do this to a deposit account
When a creditor has a security interest in stocks, a creditor may perfect its security interest by doing either of these:
Either by filing a financing statement with the VA State Corporation Commission or by taking control of the stock may a creditor be able to do this to stocks
A preferential transfer made by a debtor to a creditor for an antecedent debt owed may not be what?
This type of transfer made by a debtor to a creditor for an antecedent debt owed may be what?
A gift, conveyance, assignment, or transfer of real or personal property that is intended to defraud creditors may be what?
These transfers made with the intent to defraud creditors may be set aside
A creditor bears the burden of establishing the transferor’s intent to defraud by what standard?
This person bears the burden of establishing the creditor’s intent to defraud by clear and convincing evidence
An insolvent debtor may still do this to one creditor over another
This person may still favor one creditor over another
If a perfected PMSI is held by the seller and a perfected PMSI is held by the lender, whose security interest has first priority?
A perfected PMSI in collateral held by the seller holds this versus a perfected PMSI held by a lender
Generally, if there are conflicting PMSIs, this one holds first priority:
Generally, the first to file (perfect) a PMSI holds this:
If an employer entrusted an employee with responsibility with respect to a check, then this is treated as an effective indorsement
If a fraudulent indorsement of a check is made by an employee, it is effective if:
A materialman does this:
This person supplies material for the construction of a building
To perfect a mechanic’s lien, a materialman must do what?
To do this, a material man must 1) file a memorandum of lien no later than 90 days from the last day of the month when labor last performed/materials furnished, and 2) not later than 90 days from time structure is to be completed
Mechanic’s lien memorandum must be timely filed (w/in the 90 day windows) and:
This must both be timely and: 1)filed with the clerk’s office where the structure is located, 2)mailed to the owner (and general contractor if claimant is not, 3) verified by oath, 4) and have a certification filed with a copy mailed
To enforce a statutory mechanic’s lien, a mechanic may sell property at auction when?
If less than $10,000, this person enforcing this can sell w/out court petition if following statutory requirements. Over $25,000, this person must petition the circuit court where property is located
A security interest attaches to collateral when this occurs:
This attaches when 1) secured party gives value; 2) debtor has rights in collateral; and 3) debtor has authenticated security agreement describing the collateral
If a debtor transfers property to defraud creditors (fraudulent or constructively fraudulent), a creditor may do what?
If this occurs, then a creditor may set aside the transfer (only if creditor’s claim is liquidated)
UCC Article 9 generally governs what kind of transactions?
This governs transactions creating secured interests in personal property/fixutre
For a security interest to attach to collateral (enforceable vs. debtor), it must be:
For this to be enforceable, it requires: 1) value given by secured party, 2) debtor has rights in collateral, and 3) debtor has authenticated a security agreement that describes the collateral OR secured party has possession/control of collateral
Value given by the secured party for attachment of SI may be:
This can be consideration sufficient to form contract, extending credit, accepting delivery under preexisting contract, or in satisfaction of preeexisting claim
Tangible collateral subject to SI:
This may include goods - consumer goods, farm products, inventory, equipment, or software
Other collateral (classification determined w/out reference to how debtor will use):
This may include chattel paper, document of title, instruments, investment property, accounts, commercial tort claims, deposit accounts, letters of credit, and general intangibles
An authenticated record is a security agreement that:
This must 1) be in a record, 2) contain a description of collateral, and 3) be authenticated by debtor; can list specific items/list article 9 categories unless it is consumer goods/commercial tort claim (NO super generic descriptions - e.g. all assets)
An original authenticated security agreement may serve as what?
This may serve as a new debtor’s authenticated security agreement by operation of law/contract (do not need to execute new security agreement with new debtor)
Possession/Control over collateral may do this, pursuant to the security agreement:
If this is done, the secured party will have satisfied the Statute of Frauds for Art. 9 purposes
The SI may cover collateral owned when:
This may cover collateral when it is granted, as well as that which the debtor acquires after it is given
Sellers of consumer goods may not take SI in what kind of property?
These people may only take SI goods sold; however, rule does not apply to vehicles subject to certificate of title statute or goods purchased w/ an open-end credit plan
Secured party’s duties include:
These include the duty of care, to keep collateral identifiable, to relinquish possession/control of collateral
Secured party’s rights in collateral include:
These include the right to charge for reasonable expenses, risk of loss or damage is on debtor, right to use/operate collateral, to hold proceeds
If debtor assigns right to receive payment from account debtor to secured party, secured party may:
If this occurs, then secured party may notify account debtor to pay secured party; upon receipt of notification, account debtor may discharge obligation only by paying assignee
Secured party is:
This is the person whose favor the SI is created under the security agreement
An obligor is:
This person must pay/otherwise perform w/r/t obligation that is secured by the SI
A debtor is:
This person has interest, other than SI/lien, in collateral, such as sole owner (this person typically obligor)
Rights of a debtor include these two:
A debtor has this for accounting/other info from secured party AND to notification from secured party when no longer required to make payments
PMSI in goods exists when:
This exists when secured party gave value to debtor that enable debtor to acquire goods & value given was used OR secured party sold goods to debtor, debtor incurred obligation to pay secured part all/part of purchase price
PMSI in software:
This exists only when debtor acquired interest in software as part of integrated transaction where acquired interest in goods, and acquiring software is for principal purpose of goods.
Accessions are:
These are goods that are physically united w/ other goods such that id of original goods is not lost
A SI created in collateral that becomes an accession is:
When this occurs, the SI is not lost; an SI may be created in collateral that is this
Comingled goods are:
These are goods that are physically united with other goods such that their identity is lost in a product/mass
A SI may attach to the product/mass that results when this occurs, but:
When goods are comingled, an SI may attach in this scenario but not in the specific goods comingled; if SI in collateral that becomes comingled, it is transferred to this
Methods of perfecting a security interest (generally):
These include filing, possession, control, and automatic perfection
Perfection with a filing statement is this:
This gives interested parties notice of the existence of the SI, and is the method of perfection for any SI except a deposit account, money or letter of credit rights
Filing a financing statement requires:
This must contain the debtor’s name, secured party’s name, and description of the collateral (it is a notice filing)
A filing office may only refuse a financing statement in Virginia for:
This may only occur to financing statement for failure to 1) pay required fee, 2) submit financing statement by authorized method, or 3) identify debtor
Perfection with possession is this:
A SI in goods, instruments, neg documents, money, tangible chattel paper, and certificated security may be perfected this way BUT it only lasts during the period of it
Perfection with control is this:
A SI in investment property, deposit accounts, letter of credit rights, electronic chattel paper, or electronic documents may be perfected this BUT it only lasts while retained
For letter of credit rights and deposit account, perfection:
Perfection of this can only occur by control, unless such rights are supporting obligation for other collateral with this type of collateral
A PMSI in consumer goods is perfected:
This is automatically perfected upon attachment, and a secured party need not file a financing statement (indefinite)
A general creditor is this, and an SI does this to them:
This holds an unsecured claim (including a judgement), but no lien on collateral; thus, this always prevails over their rights in the collateral
A perfected SI has priority over this:
This has priority over a judicial lien
A judicial lien has priority over this:
This has priority over an unperfected SI unless only reason its unperfected is that secured party has yet to give value
If a PMSI is perfected before or w/in 20 days after debtor receives possession of collateral:
When this occurs, the PMSI has priority over creditor’s rights that arose between time of attachment of SI and filing
