đ Flashcards
(31 cards)
What is a secured transaction?
A transaction intended to create a secure interest in property.
What body of law governs secure transactions?
Article 9 of the UCC
Define âcollateralâ
Property subject to the security interest.
Define âAttachmentâ
Term used when a valid security interest is created
What are the 3 methods of attachment?
Security agreement
Possession
Control
What are the 3 requirements of a valid security agreement
- Agreement is in writing (Authentication with debtors signature, intent to enter agreement, adequately describes collateral)
- Creditor gives something of value
- Debtor gives collateral that he has actual ownership of or legal rights to in return
Possession (Attachment)
If creditor receives possession of the collateral, a secure transaction is presumed
Control (Attachment)
If creditor received control of the collateral, a secure transaction is presumed.
What is perfection?
Putting the world and all 3rd parties on notice of a security interest.
What are the ways a security interest can be perfected?
- Financing statement
- Possession
- Control
- PMSI of consumer goods
What are the requirements for a valid financing statement?
Must be filed with the state and name the debtor, creditor, and collateral
*Minor errors are ok as long not seriously misleading
How to âperfectâ a security interest in a car?
Notation on title
How to perfect a security interest in land?
Need a filing statement describing the land and must be filed in state where land is located
What are consumer goods?
Goods bought for personal or household purposes.
What are inventory goods?
Goods that are quickly sold or leased by a business.
What is equipment?
The âcatch allâ category of physical goods if doesnât fall under consumer, inventory, or farm goods. (Think âbusinessâ supplies)
What are farm goods?
Goods such as livestock, supplies, crops, produced in farming operation in manufactured state. Debtor must be engaged in farming.
Priority: Perfected v. Unperfected SI?
Perfect wins
Priority: Perfected v. Perfected?
1st to perfect or file financing statement
Priority: PMSI v. Non PMSI?
PMSI wins
Security Agreement and Proceeds
SI automatically gives rights to proceeds
Proceeds and Perfection
- If creditor perfected collateral, proceeds also automatically perfected it within 20 days
- To remain perfected (after the 20 days) the creditor must perfect UNLESS:
*identifiable cash proceeds ($, check, account)
OR
*Proceeds of the same type (eg. âequipmentâ for âequipmentâ)
What are the creditorâs options if the debtor defaults?
Demand payment or use self help
How does a creditor properly use self help in case if a default?
⢠Repossess collateral peacefully
⢠Sell in reasonable manner
⢠Use proceeds to pay debt
