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Flashcards in Florida Secured Transactions Deck (91)
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1

Definition of secured transaction:

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

(Generally involves a sale on credit or a loan in which the seller or the lender obtains a lien on some or all of the debtor's property as security for payment).

2

What should you look out for to identify a secured transaction question?

1. Credit transaction (sale on credit or loan) and
2. An agreement that creates a lien in favor of the creditor in the debtor's personal property to secure the debt.

3

T/F: Secured transactions law relates to real property?

False -- personal property is used to secure the debt.

4

Hilda ____ borrows $20,000 from First Bank ______ to buy some additional inventory for her retail hat shop. First Bank and Hilda execute a document _____ that grants to First Bank a lien _____ on the hats being purchased and in addition on all other inventory _____ now owned or hereafter acquired by Hilda ______ to secure this loan and any future indebtedness of Hilda to First Bank ______. First Bank also files a form ______ in the public records that indicates that First Bank has a lien on HIlda's inventory.

Hilda = debtor
First Bank = secured creditor
document= security agreement
lien = security interest
all other inventory = collateral
after acquired property clause
future advance clause
form = financing statement

5

Debtor definition:

The person who owes payment or performance of the obligation secured.

6

Secured party definition:

A lender, seller, or other person in whose favor there is a security interest

7

Security agreement definition:

The agreement between the debtor and the secured party that creates the security interest

8

Security interest definition

an interest in personal property or fixtures that secures paymnet or performance of an obligation

9

collateral definition:

the property subject to a secuirty interest

10

Puchase Money Security Interest Definition:

Two types:

1. secured party sells debtor collateral on credit and retains a security interest or
2. an enabling loan (a loan to a debtor that enables the debtor to buy collateral).

* The credit or loan proceeds must actually be used to acquire the collateral.

11

T/F: IN order to be a proper puchase money security interest, the credit or loan proceeds must actually be used to acquire the collateral?

True!

12

What are three situations that don't destroy an initial PMSI?

1. The PMSI also secures an obligation that is not puchase money: Lender lends debtor money to puchase a machine and takes a PMSI in that machine. 3 months later, lender loans debtor additional funds secured by the machine. Initial PMSI still valid.

2. Nonpurchase money collateral also secures the puchase money obligation: Lender loans debtor money. Loan is secured both by collateral to be purchased by the debtor using the loan proceeds and by collateral already owned by the debtor.

3. PM obligation has been renewed, refinanced, consolidated, or restructured: Lender loans debtor money to purchase a machine. Several months later, loan is refinanced. Still PMSI.

13

After-acquired property clause definition:

Clause in security agreement that allows a secred party to obtain a security interest not only in debtor's present property, but also in property that the debtor will obtain in the future.

14

What is a future advance clause?

A clause in a security agreement that allows the secured party to make future loans to the debtor and to secure those future advances in the present security agreement. New security agreement is not needed when a future advance is made.

15

What is attachment?

The steps legally required to give the secured party a security interest in the collateral that is effective as against the debtor.

16

What is perfection?

Those steps legally required to give the secured party an interest in the collateral that is effective as against the world.

17

What is a financing statement?

Document generally used to provide public notice of the security interest, and so to perfect the security interest.

18

What are the two broad types of collateral?

1. Goods (4 types)
2. Semi-intangible and intangible property (8 types)

19

What are classifications are included under "goods" in types of collateral?

1. consumer goods
2. equipment
3. farm products
4. inventory

*In classifying the collateral, look to see how the debtor is using the collateral.

20

What is the definition of "goods" as a type of collateral?

Includes all things which are movable "at the time the security interest attaches" and include the unborn young of animals and growing crops. Also includes fixtures.

21

Definition of consumer goods:

Type of good used or bought for use primarily for personal, family, or household purposes.

22

What is equipment?

Used or bought for use primarily in business.

(type of good).

23

What are farm products?

Type of goods collateral - Crops or livestock or supplies used or produced in farming operations or products of crops of livestock in their unmanufactered states (such as ginned cotton, wool-clip, maple syrup, milk, and eggs) if they are in the possession of a debtor engaged in farming operations.

24

What is inventory?

Type of goods collateral - held by a person who holds them for sale or lease or to be furnished under serivce contracts; materials used or consumed in a business in a short period of time.

25

What classification of collateral?
1. Guitar for chanukah present for son?
2. Guitar purchased by musician for use on tour?
3. Milk in the hands of farmer?
4. Milk in the grocery store?
5. Milk in hands of grocery store's customer for family?
6. Automobiles held by local care rental agency?
7. Pencils & stationery used by Sears in credit offices?

1. consumer goods
2. equipment
3. farm product
4. inventory
5. consumer goods
6. inventory
7. inventory because used in business in a short time

26

What are the 8 types of semi-intangible and intangible collateral (property)?

1. instruments
2. documents
3. chattel paper
4. investment property
5. accounts
6. deposit accounts
7. commercial tort claims
8. general intangibles

27

What are instruments?
(intanglible property/ collateral)

Negotiable instruments and any other writing that evidences a right to the payment of a monetary obligation, and which are, in the ordinary course of business, transferred by delivery with any necessary indorsement or assignment (not investment property).

28

What are documents?
(intanglible property/ collateral)

A document that, in the ordinary course of business, is treated as evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers (e.g. bill of lading, warehouse receipt).

29

What is chattel paper?
(intanglible property/ collateral)

A record or records that evidence both a monetary obligation and a security interest in or a lease of specific goods. A record is information that is stored in iether a tangibel medium (written on paper) or an intangible medium (e-stored). Chattel paper that is stored in an e-medium is also called electronic chattel paper.

30

What is investment property?
(intanglible property/ collateral)

Includes items such as stocks, bonds, mutual funds, and brokerage accounts containing such items.