MEE Secured Transaction Flashcards
(53 cards)
Analysis
Attachment
Perfection
Continuation
Priority Rules
Article 9
What is an Article 9 Transaction?
Item –> Collateral.
Secured Party (Creditor)
Different types of collateral
- Goods, rare items, bikes.
- Regular goods
- Consumer goods
- Inventory (goods for commercial use).
What is the most important sentence?
Article 9 of the UCC governs any transaction regardless of its form that creates a security interest.
This includes security interests in both tangible and intangible property.
Debtor
The P who takes the loan and provides the collateral
Creditor
Lender or who can be secured or unsecured
Two Types of Interests
Possessory: you get to keep while you pay for it.
Non-Possessory: Do not get keep it.
Example of Secured Transactions
Buy a Tesla but do not have money. Lender hands you the money –> Lender unsecured.
Lender is secured and he has ownership position on you and if you play with his money, he is coming for you.
Tangible Collateral
Stuff you can see and touch
Consumer Goods
Personal use
Equipment as goods used for business
But not sold;
Chairs, computers you work on, machines, desks, restaurants, and kitchen equipment.
Inventory
Goods held by SALE by a business.
Difference between inventory and equipment
Equipment is used and inventory is sold.
Farm Products
Goods that are UNIQUE to farming operations.
Livestock, feed, agricultural products, fertilizer.
Fixtures
Something attached to a building in such a permanent way that it is considered part of that real property.
Ownership interest in property lie a mortgage is superior to an ownership interest in fixtures unless you file a fixture filing.
Intangible Collateral
Stuff you cannot touch.
Accounts Receivable
Unpaid invoices, money owed to customers to the business.
Chattel Paper
Movable property
This is like when you are trying to buy something like furniture and you have to make a bunch of smaller payments and still keep it.
Security interest papers and debt obligation papers are considered “chattel paper.”
Deposit Accounts
Checking and savings accounts
Investment Property
Stocks and bonds
Attachment Requirements
- The secured party must give value
- Debtor must have RIGHTS in the collateral
- The debtor must agree to give the secured party a SECURITY INTEREST.
- The secured party must give value
- Means that loaned $$ = transferred to the buyer but it can also access to a line of credit or even service.
- Value was given (loan)
- One lender gave $$ as a GIFT; not a LOAN. Must be a mutual exchange!
- Debtor must actually have rights in the collateral
- Ownership or the rights to transfer it.
- Sometimes debtors try to allow the creditor to attach stuff to other people’s property. Ex: G tried to take out a loan and give the lender his mom’s machine. Earlier, she said you do not have the right to transfer it or give it to anyone = Attachment failed.
- The debtor must agree to give the secured party a SECURITY INTEREST
- How to get an security interest? Security Agreement.
- Security Agreement requires 2 things to be valid:
- It must describe the collateral.
- Description to be adequate it has to reasonably identify what is described such that the collateral is objectively and reasonably determined.
- It will always be reasonable if you refer to our appropriate collateral categories. - Saying “all assets” = bad
- Cannot determine what this means and no states allow super generic descriptions in security agreements, - “All equipment” - permitted.
- Certain cars or some cars - bad.
- All cars = good board scriptions are good for the secured party b/c if they get too specific, they may forget certain collateral and their interest do not attach.
It must be AUTHENTICATED.
- Requires signatures. All valid.
Alternatives to Security Agreement
- Possession of tangible objects
- Control of intangible objects like bank accounts.
