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Flashcards in R7- Secured Transactions Deck (11)
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When does a security interest attach; or become legally enforceable?

- Secured interest must be supported by consideration given.

- Debtor must actually own the rights to the collateral or have possession.

- Secured interest must be recorded


What are the Characteristics of Perfection of Interest in a secured transaction?

- Gets higher priority over others claiming rights to collateral after the perfection takes place

- Attachment must take place BEFORE perfection


How does Perfection occur in a secured transaction?****

- By filing a financing statement

- By possessing the collateral

- Control

- Automatic Perfection

- Temporary Perfection


When does Automatic Perfection occur in a secured transaction?***


- Consumer Goods for Personal Use

Ex-Store sells a consumer good on credit

- Store retains security interest


What are the priority rules for Payment in a secured transaction?

If two parties are perfected; then the first one to file wins

If neither party is perfected; then the first one to attach wins


What are the advantages of a creditor holding a lien in a secured transaction?

- Creditor holds priority over claims to collateral vs. unperfected security interests

- Beats perfected security interests filed after lien attachment

Exceptions: Purchase money security interest; which has a 10 day grace period to be filed

Buyers purchasing in the ordinary course of business are immune from security interests held by merchants


What is a Purchase Money Security Interests?

- Has priority over all other types of security interests in the same collateral:

-- If the PMSI is properly perfected


What are the 3 Requisites for Attachment?**

- Authenticated record OR Creditor's taking Possession

- Value

- Debtor must have Rights in the collateral


What are the Priority Rankings, Highest to Lowest?****

- Buyer in the ordinary course of business

- Perfected PMSI

- Perfected Security Interest

- Unperfected Security Interest

- Debtor


What is the Filing Grace Period for Non-inventory PMSI?

- Priority if Filing within a 20 day Grace Period


The secured party may sell or lease Collateral after a default or repossession by?

- Commercially reasonable

-Debtors/others must generally be given notice of the sale

- Sale wipes out all Subordinate interests, but subject to superior interests

- May Redeem if pays off before the sale