Secured Essay

Question 1

Priority

PMSI in Equipment

Answer 1

Art 9 provides that a PMSI in non inventory collateral will have priority over other perfected SI in the same collateral as long as the SI is perfected within 20 days after the debtor receives possession of the collateral.

• no notice to the other creditor is required.

Question 2

Priority

PMSI in Inventory

Answer 2

In order for a PMSI in inventory collateral to have priority over a perviously perfected SI, the lender must provide the other secured creditor with notice of SI and the interest must be filed before the debtor takes possession.

Question 3

Secured Interest

Authorized Sale of Collateral

Answer 3

If the sale of collateral is authorized by SP, the buyer takes free of SI.

• the authorization may be expressed, it it may be implied from the type of sale or from the seller’s conduct.

Question 4

Secured

Default

Answer 4

Generally, if a debtor defaults on a Secured Transaction, the creditor has a right to repossess the collateral on which it has attache a SI.

Question 5

Default

Failure to Comply

Answer 5

However Art 9 also provides that a SP will be liable to the debtor for any damages by a failure to follow any of the rules provided by Art 9, and

• will be prohibited from collecting any deficiency if any Art 9 rules regarding the debtor default are broken, Unless
• Sp can show that the breach did not cause the deficiency.

Question 6

Default

Right to Redeem

Answer 6

SP (debtor) has a right to Redeem collateral after a default.
* the right can be waived but only after their has been a default.

Question 7

Secured

Ranking of Priorities

Answer 7

1) Buyer is ordinary Course of Business
2) Holder in Due Course
3) Transferee of funds from Deposit accounts
4) Purchaser of Chattel Paper or instrument
5) Possessory Lien holders
6) PMSI
7) Perfected SI and attachment lien
8) Unperfected Lien holder
9) Debtor

Question 8

Essay

Attachment

Answer 8

For attachment, the parties must have:
1) Written a Security Agreement, or Creditor must take possession/control of collateral.

2) The creditor must give value
3) Debtor must have right in collateral

Question 9

Essay

Perfection by Filing

Answer 9

Requires a filing of a FS in the proper place

• FS must contain
  1) Parties Name
  2) Debtors Signature
  3) Address of both parties
  4) Description of collateral
• FS should be filed in the office of Secretary of State

Question 10

Default

Self-Help

Answer 10

A SP can use self help to repossess collateral after there has been a default

• the creditor need not seek an order from the court in order to repossess
• However, a SP can use self help to repossess collateral only if it can do so without breaching the peace.

Question 11

Secured

Construction Mortgage (Fixture)

Answer 11

Art 9 provides that a construction mortgage has priority over any Security Interest in a fixture to be installed during construction if the mortgage was recored before goods become affixed.

Fixture:
* a fixture is a personal property attached to real property that it becomes part of real property.

Not Fixture
* seller can reposes appliances that have not become fixtures.