Secured Transactions

Question 1

Goods Elements

Answer 1

Tangible
Movable
Personal property

Question 2

Types of Goods

and which is default

Answer 2

Consumer goods
Equipment
Farm products
Inventory

Question 3

Types of Semi-Intangibles/Intangibles

and which is default

Answer 3

General intangibles - IP, copyright
Instruments - checks and notes
Documents - BoL or warehouse receipt
Chattel paper - promise to pay w/ sec. interest
Records
Investment property - stocks/bonds
Accounts - right to payment for services rendered
Deposit accounts - bank accounts
Commercial tort claims - right to sue

Question 4

Article 9 Scope

Answer 4

Transaction creating security interest in personal property or fixtures
Agricultural liens
Consignments
Secured sales, disguised as leases

Question 5

Sale vs. Lease

Answer 5

At the time of the transaction was the lessee due to return the property with remaining MEANINGFUL ECONOMIC VALUE?

Question 6

Attachment & Perfection

PIG FATT

Answer 6

Attachment (all 3):
Possessed by debtor (legal title)
Interest created (security agreement)
Given value

Perfection (any 1 of 4):
Filing financing statement
Automatic (PMSI in consumer goods)
Take possession/control
Title notation

Question 7

Security Agreement Requirements

Answer 7

1. Possession + Oral agreement
2. Control
3. Written Agreement:
   - Record + intent
   - Authentication by debtor
   - Reasonably identify collateral

Question 8

After Acquired Property

• May include what?
• Attaches how?

Answer 8

May include future advances, after-acquired property, proceeds from sale or disposition.

SI automatically attaches to identifiable proceeds of collateral

*Ct. may imply AAP Cl. if collateral is of the type that is rapidly depleted and replenished

Question 9

Lowest Intermediate Balance Test

Answer 9

When cash proceeds are commingled in a deposit account, the SI attaches to the extent of the lowest account balance after proceeds are deposited.

Question 10

Perfection Methods

FATT

Answer 10

*Attachment* and any of:
Financing statement
Automatic
Take possession/control
Title notation

Question 11

Special Perfection Rules

• Inventory
• Title statute
• Money
• Non-consumer deposit account (aka business bank acct.)

Answer 11

Inv. - only by financing statement
Title Stat. - only by notation on title
Money - only by possession
NCDA - only by control

Question 12

Financing Statement Requirements

Answer 12

1. Name of debtor (from ID, no trade name)
2. Description of collateral
3. Name of secured party
4. Debtor authorize filing (i.e. signing financing statement in same collateral or separate authorization)
5. Publicly filed with FL Secured Transaction Registry

Refiled every 5 years, within 6 months of expiration

Question 13

Jurisdiction after:

1. Debtor moves
2. Collateral moves
3. Debtor changes name

Answer 13

Debtor move - 4 months to refile

Collateral move - 1 year to refile

Debtor name change - effective for all property gained up to 4 months after change

Question 14

Effect of Filing Errors

Answer 14

SP not liable for agency errors

Otherwise error must not be SERIOUSLY MISLEADING – Would someone find the right record if searching using the erroneous information?

Question 15

Proceed Perfection

Answer 15

Automatic for 20 days
\+
Continues if:
1. Identifiable,
2. Same Office Rule met, and
3. Amendment to financing statement

Question 16

Basic Priority Rules

Answer 16

One party perfected: Perfection wins

Both parties perfected: First to file/perfect/levy (if lien-holder)

Both parties unperfected: First to attach

Question 17

Priority:

Special Rules for PMSI

Answer 17

1. Superpriority over NON-LIVESTOCK/EQUIPMENT if perfected within 20 days.
2. Superpriority in INVENTORY if, BEFORE BUYER RECEIVES POSSESSION,
   - the secured party perfected,
   - authorized notice sent to other holders, and
   - notice is received by other holders within 5 years of debtor’s possession
3. Seller beats financer PMSIs

Question 18

Priority:

Special Rules of Deposit Accounts

Answer 18

Best to Worst:

1. Account in SP’s name
2. Bank maintaining account
3. Control agreement

Question 19

Priority:

Special Rules for Subsequent Purchasers

Answer 19

Buyer has priority if:

1. Sale authorized by SP either:
   - Expressly
   - Impliedly, or
   - Inventory sold to consumer (unless prohibited by agreement)
2. Buyer in Ordinary Course
   - Free from seller-created obligation
3. Garage Sale Rule
   - No knowledge of sec. int.
   - Pays value
   - For personal/family/home use
   - No financing statement filed

Question 20

Buyer In Ordinary Course (BIOC)

Answer 20

1. Good faith
2. W/o knowledge of prohibited sale
3. From a regular business transaction with a seller of goods of that kind

Question 21

Priority:

Special Rules for Lien-Holders

Answer 21

1. PMSI filed within 20 days of debtor possession wins
2. Statutory lien-holder in possession wins
3. Judicial lien-holder wins over future advance if FA was made more than 45 days of lien, unless FA was made without knowledge of lien

Question 22

Resale Rules

Answer 22

1. Notice given at least 10 days prior to sale to all parties with an interest in property
2. Sale must be commercially reasonable in every aspect
3. Proceeds are delivered to:
   - Foreclosing party, then
   - Junior creditors, then
   - Debtor if surplus remains
4. Deficiency judgment may be executed against debtor’s non-exempt assets

Question 23

What is an accession?

Answer 23

Goods physically united with others (not realty), so as to lose their individual character.

Examples: Tires on a car, Specialty attachments to tools

Subordinate to security interest in the whole of the property.