Secured Transactions Flashcards
A security agreement is…
an agreement that creates or provides for a security interest.
A security interest is not enforceable unless:
it has been attached to the collateral.
A security interest attaches to the collateral if:
(1) Value is given by the secured party;
(2) The debtor has rights in the collateral;
(3) There is a security areement that either:
(i) is authenticated and describes the collateral; OR
(ii) is unauthenticated but where the secured party has possession or control over the collateral.
After-aquired collateral clauses are generally….
valid in Virginia.
When a debtor is a corporation organized under Virginia law, the usual means of perfecting a security interest is….
filing a financing statement with the State Corporation Commission.
When two parties with perfected security interests are competing for the same collateral, priority normally goes to the one who was either….
- First to perfect; or
- First to file a valid financing statement.
A purchase money security interest is a security interest in goods or software where ….
(1) The value given allows the debtor to acquire the collateral; and
(2) The collateral acquired secures the loan.
When collateral is inventory, a PMSI will have super priority only if the creditor….
(1) Sends a special written notice to other security interest holders, and
(2) Takes steps to assure that its PMSI will be perfected at the time the debtor receives possession.
Some types of collateral will automatically perfect when a security interest attaches, with no filing, possession, or control required. The most common example is….
A PMSI in consumer goods.
Consumer goods are goods used for….
personal, family, or household use.
In Virginia, an after-acquired collateral clause is ineffective as to…
consumer goods acquired more than 10 days after the creditor has given value.
Generally, unless a secured party authorizes a sale free and clear of its security interest, a buyer takes…
subject to a perfected security agreement.
A buyer in the ordinary course of business takes free of a security interest created by the buyer’s seller if:
exception to general rule
(1) The buyer buys goods from a merchant;
(2) In the ordinary course of the merchant’s business;
(3) In good faith and without knowledge that the sale violates the rights of other’s interests; and
(4) The seller is in the business of selling goods of the kind.
(applies even if they have knowledge of the security interest)
If a buyer doesn’t meet the BITOCOB exception and remains subject to a creditor’s security interest, in the case of a default, the creditor….
has the right to resort to Article 9 remedies, including the right to repossess the collateral.
In the case of of loan, the secured party has given value by….
promising to make the loan, before the loan is ever extended.
e.g., a Bank gives value when it promises to make a loan to a debtor.
For tangible property that is not perfected outside of Article 9, such as motor vehicles, the default means of perfection is….
filing.
An enforceable security interest is created by:
- Attachment
- Perfection.
Perfection occurs for the purpose of…
putting the world on notice of the security interest.
Filing, for the purpose of Article 9 perfection, occurs by ….
the secured party filing a financing statement in the jurisdiction where the debtor is located.
If a debtor is a corporation located within Virginia, the secured party can record its filing statement….
with the State Corporation Commission anywhere in Virginia.
A secured party’s financing statement (need/need not) be signed by the debtor.
Need NOT. It is solely created to put others on notice of the security interest.
If a secured party has perfected a security interest, they should have….
priority over all subsequent creditors.
Every mechanic who alters or repairs any article of personal property at the request of the owner has….
a lien for his just and reasonable charges and may retain possession until such charges are paid.
A mechanic’s lien only has priority over other secured parties up to…
$1,000.
