Secured Transactions Flashcards
A security interest is enforceable if it has…
… attached to the collateral
What are the requirements for a security interest to attach?
(i) the secured party must have given value;
(ii) the debtor must have rights in the collateral; and
(iii) the debtor must have authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral pursuant to a security agreement.
No new security agreement is necessary when the collateral is acquired later if…
… If the security agreement includes after-acquired property, then the interest in that party is perfected
…the original security agreement provides that it applies to after-acquired collateral.
… upon attachment.
Equipment consists of goods that are not…
… consumer goods, farm products, or inventory.
What are the 4 ways by which a party can perfect a security agreement?
(1) filing a financing statement
(2) possession of the collateral
(3) control over the collateral
(4) automatic perfection
Generally, when there are two or more perfected secured parties with rights to the same collateral, the ___ has priority.
… the first to file or perfect its security interest …
What types of goods can a PMSI apply to?
Goods or software.
A PMSI in goods other than inventory or livestock prevails over…
A PMSI in inventory prevails over all other security interests in the collateral, if (1) and (2).
A PMSI in consumer goods is ___ perfected upon ___ and prevails over all other security interests in the collateral without ___.
all other security interests in the collateral, even if they were previously perfected, if the secured party perfects before or within 20 days after the debtor receives possession of the collateral.
Knowledge by the purchase money secured party of the conflicting prior security interest does not prevent the priority of the PMSI over the earlier perfected security interest.
… (1) the PMSI is perfected by the time the debtor receives possession of the collateral; and (2) the purchase money secured party sends an authenticated notification of the PMSI to the holder of any conflicting security interest before the debtor receives possession of the collateral.
… automatically …. attachment … the secured party having to take action to perfect
A PMSI exists in goods for which:
(i) a secured party gave value to the debtor to enable the debtor to acquire rights in or use of the goods, and the value given was so used; OR
(ii) a secured party sold goods to the debtor, and the debtor incurs an obligation to pay the security party all or part of the purchase price.
Who prevails with respect to the debtor’s collateral between a secured party and a general creditor?
A secured party will always prevail over a general creditor with respect to the debtor’s collateral.
What is a general creditor?
A general creditor is one who has a claim, including a judgment, but who has no lien or security interest with respect to the property in question (i.e., the collateral).
A general creditor has no interest to assert under Article 9; this type of creditor does not have a claim to particular property owned by the debtor.
Perfection has no relevance to…
…the secured party’s rights against the debtor.
What is the only way to perfect a deposit account?
A security interest in a deposit account can be perfected only by control.
A secured party has control of a deposit account if:
(1) the secured party is the bank with which the deposit account is maintained;
(2) the bank, secured party, and debtor agreed in writing to follow the instructions of the secured party; or
(3) the secured party becomes the bank’s customer with respect to the deposit account.
What are the requirements of a financing statement?
A financing statement must contain:
(1) the debtor’s name;
(2) the name of the secured party; and
(3) the collateral covered by the financing statement.
When the collateral is related to real property, what must a financing statement must include (in addition to normal requirements)?
(1) an indication that it covers this type of collateral;
(2) an indication that it is to be filed in the real property records;
(3) a description of the real property to which the collateral relates; and
(4) the name of a record owner, if the debtor does not have an interest of record in the real property.
What is an agricultural lien?
An agricultural lien is an interest in farm products such as crops or livestock that secures payment for either goods or services with respect to the debtor’s farming operation, or rent on real property leased in connection with a farming operation.
Are growing or unharvested crops covered by Article 9?
yup.
Where must a party generally file its financing statement?
at Virginia’s State Corporation Commission (SCC)
A secured party’s possession of tangible (e.g., goods) or quasi-intangible (e.g., chattel paper) collateral [satisfies/does not satisfy] the Article 9 Statute of Frauds for attachment and perfection of the secured party’s security interest if the secured party’s possession is pursuant to the security agreement.
satisfies.
As a general rule, this security interest remains perfected only while the secured party retains possession.
When one security interest is perfected and the other is not, which has priority?
the perfected security interest
Who has a right to redeem collateral?
A debtor, secondary obligor, or any other secured party
What is required to redeem collateral?
The redeemer must fulfill all obligations secured by the collateral and reasonable expenses, including attorney’s fees, incurred by the secured party in retaking the collateral or preparing for its disposition.
The test for the timeliness of a notification is […].
Reasonableness.
The notification should be sent sufficiently far in advance of the disposition to allow the notified party to act on the notification.
A statutory or common-law lien creditor is a creditor…
…who obtains a possessory lien on the property of another by operation of a statute or common-law rule.
Unlike an Article 9 security interest, these are nonconsensual liens.
