Secured Transactions Flashcards
(11 cards)
Secured Transactions
A security interest attaches when three elements are satisfied:
_______ is given by the secured party,
The debtor has _______ in the collateral, and
There is an _______ that reasonably describes the collateral and is authenticated by the debtor.
- Value
- Rights
- Authenticated security agreement
Secured Transactions
A security interest is perfected when it has _______ and the secured party has taken steps like _______ or possession/control, depending on the type of collateral.
Attached; filing a financing statement
Between two perfected secured parties, the one who _______ has priority.
Between a perfected and unperfected party, the _______ party wins.
Between two unperfected parties, the _______ party wins.
First files or perfects; perfected; first to attach
A buyer in the ordinary course of business (BIOCOB) takes goods _______ of a perfected security interest created by the _______ — even if the buyer knows of the interest.
Free and clear; seller
Under the garage sale rule, a buyer of consumer goods from another consumer takes free of a security interest if:
The buyer buys for _______
Without _______ of the security interest
And _______ a financing statement is filed.
- Value
- Knowledge
- Before
- Attachment (The Big Three Requirements)
A security interest attaches when three conditions are met:
Value has been given by the secured party;
The debtor has rights in the collateral; and
There is a security agreement that reasonably identifies the collateral and is authenticated by the debtor (or the secured party has possession or control of the collateral).
🧠 Why it matters: If there’s no attachment, there’s no enforceable security interest — and the bar loves testing “was this even attached?”
- Attachment (The Big Three Requirements)
A security interest attaches when three conditions are met:
Value has been given by the secured party;
The debtor has rights in the collateral; and
There is a security agreement that reasonably identifies the collateral and is authenticated by the debtor (or the secured party has possession or control of the collateral).
🧠 Why it matters: If there’s no attachment, there’s no enforceable security interest — and the bar loves testing “was this even attached?”
Perfection (Especially by Filing)
A security interest is perfected when it has attached and the secured party has taken steps required by Article 9 — typically by filing a financing statement in the appropriate state office.
For most types of collateral, filing is the most common method.
🧠 Why it matters: They love testing whether someone perfected first or at all — especially when there are priority fights.
Perfection (Especially by Filing)
A security interest is perfected when it has attached and the secured party has taken steps required by Article 9 — typically by filing a financing statement in the appropriate state office.
For most types of collateral, filing is the most common method.
🧠 Why it matters: They love testing whether someone perfected first or at all — especially when there are priority fights.
Priority Between Competing Secured Parties
Between two perfected secured parties, the one who first filed or perfected has priority.
Between a perfected and an unperfected secured party, the perfected party wins.
Between two unperfected parties, the first to attach wins.
🧠 Why it matters: Priority fights are the most common MEE Secured Transactions issue — and these rules unlock who wins.
Priority Between Competing Secured Parties
Between two perfected secured parties, the one who first filed or perfected has priority.
Between a perfected and an unperfected secured party, the perfected party wins.
Between two unperfected parties, the first to attach wins.
🧠 Why it matters: Priority fights are the most common MEE Secured Transactions issue — and these rules unlock who wins.
Buyer in the Ordinary Course of Business (BIOCOB) Exception
A buyer in the ordinary course of business takes free of a perfected security interest created by the seller — even if the buyer knows of the interest.
🧠 Why it matters: This rule trips people up, but it protects regular shoppers from creditors’ claims. Very common MEE twist.
Buyer in the Ordinary Course of Business (BIOCOB) Exception
A buyer in the ordinary course of business takes free of a perfected security interest created by the seller — even if the buyer knows of the interest.
🧠 Why it matters: This rule trips people up, but it protects regular shoppers from creditors’ claims. Very common MEE twist.
Consumer-to-Consumer Sales Exception (Garage Sale Rule)
A buyer of consumer goods from another consumer takes free of a security interest if:
The buyer buys for value,
Without knowledge of the security interest, and
Before a financing statement is filed.
🧠 Why it matters: They love to sneak this into MEE fact patterns where someone sells their used stuff on Craigslist or at a yard sale — and the secured creditor is trying to claim it.
Consumer-to-Consumer Sales Exception (Garage Sale Rule)
A buyer of consumer goods from another consumer takes free of a security interest if:
The buyer buys for value,
Without knowledge of the security interest, and
Before a financing statement is filed.
🧠 Why it matters: They love to sneak this into MEE fact patterns where someone sells their used stuff on Craigslist or at a yard sale — and the secured creditor is trying to claim it.
