Secured Transactions Flashcards
Attachment &3elements
Give secured creditor right to collateral upon default of debtor
3 elements of attachment:ALL have to meet
+ must have AGREEMENT between creditor and debtor
+must have VALUE given by CREDITOR
+DEBTOR must have RIGHT to COLLATERAL
Purchase Money Security Interest (PMSI )
PMSI Creditor: creditor gave you the money for collateral
Non PMSI Creditor: gave money on the property you own for collateral
5 ways to Perfection
To max creditor right over 3rd parties
If CREDITOR is UnPERFECTED, the CREDITOR is UNPROTECTED
- FILING with the State: FS cover collateral, debtor authorize and FS valid in5yrs
- Take POSSESSION of property
- By Attachment: automatic on consumer sale
- By CONTROL
Order of priorities over collateral
1.Buyer in ordinary course of business: buy goods from Merchant Inv
2.Perfected PMSI ( except buyer resale consumer goods inGARAGE SALE)
+ PMSI in INV: Must file
+PMSI in equipment: must file in20days
- Perfected but Non PMSI
- Unperfected with Attach only
- Debtor
Types of collateral
Personal property is subject to the creditor’s security interest
GOODS:
+ Consumer goods: goods for personal use
+ Intangible: right to pmt AR
+ Investment property: Stocks, Bonds& Mutual Funds
+ Proceeds: Trade in from Sale or Exchange
Take goods free from perfect PMIS creditor if
Buyer uses good for his ordinary course of business ( not for resale)
Document of title merely represent the goods, a perfected security interest in the warehouse receipts is
Perfected security interest in the goods covered by the documents
Automatic perfection
Apply only to purchase money security interests in consumer goods
HIDC provides partial value of negotiable instrument
Holder is entitled to the percentage of the value provided rather than actual value provided.
Ex: he paid 20% (50/250) before he learned of the defense, then he is entitled to 20% of the face value of the note
