Flashcards in Secured Transactions Deck (32):
When will a fixed financier defeat a pre-existing realty interest? (priority 4)
1. fixture see interest is BMSI
2. S.I. is perfected by filing
3. filing made before OR w/in 20 days of goods becoming fixtures (ex. furnance)
4. debtor has a recorded interest or possession of the realty
What are the 3 ways a secured party may excerize their repossession right?
1. self-help repossession
2. repossession by judicial action (sheriff will obtain)
3. strict foreclosure (creditor retains collateral in satisfaction of debt)
For self-help repossession, what must a secured party avoid? (2)
1. breach of peace (violence, protest by debtor)
2. cannot enter debtors home to repossess w/o voluntary & contemporaneous consent of debtor
What is required to accomplish strict-foreclosure repossession?
written proposal to retain collateral to designated parties
For strict foreclosure of non-consumer goods, what 3 ppl/ entities must recieve notice of foreclosure?
1. parties who told foreclosing creditor of SI
2. perfected secured parties
3. secondary obligors
For strict foreclosure of consumer goods, what 2 ppl/ entities must be notified of foreclosure?
2. secondary obligors
Upon default, what 2 rights does a secured party have?
1. collection (payment)
What is an accession?
goods physically united with other goods in a way that the ID of the original good is not lost (SI in accession is subordinate to SI in whole good)
What are co-mingled goods?
good physically united w/ other goods where the ID of original good is lost in a mass (no SI)
Who wins AACF v. PMSI when collateral is inventory?
PMSI that acquries interest after AACF must
1. file properly
2. notify AACF b4 debtor takes possession (ex Macys)
Who wins AACF v. PMSI when collateral is equipment?
PMSI holder acquiring interest after AACF must properly file w/ in 20 days of debtor taking possession
What does UCC9 apply to?
consensual security interests in personalty & fixtures (not real estate)
What is a consensual security interest?
voluntary collateralization (UCC9 doesnt apply to statutory of mechanic liens)
What is the only way to perfect a security interest (SI) in a deposit account & a letter of credit?
by control, filing not sufficient
What is a purchase money SI?
SI that enables debtor to purchase goods
What are consumer goods?
items used for personal/ familial purposes (ex blender,oven)
What is equipment?
items used in business (ex cash registers, sewing machines)
What is inventory?
goods held for sale/ lease
What are farm products?
supplies used in farming operations (ex crops, livestock, eggs, corn, cows)
What are fixtures?
items annexed to real estate (furnance, light fixtures)
What is the standard for sufficiency of description?
collateral is objectively determinable by specific listing, type of collateral, quantitiy, formula, or procedure
When does a security interest attach to collateral?
when it becomes enforceable against debtor
What are the 4 requirements for attachemnt?
1. value must be given by creditor
2. written agreement (record) needed that must be authenticated
3. agreement must reasonably ID collateral -- cannot be generic like "all collateral" but "all inventory/equipment" OK
4. debtor must have rights in collateral
What are the 2 rights/ duties of a secured party in possession of collateral?
1. duty of reasonable care
2. duty to keep collateral identifiable
What is an after-acquired collateral financier (AACF)?
secured creditor who takes security interest as collateral in all of debtors assets, whether now held or hereafter acquired
What is significance of proper perfection?
gives secured party priority over competing unperfected creditors
What are the 3 methods of achieving proper perfection?
1. Possession: secured party takes possession, applies to promissory notes, checks, CD's, negotiable instruments
2. automatic perfection of PMSI in CONSUMER goods
3. Filing: secured party files notice of security interest in public records -- applies for most tangible collateral like inventory and equipment
4. Control: applies to intangible assets i.e. deposit accounts, electronic chattel paper, investment property etc.
What are the 2 types of filing docs?
1. security agreement (rarely used)
2. fianacing statement (sinple doc)
What are the 3 contents of filing statements?
1. debtors name and address
2. creditors name and address
3. description of collateral (supergeneric description are permissible)
Where are filing docs typically filed?
in debtors state with state secretary of state (principal place of residence)
-organized debtor files in state under whose laws it is organized
What 3 categories of ppl/ entities are always given priority over security interests?
1. buyer of goods in ordinary course of business
3. holders of possesory liens (created by law)