2 Secured Transactions Mee 2013

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PMSI

Back 1

Seller Financed: A secured party sells debtor collateral on credit and retains a security interest in the item sold.

Financer Financed: 3rd party issues funds enabling debtor to purchase goods that are then used as collateral to secure the loan.

Automatically perfects in consumer goods. In inventory: must have filed and given written notification prior to possession. Generally: Takes priority over conflict SIs if perfect in 20 days.

Front 2

Tangible Goods

Back 2

Classified by primary use by the debtor:
Consumer Goods: used or bought for use primarily for personal, family or household purposes.
Farm Products: Crops/livestock/supplies used or produced in farming operations, in possession of debtor engaged in farming.
Inventory: held for sale, lease, or consumed in business.
Equipment: Used or bought for use primarily in business (catch all category, not consumer goods, inventory, or farm products).

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Intangible Property

Back 3

Instruments: writing evidencing right to payment.
Documents: Bill of lading, warehouse receipt.
Chattel Paper: record of both monetary obligation and a security interest.
Investment Property: stocks, bonds, mutual funds.
Accounts: Right to payment for goods or services rendered.
Deposit Accounts: non consumer deposit accounts maintained with a bank.
Commercial Tort Claims: claim arising in tort by an organization, or individual in course of business not including damages for personal injury or death.
General Intangibles: software, patent, trademarks.

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Attachment

Back 4

1. Security agreement: evidenced by authenticated writing, control, or possession.
2. Value has been given.
3. Debtor has rights in the collateral

Front 5

Perfection

Back 5

Occurs after attachment and one of these:

Automatic, Possession, Control, Notation on Title/Temporary, or Filing a financing statement.

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Financing Statement

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Debtor and Secured Party’s names and addresses, indication of collateral (description if real property or fixtures).

Works for all types of collateral but deposit accounts and money.

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Possession

Back 7

Possession may be used as a means of perfection for everything but intangibles

Front 8

Control

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Control used as a means of perfection only for investment property, non consumer deposit accounts, and electronic chattel paper.

Front 9

Continuation of Perfection in Proceeds

Back 9

Proceeds are continuously perfected for 20 days.

Continues if financing statement would be filed in same place as original collateral, proceeds are identifiable cash proceeds, or SI in proceeds is perfected within 20 days.

Front 10

Priority

Back 10

(1) Buyer in ordinary course, Holder in due course, and the like, Possessory lienholder, article 2 claimant with possession,
(2) PMSI,
(3) Perfected security interest + lien creditors, purchaser for value with no notice,
(4) Unperfected security interest,
(5) Debtor.

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Rights after Default

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Take possession and sell in commercially reasonable manner: made an effort to obtain best price for the collateral.

Retention: Can't do if 60% paid for of consumer goods. Retention is in full satisfaction if debtor agrees after default in writing OR not object to notice sent within 20 days from secured creditor.

Partial satisfaction if non consumer goods, and above requirements are met.

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Where to File?

Back 12

File in the Secretary of State’s office of state where debtor is located: Individual, principal residence; Registered org., where registered; General partnership, place of business or chief executive office)

Real Property: filed in local county filing office where real estate filings go.

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Deposit Accounts

Back 13

Control is the best way to perfect. Priority according to time of control.
Priority to creditor with name on account, then to bank maintaining account, then all others.

Front 14

Secured Party v. Buyer of Collateral

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Authorized Sale: Buyer takes free of security interest. Inventory implicit in normal course.

Unauthorized Sale: A buyer in the ordinary course of business takes free of a security interest created by his seller.

Ordinary Course: in good faith from person in business of selling good of that kind.

Front 15

Secured Party v. Judgment Lien Holder

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Perfected before Lien: Perfected takes priority.

Lien before perfected: Lien takes priority.

Front 16

Secured Party v. Statutory Lien Claimants

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Statutory Lien Claimant takes priority over even a PERFECTED secured creditor.

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Breach of Peace

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Conduct by secured party that has potential to lead to violence.

Physical presence by debtor plus verbal objection.

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True Lease

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At the time of the transaction, was it reasonably likely that the lessor would get the item back when it still had meaningful economic value? If NO, sale governed by article 9.

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When will a consignment be treated as a PMSI in inventory?

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When (i) goods are worth $1000 or more (ii) the consignor did not use the gods for personal purposes (iii) the consignee is a person who deals in goods of that kind under a name other than the consignor's (iv) the consignee is not an auctioneer (v) and the consignee is not generally known by his creditors to be substantially engaged in selling the goods of others.

Front 20

PMSI v. Fixture Filing

Back 20

In a contest between a holder of a security interest in a a fixture and a holder of an interest in the real property to which the fixture is attached, the first party to file a FIXURE FILING or record its real property interest prevails.