2011 Mee Secured Transactions Dc

Front 1

What is a Secured Interest?

Back 1

An interest in personal property or fixtures thats secures payment or performance of an obligation.

Front 2

What is a Purchase Money Security Interests?

Back 2

Specific instance where loan or extension for the purpose of allowing debtor to purchase property in which he gives the security interests.

Front 3

Exceptions to Article 9 Security Interests?

Back 3

1) Security Interests subject to federal statutes (govern rights of parties)
2) Landlord Liens or Ag Liens
3) Liens for Services or Materials (other than Ag)
4) Transfer of claims of an employee for wages
5) Sale of Accounts, Chattel Paper, Payment Intangibles, Promissory Notes as part of sale of the business or assignment
7) Interests in claims in or under insurance policies
8) Judicial Judgments
9) Liens on Real Estate
10) Claims out of Torts
11) Transfers of Bank Deposits

Front 4

SI Enforceable under Revised Article 9?

Back 4

If perfected and enforceable under requirements of new Art 9

Front 5

SI Unenforceable under Revised Article 9?

Back 5

If perfected but does not meeting requirements of new Art 9 then unenforceable unless brought into compliance during 1 yr grace period

Front 6

Creation of a Security Interests?

Back 6

1) WRITTEN Security Agreement
2) Secured Party TAKING POSSESSION of debtor's property with INTENT to secure a debt

Front 7

Requirements of a Security Agreement?

Back 7

1) In WRITING
2) INTENT to create interests
3) DESCRIPTION of collateral
4) be AUTHENTICATED

Front 8

Priority Rules Among Security Parties:

Back 8

1) FIRST IN TIME
a) Both Perfected
b) Only one perfected
c) Neither perfected

2. Purchase Money Security Interests (PMSI) Has Priority
a) Inventory:
-Perfection before Possession
-Notice

b) Other collateral, perfection w/in 20 days of possession

3. Chattel Paper
-Purchaser of CP has priority over SI only as proceeds IF;
a) Gives new value
b) takes possession in ordinary course of business

Front 9

Secured Party vs. Purchasers Rule:

Back 9

1) First in time - time of perfection vs. time of purchase
2) Debtor has permission to sale - extinguishes SI upon sale
3) Buyers in Ordinary Course - take free of all SI created by seller
4) Consumer Purchaser take free of all unfiled SI (even if perfected)
5) HDC TAKE CLEAR (Commercial Paper)

Front 10

Secured Party vs. Creditors Rules:

Back 10

1. Secured party takes over unsecured creditor
2. Lien Creditors - 1st in Time prevails (20 day grace period for PMSI)
3. Statutory Liens - Take priority over SI if prop in possession of lienor.

Front 11

Secured Party vs. Trustee in Brankruptcy

Back 11

1. Trustee is a lien creditor as of petition date.
2. Within 90 days can be avoided by trustee

Front 12

Approaching Priority Problems:

Back 12

1) Determine Nature of Collateral
2) Nature of the SI (PMSI or Non-PMSI)
3) Other Interests
4) Perfection acquired, lien, or other valid interests
5) Date

Front 13

Most basic rule of Article 9 SI Priorities?

Back 13

FIRST IN TIME, FIRST IN RIGHT

Front 14

Lien Creditor vs. Secured Party (Priority)

Back 14

First in time, First in right

Lien attachment vs. Perfection (1st in time wins)

If failure to attach lien or perfect, secured party wins

*PMSI exception - perfection w/in 20 days of delivery, perfection predated to date of delivery

*Statutory Lien Exception - if lienor in possession (reqd by statute) then wins

Front 15

Secured Party vs. Secured Parties (Priority)

Back 15

First in time, First in right

*PMSI Exception - Inventory PMSI wins over everything provided perfects before possession and gives notice.

Front 16

EXCEPTION ---> Buyer in Ordinary Course of Business

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Person who:
1) In good faith
2) Without notice or knowledge that sale is in violation of ownership rights or SI of 3rd party
3) buys in ordinary course of business

Defeats or takes free of SI

Front 17

Other common exceptions:

Back 17

1) Consumer
2) HDC of Negotiable Instrument
3) Bona Fide Purchaser (Security)
4) HDC (Document of title)
5) Purchaser of Chattel Paper

Front 18

Methods of Perfection:

Back 18

1) Taking Possession of Collateral
2) Taking Control of Collateral
3) Filing a Financing Statement

*Automatic w/ Attachment of SI

Front 19

Perfection by Possession of Common Items:

Back 19

1. Goods - Filing or Possession
2. Chattel Paper - Filing (electronic or paper), Possession (paper)
3. Negotiable Docs - Filing or Possession
4. Instruments - Filing or Possession
5. Investment Property - Filing or Possession (taking delivery)

Front 20

Perfection by Control of Common Items:

Back 20

1. Investment Property
2. Electronic Chattel Paper
3. Non-Consumer Deposit Accounts
4. Letter of Credit Rights

Front 21

Perfection by Filing:

Back 21

1. Where to File
2. What to File (Notice)
a) Names of parties
b) Description of Collateral

Front 22

Common Automatic Perfection:

Back 22

1) PSMI Consumer Goods
2) Assignment of Accounts or Payment Intangibles
3) Sale of Payment Intangible
4) Sale of Promissory Note
5) SI by assignment of a Health Care Insurance to Provider
6) SI of collecting bank
7) etc

Front 23

Waiver of Defense Clause:

Back 23

Valid if:
1) For Value
2) In Good Faith
3) Without Notice of a Claim or Defense

*Negotiable Note Automatic Waiver of Defense Clause