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20 Cards in this Set

  • Front
  • Back
secured loan
collateral is provided
consensual (contractual relationship)
unsecured loan
collateral not provided
collateral
real or personal property (teacher speaks of personal)
Tangibles, quasi-tangibles, intangibles
security interest
'lien'
right to use collateral to cover debt
to have money repayed (on loan or full price of purchased property)
4 steps with Real property
1 mortage is used (transfer of interest for security)
2 borrower signs promissory note (evidence of loan) & mortgage instrument
3 legal claim is called a lien (gives lender right to sell property if debt not paid)
4 if property sold & debt paid borrowers obligation over unless still owes money
about a lien
-an interest in property created to secure the payment or performance of an obligation
-allows the creditor (lienholder recrouse against the property:ie repossess & retain or sell the collateral in satisfaction of the obligation
about the 3 types of liens
CONSENSUAL-created by consent of the debtor(contract)
-STATUORY created by legislative action
-JUDICIAL created as a result of judicial action
5 MECHANICS LIEN-CHARACTERISTICS
1 arises when a person owning real property contracts for labor, services or material for purpose of making improvements to the real property
2 The debtor cant immediately pay for improvements
3 when the lien is affixed to the real property the property becomes the security for the debt
4 property can be sold to satisfy the debt
5 the statue for affixing the lien must be carefully followed
ARTISAN’S & HOTELKEEPER’S LIEN CHARACTERISTICS
1 arises when personal property is placed in the hands of a party to repair, enhance the value, or care for the property
2 a possessory lien
3 terms of the contract is cash & not credit
4 property can be sold eventually ot satisfy the debt
evolution of secured transactions (4)
risks inherent in making loans of money or extending credit
-need for creditor security
-codified under article 9 uniform commercial code
-applies to security interests in personal property-not real property
creditor concerns-defaulting debtor (2)
is the collateral enough to cover
competition from other creditors
debtor
party who owes the obligation and gives security
secured party
the lender, seller or other party in whose favor a security interest exists
financing statement
public notice of a security interest
3 types of security interests & definitions
Possessory- collateral is physically delivered to the possession of the secured party, known as a pledge
-the security interest attaches and is perfected at the time the collateral is delivered the the secured party.
Non possessory collateral is retained by the debtor
Requires the execution of a security agreement
Purchase money security interest- a purchase of personal property on credit & the buyer (debtor) gives to the seller a security interest in the purchased property; or, gives to a lender a security interest in the purchased property on the basis of a loan made in order to enable the buyer to buy the property
attachment
creditor has legal right to security interest
attachment occurs: (creditor possession) (3steps)
1 Written security agreement is signed by the debtor
2 Secured party gives value
3 debtor obtains rights in the collateral (ownership/possession)
Perfection & 3 ways to do it
1 filing
2 possession (stocks, bond, money)
3purchase money
automatically perfected by attachment
-applies only to consumer goods
-doesn’t apply to automibles or fixtures, or other forms of collateral
-requires the filing of a financing statement
Consumer goods
personal property purchased for personal, family or household purposes
define FILING
3 requisites
4 places to file
-filing a financing statement in a designated public office
-requisites of a financing statement
1 signed by the debtor
2 name of debtor(s) and secured party
3 description of the collateral by type or item
-place of filing
-classification of collateral
-state law
-county clerk (consumer goods)
Secretary of state (all others)