Business Law (Mortgages & Other Security Devices)

Front 1

secured loan

Back 1

collateral is provided
consensual (contractual relationship)

Front 2

unsecured loan

Back 2

collateral not provided

Front 3

collateral

Back 3

real or personal property (teacher speaks of personal)
Tangibles, quasi-tangibles, intangibles

Front 4

security interest

Back 4

'lien'
right to use collateral to cover debt
to have money repayed (on loan or full price of purchased property)

Front 5

4 steps with Real property

Back 5

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

Front 6

about a lien

Back 6

-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

Front 7

about the 3 types of liens

Back 7

CONSENSUAL-created by consent of the debtor(contract)
-STATUORY created by legislative action
-JUDICIAL created as a result of judicial action

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5 MECHANICS LIEN-CHARACTERISTICS

Back 8

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

Front 9

ARTISAN’S & HOTELKEEPER’S LIEN CHARACTERISTICS

Back 9

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

Front 10

evolution of secured transactions (4)

Back 10

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

Front 11

creditor concerns-defaulting debtor (2)

Back 11

is the collateral enough to cover
competition from other creditors

Front 12

debtor

Back 12

party who owes the obligation and gives security

Front 13

secured party

Back 13

the lender, seller or other party in whose favor a security interest exists

Front 14

financing statement

Back 14

public notice of a security interest

Front 15

3 types of security interests & definitions

Back 15

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

Front 16

attachment

Back 16

creditor has legal right to security interest

Front 17

attachment occurs: (creditor possession) (3steps)

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1 Written security agreement is signed by the debtor
2 Secured party gives value
3 debtor obtains rights in the collateral (ownership/possession)

Front 18

Perfection & 3 ways to do it

Back 18

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

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Consumer goods

Back 19

personal property purchased for personal, family or household purposes

Front 20

define FILING
3 requisites
4 places to file

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-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)