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34 Cards in this Set

  • Front
  • Back
Security interest
Interest in personal property or fixtures which secures payment or performance of an obligation.
Personal property permanently attached to real estate
Property subject to a security interest
Party owing money or an obligation secured by the security interest
Secured party
Person who holds (owns) security interest
Financing statement
notice of security interest filed with a government office.
right to sell property on default

Ex: mortgages, some judgements and security interests
Things tangible and movable, or fixtures.

Goverened under article 9 of the UCC
Quasi tangibles
Paper instruments which in themselves evidence a right
(e.g. negotiable instruments)

Goverened under article 9 of the UCC
Property with no aspect of physical existence
(e.g. accounts receivable and goodwill of business)

Goverened under article 9 of the UCC
Article 9 of the UCC does not apply to...
Real estate or to perfection of security interests in motor vehicles
What are the three requirements to create a security interest by attachment?
1. Written security agreements or posession
2. The secured party gives value
3. Debtor has rights in the collateral
When creating a security interest by attachment, the written part of the security agreement must have what properties?
1. The language must transfer a security interest in collateral
2. Must be signed by debtor
3. Must contain a description of the collateral
4. EXCEPTION: no writing is required if the secured party takes posession of the collateral
Perfection of a security interest
The process to make the security interest enforceable against third parties who take a later interest in the collateral
What are the three ways to perfect a security interest?
1. By posession
2. By attachment of security interest if the holder has a purchase money security interest in consumer goods, other tha motor vehicles and fixtures.
3. By filing a financing statement
Public notice of security interest contains:
1. The name and address of the debtor
2. The name and address of the secured party
3. Description of collateral (type of collateral enough- puts public on notice)
Public notice of security interest is required when:
The required method of perfecting if no posession of collateral and the security interest is not a PMSI in consumer goods
A public notice of security interest can be filed at:
The secretary of state's office
Floating lien
The collateral or amount of obligation changes
A security agreement in proceeds
Whatever is received by the debtor in exchange for transferred collateral
A security agreement in future advances
Loans to be made by a secured party in the future, that is some time after the promissory note is signed
A security agreement in after acquired property
Property of a type similar to the collateral acquired by the debtor after the execution of the security agreement

e.g.- inventory
A buyer of goods in the ordinary course of business
Takes free of security interests in seller's inventory
Purchase money security interest
A non inventory PMSI is perfected within 10 days of attachment has first priority. Priority date relates back to time of attachment to receive priority over the perfected secured parties.
Secondhand purchaser of security goods
takes free of security interest perfected by attachment
First to perfect or become lien creditor
Perfection of a security interest in one of three ways:
posession, attachment or filing

Lien creditor is someone with judgement and execution lien and a trustee in bankruptcy
List the rights and duties of the parties upon default
Ignore the security interest
Repossession sale
Retaining collateral
Rights and duties of the parties upon default- Ignore the security interest:
A secured party may obtain a judgement based upon the underlying obligation rather than enforcing the security interest.
Rights and duties of the parties upon default- Repossession:
A secured party may take possession of collateral covered by a security agreement.
No breach of peace is allowed when repossessing collateral.
Rights and duties of the parties upon default- Repossession sale:
Secured parties may disposes of collateral and apply the proceeds to the obligation.
Rights and duties of the parties upon default- Retaining collateral:
A secured party may sometimes keep the collateral as satisfaction of the obligation.
Transfer of good title
A purchaser at a repossession sale takes title free of ownership claims of the debtor and the secured party
Order of a distribution of proceeds
Expenses of the repossession sale.
Satisfaction of debt of 1st lien holder.
Subordinate security interest holders.
Debtor is entitled to any surplus.
When the debt is paid or other obligation satisfied, the secured party files a termination statement in the office where the original financing statement was filed.