Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
33 Cards in this Set
- Front
- Back
|
What is the situation with ST?
|
want to borrow money or obtain goods/services on credit.
So, you want to become a debtor |
|
|
What type of collateral may the creditor gain over Real Property?
Over Personal Property? |
RP - MG or deed of trust over the land
PP - Security interest in debtor's personal property under Article 9 of the UCC |
|
|
Approach to these problems?
|
Is transaction w/ in scope of Art. 9?
Classify the collateral Determine if SI has been created aka has ATTACHMENT occurred. Has SI been properly perfected? Determine persons making claims to the collateral. Apply proper priority rules and rules regarding possession |
|
|
What is the subject matter of Art. 9?
|
Collateralized transactions - any transaction intended to create SI in personal property or fixtures...the property may be ALREADY OWNED, to be acquired with loan (PMSI), or AFTER ACQUIRED (inventory)
Sales of Receivables - Outright sale of accounts, chattel paper, payment intangibles, and promissory notes. CONSIGNMENTS Ag Liens created by statute - nonpossesory liens on farm proudcts such as crops and livestock created by state law in favor of a person who provides goods or services to a farmer. Lease purchase agreements (tested regularly) |
|
|
When does consignment apply with art 9?
|
a. consigned goods worth a total of $1000 or more, and
b. consignor did not use th eogods for personal, family, or household purposes, and c. Potentially deceptive Consignee (2d seller) - (consignee must be in position to deceive potential creditors with teh consigned goods: (1) consignee DEALS WITH GOODS OF THAT KIND under a name other than the CONSIGNORS name, (2) Consignee is not an auctioneer, and (3) Consignee is not generally known by consignee's creditors to be subtsantially engaged in selling consigned goods. |
|
|
Lease-purhcase Agreements subject to Art. 9
|
A lease which is actually an INSTALLMENT or CREDIT SALE is covered....doesnt not govern true leases of personal property in any manner.
Examples of evidence of secured transaction: Lessee cannot terminate the lease and: Lease term is = or greater than remaining of goods, or lessee owns property at end of lease term, or lessee has option to buy for nominal consideration at end of leaes term. |
|
|
What is excluded from Art. 9 ?
|
a. Rights governed by fed law
b. Real property (except fixtures) c. Tort claims (Hoever, Commercial tort claims are covered) d. Deposit accounts in consumer transactions e. Statutory liens (LL, Mechanics) F. Wage assignments. |
|
|
STEP 2 CLASSIFY THE COLLATERAL:
From whose perspective do you classify the collateral? |
the debtor's
|
|
|
Goods: Generally, Specific inclusions and exclusions
|
Generally movable items and fixtures
SPecific inclusion: standing timber, growing crops, unborn young of animals Specific exclusions: Money, Minerals before extractions, collateral that fits other categories |
|
|
What are the different classifications of goods?
|
Consumer - personal, family, or household purposes
EQUIPMENT (default category) - business purposes...including farm or professions. includes good from non profit org or gov't subdivision/agency. INVENTORY - Goods held for sale or lease in ordianry course of business; Raw materials & work in progress; Consumed materials; Farm products (crops livestock) ....2 req'ts for FP in POSSESSION of farmer engaged in farm ops and in an UNMANUFACTURED condition. MULTIPLE USES - Principal use determinative. |
|
|
Semi Tangible and Intangible Collateral:
|
1. INSTRUMENTS - represent $, notes, drafts
2. DOCUMENTS - written/electronic representation of goods. Documents of title, warehouse receipts (goods in storage) , and bills of lading (goods in transit) 3. CHATTEL PAPER - Writing evidencing Monetary obligation, plus security interest in or lease of goods. 4. Account - A right to pymt of $ for goods sold or leased. Or for services rendered not evidenced by instrument or chattel paper. 5. DEPOSIT ACCOUNTS: Accts with a financial institution 6. Investment Property - wall street stuff 7. Commercial tort claims: Business tort claims that dont involve personal injury 8. General intangibles: Any other type of personal prop, except money. (intellectual property, iquor license, good will of business. |
|
|
Proceeds
|
Whatever is received upon the SALE, EXCHANGE, COLECTION or other disposition of collateral or proceeds.
|
|
|
ATTATCHMENT: What is it?
|
Process by which SI si created an beecomes enforceable against the debtor so the creditor can repossess the collateral if the debtor does not pay.
|
|
|
3 elements for attachment
|
VCR
Creditor gave VALUE CONTRACT - The Secuirty Agreement debtor has RIGHTS in collateral |
|
|
When does creditor give value? (V IN VCR)
|
Lending $, supplying goods on credit
|
|
|
CONTRACT (C IN VCR) - What is the security agreement?
|
where debtor gives creditor a security interest in teh collateral
|
|
|
What are the methods of proving a security agreement?
|
Oral - only if collateral is in creditors POSSESSION...referred to as a pledge..creditor has duty to take reasonable care of collateral in possession
Authenticated record - may be written/electornic as long as signed or marked with present intent to identify the debtor and adopt agreement. the authenticated record must reasonably identify the property. Control - creditor has right to sell or cash in the collateral without further action from the debtor SEcurity agreement may be demonstrated by control if collateral is nonconsumer deposit accounts, electronic chattel paper, or investment property. |
|
|
R in VCR for attachemtn....debtor has rights in the collateral
|
debtor cannot give a SI in property without having rights in property such as ownership or identification to a K.
|
|
|
After acquired property & attachemtn
|
debtor can agree that new acquisition of property will serve as additional collateral for an old loan...will not attach until they actually uy the inventory.
AAP Consumer good exception - AAP cluase will work only for consumer goods acquired within 10 days of creditor giving value. also, AAP will not work with commercial tort claims |
|
|
Future advances
|
debtor agrees collateral will serve as ocllateral for new loans as well as the current one.
|
|
|
4th step: PERFECTION. When is it relevant?
|
Process by which creditor prtoects SI from other claimant to teh same collateral.
if fight btwn creditor and 3d party claiming the same collateral. If fight btwn creditor adn debit, creditor will usually prevail if creditor has attahced. |
|
|
What are the elements for perfection?
|
1. Attachment - VCR
2. ACts of perfection (depends on type of collateral) a. possession by creditor b. filing fin statement c. Automatic permanent - attachment along is sufficient d. Automatic Temporary - attachment along sufficient for short period of time e. control f. Notation of SI on cert. of title |
|
|
Perfection by possession (tested lots)
|
Almost all collateral, except follwing may be perfect by possession:
a. accounts b. deposit accounts c. nonnegotiable documents d. electronic documents e. electronic chattel paper f. general intangibles Loss of possession: if creditor no longer has possession, perfection los. 20 day exception with instruments, negotiable documents and certificated securities |
|
|
Filing a fin statement...what cant be perfected this way
|
deposit accounts and money
|
|
|
Requirements for fin statement
|
1. Name & address of debtor/creditor
2. Debtors non-oral authorization in an authenitcated record. (authorization of fin statemtn is auto if debtor authenticated underlying security agreement.) 3. Description of collateral - may be broader than Security agreement such as "all assets"...need description of land if timber, minerals, fixtures or crops....AAP that fits w/in description auto included. 4. errors - if not seriously misleading, then excused 5. Designation of debtor: (MOST IMPORTANT)...Filed under debtors name. Name as on DL is ok. If it's a registered or then name under which entity is organized....Trade name is not sufficient unless similar to debtors name....sufficient if would be discovered in search of SoS recrods |
|
|
What if theres a change in debtors name for fin statement?
|
Collater D has at time of change perfection will continue
Collateral D gets within 4 months - perfection continues Collateral D obtains after 4 months - perfecion ends unless refiled under new name w/in 4 motnh period. |
|
|
Where to file fin statement
|
SoS in austin.
If fixtures, minerals or timber to be cut, then county where MG on real estate would be filed |
|
|
Duration of fin statement
|
5 years from date of filing.
If recorded real property MG covering fixtures then continues until MG is released or satisfied. |
|
|
When do you file continuation statement
|
within 6 months prior to expiration date and before 5 years expires.
|
|
|
Termination statement with consumer and non consumer goods
|
consumer goods: creditor must file in timely manner...the earlier of 20 days after debtors wrtten demand; or 1 month after no outstanding secure obligation or commitment to make advances, even without a demand.
Non consumer goods: only upond debtors request. If request, within 20 days of written demand. |
|
|
Fraud filing
|
person cant file fin statement knowing it is forged, contains material false statement or is groundless.
5k penalty plus court costs adn rxnble atty fees. |
|
|
What is auto permanently perfected
|
PMSI in consumer goods...as long as not cert of title items or fixtures
Assignemnt of insignificant amount of debtors accounts Sale of promissory notes |
|
|
Automatic temporary perfection
|
Proceeds for 20 days from debtors receipt of the proceeds
New value for instruments, negotiable documents, and certified securities |
