Secured Transactions

Front 1

Methodology for SI analysis?

Back 1

CCC PP DRD
COVERAGE & SCOPE
CLASSIFICATION
CREATION OF VALID SECURITY AGREEMENT
PERFECTION
PRIORITY
DEFAULT, REPOSSESSION, AND DISPOSITION

Front 2

Different types of goods are?

Back 2

- Consumer goods
- Inventory
- Equipment
- Farm products

Front 3

Inventory includes

Back 3

- things owned by business which it is in the business of selling --includings goods held for slae or lease.
- material used and consumed in the business
- raw materials and works in products

Front 4

Equipment is?

Back 4

- the catchall, for materials that don't fit any of the other goods categories.

Front 5

What is accession and can you have SI in goods that become a part of it

Back 5

- Accessions are goods that are physically united w/ other goods in such a manner that the ID of the original goods is not lost.
- If SI is perfected when collateral becomes an accession, the SI remains perfected

Front 6

Commingled goods and the affect if SI in the goods that becomes commingled?

Back 6

- goods that are physically united w/ other goods in such a way that their ID is lost in a product or mass.
- If have SI bf it becomes commingled, your SI is perfected to the interest and the good as a whole.
- A SI in collateral that is perfected bf the collateral becomes commingled has priority over a SI that is unperfected at the time the collateral becomes commingled.
- Multiple perfected Sis in commingled will rank equally in proportion to the value of the collateral at the time it became commingled goods.

Front 7

What does tangible intangibles include?

Back 7

- instruments
- documents
- chattel paper

Front 8

Tangible intangibles include

Back 8

- accounts (IOUs) (like health care insurance recievables)
- commercial tort claims
-general intangibles
- Literary rights
- anything suspectible of being owned and has value that is not in any other category
--Does NOT include deposit accounts

Front 9

What is chattel paper?

Back 9

a record evidencing both a monetary obligation and a security interest in, or a lease of, specific goods.

Front 10

Sometimes the class of the collateral depends on

Back 10

The particular use it is being used for in that fact pattern.

Front 11

Requirements for a valid security agreement?

Back 11

S Ag =
--Signed writing +
--Indicating that (1) D grants SI to S Pty (2) describes the collateral (3) IDs the obligation secured

OR

- Oral S Ag with S Pty taking possession of the collateral.

Front 12

Requirements for the Security interest to attach?

Back 12

Valid SA (written or possesion of collateral pursuant to a S Ag)
+ D has an interest in the collateral
+ S Pty has given D some value

Front 13

When is the description in a SA of the collateral sufficient?

Back 13

- When it R identifies the collateral
--enough if it just says the type of collateral
--can not be supergeneric description like "all of D property"

Front 14

What is a PMSI? 2 different ways it can occur?

Back 14

(1) SI aken or retained by the seller of the collateral to secure all or part of its purchase price,
or
(2) Taken by a lender who gives value
to enable the D to acquire rights in the collateral if such value is in fact used by the D to acquire rights in that collateral.

Front 15

Different ways you could perfect an SI (depending on the type of collateral)?

Back 15

-filing a form called a “financing statement” 9-310

- S Pty’s possession of collateral 9-313

- “controlling” collateral such as bank account
- enter on certificate of title if automobile

- in some cases, obtained automatically if a PMSI in consumer goods, etc.

Front 16

- What must the financing statement have in it?

-- Things that could make the Sec of State deny even if the normal requirements are met?

Back 16

Fin St MUST include
Names of D and S Pty.
Indication or description of collateral.


Although a Fin St containing only the information above is effective to perfect if it is accepted by the SOS, another Code section provides that SOS may reject a Fin St unless it also contains (1) mailing address of S Pty and (2) the D, and (3) indication of whether D is individual or organization, and if organization. 9-516(b)

Front 17

Where do you file a SI? if it is an individual? business? corp? association?

Back 17

- Individual is located at principal residence.
-Business at its place of business; if more than one, its executive office.
- Corporation, LLC or Limited PS is located in state in which it was organized.

Front 18

How long is a filing statement good to keep the SI perfected? When should you renew?

Back 18

- 5 years
- Should renew within 6 months bf the 5 years is over

Front 19

Searching for a name on a filing statement?
In WV what is the correct name for the individual?

Back 19

A Financing Statement is only effective if it contains the correct name of D, so that a computer search of the records will turn up the filed financing statement. Corporations, etc., the correct organizational name.

In some states, including WV, the only correct name for an individual is the name on the WV driver’s license if one has been issued.

Front 20

What if the financing statement doesn't have accurate, adequate info or is filed in the wrong place?

Back 20

the SI will be left unperfected.

Front 21

- Priority: unperfected S pty v. general creditors?

Back 21

S Pty, perfected or unperfected, takes priority over the D and other general creditors.

Front 22

Priority among S Ptys

Back 22

First to file or perfect

Front 23

Unperfected S Ptys v. bankruptcy trustees, lienholders, and purchasers?

Back 23

lienholders, bankruptcy trustees, and purchasers take priority OVER unperfected S Ptys.

Front 24

Perfected S Ptys v. bankruptcy trustees, lienholders, and purchasers?

Back 24

- Perfected S Ptys take priority over SUBSEQUENT bankruptcy trustees, lienholders, and purchasers
- Perfected S Ptys do NOT have priority over bankruptcy trustees, lienholders and purchasers that were there first.

Front 25

Priority among unperfected S Ptys?

Back 25

the first to CREATE a SI.

Front 26

PMSI in goods (other than inventory and livestock) has priority over earlier perfected SI if what?

Back 26

- If the PMSI is perfected within 20 days of D’s receipt of the goods, has priority over an earlier perfected SI.

Front 27

Later PMSI in inventory has priority over an earlier perfected SI if what? (4 things)

Back 27

(1) PMSI is perfected when D receives possession,
(2) PMSI S Pty sends signed notice to the earlier S Pty (3) who receives the notice within 5 years before D takes possession, and
(4) notice describes the inventory and states that sender expects to acquire a PMSI in such inventory.

Front 28

PMSI in consumer is perfected when?

Back 28

Automatically and lasts.

Front 29

Priority among PMSIs?

Back 29

- PMSI securing the price of collateral previals over a PMSI that secures a loan AND
- in all other cases, the first in time first in right rule applies.

Front 30

What is default? Does Article 9 define it?

Back 30

- Occurs when D fails to make a payment on the underlying obligation, or breaches some other promise made in the S Ag.

- Art. 9 does not state what constitutes default, it is left to the parties in the S Ag.

Front 31

What is repossession?

Back 31

Self-help action of a S Pty in taking the collateral from the D when the D defaults on the promises made in the S Ag, usually a failure to pay money owed when due.

Front 32

Ways a S Pty can repossess?

Back 32

- Upon D’s default, S Pty may sue to enforce the S Ag and take the collateral.

- Use self-help and take the collateral herself as long as it is done without breaching the peace. 9-609(b)

Front 33

What kinds of things breach the peace?

Back 33

Trespass does not constitute breach of the peace, but unauthorized entry into D’s building or a confrontation which threatens physical violence, is likely breach of the peace.

Front 34

- Ways S Pty can reposses? Can a S Pty buy at a public sale? private sale?
- If selling at private or pubic how must it be done?
- Disposing S Pty must give notice of the sale to who?

Back 34

S Pty may sell at private or public sale (advertised auction).

S Pty may buy at public sale, but not at private sale unless collateral is of type sold in recognized market with public price quotations (bushels of wheat or listed stocks).

All aspects of sale must be commercially reasonable. 9-610

Disposing S Pty must give notice of sale to D and, if collateral is not consumer goods, to other S Ptys who have filed Fin St or given notice of their interest. Must send a R authenticated notification of disposition (not apply to collateral that is perishable, that may decline quickly in value, or that is of a type customarily sold on a recognized market)

Front 35

Money received from proceeds of disposition go to who in what order?

Back 35

1. Expenses of repossession and sale
2. If K provides, attorney fees incurred
3. Debt to foreclosing S Pty
4. Debt to subordinate S Ptys who have notified foreclosing S Pty
5. Remainder to D

Front 36

Buyer at disposition takes subject to and free of what?
Debtor remains liable on what?

Back 36

- Buyer at sale takes free of SI of foreclosing S Pty and subordinate S Ptys, but subject to continuing SI of priority S Ptys. 9-617

- D remains liable on the unpaid remainder of the underlying debt (deficiency).

Front 37

Can debtor reedem bf foreclosure?

Back 37

D has right to redeem collateral before disposition by paying the full underlying obligations. 9-623

S Pty may keep collateral in full satisfaction of debt if D agrees.

Front 38

After-acquired collateral in inventory? Accounts receivable?

Back 38

- Authomatic bc inventory, by its nature, is constantly depleted an replinsihed.

Front 39

Exception that can just put type of collateral in SA?

Back 39

- If consumer goods, need to be more specific than just saying "all consumer goods"

Front 40

If want SI in after-acquired have to state how in the SA?

Back 40

- Specifically, enough that it would work under K principles
- If just say give "all goods" probably not enough

Front 41

After-acquired interests in consumerr goods?

Back 41

- Cannot unless the debtor gets the consumer goods w/in 10 days of the transaction

Front 42

Filing is not effective for?

Back 42

- deposit acct
- Leter of credit right
- Money

Front 43

Possession only applies to what types of collateral (5)?

Back 43

- negotiable documetns
- goods
- instruments
- money
- tangible chattel paepr

Front 44

Duty of care if posses collateral?

Back 44

- YES, S Party must use R care in its custody and preservation of the collateral.

Front 45

Taking control of collateral applies only to? (4)

Back 45

- investment securities
- letter-of credit rights
- deposit accounts;
- electronic chattel paper

Front 46

Filings for fixtures must include (5)

Back 46

- all info required in a financing statement
- indicate that it cover fixtures
- indicate that it is to be filed int eh real property records
- provide a description of the real property to which the fixture is related; and
- if the debtor does not have an interest of record in the real property, provide the name of the record owner.

Front 47

What if the sec of state wronfully rejects a SI? rightfully?

Back 47

- wrongfully: the FS is still effective as a filing EXCEPT as against a purchaser of collateral that gives R reliance upon the absence of the record from the files.
- Rightfully rejected: SI not perfected

Front 48

What kind of errors in the FS will make the attempt of perfection ineffective?

Back 48

- if minor errors that still substantially satisfy the requirements = OK
- UNLESS the errors make the FS SERIOUSLY MISLEADING.

Front 49

What if the FS becomes seriously misleading AFTER it is filed--still effective?

Back 49

Yes UNLESS the debtor changes his name or the original collateral is exchanged for proceeds.

Front 50

If debtor changes his name, is the FS still effective?

Back 50

- the FS becomes seriously misleading, so it will only be effective to perfect SI in acollateral acquired w/in FOUR months of the name change
- UNLESS an amendment to the FS correcting this is filed w/in FOUR months of the name change.

Front 51

What if the debtor changes locations--how long is the SI still perfected?
- If it is a possesory SI?

Back 51

- remains perfected until the earliest of (1) the time perfection would have ceased under the law of the jurisdiction where the debtor is located 92) the expiration of FOUR months after debtor move; (3) the expiration of ONE YEAR after the collateral is transferred to a new debtor in another jursidciton.

- Possessory: remain continuously perfected if (1) the collateral is located in one jurisdiction and subject to a SI perfected under that jurisdiction's law, (2) the collateral is later brought into another jurisdiction; and 93) the SI is then perfected under the law of the other jurisdiction.

Front 52

- Special rules for PMSIs in regards to priority btw a PMSI and lien creditor?

Back 52

- If the PMSI is perfected w/in 20 days after the debtor receives the collateral, the PMSI will take priority over an intervening lien creditor whose rights arise btw the time the security interest attaches and the time of filing.

Front 53

SI in an accession v. the whole which it is accessed to?

Back 53

- If have SI in the whole, it is has priority over a SI in the accession.

Front 54

Exceptions to general rule that a SI survives a sale of the collateral (6)

Back 54

- If the S Pty consents to the sale free of the SI
- buyer in the ordinary course of business
- buyer of consumer goods
- buyer of chattel paper
- buyer of an instrument
- buyer who takes delivery

Front 55

Elements of buyer in the ordinary course of business exception? (3)

Back 55

- buys in
- buys w/out knowledge that the sale violates the rights of another person in the goods; and
- buys in the ordinary course from a person in the business of selling goods of that kind.

Front 56

Garage sale exception elements?

Back 56

- person buys from a person who used for personal use
- w/out knowledge of the SI
- for interests
- primarily for consumer use
- BEFORE the filing of a financing statement covering the goods

Front 57

Exceptions to the general rule that first in time first in right btw a mortgage and a fixture filing (4)?

Back 57

- a PMSI in a fixture
- fixtures that are readily removable
- a lien on real property
- where the owner consents in an authenticated record.

Front 58

If debtor wants to redeem bf foreclosure--what all does he have to pay?
When must the redemption be done?

Back 58

- pay: the amount of the obligation + R expenses and atty fees caused by the default (unless the debtor has agreed otherwise in writing after default)

- when: bf the collateral has been collected, the DP has disposed of the collateral or entered into a K for its disposition; OR the SP has accepted the collateral in full or partial satisfaction of the obligation.

Front 59

Can a debtor waive his right to redeem?

Back 59

- Can if the waiver agreement is entered into and authenticated AFTER default. CANNOT be made in advance of default.
-- However, CANNOT waive right to redeem CONSUMER GOODs.

Front 60

Sale in the disposition after default is commercially R if it is made?

Back 60

- in the usual manner on any recognized market
- at the price current in any recognized market at the time of the sale; OR
- otherwise in conformity w/ /R commercial practces among dealers in the type of property that was sold.

--fact that a greater amount could have been obtained in a different time/method is not in of itself, enough to preclude the SP from establishing the sale was commercially R.

Front 61

Does a sale of the collateral after default discharge all of the debor's rights and junior creditor's rights if the S Pty fails to comply w/ the rules governing sales and dispositions?

Back 61

- Yes as long as the transferee acts in GF
- If the transferee acts in BF, he takes subject to the debor's rights in the colalteral.

Front 62

Commercially UnR sale of disposition rule?

Back 62

If commercially unR aspects of the sale, debtor can raise the rebuttable presumption that there is no deficiency in the sale of the disposition.
Rebut w/ if followed all requirements would get enough to pay all of the debt.