Secured Transactions

Front 1

A security interest/lien is defined as:

Back 1

prop. interest in a debtor's personal property, created by CONSENSUAL AGREEMENT, that SECURES PAYMENT or PERFORMANCE of an obligation owed by the debtor.

Front 2

Ownership interest is defined as:

Back 2

exclusive right to possession

Front 3

List the four types of liens:

Back 3

1. Article XI security interest
2. Judicial liens (invol)
3. Tax lien (invol)
4. Hybrid (statute/vol/or invol)

Front 4

Sale on Credit (PMSI) is defined as:

Back 4

Seller sells goods on credit to buyer. Via a written security agreement, buyer grants seller a security interest in the goods to secure payment. Buyer gets the goods and seller has a PMSI (obligation to pay the price of the collateral); obligation secured by what was purchased.

Front 5

A transferor of property can/cannot transfer more interest than he has in the property.

Back 5

CANNOT.

Front 6

VOID title means:

Back 6

no title beyond a bare possessory right (no legal right).

Front 7

If a thief sells property to an innocent buyer, the true owner recovers the property through a writ of ________.

Back 7

Replevin

Front 8

Sole proprietorship is defined as:

Back 8

one owner of business. Liable for debts of business and business is liable for debts of sole proprietorship.

Front 9

Unlimited Liability Companies are:

Back 9

owner responsible for debts of organization.
Two types:
Joint venture: each of owners would be responsible for all debts of the organization].

General partnership: responsibility for debts of organization is first partnership property and then it is the partners.

Front 10

Limited liability companies:

Back 10

owners not responsible for debts of organization. Organization is completely separate from owners.

Limited Partnership:
LLP: You cannot be a LLP without permission of the state government.

Front 11

What are the remaining rights of seller in the goods that are sold to the buyer?

Hypo: 7/1 S owns goods, sells them to B who promises to pay 10/1. B gets possession of goods. 10/1 B doesn’t pay.

Can S recover the goods sold to B?

Back 11

1. Sale on credit; promise to pay

GR title transfers to B upon sale 2-401(2); so S does not have Writ of Replevin against B; only COA is for breach of K.

Front 12

A’s bales of cotton worth $5K were stored in A’s warehouse. B stole the cotton and sold to C. C paid FMV for cotton w/o notice.

#1 C is in possession of cotton; A brings replevin action against C; what result?

#2 Assume C resold to D prior to learning of A’s right; does A still have COA against C?

#3) Does A have any rights against D?

d) Does D have right of recourse against C?

Back 12

Answer to #1: Title remains w/A, A has superior rights, so A can recover goods from C .

Answer to #2: Not replevin but tort of conversion; A can sue C for damages; idea is that A has ownership interest entailing right of possession and C interfered w/ A’s property right to possession of the cotton; strict liability for C.

Answer to #3: A has right of replevin or conversion.

Answer to #4: implied warranty (promise) 2-312 by seller that he has good title of the goods and entitled to sell the title; therefore D would have COA for breach of implied warranty of good title.

Front 13

A buyer of collateral gets the property subject to perfected security interest UNLESS:

Back 13

BIOCOB.

Front 14

Hypo: Sears borrows money from Bank One w/gives Bank One security interest in all inventory. Sears sells washing machine to Buyer.

What is Sears?

Back 14

BIOCOB takes washing machine free of security interest; alleviates any title risk incurred by buyer when dealing w/merchant.

Exceptions:
agriculture; no BIOCOB

going out of business sale; no BIOCOB

sales when merger occurs; no BIOCOB

Front 15

What is the strong arm clause?

Back 15

Strong arm clause wipes out unperfected SI; but usually respects perfected SI. Gives bankruptcy trustee status of lien creditor. Serious fairness issues but policy is to protect the overall financial well of financial structure as a whole; not individual small businesses.

Front 16

Security Interest is:

Back 16

an interest in personal property or fixtures which secures payment or
performance of an obligation. 1-201(37). Collateral is property subject SI; 9-102(a)(12).

Front 17

Security Agreement is:

Back 17

consensual, created by agreement of parties; 9-201 and in compliance w/certain formalities; 9-203(b); which creates a SI 9-102(a)(73) to secure performance of an obligation, usually to pay money. An all obligations clause secures the payment as well as adherence to the terms of the SA. An acceleration clause allows the creditor to accelerate the loan and demand full payment. After acquired clause covers the continued turnover of inventory to continue to secure the loan. Negative pledge clause keeps collateral free and clear of rival claims.

Front 18

GR for Ordering Priority:

Back 18

First in time, first in right if done right
Remember to include residual ownership interest in all hypos

Front 19

Hypo: Assume BO perfected, in 5/2003 AWC sold and delivered all whistles to Wal Mart w/paid for it. When AWC defaults against BO can BO recover the inventory?

Back 19

? BR is that purchasers take subject to perfected SI; 2-403(1); however 9-320(a) says No, b/c WalMart is a BIOCOB who takes free of SI created by seller even though perfected. Policy is to promote salability of goods.

Front 20

Hypo: AWC owes BO $100K w/perfected SI in all inventory and accounts. AWC owes MSB $75K, initially unsecured but got writ of execution and levied against inventory and accounts. Both MSB and BO have interest, in addition to AWC residual ownership interest. Inventory and accounts are sold producing $125K. Who gets what?

Back 20

BO is first perfected; has priority; gets 100% of their debt; $100K
MSB is second; subordinate; gets $25K of $75K and COA against AWC for breach
AWC has nothing

Front 21

Hypo: Main Motors sells about 700 new cars each year at retail value of $13,500,000; 1/3 of this amount is sales of used cars taken as trade ins. First Bank lends money to MM for floor planning; takes SI hostage collateral in cars/PP of MM to secure. ? w/car sold:

Back 21

FB
-gets promise to repay
-SI in inventory perfection upon filing financing statement

MM
-gets promise to pay
-SI in specific goods; chattel paper; valuable collateral perfection via Certificate of Title Act; sends in Manufacturer Statement of Origin to the state w/then issues Title showing MM as first lien holder on face of title

BIOCOB takes free of FB’s SI but subject to MM’s SI via SA; car is hostage collateral

All Obligations Clause secures repayment and adherence to all terms of SA; breach of any term can cause acceleration of debt via acceleration clause.

Deficiency Judgment is difference b/w sale of item held hostage by SI and amount owed.

Front 22

GR: Two documents required to create a perfected SI?

The exception?

Back 22

1) SA serves two policy considerations: evidentiary function & SofF
i) writing
ii) signed by debtor
iii) describing collateral or categories of collateral

2) Financing Statement; accurately completed and filed in UCC office

Exception: Bollinger totality of transaction; no formal SA was ever signed but various documents signed by debtor evidence intent to create a SA; read in conjunction w/financing statement signed by parties and filed in appropriate office enough to establish a SA; look at totality of transaction, here meets both policy concerns; evidentiary and SofF.

Front 23

Requires for Attachment/Enfor?

Back 23

1. Value (loan, sale on credit, promise to pay, antecedent debt).

2. Rights in collateral (cannot be thief, mere possessory right is not enough)

3. One of Specific Four Conditions Met; 9-203(3)(b)(3)(A-D)

A. debtor signed or otherwise authenticated a SA w/description of collateral and if timber, land concerned

B. the collateral is not a certificated security & is in the possession of secured party pursuant to debtor’s SA

C. collateral is a certificated security in registered form and the security certificate has been delivered to the secured party pursuant to debtor’s SA

D. collateral is deposit accounts, electronic chattel paper, investment property, letter of credit rights or electronic documents, and the secured party has control pursuant to debtor’s SA.

Front 24

Main Motors sells about 700 new cars each year at retail value of $13,500,000; 1/3 of this amount is sales of used cars taken as trade ins. First Bank finances (floorplans) MM and takes SI in cars and PP of MM (hostage collateral) to secure via SA. MM defaults. What are FB’s remedies?

Back 24

i) can sue for breach of K; 9-601(a) gives money judgment at law; only COA w/o SI

ii) tangible collateral can seize (repo) out of inventory; 9-609 and sell, apply proceeds

iii) intangible collateral assert rights to payments by directing payers to pay FB not MM

iv) “ “ deposit accounts; remove monies and apply to debt

Front 25

: FB sent MM letter w/financing statement attached and MM signed letter and returned. Thereafter signed a promissory note and FB paid GM for trailerload of cars. Does FB have enforceable SI in the cars?

Back 25

Under Bollinger argue totality of circumstances, all met so there is an enforceable SI

Front 26

Car was omitted from the Loan Request Form and this form and promissory note only documents executed by MM.

#1 Does FB have an enforceable SI in the omitted car?

#2: Would a signed Dealer Inventory SA cover the slip-up?

#3: Same answer if only stated “motor vehicle inventory located at dealer’s address as set forth above”

#4 Would answer be same if 5 of the Dealer Inventory SA contained no subparagraphs and covered only “all dealer’s personal property”

Back 26

#1: No, fails at SofF

#2: Yes, b/c part of the inventory classification; 9-108(b) says generic category is ok

#3: No, b/c 9-108(c) says no super generic categories

#4: Not reasonably certain as to what is being attached so it would fall out

Front 27

Hypo on “after acquired” collateral: Assume that in connection w/the loan and establishment of line of credit w/FB, MM signs the Dealer Inventory SA on 3/19/2002. MM grants a SI to FB in all of MM inventory “now owned and hereafter acquired”. On 9/1/2002 MM bought and took delivery of 15 used cars at a wholesale dealer’s auction, paying cash. FB did not directly finance the acquisition. MM immediately puts the 15 used cars in inventory.

Does FB have a SI in the 15 used cars in MM’s inventory?

Back 27

Yes; attaches 9/1/2002.

Front 28

Hypo on “obligations secured”: Assume that MM signs the Dealer Inventory SA and among other things, MM granted a SI to FB to secure “the prompt and punctual payment and performance of all liabilities and obligations of MM to FB of any nature whatsoever. On 12/1/2002 FB makes a $500K loan to MM to enable MM to acquire new cars for its inventory form GM, is that loan a secured loan under the 3/19/2002 SA?

Back 28

Yes.

Front 29

What is the process by which a secured party gives public notice to the world that she may have a security interest in ID'd collateral:

Back 29

perfection

Front 30

Financing statement lasts for:

Back 30

five years -- MUST file within six months of expiration via a continuation statement

Front 31

Security agreements in disguise:

Back 31

1. seller reserves title until full payment.

2. Security lease

3. Cosignment

4. Sale of certain financial devices held by a creditor (accounts, chattel paper, payment intangibles, or promissory notes)

Front 32

T/F: You can have a gift security interest.

Back 32

False.

Front 33

T/F: Rights in the collateral are not acquired until delivery of the collateral?

Back 33

True.

Front 34

T/F: If one has only signed a promissory note and has made an oral agreement with the debtor, this is not enough to establish objective evidence that there is a security agreement?

Back 34

True.

Front 35

What are the classification of goods:

Back 35

1. consumer goods
2. farm products
3. inventory
4. equipment

Front 36

What are the three days to exercise the rt. of possession?

Back 36

1. Debtor Consents
2. Judicial process
3. Self-help w/o judicial process

Front 37

What are the two policies behind breach of the peace?

Back 37

Territorial: an enclosed place by the debtor where the debtor has a REASONABLE EXPECTATION to be free from the exclusion of others.

Social Condition: prevent violence

Front 38

Using force...
Threat (implicit or explicit)...
Debtor asks repo to stop...

These are all:

Back 38

breaches of peace

Front 39

What are the remedies for debtor for breach of peace:

Back 39

1. Debtor gets damages (creditor responsible for the damages in the amount the debtor can prove a loss)
2. Trespass (if invasion of private space).
3. Conversion
4. Punitive Damages (rare)

Front 40

What is not a remedy for a breach of peace:

Back 40

Debtor does not get the collateral back if the debtor has defaulted.

Front 41

What does buyer get at foreclosure sale?

Back 41

a) all rights of debtor in sale (residual ownership interest)

b) free of the SI being enforced

c) free of any subordinate SI

d) subject to any senior SI being enforced

e) title risk usually brings collateral below FMV

Front 42

In a strict foreclosure situation, the secured creditor MUST SELL if:

Back 42

60% of obligation has been paid by debtor.

Front 43

What are the five methods of perfection?

Back 43

1. Five Methods of Perfection

a. Filing Financing Statement

b. Take possession of collateral (tangible)

c. Take control of financial devise (intangible)

d. Certificate of Title Acts

e. Automatic Perfection (by operation of law)
i) Seller of goods on credit reserves title until full payment
ii) Security Lease; 1-203 documented as lease but no meaningful economic life at end of lease; law treats as sale; imports all Art. 9 and transferor retains no title in goods and holders only a SI w/must be perfected to be enforceable.
iii) Consignment 9-102(a)(20); 1-201(b)(35); 9-109(a)(4); 9-103(d)

Front 44

Hypo: FB loan to MM, MM sells car to Lee who obligates himself through chattel paper to 48 payments to MM. FB has in inventory and chattel paper. If MM defaults on loan to FB, what remedies?

Back 44

FB can assert SI in chattel paper against Lee and force payments to be made directly to FB. Can not assert SI in inventory against Lee b/c he is BIOCOB.

Front 45

Security interest in proceeds of original collateral automatically attaches to any _____ of the original collateral; 9-315(a)(2).

Back 45

identifiable proceeds

Front 46

Tracing Rule/WILO/Lowest Intermediate Balance Rule:

Back 46

whenever identifiable
cash proceeds are deposited into general account those proceeds w/be the last
removed from account; protects SC until account funds are depleted.

Front 47

Temporary automatic perfection of proceeds:

Back 47

for at least 20 days from date the SI attaches to proceeds; 9-315(c) & (d)

Front 48

Continuous perfection after initial 20 days if any of following applies:

Back 48

a) Same Place Rule: automatic continuous perfection if FS covers original collateral filed in same place as FS would be filed to cover collateral; or

b) Proceeds are identifiable cash proceeds (debtor sold OC for cash); or

c) Action Required to Perfect was done w/in 20 days after automatic attachment
i) SC takes possession
ii) SC files FS or amends to continue uncovered collateral
iii)if identifiable cash proceeds extends automatically

Front 49

Proceeds -NOT CONTINUED IF INTERVENING CASH PHASE RULE APPLIES:

Back 49

cuts off automatic perfection (debtor converts OC to cash and then purchases something w/cash.

Front 50

Proceeds - Relation Back Rule is:

Back 50

Relation-Back Rule - the time of filing to perfect original collateral is the time for filing as to proceeds; 9-322(b)(1). Applying the First to File or Perfect priority rule, first in time wins w/regard to collateral as well.

Front 51

Bankruptcy respects _____ SI. Strong Arm Clause wipes out _____ SI.

Back 51

1. perfected
2. unperfected

Front 52

Upon filing bankruptcy, there is automatic stay, which means:

Back 52

no activity w/D; no repos; no collection; nothing. Stay includes the creation or perfection of SI; no more activity allowed involving D.

Front 53

Hypo: $100cash and $2,900 check = MM cash proceeds. MM goes to computer store and buys new desk top computer for $3K (uses identifiable cash proceeds to purchase another item). Is MM automatically perfected beyond 20 days?

Back 53

No b/c rule cuts off automatic perfection; would have to file amended FS to continue.

Front 54

Iif debtor changes location you have automatic perfection for:

Back 54

4 months following change but must re-file in new location or lose perfection; 9-316.

Front 55

Hypo: Original SA covers everything including chattel paper. If chattel paper is sold, does SI follow proceeds?

Back 55

Yes, for 20 days (automatic perfection) and continues beyond b/c FS was originally filed in location of debtor so perfection continues automatically and relates back to original filing date. If original SA did not cover chattel paper but it was identifiable cash proceeds of collateral w/was originally w/in SA it would still have automatic perfection beyond the 20 days as identifiable cash proceeds.

Front 56

Hypo: S sells goods to D; D bails goods w/Bailee; goods subject to SI owned by D; S has SI in same goods. How does S perfect?

Back 56

a) file FS as to goods b/c goods NOT in possession of D

b) 9-313(c) bailee can authenticate a record (sign an agreement) during the terms of the SA b/w D and S (see comment 4); this will not work if bailee is lessee in D’s OCofB b/c D controls B.

Front 57

Hypo: Goods held by Bailee who is issued Negotiable Title of Goods; how does a secured party perfect?

Back 57

a) SP can file as to the goods
b) SP can take possession of the negotiable document (this is the best way)
c) SP can file as to the document; thereby limiting effect of possession

Front 58

Commercially Reasonable Standard - requirements:

Back 58

a) Commercially Reasonable Standard and duties goes to all

b) Sale can be Public or Private, as long as CR

c) Public Sale - must have meaningful opportunity for bidding w/suff. notice

d) Private Sale - FMV closely watched

e) Notice must give adequate notice of sale (perishable item exception)

i) to debtor b/c of Right of Redemption; ensure CR followed, Bankruptcy

ii) to other creditors and parties of interest

Front 59

iv) Deficiency Judgment; 9-616(b); 9-625(e)(5)(6) requirements:

Back 59

a) must send detailed explanation to debtor of how calculated; burden on SC

b) non compliance liability for any loss caused plus $500

c) most states if consumer shows SC violated CR; absolute bar to DJ

Front 60

Creditor Misbehavior; 9-625-628

1. Injunction:

2. Damages in tort to debtor or other parties:

Back 60

#1: can be automatic stay if bankruptcy filed

#2: must prove “but for” and then be put in same position as if bad behavior had not occurred

Front 61

Creditor Misbehavior:

Special Circumstances; Differences b/w Consumer and Business Debtor

a) When loan was to consumer to buy collateral then consumer gets PMSI. If SC has wrongly repo’d collateral the Consumer gets:


Hypo: Principal loan amount is $15K; interest over the life of loan is $3K;
10% of principal is $1,5K; so damages = $4,500K
Time Differential Plus 10% of Cash Price
Sale of goods on credit uses purchase price plus finance charges of same
[which is the time differential b/w cash price and purchase price]
$15K cash price or $18K financed price=TD of $3K plus 10% of cash
price = $1,5K so damages = $4,500K
Business Debtor (no special circumstances here)
If business debtor alleges SC violated CR standard debtor has burden
of going forward; there is a rebuttable presumption that SC followed CR.

ii) Damages in tort to debtor or other parties; must prove “but for” and then
be put in same position as if bad behavior had not occurred
Special Circumstances; Differences b/w Consumer and Business Debtor
a) When loan was to consumer to buy collateral then consumer gets PMSI.
If SC has wrongly repo’d collateral the Consumer gets credit service charge
plus 10% of the principal as damages. Credit service charge is the interest and related charges as defined w/in the documents.

Back 61

credit service charge plus 10% of the principal as damages. Credit service charge is the interest and related charges as defined w/in the documents

Front 62

Creditor Misbehavior:

Hypo: Principal loan amount is $15K; interest over the life of loan is $3K; 10% of principal is $1,5K; so damages = __________.

Back 62

$4,500K

Front 63

Creditor Misbehavior / Time Differential =

Back 63

Plus 10% of Cash Price Sale of goods on credit uses purchase price plus finance charges of same [which is the time differential b/w cash price and purchase price] $15K cash price or $18K financed price=TD of $3K plus 10% of cash price = $1,5K so damages = $4,500K

Front 64

If business debtor alleges SC violated CR:

Back 64

standard debtor has burden of going forward; there is a rebuttable presumption that SC followed CR.

Front 65

Debtor's Right to Redemption:

Back 65

Before the secured creditor sells or collects the collateral -> may be able to redeem by paying all the obligations that is owed/due.

Installments: you cannot just pay the installments you missed (you have to pay all that is due).

Front 66

Debtor counterclaims for damages:

1. Absolute Bar Rule:
2. Rebuttable Presumption:

Back 66

1. Absolute Bar: If debtor shows secured creditor violated an article XI requirements, the deficiency is barred and there is n o deficiency judgment.

2. Rebuttable Presumption: If the debtor shows a violation by the secured creditor, he can rebut the presumption by showing the fair liquidation value of the collateral.

Front 67

Strict foreclosure is when:

Back 67

secured creditor takes the collateral and accepts as partial or full satisfication of the debt taking it free of a security interest or lien and is full or partial satisfication of the debt.

Front 68

Strict Foreclosure -

T/F: Other secured creditors have to be notified of the proposal and they must consent to full or partial foreclosure.

Back 68

True.

Front 69

T/F: A debtor cannot agree to strict foreclosure until he defaults.

Back 69

True.

Front 70

In business tranactions, the secured creditor is presumed to have complied to Article XI requirements. T/F.

Back 70

True

Front 71

A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral:

Back 71

unless an agreement expressly postpones the time of attachment. 9-203.

Front 72

A debtor who is an individual is located:

Back 72

A debtor who is an individual is located at the individual's principal residence.

Front 73

A debtor that is an organization and has only one place of business is located:

Back 73

A debtor that is an organization and has only one place of business is located at its place of business.

Front 74

A debtor that is an organization and has more than one place of business is located:

Back 74

A debtor that is an organization and has more than one place of business is located at its chief executive office.

Front 75

Except as otherwise provided in subsection (e), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

Back 75

(1) without knowledge of the security interest;

(2) for value;

(3) primarily for the buyer's personal, family, or household purposes; and

(4) before the filing of a financing statement covering the goods.

Front 76

a financing statement is sufficient only if it:

Back 76

(1) provides the name of the debtor;

(2) provides the name of the secured party or a representative of the secured party; and

(3) indicates the collateral covered by the financing statement.

Front 77

A financing statement that provides only the debtor's trade name:

Back 77

does not sufficiently provide the name of the debtor.

Front 78

A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

Back 78

(1) a description of the collateral pursuant to Section 9-108; or

(2) an indication that the financing statement covers all assets or all personal property.

Front 79

A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless:

Back 79

the errors or omissions make the financing statement seriously misleading.

Front 80

f a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided:

Back 80

does not make the financing statement seriously misleading.

Front 81

If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 9-506:

Back 81

(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.

Front 82

A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

Back 82

(1) the debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c); or

(2) the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

Front 83

By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

Back 83

(1) the collateral described in the security agreement; and

(2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly covers proceeds.

Front 84

A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

Back 84

(1) the secured party of record authorizes the filing; or

(2) the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

Front 85

f a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided:

Back 85

does not make the financing statement seriously misleading.

Front 86

If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 9-506:

Back 86

(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.

Front 87

A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

Back 87

(1) the debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c); or

(2) the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

Front 88

By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

Back 88

(1) the collateral described in the security agreement; and

(2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly covers proceeds.

Front 89

A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

Back 89

(1) the secured party of record authorizes the filing; or

(2) the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.