Secured Transactions Mee 2013

Front 1

PMSI

Back 1

Seller Financed: A secured party sells debtor collateral on credit and retains a security interest in the item sold.

Financer Financed: 3rd party issues funds enabling debtor to purchase goods that are then used as collateral to secure the loan.

Automatically perfects in consumer goods. In inventory: must have filed and given written notification prior to possession. Generally: Takes priority over conflict SIs if perfect in 20 days.

Front 2

Tangible Goods

Back 2

Classified by primary use by the debtor:
Consumer Goods: used or bought for use primarily for personal, family or household purposes.
Farm Products: Crops/livestock/supplies used or produced in farming operations, in possession of debtor engaged in farming.
Inventory: held for sale, lease, or consumed in business.
Equipment: Used or bought for use primarily in business (catch all category, not consumer goods, inventory, or farm products).

Front 3

Intangible Property

Back 3

Instruments: writing evidencing right to payment.
Documents: Bill of lading, warehouse receipt.
Chattel Paper: record of both monetary obligation and a security interest.
Investment Property: stocks, bonds, mutual funds.
Accounts: Right to payment for goods or services rendered.
Deposit Accounts: non consumer deposit accounts maintained with a bank.
Commercial Tort Claims: claim arising in tort by an organization, or individual in course of business not including damages for personal injury or death.
General Intangibles: software, patent, trademarks.

Front 4

Attachment

Back 4

1. Security Agreement: evidenced by authenticated writing, control, or possession.
2. Value has been given.
3. Debtor has rights in the collateral

(AGO - Agreement/give Value/debtor Owns)

Front 5

Perfection

Back 5

Occurs after attachment and one of these:

Automatic, Possession, Control, Notation on Title/Temporary, or Filing a financing statement.

Front 6

Financing Statement

Back 6

Debtor and Secured Party’s names and addresses, indication of collateral (description if real property or fixtures).

Works for all types of collateral but deposit accounts and money.

Front 7

Possession

Back 7

Possession may be used as a means of perfection for everything but intangibles

Front 8

Control

Back 8

Control used as a means of perfection only for investment property, non consumer deposit accounts, and electronic chattel paper.

Front 9

Continuation of Perfection in Proceeds

Back 9

Proceeds are continuously perfected for 20 days.

Continues if financing statement would be filed in same place as original collateral, proceeds are identifiable cash proceeds, or SI in proceeds is perfected within 20 days.

Front 10

Priority

Back 10

(1) Buyer in ordinary course, Holder in due course, and the like, Possessory lienholder, article 2 claimant with possession,
(2) PMSI,
(3) Perfected security interest + lien creditors, purchaser for value with no notice,
(4) Unperfected security interest,
(5) Debtor.

Front 11

Rights after Default

Back 11

Take possession and sell in commercially reasonable manner: made an effort to obtain best price for the collateral.

Front 12

Where to File?

Back 12

File in the Secretary of State’s office of state where debtor is located: Individual, principal residence; Registered org., where registered; General partnership, place of business or chief executive office)

Real Property: filed in local county filing office where real estate filings go.

Front 13

Deposit Accounts

Back 13

Control is the best way to perfect. Priority according to time of control.
Priority to creditor with name on account, then to bank maintaining account, then all others.

Front 14

Secured Party v. Buyer of Collateral

Back 14

Authorized Sale: Buyer takes free of security interest. Inventory implicit in normal course.

Unauthorized Sale: A buyer in the ordinary course of business takes free of a security interest created by his seller.

Ordinary Course: in good faith from person in business of selling good of that kind.

Front 15

Secured Party v. Judgment Lien Holder

Back 15

Perfected before Lien: Perfected takes priority.

Lien before perfected: Lien takes priority.

Front 16

Secured Party v. Statutory Lien Claimants

Back 16

Statutory Lien Claimant takes priority over even a PERFECTED secured creditor.

Front 17

Breach of Peace

Back 17

Conduct by secured party that has potential to lead to violence.

Physical presence by debtor plus verbal objection.

Front 18

True Lease

Back 18

At the time of the transaction, was it reasonably likely that the lessor would get the item back when it still had meaningful economic value? If NO, sale governed by article 9.

Front 19

Strict Foreclosure

Back 19

Retention of collateral allowed if
(1) all other creditors consent and
(2) debtor consents

Front 20

Debtor's Right to Redeem

Back 20

You can get your stuff back but will need to pay everything (assuming acceleration clause)f

Front 21

Lease Purchase Agreements

Back 21

Treated as security interest if:
(1) Cannot terminate rental obligation
(2) has option to purchase for no or nominal consideration at end of lease