Wa Bar Secured Transactions

Front 1

Attachment

Back 1

Attachment occurs when (in any order or over any duration):
• Secured party gives value
• Debtor has rights in the collateral, and
• Debtor either
o Authenticates a security agreement describing the collateral
o Or gives possession of the collateral to the secured party under an oral security agreement.

Front 2

Requirements for security agreement

Back 2

Security agreement must be in writing, authenticated by the debtor, must grant or create a security interest, and must identify the collateral.
• Language must fit the property and be specific enough to say whether the particular property is included or not.

Front 3

Types of Collateral

Back 3

The correct type classification of collateral is determined by the debtor’s primary intended use at the time of attachment.
• Farm Products (crops, livestock, or supplies used or produced in farming operations; products of crops or livestock in un-manufactured states in possession of a farmer)
• Account (right to payment for goods or services)
• Consumer goods (bought/used primarily for personal, family or hshld)
• Inventory (goods held for sale/lease, raw materials, & biz supplies)
• Equipment (every other good)

Front 4

After Acquired Property

Back 4

Article 9 permits a debtor to grant a security interest in property to be acquired at a later time, except for consumer goods acquired more than 10 days after the secured party gives value.

Front 5

Pledge

Back 5

Debtor must consent to the secured party's possession of the collateral pursuant to the pledge.

Front 6

Purchase Money Security Interest

Back 6

A PMSI secured repayment of a loan or credit that enabled the debtor to buy the collateral. (still must sign a security agreement).
• Seller-purchase-money security interest: Secured party sells the debtor collateral on credit.
• Lender-purchase-money security interest: Lends the debtor the funds that are used to purchase the collateral. Lender must have made the loan in order to permit the debtor to acquire collateral, and the money was used in that way.

Front 7

Perfection

Back 7

Perfection requires attachment +
• Possession
• Filing a financing statement (Department of Licensing)
o Statement must be authorized by the debtor,
• Debtor authorizes the financing statement by signing the security agreement.
o Give the names and addresses of the secured party and debtor, and
• Must use the correct names so that a search in the record would find it.
• Trade names are invalid.
o Indicate the collateral
• Can be super generic “all debtor’s personal property”
• Need not refer to after-acquired or proceeds

Front 8

Perfection after a business incorporates

Back 8

If later incorporated and the corporation assumes the debtor’s business obligations, then it becomes bound by the security agreement as a new debtor. Automatically extends to (1) all collateral transferred to the corporation, and (2) all collateral acquired for 4 months after becoming new debtor.
• Not perfected for any collateral after the 4 months unless the creditor refiles in the name of the new debtor.

Front 9

How long is a financing statement valid for?

Back 9

A financing statement will lapse after 5 years unless a continuation statement is filed within 6 months before lapse.

Front 10

Priorities

Back 10

First to attach if both unperfected
Perfected has priority over unperfected
First to file or perfect has priority between two perfected parties, unless one has super priority

Front 11

Priority for Non-inventory PMSI

Back 11

A secured party with a PMSI in non-inventory will have priority over earlier-filed interests if she perfects before or within 20 days after the debtor receives possession of the collateral

Front 12

Priority for Inventory/Consignor PMSI

Back 12

Before the debtor receives possession, the purchase-money secured party must both
• Give written, signed notice to secured parties of record describing the collateral, and
• File

Front 13

BFP's

Back 13

Unless an exception applies, if the collateral is sold without the secured party’s consent,
• The buyer in good faith will take collateral free from an unperfected security interest in the collateral.
• A buyer in good faith will take collateral subject to a perfected security interest.

Front 14

Relation Back

Back 14

If a buyer purchases collateral from seller (debtor) before a PMSI files, but then the PMSI files within 20 days, they take it subject to the security interest.
• Filing within 20 days relates back to the date the debtor received possession.

Front 15

Buyer in Ordinary Course of Business

Back 15

A buyer in the ordinary course of business takes free from a perfected security interest in goods purchased.
A BIOCOB buys goods:
• In good faith without knowledge that the sale violates a security agreement.
• In the ordinary course of the seller’s (debtor’s) business
• From a seller (debtor) in the business of selling collateral of that kind.
Consumers are usually considered BIOCOB.

Front 16

Proceeds

Back 16

A security interest that had attached to the sold collateral will automatically attach to the proceeds and will have the same priority.
• A security interest perfected by filing will remain perfected in cash proceeds for as long as they remain identifiable (until they become untraceable or the debtor spends them).

Front 17

Enforcement (repossession)

Back 17

Upon the debtor’s default, the secured party may repossess the collateral if it can be done without breach of the peace. Otherwise it must use judicial repossession (replevin).

Front 18

Enforcement (sale)

Back 18

After repossession, the secured party may sell the collateral (privately or at auction) but only if
• Gives written, signed notice (10+) of the sale to the debtor and any secured party of record, and
• Every aspect of the sale is commercially reasonable, including method, manner, time, place and terms.
• Prior to the sale, Debtor may redeem the collateral by paying all obligations and expenses to the secured party.
Secured party is liable in damages to the debtor for any harmed caused by failure to observe these rules.

Front 19

Distribution from proceeds of creditor or judicial sale

Back 19

Proceeds of the sale are applied
• (1) expenses of the sale
• (2) foreclosing party’s unpaid debt
• (3) any junior secured party
• (4) if surplus, to the debtor
• Debtor is liable for any deficiency.

Front 20

Perfection of Cars

Back 20

Need an endorsement on the certificate of title.

Front 21

Perfection of Fixtures

Back 21

Fixture filing must indicate (1) that is covers the fixtures to be attached to realty, (2) describe the realty using a legal description, and (3) filed in the county auditor’s office in the county where the realty is located.

Front 22

Enforcement (Retain Possession)

Back 22

Upon written notice delivered to the debtor and other secured parties, the secured party may proposed to retain the repossessed collateral in full satisfaction of the debt as long as the debtor does not object in writing within 21 days. If so, the secured party may not sue for a deficiency.

Front 23

What you need for a secured transaction essay

Back 23

1. Governing law
2. Attachment (description of collateral types)
3. PMSI
4. After acquired clause
5. Perfection
6. BIOCOB
7. Interest in proceeds (if collateral sold)
8. Priorities
9. Damages (if question asks)