Term
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Definition
GOODS - movable items & fixtures (also includes standing timber, growing crops, unborn young of animal - does NOT include money, pre-extracted minerals)
CONSUMER GOODS - personal, family or household purposes
EQUIPMENT - bought or used primarily for business - DEFAULT CATEGORY
INVENTORY - goods held for sale or lease in the ordinary course of business - raw materials and work in progress, consumed materials
FARM PRODUCTS - crops, livestock, etc - must be IN THE HANDS OF THE FARMER and UNMANUFACTURED (ice cream would not qualify b/c it's manufactured) |
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Term
| Semi- and Untangible Collateral |
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Definition
INSTRUMENTS - promissory notes, checks, drafts
DOCUMENTS - documents of title under A7
CHATTEL PAPER - writing(s) evidencing i) monetary obligation plus ii) security interest (promissory note + SA)
ACCOUNT - A/R of a business, credit card receivables, deposit accts
INVESTMENT PROPERTY - stocks, bonds, etc
COMMERCIAL TORT CLAIMS - business tort claims that don't involve PI
GENERAL INTANGIBLES - copyrights, patents, trademarks, liquor licenses |
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Term
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Definition
-Creditor gave value
-Contract - security agreement
-Debtor has rights in collateral (must have ownership/rights - can't use someone else's!)
NO ATTACHMENT UNTIL ALL ELEMENTS ARE SATISFIED |
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Term
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Definition
Oral only if creditor has possession of collateral
Evidence of record, description of collateral, and control (if nonconsumer deposit accounts, e-chattel paper, or investment property) |
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Term
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Definition
| Using new acquisitions of property to serve as additional collateral for an old loan - VERY common with INVENTORY |
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Term
| Consumer Good Exception - Attachment |
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Definition
| After-acquired property clause only works if consumer goods were acquired within 10 days of the creditor giving value |
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Term
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Definition
DEPENDS on type of collateral!
-Possession of collateral
-Filing of financing statement
-Automatic permanent (just need attachment)
-Automatic temporary (just need attachment, for first 20 days)
-Control
-Notation of SI on Certificate of Title |
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Term
| What collateral CANNOT be perfected by possession? |
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Definition
Accounts, deposit accounts, nonnegotiable documents, e-docs, e-chattel paper, general intangibles
IF CREDITOR LOSES POSSESSION, IT'S NO LONGER PERFECTED |
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Term
| Requirements of Financing Statement |
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Definition
-Names and addresses of debtor/creditors
-Debtor's authorization in an authenticated record
-Description of the collateral
-If registered org is debtor, use their name they organized under
-File at SOS in Austin
*If debtor changes name - must refile within 4 mos |
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Term
| Financing Statement Duration |
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Definition
Lasts for 5 years from date of filing (except for fixtures which continue til mortgage is released) - to extend, creditor must file a continuation statement w/i 6 mos before it expires
TERMINATION STATEMENT: for consumer goods, must file w/i 20 days after debtor's written demand or 1 mo after no more outstanding obligations; only has to file one for non-consumer goods w/i 20 days after debtor's written demand |
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Term
| Automatic Permanent Perfection |
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Definition
-PMSI in Consumer Goods
-Assignment of Small Amount of Debtor's Acct
-Sale of Promissory Notes |
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Term
| Automatic Temporary Perfection (20 Days) |
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Definition
-Proceeds (from when debtor receives them)
-New Value for Instruments, Negotiable Documents, Cert. Securities
-Delivery of These Docs to Debtor for 20 Days for Certain Purposes |
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Term
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Definition
| Investment property, nonconsumer deposit accounts, e-docs, e-chattel paper - creditor has right to sell/cash in without further action from debtor |
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Term
| Perfection - Motor Vehicles, Boats, Trailers |
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Definition
| MUST note security interest on certificate of title to be perfected |
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Term
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Definition
| Continues for 20 days automatically - file FS in same place where FS for collateral was filed (don't need to file for proceeds if the cash remains identifiable from the sale) |
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Term
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Definition
Follow the law where:
-Debtor is located
-Individual: principal residence
-Registered org: state where org'd
-Unregistered org: place of business/CEO
FOLLOW LAW OF LOCATION FOR: SIs perfected by possession, fixtures, timber |
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Term
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Definition
First creditor to either FILE or PERFECT
PMSI in goods PREVAILS if perfected when D receives possession or w/i 20 days
PMSI in inventory/livestock PREVAILS if perfected when D receives possession AND gives proper notice to all SI holders |
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Term
| Secured Party VS Purchaser |
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Definition
If debtor has permission to sell, purchaser wins
Purchaser wins if buyer gives value, receives delivery, and has no knowledge of SI at time of delivery |
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Term
| Buyers in the Ordinary Course of Business |
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Definition
Top priority - can prevail even over perfected creditor if:
-GOOD FAITH
-WITHOUT KNOWLEDGE OF SI VIOLATION
-GOODS BOUGHT WEREN'T FARM PRODUCTS
-ORDINARY PURCHASE (buying goods from a person in the business of selling goods of that kind)
-SI CREATED BY SELLER
-CREDITOR NOT PERFECTED BY POSSESSION |
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Term
| Secured Creditor VS Lien Creditor |
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Definition
To win, secured creditor must be PERFECTED WHEN LIEN ATTACHES
*PMSIs who filed w/i 20 days after D gets possession WIN over lien creditors
*Lien creditors will win for future advances if secured creditor knows of the lien and 45 days passed
*Statutory mechanics liens win AS LONG AS THEY MAINTAIN POSSESSION |
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Term
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Definition
Goods incorporated into a structure become real property
*Secured creditor may win if perfected w/ fixture filing (describe real property, file with office where mortgage is filed) before real estate interest is recorded |
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Term
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Definition
Can WIN if perfected by fixture filing within 20 days of good becoming a fixture and competing real estate interest isn't a construction mortgage
*SIs in FIXTURES WIN OVER LATER-ACQUIRED JUDICIAL LIENS |
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