Term
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Definition
| Interest in personal property or fixtures which secures payment or performance of an obligation |
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Term
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Definition
| Personal property permanently attached to real estate |
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Term
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Definition
| Property subject to a security interest |
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Term
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Definition
| Party owing money or an obligation secured by the security interest |
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Term
| Secured Party (Typically lender) |
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Definition
| Person who holds (owns) security interest |
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Term
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Definition
| Notice of security interest filed with a government office |
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Term
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Definition
1. Right to sell property on default
2. Examples: Mortgages, some judgments and security interests |
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Term
| Types of Collateral Governed Under Article 9 of UCC: Goods |
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Definition
| Things tangible and moveable or fixtures |
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Term
| Types of Collateral Governed Under Article 9 of UCC: Quasi Tangibles |
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Definition
| Paper (instructions) which in themselves evidence a right (e.g. negotiable instruments) A check |
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Term
| Types of Collateral Governed Under Article 9 of UCC: Intangibles |
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Definition
Property with no aspect of physical existence
1. Accounts receivable
2. Goodwill of business |
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Term
| Types of Collateral Governed Under Article 9 of UCC: When Inapplicable |
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Definition
| Article 9 regulating security interests does NOT apply to real estate OR to perfection of security interests in motor vehicles |
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Term
| Creating a Security Interest by Attachment: Three Requirements (1. Security Agreement) |
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Definition
1. Security Agreement:
a. With language transferring a security interest in collateral
b. Signed by the debtor
c. Containing a description of collateral sufficient to identify it
2. An oral security agreement is enforceable if the secured party takes possession of the collateral |
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Term
| Creating a Security Interest by Attachment: Three Requirements (2. The Secured party gives value) |
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Definition
| Value: Past or present consideration |
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Term
| Creating a Security Interest by Attachment: Three Requirements (3. Debtor has rights in the collateral) |
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Definition
| Ownership or permission from the owner to pledge the collateral |
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Term
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Definition
| Perfection is the process to make the security interest enforceable against third parties (parties other than the secured party and the debtor) who take a later interest in the collateral |
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Term
| Three ways to perfect a security interest: (1. By possession) |
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Definition
a. Common law pledge
b. Pawn shop |
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Term
| Three ways to perfect a security interest: (2. By attachment of security interest) |
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Definition
If the holder has a purchase money security interest (PMSI) in consumer goods, other than motor vehicles or fixtures
a. Consumer goods: purchased for non-business use |
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Term
| Three ways to perfect a security interest: (3. By filing a financing statement) |
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Definition
| (Effective 5 years) -> typical way to perfect in business transactions |
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Term
| Financing Statements - Public Notice of Security Interest: Contents |
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Definition
1. Name and address of the debtor
2. Name and address of the secured party
3. Description of collateral (type of collateral enough -> puts public on notice) |
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Term
| Financing Statements - Public Notice of Security Interest: When financing statements required |
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Definition
| Required method of perfecting for most business transactions: must file if no possession of collateral and no PMSI in consumer goods |
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Term
| Financing Statements - Public Notice of Security Interest: Where to file |
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Definition
| Generally, the secretary of state's office |
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Term
| Floating Liens -> A Security Agreement In: Proceeds |
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Definition
| 1. Whatever is received by the debtor in exchange for transferred collateral |
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Term
| Floating Liens -> A Security Agreement In: Future advances |
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Definition
| 1. Loans (advances) to be made by a secured party in the future, that is some time after the promissory note is signing (collateral is security for line of credit). |
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Term
| Floating Liens -> A Security Agreement In: After-acquired property |
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Definition
| 1. Property of a type similar to the collateral acquired by the debtor after the signing of the security agreement |
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Term
| Five Types of Secured Parties in Order of Priority: (1) |
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Definition
| 1. Buyers of goods in the ordinary course of business -> take free of security interests in seller's inventory |
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Term
| Five Types of Secured Parties in Order of Priority: (2) |
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Definition
| Purchase Money Secruity Interest -> non-inventory PMSI if perfected within 10 days of attachment has first priority -> priority date relates back to time of attachment to receive priority over other perfected secured parties |
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Term
| Five Types of Secured Parties in Order of Priority: (3) |
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Definition
| Secondhand purchaser of consumer goods - takes free of security interest perfected by attachment - garage sale rule |
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Term
| Five Types of Secured Parties in Order of Priority: (4) |
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Definition
4. First to perfect or become lien creditor
a. Perfection of a S.I. in any of the three ways -> possession, attachment or filling finance statement
b. Lien creditor -> creditor who has obtained a judgement and an execution lien; a trustee in bankruptcy is the most common example of a lien creditor |
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Term
| Five Types of Secured Parties in Order of Priority: (5) |
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Definition
| 5. First to attach if no secured parties have perfected |
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Term
| Rights and Duties of Parties upon Default: Ignore the security interest |
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Definition
| 1. A secured party may obtain a judgement based upon the amount owed rather than repossessing the collateral |
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Term
| Rights and Duties of Parties upon Default: Repossession |
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Definition
1. A secured party may take possession of collateral covered by a security agreement
2. No breach of peace is allowed when repossessing collateral |
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Term
| Rights and Duties of Parties upon Default: Repossession Sale |
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Definition
| A secured party may dispose of collateral and apply the proceeds to the obligation |
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Term
| Rights and Duties of Parties upon Default: Retaining Collateral |
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Definition
| A secured party may sometimes keep the collateral as satisfaction (payment in full) of the obligation. This requires notice, a right to redeem the collateral and proper protection of consumers |
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Term
| Effect of Disposition of Collateral at a Repossession Sale: Transfer of Good Title |
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Definition
| A purchaser at a valid repossession sale takes title free of ownership claims of the debtor and the secured party |
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Term
| Effect of Disposition of Collateral at a Repossession Sale: Order of distribution of proceeds |
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Definition
1. Expenses of the repossession sale (possessing, holding and preparing collateral for sale, including attorney fees)
2. Satisfaction of debt of 1st lien holder
3. Subordinate (lower priority) security interest holders who gave written notification. (2nd lien, 3rd lien, etc.)
4. Debtor is entitled to any surplus. (Usually a debtor is responsible for a deficiency.) |
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Term
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Definition
| When the debt is paid or other obligation satisfied, the secured party files a termination statement in the office where the original financing statement was filed. A termination statement gives notice that the creditor no longer has a lien on the property. |
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