Term
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Definition
| a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a deb |
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Term
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Definition
| The specific personal property of the debtor that ensures payment |
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Term
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Definition
1. Contractual Security Interests
2. Sales of accounts; chattel paper; payment intangibles; and promissory notes
3. Commercial consignments
4. Agricultural liens
5. Leases that intended to serve as security arrangements
6. A seller's retention of title to delivered goods
NOT LAND |
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Term
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Definition
Purchase money security Interest
Holder has SUPER priority over security interests in same goods if certain requirements are met |
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Term
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Definition
| A security interest in nonconsumer goods does not lose its status as a PMSI if: (1) the security interest is also secured by property not purchased with the loan money or credit; (2) the collateral also secures advances that were not made for the purchase of collateral; (3) PMSI has been refinanced, consolidated, etc. |
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Term
| Tangible Collateral (list) |
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Definition
Consumer Goods
Inventory
Farm Products
Equipment |
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Term
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Definition
| bought for personal, family, or household purposes |
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Term
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Definition
| goods held for sale or lease and goods consumed by a business |
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Term
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Definition
| goods used or produced in farming; possessed or used by farmed |
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Term
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Definition
| goods that are not consumer goods, inventory, or farm products |
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Term
| Intangible / Semi-Intangible Collateral |
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Definition
Instruments
Documents
chattel paper
accounts
deposit accounts
investment property
commercial tort claims
general intangibles |
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Term
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Definition
| WHATEVER is received upon sale, exchange, collection, or disposition of collateral |
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Term
| 3 requirements for creation of a security interest |
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Definition
1. Agree to take the security interest
2. Value must be given by the secured party
3. Debtor must have rights in collateral |
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Term
Security interest creation, element #1
AGREEMENT TO CREATE SECURITY INTEREST |
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Definition
Taking possession or control
Debtor's authentication of a security agreement describing collateral
Description must be TYPE or SPECIFIC
Consumer goods/security accounts/tort claims MUST be specific |
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Term
| Obtaining control of a bank deposit |
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Definition
Same bank = automatic
Different bank
1. Put account in secured parties name OR
2. Recorded agreement providing access to account |
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Term
| Rights and Duties of Secured Party in Possession |
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Definition
1. Must use reasonable care in storing and preserving collateral
2. Can be reimbursed
3. Risk of loss remains on debtor to the extent of insurance deficiencies
4. Secured party may hold profits as additional security |
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Term
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Definition
Security agreement may create an interest in property acquired in the future
Interest will attach as soon as debtor acquires interest
Generally requires an "after-acquired property clause"
Exceptions: (1) proceeds from sale of collateral or (2) new inventory collateral
Consumer goods = 10 days after CREDITOR gives value |
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Term
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Definition
1. Filing
2. Taking possession
3. Control
4. Automatic perfection
5. Temporary perfection |
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Term
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Definition
A security interest is not enforceable against anyone until it has attached to collateral
If perfected before attachment, attachment = perfection
REVIEW attachment (RAV): rights, agreement, value |
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Term
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Definition
Achieves perfection by filing
Includes:
1. debtor's name and mailing address
2. secured party's name and mailing address
3. Indication of collateral covered
4. If real property related a description of real property |
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Term
| Financing Statement: error in debtor's name |
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Definition
Issue: seriously misleading name change
Financing statement applies to prior name AND within four months of change |
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Term
| Financing Statement: Indication of collateral |
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Definition
Can be supergeneric
Example: assets
Advantage: need not mention future acquired assets |
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Term
| Financing Statement: Debtor Authorization |
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Definition
1. Debtor must authorize in an authenticated record
2. Debtor authorizes if she authenticates the financing statement or security indication covering the same collateral |
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Term
| Financing Statement: Place of Filing |
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Definition
1. Default: Secretary of state office
2. Timber/Minerals/Fixtures/Et al: county recording office
(see financing statement slide 1, #4) |
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Term
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Definition
1. Five years
2. Can refile within 6 months of expiration
3. Authorization of debtor not required |
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Term
| Perfection by taking possession [pledge] |
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Definition
Not applicable to intangibles, accounts, etc. (See control)
Actual possession = perfected
Bailee possession = as soon as bailee authenticates record |
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Term
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Definition
| Security interests, electronic chattel, etc. |
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Term
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Definition
A purchase money security interest in consumer goods
Attachment = perfection |
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Term
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Definition
| Security interest in motor vehicles can be perfected only by notation on the vehicle's certificate of title |
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Term
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Definition
Security interest in proceeds from the original collateral is continuously perfected for 20 days from the debtor's receipt of the proceeds
Unperfected after 20 days unless statutory requirements are met
Will continue beyond 20 days if:
1. security interest in collateral was perfected by filing
2. proceeds are identifiable cash proceeds or
3. the interest in proceeds is perfected within 20 day period |
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Term
| Priorities: secured vs. secured |
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Definition
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Term
| Priorities: Unperfected vs. perfected secured |
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Definition
| perfected prevails over an unperfected security |
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Term
| Priorities: Investment property |
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Definition
1. Control PREVAILS over
2. Time of perfection |
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Term
| Priorities: Perfected secured vs. perfected secured |
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Definition
| General rule: Look at time of possession |
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Term
| PMSI in Inventory/livestock |
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Definition
1. Perfected at time debtor gets possession (pre-file) AND
2. Written notification is provided to other secured parties
3. Before debtor takes possession
Consigners get superpriority if follow steps above |
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Term
| PMSI in non-inventory/livestock |
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Definition
SUPER PRIORITY IF:
Perfected within 20 days after the debtor receives possession |
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Term
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Definition
1. Seller trumps lender
2. First secured party to file or perfect prevails
REVIEW
1. Consumer goods = automatic
2. equipment = within 20 days after debtor possession
3. Inventory = must be perfected by time debtor gets possession |
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Term
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Definition
Filing = priority with filing statement
Non-filing collateral = control
General rule: perfection in security interest is perfection in proceeds and proceeds are cash or same type of collateral
Mindblower: If filing collateral, non-filing proceeds, race |
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Term
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Definition
| Personal property that becomes so attached to real property that a property interest arise |
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Term
| Fixture Dueling Priorities |
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Definition
Property Interest vs. Fixture Interest
1. First to file or record property interest
2. Exception for purchase money security interest (20 day) |
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Term
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Definition
Goods physically united with original good
APPLY GENERAL RULES
If accession becomes part of whole (engine in car), whole takes precedence |
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Term
| Buyer vs. unperfected security interest |
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Definition
Buyer is generally superior if:
1. No knowledge
2. Consideration
3. Delivery
*Watch out for PMSI grace period |
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Term
| Buyer vs. perfected security |
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Definition
Perfected security will have priority over buyer
Exceptions
1. Consent
2. Buyer or lessee in ordinary course of business
3. Consumer from consumer (has priority of pmsi)
4. Not ordinary course of business = priority over future advances |
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Term
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Definition
1. ordinary course of business buyer
2. Holder in due course
3. Transferee of money re: accounts
4. Certain purchases of instruments + control
5. Possessory lien holder
6. Article 2 claimant with possession
7. PMSI
8. Perfected security interest and judicial liens
9. Purchaser for value w/o notice + delivery
10. Unperfected security interest
11. Debtor |
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Term
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Definition
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Term
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Definition
Sue on debt itself OR
Take possession of the collateral |
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Term
| Default: Taking possession of collateral |
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Definition
Only if will not breach the peace
Can sell for deficiency
Sale must be commercially reasonable
(trying to make money)
Notice to debtor, sureties, other secured parties |
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Term
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Definition
1. Liable for actual damages caused by failure to follow rules
2. Debtor may lose right to seek deficiency judgment
3. Rebuttable presumption rule: collateral satisfies debt |
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Term
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Definition
| An agreement that creates or proves a security interest |
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Term
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Definition
| Establishes the secured party's rights to the collateral |
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