Bar Prep Secured Transactions

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  1. Secured transaction
    a transaction intended to create a security interest in personal property or fixture
  2. security agreement
    an agreement between the debtor and the secured party that creates the security interest
  3. goods
    all things which are movable at the time the security interest attaches
  4. consumer goods
    used or bought for the use primarily for personal, family or household purposes
  5. equipment
    (default) used or bought for use primarily in business
  6. Farm products
    crops, livestock or supplies used/produced in farming operations, or products in unmanufactured states if in possession of a debtor engaged in farming operations
  7. inventory
    held by a person who holds them for sale or lease, or to be furnished under service contracts, and materials used or consumed in a business in a short period of time
  8. Instruments
    negotiable instruments and any other writing wich evidences a right to the payment of a monetary obligation, which are in the ordinary course of business transferred by delivery with any necessary indorsement or assignment
  9. documents
    a document which in the regular course of business is treated as evidencing that the person in posession of it is entitled to recieve, hold, and dispose of the document and the goods it covers
  10. chattel paper
    a record or records which both a monetary obligation and a security interest in or a lease of specific goods
  11. record
    information that is stored in either a tangible medium
  12. investment property
    items such as stocks, bonds, mutual funds, and brokerage accounts
  13. accounts
    a right to payment for goods, services, real property etc(exluding loan)
  14. deposit accounts
    an account maintained with a bank
  15. Security agreement requirement
    Unless collateral is in possesion or control of the secured party pursuant to an agreement a written security agreement is required

    must be show intent to create security interest, authenticated and describe collateral
  16. Authentication
    usually signed by debtor, any symbol made with the present intent to authenticate the record
  17. Description
    agreement must descripbe collateral, reasonably identify
  18. Proceeds
    whatever is received upon the sale, exchange, collection or other disposition of collateral proceeds
  19. Most common situation of Automatic Perfection
    purchase money security interest in consumer goods
  20. Only way to perfect in an automobile
    for secured party to note its lien on certificate of title
  21. To perfect nonconsumer deposit accounts
    • 1. bank where it is maintained automatically controls
    • 2. If not ^
    • a. put deposit account in secured party's name
    • b. agreeing in authenticated record with the debtor and bank in which account is maintained that bank will follow secured party's orders without consent by the debtor
  22. Contents of financing statement
    Debtor's name, description of collateral, secured party's name
  23. Debtor's Name
    • if an individual, individual's name
    • if corporation the corporate name
    • if partnership, the partnership name
  24. seriously misleading
    if a search under correct name, using filing office's standard search logic would not retrieve the erroneous financing statement
  25. Debtor name change
    if debtor so changes its name making the FS seriously misleading the FS is effective to perfect in collateral acquired before or within 4 months after change
  26. Where to file Financing Story
    made with secretary of state where the debtor is located
  27. When debtor moves
    Secured party becomes unperfected 4months after debtors move unless it files a FS in the new jurisdiction before the 4 months is up
  28. When collateral is transfered to a new debtor located in a new state
    Secured party becomes uperfected 1yr after collateral moves unless new filing statement filed within 1 year
  29. Perfection as to proceeds
    autoatically perfected in proceeds received in exchange for collateral for 20 days
  30. to remain perfected in proceeds longer than 20 days secured party must take new action to perfect its interest unless
    proceeds are identifiable cash proceeds or security in original collateral was perfected by filing financing statenment and financing statement for proceeds would be filed in same place, and proceeds were not purchased with cash proceeds of the collateral
  31. Secured party v. Secured party
    first to file or perfect
  32. Special rule for PMSI
    PMSI has priority if PMSI is perfected when debtor received possession of collateral or within 20 days thereafter
  33. PMSI in inventory has priority if
    before debtor receives possession the SP perfects and sends authenticated notification to holders of previously filed SIs in collateral
  34. Conflicting PMSI's
    Seller has priority of financer pmsi
  35. Special Priority rules for deposit accounts
    • 1. a SI perfected by control has priority over SI perfected via proceeds
    • 2. if conflicting interests perfected by control, first to obtain control wins
    • 3. SP who controls by putting DA in own name has priority over all other secured parties with control
    • 4. Bank maintaining DA has priority over all other SP with control, save an SP with the DA in its own name
  36. Authorized sale of collateral
    if sale was authorized by the SP then buyer takes free and clear (either express or implied)
  37. Unauthorized sale of collateral
    buyer in ordinary course of business takes free of SI created by his seller even if perfected and buyer knows of its existence
  38. Buyer in ordinary course
    person who buys goods in good faith without knowledge that sale violates the rights of another person and in the ordinary course from person in the business of selling goods of that kind
  39. Consumer to consumer sales
    buyer takes free of SI even though perfected if he buys without knowledge of SI, sale was for value and for his own personal use unless SP has filed a FS prior to buyers purchase
  40. SP v Judgment Lien holders
    person who becomes a lien creditor before the security interest is perfected has priority
  41. SP is entitled to take possession of collateral without judicial process if
    it can be done without a breach of the piece
  42. Breach of the Peace
    any conduct by the secured party that has the potential to lead to vialence...

    Generally physical presence by the debtor plus verbal objection is enough to create a breach of the peace
  43. Secured party sale of collateral discharges
    the SI under which the sale is made and all subordinate security interests
  44. Fixture
    goods that have become so related to particular real property that an interest in them arises under real property law
  45. Accessions
    goods that are physically united with other goods in such a manner that the identity of the original goos is not lost
  46. Contents of Notice of disposition sale
    • 1. description of debtor and secured party
    • 2. description of collateral
    • 3. method of sale
    • 4. statement that debtor is entitled to an accounting for the unpaid indebtedness and the charge for performing the accounting
    • 5. Time and place of public sale or time after which private sale will be made 
  47. Financing Statement for Corporation must be
    filed in the state of incorporation
  48. Article 9 applies to
    • 1. any transaction creating SI in Per. Prop or Fixtures by K
    • 2. agricultural lien
    • 3. sale of accts, ch. paper, payment intangibles, or pr. notes
    • 4. certain consignments
    • 5. secured sale disguised as lease    
  49. Security Agreement MUST
    • 1. be evidenced by a record and show intent to create SI
    • 2. Be authenticated
    • 3. contain description of collateral (reasonably identify)  
  50. Requirements to Create SI
    • A security agreement
    • Secured party must give value
    • Debtor must have rights in collateral
  51. Breach of the peace
    any conduct by SP that has the potential to lead to violence is a breach of peace

    generally physical presence plus verbal objection by debtor enough 
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Bar Prep Secured Transactions
Secured transactions
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