FSP Secured

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FSP Secured
2012-07-23 09:51:56
Secured Transactions Bar Points FSP

Secured Transactions
Show Answers:

  1. What are the different categories of Goods?
    • consumer goods
    • inventory
    • farm products
    • equipment
  2. What are the different categories of tangible intangibles?
    • instruments
    • documents
    • chattel paper
  3. What are the different categories of intangible intangibles?
    • accounts
    • commercial tort claims
    • general intangibles
  4. What are the different types of investment property?
    • certificatd and uncertificated securities
    • securities accounts
    • commodity K
  5. What does a security interest arise?
    debtor uses certain property as collateral to secure repayment of funds to another party
  6. What are fixtures?
    goods that become so related to particular real estate that an interest in tohse goods aises under real property law
  7. What is the priority b/t a SI in a good that becomes a fixture and the real property to which it is attached?
    SI generally subordinate to conflicting interest in the related real estate
  8. What are accessions?
    goods that are physically united with other goods in such a manner that the identity of the original goods isn't lost
  9. What happens if a SI is perfected in a good that becomes an accession?
    the SI remains perfected
  10. What are commingled goods?
    • goods that are physically united with other goods in such a way that their identity is lost in a product or mass
    • goods whose identity is lost thru manufacturing or production
    • goods whose identity is lost thru mere mixing with other goods from which they can't be distinguished
  11. Does a SI exist in specific goods that are commingled?
    no but may attach to a product/mass that results when goods become commingled
  12. What is the result if a SI in collateral is perfected before the collateral becomes commingled goods?
    the SI that attaches to the commingled product/mass is perfected
  13. What is the definition of goods?
    all things that are movable a the time the SI attaches
  14. What is the definition of a document?
    doc that in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the doc and the goods it covers
  15. What is the definition of chattel paper?
    record(s) evidencing both a monetary obligation and a SI in, or a lease of, specific goods
  16. What must be included in the security agreement?
    • granting clause
    • description of the collateral
    • authenticated by debtor
  17. When is the description of collateral sufficient in the SA?
    reasoably identifies what is desribed
  18. When is an oral SA sufficient?
    when SP has possession of the collateral
  19. A SA may be evidenced by control if the collateral is what?
    • deposit accounts
    • electronic chattel paper
    • investment property
    • letter of credit rights
  20. Between whom is a SA generally effective?
    • b/t the parties
    • against purchasers
    • against creditors
  21. What are the elements of attachment?
    • Rights in the collateral
    • Agreement
    • Value given
    • (RAVE)
  22. In what type of collateral will a SI in after acquired property be created even if not mentioned in the SA?
  23. A SA can't provide that it covers after acquired consumer goods unless what?
    D acquires rights in the consumer goods w/in 10 days of SP giving value
  24. What happens to the SI if the collateral is disposed of?
    • continues unless SP authorized the disposition free of the SI
    • automatically extends to identifiable proceeds of the collateral
  25. What is a PMSI?
    • SI in goods that are purchase money collateral securing a purchase money obligation
    • seller financing
    • 3P financing
  26. A SI in goods is a PMSI in what 3 circumstances?
    • given as collateral for n obligation for the purchase and actually used for the purchase
    • inventory that is or was PM collateral
    • secures a PM obligation incurred with respect to software in which SP holds or held a PMSI
  27. What is a production money SI?
    • concept for crop production
    • incurred for value given to enable the D to produce crops if the value is in fact used for the production of crops
  28. When is a SI perfected?
    • all of the requirements for perfection have been met
    • if requirements are met before attachment, SI is perfected upon attachment
  29. What are the different methods of perfection?
    • filing
    • possession
    • control
  30. What law governs perfection and priority
    • jurisdiction where D is located
    • where collateral is located in a jurisdiction, local law of that jurisdiction will govern
  31. What types of collateral can be perfected by possession?
    • negotiable docs
    • goods
    • instruments
    • money
    • tangible chattel paper
  32. What is the only way to perfect an SI in money?
  33. What is the duty of care associated with perfection by possession?
    reasonable care in its custody and preservation
  34. When does perfection occur automatically?
    • PMSI in consumer goods
    • assignment of accounts or payment intangibles
    • sale of payment intangible or PN
    • assignment for benefit of all creditors of the transferor and subsequent transfers by the ASE
    • assignment of beneficial interest in a decedent's estate
    • account that is a right to paymen of winnings in a lottery
  35. Automatic perfection for proceeds continues for only 20 days after attachment unless what?
    • filed financing statement covers the original collateral, proceeds are collateral that can be perfected by filing, not acquired with cash proceeds
    • identifiable cash proceeds
    • otherwise perfected when the SI attachesto the proceeds or w/in 20 days thereafter
  36. When does perfetion occur for PMSI?
    • upon attachment
    • filing FS w/in 20 days after D receives delivery - relates back to date the SI attached
  37. What must be included in the FS?
    • name of D
    • name of SP
    • description of collateral
  38. a FS sufficiently describes the collateral it covers if it provides what?
    • reasonably identifies what is described
    • indication that FS covers all assets or all personal property
  39. What authorizes the filing of FS?
    the SA
  40. What are the requirements for a good becoming a fixture?
    • attached to real estate
    • adapted to use of the real estate
    • intended to be a permanent attachment to the real estate
  41. What must be included in a fixture filing?
    • all info required for FS
    • indicate covers fixtures
    • filed in the real property records
    • description of real property
    • name of record owner
  42. What happens if a FS is wrongfully rejected by the filing office?
    still effective except against purchaser giving reasonable value in reasonable reliance upon the absence
  43. What is the rule regaring errors or omissions in FS?
    • minor errors - still effective
    • seriously misleading - ineffective UNLESS search under D correct name using office's standard search will reveal the FS containing the error
  44. When may a FS be filed?
    before or after the SI attaches
  45. Will a FS remain effective if the collateral is sold, exchanged, leased, or otherwise disposed of?
  46. If D moves, how long will the FS remain effective to perfect the SI in collateral?
    • time perfection would have ceased under law of that jurisdiction
    • four months after D moves
    • one year after collateral transferred to new debtor
  47. How long is a FS effective?
    5 years unless continuation statement is filed w/in 6 months before termination of the 5 year period
  48. What is the general rule regarding priority?
    first in time, first in right
  49. What is the priority b/t unperfected SI?
    first SI to attach wins
  50. What is the priority b/t perfected and unperfected SI?
    perfected wins over unperfected
  51. What is the priority b/t 2 perfected interests?
    • first to file wins
    • collateral is chattel paper or instrument - perfection by possession wins over perfection by filing
  52. When will PMSI in crops have super priority?
    • perfected by filing
    • SP send authenticated notice to conflicting SI holder b/t 10 and 30 days before new value given
    • notice informs that SP expects to acquire production money SI in crops
  53. When will the rule second in time, first in right come into play?
    perfected PMSI in goods
  54. What is required for SP to have super priority in PMSI proceeds?
    • PMSI is perfected when D receives possession and either:
    • (1) filed FS covering same inventory b4 PMSI was perfected by filing OR
    • (2) before beginnning of 20 day period authenticated notification received w/in 5 years of D taking possession
  55. What is priority b/t conficting PMSIs?
    • seller financing over 3P financing
    • all others - first in time, first in right rule applies
  56. SP has priority over a lien creditor if the SP does what?
    • perfects b4 lien creditor's interest arises
    • OR
    • files FS and evidences a SA b4 lien creditor's interest arises
  57. What is the special rule regarding PMSI and lien creditors priority?
    if PMSI perfected w/in 20 days after D receives collateral the PMSI priority over intervening LC whose rights arise b/t the time the SI attaches and time of filing
  58. When will a SI not survive a sale?
    • SP consents to sale free of SI
    • BIOCOB
    • buyer of consumer goods
    • buyer of chattel paper
    • butyer of an instrument
    • buyer who takes delivery
  59. What are the requirements for a BIOCOB?
    • good faith
    • w/o knowledge
    • in the ordinary course of S business
  60. What is the garage sale exception?
    B of consumer goods in this manner takes free of SI
  61. What are the elements for the garage sale exception to apply?
    • bought from person who used or bought goods primarily for personal, family, or household use
    • w/o knowledge
    • for value
    • primarily for B personal, family, or household purposes,
    • b4 filing of FS covering the goods
  62. When is the time of filing or perfection for proceeds?
    time of filing or perfection as to the SI - relates back
  63. What is the only way for a SP with an SI in fixture to obtain priority ove a mortgage?
    filing a fixture filin
  64. What is the general priority rule regarding fixtures and mortgages?
    first in time, first in right
  65. What are the exceptions to the general priority rule b/t fixtures and mortgages?
    • PMSI in a fixture
    • fixtures that are readily movable
    • lien on real property
    • owner consents in authenticated record
  66. Who will PMSI prevail over in priority contest?
    • perfected SI
    • lien creditor
    • unperfected SI
  67. Who will PMSI not prevail over in priority contest?
  68. Who will lien creditor prevail over in priority contest?
    • perfected SI if attached first
    • unperfected SI if attached before perfected
  69. Who will lien creditor not prevail over in a priority contest?
    • BIOCOB
    • PMSI
    • perfected SI if perfected first
  70. What are SP rights upon default?
    • reduce a claim to judgment
    • foreclose
    • otherwise enforce the claim
  71. A SP has the right to repossess property if it can do so how?
    w/o breaching the peace
  72. What is the D right to redeem upon default?
    by tendering to the SP the amount of the obligation together with reasonable expenses and attorney's fees
  73. A D must exercise his right to redeem before what?
    • collateral been collected
    • SP disposed of the collateral or entered into K for its disposition
    • SP accepted the collateral in full or partial satisfaction
  74. When may a D waive his right to redemption?
    in authenticated agreement entered into after default
  75. In what kinds of transactions may a D not waive his right to redeem?
    consumer X
  76. All aspects of disposition of collateral after default must be what?
    commercially reasonable
  77. A sale is considered commercially reasonable if it is made how?
    • usual manner on any recognized market
    • price current in any recognized market
    • conformity with reasonable commercial practices
  78. To whom must SP send notice before disposing of collateral?
    D and any secondary obligor
  79. When is notice of disposition not required?
    collateral is perishable, may decline quickly in value, or type customarily sold on a recognized market
  80. What is the effect of a disposition sale after default?
    • transfers for value all of D rights
    • discharges the SI and any subordinate SIs or liens
  81. If a B acts in bad faith at disposition sale after default, what is the result?
    takes subject to the D rights and SI in the collateral
  82. What must notice of sale in a noncomsumer X include?
    • description of D and SP
    • description of collateral
    • method of disposition
    • statement that D is entitled to accounting
    • time and place
  83. What additional information is needed in a notice of sale in a consumer goods X?
    • description of liability for deficiency
    • telephone number for D to ascertain amount required to redeem
    • telephone number or address for information
  84. When may SP accept collateral in full or partial satisfaction of the debt?
    • D consents
    • SP sends notice of proposal to accept the collateral in full or partial satisfaction of the debt
    • SP doesn't receive an authenticated notice of objection w/in 20 days after sending notification; and
    • if collateral is consumer goods - not in D possession when D consents
  85. May a SP accept collateral in partial satisfaction of the debt in a consumer X?
  86. How are cash proceeds of foreclosure sale distributed?
    • reasonable expenses of collection and enforcement
    • satisfaction of obligations secured by SI
    • satisfaction of obligations secured by any subordinate SI
    • surplus to D or liability for deficiency
  87. If the sale is conducted in a commercially unreasonable manner, the deficiency can be reduced to the difference b/t what?
    • outstanding amount of loan
    • AND
    • greater of actual proceeds or amount the collateral would have sold for in a commercially reasonable sale