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Security interests attach with (VCR):
- Rights in Collateral
What is perfection?
Record notice of the SI's existence
Default priority rule for security interest battle:
First in time, first in right.
After-acquired collateral clauses take a SI in:
assets that are acquired after the initial SI, similar to a floating lien.
A party may perfect a security interest by:
1. Taking possession of the collateral
2. Purchase Money Security INterest
3. File a financing statement (UCC-1 form).
A PMSI is:
a security interest that enables the debtor to purchase the goods. (must come from the vendor)
A financing statement must contain:
1. Debtor's name and address.
2. Creditor's name and address.
3. Description of the collateral
In priority contests each claimant is entitled to satisfaction in:
full before a subordinated claimant is entitled to take.
The general priority for rights in collateral are:
1. Buyer in the Ordinary Course of Business
2. Perfected attached creditor
3. Lien creditor
4. Non-Ordinary Course BUyer
5. Attached Unperfected Creditor
6. General Unsecured Creditor
Early filing allows a creditor to file a filing statement before a security interest attaches which then:
relates back to the original filing date.
A creditor who takes a security interest in after-acquired collateral is automatically subordinate to a:
PMSI in equipment if the PMSI holder files properly within 20 days after debtor takes possession.
A creditor who takes a security interest in after-acquired inventory is subordinate to a PMSI only if:
the PMSI holder files appropriately and notifies the perfected creditor before the debtor takes possession.
A Perfected Attached Creditor will always lose to:
a buyer in the ordinary course of business.
Under Aritcle 9, self-help is permissible as long as the security interest holder:
does not breach the peace.
Any protest made by a debtor over the creditor's repossession of collateral will be construed as:
a breach of the peace.
A secured party may not enter a:
debtor's home without voluntary and contemporaneous consent.
A secured party may take the collateral so long as there is:
no debtor objection.
In a Repossession by judicial action a secured party:
obtains a judicial writ, ordering a sheriff to obtain possession of the collateral and deliver it to the secured party.
Strict foreclosure occurs when the secured party:
retains the collateral in full satisfaction of the debt still owed.
To strictly foreclose on collateral the secured party must send:
a written proposal to retain the collateral in satisfaction of the debt to:the debtor and secondary obligor if in existence.
The 60% rule:
Regarding consumer goods, which the debtor has paid 60% of the loan in the event of a non-PMSI or 60% of the cash price in the event of a PMSI, strict foreclosure will not be allowed. Creditor must sell the collateral within 90 days or be liable for conversion.
When a secured party sells collateral, every aspect of the sale must be:
Article 9 provides standard collateral sale forms which, if used:
are presumptively commercially reasonable.
For a collateral sale, notice must be sent to:
the debtor, all other perfected creditors, and secondary obligors.
For collateral sales of consumer goods, additional consumer protective provisions are mandatory including:
how to calculate deficiency and how debtor can redeem the collateral.
A non-consumer transaction collateral sale is presumed reasonable if notice is sent:
10 days or more before the time of sale.
During a sale of collateral, a secured party may buy the collateral at a:
public sale, but not at a private sale
A debtor who's sale of collateral nets a price lower than the debt owed:
may obtain a deficiency judgment against the debtor unless the secured party sold the collateral to an insider buyer. If that happens, then the price would be that which an independent 3rd party would have paid, rather than the actual amount paid, being used to calculate the deficiency.
A debtor's right to redeem collateral is cut off once:
the secured party has resold or completed a strict foreclosure.
To a redeem a debtor must pay:
the missed payments plus any interest and a creditor's reasonable expenses, including attorney fees.