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UCC 9- Secured Trans
Barbri Review
| Question | Answer |
|---|---|
| Basics for exam preparation- Article 9 | Provides a body of law dealing w/loans, sales, and other obligations for which voluntary lien (security interest) is given by obligor w/respect to all or party of obligor's property (collateral) to create secondary source of repayment |
| Basics for exam preparation- Article 9; Creditors and lenders to protect themselves when same collateral given to multiple | Central filing system that determines what its priority will be w/respect to collateral vis-a-vis other creditors/lenders |
| Basics for exam preparation- Article 9; Rules creditor/lenders use collateral | To be paid if obligor defaults on his obligations to pay |
| Basics for exam preparation- Article 9; Exam questions analysis: a-c | a. Does fact patter talk about loan/other debt w/SI given? b. SI attached? c. Has secured party properly perfected SI in collateral to receive protection against others? |
| Basics for exam preparation- Article 9; Exam questions analysis: d-f | d. Default on secured obligation? e. Secured party acted properly in repossessing and selling collateral to get paid? f. Creditor have first priority to collateral proceeds? |
| Scope of Article 9- In general; Security interest | An interest in personal property or fixtures that secures payment or performance of an obligation- a. Sales receivables, b. Consignments, c. Agricultural liens |
| Scope of Article 9- In general; Security interest: Agricultural lien | Non-possesory lien on farm products created by state statute in favor or person providing goods/services/rental land to farmer; Article 9 governs perfection and priority |
| Scope of Article 9- Agreements intended to have security effect | Certain types of transactions that parties attempt to characterize as legal arrangements other than SI may governed by Article 9 if transactions are, in fact, intended to have effect as security- a. Lease-purchase agreement, b. Retention title |
| Article 9 Exceptions- Tort claims | Assignment of tort claims (other than commercial tort claims) |
| Article 9 Exceptions- Deposit accounts | Assignments of deposit accounts in consumer transactions |
| Article 9 Exceptions- Given for services or materials | State statutory or common law liens (other than agricultural) given for services or materials, such as mechanic's liens, except with respect to priorities in personal property covered by liens |
| Article 9 Exceptions- Wages | Assignment of claims for wages |
| Article 9- Types of security interests; Typical security interest | On party (the creditor) gives another party (the debtor) something of value in exchange for the debtor's giving the creditor an interest in the debtor's personal property or fixtures (the collateral) |
| Article 9- Types of security interests; Purchase money security interest (PMSI) | Special type of SI in goods that has priority over all other security interest in same goods if certain requirements are met |
| Article 9- Types of security interests; Purchase money security interest (PMSI): Arises when- | 1. Creditor sells the goods to debtor on credit, retaining a SI in goods for all or part of purchase price (creditor and seller are same person), or 2. Creditor advance funds that are used by debtor to purchase goods (creditor/seller different persons) |
| Article 9- Collateral | Property subject to a security interest |
| Article 9- Collateral; Tangible collateral or goods | All things movable at time SI attaches (including timber to be cut, unborn animals, growing crops, excluding money/intangibles) and fixtures- a. Consumer goods b. Farm products c. Inventory d. Equipment |
| Article 9- Collateral; Tangible collateral or goods: Determining type | Category into which tangible collateral is placed does not depend on nature of collateral, but rather on primary use to which debtor puts collateral at time SI attaches |
| Article 9- Collateral; Intangible or semi-intangible collateral: Types | a. Instruments, b. Documents, c. Chattel paper, d. Accounts, e. Deposit, f. Investment property, g. Commercial tort claim, h. General intangibles |
| Article 9- Collateral; Proceeds | Whatever received upon sale, lease, exchange, license, collection, or other disposition of collateral or proceeds; Differ from other types of collateral in that they constitute any collateral that has changed in form from previous category |
| Article 9- Collateral; Proceeds: Proceeds include second generation proceeds | Proceeds can go through several transformations and still retain their character as proceeds |
| Article 9- Collateral; Proceeds: Insurance payments and claims for damages | Are proceeds |
| Requisite for attachment- Of a security interest | 1. Parties must have an agreement that SI attach, 2. Value must be given by secured party, and 3. Debtor must have rights in collateral |
| Requisite for attachment- Of a security interest; Parties' agreement | Parties must agree to create SI (enter into security agreement); Must be evidenced |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Description of collateral | Sufficient if it reasonably identifies collateral by specific, category, type, quantity, computational formula, or any other method in which identity of collateral is objectively determinable; Super-generic description NOT sufficient ("all debtors assets |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Description of collateral, Exception | Collateral that cannot be described by type alone- 1. Commercial tort claims, 2. Consumer goods, and 3. Consumer securities account |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Description of collateral, Possession | Security agreement may be evidence by creditor's possession of collateral |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Description of collateral, Control | If collateral is non-consumer deposit account, electronic chattel paper, or investment property, security agreement may be evidenced by control |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Value | Must be given by secured party before security agreement effective to create SI; Any consideration sufficient to support simple K; No requirement consideration actually performed; Pre-existing debt considered value given |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Rights in collateral | Debtor must have rights in collateral to create SI; Ownership interest in or right to obtain possession of collateral qualifies as "rights in collateral" |
| Requisite for attachment- Of a security interest; Parties' agreement: Security agreement evidenced by, Authenticated security agreement- Co-existence required | Possession, value, and rights in collateral can happen in any order, but must co-exist before SI attaches |
| Property that debtor acquires in future- After acquired property and future advances; After-acquired property | It is permissible to take a SI in property to be acquired later by debtor |
| Property that debtor acquires in future- After acquired property and future advances; After-acquired property: G/R | Security interest may attach to after-acquired property since SI attaches as soon as debtor acquires an interest in property; Created only by specifically including security agreement an after-acquired property clause |
| Property that debtor acquires in future- After acquired property and future advances; After-acquired property: G/R, Proceeds and floating liens | SI attaches to identifiable proceeds of collateral whether or not security agreement specifically so provides; SI in aggregation of individual items expected to be disposed of & replaced automatically attaches to new items as replace the ones disposed |
| Property that debtor acquires in future- After acquired property and future advances; After-acquired property: G/R, Exception- Consumer goods and commercial tort claims | After-acquired property clause is ineffective as to consumer goods other than accessions when given as additional security, unless debtor acquire right in good w/in 10 days after credit give value; Also ineffective to commercial tort claim |
| Property that debtor acquires in future- After acquired property and future advances; Future advances | Future loans to debtor and wants to secure in present security agreement; May cover future advance on present collateral regardless of whether secured arty obligated to make advance; New security agreement not needed |
| Perfection of Security Interest- In general | Attachment established secured party's rights to collateral vis-a-vis the debtor; Subsequent purcahser of collateral, unsecured creditors and other secured creditors; To acquire maximum priority not enough SI attaches, so secured party must also perfect |
| Perfection of Security Interest- In general; Methods of perfection | a. Filing, b. Taking possession of collateral, c. Control, d. Automatic perfection, and e. Temporary perfection |
| Perfection of Security Interest- In general; Timing of perfection | A SI is not enforceable against any party until it has attached to the collateral |
| Perfection of Security Interest- In general; Effect of perfection limited | Despite perfection, a non-possessory SI may nevertheless be subordinated to some type of third-party claims |
| Perfection of Security Interest- Perfection by filing | SI may be perfected by filing (either in writing/electronically) as to all kinds of collateral except deposit accounts and money |
| Perfection of Security Interest- Perfection by filing; Notice | Given by filing a financing statement containing- 1. Name/mailing address of debtor, 2. Name/mailing address of secured party, 3. Indication of collateral, and 4. If covers real property related collateral, also provide description of real property |
| Perfection of Security Interest- Perfection by filing; Notice: Debtors and secure party's names | Financing statement indexed under debtor's name (error w/secured party doesn't matter); Minor error= valid; Seriously misleading error= invalid |
| Perfection of Security Interest- Perfection by filing; Notice: Debtors and secure party's names, Registered organization | Seriously misleading if not match name debtor was organized; Trade name= insufficient; Safe harbor= not misleading if would be discovered in filing office search under debtor's correct name using standard search logic |
| Perfection of Security Interest- Perfection by filing; Notice: Debtors and secure party's names, Debtor name change | If debtor changes name after FS filed and new seriously misleading, FS effective only against collateral acquired by debtor before and w/in 4 mos of change; Secured party must refile using debtor's name to perfect SI after 4 mo period |
| Perfection of Security Interest- Perfection by filing; Notice: Debtor's and secured party's addresses | ... |
| Perfection of Security Interest- Perfection by filing; Notice: Indication of collateral | FS sufficiently indicate collateral if identifies specifically or by category/type/quantity/computational formula/other method in which identity of collateral objectively determinable; FS may indicate "all assets/personal property" |
| Perfection of Security Interest- Perfection by filing; Notice: Description of related real property | If FS covers collateral related to real property, property to which collateral is related must also be described, although generally a full legal description not required |
| Perfection of Security Interest- Perfection by filing; Notice: Debtor must "authorize" filing of FS | For FS effective, debtor must authorize it in authenticated record (not oral); Can be after FS filed; Authorized if authenticates FS or security agreement covering same collateral as FS; FS on agricultural lien effective even if debtor not authorize |
| Perfection of Security Interest- Perfection by filing; Notice: After-acquired property | FS need not mention after-acquired property to perfect SI if description in FS broad enough to cover; Perfection intended to put party on notice may be SI in collateral and further investigation may be necessary to disclose |
| Perfection of Security Interest- Perfection by filing; Authenticated security agreement itself may be filed | As FS if parties so desire; Must contact all elements; Recorded real property mortgage listing fixtures w/all elements effective as FS for perfecting SI in fixtures |
| Perfection of Security Interest- Perfection by filing; Place of filing: G/R, File centrally | Filing must be done centrally w/secretary of state of state where debtor located; Individuals= place of primary residence; Entities= State of incorporation and where no state filing required then principal place of business |
| Perfection of Security Interest- Perfection by filing; Place of filing: Exception, Timber to be cut/minerals/fixtures | If fixture or becoming fixture, filing is in office where mortgage on real property would be filed (locally); Secured party not certain whether particular collateral is fixture so safe procedure is file in real property records and w/secretary of state |
| Perfection of Security Interest- Perfection by filing; Period for which filing is effective: Original filing | FS effective for five years |
| Perfection of Security Interest- Perfection by filing; Period for which filing is effective: Continuation statement | May be filed during last 6 mos of effective period of a prior filing and will continue effectiveness of filing for 5 more yrs; Debtor need not authorize only secured party |
| Perfection of Security Interest- Perfection by filing; Period for which filing is effective: Termination of FS | Secured party not obligated to terminate FS |
| Perfection of Security Interest- Perfection by filing; Filing as to motor vehicles for which certificates of title are issued: WY | For perfection of SI in motor vehicle required to be titled- 1. FS/security agreement filed in office of county clerk of county vehicle located, and 2. Notation of SI endorsed on certificate of title to motor vehicle; Endorsement concurrent w/filing |
| Perfection of Security Interest- Perfection by filing; Filing as to motor vehicles for which certificates of title are issued: WY, Title not available for perfection | Transitional ownership document filed w/FS perfecting lien on date of filing as to all creditors, subsequent purchasers, and holders of SI in good faith for valuable consideration and w/o notice of lienor's interest; No endorsement required |
| Perfection of Security Interest- Perfection by filing; Filing as to motor vehicles for which certificates of title are issued: WY, Title not available for perfection- Certificate of title | Certificate of title must be filed w/county clerk w/in 90 days from date of FS, and if not transitional ownership doc invalid |
| Perfection of Security Interest- Perfection by filing; Filing as to motor vehicles for which certificates of title are issued: WY, Dealers | SI created by dealer in leased motor vehicles or motor vehicles held in inventory for sale or lease are perfected by filing under ordinary Code rules, even though certificate of title covering vehicle is outstanding |
| Perfection of Security Interest- Perfection by taking possession (pledge) | A secured party may perfect a SI in most types of collateral simply by taking possession of collateral |
| Perfection of Security Interest- Perfection by taking possession (pledge); Collateral that cannot be changed | SI in accounts, certificates of title goods, deposit accounts, non-negotiable documents, electronic chattel paper, or general intangibles cannot be perfected by possession, even if tangibly represented; Perfection by another means required |
| Perfection of Security Interest- Perfection by control | SI in investment property, non-consumer deposit accts, and electronic chattel paper may be perfected by control; Requires- agreement b/w holder of property & secured party allow secured party to direct the holder to turn over collateral if default occurs |
| Perfection of Security Interest- Automatic perfection | In some transaction, Code provides SI is perfected simply by attachment of SI, w/o additional steps |
| Perfection of Security Interest- Automatic perfection; PMSI in consumer goods | PMSI in consumer goods= perfected as it attaches; PMSI in inventory/equipment= perfect after filed |
| Perfection of Security Interest- Automatic perfection; Small-scale assignments of accts or payment intangibles | ... |
| Perfection of Security Interest- Automatic perfection; Sales of payment intangibles or promissory notes | ... |
| Perfection of Security Interest- Automatic perfection; Beneficial interest in a decedent's estate | SI created by an assignment of beneficial interest in decedent's estate automatically perfected |
| Perfection of Security Interest- Temporary perfection; 20 day period for proceeds | SI in proceeds from original collateral is continuously perfected for 20 days from debtor's receipt of proceeds; SI becomes unperfected on 21st day after debtor's receipt unless statutory requirement complied with |
| Perfection of Security Interest- Temporary perfection; Delivery of collateral to debtor for disposition | ... |
| Perfection of Security Interest- Temporary perfection; Interstate shipments | When collateral or debtor moves from one state to another, and location of collateral or debtor which state's law governs perfection, SI in collateral was perfected in original state often remain temporarily perfected in new state |
| Perfection of Security Interest- Continuation of perfection of interest in proceeds; SI in proceeds will continue to be perfected beyond 20 days if: Same office rule | SI in original collateral perfected by filing FS, SI in type of collateral constituting proceeds filed in same place as FS for original, and process were not purchased w/cash proceeds of collateral |
| Perfection of Security Interest- Continuation of perfection of interest in proceeds; SI in proceeds will continue to be perfected beyond 20 days if: Cash proceeds rule | Proceeds are identifiable cash proceeds |
| Perfection of Security Interest- Continuation of perfection of interest in proceeds; SI in proceeds will continue to be perfected beyond 20 days if: Perfected w/in 20-day period | SI in proceeds if perfected w/in 20 days period |
| Priorities- G/R; First to file or perfect | When there are conflicting perfected SI in same collateral, priority goes to whichever party was first to either file or perfect (whichever is earlier) provided that there is no period thereafter when there is neither filing nor perfection |
| Priorities- Special priority rules for investment property | Generally, G/R governs investment property, but SI perfected by control has priority over SI perfected by another other methods (filing/automatic) |
| Priorities- PMSI Super-priority | PMSIs are superior to prior perfect SI in same goods if certain conditions met; PMSI superpriority does not really harm competing SI b/c but for PMSI creditor, debtor would not have goods |
| Priorities- PMSI Super-priority; PMSI in inventory | Priority over conflicting SI in inventory itself, proceeds that are chattel paper, proceeds that are instruments, and any identifiable cash proceeds that are received on or before delivery to buyer if 1) and 2) |
| Priorities- PMSI Super-priority; PMSI in inventory: Perfected at time of possession | PMSI in inventory is perfected at time debtor gets possession of inventory (filing must take place before inventory is delivered to debtor) |
| Priorities- PMSI Super-priority; PMSI in inventory: Authenticated notification | Secured party filed SI in same inventory receives authenticated notification of PMSI before debtor in possession, and notification states purchase money party has/expects PMSI in inventory of debtor described by kind/type; Notification effective for 5 yr |
| Priorities- PMSI Super-priority; Consignor has PMSI in inventory | Article 9, a consignor's interest in consigned goods is considered to be PMSI in inventory so consignor can acquire PMSI super-priority in consigned goods if complies w/above requirements for gaining PMSI super-priority in inventory |
| Priorities- PMSI Super-priority; PMSI good other than inventory and livestock | PMSI in goods other than inventory/livestock priority over conflicting SI in same goods & identifiable proceeds only if interest perfected before or w/in 20 days after debtor received possession; No requirement secured party notify other holders in SI |
| Priorities- PMSI Super-priority; Conflicting PMSIs | If more than one party has PMSI super-priority in collateral, the following applies |
| Priorities- PMSI Super-priority; Conflicting PMSIs: Seller | Secured party who has PMSI in collateral as seller has priority over secured party who has PMSI in same collateral as lender |
| Priorities- PMSI Super-priority; Conflicting PMSIs: First | Otherwise, the first secured party to file or perfect prevails |
| Priorities- PMSI Super-priority; Conflicting PMSIs: Any other SI w/o knowledge that its purchase violated rights of secured party | Any other SI in chattel paper, as long as chattel paper purchaser acquired its interest w/o knowledge purchase violated right of secured party; Notation on chattel paper stating assigned to secured party sufficient to give notice |
| Priorities- Instrument purchasers | Purchaser of instrument priority over perfected SI in instrument if purchaser gives value and takes possession of instrument in good faith and w/o knowledge purchase violates rights of secured party; Notation on instrument sufficient notice |
| Priorities- G/R; As to date of perfection in proceeds | Perfected SI in proceed will have same date of priority as perfected SI in original collateral, as long as perfection of SI in proceeds e extends beyond 20 days temporary perfection period |
| Priorities- Special rule; Certain proceeds of non-filing collateral | Secured party has priority in proceeds of non-filing collateral if- 1. Priority in original collateral, 2. SI in proceeds perfected, and 3. Proceeds are cash proceeds or proceeds of same type as original collateral |
| Priorities- Special rule; Certain proceeds of non-filing: Proceeds of proceeds | All intervening proceeds must either be cash proceeds, proceeds from same type as original collateral, or accts relating to collateral |
| Priorities- Special rule; Certain proceeds of non-filing: Exception, Filing collateral as proceeds of non-filing collateral | If SI in original collateral that is non-filing collateral is perfected by method other than filing, and proceeds of original collateral are filing collateral, first secured party to file FS covering proceeds has priority in proceeds |
| Priorities- Fixtures; G/R | Fixtures are goods that becomes so attached or otherwise related to real property that interest in them arises under real property law |
| Priorities- Fixtures; G/R: Ordinary building material | Not considered fixtures (e.g. bricks) |
| Priorities- Fixtures; G/R: Contest b/w holder of SI in fixture and holder in interest in real property | Fixture is attached, then first party to file fixture filing or records its real property interest prevails |
| Priorities- Fixtures; G/R: "Fixture filing" required | To gain priority over holder of an interest in real property, a party w/SI in fixture must perfect by making fixture filing; Accomplished by filing FS in office where mortgage recorded containing description of real property fixture attached |
| Priorities- Fixtures; G/R: Exceptions, PMSIs | PMSI secured party who makes fixture filing w/in 20 days after affixation will prevail over real property interest in same fixture that recorded prior to affixation |
| Priorities- Fixtures; G/R: Exceptions, PMSIs- Construction mortgage exception | G/R exception does not apply to prior construction mortgage |
| Priorities- Fixtures; G/R: Exceptions, PMSIs- Later acquired liens | SI in fixtures perfected in any manner authorized by Code will prevail over later-acquired lien on real property |
| Priorities- Fixtures; G/R: Real property encumbrancer consents | ... |
| Priorities- Fixtures; G/R: Debtor has right to remove fixtures | ... |
| Priorities- Accessions; G/R | Accession are good that are physically united w/other goods in such manner that identity of original goods is not lost; Usually g/r for property apply to accessions |
| Priorities- Accessions; G/R: Exception | If accession (new motor) becomes part of a whole that is subject to SI perfected by notation on certificate of title (car), SI in whole (car) has priority over SI in accession (new motor) |
| Priorities- Crops | A perfected SI in crops has priority over conflicting interest in real property on which crops are growing, regardless of time of filing or perfection |
| Priorities- Crops; G/R: Buyer prevails | A buyer of collateral (lessee of goods) takes free of SI covering collateral is both gives value and receives delivery of collateral w/o knowledge of SI before it is perfected |
| Priorities- Crops; Exceptions | 1. Buyers of receivables, 2. PMSI grace period |
| Priorities- Perfected secured party v. buyer | Generally, perfected SI in goods is good against subsequent buyers |
| Priorities- Perfected secured party v. buyer; Cases which buyer will defeat even perfected prior SI | 1. Secured party consents to sale, 2. Buyer in ordinary course of business, 3. Future advances |
| Priorities- Perfected secured party v. buyer; Cases which buyer will defeat even perfected prior SI: Buyer in ordinary course of business | Generally takes free of non-possessory perfected SI in inventory even if buyers knows of it, unless buyer also knows sale is in violation of terms of security agreement |
| Priorities- Perfected secured party v. buyer; Cases which buyer will defeat even perfected prior SI: Future advances | Generally, if credit makes future advance, time of perfection of future advance relates back to time of perfection of original advance |
| Priorities- Secured party v. holder in due course or the like | A holder in due course (HDC) of negotiable instrument (or holder two whom negotiable doc of title has been negotiated, or protected purchasers of security) take priority over any SI in negotiable instrument |
| Priorities- Secured party v. transferee of money or deposit account funds | If debtor transfers money/deposit acct funds, person takes free of SI in money/funds, unless transferee acts in collusion w/debtor in violating rights of secured party; If deposit acct fund in form of check, holder of check may also have priority as HDC |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Unperfected secured party v. judicial lien creditor | Judicial lien creditor (person who acquired lien on collateral through judicial attachment/levy) prevails over holder of SI in collateral if lien creditor becomes such before the SI is perfected |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Unperfected secured party v. judicial lien creditor: Trustee in bankruptcy | Judicial "lien creditor" includes trustee in bankruptcy, who is said to be hypothetical judicial lien creditor in all of debtor's property beginning on date bankruptcy petition filed |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Unperfected secured party v. judicial lien creditor: PMSI grace period exception | Secured party who attaches a PMSI in debtor's collateral before a judicial lien creditor acquire an interest in collateral will have priority over judicial lien creditor if it files w/in 20 days after debtor receives collateral |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Perfected secured party v. judicial lien creditor: G/R, Lien subject to prior perfected interest | Prior perfected SI in collateral has priority over judicial lien creditor's interest in same collateral |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Perfected secured party v. judicial lien creditor: G/R, Lien subject to prior perfected interest- Prior filed SI may also have priority | If secured party files SI but not attach before judicial lien creditor's interest arises |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Perfected secured party v. judicial lien creditor: G/R, Lien subject to prior perfected interest- Prior filed SI may also have priority if- | The secured party has priority over judicial lien creditor as long as secured party 1) evidence its security agreement w/an authenticated security agreement, possession, or control, and 2) eventually attaches and perfects its security interest |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Perfected secured party v. judicial lien creditor: G/R, Exception- Lien has priority over some future advances | Judicial lien creditor's interest gain priority over future advances if made more than 45 days after lien arose, unless future advance was made 1) w/o knowledge of lien, or 2) pursuant to commitment made w/o knowledge of lien |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Holders of possessory liens arising by operation of law | By statute or common law, most states grant people who supply goods or services a lien on goods in their possession to secure payment for goods or services provided; Article 9 does not govern except for priority |
| Priorities- Secured party v. judicial lien creditor or holder of possessory lien; Holders of possessory liens arising by operation of law: Article 9 priority | Possessor liens have priority over any SI in collateral as long as goods or services were provided in ordinary course of business and collateral remains in lien holder's possession, unless lien created by statute provides otherwise |
| Priorities- In a nutshell | When debtor defaults and number of persons have interest in same collateral, use hierarchy |
| Priorities- In a nutshell; Hierarchy | Person with highest priority has first right in collateral, if any part of collateral or its proceeds is left, next person can recover (excluding investment property/non-consumer deposit accts since control has priority) |
| Priorities- In a nutshell; Hierarchy order: First | Buyers in ordinary course of business who do not know sale is in violation of SI |
| Priorities- In a nutshell; Hierarchy order: Second | Holders in due course and like of negotiable instruments (commercial paper, documents of title, securities) |
| Priorities- In a nutshell; Hierarchy order: Third | Transferee of funds from deposit accounts |
| Priorities- In a nutshell; Hierarchy order: Fourth | Certain purchasers of chattel paper or instruments who have possession or control |
| Priorities- In a nutshell; Hierarchy order: Fifth | Possessor lienholders |
| Priorities- In a nutshell; Hierarchy order: Sixth | Article 2 claimants w/possession of goods |
| Priorities- In a nutshell; Hierarchy order: Seventh | PMSIs (except consumer purchaser from consumer); PMSI in consumer goods perfected automatically and other PMSI perfected anoterh way, but 20 day grace period for PMSI in goods other than inventory/livestock |
| Priorities- In a nutshell; Hierarchy order: Eighth | Purchasers of collateral who buy for value and receive delivery w/o notice of any unperfected SI |
| Priorities- In a nutshell; Hierarchy order: Ninth | Unperfected SI (rank in priority according to order of attachment) |
| Priorities- In a nutshell; Hierarchy order: Tenth | Debtor |
| Right In Default- Determining when default has occurred | Security agreement usually provide upon certain vents secure party may exercise default remedies; Default on agricultural liens determined by lien statutes |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Self-help | Secured party may take possession by self-help w/o judicial process if she can do so w/o breach of peach; Also able to make equipment unusable and dispose of it on debtor's property if w/o breach of peace (not easily moveable) |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Self-help, "Breach of peace" | Repossession made over any protect by debtor constitutes breach of peach, even though no violence or significant disturbance occurs |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Self-help, "Breach of peace"- Constructive force | Constructive force or actions contain implied threats are not peaceful so breach by carrying weapons or dress as cop |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Self-help, "Breach of peace"- Breaking and entering/trespass | Breaking and entering probably a breach of peach, but simple trespass is not; Hot wire car in drive way, but not enclosed garage |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Self-help, Consequences of breach of peace | When secured party breaches peace, he loses Code's authorization to repossess and may be sued for conversion and is liable for actual damages (usually punitive) |
| Right In Default- Right to take possession of and sell collateral; Taking possession: Collection rights of secured party | W/non-goods collateral (accts/instruments), if debtor who gave SI in collateral defaults, secured party can notify person owing money to debtor to make payment to secured party instead; Upon notification, acct debtor must pay secured party not debtor |
| Right In Default- Right to take possession of and sell collateral; Sale | Secured party, after default, may sell/lease/license collateral either in its condition when taken or after commercially reasonable preparation or processing; Disposition may be public or private sale, by one or more Ks |
| Right In Default- Right to take possession of and sell collateral; Sale: Commercial reasonableness | Test to validity of sale's method, manner, time, place, and terms; Fact better price could have been obtained not sufficient b/c commercial reasonable if manner recognized by market or market price, OR conforms to standard among dealers in goods sold |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice | Unless collateral perishable/threat value decline rapidly, reasonable notice authenticated by secured party must be given to debtor and sureties of debt |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, After default | Debtor or surety may in authenticated agreement waive right to notice of sale |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Same notice | Except in consumer goods, same notice given to other secured parties who gave authenticated notice to secured party in possession, and any secured parties who have perfected by filling FS or making notation on certificate of title |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Timeliness of notice | Notice must be sent w/in reasonable time before sale; Question of fact however non-consumer transaction notice sent w/in reasonable time if sent 10 days or more before time of sale |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Contents of notice- Collateral other than consumer goods | In sale notice should contain- 1. Description of debtor and secured party, 2. Description of collateral, 3. Method of sale, 4. Statement that debtor entitled to an accounting or charge, 5. Time/place public sale or time after which private sale made |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Contents of notice- Collateral other than consumer goods, Per se sufficient | Must contain all elements if sale of collateral other than consumer goods or else sufficiency question of fact |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Contents of notice- Consumer good collateral | In sale of consumer goods, notice must contain all info listed in collateral other than consumer goods |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Contents of notice- Consumer good collateral, Must contain description of recipients | Liability for a deficiency, a telephone number from which recipient can discovery costs of redeeming the collateral, and telephone number or mailing address from which recipient can get additional info concerning sale |
| Right In Default- Right to take possession of and sell collateral; Sale: Notice, Explanation of deficiency or surplus | If debtor is a consumer, after the sale, secured party must send debtor an explanation of calculation of any debtor still owed (deficiency) or money debtor will receive (surplus) |
| Right In Default- Right to take possession of and sell collateral; Sale: Purchase by secured party | Secured party may purchase collateral at public sale; Secured party may purchase at a private sale if collateral is of type customarily sold in recognized market or is of type on which there are widely distributed price quotations |
| Right In Default- Right to take possession of and sell collateral; Sale: Effect of sale | Absent bad faith on party of purchase, purchaser of collateral generally takes all of debtor's rights in collateral; Sale discharges SI under which sale being made and all subordinate SI and liens; Purchaser still subject to super SI |
| Right In Default- Right to take possession of and sell collateral; Sale: Proceeds | Upon sale, proceeds go first to expenses of repossession and sale, then satisfaction of debtor, then satisfaction of subordinate 3rd party SI debts and interests of consignors, in order of priority |
| Right In Default- Right to take possession of and sell collateral; Sale: Proceeds, Deficiency | If collateral sold does not bring enough to pay expenses of sale and debt, secured party may recover any deficiency from debtor |
| Right In Default- Right to take possession of and sell collateral; Sale: Proceeds, Deficiency- Relatives | If the secured party, a person related to secured party or surety on debt purchases collateral for an amount significantly below expected price, deficiency calculated according to what amount would have been if disinterested party had purchased collateral |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): G/R (cannot be waived) | After default, foreclosing secured party may keep collateral to fully/partially satisfy debt if- 1. Debtor consents- a. Agree to authenticated record, or b. Fail to make authenticated objection; 2. Authenticated notice; 3. None of notified parties ob |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): G/R- Debtor consents | To strict foreclosure by- a. Agree to strict foreclosure in authenticated record after default, or b. Full strict foreclosure and failing to make an authenticated objection w/in 20 days after secured party sent notice (debtor cannot consent to partial) |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): G/R- Authenticated notice | Secured party send authenticated notice of intent to keep collatearl in satisfaction of debt to- 1. Debtor, 2. Secured party sent notice to claim, and 3. Secured party who perfected SI in collateral by filing FS or making notation |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): G/R- None of the notified parties objects | W/in 20 days after notice is sent (if notified party objects, the collateral must be disposed of by sale) |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): Exceptions | 1. No partial strict foreclosure in consumer transactions, 2. Consumer goods sixty percent rule |
| Right In Default- Right to take possession of and sell collateral; Retention of collateral in full or partial satisfaction of debt (strict foreclosure): Exceptions- 60% rule in consumer goods cases | Where debtor paid at least 60% of cash price in PMSI case or 60% of loan, secured party must sell collateral w/in 90 days after repossession unless after default an authenticated agrmt from debtor waiving right/extending time collateral may be sold |
| Right In Default- Right to take possession of and sell collateral; Right to redeem collateral: Until secured party sold collateral or dicharged debt by retention of collateral- | Debtor/surety/other secured party/lienholder, unless otherwise agreed after default may redeem collateral by paying all oblgiations secured by collateral plus reasonable expenses incurred by secured party in relations to repossession, including atty fees |
| Right In Default- Right to take possession of and sell collateral; Secured party's liability for failure to comply w/Code requirements | A secured party is liable for actual damages caused by failure to follow any of Code's rules |
| Right In Default- Right to take possession of and sell collateral; Secured party's liability for failure to comply with code default rules: Minimum recovery for consumer goods | If collateral is consumer goods and secured party violates Code default rules, the debtor is entitled to minimum of 10% of cash price of goods plus an amount equal to all interest charges to be paid over life of loan |
| Right In Default- Right to take possession of and sell collateral; Secured party's liability for failure to comply with code default rules: Possible loss of deficiency judgment | Secured party who violates default rules also may lose right to deficiency judgment |
| Right In Default- Right to take possession of and sell collateral; Secured party's liability for failure to comply with code default rules: Possible loss of deficiency judgment, Non-consumer transactions | Rebuttable presumption rules applies- Value of collateral is presumed to equal amount of debt unless secured party proves otherwise; So presumption arise that proper sale would have generated enough money to pay off debt entirely |
| Right In Default- Right to take possession of and sell collateral; Secured party's liability for failure to comply with code default rules: Possible loss of deficiency judgment, Consumer transactions | Code does not provide a rule for consumer transactions and leave determination of a rule to cts |
| Right In Default- Remedies are cumulative | All rights and remedies are cumulative allowing secured creditor to pursue any remedy until debt obligations paid in full, but creditor entitled only to one satisfaction |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Location of debtor | If debtor- Individual= state of principal residence; Registered organization= state whose laws organized; Unregistered organization= located at place of business or chief executive office if more than one place of business |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Possessory SI and SI in fixtures and timber to be cut | Perfection of possessory SI as well as SI in fixtures and timber to be cut, governed by law of state in which collateral located |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Goods covered by certificate of title | If goods are covered by certificate of title, law of state issuing the most recent certificates of title governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Deposit accounts | If collateral is deposit account unless debtor's agreements w/bank provide otherwise, law of state in which bank has its chief executive office governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Investment property- Certificated security | If collateral certificated security law of state where certificated security is located governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Investment property- Uncertificated security | Unless debtor's agreements w/issuer provided otherwise, law of state where issuer was organized governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Investment property- Collateral securities account | Unless debtor's agreement w/securities intermediary provide otherwise, law of state where securities intermediary's chief executive office is located governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Investment property- Exception, Perfection by filing or automatic perfection | If SI in investment property perfected by filing, or if it automatically perfected by securities intermediary, laws of state where debtor located governs perfection |
| Jurisdictional rules- G/R; Law of state where debtor is located governs perfection: Agricultural liens | Perfection governed by law of state in which farm product covered by lien is located |
| Jurisdictional rules- G/R; Debtor moves to another state | SI will remain perfected w/o any further action until 4 mos after debtor moves or until perfection in first state lapses, whichever occurs earlier |
| Jurisdictional rules- G/R; Collateral transferred to new debtor located in different state | SI will remain perfected w/o any further action until 1 yr after sale of collateral or until perfection in first state lapses whichever it occurs first |
| Jurisdictional rules- G/R; Exception: Purchasers for value | If vehicle subject to perfected SI in one state moved to new state and covered by certificate of title issued by new state, SI in original state is perfected as against purchaser for value of vehicle only until earlier of 1) unperfected or 2) 4 mos |
| Jurisdictional rules- G/R; Exception: Purchasers for value, Unperfected | Time when Si would have become unperfected in original state if vehicle had not been covered by new certificate of title |
| Jurisdictional rules- G/R; Exception: Purchasers for value, 4 mos | After vehicle covered by new certificate of title |
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