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25 Cards in this Set

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Security Interest
A security interest is an interest in personal property or fixtures which secures payment for or performance of an obligation. A security interest can be created via a security agreement, possession or control.
Attachment
Attachment occurs when the secured party gives value to the debtor, pursuant to an agreement that it be to secure a debt and the debtor gets rights in the collateral.
Purchase Money Security Interest
A purchase money security interest (PMSI) is taken by a (seller or) non-seller lender who gives the debtor value to purchase the collateral which the debtor in fact uses to purchase the collateral.
Perfection
Perfection, for most collateral, can be accomplished by filing or possession of the collateral.
Equipment
Equipment is a catch-all that usually refers to goods that are used or bought for primarily in business.
Perfection - PMSI in Non-Inventory Goods
To perfect a PMSI in non-inventory goods (or software), if a financing statement is properly filed within 20 days after the debtor receives delivery of the collateral, perfection relates back to the date the security interest attached (when the debtor received the collateral).
Inventory
Inventory is goods, other than farm products, that are held for sale or lease.
Secured Party v. PMSI in Non-Inventory
As between a prior perfected secured party and a perfected PMSI in non-inventory who perfects within the grace period, the PMSI has priority.
Secured Party v. PMSI in Inventory
As between a prior perfected secured party and a perfected PMSI in inventory (goods or software only), the purchase money secured creditor has priority if s/he 1) perfect by filing before the debtor takes possession and 2) notifies other conflicting secured parties within 5 yrs before the debtor takes possession of the goods.
"Seven Angry Creditors Persistently Pursue Secured Parties Relentlessly"
Security interest?
Attached? --> VCR
Collateral Classification?
PMSI?
Perfected?
Status of Parties?
Priority Rules?
Remedy
Security Interest - via Possession
A security interest can be created by possession of the collateral pursuant to an agreement that the secured party possesses the collateral to secure a debt.
General Intangible
A general intangible is an intangible which fails to fit into any other category.
Perfection - General Intangible
Perfection of a security interest in a general intangible can only be accomplished by filing or control.
Buyer of a General Intangible - Pays Value, But Without Knowledge
A buyer of a general intangible who gives value without knowledge of the security interest before the secured party perfects, has priority.
Perfection - PMSI in Inventory
To perfect a PMSI in inventory, perfection must have occurred at the time debtor took possession, notice to any secured party who filed an earlier financing statement was received within 5 yrs before debtor took possession AND notification stated taking security interest and described the collateral.
Default
On default, the secured party has the right to repossess the collateral, provided it can do so without a breach of the peace.
Disposition of Collateral
After repossession, the secured party may dispose the collateral after giving proper notice to the debtor and any other known secured parties, provided that the disposition is commercially reasonable.
Distribution of Proceeds of Collection or Enforcement
The proceeds of collection/enforcement must be distributed in this order:
1) Reasonable expenses of collection and enforcement
2) Satisfaction of obligations secured by the security interest
3) Satisfaction of obligations secured by subordinate security interests/other liens on the collateral
4) Surplus goes to debtor OR obligor is liable for deficiency
Notice - Perishable Collateral
Where the collateral is perishable, the notice requirement to sell the collateral is less strictly enforced.
Commercially Reasonable Sale
The court will consider the price, market price, usual manner of sale, and whether sale was conducted in a recognized market in assessing the commercial reasonableness of the sale.
Deficiency Judgment
A deficiency judgment is unlikely if the secured party fails to comply with the notice and commercial reasonableness requirements.
SP's Failure to Comply Causes Loss to Debtor
When a secure party fails to comply with the requirements of Title 9 as to disposition of the collateral and that failure causes a loss to the debtor, the secured party will be liable to the debtor for that loss.
Filing & Financing Statement
Filing is accomplished by filing a financing statement with SDAT; a financing statement is an authorized record containing the names and addresses of the secured party and debtor and describes the collateral.
Perfection - Money
A security interest in money can only be perfected by taking possession of it.
Perfection for Certificate of Title Equipment (cars/vans/planes/boats, etc)
A security interest in equipment requiring a certificate of title is perfected when the security interest is noted on the actual certificate of title (which is obtained through registration through the appropriate authority).