B Law II, Chapter 20
Terms in this set (23)
there must be a written agreement, creditor must give value to the debtor; and the debtor must have rights in the collateral
What three things need to be present for the creation of a security interest (to attach)?
protects a security interest against some claims of third parties who may wish to have their debts satisfied out of the same collateral
filing a financing statement
What is the most common method for perfecting a security interest?
signed by the debtor, contain the addresses of debtor and creditor, and describe collateral by type or item
What three things must a financing statement do?
perfection by possession and perfection by attachment
What are the two ways to perfect without filing?
5 years (can be renewed)
How long is a filing statement effective?
property acquired after the execution of a security agreement (ex. inventory)
A secured party can take possession of collateral on default unless the security agreement states otherwise, as long as there is no breach of the peace
retain, sell, lease, or dispose of
What can a creditor do with the collateral after default?
reasonable expenses, the balance of the debt, subordinate security interests, and surplus to the debtor
What order are proceeds from the sale distributed in?
central state government office (usually secretary of state)
Where do you file a financing statement?
at the time of credit sale, unless certificate of title is required (PMSI)
When is there automatic perfection?
Purchase Money Security Interest
What does PMSI stand for?
security interest in proceeds, after-acquired property, or in collateral subject to future advances
Who wins for Secured vs. unsecured creditors?
Who wins for Perfected secured vs. unperfected secured creditor?
first in time
Who wins for Secured creditor vs. secured creditor?
Who loses when Buyer not in the ordinary course of the Seller's business?
Who wins for Buyer in the ordinary course of the Seller's business?
Buyers in the Ordinary Course of Business
Buyer in good faith and without knowledge of defects, takes goods free of security interest
requesting to release financing statement to release collateral, for consumer debts, must file within one month or when request in writing, must file within 10 days of receipt of request, whichever is earliest
Difference between sale and what is actually owing by debtor, must be paid by debtor
Debtor or other secured party to retake and maintain the collateral