Secured Transactions

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Terms in this set (...)

General Essay Approach
1) Has SI Attached?

2) Is SI Perfected?

3) Who has priority

4) Who receives proceeds of sale?
Attachment
1) Value given by secured party

2) Debtor has rights in collateral

3) Authenticated SA - or possession or control
Authenticated Security Agreement
1) Record

2) Description of collateral

3) Authenticated by the debtor
Priority - General Unsecured Creditor
S.P. always wins because there is no lien and they haven't levied on prop.
Judicial Lien Creditor
Perfected has priority over judicial liens

Unperfected does not have priority UNLESS
- only step remaining to perfect is giving value
Transferee - Not Buyer
Generally - S.I. continues unless SP authorizes transfer free and clear of SI
Mechanics Lien/Statutory Lien
Priority over perfected if
1) lien depends on lien holders possession of goods and
2) lien secures payment or performance of obligation for services on goods

Mechanics lien
Buyer vs. Unperfected
Buyer takes free if

1) Gives value

2) receives delivery of collateral

3) with no knowledge of security interest
Buyer vs. Perfected
General Rule - buyer takes subject to unless S.P. authorizes sale free and clear of security interest
Buyer in ordinary course of business
takes free even if perfected if

1) buys goods

2) in ordinary course of business

3) from merchant in business of selling goods of the kind

4) In good faith

5) without knowledge sale violates rights of another (even if know of SI and that its perfected)
Garage Sale Exception - consumer goods
take free of perfected S.I. if

1) Buys consumer goods for value

2) For personal, family, or household use

3) From Consumer Seller

4) w/out knowledge of S.I.

UNLESS S.P. filed F.S. before the purchase (this is for PMSI's - generally they are automatically perfected so to prevent this they just need to file)
Perfected v perfected
First to file or perfect!

**FIRST TO FILE! - even if perfects after other one perfects
Perfected vs. Unperfected
Perfected has priority
Unperfected vs. Unperfected
First to Attach!!
PMSI in Inventory or Livestock
Prevails over all other SI's in the collateral even if previously perfected if:

1) PMSI is perfected by the time the debtor receives possession of the collateral

2) PM Secured Party sends authenticated notification of PMSI to holder of any conflicting SI before debtor receives poss. of collateral
PMSI in Goods other than Inventory or Livestock
Prevails over all other SI's in collateral even if previously perfected if:

S.P. perfects before or within 20 days after the debtor receives possession of the collateral