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11 Cards in this Set
- Front
- Back
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When is a security interest enforceable?
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When it attaches. It attaches when:
1. parties agree to create a security agreement 2. Value is given by the secured party 3. the Debtor as rights in the collateral. |
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When more than one creditor has a security interest, who prevails?
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The first to file or perfect, unless it is a PMSI, which has priority over an earlier perfected security interest.
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PMSI in non-inventory has super priority if...
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it is perfected anytime within 20 days after the debtor gets possession of the collateral
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PMSI in consumer goods perfects when...
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it attaches (VAR).
consumer goods are used at home for no n-business related purposes. |
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How do you perfect in chattel paper (i.e. accounts receivable)
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First to file or perfect
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How do you perfect a security interest in a instrument (i.e. promissory note)?
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Must be perfected by possession or filing; BUT, a good faith purchaser will trump an earlier perfect interest.
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PMSI
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Have super priority.
Arise where the seller sells the collateral to the debtor on credit, OR the creditor advances funds to allow the debtor to purchase the collateral and takes a security interest in the collateral |
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PMSI in inventory
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Has priority if:
- perfeted AT THE TIME the debtor gets possession - any other secured party who has a perfected security interest in the same inventory receives WRITTEN NOTICE of the PMSI before the debtor receives possession of the inventory, and the notice states the purchase money party has or expects to take PMSI in inventory of the debtor described by kind of type (similar rule in livestock). |
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If 2 PMSI's has super priority, priority goes to
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1. secured party who has a PMSi as a SELLER (rather than the lender)
2. otherwise, the first secured party to file or perfect. |
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Buyer in the Ordinary Course of Business
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1. purchased in good faith
2. did not know that the sale violated any terms of the creditors' security agreement 3. purchased non-farm products from a person in the business of selling goods of the kind, 4. the competing interests were created by the seller, and 5. competing creditor was not perfected by possession |
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Perfection in the proceeds
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-perfection continues for 20 days in the proceeds (sell computer and get a $2000 check; check is proceeds)
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