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Related Flashcards
Cards In This Set
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A transaction that's created when a creditor makes a loan to a debtor in exchange for the debtor's pledge of personal property as security
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Secured Transaction
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Debtor
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The party who owes PMT or other performance of the secured obligation.
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Secured Party
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A seller, lender, or other party in whose favor there's a security interest, including a party to whom accounts or chattel paper has been sold
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Security Interest
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An interest in person property or fixtures that secures PMT or performance of an obligation
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Tangible property like equipment, jewelery, etc as well as intangible property like copyrights
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Personal Property
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Security Agreement
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The agreement between the debtor and the secured party that creates or provides for a security interest.
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Collateral
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The property subject to a security interest, including acounts and chattle paper that have been sold.
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Differences between Unsecured and Secured Credit when Personal Property is sold on Credit?
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Unsecured Credit:
No interested granted in collateral.
If debtor defaults = creditor must sue debtor.
Secured Credit:
Purchaser pledges collateral
Creditor may recover collateral in case of deaut
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Secured Transaction
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Creditor extends credit to debtor and takes security interest.
Secured party is seller, lender, or 3rd party.
Secured party can foreclose on the collateral if the debtor fails to pay.
Governed by Revised Article 9 UCC
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6 Personal Property Subject to Security Agreement
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1. Goods
2. Instruments
3. Chattel Paper
4. Documents of Title
5. Accounts
6. General Intangibles
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5 Types Goods
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Consumer Goods - Bought or used primarily for personal or family.
Equipment - Bought or used primarily for BUSINESS.
Farm Products - Anything used or produced in farming operations.
Inventory - Held for sale or lease, lncluding work in progress and materials.
Fixtures - Affixed to real estates so as to become part thereof.
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Written Security Agreement and Steps to create one!!!
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The agreement between the debtor and the secured party that creates or provides for a security interest.
To be valid, a written security agreement must:
1. Clearly describe the collateral, so it can be IDED.
2. Contain the debtor's promise to repay, including repayment terms.
3. Set forth the creditor's rights upon the debtor's default.
4. Be signed by the DEBTOR.
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Attachment
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Debtor must have current or future legal right in or right to possession of collateral.
If so, the rights of the secured party attach to the collateral.
Creditor has enforceable security interest in property.
Debt can be satisfied out of collateral.
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Floating-Lien
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A security interest in property that was NOT in possession of the debtor when the security agreement was executed.
Can attach to:
After-Acquired Property
Future Advances
Sale Proceeds
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Property that a debot acquires after a security agreement is executed
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After-Acquired Property
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