PMSI/Proceeds
What are the two types of PMSI?
Seller-financed
Financer-financed
What is attachment?
What is perfection?
Where the secured creditor gives the public notice of the security interest
Who wins between 2 perfected secured creditors?
First to file or perfect
What is self-help repossession?
Creditor takes without going to court if it can be done without breach of the peace
Elements for Seller-financed PMSI
1) Secured party sells goods to debtor on credit
2) and retains a security interest in the goods
Requirements for attachment
1) security agreement
2) creditor gives value
3) Debtor has rights in collateral
What is the usual method of perfection?
Filing a UCC-1 financing statement OR taking possession of the collateral
What is the PMSI Superpriority?
PMSI in goods other than Inventory and Livestock jump to front of line if perfected immediately or within 20 days
Elements for breach of peace
1) physical presence of debtor (or rep)
2) verbal objection
Elements for financer-financed PMSI
1) Creditor loans the funds to debtor
2) Debtor buys the specific collateral
3) Creditor takes a security interest in the collateral
Types of Collateral: Goods
1) Equipment
2) Consumer goods
3) Farm products
4) Inventory
Elements of perfection
1) Attachment
2) A method of perfection
Secured creditor v. buyer - General Rule
Buyer takes subject to security interest
What is self-help in accounts?
If collateral is an account, secured party can notify person owing $ to debtor to make payments to the secured creditor
What is the Cash Proceeds Rule?
Where there is a perfected security interest, but it is sold for cash proceeds, the perfection continues as long as the proceeds are identifiable cash proceeds
Default Type of Good
Equipment
Methods of perfection
1) Automatic (PMSI in consumer goods)
2) Possession of collateral
3) Control (for an account, bank where account is maintained)
4) Notation of lien on the cert of title (vehicles)
5) Financing Statement
2 Exceptions to the Secured Creditor v. Buyer General Rule
1) Authorized Sale (express or implied to take without)
2) Buyer in the Ordinary Course (buyer buys in good faith, without knowledge of violation of security interest, in the ordinary course from a person in the business of selling)
Mini Bob's most important phrase regarding foreclosure
"Every aspect of the sale must be commercially reasonable. If it's not, there can be penalties."
What is the Same Office Rule?
Basically a swap of property
1) Original collateral was perfected by financing statement
2) Security interest in proceeds is a type that would be perfected by filing in the same place
3) Proceeds were not purchased with cash proceeds of the collateral
Types of Collateral: Intangibles
1) Instruments
2) Documents
3) Chattel paper
4) Investment property
5) Accounts
6) Deposit accounts
7) Commercial tort claims
8) General intangibles
Requirements for UCC filing statement
1) Debtor's name (cannot be seriously misleading)
2) Secured party's name
3) Description of the collateral (reasonably identifiable)
What is the Garage Sale Rule?
Buyer of consumer goods takes free of security interest if:
1) buyer buys without knowledge of security interest
2) for value
3) for personal use
4) before financing statement is filed
What is the right to redeem?
Debtor's ability to recover collateral by paying everything owed to creditor.