SECURED TRANSACTIONS

In order for a consignment to be subject to Article 9, what 4 requirements must be met?

(1) A consignor must deliver goods to a merchant (consignee) to sell; (2) The merchant (consignee) must deal in goods of that kind, not operate under the name of the consignor, not be generally known by its creditors to be substantially engaged in the business of selling goods of others, and not be an auctioneer; (3) The value of the goods must be at least $1,000 in each delivery; and (4) The goods must not be consumer goods immediately before delivery.

Once there has been a default, the secured party can repossess the collateral in what two ways?

(1) By use of judicial process (e.g., replevin action); or (2) Self-help repossession

What are the four classes of tangible collateral (goods)?

(1) Consumer goods; (2) Farm products; (3) Inventory; and(4) Equipment.

"Goods" encompasses anything that is moveable at the time that a security interest attaches. Also included in "goods" that are technically not moveable. Give 5 examples of these non-moveable goods.

(1) Fixtures (2) Standing timber (3) Unborn animals (4) Growing or unharvested crops (including crops grown on trees, vines, or bushes) (5) Manufactured homes

What happens to perfection when (1) a debtor moves to another state, or (2) the collateral is transferred to a person in another state who takes the collateral subject to the security interest?

(1) If a debtor moves to another state, a perfected security interest will remain perfected for four months after the move (unless the financing statement lapses earlier). This four month grace period also covers collateral the debtor acquires after the debtor moves. To remain continuously perfected, the secured party must re-file in the new state within the four-month window. (2) If the collateral is transferred to a new debtor out of state, the secured party has one year to file a new financing statement listing the new debtor.

A security interest in proceeds enjoys temporary perfection (20 days) and may continue to be perfected indefinitely under what three circumstances?

(1) If the original financing statement is broad enough to encompass the proceeds or the secured party amends the financing statement within 20 days;(2) If the proceeds are identifiable cash proceeds and the security interest in the original collateral was perfected (note that cash proceeds includes checks and deposit accounts); or(3) If the same office rule applies

The characterization of collateral can affect the validity of a security interest, the way in which a security interest can be perfected, and the rights of a third party in the collateral. Please classify the following collateral: (1) A check or a promissory note; (2) A check along with a security agreement;(3) The right to be paid for a service rendered;(4) A savings account at a bank

(1) Instrument;(2) Chattel paper;(3) Accounts;(4) Deposit Account

A PMSI in fixtures has priority over a prior interest in the real property with which they are associated when what two things occur?

(1) The debtor has an interest in the real property (owner) or is in possession (lessee); and(2) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.

(1) What is the general rule for a security interest in fixtures versus a real property interest to which it is associated? (2) In order for a security interest in a fixture to have priority over an interest in the real property, what must happen?

(1) The general rule is that a security interest in fixtures is subordinate to a conflicting interest of an owner of the related real property (other than the debtor). (2) For a security interest in fixtures to have priority over an interest in real property, the secured party must file a fixture filing before the real property interest is recorded. (A fixture filing is a financing statement covering goods that are or are to become fixtures.) It must be filed in the office designated for the recording of a mortgage on the related real property (i.e., local real property records).

Even if parties label their transaction as a lease in the hopes of avoiding Article 9 rules, their transaction will be governed by Article 9 if one of the following four conditions is present:

(1) The original lease term is equal to (or greater than) the good's remaining economic life; (2) The lessee is bound to renew the lease for the good's remaining economic life (or is bound to become the owner of the goods); (3) The lessee has the option to renew the lease for the good's remaining economic life for nominal or no additional consideration; or (4) The lessee has the option to become the owner of the goods upon completion of the lease for nominal or no additional consideration. (In essence, the economic reality in all of these situations is that there is a sale to the lessee with a security interest retained by the lessor. Thus, the lessor is a secured party and cannot avoid filing by labeling the transaction as a lease. The lessor would need to file or otherwise perfect his/her interest in the goods.)

When can a PMSI exist in goods?

(1) The value given (e.g., a loan) allows the debtor to acquire the goods or software; or(2) The goods or software acquired is the collateral that secures the loan (e.g., goods bought on credit)

For a security interest to be enforceable against a debtor (i.e., attachment), what three conditions must be met?

(1) Value has been given by the secured party;(2) The debtor has rights in the collateral; and(3) The debtor has authenticated a security agreement describing the collateral, or the secured party has possession or control of the collateral.

Which of the following descriptions of collateral in a security agreement are inadequate for purposes of attachment? Why? (1) "All of debtor's equipment"(2) "All of debtor's inventory"(3) "All of debtor's assets"(4) "All of debtor's personal property"

(3) and (4) are inadequate descriptions because they are super-generic and do not reasonably identify the collateral. (Note that super-generic descriptions in a financing statement are adequate for perfecting a security interest. The security agreement for attachment purposes must be more specific.)

After collateral is sold or otherwise disposed of, the secured party has an automatically perfected security interest in the proceeds for __________ days.

20

What is a a buyer in the ordinary course of business (BOCB)

A BOCB is a person who: (i) buys goods; (ii) in the ordinary course of business; (iii) from a merchant who is in the business of selling goods of that kind; (iv) in good faith; and (v) without knowledge that the sale violates the rights of another in the same goods.

What is the buyer in the ordinary course of business (BOCB) exception and who qualifies as a BOCB?

A BOCB takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence. A BOCB is a person who: i) Buys goods (other than farm products); ii) In the ordinary course; iii) From a seller who is in the business of selling goods of that kind; iv) In good faith; and v) Without knowledge that the sale violates the rights of another in the same goods.

A PMSI in what type of goods automatically perfects upon attachment?

A PMSI in consumer goods automatically perfects upon attachment. (A PMSI in other types of goods (e.g., inventory, equipment) or automobiles does not automatically perfect.)

When is PMSI perfected?

A PMSI in consumer goods is automatically perfected upon attachment.

When does a PMSI exist?

A PMSI in goods exists when a secured party sold goods to the debtor, and the debtor incurs an obligation to pay the secured party all or part of the purchase price.

What is a PMSI?

A PMSI is a special type of security interest in goods that has priority over other security interests in the same goods.

The general rule is that unless the secured party authorizes the sale free and clear of its security interest, a buyer takes subject to a perfected security interest. This is not the case for a buyer in the ordinary course of business who can take free of the security interest, even if the buyer knows of its existence. Explain what it means to be a buyer in the ordinary course of business.

A buyer in the ordinary course of business (BOCB) is a person who: (1) buys goods (not farm products) in the ordinary course of business; (2) from a merchant who is in the business of selling goods of that kind; (3) in good faith; and (4) without actual notice that the sale violates the rights of another in the same goods. Note: A buyer cannot receive BOCB status if the merchant is a pawnbroker.

Does the buyer of collateral subject to a perfected security interest take the collateral free and clear, or subject to the security interest?

A buyer of collateral subject to a perfected security interest generally takes the collateral subject to that interest, unless the secured party has authorized its sale free of the security interest.

Explain the "garage sale" exception to the general rule that unless the secured party authorizes the sale free and clear of its security interest, a buyer takes subject to a perfected security interest. Is there an exception to this exception?

A buyer of consumer goods will take free of a security interest even if it is perfected, if the buyer buys consumer goods for value, from a consumer seller, it's for his own personal, family, or household use, and it's without knowledge of the security interest. However, if the party holding a PMSI in consumer goods filed a financing statement covering those goods before the consumer to consumer purchase occurred, then the secured party's security interest will be good against the consumer buyer. (Recall that a PMSI in consumer goods is automatically perfected and filing is not required. By filing regardless of automatic perfection, the secured party protects his priority in the event of a consumer to consumer purchase of the covered goods.)

Under what circumstances does a buyer of goods take free of an unperfected security interest?

A buyer, other than a secured party, of collateral that is goods, takes free of an unperfected security interest in the same collateral if the buyer :i) Gives value; and ii) Receives delivery of the collateral; iii) Without knowledge of the existing security interest.

What is the rule regarding construction mortgages and subsequent security interests in fixtures?

A construction mortgage has priority over any subsequent security interest in fixtures, including PMSIs in fixtures, if it is recorded before the goods become fixtures, and it covers only those goods that become fixtures before completion of the construction.

Who is a consumer buyer?

A consumer buyer is a person who: (i) buys consumer goods for value; (ii) for his own personal, family, or household use; (iii) from a consumer seller; and (iv) without knowledge of the security interest. This is often referred to as the "garage sale" rule.

Does a consumer buyer take free of a security interest?

A consumer buyer of consumer goods takes free of a security interest, even if perfected, UNLESS prior to purchase, the secured party filed a financing statement covering the goods.

What is the consumer buyer exception and who qualifies as a consumer buyer?

A consumer buyer of consumer goods takes free of a security interest, even if perfected, unless prior to the purchase, the secured party filed a financing statement covering the goods.A consumer buyer is a person who: i) Buys consumer goods for value; ii) For his own personal, family, or household use; iii) From a consumer seller; and iv) Without knowledge of the security interest. This is often referred to as the "garage sale" rule, because that type of sale would qualify.

WHat is a consumer good?

A consumer good is a good that is acquired primarily for personal, family, or household purposes.

All aspects of the disposition of collateral must be conducted in a commercially reasonable manner. When is a disposition considered commercially reasonable?

A disposition is commercially reasonable when the collateral is: (1) Sold in the usual manner in a recognized market that has standardized prices for fungible goods; (2) Sold at the price current in a recognized market; or (3) Disposed of in conformity with reasonable commercial practices among dealers in that type of collateral.

At a minimum, what information must a financing statement contain?

A financing statement must contain the following information :i) The debtor's name; ii) The name of the secured party or a representative of the secured party; and iii) The collateral covered by the financing statement.

As between a secured party and a judicial lien creditor, who has priority?

A judicial lien creditor takes the collateral subject to an existing perfected security interest but generally has priority over an unperfected security interest.

Typically, a secured party must give authenticated notice of disposition to a variety of parties. When is notice not required?

A secured party is not required to send a notice of disposition when: (1) The collateral is perishable or threatens to decline speedily in value; (2) The collateral is customarily sold on a recognized market; or (3) Notice is waived by an authenticated agreement after default.

Who has priority in a car radio that had been installed in a vehicle that was perfected under a certificate-of-title statute?

A security interest in an accession is usually subject to general priority rules. However, a security interest in an accession is subordinate to a security interest in the whole collateral if that collateral was perfected under a certificate-of-title statute. Here, the radio was installed in a vehicle that was perfected under a certificate-of-title statute. Therefore, the security interest in the car radio is subordinate to the holder of the lien noted on the title certificate of the vehicle.

What collateral can be perfected with a financing statement?

A security interest in any collateral, except a deposit account, money, or letter-of-credit rights that are not a supporting obligation, may be perfected by filing a financing statement.

Proceeds are whatever results when collateral is sold, leased, licensed, exchanged or otherwise disposed of. If a security interest was attached to collateral, how does the security interest then attach to the proceeds of that original collateral upon its sale or disposition?

A security interest in collateral attaches automatically to identifiable proceeds.

A PMSI may exist only with respect to two types of collateral. What are they?

A security interest qualifies as a PMSI only if the collateral is goods (including fixtures) or software.

As between a perfected secured creditor and a statutory lien claimant, who has priority in a dispute over the same collateral?

A statutory lien claimant has priority over a perfected secured creditor provided: (1) The lienholder has possession the goods; and (2) The lien secures payment or performance of an obligation for services or materials furnished in the ordinary course of the person's business (e.g., a mechanic's lien).

Self-help repossession cannot "breach the peace," which is not defined by Article 9 and is left up to the courts. What self-help measures are typically deemed acceptable by courts?

A trespass with respect to the collateral itself (e.g., entering a car or other vehicle), or the debtor's land (e.g., seizing a car from the debtor's driveway [but not the garage or residence]) are generally deemed acceptable means of self-help repossession that do not breach the peace.

When is a lease a security interest?

A true lease of goods does not create a security interest. However, a transaction that appears to be in the form of a lease may actually be a secured transaction, creating a security interest. The transaction may be categorized as a secured transaction if the lessee must pay consideration to the lessor for the right to possess and use the goods for the term of the lease, the payment obligation cannot be terminated by the lessee, and one of four conditions is also met,

What is the difference between accessions and commingled goods? What happens to security interests that are attached to those types of goods?

Accessions are goods that are physically united with other goods so that the identity of the original goods is not lost (e.g., a framed piece of art). The security interest in the accession continues in the accession. Commingled goods are goods that are physically united with other goods to the point that their identity is lost (e.g., eggs being used to make a cake). The security interest in the good does not continue, but it will attach to the larger product.

When distinguishing between types of collateral, what is the difference between "accounts" and "deposit accounts"?

Accounts include the right to payment for property sold, leased, licensed, or for services rendered. Also included are rights to payment under insurance policies, amounts owing on credit cards, as well as a company's accounts receivable. Deposit accounts include savings, passbook, time, or demand accounts maintained with a bank.

An after-acquired clause is not effective if the collateral is consumer goods, unless ______?

An after-acquired clause is not effective if the collateral is consumer goods, unless the debtor acquires them within 10 days after the secured party gives value.

A new security agreement is not necessary when a debtor buys additional collateral if the original security agreement includes what?

Because a security interest only attaches to the collateral described in the security agreement, an after-acquired property clause should be included in the original security agreement if a creditor wants to have a security interest in property acquired by the debtor after the agreement is authenticated. Typical language includes, "all of the debtor's existing and after-acquired [collateral]" or "all of the [collateral] now owned or hereafter acquired."

If a secured party holding a subordinate security interest in a piece of collateral reposseses and sells that collateral, what happens to the senior, or superior, security interests in that collateral?

Senior, or superior, security interests survive the sale. In other words, the superior security interest continues in the collateral in the hands of whoever bought, leased, or licensed it in the foreclosure sale (buyer or transferee takes it subject to the senior security interest).

If a secured party sells collateral, cash proceeds of a disposition are distributed in what order?

Cash proceeds of a disposition are distributed in the following order: (1) Pay reasonable expenses for collection and enforcement (e.g., reasonable attorney's fees); then (2) Pay off the debt to the foreclosing secured party; then (3) Pay subordinate security interests, provided the subordinated party makes a formal demand prior to distribution of the proceeds; then (4) Any surplus or remainder will be returned to the debtor.

What remedy is available to a secured party of large equipment that makes repossession difficult?

Equipment that is hard to repossess can be rendered unusable in lieu of repossession. This is usually followed by disposal (e.g., sale) on the debtor's premises.

The general rule for a perfected security interest versus another perfected security interest in the same collateral is that the first to file or perfect has priority. In essence, this rule rewards the earlier _________.

Filer. In essence, this rule rewards the first to file - even if the other party was first to attach or first to perfect. In other words, if both parties perfected by filing, the first party to file wins whether or not perfection was actually complete when the filing took place. Furthermore, if two parties perfected at the same time, but one party perfected by filing and the other party perfected using another means (control or possession), the party that perfected by filing wins.

What is the most common method of perfection, and what is this method's objective?

Filing is the most common method of perfection. By filing a financing statement, the secured party is giving notice that he/she has an interest in the debtor's personal property. (The actual security agreement between the parties does not have to be filed. Perfection by filing assumes that a third party will investigate any details of a security agreement.)

What happens when parties leave out after-acquired language in situations that suggest they intended to include it (e.g., when the collateral is inventory or accounts)?

General rule: If there is no reference to after-acquired property, the security interest attaches only to the collateral that exists at the time that the security agreement is executed. Exception: In most states, if the security agreement describes inventory or accounts, there is a rebuttable presumption that the description includes after-acquired inventory and accounts.

Where must a financing statement be filed?

Generally, the financing statement must be filed with the Secretary of State ("central filing") of the state of the debtor's location.

"Default" is not defined by Article 9. Typically, parties to a security agreement agree to what circumstances give rise to a default. In the absence of such an agreement, what event gives rise to a default?

In the absence of an agreement between the parties, the only event of default will be the failure of the obligor to make timely payments to the secured party.

When does a PMSI arise?

It arises when a creditor sells goods to a debtor on credit and retains a security interest in those goods, or the creditor advances funds, which are then used to purchase the goods and the creditor reserves a security interest in those goods.

Chattel paper is a record (paper or electronic) with what two components?

It is a record that evidences both (1) a monetary obligation and (2) a security interest in specific goods (security agreement) or a lease of specific goods.

Does an automatically attaching PMSI guarantee priority over collateral?

NO. While a PMSI in consumer goods automatically perfects, that perfection does not guarantee priority in a dispute over the same collateral. (e.g., consumer buyer--garage sale exception)

What serves to provide notice of a security interest to establish a claim superior to others?

Perfection

______ of a security interest is necessary for the secured party to have a superior right in the collateral.

Perfection

When can perfection occur as it relates to attachment?

Perfection can happen after attachment or at the same time - but not before.

If attachment is the process by which a security interest in a piece of collateral becomes enforceable against a debtor, then why is it important to perfect?

Perfection is generally necessary for the secured party to have rights in the collateral that are superior to any rights claimed by third parties. The focus is to protect the secured party from subsequent buyers of the collateral, lien creditors, etc. who may claim an interest in the same collateral. While perfection has no relevance to the secured party's rights against the debtor, it stakes the secured party's claim so that the secured party might have priority over a later party.

What is necessary for a secured party to have superior rights in collateral over 3rd parties?

Perfection of a security interest is generally necessary for the secured party to have rights in the collateral that are superior to any rights claimed by third parties.

what can the holder of an automatically perfected security interest do in order to avoid the "garage sale" exception?

Properly file a financing statement covering the goods before they are sold

A PMSI in goods exists when ...

secured party sold goods to the debtor and the debtor incurs an obligation to pay the secured party all or part of the purchase price.

A buyer of collateral subject to a perfected security interest generally takes the collateral _______ that interest.

subject to

Perfection of a security interest is generally necessary for the secured party to have rights in the collateral ...

that are superior to any rights claimed by third parties.

A financing statement must generally be filed in ______.

the central filing office of the appropriate state

A security interest is perfected when ....

the collateral attaches and the secured party complies with one of the methods of perfection.

When there are two or more perfected secured parties with rights in the same collateral, _______ has priority.

the first to file OR perfect. if both security interests are perfected, then priority dates from the time of filing or perfection, whichever occurs first.

When there are two or more perfected secured parties with rights in the same collateral, who has priority?

the first to file or perfect its security interest has priority.

What happens to a security interest if a buyer transfers collateral to a non buyer (a gift)

the security interest generally continues in the collateral, unless the secured party has authorized its sale free of the security interest.

What are consumer goods?

those goods acquired primarily for personal, family, or household purposes.

When there are two unperfected security interests in the same collateral, the first security interest __________ has priority.

to attach or become effective

A security interest is perfected

upon attachment of that interest and compliance with one of the methods of perfection

Consignments may fall within Article 9 in order to facilitate public notice. These consignments carry the risk that a consignee's lenders may be misled into thinking that consigned inventory is actually owned by the consignee rather than the consignor. If a consignment is subject to Article 9, how are the consignor and the security interest in the consigned goods treated?

The consignor is treated as the secured party and must perfect its security interest in the consigned inventory, and the security interest in the consigned goods is treated as a PMSI in inventory. (In other words, a consignor will have PMSI super-priority in consigned goods if the consignor perfects by filing before the consignee receives possession of the items, and the consignor properly notifies any secured parties with conflicting security interests in consignee's inventory.)

What happens when a consumer buyer of consumer goods (garage sale) buys something with a security interest?

The consumer buyer takes free of a security interest, even if perfected, unless prior to the purchase the secured party filed a financing statement covering the goods.

How must the collateral be described in a financing statement?

The financing statement must contain a description of the collateral that sufficiently indicates the collateral (such as one that meets the requirements for creation of an enforceable security agreement). When the security interest covers all of the debtor's assets or personal property, the description can contain a broad statement to that effect.

What does the financing statement have to contain?

The financing statement must contain the debtor's name, the name of the secured party, and the collateral covered by the financing statement.

How do you determine priority when there is an unperfected security interest versus another unperfected security interest in the same collateral?

The first to attach takes priority.

Upon default, what happens when a secured party has priority in a fixture?

The secured party may remove the fixture from the real estate but will be liable for the cost of repairing any physical damage to the real estate, but not for any reduction in the value of the real property due to the removal.

Once a default has occurred, what are the secured party's options?

The secured party may: (1) Seek possession of tangible collateral (repossess) and either sell or retain it in satisfaction of the obligation owed; (2) Initiate a judicial action to obtain a judgment against the debtor or obligor; or (3) Pursue other courses of action to which the debtor and secured party have agreed.

Upon default, what happens when a secured party has priority in an accession?

The secured party with priority in the accession is allowed to remove the accession from the other goods (i.e., if the security interest in the accession has priority over the claims of every person having an interest in the whole). A secured party that removes an accession from other goods must reimburse the holder of a security interest or the owner of the whole for physical injury to the whole or other goods. Note: A security interest in a car radio is subordinate to a security interest in the car perfected by notation of the security interest on the title to the car.

What is the priority rule for a lender with a PMSI versus a seller with a PMSI?

The seller PMSI beats the lender PMSI. (In other words, the seller of collateral has priority over the lender whose loan enabled the purchase of the collateral.)

What is the priority rule for a PMSI in inventory or livestock?

This PMSI will have priority over all other security interest in the same inventory or livestock if the secured party: (1) Perfects before the inventory or livestock is delivered to the debtor; and (2) Sends an authenticated notification of the PMSI to other secured parties.

What is the priority rule for a PMSI in goods (other than inventory or livestock)?

This PMSI will prevail over all other security interests in the same collateral, even if those other security interests were previously perfected (e.g., an existing after-acquired equipment clause by a lender), so long as the security interest is perfects before or within 20 days after the debtor receives possession of the collateral.

How and when does tangible collateral (goods) get classified, and does this method apply to other types of collateral?

To properly classify tangible collateral (goods), look to the debtor's principal use when the security interest attaches. Unlike tangible goods, classification of other types of collateral does not turn on the manner in which the debtor uses the property.

When is a security interest perfected if the secured party takes steps for perfection first and then attaches its interest?

Typically, a security interest attaches and is then perfected. But, if the necessary steps for perfection are taken prior to attachment, then the security interest is perfected upon attachment.

Under what circumstances does the same office rule extend temporary perfection?

Under the same office rule, temporary perfection in proceeds may continue indefinitely if: (1) A filed financing statement covers the original collateral; (2) The proceeds are collateral in which a security interest may be perfected by filing in the same office as the original financing statement; and (3) The proceeds are not acquired with cash proceeds. (E.g., Lender filed a financing statement covering candle inventory. The candles are sold on credit to Boutique generating an account (which is the proceeds of the inventory). Those proceeds and the original inventory would be perfected by filing in the same office, and the account was not acquired with cash proceeds. Lender is perfected in the account without having to file a new financing statement.)

What are the requirements for attachment?

Violet Roses Smell Amazing VALUE has been given by the secured party. The debtor has RIGHTS in the collateral. The debtor has authenticated a SECURITY AGREEMENT that describes the collateral, or the secured party has possession or control of the collateral pursuant to a security agreement.

If a buyer obtains goods under the BOCB exception free of the security interest in the goods created by the buyer's seller, can the buyer sell the goods to a second buyer?

YES. The second buyer is not required to qualify as a BOCB.

Can security interest can attach to collateral that the debtor acquires in the future?

Yes

If a retailer retains title to chattle, but creates a security interest, if it a security interest?

Yes, if the substance of the agreement was to create a security interest. If the substance of the transaction is the creation of a security interest, then Article 9 applies regardless of the form of the transaction. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer is limited in effect to a reservation of a security interest.

Does a perfected security interest have priority over an earlier created but unperfected security interest in the same collateral?

Yes, the perfected security interest has priority of over an earlier created but unperfected security interest in the same collateral.

What happens if a buyer takes a collateral subject to a security interest if the buyer is a buyer in the ordinary course of business (BOCB)

a buyer in the ordinary course of business (BOCB) takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

The "filed but unattached" security interest exception applies with regard to a contest between __________.

a judicial lien creditor and the holder of an unperfected security interest

A PMSI in goods other than inventory or livestock prevails over ...

all other security interests in the collateral, even if they were previously perfected, if the security interest is perfected when the debtor receives possession of the collateral or within 20 days.

Under Article 9, for a security interest to be enforceable against a debtor, the interest must _________

attach to the collateral.

A security interest in collateral ________ to identifiable proceeds.

automatically attaches

A lessor who is unsure if it is a true lease or secured transaction will want to take steps to ....

comply with the necessary filing rules and by making such a protective filing, the lessor is not prevented from asserting that the transaction constitutes a lease, but he will be accorded perfected status in the event that a court later determines that it is not.

A security interest in a ________ can be perfected only by control.

deposit account

What are the methods of perfection?

filing a financing statement, having possession or control of the collateral, or it can be automatically perfected.

Perfection of a security interest is generally necessary for the secured party to...

have rights in the collateral that are superior to any rights claimed by third parties.

When can the holder of a PMSI in consumer goods lose to a consumer buyer?

if he/she does not file a financing statement.

When does a security interest NOT continue with a GIFT of the collateral

if the secured party authorized its sale free of the secured interest

If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected, the perfected security interest in the proceeds continues _____.

indefinitely.

A security interest is only enforceable against the debtor if ...

it has attached to the collateral.

A security interest in ________ can be perfected only by possession.

money