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Secured Transactions Flashcards

6 cards from real DE BAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Secured Transactions flashcards as text

  1. What is a security interest under Article 9 of the UCC?

    Answer: An interest in personal property or fixtures that secures payment or performance of an obligation

    A security interest is a creditor's interest in the debtor's personal property that serves as collateral to secure repayment of a debt or performance of an obligation under UCC Article 9.

  2. What are the requirements for attachment of a security interest?

    Answer: Value given, debtor has rights in the collateral, and a security agreement authenticated by the debtor

    Attachment requires three elements: the secured party must give value, the debtor must have rights in the collateral, and there must be an authenticated security agreement describing the collateral.

  3. What is the purpose of filing a UCC financing statement?

    Answer: To perfect the security interest and establish priority over other creditors

    Filing a financing statement (UCC-1) perfects the security interest, giving public notice and establishing the creditor's priority position relative to other creditors who may claim the same collateral.

  4. What is a purchase money security interest (PMSI)?

    Answer: A security interest in goods that secures the price of those goods or a loan used to purchase them

    A PMSI arises when the secured party provides the loan or credit that enabled the debtor to acquire the specific collateral, giving the PMSI holder priority over earlier-filed security interests.

  5. What happens to a security interest when the debtor defaults?

    Answer: The secured party may repossess the collateral and either keep it or sell it to satisfy the debt

    Upon default, the secured party has the right to take possession of the collateral (peacefully or by court order) and may dispose of it through commercially reasonable sale or retain it in satisfaction of the debt.

  6. What is the first-to-file rule in secured transactions?

    Answer: Among perfected security interests, priority generally goes to the first to file or perfect

    Under UCC Article 9, when multiple perfected security interests exist in the same collateral, priority is generally determined by which was first filed or perfected.