VA Bar Secured Transactions

Question 1

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

Accepted Answer

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

Answer

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.

Question 2

What are the requirements for attachment of a security interest?

Accepted Answer

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

Answer

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.

Question 3

What is the purpose of filing a UCC financing statement?

Accepted Answer

To perfect the security interest and establish priority over other creditors

Answer

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.

Question 4

What is a purchase money security interest (PMSI)?

Accepted Answer

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

Answer

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.

Question 5

What happens to a security interest when the debtor defaults?

Accepted Answer

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

Answer

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.

(VA Bar) Virginia Bar Exam Practice Test

(VA Bar) Virginia Bar Exam Practice Test

VA Bar Secured Transactions