Secured Transactions
Secured Transactions tests UCC Article 9: attachment, perfection, priority, proceeds, and default. Ask whether the creditor has an enforceable security interest and then whether it is perfected.
Core rules
- Attachment requires value, debtor's rights in the collateral, and an authenticated security agreement with a reasonable description.
- Perfection methods: filing, possession, control, automatic perfection, and compliance with certificate-of-title rules.
- Priority: first to file or perfect; purchase-money security interests have special priority; buyers in ordinary course take free of security interests.
- Proceeds and commingled funds; deposit accounts require control for perfection.
- Default: repossession, notice, commercially reasonable sale, and deficiency judgment.
Worked example
Bank A lends Debtor for equipment and files a financing statement on March 1. Bank B later loans for the same equipment and perfects a PMSI on March 10. Under UCC § 9-324(a), a PMSI in equipment perfected within 20 days after the debtor receives possession has priority over an earlier perfected security interest. Bank B wins if it gives value and perfects timely; otherwise Bank A's first filing controls.
Traps
A PMSI in inventory requires notice to prior filers before the debtor receives possession. After-acquired property clauses do not reach consumer goods without more. A lease can be a disguised security interest. A buyer in ordinary course takes free of a security interest created by the seller.