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Secured Transactions Assignment 28

Secured Transactions Assignment 28. Lienors vs. Secureds: The Basics. The Big Picture. Part Two: The Creditor Third Party Relationship Chapter 6-7: Perfection Chapter 8: The Concept of Priority Chapter 9: Competitions for Collateral Assignment 28: Lien Creditors vs Secureds: The Basics

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Secured Transactions Assignment 28

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  1. Secured TransactionsAssignment 28 Lienors vs. Secureds: The Basics

  2. The Big Picture Part Two: The Creditor Third Party Relationship Chapter 6-7: Perfection Chapter 8: The Concept of Priority Chapter 9: Competitions for Collateral Assignment 28: Lien Creditors vs Secureds: The Basics Assignment 29: Lien Creditors vs Secured: Future Advances Assignment 30: Trustees vs Secureds: The Strong Arm Assignment 31: Trustees vs Secureds: Preferences Assignment 32: Secureds vs. Secureds: Basics Assignment 33: Secureds vs. Secureds: Land and Fixtures

  3. The Big Picture Part Two: The Creditor Third Party Relationship Chapter 6-7: Perfection Chapter 8: The Concept of Priority Chapter 9: Competitions for Collateral Assignment 28: Lien Creditors vs. Secureds: The Basics Assignment 29: Lien Creditors vs. Secured: Future Advances Assignment 31: Preferences Assignment 32: Secured Creditors vs. Secured Creditors Assignment 36: Buyers vs. Secured Creditors Land, Fixtures, Agriculture, and Minerals

  4. Article 9 Terminology §9-102(a)(52). “Lien creditor” means . . . a creditor that has acquired a lien on the property involved by attachment, levy, or the like . . . . §9-102(a)(72). “Secured party” means . . . a person in whose favor a security interest is created . . . under a security agreement. (Excludes mortgages) Security interests are contractual; liens are judicial. The categories are mutually exclusive. Security interest Lien

  5. Article 9 Terminology §9-102(a)(52). “Lien creditor” means . . . a creditor that has acquired a lien on the property involved by attachment, levy, or the like . . . . §9-102(a)(72). “Secured party” means . . . a person in whose favor a security interest is created . . . under a security agreement. (Excludes mortgages) Security interests are contractual; liens are judicial. The categories are mutually exclusive. Mortgage Security interest Lien Statutory lien

  6. Bankruptcy and Tax Code Terminology §101(51): Security interest means a lien created by agreement. (Includes mortgages) §101 (36): Judicial lien means lien obtained by judgment, levy, sequestration, or other legal or equitable process . . . §101(53): Statutory lien means a lien arising by statute, but does not include security interest or judicial lien §101(37) Lien means charge against property to secure payment Lien Lien Judicial Lien Security interest Mortgage Article 9 security interest Statutory Lien

  7. The Priority Rules The system of priority is basically “first in time, first in right.”

  8. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  9. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first? Answer up until now: perfect

  10. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first? Answer up until now: perfect Answer now: the act specified by the rule governing that priority contest

  11. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  12. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  13. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  14. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  15. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  16. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  17. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  18. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  19. The Priority Rules The system of priority is basically “first in time, first in right.” Question: Precisely what must a creditor do first to be first?

  20. Purchase money priority File PMSI Lien §9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest

  21. Purchase money priority 20 day grace Delivery File PMSI Lien §9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after . . . delivery of the collateral

  22. Purchase money priority 20 day grace Delivery File PMSI Lien Levy §9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after . . . delivery of the collateral, the security interest takes priority over the rights of a . . . lien creditor

  23. Purchase money priority 20 day grace Delivery Attachment File PMSI Lien Levy §9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after . . . delivery of the collateral, the security interest takes priority over the rights of a . . . lien creditorwhich arise between [attachment and] filing.

  24. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy

  25. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy Who has priority?

  26. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy Who has priority? Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts.

  27. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy Who has priority?Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts. Attachment Filing Security Interest Judgment Levy

  28. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy Who has priority?Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts. Attachment Filing Security Interest Judgment Levy Who has priority? Judgment. §9-317(a).

  29. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage Judgment Levy Who has priority?Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts. Attachment Filing Security Interest Judgment Levy Who has priority? Judgment. §9-317(a).

  30. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Phyllis 3/7

  31. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Phyllis 3/10 3/7 Star Levy

  32. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis 3/10 3/7 3/11 Star Levy

  33. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis 3/10 3/7 3/11 Star Now Levy

  34. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis 3/10 3/7 3/11 Star Now Levy • Is Phyllis perfected?

  35. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis 3/10 3/7 3/11 Star Now Levy • Is Phyllis perfected? Depends on whether value has been given

  36. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis lends Phyllis 3/10 3/7 3/11 Star Levy • Is Phyllis perfected? Depends on whether value has been given • If Phyllis disburses, does she have priority over Star?

  37. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis lends Phyllis 3/10 3/7 3/11 Star Levy • Is Phyllis perfected? Depends on whether value has been given • If Phyllis disburses, does she have priority over Star? • §9-317(a)(2). A security interest . . . is subordinate to . . . a person that becomes a lien creditor before the earlier of the time • (A) the security interest . . . is perfected; or • (B) one of the conditions in §9-203(b)(3) is met and a financing statement . . . is filed.

  38. Problem 28.2, page 477 Financing statement filed Security agreement Note Search Search report Phyllis lends Phyllis 3/10 3/7 3/11 Star Levy • Is Phyllis perfected? Depends on whether value has been given • If Phyllis disburses, does she have priority over Star? Yes. • §9-317(a)(2). A security interest . . . is subordinate to . . . a person that becomes a lien creditor before the earlier of the time • (A) the security interest . . . is perfected; or • (B) one of the conditions in §9-203(b)(3) is met and a financing statement . . . is filed.

  39. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT

  40. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT Now How could RFT get priority over Sheng?

  41. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects How could RFT get priority over Sheng? How could RFT get a security interest?

  42. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects How could RFT get priority over Sheng? How could RFT get a security interest? Why would Conda Copper grant it?

  43. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects How could RFT get priority over Sheng? How could RFT get a security interest? Why would Conda Copper grant it? Spite? Gratitude? Money? Grocer’s Supply protection?

  44. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT files How could RFT get priority over Sheng? How could RFT get a security interest? Why would Conda Copper grant it? Spite? Gratitude? Money? Grocer’s Supply protection? What if Conda Copper authorized a financing statement but not a security agreement?

  45. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT files How could RFT get priority over Sheng? How could RFT get a security interest? Why would Conda Copper grant it? Spite? Gratitude? Money? Grocer’s Supply protection? What if Conda Copper authorized a financing statement but not a security agreement? Not enough. §9-317(a)(2).

  46. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects • How could RFT get priority over Sheng? • How could RFT get a security interest? • Why would Conda Copper grant it? • Spite? Gratitude? Money? Grocer’s Supply protection? • Points: • Secured creditor can establish rights faster than unsecured • Debtor can “auction” priority among the unsecureds.

  47. Problem 28.4, page 478 Security agreement Financing statement Search report View collateral Close loan National Execution creditor

  48. Problem 28.4, page 478 Security agreement Financing statement Search report View collateral Close loan National Execution creditor Rule: “becomes a lien creditor at levy.”

  49. Problem 28.4, page 478 Security agreement Financing statement Search report View collateral Close loan National Execution creditor Rule: “becomes a lien creditor at levy.” 9-317(a)(2). A security interest . . . is subordinate to . . . a person that becomes a lien creditor before the earlier of the time (A) the security interest . . . is perfected; or (B) one of the conditions in §9-203(b)(3) is met and a financing statement . . . is filed.

  50. Problem 28.4, page 478 Security agreement Financing statement Search report View collateral Close loan National Execution creditor Rule: “becomes a lien creditor at levy.” 9-317(a)(2). A security interest . . . is subordinate to . . . a person that [levies] before the earlier of the time (A) the security interest . . . is perfected; or (B) one of the conditions in §9-203(b)(3) is met and a financing statement . . . is filed.

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