Exam 29: Secured Transactions

A secured party can release the col?lateral described in a filed fi?nancing statement only if the debtor has paid the debt.

If collateral consists of consumer goods subject to a purchase-money security interest, the secured party must "purchase" the goods on default.

Green Landscape Company buys a backhoe on credit from Heavy Equipment Corporation, but does not make a payment on the loan for sev?eral months. Heavy repossesses the backhoe by towing it from a pub?lic street. Green sues Heavy for breach of the peace. Green will probably

Efrem owns Fans & Players, a retail sporting goods shop. When Great Hill Lodge, a new ski resort, is built in the area, Efrem decides to expand and borrows a large sum from Hometown Bank. The bank takes a secu?rity interest in Efrem's present inventory and any after-acquired inven?tory as collateral for the loan. The bank properly perfects the security in?terest by filing a financing statement. Efrem's business is profitable, and he begins doubling his inventory. A year later, an avalanche destroys the ski slope and lodge. Efrem's business takes a turn for the worse, and he defaults on his debt to the bank. The bank seeks possession of his en?tire inventory, even though the inventory is twice as large as it was when the loan was made. Efrem claims that the bank has rights to only half of his inventory. Is Efrem correct? Explain.

The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt regardless of any deficiency.

A security interest is enforceable only if the collateral is in the secured party's possession.

Cross-collateralization occurs when an asset that is not the subject of a loan is used to collateralize that loan.

The person who owes the payment of a secured obligation is the secured party.

On default, unless the security agreement states otherwise, the secured party has the right to repossess collateral.

A future advance against a line of credit must be of the same type as the original advance to be subject to the same collateral.

A security interest is not enforceable after the creditor's rights have at?tached to the collateral.

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

Fact Pattern 29-1A Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses. -Refer to Fact Pattern 29-1A. Ira, a police officer, buys an Excel from Fine to drive in his off-duty hours. Ira's Excel is

A purchase-money security interest arises only when a seller pro?vides a buyer with the "purchase money" to buy goods.

Khalil holds a security interest in inventory owned by Luc. Khalil assigns his interest in the inventory to Mal. Mal becomes the secured party of record

Edie needs $1,500 to buy textbooks and other school supplies. Frank agrees to loan Edie $1,500, accepting as collateral Edie's car. They put their agreement in writing and sign it. Edie keeps possession of the car. Does Frank have an enforceable security interest? How can Frank let other creditors know of his interest in the car?

To qualify as a commercially reasonable sale, a secured party's sale of col?lateral, after default and repossession, must be public.

Filing a financing statement with the appropriate public office is the only way to per?fect a purchase-money security interest in consumer goods.

A security interest may attach to intangible collateral but cannot be perfected.

Computer World (CW), after repossessing a multimedia system from Dave, a consumer, decides to keep the system instead of reselling it. CW sends written notice to Dave. CW can now keep the system