CH 16 17 18 B Law Chapter 16 secured transactions Secured Transactions chattel mortgages transactions where a debtor pledges personal property or fixtures to a creditor as security for a loan or another obligation personal property includes all property except real estate and items attached to real estate security interest a lien on personal property or fixtures which secures payment of an obligation allowing repossession and sale of the collateral is there is a default on the obligation lien interest in property which gives a creditor the right to sell property on default o examples mortgages security interests some court judgments fixtures items of personal property permanently attached to real estate security agreement transfers a security interest in personal property and creates a secured transaction secured party the creditor who is the holder of the security interest Attachment the process which causes a security interest to be enforceable against a certain piece of collateral Perfection process which fixes the secured partys level of priority to the collateral against others who also have a lien Financing statement written notice of a security interest filed with a government office Article 9 of UCC covers 3 types of collateral goods tangible movable or fixtures Quasi tangible documents which evidence a legal right such as negotiable instruments Intangibles items of personal property with no physical existence accounts receivable goodwill of a business Article 9 does not apply to real estate or to the perfection of security interests in motor vehicles Attachment of a security interest 3 requirements for attachment there must be a written security agreement or secured party must take possession of the collateral o must have language transferring security interest signed by debtor description of the collateral serial number o if secured party takes possession of collateral an oral security agreement is enforceable secured party must give value either past or present consideration debtor must have rights in the collateral own or have authority of the property Perfection of a security interest perfection fixes priority of a secured party and protects against claims of third parties who may take a later interest in the covered collateral 3 ways to perfect a security interest o 1 Perfected by taking possession of collateral o 2 Perfection by attachment of a security interest if it is a PMSI in consumer goods PMSI secures collateral that is purchased with money or credit supplied by the secured party o 3 Perfection by filing a finance statement a written notice of security interest statement must include name and address of debtor and secured party description of type of collateral required method for perfection of most business transactions Floating Liens security interest that switch from one piece of collateral to another 3 types of floating liens o 1 Proceeds whatever is received in exchange for collateral trade soybeans for feed feed is the proceeds o 2 After acquired property similar type to the collateral but is purchased by the debtor after the attachment of the original security interest o 3 Future advances loans to be made by secured party in the future Priorities of Security Interests highest priority to lowest 1 buyer in ordinary course of business one who buys collateral in the method typically used by the seller 2 second hand purchase of consumer goods takes free of security interest of other parties perfected by attachment garage sale 3 purchase money security interest PMSI if perfected within 20 days of attachment has priority over other liens 4 first secured party to perfect its security interest or to become a lien creditor a includes lien creditors creditor who obtains a lien upon property of the debtor because of a judgement 5 first secured party whose security interest attaches to the collateral if no secured party has perfected a security interest 4 rights of secured parties upon default options for collection of the note 1 repossession of collateral most common a must give debtor notice must be done w o breach of peace 2 repossession sale 3 retain collateral a unless more than 60 of purchase price has been paid b must give notice 4 ignore security interest and sue on the promissory note a if value of collateral has deteriorated drastically Effects of Repossession Sale purchaser at the sale can defeat claims of secured parties and debtor to the collateral proceeds of sale are divided by the following priorities o 1 Expenses of the sale are paid attorneys fees and any expenses or the secured party incurred in repossessing holding and preparing the collateral for sale o 2 Repayment of first lien holder any secured party who has a noninventory PMSI which has been perfected within 20 days of attachment o 3 Inferior lien holders o debtor is entitled to any surplus form the foreclosure sale or is responsible for any deficiency to any secured party who is not fully paid termination Statement gives notice to others that any lien has been removed opposite of financing statement must be filed in the office where the original financing statement was filed creditors who fail to file termination are liable for damages to the debtor Chapter 17 Real Estate Law Listing agreement an agreement authorizing a realtor to be a seller s agent for the purpose of soliciting offers on real estate Realtor s obligation is only to provide a buyer who is willing and able to buy o If realtor finds someone willing and able to buy but you decide not to sell the house the realtor can sue you for the commission and will most likely win o You can protect against this by adding to the contract with your realtor certain conditions necessary in order for the realtor to receive commission multi list agreement more than one realtor can show and entertain offers on the land exclusive listing agreement gives the realtor the exclusive right to be the selling agent for the land o the agent receives commission on the sale no matter what if you have an exclusive listing agreement with a realtor but you personally sell your house to your cousin who is interested in the house the realtor still receives full commission Types of Land Sale Contracts 2 1 Cash on closing the entire purchase price is paid prior to transfer of possession of the land and the seller gives the buyer the deed to the land immediately a Paid in part by the buyer down payment and in part by the lender providing financing to the buyer