Exam 23: Secured Transactions

Jackson offers his 1985 Yugo as collateral to a loan that he secured. A half year later Jackson sells the Yugo to Lee and therefore, the car will no longer be collateral to the loan.

Which of the following types of collateral are required to be perfected by filing a UCC-1 financing statement?

Orlando Bank filed a UCC-1 financing statement on March 22^nd for a car, valued at $45,000, that Donald offered as collateral on a $1000.00 loan. Donald also offered the same car as collateral to Kissimmee Bank for a $5000.00 loan. Kissimmee bank filed a UCC-1 financing statement on March 24. Donald ended up defaulting on both loans. Which statement below is correct?

Explain the process that one must establish to secure an interest that is enforceable? And give an example of each of the requirements.

The assets a buyer has pledged to secure a loan is called

In general, explain why creditors see seizing collateral as a least preferred option when the borrower defaults on a loan. Give some examples.

Caleb offers "all dirt bikes currently owned and hereinafter acquired" as collateral to purchase a building for his dirt bike repair shop. This is an example of a

Wrett purchases a new four-wheeler with a loan from his bank. The bank requires that he use his car, which is paid off, as collateral for the loan he secured from the bank. The value of the 4-wheeler is $2500.00. The value of the car is $15,000.00. Wrett defaults on his loan for the 4-wheeler and thus is forced to sell his car to repay the loan. Which statement below is true regarding this secured transaction?

Juan delivers possession of his car to Magic Bank and Financial Services as collateral on a loan on September 1^st. The next week he uses the same car as collateral in another loan from Truman Financial on September 8^th. Truman Financial files a UCC-1 financing statement that same day on September 8^th. A month later, Juan defaults on both loans. Which bank has priority?

Angelina, a resident of Florida, borrowed some money from Italiano Bank to pay for her college tuition bill of $10,000. She offered her car, valued at $20,000 as collateral for the loan. Next she decided that she wanted to go on an extravagant trip to Bali, and to finance the trip she got another loan, for $10,000, from Italiano Bank and delivered a G.B. Rielle original work of art, valued at $15,000, to the bank to hold onto as collateral for the loan for the trip. Before leaving for Bali, she also bought a kayak for $1000.00 from a store to take on the trip with her and borrowed the money from a friend, Maddie, promising to pay her back. On her way to the airport to fly out to Bali, she realized that the plane ticket she purchased was for the next month when she would be in school. Therefore, she quickly borrowed additional money, $2000.00 from New York Finance to purchase another plane ticket and used her car again as collateral. New York Finance immediately filed a UCC-1 financial statement with the secretary of state in Florida. After her grand excursion Angelina realized she could not pay her loans back on her meager wage as a taco delivery driver. Therefore, she defaulted on all of her loans. Explain the order of priority of the loans and who would get repaid for the defaulted loans if the loan amounts remained the same as when originally loaned.

Trent is broke and needs cash immediately to pay off a debt he incurred. He visits the local pawn shop and leaves his grandfather's watch in exchange for $100.00 cash. This is an example of what type of loan?

A person can use a checking account as collateral in a secured transaction.

In Morgan County Feeders v. McCormick, the court determined that classifying a good as inventory, rather than equipment,

Eunice purchased a station wagon from Lindy's Auto Store. To finance the purchase she entered into a finance agreement with Lindy's in writing which stated the terms of the finance agreement. Eunice then drove the car home. Which statement below is correct?

Mika enters into a loan with correct Bank to purchase business equipment for her auto repair supply shop for $5000.00. For collateral, she delivers her computer to correct Bank. Correct Bank memorializes this transaction in writing and adds the phrase, "all computers and tools currently owned and hereafter acquired." Shortly thereafter, Mika defaults on her loan with True Bank and they sell the computer that she delivered to correct Bank originally for $500.00. True Bank realizes that it needs more money to be made whole so they tell Mika to hand over all her equipment for them to sell to satisfy the debt she owes. Mika refuses stating that the computer of which they had possession was the only computer used for collateral. A long time customer of Mika, Breshnev, purchases his socket parts to repair his cars as he normally does, not knowing of Mika's financial issues. Finding that out, correct Bank also wants those tools sold to Breshnev as they claim they were used as collateral as well. Given the facts above what assets may correct Bank use as collateral?

Why might a lender require that a loan be secured with collateral?

Kahl Printing enters into a loan with Universal Bank wherein Kahl Printing uses all of its printing press equipment as collateral. Kahl Printing, including all the business assets, is bought by Scotty Printing. Shortly thereafter, Kahl Printing defaults on its loan to Universal Bank. Which of the following statements is correct?

A security interest is created when an interest in real property is used to secure payment of an obligation.

Juan gives his class ring to Maren to use as collateral for a loan she made to him. This collateral is said to be perfected by possession.

When a client of a brokerage firm borrows money to make additional investments and offers securities as collateral it is called purchasing on