Exam 20: Secured Transactions

The method of perfecting a security interest does not depend on the classification of the collateral.

City Bank's financing statement in collateral owned by Delta Waters Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for

A purchase-money security interest in consumer goods is perfected automatically at the time of a credit sale.

Khalil holds a security interest in inventory owned by Luc. Khalil protects his claim to the inventory in the event of Luc's default by

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

Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered

Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and immediately files a written request for a termination statement. Fidelity

Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a security agreement. Later, Glade buys new HD-TVs to add to its inventory. Everyday has a security interest in the new inventory

Saf-T Lenders, Inc., takes possession of Tiara's stock in Urgent Care Corporation to perfect Saf-T's security interest in the stock. This is

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

Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company. Town & Country perfected its security interest before Uno. Town & Country takes possession of the collateral in which it has a security interest. On a sale of the collateral, the proceeds will be applied first to

The first security interest to be perfected is the last in priority over any other perfected security interests.

Pete borrows $5,000 from Willy in a secured transaction using Pete's BMW as collateral. Pete then borrows $7,000 from Janet using the same car as collateral. Neither Willy nor Janet perfects their security interests. Pete defaults on the loans. The party with priority is

Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral. To perfect its security interest, First Line Credit must file its financing statement with

The payment of Eden's debt to Flem is guaranteed by Eden's personal property. This property is

Jane is the secured party in a secured transaction with Margaret. Jane could also be referred to as the

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 security interest in Efrem's present inventory and any after-acquired inventory as collateral for the loan. The bank properly perfects the security interest 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 entire 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.

Fiona borrows $1,000 from Garden State Bank, using her motorcycle as collateral. To perfect its security interest, the bank must file its financing statement with

Kathy is the secured party in a transaction with Julie, who is the debtor. The collateral is a 2007 Chevrolet F150 pick-up truck. Kathy files a financing statement in which she describes the collateral as "a vehicle." To perfect Kathy's interest this is

Proceeds from the disposition of collateral after default on the underlying debt are distributed equally among lienholders who have made demands.