Sarah, a Public Servant, Gave a Security Interest to Her

Multiple Choice

Sarah, a public servant, gave a security interest to her brother Peter in all her assets to secure her obligation to repay a loan from Peter. Peter filed a financing statement to register his interest. Subsequently, Joan bought some furniture from Sarah. Joan had no knowledge of Peter's security interest. Which of the following statements best describes Joan's legal position?

A) Joan bought the furniture free of Peter's security interest because she had no notice of it.
B) Joan's interest in the furniture is subject to Peter's security interest.
C) Joan's bought the furniture free of Peter's security interest because Sarah is not in the business of selling furniture.
D) Joan is obliged to give the furniture to Peter.
E) Joan bought the furniture free of Peter's security interest because security interests of close family relatives are not enforceable against third parties.