Secured Transactions Assignment 28

1
Secured TransactionsAssignment 28

• Lienors vs. Secureds The Basics

2
The Big Picture

• Part Two The Creditor Third Party Relationship
• Chapter 6-7 Perfection
• Chapter 8 The Concept of Priority
• Chapter 9 Competitions for Collateral
• Assignment 28 Lien Creditors vs Secureds
  The Basics
• Assignment 29 Lien Creditors vs Secured
  Future Advances
• Assignment 30 Trustees vs Secureds The
  Strong Arm
• Assignment 31 Trustees vs Secureds
  Preferences
• Assignment 32 Secureds vs. Secureds Basics
• Assignment 33 Secureds vs. Secureds Land and
  Fixtures

3
The Big Picture

• Part Two The Creditor Third Party Relationship
• Chapter 6-7 Perfection
• Chapter 8 The Concept of Priority
• Chapter 9 Competitions for Collateral
• Assignment 28 Lien Creditors vs Secureds
  The Basics
• Assignment 29 Lien Creditors vs Secured
  Future Advances
• Assignment 31 Trustees vs Secureds
  Preferences
• Assignment 32 Secureds vs. Secureds Basics
• Assignment 33 Secureds vs. Secureds Land and
  Fixtures
• Assignment 34 Secureds vs. Secureds
  Marshaling

4
The Big Picture

• Part Two The Creditor Third Party Relationship
• Chapter 6-7 Perfection
• Chapter 8 The Concept of Priority
• Chapter 9 Competitions for Collateral
• Assignment 28 Lien Creditors vs Secureds
  The Basics
• Assignment 29 Lien Creditors vs Secured
  Future Advances
• Assignment 31 Trustees vs Secureds
  Preferences
• Assignment 32 Secureds vs. Secureds Basics
• Assignment 33 Secureds vs. Secureds Land and
  Fixtures
• Assignment 34 Secureds vs. Secureds
  Marshaling

5
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . . .

6
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . .
. 9-102(a)(72). Secured party means . . . a
person in whose favor a security interest is
created . . . under a security agreement.

7
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . .
. 9-102(a)(72). Secured party means . . . a
person in whose favor a security interest is
created . . . under a security agreement. 1-201(b
)(35). Security interest means an interest in
personal property or fixtures which secures
payment or performance of an obligation.

8
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . .
. 9-102(a)(72). Secured party means . . . a
person in whose favor a security interest is
created . . . under a security agreement. 1-201(b
)(35). Security interest means an interest in
personal property or fixtures which secures
payment or performance of an obligation. 9-109(a)
(1). This article applies to a transactions . .
that creates a security interest . . . by
contract . . .

9
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . .
. 9-102(a)(72). Secured party means . . . a
person in whose favor a security interest is
created . . . under a security agreement. 1-201(b
)(35). Security interest means an interest in
personal property or fixtures which secures
payment or performance of an obligation. 9-109(a)
(1). This article applies to a transactions . .
that creates a security interest . . . by
contract . . . Conclusion Article 9 security
interests are contractual

10
Terminology
9-102(a)(52). Lien creditor means . . . a
creditor that has acquired a lien on the property
involved by attachment, levy, or the like . . .
. 9-102(a)(72). Secured party means . . . a
person in whose favor a security interest is
created . . . under a security agreement. 1-201(b
)(35). Security interest means an interest in
personal property or fixtures which secures
payment or performance of an obligation. 9-109(a)
(1). This article applies to a transactions . .
that creates a security interest . . . by
contract . . . Conclusion Article 9 security
interests are contractual (Bankruptcy terminology
is different. Lien includes security
interest. 101(51))

11
The Priority Rules

• The system of priority is basically first in
  time, first in right.

12
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?

13
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect

14
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest

15
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor

16
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

17
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

18
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

19
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

20
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

21
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus lien
  creditor First to

22
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus secured
  creditor

23
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus secured
  creditor First to

24
The Priority Rules

• The system of priority is basically first in
  time, first in right.
• Question Precisely what must a creditor do first
  to be first?
• Answer up until now perfect
• Answer now the act specified by the rule
  governing that priority contest
• Rules governing lien creditor versus secured
  creditor First to

25
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
26
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
Now
How could RFT get priority over Sheng?
27
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT perfects
How could RFT get priority over Sheng? How could
RFT get a security interest?
28
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT perfects
How could RFT get priority over Sheng? How could
RFT get a security interest? Why would Conda
Copper grant it?
29
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT perfects
How could RFT get priority over Sheng? How could
RFT get a security interest? Why would Conda
Copper grant it? Spite? Gratitude? Money?
30
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT files
How could RFT get priority over Sheng? How could
RFT get a security interest? Why would Conda
Copper grant it? Spite? Gratitude? Money? What
if Conda Copper authorized a financing statement
but not a security agreement?
31
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT files
How could RFT get priority over Sheng? How could
RFT get a security interest? Why would Conda
Copper grant it? Spite? Gratitude? Money? What
if Conda Copper authorized a financing statement
but not a security agreement? Not enough.
9-317(a)(2).
32
Problem 28.1, page 469
Judgment entered
Levy?
Sheng
RFT
RFT perfects

• How could RFT get priority over Sheng?
• How could RFT get a security interest?
• Why would Conda Copper grant it?
• Spite? Gratitude? Money?
• Points
• Secured creditor can establish rights faster than
  unsecured
• Debtor can auction priority among unsecured.

33
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis
3/10
3/7
3/11
Star
Now
Levy
34
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis
3/10
3/7
3/11
Star
Now
Levy

• Is Phyllis perfected?

35
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis
3/10
3/7
3/11
Star
Now
Levy

• Is Phyllis perfected? Depends on whether value
  has been given

36
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis lends
Phyllis
3/10
3/7
3/11
Star
Levy

• Is Phyllis perfected? Depends on whether value
  has been given
• If Phyllis disburses, does she have priority over
  Star?

37
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis lends
Phyllis
3/10
3/7
3/11
Star
Levy

• Is Phyllis perfected? Depends on whether value
  has been given
• If Phyllis disburses, does she have priority over
  Star?
• 9-317(a)(2). A security interest . . . is
  subordinate to . . . a person that becomes a lien
  creditor before the earlier of the time
• (A) the security interest . . . is perfected or
• (B) one of the conditions in 9-203(b)(3) is met
  and a financing statement . . . is filed.

38
Problem 28.2, page 461
Financing statement Security agreement Note
Search
Search report
Phyllis lends
Phyllis
3/10
3/7
3/11
Star
Levy

• Is Phyllis perfected? Depends on whether value
  has been given
• If Phyllis disburses, does she have priority over
  Star? Yes.
• 9-317(a)(2). A security interest . . . is
  subordinate to . . . a person that becomes a lien
  creditor before the earlier of the time
• (A) the security interest . . . is perfected or
• (B) one of the conditions in 9-203(b)(3) is met
  and a financing statement . . . is filed.

39
Problem 28.3, page 462
Search report View collateral
Financing statement
Loan
NBC
40
Problem 28.3, page 462
Search report View collateral
Financing statement
Loan
NBC
Rule becomes a lien creditor at
levy. 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
41
Problem 28.3, page 462
Search report View collateral
Financing statement
Loan
NBC
Execution creditor
Levy 1
Levy 2
Rule becomes a lien creditor at
levy. 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
42
Problem 28.3, page 462
Search report View collateral
Financing statement
Loan
NBC
Execution creditor
Levy 1
Levy 2
Does this system beat the levies?
Rule becomes a lien creditor at
levy. 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
43
Problem 28.3, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Levy 1
Levy 2
Does this system beat the levies? Only if
SA is signed before viewing the collateral
Rule becomes a lien creditor at
levy. 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
44
Problem 28.4, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Levy 1 File 1
Levy 2, File 2
Rule becomes a lien creditor at levy or
filing 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
45
Problem 28.4, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Levy 1 File 1
Levy 2, File 2
Does this system beat them?
Rule becomes a lien creditor at levy or
filing 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
46
Problem 28.4, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Levy 1 File 1
Levy 2, File 2
Does this system beat them? Yes. If
Security Agreement signed before filing.
Rule becomes a lien creditor at levy or
filing 9-317(a)(2). A security interest . . . is
subordinate to . . . a person that becomes a lien
creditor before the earlier of the time (A) the
security interest . . . is perfected or (B) one
of the conditions in 9-203(b)(3) is met and a
financing statement . . . is filed.
47
Problem 28.5, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Deliver
Levy 2
Levy 1
Rule becomes a lien creditor at levy, relates
back to delivery 9-317(a)(2). A security
interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier
of the time (A) the security interest . . . is
perfected or (B) one of the conditions in
9-203(b)(3) is met and a financing statement . .
. is filed.
48
Problem 28.5, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Deliver
Levy 2
Levy 1
Does this system beat them the levies?
Rule becomes a lien creditor at levy, relates
back to delivery 9-317(a)(2). A security
interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier
of the time (A) the security interest . . . is
perfected or (B) one of the conditions in
9-203(b)(3) is met and a financing statement . .
. is filed.
49
Problem 28.5, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Deliver
Levy 2
Levy 1
Does this system beat them the levies? No
Rule becomes a lien creditor at levy, relates
back to delivery 9-317(a)(2). A security
interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier
of the time (A) the security interest . . . is
perfected or (B) one of the conditions in
9-203(b)(3) is met and a financing statement . .
. is filed.
50
Problem 28.5, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Deliver
Levy 2
Levy 1
Does this system beat them the levies? No What
do we need to do?
Rule becomes a lien creditor at levy, relates
back to delivery 9-317(a)(2). A security
interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier
of the time (A) the security interest . . . is
perfected or (B) one of the conditions in
9-203(b)(3) is met and a financing statement . .
. is filed.
51
Problem 28.5, page 462
Search report View collateral
SA and Fin statement
Loan
NBC
Execution creditor
Deliver
Levy 2
Levy 1
Does this system beat them the levies? No What
do we need to do? Search in the sheriffs offices
to our filing date
Rule becomes a lien creditor at levy, relates
back to delivery 9-317(a)(2). A security
interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier
of the time (A) the security interest . . . is
perfected or (B) one of the conditions in
9-203(b)(3) is met and a financing statement . .
. is filed.
52
Problem 28.6, page 462
Orville
Judgment
53
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
54
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
Levy
55
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?

56
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply

57
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply
• No, if not consumer goods. BBW is unperfected.

58
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply
• No, if not consumer goods. BBW is unperfected.
• b. Is there anything BBW should do?

59
Problem 28.6, page 462
Delivery Attachment
20 day grace
File
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply
• No, if not consumer goods. BBW is unperfected.
• b. Is there anything BBW should do?
• File the financing statement to obtain 9-317(e)
  priority

60
Problem 28.6, page 462
Delivery Attachment
20 day grace
File
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply
• No, if not consumer goods. BBW is unperfected.
• b. Is there anything BBW should do?
• File the financing statement to obtain 9-317(e)
  priority

61
Problem 28.6, page 462
Financing statement, not filed Security
agreement Sale Note
Demand possession
File
BBW
Orville
Judgment
Levy

• Can BBW get the boat back from the sheriff today?
• Yes, if boat is consumer goods. BBW is prior
  perfected secured creditor, entitled to
  possession under Grocers Supply
• No, if not consumer goods. BBW is unperfected.
• b. Is there anything BBW should do?
• File the financing statement to obtain 9-317(e)
  priority
• Demand possession from sheriff

62
Problem 28.7, page 463
Financing statement, not filed Security
agreement, not signed Sale Note
BBW
Orville
Judgment
Levy
Edith did not sign the security agreement.
63
Problem 28.7, page 463
Financing statement, not filed Security
agreement, not signed Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand?
64
Problem 28.7, page 463
Financing statement, not filed Security
agreement, not signed Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so unperfected.
65
Problem 28.7, page 463
Financing statement, not filed Security
agreement, not signed Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so
unperfected. Should we get Ediths signature now?
66
Problem 28.7, page 463
20 day grace
Delivery
File
Attachment
BBW
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so
unperfected. Should we get Ediths signature now?
Yes, but too late for purchase money priority.
9-317(e). If a person files a financing
statement with respect to a purchase money
security interest before or within 20 days after
. . . delivery of the collateral, the security
interest takes priority over the rights of a . .
. lien creditor which arise between attachment
and filing.
67
Problem 28.7, page 463
20 day grace
Delivery
File
Attachment
BBW
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so
unperfected. Should we get Ediths signature now?
Yes, but too late for purchase money priority.
9-317(e). If a person files a financing
statement with respect to a purchase money
security interest before or within 20 days after
. . . delivery of the collateral, the security
interest takes priority over the rights of a . .
. lien creditor which arise between attachment
and filing.
68
Problem 28.7, page 463
20 day grace
Delivery
File
Attachment
BBW
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so
unperfected. Should we get Ediths signature now?
Yes, but too late for purchase money priority.
Would a well-advised Edith sign? 9-317(e). If
a person files a financing statement with respect
to a purchase money security interest before or
within 20 days after . . . delivery of the
collateral, the security interest takes priority
over the rights of a . . . lien creditor which
arise between attachment and filing.
69
Problem 28.7, page 463
20 day grace
Delivery
File
Attachment
BBW
How about waiving the paper without saying when
signed?
Orville
Judgment
Levy
Edith did not sign the security agreement. Now
where do we stand? Unsecured and so
unperfected. Should we get Ediths signature now?
Yes, but too late for purchase money priority.
Would a well-advised Edith sign? 9-317(e). If
a person files a financing statement with respect
to a purchase money security interest before or
within 20 days after . . . delivery of the
collateral, the security interest takes priority
over the rights of a . . . lien creditor which
arise between attachment and filing.
70
Problem 28.9.a, page 463
Mortgage granted
Mortgage recorded
Mortgage
Judgment
Levy
71
Problem 28.9.a, page 463
Mortgage granted
Mortgage recorded
Mortgage
Judgment
Levy
Who has priority?
72
Problem 28.9.a, page 463
Mortgage granted
Mortgage recorded
Mortgage
Judgment
Levy
Who has priority? Mortgagee. Judgments are not
protected under most recording acts.
73
Problem 28.9.b, page 463
Attachment
Filing
Security Interest
Judgment
Levy
74
Problem 28.9.b, page 463
Attachment
Filing
Security Interest
Judgment
Levy
Who has priority?
75
Problem 28.9.b, page 463
Attachment
Filing
Security Interest
Judgment
Levy
Who has priority? Judgment. 9-317(a).