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Secured Transactions
South Texas College of Law Houston
Musselman, James L.

Condensed Outline
Exceptions to the Article 9 Filing Requirements
Goods; Instruments; Chattel Paper
Only way = Accounts; General Intangible; Commercial Tort Claims;
Commercial Tort Claims
In the F/S has to be specific
Has to be around at time of S/I’s creation
Breach of Contract = General Intangible
Goods; Instruments; Chattel Paper
Only way = Money
Cash in D’s Register
Possession by Agent or 3rd party
Possession v. Filing
Instruments – Purchaser wins if:
Good Faith; AND
Without Knowledge of Violation.
Chattel Paper – Purchaser wins if:
New Value AND
Other ways to have Possession
Independent 3rd Party – S/P has possession if:
3rd Party authenticates a record -> Holds for S/P; OR
3rd Party takes possession after authenticates a record -> Holds for S/P
Preexisting 3rd party in possession:
Acknowledgment of new S/P interest not required
If Acknowledged:
Is effective even if violates rights of D; AND
3rd party owes no duty to S/P + not required to confirm acknowledgment to another person
Agent – S/P has possession if:
Agent has possession;
On behalf of S/P; AND
Not an agent for D
**D can’t qualify as S/P’s agent**
Deposit Account:
S/P = Bank where deposit account is maintained;
D, S/P, and Bank;
Authenticate Record; AND
Bank listens to S/P without D’s approval; OR
S/P’s name is on the account.
Lender’s PMSI –
S/P loans money to D;
The loan enabled D to acquire the goods; AND
The loan proceeds are actually used to acquire the goods.
Seller’s PMSI:
S/P sells goods on credit to D; AND
S/I acquired in goods sold.
S/I NOT covered by Article 9
Assignment of a deposit accounts in a consumer transaction
Non-Commercial Tort Claims
Debtor can request for an accounting; S/P has 14 days to comply
Use of goods is determined at time of purchase
Land and Fixtures Recording System
As Goods
File F/S
Automatic – PMSI
As Fixtures
Fixture Filing – Goods that are OR will become Fixtures
D’s name;
S/P’s name; AND
Description of collateral
Special Requirements
Indicates type of collateral;
Filed in real property records;
Description of real property; AND
If D has no interest of record in the real property:
Record Owner’s name
Personal property secured by S/I in mortgage
Attachment and perfection of the personal property also perfects a S/I in a mortgage
Individual’s interest in a Partnership = Personal Property
LC v. S/P
Perfected S/I in fixtures has priority
Regardless of perfection method
Characterizing Collateral and Transactions
Article 9 applies to:
A transaction that creates a S/I in personal property or fixtures by contract
A sale of accounts, chattel paper, payment intangibles, or promissory notes
Article 9 does NOT apply to: §1-9-109(b) pg. 702
Landlord lien;
Assignment of a claim for wages of an employee;
Sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;
Assignment of a right to payment under a contract to an assignee t

ervices to be rendered.
**Liquor Licenses, Credit Card Receivables**
General Intangible
**A S/I, created by a sale of a payment intangible, perfects when it attaches**
True Lease vs. S/I
If a true lease – Article 9 does not apply and lessor has title to property
If not a true lease – Article 9 does apply
S/A = lease document
Authenticated by D
Describes collateral
S/P will have to perfect
D has title to property
**If D defaults, S/P will have to foreclose it S/I under Article 9**
If below is met, transaction will be treated as a sale of the leased property on credit and retention of S/I to secure the price.
A transaction is a S/I if:
The consideration paid is an obligation for the full initial term of the lease; AND
The lessee has no right to terminate the lease; AND either
The goods have no economic value at the end of the lease;
Lessee is bound to renew for the remaining economic life;
The lessee has an option to renew the lease for the remaining economic life for little or nothing; OR
Option to renew is irrelevant, as long as the good still has useful economic life at the end of the lease period
The lessee can purchase the goods from the lessor for little or nothing.
**Lessee paying taxes, insurance, or maintenance fees is also irrelevant**