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Secured Transactions
University of Kansas School of Law
Ware, Stephen J.

I. Scope of Article 9
A. 9-109(a): Art. 9 applies to any transaction (regardless of its form) which is intended to create a SI in personal property or fixtures, any sale of accounts, chattel paper, payment intangibles, or promissory notes, consignments, agricultural liens and security interests arising under other UCC articles.
B. Does not cover (the following cannot be used as collateral subject to art. 9)
1. right in life insurance; rents / leases from real estate à including apartment rents ect.
2. deposit accounts in consumer transactions
C. 9-102(a)(49): investment property are not goods so stocks are not goods
D. Credit Card Receivables are not chattel paper or instrument they are just accounts
E. Commitment to give a loan is giving “value” 1-204
F. If the collateral is timber to be cut the SA must contain a real estate description 9-203(b)(3)(A)
G. If concerned that personal property may become a fixture then you should file with the SOS and the county clerk
H. Accounts à to perfect you must file a FS (taking possession of account will not perfect) 9-310(a)
1. Chattel paper and promissory notes can be perfected by possession or filing a FS
2. This has to do with the sale of accounts, chattel paper, or promissory notes
I. The CR is entitled to receive a series of payments the present value of which is equal to what you would have received under chapter 7 liquidation
J. Problem: it is unincorporated business and ex-wife is 1/3 interest as a tenant in common.
1. The bank can force the debtor to register to make it easier to deal with. This is important for the test.
K. Copyrights can be perfected only by recording a SI in debtor’s registered copyrights in the national registry
1. Federal law does not preempt art. 9 à must file FS w/ SOS
L. Patent and Trademarks may be filed in the SOS office with a FS à Peregrine
M. SI that is perfected by control has priority over a SI perfected by filing even if it was filed first
1. 9-322(f)(1) the general rule is subject to priority rules found else where
2. 9-327(1): with deposit accounts Control trumps filing
3. 9-328: with investment property Control trumps filing
N. Inventory and Chattel paper are filed in the same place so the 20 days does not apply
O. When analyzing priority always being with the first in time general rule of 9-322(a)(1)
1. Exception for non-inventory PMSI 9-324(a)
2. Exception for inventory is PMSI 9-324(b)
3. PMSI – 9-103(a) & (b)
4. Seller PMSI vs. lender PMSI = seller wins à 324(g)(1)
P. USC: must sue, win a judgment, get a writ, have sheriff levy, sheriff sales (USC à Jgmt Creditor à Lien Creditor)

Surplus Proceeds:
A debtor is entitled to surplus proceeds after disposition: 9-615(d)(1)
A debtor cannot waive their right to proceeds: 9-602(5)
9-610(b): all aspects of a collateral disposition must be commercially reasonable
9-602(7): bars waiver of commercially reasonable
debtor’ s has right to receive notice of sale 9-611(b) and (c)
9-625(a): debtor can waive but only after default

Substance:
The top Ten Things to Memorize about Secured Transactions:

Most plaintiffs are unsecured Creditors

You see someone who has a claim (a tort, environmental claim) these people who are going to seek money damages are unsecured Creditors

Unsecured Creditors can enforce debts by winning a judgment and obtaining a judicial lien.

Once you win a judgment à how do you get your money
Execution, garnishment, judicial

Judicial liens are governed by non-uniform state law rather than Article 9 of the UCC.
An agreement (such as a security agreement, mortgage or deed of trust is the way to acquire a consensual lien, that is, to become a secured creditor.
As between secured creditor and debtor, contract law is the place to start.
As between secured creditor and debtor, perfection is irrelevant.

SC v. Debtor just look at the attachment 9-203 analysis

As between secured creditor and somebody other than the debtor, perfection is relevant and often decisive.
There cannot be a perfected SI unless there is a se

ks money judgment on the debt
i. Judgment, Execution, Garnishment
b. Statutory Lien: Not consensual and does not depend on judicial action. Excluded by Art. 9: 9-109(d)(1)
i. Mechanics liens; tax liens; landlord liens
c. Consensual Lien: arises at the inception of a credit transaction. 9-109(a)(1) regardless of its form.

B. Security Interest: §1-201(37): A security interest is an interest in personal property which secures payment or performance of an obligation (the most common form of a lien)
1. Any lien created by contract between debtor and creditor regardless of form 9-109(a)(1)
a. This is the “intended as security doctrine”
i. The intended as security doctrine applies to personal property transactions as well as those involving real property. It applies to any transaction that creates a security interest
2. A Mortgage is a security interest in real estate

C. Foreclosure: process by which creditor can compel the application of the value of collateral to the payment of debt.
1. In General:
a. Foreclosure only occurs after default
b. Differs widely from State to State; it also varies based on collateral
c. Process that transfers ownership from the debtor to the creditor
d. The usefulness of property as Collateral will depend on:
i. How much value the creditor can extract from it after default
ii. How much leverage the creditor can derive from the creditor’s ability to deprive the debtor of the property
e. Process:
i. Complaint; Defenses; Judgment & Sale Date set; Sale; Proceeds are dispersed; Right of Redemption
f. Redemption of Property: Cannot be waived or abandoned by stipulation at the time of the SA