SECURED TRANSACTIONS – Essay Checklist
1. Who are the parties involved in the transaction? (what kind of creditors are there?)
Secured v. unsecured? Secured v. secured? Secured v. lienholder?
Secured v. PMSI? Secured v. buyer?
ASK: is there a chain of transfers
PMSI v. PMSI? Buyer v. buyer? or sales? Trace it! (ex. debtor to
third party to consumer, etc.)
2. Is it an Article 9 transaction? see 9-109 (scope of Art. 9)
Art. 9 applies to:
(1) transaction that creates a security interest in personal property or fixtures by contract
(2) agricultural liens
(3) sale of accounts, chattel paper, promissory notes
(4) consignment
Art. 9 does NOT apply to:
(1) landlord's lien
(2) lien given by statute or other law (ex. real property)
3. What is the collateral? How do we classify it?
*Note: classification is based on the use/purpose of the collateral in the debtor’s hands
GOODS (moveable) QUASI-TANGIBLE (paper) INTANGIBLES
Consumer goods: primarily Document: document of title or Account: right to payment for
personal, household or family receipt under 7-201(b) services/goods provided (does
purposes (ex. laptop) Investment property: security, NOT include rights in other
Equipment: good other than security entitlement, securities categories, such as rights to
inventory, farm product, or account, commodity contract or payment evidenced by
consumer good ("catch-all") account (ex. stocks and bonds) instrument/chattel paper)
Inventory: (i) lease, (ii) held Instrument: includes negotiable Commercial tort claim: claim
for sale or lease, (iii) document/writing that evidences arising in course of claimant's
furnished under service right to payment of monetary business (as an organization)
contract, (iv) raw materials, obligation that can be transferred AND is not a personal
(v) work in process, (vi) by endorsement (exclusions injury/death claim
materials used or consumed apply) (***most common Insurance receivables: subset
in a business (ex. clothing for instrument = promissory note) of accounts
retail) Chattel paper: record Deposit account: includes any
Farm product: products of evidencing both monetary accounts (checking and saving)
the debtor (who is engaged in obligation AND security interest maintained at bank (excludes
farming operations) and in specific goods (security investment property and
includes crops, livestock, agreement piece of paper & instruments)
supplies, or products thereof interest in movable property) General intangible: does not
(ex. milk from cow) Letter of credit right: right to fall into any other category
payment under a letter of credit ("catch-all") (ex. patents)
*farm product ≠ inventory!* Payment intangible = subset of
general intangibles
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4. Has there been attachment? (enforceable?)
9-203(b): security interest is enforceable [attaches] only if:
(1) value has been given,
(2) debtor has rights in the collateral (or power to transfer rights to it), AND
(3) debtor authenticated security agreement with a description of collateral,
OR collateral is in secured party’s possession,
OR collateral is a certificated security delivered to the secured party,
OR collateral is deposit accounts, e-chattel paper, investment property,
letter of credit rights, or e-documents, and the secured party has control
5. Has the interest been perfected?
Perfection requires:
(1) Attachment (see #4 above)
(2) Filing (or other reasonable equivalent)
Filing methods:
(a) Filing a financing statement (*most common method)
(b) Automatic perfection (ex. for proceeds + PMSI in consumer goods)
(c) Possession of collateral (for tangibles)
(d) Control of collateral (for intangibles)
(e) Other applicable law (ex. certificate of title statute, federal law, copyright)
6. Has it been perfected in the proper manner? (i.e., filing methods)
*Each collateral type has its own required or permissible methods for perfection
(Refer to chart on p. 247 in textbook!)
7. Has there been any lapse in perfection? (continuously perfected?)
Check to see if there have been any changes that would require an amendment to filing
(including change to debtor’s name, change in debtor’s location, expiration of filing, etc.)
*Must stay continuously perfected or else party risks having an unperfected interest
*Other factors to take note of:
DATES – when did attachment occur? Filing? Perfection? (take note of all)
LOCATION – for the purpose of a valid filing, where is the debtor located, and
where did the parties file their financing statements?
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8. Where do we lie in PRIORITY?
Priority General Rules: first to file or perfect wins AND perfected > unperfected
9-322(a): general priority rules
(1) if two perfected interests – first to file or perfect wins
(2) if perfected v. unperfected – perfected > unperfected
(3) if two unperfected interests – first to attach
*For priority battles, must identify:
What is the collateral classification? (some rules depend on collateral type)
Who is involved? What type of creditors do we have? (lien, secured, PMSI)
**For full list of PRIORITY RULES and exceptions, refer to outline p. 34 and up!**
9-322(c): special priority rules (proceeds)
*Super priority to PMSIs in non-inventory under 9-324(a) and inventory under 9-324(b)
9-317: unperfected security interest subordinate to all
9-317(b): BUYER takes collateral FREE of any interests or liens IF:
(1) buyer gave value, AND
(2) receives delivery without knowledge of security interest AND
(3) before the interest is perfected
*Note: secured party’s interest in collateral ends, but continues in PROCEEDS!
9-325: double debtor problem
Interest is subordinate to other security interest if:
(a)(1) debtor acquired the collateral subject to the security interest in first debtor
(a)(2) security interest was perfected when second debtor acquired collateral
(a)(3) no lapse in perfection
(b)(1) debtor would have otherwise had priority under 9-322(a) or 9-324
