Ch31–Secured Transactions in Personal Property

Define Security Interest?

Creditor’s legal interest in collateral to secure payment

Define Secured Party?

Lender or other party benefiting from security interest

Define Attachment?

When an enforceable security interest arises against debtor?

Define Perfection?

Usually strengthens priority against 3rd parties

Define purchase-money security interest (PMSI)

Security interest connected to financing purchase of the collateral

Define lien?

Security interest placed on an asset (ex. cart) by a creditor to guarantee the payment of a debt/obligation. If you owe money and fail to pay, lien gives the creditor a legal right to seize or force the sale of the property to get paid

What creates a lien?

Attachment

Difference between “Perfection” and “Priority”

Perfection: Creditor legally publicizes their security interest in collateral so that 3rd parties are put on notice
Priority: Order or ranking that decides which creditor gets paid or claims the collateral first when debtor defaults or mutliple parties hold claims to same asset

Define Reposition Collateral?

1) Lender takes collateral

2) Lender sells it

3) Lender applies proceeds to loan

4) Results in surplus or deficiency