2015 SECURED TRANSACTIONS – FLORIDA ESSAY CHECKLIST

I. Is this an Article 9 transaction?

a. What is collateral?
i. Goods? Non-goods?
1. Goods=movable items
a. Consumer goods (ex: television): primarily for family/household use
b. Inventory (ex: items for sale in store; rental cars): held for lease or sale
c. Farm Products (ex: chickens): animals, crops, etc. on farm; does not include equipment
such as tractors
d. Equipment (ex: machinery): anything not in the other categories; generally includes
goods with long useful life held by a business
2. Common non-goods categories (not an all-encompassing list)
a. Deposit Account: bank accounts
b. Accounts: amounts owed to the debtor (e.g., accounts receivable)
c. Investment Property: stocks, securities entitlements (via stockbroker), commodities
investments
d. Documents: warehouse receipts, bills of lading, etc.
e. Instrument: promissory note, checks
f. Chattel Paper: promissory note plus a security interest included
g. General Intangible: no other category applies (ex: license, intellectual property)
ii. Collateral can only be classified as one type of collateral at any time, but can change classification over
time (ex: lawyer buys curtains for office—equipment—and then brings them home for living
room—consumer good)

b. Article 9 Transaction?
i. Voluntary security interest?
ii. Sale/transfer of accounts, chattel paper, payment intangible, promissory note?
1. ARTICLE 9 DOES NOT APPLY TO: sale of accounts as part of a business, assignment for collection
purposes only, assignment of just one on account of a pre-existing debt
iii. Consignment?
1. Covered by Article 9 if elements met (long list of elements, but key is that the entity to whom the
goods are consigned is not known to be a consignor by its creditors)
2. Ex: Jenny designs clothes and convinces local clothing store to sell some of her clothes on a
consignment basis. The store is not generally a consignment store, but agrees to sell the clothes,
keeping 25% of the proceeds of sale and turning the rest over to Jenny. Creditors will not realize
that the clothing in the store actually belongs to Jenny, rather than to the store. For that reason,
the consignor—Jenny—must comply with Article 9 to provide notice to the creditors of the
consignee—store—that the clothing belongs to Jenny.
iv. Lease reclassified as a sale with security interest reserved?
1. If so, subject to Article 9
2. Reclassify to a sale if the lease is not able to be terminated and at the end of the lease term, the
“lessee” is unlikely to return the goods to the “lessor”
3. Remaining Economic Life Test: if the lessee is likely to retain the goods for the remaining
economic life of the goods, it is a sale rather than a lease and the “lessor” merely retains a
security interest in the goods
II. Attachment
a. Has a creditor’s interest attached?
i. Requires: Value, Rights, and
1. Signed SA? or
2. Control or Possession pursuant to an oral or unsigned security arrangement?
ii. Security agreement reasonably identifies collateral?
1. 9-108 met?
a. Super-generic and some generic not sufficient
i. NO: all assets or all personal property
b. Collateral classifications OK
i. Except: Commercial tort claims, Consumer goods, Securities/commodity
account in a consumer transaction
 c. Cross-collateralization is OK
i. After-acquired clauses OK (“All Equipment, now owned or later acquired”)
ii. Dragnet clauses OK (“This collateral covers any loan from the creditor, now
existing or created in the future.”)
iii. New collateral must be covered by SA
III. Perfection
a. Has a creditor perfected its interest?
i. Cannot be perfected until attached, but can take steps (such as “prefiling” to perfect before attachment so
that upon attachment, perfection is complete)
ii. Filing
1. Met requirements (done with a UCC-1 form)?
a. Debtor’s name
i. Indexed by debtor’s name, so if the debtor’s name is incorrect, the filing is
“substantially misleading” and ineffective UNLESS the filing comes up when
searched for under the correct name using the state’s standard search logic
ii. Naming conventions
1. Registered organization: use name in the registry (no trade names!)
2. Unregistered organization: use official organization name if there is
one (ex: name listed in the partnership agreement)
3. Estate, Trust: name with indication of status as an estate/trust
4. Individual: name on driver’s license if there is one; otherwise, code
only tells you to use individual’s name
5. Others (ex: unregistered org without an official name): use names of
those making up the organization
b. Creditor's name
c. Indication of collateral
i. Supergeneric is allowed on UCC-1 (Ex: “All Assets”)
2. Indicate if a local filing (used for fixtures attached to real property)?
3. Amendments (done with a UCC-3 form)?
a. Name change—have four months to correct the name
b. Non-name change? Can include amendments, information statements, termination
4. Continuation statement?
a. Must file within 6 months before lapse of initial financing statement
b. Initial filing lasts for 5 years
c. Continues effectiveness of initial filing for an additional 5 years
iii. Possession
1. ONLY
a. Documents
b. Goods
c. Instruments
d. MONEY (can only perfect money by possession)
e. Tangible Chattel Paper
f. Certificated securities
iv. Control
1. Investment property?
a. Possess stock certificate, with endorsements if necessary OR
b. If stock is registered (e.g., issuer of stock maintains a list of stockholders), then become
the named stock owner on the registry OR
c. If stock held through a securities intermediary, then become the named owner on the
intermediary’s registry OR
d. Enter into agreement with the issuer of the stock or the securities intermediary to
change registry name at a later date upon request of creditor
2. Deposit accounts? (can only perfect deposit account by control)
a. Three methods to control a deposit account: 1) Creditor becomes the banks customer on
the account, 2) be the bank maintaining the account, 3) a tripartite agreement between
bank maintaining account, creditor, and debtor that bank will comply with creditor
instructions.
3. Letter of Credit Rights? (can only perfect letter of credit right by control)
 a. Consent of bank issuing letter of credit to comply with creditor’s instructions

4. Electronic Chattel Paper?

a. Creating of definitive original of chattel paper with inability to modify/copy without
creditor’s consent

v. Automatic Perfection - no need to take further action to perfect because perfection occurs automatically
upon attachment (there are others; these are most common):
1. Purchase Money Security Interest in consumer goods
a. PMSI occurs when creditor loans money or gives value that enables debtor to acquire
the collateral (ex: purchase of furniture on credit from furniture store)
b. But remember that there must be a grant of a security interest (ex: buying furniture on
credit only gives PMSI if the debtor/purchaser signs a security agreement granting the
creditor/seller a security interest in the furniture purchased)
c. And the debtor must actually purchase the collateral with the value/loan—it isn’t
enough that the parties intend that to be what the loan is for
2. Minor transfer of accounts
a. Code test (9-309(2)): Significance (what percentage of accounts are transferred?)
b. Comment Test: Casual/Isolated (how common is this transaction?)
IV. Proceeds
a. Includes anything received upon disposition of collateral
b. If attached to original collateral, then automatically attached to proceeds
c. 20 day grace period for perfection from time of conversion; re-perfect unless:
i. Original filing valid + proceeds are file-able in the same jurisdiction as original collateral+ no intervening
cash
ii. Proceeds are cash, OR
iii. Creditor otherwise already perfected in the proceeds

V. Priority
a. GENERAL RULE among secured creditors: first-to-file-or-perfect has priority
b. EXCEPTION to general rule: PMSI creditor has priority
i. If PMSI in inventory or livestock, creditor must (1) file and (2) notify competing creditors of PMSI priority
within 5 years before debtor takes possession of inventory/livestock to have priority
ii. If PMSI in equipment or farm products (other than livestock), creditor must file within 20 days of debtor’s
possession
c. EXCEPTION to general rule: control creditors have priority over filing creditors
i. For deposit account, if bank at which account is maintained is one of the competing creditors, then the
bank at which account is maintained takes priority over creditor who has control through tripartite
agreement. However, a creditor who has control by becoming bank’s customer has priority over the bank
at which account is maintained.
ii. Otherwise, priority among creditors with control is first-in-time
d. Priority between secured creditors and lien creditors (involuntary liens)
i. Secured creditor takes priority if they are either fully perfected OR has a signed security agreement and
has filed a UCC-1 financing statement before the lien creditor comes into existence
ii. Lien creditor includes involuntary liens (judgment liens, mechanics lien, etc.) and bankruptcy trustees

VI. Sales—security interest continues in property when it is sold, unless it is sold to:
a. Buyer in the Ordinary Course of Business
i. Must be buying inventory (from the seller’s point of view—can be anything to buyer!)
ii. Must purchase in ordinary course of business (long list of requirements, but boils down to buying in
ordinary course)
b. Consumer purchasing goods from another consumer (e.g., garage sale) as long as the purchaser is NOT aware of
the security interest AND the creditor has not filed
c. Good faith purchaser, as long as the purchaser is NOT aware of the security interest AND the creditor has not
perfected
VII. Bankruptcy
a. Preferential transfer: transfer within 90 days pre-bankruptcy filing (known as “prepetition”) that allows the creditor
to receive more than he/she would have received in the bankruptcy distribution without the transfer
i. Reachback extends to one year for an insider
ii. Most important secured transaction issue: payment to the creditor on the loan
b. Most relevant exceptions?
i. PMSI creditor who perfects within 30 days
ii. Ordinary course of business transaction (e.g., paid in ordinary course)
iii. Substantially contemporaneous exchange (creditor gives value in exchange for debtor giving value)

VIII. Default
a. Is there default?
i. Non-payment?
ii. Security agreement defined?
iii. Creditor needs a good-faith basis for declaring default
b. Pre-default duties of creditor
i. Maintain collateral in its possession under “reasonable care” standard
ii. Costs of reasonable care (storage, insurance) are charged to the debtor
c. If repossession (or rendering unusable), must either:
i. Repossess without breach of peace, OR
1. Breach of peach occurs when there is violence or threat of violence
ii. Obtain court order to utilize sheriff in repossession
d. Notice sent?
i. Notice to debtors, guarantors, and anyone else who requests notice
ii. Notice to any creditor who files a financing statement
iii. At least 10 days in advance unless collateral is perishable or loses value fast
e. Sale?
i. Commercially reasonable (consider time, place, manner of sale)
ii. Public v. private
1. Must have opportunity for competitive bidding
2. Secured creditor who is selling can only buy in public sale
iii. Alternative: strict foreclosure (creditor keeps property instead of selling it)
1. Strict foreclosure in full satisfaction
a. Debt cancelled completely
b. Debtor must receive notice and if debtor doesn’t object, deemed to consent
2. Strict foreclosure in partial satisfaction
a. Debtor owes deficiency (difference between debt and value of collateral)
b. Debtor must expressly consent in signed writing
f. Proceeds distributed properly?
i. Costs of sale?
ii. Selling creditor?
iii. Other creditors?