To consensual security interests in personalty and fixtures.

(Note: when the security is real property, apply the law of mortgages)

Consumer goods: items used for personal or familial purposes

Equipment: items used in business

Inventory: goods held for sale or lease

Farm products: crops, livestock, supplies used in farm operations, etc.

Fixtures: items annexed to realty

VCR:

1. Value must be given by the creditor

2. Contract (security agreement)

3. Rights in the collateral belonging to the debtor

1. Be authenticated (signed or electronically marked) by the dealer

2. Reasonably identify the collateral

Note - security agreement is not required if secured party has already taken possession of the collateral

A security interest in inventory or some other body of property that will be increased, e.g., "in all of Staples' inventory, whether now held or hereafter acquired."

A.k.a. a floating lien

After-acquired collateral clauses are enforceable

The method by which a secured party puts the world on notice of its interest in the property

Protects the secured party from competing creditors - subsequent parties take w/ notice of the first party's priority

1. Taking possession of collateral

2. Purchase money security interest (PMSI) is automatically perfected.

PMSI = security interest that enables debtor to purchase goods

3. Filing notice of security interest in public records

1. Security agreement - but rare

2. Financing statement - brief doc stating debtor's name and address, creditor's name and address, and generic description of description of collateral - much more common

Only needs to provide enough info for a searcher to make reasonable follow-up inquiries

1. In the state where the debtor is located (individual - state of residence; corporation - state under whose laws it is organized)

2. However, if collateral is timber, minerals, or fixtures, filing is done in the county where the real property is located.

BIOC à PAC à LC à NOCie à AUPie à GUC

1. Self-help repossession

2. Repossession by judicial action

3. Strict foreclosure

4. Sale

5. Action for deficiency judgment

Can repossess collateral so long as no breach of the peace occurs.

Breach of the peace = actions by secured party that are likely to cause violence; any protest by the debtor whatsoever = breach of peace

Not without the debtor's contemporaneous and voluntary consent.

Home = zone of privacy

Available to a secured party after obtaining possession of collateral - SP retains collateral in full satisfaction of the debt

Works best when SP has some use for the collateral or the value of the collateral roughly matches the amount of debt outstanding.

Send written proposal to debtor & secondary obligors (for consumer goods) or debtor, other SPs of whom foreclosing SP is aware, & secondary obligors (for non-consumer goods)

If any of the notified parties objects w/in 20 days, strict foreclosure is not allowed and instead foreclosure must be done by sale.

If the collateral is consumer goods and the debtor has already paid 60% of the loan in non-PMSI or 60% of the cash price in a PMSI, strict foreclosure not allowed.

Secured party may sell the collateral and apply the proceeds toward payment of the debt

2 rules: 

1. Sale must be commercially reasonable

2. Prior to sale, reasonable notice must be given

For consumer goods, notice must be sent to debtor and secondary obligors

For non-consumer goods, notice must be sent to debtor, other secured parties, and secondary obligors

For public sale, notice must be given of the time and date of the sale

For private sale, notice must be given of the date after which the collateral will be sold

No bright-line rule of how much advance notice is needed - must be commercially reasonable

In non-consumer transactions, notice sent 10 days or more before sale is presumptively reasonable

Yes, if it is a public sale.

If it is a private sale, secured party may not purchase unless there are external market checks - too much potential for self-dealing

Debtor may redeem the collateral by paying the amount owed + interest + creditor's reasonable expenses

If the security agreement contained an acceleration clause, debtor must pay off the entire debt + interest and expenses

Cut off once the SP has sold the collateral or completed a strict foreclosure.