Secured Transactions Perfection Practice Qs
Answers
Bob cWolton chad calways cused c"Bob" cas chis cfirst cname calthough chis cname cis creally c"Robert cE
cpublic crecords cused c"Bob cWolton" cand cthat cis cthe cname con chis cdrivers clicense.
1. cWhen cBob capplied cfor ca cloan cfrom cthe ccredit cunion, cusing chis cvaluable ccomic cbook ccollec
ccredit cunion cbe cperfected cin can cAlternative cA cstate cif cits cfinancing cstatement cidentifies chim ca
2. cIn cAlternative cState cB? c
3. cIn ceither cstate chis cdrivers clicense cexpires cand che cfails cto cget ca cnew cone? c- cCORRECT cA
cfrom c"this cstate."
2. cNo, cbecause clicense cnot cfrom cthis cstate. c
3. cNo
Barbara cSong cborrowed c$50K cfrom cONB cin corder cto cstart ca cbusiness ccalled c"Barb's cInteriors
cspecialty. cONB c& cSong csigned ca cSA cshowing cher cas cthe cdebtor c& cgiving cONB can cinterest c
cONB cduly cfiled ca cFS. cSubsequently, cSong cmarried cFred cDancer c& cshe cchanged cher cname ct
cborrowed canother c$50K cfrom cthe cNighflyer cFinance cCo., cwhich cloaned cher cthe cmoney cafter c
c"Dancer" cand cfinding cno cprior cencumbrances con cthe cbusiness's cinventory c& cequipment.
Did cONB close cits csecurity cinterest cbecause cit cfailed cto crefile cwhen cher cname cchanged? c- cCO
cfor cnew ccollateral cfirst cfalling cunder cthe cfloating clien c4 cmo. cafter cthe cchange. cThey close cthe c
c4 cmo. cwith cher ccorrect cname. cHer cbldg. cwould cnot cbe cincluded cas ca cSI cbc cit cis ca cmortgage
cshould ccheck con chis cdebtor cfor cany cchanges.
LNB cfiled ca cfinancing cstatement cin cthe cproper cplace cto cperfect ca cSI cin cthe caccounts creceivab
cStore. cWhen cthe clatter cran cinto cfinancial cdifficulty, cits cassets cwere csold cto ca cnew celectronics
cmoved cinto cthe csame cretail clocation.
1. cMust cLNB crefile cto ckeep cits csecurity cinterest cperfected cin cthe caccounts cactually ctransferred
cof cJapan?
2. cDo cwe cget cthe csame cresult cif cAmerican cElec. cmerges cwith cVoice cof cJapan c& cthe cnew cent
3. cWhat cif cthe copposite chappens c& cthe cdebtor cremains cthe csame, cbut cLNB cassigns cits cintere
, The cfinancing cstatement cdescribed cthe ccollateral cas: c"All cassets cof cthe cDebtor, cincluding cbut c
cthe cpremises cat c100 cRiver cRock cDrive" cAfter cthe cfinancing cstatement cwas cfiled cand cpaymen
cmoved ceverything cin cthe cbusiness cto ca cnew clocation. cNo cone cthought cto camend cthe cfinancin
Will cthe cdescription cbe csufficient cto cgive cthe ccreditor ca cvalid cinterest cin cthe csame cassets cat ct
cANS✔✔Got clucky, cprobably cfine cbecause cof c"including cbut cnot climited cto" cbut ctypically cnot ca
con cthe ccollateral cline.
A cfinancing cstatement cstates: c"This cFinancing cStatement calso crelates cto can cobligation csecured
ccollateral cand cis cevidenced cby cthe cMortgage creferred cto cabove cand cthe cAll-Assets cSecurity cA
cSeptember c28, c2015."
Does cthe cfinancing cstatement cperfecta csecurity cinterest cin ccollateral clisted cin cthe cAll-Assets cS
cCORRECT cANS✔✔Typically cno, cunless cyou care cin cthe c7th ccircuit.
Polly cowned ca cclothing cstore cthat cwas cdoing cquire cwell cso cshe cdecided cto copen cbranches cal
cborrowed cmoney cto cdo cso cfrom cLonghorn cState cBank, cwhich ctook ca csecurity cinterest c(accord
cin c"all cinventory, caccounts creceivable, cequipment, cinstruments, cgeneral cintangibles, cand cperso
cmade cher cpledge cher cextension ccollection cof cjewelery cto cthe cbank, cmaking cher cbring cit cfrom
cthe cvault. cA cyear clater cshe casked cto chave cthe cjewlery cback cto cwear cit cto ca csocial coccasion,
cBefore cshe ccould creturn cit, canother ccreditor cseized cit cby cjudicial cprocess.
Is cthere cinterest cin cthe cjewelry cperfected cby cthe cfiled cfinancing cstatement? c- cCORRECT cANS
cas clong cas cyou chave cpossession, cso cthat cperfection cis cout cthe cwindow. cHowever, cthe cjewerl
c"personal cproperty" cin cthe cfinancing cstatement c(this cisn't ctoo cbroad cfor ca cfinancing cstatement)
cfiled can camendment cto cthe cfinancing cstatement cbefore cgiving cthe cjewelry cto cher.
The cSA c& cthe cFS cboth cdescribed cthe ccollateral cas c"inventory."
1. cDoes cthis climit cthe cSI cto cexisting cinventory conly, cor cdoes cthe cSI cextend cto creplacement cfo
2. cIs cthis csufficient cfor cafter-acquired cinventory cin cthe cFS? c- cCORRECT cANS✔✔1. cExtends cto
chad csaid c"inventory cnow cowned cor cafter cacquired" cbut cthe cFS csimply cmentioned c"inventory,"
2. cYes, cbut conly can cidiot cwould cnot calso cinclude cafter-acquired cin cFS.
Your cclient, cArchibald cGracie, cowns cThe cWhite cStar cof cEngland, ca cfamous clarge cdiamond ccu
cMuseum cin cNY. cMolly cBrown, ca cwealthy cColorado cinvestor, chas cagreed cto cbuy cthe cdiamond
cmade ca csubstantial cdown cpayment, cwith can cagreement cto cmake c3 cmore cpayments cbefore csh
cBrown chave csigned cthe cpurchase cagreement, cwhich ccontains ca cclause cgranting chim ca cSI cin c
chas cmade call cthe crequired cpayment.
Can che cperfect ca cSI cin cthe cdiamond cby csimply cnotifying cAstor cMuseum cof cthe csale cand ctellin
chis cbenefit cuntil cshe cmakes cpayment cin cfull, cthus ccreating can cescrow carrangement cin cwhich c
cescrow cagent? c- cCORRECT cANS✔✔No, cnot cuntil cthe cbailee cacknowledged cin can cauthenticat
csecured cparty
Kiddie cDelight, ca cmanufacturer cof ctoys, cwanted cto cborrow cmoney cand cuse cits cinventory cof ctoy
cFred's cField cWarehouse cCompany, cand cFred's ccame cto cthe cplant, cput cthe cinventory cin ca cloc
con cthe cdoor csaying c"Contents cof cRoom cUnder cControl cof cFred's cField cWarehouse." cFred's cth
cwarehouse creceipt cdeliverable cto cthe corder cof cKiddie cDelight. cFred's chired cMort cMenial, cthe cK
clocal cwarehouse ccustodian c(Mort cwas cpaid c$1.00 ca cweek cby cFred's cto cmind cthe cgoods; che c
cnormal cpaycheck cfrom cKiddie cDelight). cKD cthen cpledged cthe cwarehouse creceipt c(a cdocument
cfor ca cloan. cKD cwent cbankrupt cshortly cafter.
1. cBy chaving cpossession cof cthis cdocument, cdid cthe cbank chave ca cperfected cSI cin cthe cinventor
2. cAssume cthere cis ca cwarehouse creceipt cthat cis cvalidly cissued cand ceffective. cIf cthe cbank cand
Answers
Bob cWolton chad calways cused c"Bob" cas chis cfirst cname calthough chis cname cis creally c"Robert cE
cpublic crecords cused c"Bob cWolton" cand cthat cis cthe cname con chis cdrivers clicense.
1. cWhen cBob capplied cfor ca cloan cfrom cthe ccredit cunion, cusing chis cvaluable ccomic cbook ccollec
ccredit cunion cbe cperfected cin can cAlternative cA cstate cif cits cfinancing cstatement cidentifies chim ca
2. cIn cAlternative cState cB? c
3. cIn ceither cstate chis cdrivers clicense cexpires cand che cfails cto cget ca cnew cone? c- cCORRECT cA
cfrom c"this cstate."
2. cNo, cbecause clicense cnot cfrom cthis cstate. c
3. cNo
Barbara cSong cborrowed c$50K cfrom cONB cin corder cto cstart ca cbusiness ccalled c"Barb's cInteriors
cspecialty. cONB c& cSong csigned ca cSA cshowing cher cas cthe cdebtor c& cgiving cONB can cinterest c
cONB cduly cfiled ca cFS. cSubsequently, cSong cmarried cFred cDancer c& cshe cchanged cher cname ct
cborrowed canother c$50K cfrom cthe cNighflyer cFinance cCo., cwhich cloaned cher cthe cmoney cafter c
c"Dancer" cand cfinding cno cprior cencumbrances con cthe cbusiness's cinventory c& cequipment.
Did cONB close cits csecurity cinterest cbecause cit cfailed cto crefile cwhen cher cname cchanged? c- cCO
cfor cnew ccollateral cfirst cfalling cunder cthe cfloating clien c4 cmo. cafter cthe cchange. cThey close cthe c
c4 cmo. cwith cher ccorrect cname. cHer cbldg. cwould cnot cbe cincluded cas ca cSI cbc cit cis ca cmortgage
cshould ccheck con chis cdebtor cfor cany cchanges.
LNB cfiled ca cfinancing cstatement cin cthe cproper cplace cto cperfect ca cSI cin cthe caccounts creceivab
cStore. cWhen cthe clatter cran cinto cfinancial cdifficulty, cits cassets cwere csold cto ca cnew celectronics
cmoved cinto cthe csame cretail clocation.
1. cMust cLNB crefile cto ckeep cits csecurity cinterest cperfected cin cthe caccounts cactually ctransferred
cof cJapan?
2. cDo cwe cget cthe csame cresult cif cAmerican cElec. cmerges cwith cVoice cof cJapan c& cthe cnew cent
3. cWhat cif cthe copposite chappens c& cthe cdebtor cremains cthe csame, cbut cLNB cassigns cits cintere
, The cfinancing cstatement cdescribed cthe ccollateral cas: c"All cassets cof cthe cDebtor, cincluding cbut c
cthe cpremises cat c100 cRiver cRock cDrive" cAfter cthe cfinancing cstatement cwas cfiled cand cpaymen
cmoved ceverything cin cthe cbusiness cto ca cnew clocation. cNo cone cthought cto camend cthe cfinancin
Will cthe cdescription cbe csufficient cto cgive cthe ccreditor ca cvalid cinterest cin cthe csame cassets cat ct
cANS✔✔Got clucky, cprobably cfine cbecause cof c"including cbut cnot climited cto" cbut ctypically cnot ca
con cthe ccollateral cline.
A cfinancing cstatement cstates: c"This cFinancing cStatement calso crelates cto can cobligation csecured
ccollateral cand cis cevidenced cby cthe cMortgage creferred cto cabove cand cthe cAll-Assets cSecurity cA
cSeptember c28, c2015."
Does cthe cfinancing cstatement cperfecta csecurity cinterest cin ccollateral clisted cin cthe cAll-Assets cS
cCORRECT cANS✔✔Typically cno, cunless cyou care cin cthe c7th ccircuit.
Polly cowned ca cclothing cstore cthat cwas cdoing cquire cwell cso cshe cdecided cto copen cbranches cal
cborrowed cmoney cto cdo cso cfrom cLonghorn cState cBank, cwhich ctook ca csecurity cinterest c(accord
cin c"all cinventory, caccounts creceivable, cequipment, cinstruments, cgeneral cintangibles, cand cperso
cmade cher cpledge cher cextension ccollection cof cjewelery cto cthe cbank, cmaking cher cbring cit cfrom
cthe cvault. cA cyear clater cshe casked cto chave cthe cjewlery cback cto cwear cit cto ca csocial coccasion,
cBefore cshe ccould creturn cit, canother ccreditor cseized cit cby cjudicial cprocess.
Is cthere cinterest cin cthe cjewelry cperfected cby cthe cfiled cfinancing cstatement? c- cCORRECT cANS
cas clong cas cyou chave cpossession, cso cthat cperfection cis cout cthe cwindow. cHowever, cthe cjewerl
c"personal cproperty" cin cthe cfinancing cstatement c(this cisn't ctoo cbroad cfor ca cfinancing cstatement)
cfiled can camendment cto cthe cfinancing cstatement cbefore cgiving cthe cjewelry cto cher.
The cSA c& cthe cFS cboth cdescribed cthe ccollateral cas c"inventory."
1. cDoes cthis climit cthe cSI cto cexisting cinventory conly, cor cdoes cthe cSI cextend cto creplacement cfo
2. cIs cthis csufficient cfor cafter-acquired cinventory cin cthe cFS? c- cCORRECT cANS✔✔1. cExtends cto
chad csaid c"inventory cnow cowned cor cafter cacquired" cbut cthe cFS csimply cmentioned c"inventory,"
2. cYes, cbut conly can cidiot cwould cnot calso cinclude cafter-acquired cin cFS.
Your cclient, cArchibald cGracie, cowns cThe cWhite cStar cof cEngland, ca cfamous clarge cdiamond ccu
cMuseum cin cNY. cMolly cBrown, ca cwealthy cColorado cinvestor, chas cagreed cto cbuy cthe cdiamond
cmade ca csubstantial cdown cpayment, cwith can cagreement cto cmake c3 cmore cpayments cbefore csh
cBrown chave csigned cthe cpurchase cagreement, cwhich ccontains ca cclause cgranting chim ca cSI cin c
chas cmade call cthe crequired cpayment.
Can che cperfect ca cSI cin cthe cdiamond cby csimply cnotifying cAstor cMuseum cof cthe csale cand ctellin
chis cbenefit cuntil cshe cmakes cpayment cin cfull, cthus ccreating can cescrow carrangement cin cwhich c
cescrow cagent? c- cCORRECT cANS✔✔No, cnot cuntil cthe cbailee cacknowledged cin can cauthenticat
csecured cparty
Kiddie cDelight, ca cmanufacturer cof ctoys, cwanted cto cborrow cmoney cand cuse cits cinventory cof ctoy
cFred's cField cWarehouse cCompany, cand cFred's ccame cto cthe cplant, cput cthe cinventory cin ca cloc
con cthe cdoor csaying c"Contents cof cRoom cUnder cControl cof cFred's cField cWarehouse." cFred's cth
cwarehouse creceipt cdeliverable cto cthe corder cof cKiddie cDelight. cFred's chired cMort cMenial, cthe cK
clocal cwarehouse ccustodian c(Mort cwas cpaid c$1.00 ca cweek cby cFred's cto cmind cthe cgoods; che c
cnormal cpaycheck cfrom cKiddie cDelight). cKD cthen cpledged cthe cwarehouse creceipt c(a cdocument
cfor ca cloan. cKD cwent cbankrupt cshortly cafter.
1. cBy chaving cpossession cof cthis cdocument, cdid cthe cbank chave ca cperfected cSI cin cthe cinventor
2. cAssume cthere cis ca cwarehouse creceipt cthat cis cvalidly cissued cand ceffective. cIf cthe cbank cand
