Who can take a purchase money security interest?

The protection provided by a PMSI is one reason for the growth of point of sale financing, in which a retailer offers buyers direct financing for major purchases. If the purchaser defaults, the retailer may repossess the items purchased and may do so before any other creditors are satisfied.

Is the security interest covered by this security agreement governed by the UCC?

Real estate owned by the debtor or a related principal is often the best candidate for a security interest. Security interests in real estate are not covered by the UCC but are covered by other state law.

Can you have a PMSI in equipment?

For Equipment, the PMSI Lender must be perfected either before or within 20 days after the date the Debtor receives “possession” of the equipment. For example, a person may take possession of goods as lessee under a lease contract and then exercise an option to purchase the goods from the lessor on secured credit.

How is a UCC lien enforced?

When a lender files a UCC-1 with the appropriate secretary of state — meaning the secretary of state for your residential state, or the state where your company is incorporated or organized — the lender is said to “perfect its security interest.” Legally, this means the lender can enforce the lien in a state court with …

How do I make a perfect UCC lien?

However, generally speaking, the primary ways for a secured party to perfect a security interest are:

by filing a financing statement with the appropriate public office.
by possessing the collateral.
by “controlling” the collateral; or.
it’s done automatically upon attachment of the security interest.

Can you assign a purchase money security interest?

Seller initially took a security interest in the saw that secured a “purchase-money obligation” (the Debtor’s obligation to pay the purchase price in installments), and thus Seller’s interest was a PMSI. By assigning the contract to Bank, Seller assigns this PMSI to Bank.

What does the UCC say about purchase money security interest?

An official comment in the UCC states: “The concept of ‘purchase-money security interest’ requires a close nexus between the acquisition of collateral and the secured obligation.

What should be included in a UCC security agreement?

1 The names and addresses of the debtor (or at least the owner) of the collateral 2 The name and address of the secured party, from which further information about the security interest can be obtained 3 A description of the collateral.

When to use inventory as collateral in UCC?

When inventory is used as collateral, the UCC requires four conditions to be met before a security interest can qualify as a PMSI: The PMSI must be perfected at the time the debtor receives possession of the inventory The filer must give written notification to the holder of the conflicting perfected security interest in the debtor’s inventory

Why are accounts receivable not included in UCC financing statement?

The US Court of Appeals for the Sixth Circuit ruled that a creditor bank did not have a perfected security interest in the debtor’s accounts receivable because “the bank failed to include ‘accounts’ or ‘accounts receivable’ as part of the bank’s collateral in its UCC financing statement” even though those words were used in the security agreement.