Debtor and Big Bank signed a security agreement which included all deposit accounts of Debtor, including deposit account No. 1926-7 maintained at Big Bank. However, Big Bank failed to file a financing statement to perfect its security interest. What is the status of Big Bank's security interest in account No. 1926-7?
The security interest is not perfected.
The security interest is perfected, but only if Big Bank and Debtor signed a control agreement.
The security interest is perfected, but only if Big Bank and Debtor signed a control agreement or the security agreement granted control over the deposit account to Big Bank.
On these facts, Big Bank's security interest in the deposit account No. 1926-7 is perfected without any other action.
Debtor and Big Bank signed a security agreement which included all deposit accounts of Debtor, including deposit account No. 1984-1 maintained at Local Bank. However, Big Bank failed to file a financing statement to perfect its security interest. What is the status of Big Bank's security interest in account No. 1984-1 maintained at Local Bank? Select the most complete response.
The security interest is not perfected.
The security interest is perfected, but only if Big Bank and Debtor signed a control agreement.
The security interest is perfected, but only if Big Bank, Debtor and Local Bank signed a control agreement.
The security interest is perfected, but only if Big Bank, Debtor and Local Bank signed a control agreement, or the account No. 1984-1 was re-registered into Big Bank's name.
Big Bank made a loan to Debtor on March 15 secured by a properly perfected security interests in Debtor's inventory and accounts. Debtor subsequently sold inventory on credit, generating accounts. In turn, Debtor's customers paid these accounts in the ordinary course of business by mailing checks to Debtor. Debtor immediately deposits these checks into deposit account No. 1836 maintained with Local Bank in Debtor's name. Assume that Big Bank HAS NOT obtained a control agreement among Big Bank, Debtor and Local Bank. SELECT the answer that best describes the status of Big Bank's security interest in the funds on deposit in account No. 1836.
Big Bank has no security interest in the funds on deposit in account No. 1836 because there is no control agreement.
Big Bank has no security interest in the funds on deposit in account No. 1836 because there is no control agreement nor is the deposit account registered in the name of Big Bank.
Big Bank has a perfected security interest in the funds on deposit in account No. 1836 as an interest in proceeds which will continue from the interest in the original collateral so long as the funds remain identifiable cash proceeds of the original collateral.
Big Bank has a perfected security interest in the funds on deposit in account No. 1836 as an interest in proceeds with will continue from the interest in the original collateral, but this interest will be perfected for a limited 20 day period unless Big Bank takes another step to continue perfection--such as signing a control agreement.
Debtor and Big Bank signed a security agreement which included all deposit accounts of Debtor, including deposit account No. 1984-1 maintained at Local Bank. Debtor and Local Bank had also signed a security agreement granting Local Bank a security interest in that very same account. If Debtor files for bankruptcy, which secured party will have priority in deposit account No. 1984-1? Big Bank or Local Bank? Assume that both banks have a properly perfected security interest in this account which is maintained in the name of Debtor.
Local Bank will have priority because the deposit account is maintained with it.
The first bank to have properly perfected its security interest will have priority in deposit account No. 1984-1.
Big Bank will have priority if it perfected its security interest by using a control agreement because Local Bank would have been a party to that agreement and thus consented to the the perfection of the security interest of Big Bank.
Local Bank will have priority in all funds in the account except those which are traceable as proceeds of other collateral in which Big Bank had perfected a security interest.
Debtor and Big Bank signed a security agreement which included all equipment of Debtor. This security interest was properly perfected by filing a financing statement in the location of the Debtor. Debtor sold the equipment to Buyer in exchange for a check, which Debtor deposited in its deposit account No. 1984-1 maintained at Local Bank. Buyer's check was good, with available funds appearing in the deposit account 10 days after the sale. On that day, what best describes the status of Big Bank's security interest in the funds in the deposit account. (Assume the funds are traceable to the sale of the equipment.)
On that day, Big Bank has a perfected security interest in the deposit account's funds BUT only if the deposit account was described in the granting clause of the security agreement.
On that day, Big Bank has a perfected security interest in the deposit account's funds.
Big Bank will have a perfected security interest in the funds in the deposit account, but only if the granting clause in the security agreement mentioned that it extended to "proceeds."
Big Bank will have a security interest in the funds in the deposit account but only if Buyer was a BIOCOB or "buyer in the ordinary course of business" because otherwise Big Bank will have a double security interest in both equipment and bank account (causing unjust enrichment).
Debtor and Big Bank signed a security agreement which included all equipment of Debtor. This security interest was properly perfected by filing a financing statement in the location of the Debtor. Debtor sold the equipment to Buyer in exchange for a check, which Debtor deposited in its deposit account No. 1984-1 maintained at Local Bank. Buyer's check was good, with available funds appearing in the deposit account 10 days after the sale. Thirty days after the sale, what best describes the status of Big Bank's security interest in the funds in the deposit account. (Assume the funds are traceable to the sale of the equipment).
On that day, Big Bank has a perfected security interest in the deposit account's funds BUT only if the deposit account was described in the granting clause of the security agreement.
On that day, Big Bank has a perfected security interest in the deposit account's funds because the security interest continues in identifiable cash proceeds.
Big Bank will have a perfected security interest in the funds in the deposit account, but only if the equipment had been sold to Buyer free and clear of the security interest (for otherwise there would be a double-counting)
Big Bank will have a security interest in the funds in the deposit account but only if it had properly taken additional steps to obtain control over the deposit account within 21 days after the sale of the equipment.
EVALUATE THE FOLLOWING STATEMENT: A security agreement authenticated by the Debtor is necessary for attachment of a security interest in a deposit account. Pick the most complete answer.
An authenticated security agreement is necessary for a attachment of a security interest in all bank accounts.
An authenticated security agreement is not necessary for attachment of a security interest in any deposit account.
An authenticated security agreement is necessary for attachment of a security interest of a third-party in a bank account maintained with a deposit bank, but not for a security interest of the deposit bank itself in a deposit account maintained with it.
An authenticated security agreement is necessary for attachment of a security interest of a deposit bank in a bank account maintained with it, but not for a security interest of a third-party in a deposit account maintained with the deposit bank if a control agreement has been authenticated.
Debtor and Big Bank signed a security agreement which included all equipment of Debtor. This security interest was properly perfected by filing a financing statement in the location of the Debtor. Debtor sold the equipment to Buyer in exchange for a check, which Debtor deposited in its deposit account No. 1984-1 maintained at Local Bank. Buyer's check was good, with traceable available funds appearing in the deposit account shortly after the sale. Five days after the check cleared, Debtor made a wire transfer of funds on deposit in account No. 1984-1 to pay Vendor for the delivery of business machine and the provision of a service. Pick the answer that best describes the extent of Big Bank's security interest following the wire transfer.
On that day, Big Bank has a perfected security interest in the wire transferred funds sent to Vendor as proceeds of its security interest in original collateral.
On that day, Big Bank has a perfected security interest in the wire transferred funds sent to Vendor as proceeds of its security interest in original collateral, as well as in the business machine delivered to Debtor.
On that day, Big Bank has a perfected security interest in the wire transferred funds sent to Vendor as proceeds of its security interest in original collateral to the extent used to pay for services, as well as in the business machine delivered to Debtor (but not in the funds transferred to pay for the business machine).
On that day, Big Bank has no interest, perfected or otherwise, the wire transferred funds sent to Vendor; but, if Big Bank has an after acquired property clause covering equipment in its security interest, it will have a perfected security interest in the business machine
Debtor and Big Bank signed a security agreement which included all deposit accounts of Debtor, including deposit account No. 1984-1 maintained at Local Bank. Big Bank, Debtor and Local Bank had also signed a control agreement granting Big Bank the right to direct application of funds in that very same account without the consent of Debtor. Separately, Debtor borrowed $5,000 from Local Bank on an unsecured basis. If Debtor defaults on its loan from Local Bank, what are Local Bank's rights with respect to the deposit account?
Big Bank will have a priority claim to funds on deposit in account No. 1984-1 because it has a security interest and Local Bank does not.
Local Bank may exercise a right of set-off against funds in account No. 1984-1 which has priority over the security interest of Big Bank.
Local Bank may exercise a right of set-off against funds in account No. 1984-1 but this right will not have priority over the security interest of Big Bank because Big Bank has control over the deposit account.
Local Bank may exercise a right of set-off against funds in account No. 1984-1 which has priority over the security interest of Big Bank, though this right is not given practical effect in a bankruptcy of the Debtor.
Big Bank made a personal loan to Consumer to allow consumer to purchase a portable garden shed for use in Consumer's backyard. Big Bank properly filed a UCC-1 financing statement against Consumer to provide it with an extra layer of protection as the shed's purchase price was $5,000. In addition to taking a security interest in the shed, Big Bank would like to take a security interest in Consumer's deposit account maintained with Local Bank. Big Bank has asked you for advice about its proposed collateral security package Advise Big Bank.
Big Bank may take a purchase money security interest in the shed but it may not take an interest in the deposit account as original collateral. If the shed is sold and the proceeds are deposited in the account, Big Bank may have an interest in proceeds.
Big Bank may take a security interest in both the shed and the deposit account as original collateral.
Big Bank may take either a purchase money security interest in the shed--but no other collateral, or it may take a conventional security interest in the shed, as well as an interest in the deposit account as original collateral.
Big Bank may take a security interest in the shed, but it may not take any security interest of any kind (original or proceeds) in the deposit account of a consumer.
Lenny Lender lends to Delia Debtor and Delia signs a security agreement giving Lenny a security interest in a general bank account maintained at Northern Bank at Time T1. Lenny immediately files a financing statement. Delia also borrowed from Northern Bank and gave Northern a security interest in the bank account maintained at Northern later at Time T2. Northern Bank did not file a financing statement. Who has priority as to the bank account?
Lenny Lender has priority because it was the first to file or perfect.
Northern Bank has priority because it is the bank at which the bank account is maintained so it has priority over Lenny Lender even though Lenny was the first to perfect.
Northern Bank has a security interest in the bank account because it is perfected and Lenny Lender is unperfected on these facts.
Lenny Lender has priority because it perfected its security interest in the bank account whereas Northern Bank is unperfected.
Lenny Lender lends to Delia Debtor and Delia signs a security agreement giving Lenny a security interest in a general bank account maintained at Northern Bank at Time T1. Lenny immediately files a financing statement. Delia also borrowed from Northern Bank and gave Northern a security interest in the bank account maintained at Northern later at Time T2. Northern Bank did not file a financing statement. As luck would have it, Lenny Lender also claimed the bank account as proceeds of a properly perfected inventory security interest that Lenny could prove constituted identifiable proceeds. Assume Lenny also had filed as to the inventory at Time T1 before Northern Bank took an interest in the bank account to secure its loan. On these facts,who has priority as to the proceeds of inventory on deposit in the bank account?
Lenny Lender has priority because it was the first to file or perfect and Northern Bank was never perfected in the inventory.
Lenny Lender has priority because, on these facts, the perfection in the inventory continues on with the identifieable proceeds in the bank account and it perfected in the inventory prior to the time Northern perfected in the bank account.
Northern Bank has priority because the security interest of the deposit account at which a bank account is maintained has priority, even over an earlier perfected security interest.
Northern Bank will have priority after 20 days because it may refuse to enter into a control agreement with Lenny Lender and, thus, Lenny's interest in the identifiable cash proceeds will become unperfected.