What does Article 9 of the UCC cover?
Article 9 is a section under the UCC governing secured transactions including the creation and enforcement of debts. Article 9 spells out the procedure for settling debts, including various types of collateralized loans and bonds.
What types of security interests are covered by Article 9?
PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION. § 9-313.
What is the main theme of Article 9 of the UCC?
The main point of Article 9 is to be a secured creditor:
If a creditor is secured it has a claim in something of the buyer’s (the goods exchanged for future payment or other collateral). This gives the creditor: Right of repossession of goods extended in exchange for future payment if the payment is never made.
Does UCC Article 9 apply to mortgages?
Unlike Article 3, Article 9 applies to interests in both negotiable and non-negotiable instruments. UCC § 9-102(a)(47). Article 9 applies to both a security interest in a mortgage note to secure an obligation and to the rights of a buyer of a mortgage note.
How does an Article 9 sale work?
Generally, a secured creditor may seek to enforce its rights on its collateral upon a borrower’s default. A secured creditor’s remedies include an Article 9 sale, the right to sell the collateral to a third party in a private or public sale without judicial proceedings.
How is a UCC lien enforced?
The secured party may petition the court for a judgment against the borrower. It may also utilize available judicial procedures to repossess, foreclose, or otherwise enforce the claim against the property secured by the UCC statement.
What is the difference between a lien and a security interest?
A security interest is a type of lien. A lien is a debt that is specifically attached to an asset and provides the lien holder with a security interest in that asset. A security interest generally arises at the time of lending money through agreement.
What is perfection under UCC Article 9?
§ 9-312. PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION WIT.
What transactions does Article 9 apply to?
Generally speaking, Article 9 applies only to transactions involving a “security interest” which, as we saw in Chapter 3 (The Nature of Secured Credit under Article 9), is essentially a lien by agreement on personal property.
Does the UCC cover mortgages?
The Uniform Commercial Code (“UCC”) is a set of laws that provide legal rules and regulations governing commercial or business dealings and transactions. The UCC regulates the transfer or sale of personal property. The UCC does not address transactions or financing of real property.
How do UCC liens work?
A UCC filing creates a lien against the collateral a borrower pledges for a business loan. The uniform commercial code is a set of rules governing commercial transactions. When a business owner receives financing secured by collateral, a lender can file a UCC lien against the assets pledged by the business owner.
How serious is a UCC lien?
A UCC lien isn’t anything that drastic. It’s more like a mortgage because it’s a lien to which you agree in return for the loan. As long as you keep up your payments, it shouldn’t cause problems. However, if you need additional financing at some point, the next lender knows lender number one will get paid first.
Can a UCC lien take money from your bank account?
In most cases, lenders file UCC-1 liens on real estate, property, or other major/valuable business assets. This way, if the borrower fails to repay the debt, judgment creditors can seize things like cash from a bank account or force a business owner to sell most of their assets in order to repay the debt.
What are the 3 types of security interests in real property?
Security obtained through agreement comes in three major types: (1) personal property security (the most common form of security); (2) suretyship—the willingness of a third party to pay if the primarily obligated party does not; and (3) mortgage of real estate.
What are the two kinds of lien?
Creditors come in two basic types: secured and unsecured. Although the amount of the debt may be the same, the remedies available to the creditor are very different. Secured creditors have a claim against a specific asset, whereas unsecured creditors do not.
What are the 3 requirements to have an enforceable security interest?
For a security interest to attach, the following events must have occurred: (A) value must have been given by the Secured Party; (B) the Debtor must have rights in the collateral; and (C) the Secured Party must have been granted a security interest in the collateral.
What does the UCC not cover?
Basically, the broad categories that are not covered are transactions involving the sale of real estate, transactions involving the sale of businesses (although other articles of the UCC can and will apply), and transactions involving “intangibles, such as goodwill, patents, trademarks, and copyrights.”
Can you sell an asset with a UCC lien?
Remember: as long as an asset has a UCC lien filed against it, you’re not allowed to transfer, sell, or use it as collateral for any other loan.
Can a UCC lien freeze my bank account?
Generally speaking, lenders will mostly file UCC liens on property or real estate or any other business assets. If you fail to pay your debt, a judgment creditor can usually seize cash from your bank account or force the sale of most business assets.
What are the 4 types of collateral?
What Types of Collateral Can You Submit For a Secured Business Loan?
- Real Estate. As you may know, using a home as collateral for a small business loan is a viable option for many entrepreneurs.
- Equipment. Equipment can be used as collateral to secure a loan, but it depends on a few notable factors.
- Inventory.
- Invoices.
Can a house be sold with a lien on it?
You can sell your property with a lien attached as long as the buyer is willing to pay off the lien at closing or the proceeds of the sale satisfy the lien before you receive your portion. Many buyers don’t like the thought of buying a property with a lien attached, but you can find cash buyers who won’t hesitate.
Which lien usually would be given highest priority?
A first lien has a higher priority than other liens and gets first crack at the sale proceeds. If any sale proceeds are left after the first lien is paid in full, the excess proceeds go to the second lien—like a second-mortgage lender or judgment creditor—until that lien is paid off, and so on.
What makes a security interest valid?
In order to have a valid security interest the creditor must have a security agreement with the debtor that meets certain specific requirements, namely, it must be signed, it must clearly state that a security interest is intended, and it must contain a sufficient description of the collateral subject to the security …
Who does the UCC protect?
It provides remedies and rights for both the buyer and seller. The UCC includes provisions for the sale of goods, commercial paper, bank deposits and collections, bulk transfers, investments securities, and secured transactions. Additionally, the UCC contains provisions for several types of warranties.
Does the UCC apply to everyone?
Generally speaking, the UCC and its guidelines applies to all contracts involving the sale of goods. Under the UCC, “goods” are defined as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale.”