Class 13 and 14 Slides

7/26/2019 Class 13 and 14 Slides

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Basic concepts ofBasic concepts of

securitysecurity

Unsecured creditorUnsecured creditor

remediesremedies 1



remediesremedies

2



: Creditors’ Remedies Under

State Law1. What is a security interest?

2. How does the secured creditor foreclose?

3



Basic conceptsSecurity interest: An interest in property contingent on

the non-payment of a debt. Transactions tting that denition are security interests

!"en though the documents show an absolute transfer

!#ample$ deed absolute

!#ample$ ban% account in secured creditor&s name

!"en though the parties don&t reali'e they created asecurity interest

!"en though the parties didn&t intend some security

e(ects

)egardless of who has possession *But +2-,1*1?

UCC § 9-109(a(1: /T0his article applies to a transactionregardless of its form that creates a security interest inpersonal property or #tures by contract. 4



Basic conceptsSecurity interest *lien$ (1 An interest in property

(! contingent on the non-payment (" of a debt.

5

Contract to sell later

Promise to pay $30,000

3. Debtor owes a debt (Promise to pay $30,000)1. ec!red "as an interest in t"e a!to (owners"ip)

2. #"e ri"t is continent on nonpayment (i% Debtor pays,ec!red "as no ri"t in t"e a!to).

#"is is a sec!rity interest. &2'401(1), 2

*ample 5+ ec!red arees to sell a!to to Debtor i% Debtor "aspaid $30,000, in t"ree years. ec!red ies possession now,b!t retains owners"ip !ntil payments "ae been made

Debtor ec!red



Basic conceptsRi#$t to redeem: The debtor&s right to pay the debt and own the

property free of the security interest. f a security interest e#istsdebtor always has the right to redeem.

3ynonymous with ownership.

%orec&osure: Termination of the right to redeem *four types

1. 4udicial foreclosure *court declares sale by sheri(

2. 5ower of sale foreclosure *no court by trustee real estate

6. 788 foreclosure by sale *no court by creditor personalty

,. 3trict foreclosure *court declares no sale contract for deed

'eed in &ieu of forec&osure: 9oluntary transfer of the debtor&s

ownership : right to redeem to the creditor *merger doctrine

When is a deed in lieu of foreclosure a security interest?

When secured&s right is contingent on nonpayment of a debt.

-



ale o% /cco!nts

Citibandebtor

/cco!ntdebtors

Debtor operates a b!siness

t"at enerates acco!nts, e..credit cards

Creditcards



ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



toresoods and

serices

Creditcards



ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



$00 millionadances

toresoods and

serices



ale o% /cco!nts

Citibandebtor

/cco!ntdebtors

$1.1 billionacco!nts

owin



$00 millionadances



ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



Debtor wants to %ree !p capital


owin



12

ale o% /cco!nts

Citibandebtor

/cco!nts

$1 billion

/cco!ntdebtors




o Debtor sells t"e acco!nts

!yer


owin



13

ale o% /cco!nts

Citibandebtor

/cco!nts

$1 billion

/cco!ntdebtors





!yer

$1.1 billion acco!nts

owin



14

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors





!yer


owin

6it"o!treco!rse



15

ale o% /cco!nts 6it" 7eco!rse

Citibandebtor

/cco!ntdebtors





6it" reco!rse+ 8% an acco!nt debtor doesn9t pay, Debtorwill b!y t"e acco!nt bac %or t"e acco!nt9s %ace amo!nt

!yer 7eco!rseobliation



1-


Citibandebtor

/cco!ntdebtors





!yer $500

/cco!nt




1


Citibandebtor

/cco!ntdebtors





!yer $500

/cco!nt


Citiban promises (!arantees) !yer $1.1 billion.



1

ec!rity 8nterest in /cco!nts

Citibandebtor

$1.1 billion note,

sec!rity interest$1 billion loan

/cco!ntdebtors

$1.1 billion Debtor operates a b!siness



o Debtor borrows aainst t"eacco!nts

#"is deal is t"e same as t"e ale o% /cco!nts 6it" 7eco!rse

ec!redParty



1


Citibandebtor $1 billion loan

/cco!ntdebtors




o Debtor borrows aainst t"eacco!nts

#"is deal is t"e same as t"e ale o% /cco!nts 6it" 7eco!rse.

7is o% nonpayment o% acco!nts is on Citiban.

ec!redParty

$1.1 billion note,

sec!rity interest



20



/cco!ntdebtors




o Debtor borrows aainst t"e

acco!nts



/ sale o% acco!nts wit" reco!rse is a sec!red interest.

ec!redParty

$1.1 billion note,

sec!rity interest



Asset 3ecuriti'ation5opular alternati"e to indi"idual loan security

Bundle loans.

21



22

:riinator !yer

ale o% /cco!nts

$1 billion

/cco!ntdebtors

$1.1 billion

/sset sec!riti;ation



23

:riinator #r!st (P)

ale o% /cco!nts

$1 billion

/cco!ntdebtors

$1.1 billion




24


:riinator #r!st (P)

8nestors

ale o% /cco!nts

8nestmentcerti%icates

(sec!rities)

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion



25


:riinator #r!st (P)

8nestors

ale o% /cco!nts

#ra!nc" 1#ra!nc" 2

#ra!nc" 3#ra!nc" 4

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion



2-


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion

& '10(a)(1) <#="is article applies to a transaction, reardlesso% its %orm, t"at creates a sec!rity interest in personal property



2


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

Did t"is deal create a sec!rity interest>

/n interest in property continent on t"enon'payment o% a debt.



2


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

Did t"is deal create a sec!rity interest> ?o,tr!st owns t"e acco!nts, "as t"e ris o% loss.



2


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion


/dd+ 8nestors want !aranteed ret!rn, don9t want to enae in b!siness



30


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion



1.:riinator will serice t"e acco!nts



31


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion



1.:riinator will serice t"e acco!nts2.:riinator will replace bad acco!nts (liereco!rse)



32


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion




?ow does t"e sec!riti;ation create a sec!rity interest>



33


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion




?ow does t"e sec!riti;ation create a sec!rity interest> @es,

sale is wit" reco!rse and debtor "as t"e ris o% loss.

Debtor ec!red party



34


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

#"is transaction creates and sec!rity interest.

Debtor ec!red party

/cco!ntdebtors

$1.1 billion



35


:riinator #r!st (P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion


ConseA!ence+ 8% oriinator %iles banr!ptcy, t"e acco!nts areproperty o% t"e estate. Debtor can !se collection proceeds toreorani;e.

Debtor ec!red party

/cco!ntdebtors

$1.1 billion



3ecurity and ;oreclosure 4ordan 8lass 1,

3



Trying to a"oid e#pense and time costs of foreclosure

Basile p. <6=- common law rules of construction

B8onditional 3ales

B>eases

40



B )emedies of 3ecured 8reditors

B 3ecurity and ;oreclosure

1. What is a security interest?

2. How does the secured creditorforeclose?

41




State LawAssignment ,2$ )emedies of 7nsecured 8reditors-one

Assignments ,6-,@$ )emedies of 3ecured 8reditors



2. How does the secured creditorforeclose?

42




State LawAssignment ,2$ )emedies of 7nsecured 8reditors

Assignments 2-=$ )emedies of 3ecured 8reditors

Assignment 2$


2. How does the secured creditor foreclose?

43



Basic conceptsSecurity interest: An interest in property contingent on

the non-payment of a debt.

Transactions tting that denition are security interests

!"en though the documents show an absolute transfer

!#ample$ deed absolute

!#ample$ ban% account in secured creditor&s name

!"en though the parties don&t reali'e they created asecurity interest

!"en though the parties didn&t intend some security

e(ects

)egardless of who has possession *But +2-,1*1?

UCC § 9-109(a(1: /T0his article applies to a transactionregardless of its form that creates a security interest in

personal property or #tures by contract. 44





45





4-



Basic conceptsSecurity interest *lien$ (1 An interest in personal

property(! contingent on the non-payment (" of a debt.

4

ease and option

Promise to pay rent

*ample 4+ ec!red leases an a!to to Debtor %or %ie years. /t t"e end o% t"e lease, Debtor "as t"e ri"t to p!rc"aset"e a!to %or $1.

Debtor ec!red





4

ease and option

Promise to pay rent

3. Debtor owes a debt (Promise to pay rent)


Debtor ec!red





4

ease and option

Promise to pay rent

3. Debtor owes a debt (Promise to pay rent)1. ec!red "as an interest in t"e a!to (owners"ip)


Debtor ec!red





50

ease and option

Promise to pay rent


2. #"e interest is continent on nonpayment (i% Debtor paysdebt pl!s $1, Debtor will own t"e a!to).


Debtor ec!red





51

ease and option

Promise to pay rent


2. #"e interest is continent on nonpayment (i% Debtor paysdebt pl!s $1, Debtor will own t"e a!to).

#"is is a sec!rity interest.


Debtor ec!red





52




Debtor ec!red





53



3. Debtor owes a debt (Promise to pay $30,000)


Debtor ec!red





54




1. ec!red "as an interest in t"e a!to (owners"ip)


Debtor ec!red





55







Debtor ec!red





5-






#"is is a sec!rity interest. &2'401(1), 2


Debtor ec!red



Basic conceptsRi#$t to redeem: The debtor&s right to pay the debt and own the

property free of the security interest. f a security interest e#ists

debtor always has the right to redeem.

3ynonymous with ownership.

%orec&osure: Termination of the right to redeem *four types

1. 4udicial foreclosure *court declares sale by sheri(

2. 5ower of sale foreclosure *no court by trustee real estate

6. 788 foreclosure by sale *no court by creditor personalty

,. 3trict foreclosure *court declares no sale contract for deed

'eed in &ieu of forec&osure: 9oluntary transfer of the debtor&s

ownership : right to redeem to the creditor *merger doctrineWhen is a deed in lieu of foreclosure a security interest?

When secured&s right is contingent on nonpayment of a debt.

5

l % / t



5

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



Creditcards

l % / t



5

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



toresoods and

serices

Creditcards

l % / t



-0

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors



$00 millionadances

toresoods and

serices

l % / t



-1

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors


owin



$00 millionadances

l % / t



-2

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors





owin

l % / t



-3

ale o% /cco!nts

Citibandebtor

/cco!nts

$1 billion

/cco!ntdebtors





!yer


owin

l % / t



-4

ale o% /cco!nts

Citibandebtor

/cco!nts

$1 billion

/cco!ntdebtors





!yer


owin

ale o% /cco nts



-5

ale o% /cco!nts

Citibandebtor

/cco!ntdebtors





!yer


owin

6it"o!treco!rse




--


Citibandebtor

/cco!ntdebtors






!yer

7eco!rse

obliation




-


Citibandebtor

/cco!ntdebtors





!yer $500

/cco!nt





-


Citibandebtor

/cco!ntdebtors





!yer $500

/cco!nt


Citiban promises (!arantees) !yer $1.1 billion.




-


Citibandebtor

$1.1 billion note,sec!rity interest

$1 billion loan

/cco!ntdebtors





acco!nts

#"is deal is t"e same as t"e ale o% /cco!nts 6it" 7eco!rse

ec!redParty




0



/cco!ntdebtors





acco!nts



ec!redParty





1



/cco!ntdebtors





acco!nts



/ sale o% acco!nts wit" reco!rse is a sec!red interest.

ec!redParty





2

:riinator !yer

ale o% /cco!nts

$1 billion

/cco!ntdebtors

$1.1 billion





3

:riinator #r!st

(P)

ale o% /cco!nts

$1 billion

/cco!ntdebtors

$1.1 billion





4


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion




5


:riinator #r!st

(P)

8nestors

ale o% /cco!nts

#ra!nc" 1#ra!nc" 2#ra!nc" 3#ra!nc" 4

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion




-


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

/cco!ntdebtors

$1.1 billion

& '10(a)(1) <#="is article applies to a transaction, reardlesso% its %orm, t"at creates a sec!rity interest in personal property





:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

Did t"is deal create a sec!rity interest>

/n interest in property continent on t"enon'payment o% a debt.





:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

Did t"is deal create a sec!rity interest> ?o,

tr!st owns t"e acco!nts, "as t"e ris o% loss.





:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion







0


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion




1.:riinator will serice t"e acco!nts




1


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion








2


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion





?ow does t"e sec!riti;ation create a sec!rity interest>




3


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion





?ow does t"e sec!riti;ation create a sec!rity interest> @es,

sale is wit" reco!rse and debtor "as t"e ris o% loss.

Debtor ec!red party




4


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion


Debtor ec!red party

/cco!ntdebtors

$1.1 billion




5


:riinator #r!st

(P)

8nestors

ale o% /cco!nts


(sec!rities)

$1 billion

$1 billion

#"is transaction creates and sec!rity interest.ConseA!ence+ 8% oriinator %iles banr!ptcy, t"e acco!nts areproperty o% t"e estate. Debtor can !se collection proceeds toreorani;e.

Debtor ec!red party

/cco!ntdebtors

$1.1 billion



5 bl ,6 2 T t



ale ease

Price 5,000

Down payment 0

/mo!nt %inanced 1 5,000Eont"ly payment 10.

?!mber o% payments 3-

/dditional amo!ntpayable to own

0

#otal payments -,50.2

0

5roblem ,6.2 Two ways to mo"e cars

5 bl ,6 2 T t



ale ease

Price 5,000 ?ot applicable

Down payment 0




0


1


5roblem ,6 2 T o a s to mo e cars



ale ease


Down payment 0 0




0


2




5roblem ,6 2 Two ways to mo"e cars



ale ease


Down payment 0 0

/mo!nt %inanced 1 5,000 ?ot applicableEont"ly payment 10. 10.



0


4





ale ease


Down payment 0 0


?!mber o% payments 3- 3-


0


5





ale ease


Down payment 0 0




0 10


-





ale ease


Down payment 0 0




0 10

#otal payments -,50.2 -,51.2


ale'ease Distinction



+ E-1E*a*1 /T0his article applies to a transactionregardless of its form that creates a security interest

in personal property






+1-26. F/A0 transaction in the form of a lease creates asecurity interest if the consideration . . . is anobligation for the term of the lease not subIect to

termination by the lessee







termination by the lessee and . . . /the lease is for theremaining economic life of the goods

100

conomic li%e

easeFconsideration termec!rity interest







termination by the lessee and . . . /the lease is for theremaining economic life of the goods by

1. Jriginal term

101

conomic li%e

easeFconsideration termec!rity interest







termination by the lessee and . . . /the lease is for theremaining economic life of the goods by

1. Jriginal term

2. )eDuired renewal or purchase

102

conomic li%e

ease termec!rity interest

Eandatory renewal




+ E-1E*a*1 /T0his article applies to a transactionregardless of its form that creates a security interest in

personal property+1-26. F/A0 transaction in the form of a lease creates a

security interest if the consideration . . . is an obligation forthe term of the lease not subIect to termination by the

lessee and . . . /the lease is for the remaining economiclife of the goods by

1. Jriginal term


6. )enewal term for no *or nominal additionalconsideration

103

conomic li%e


Gree renewal




+ E-1E*a*1 /T0his article applies to a transaction regardless ofits form that creates a security interest in personal property

+1-26. F/A0 transaction in the form of a lease creates a securityinterest if the consideration . . . is an obligation for the term ofthe lease not subIect to termination by the lessee and . . . /thelease is for the remaining economic life of the goods by

1. Jriginal term


6. )enewal term for no *or nominal additional consideration

,. Jption to buy for no *or nominal additional consideration0

104

conomic li%e


:ption to b!y %or %ree




+ E-1E*a*1 /T0his article applies to a transaction regardless ofits form that creates a security interest in personal property

+1-26. F/A0 transaction in the form of a lease creates a securityinterest if the consideration . . . is an obligation for the term ofthe lease not subIect to termination by the lessee and . . . /thelease is for the remaining economic life of the goods by

1. Jriginal term


6. )enewal term for no *or nominal additional consideration

,. Jption to buy for no *or nominal additional consideration0

105

conomic li%e

ease term#r!e ease

Eeanin%!l reersion




ale ale


Down payment 0 0




0 10

#otal payments -,50.2 -,51.2

10-


5roblem ,6.6.a <,=



5roblem ,6.6.a <,=

10

6e represent ban in %oreclos!re aainst t"e :9H!rleys.

5roblem ,6.6.a <,=



10


Ers. :9H!rly o%%ers a deal+ #"e :9H!rleys deed t"e property toan, an drops t"e %oreclos!re, we prepare t"e doc!ments.

5roblem ,6.6.a <,=



Gow

10

Deed inlie!

lien



5roblem ,6.6.a <,=



Gow

110

Deed inlie!

lien



ee any leal problems> 8s t"is a ood deal %or t"e ban>

5roblem ,6.6.a <,=



Gow

111

Deed inlie!

lien



ee any leal problems> 8s t"is a ood deal %or t"e ban>

8% yo! represented t"e :9H!rleys, w"at adice>



)epossession of 8ollateral

112

C dit ’ R di U d



Creditors’ Remedies Under

State LawAssignment ,,1$ )emedies of 7nsecured 8reditors

Assignment ,,,,$ 3ecurity and ;oreclosure$ title

*can occur without repossession K writ of assistance

Assignment ,,6$ )epossession$ possession

*can occur without foreclosure K cases in thisassignment

113

Basic 8oncepts$



)epossession

114

1. 7eplein

2. el% "elp

3. 7eceier

4. reac" o% t"e peace

5. #respass

-. Priilee to trespass

. Concealment

Basic 8oncepts$



)epossessionRep&ein$ A cause of action *writ for possession

1. 3ecured party has right to possession 788 + E-@E2. 5owerful$ sheri( deli"ers temporary possession

early

6. Two procedures both 8onstitutional$

Complaint

* parte"earin

De%a!lt

6rit ey

8mmediatepost'"earin?otice

De%a!lt

Complaint 6rit

Hearin

ey

10'20 days?otice

10'20 days

Basic 8oncepts$



)epossessionBreac$ of t$e peace *limits self help not sheri( le"y

1. 8riminal standard$ 5ublic disturbance

2. Article E standard$ FTending to pro"o%e others tobrea% the peace 8allaway ". Whittenton

)respass

1. 8riminal standard$ fenced posted Fafter warning

2. 8i"il$ ntentional entry on land without authority

*rii&e#e (to trespass: An entry to repossess ispri"ileged if Fthere /is0 no confrontation and thetiming and manner including notice or lac% of noticeare found reasonable.

Concea&ment$ LWhoe"er . . . conceals any personalproperty in which he %nows another has a securityinterest . . . is uilt of a 8lass ! felon L Wis. 3tat. 11-

Basic 8oncepts$)epossession



)epossessionReceier$ An oMcer of the court who ta%es possessionof collateral during foreclosure to preser"e it

Ca&ifornia$ )ecei"er gets possession if$

1. 5roperty in danger of loss remo"al inIury or

2. ebtor in default and "alue of collateral less than

amount of the debt

+&&inois$ Nortgagee gets possession if$

1. Gon-residential real property

2. 5ro"ision in the mortgage and

6. 5robability mortgagee will pre"ail

7nless good cause

11

)epo Nethod by 5roperty Type



)epo Nethod by 5roperty Type)eal estate Tangible

personal

ntangible

personal9oluntarysurrender

Oes Oes Oes

3elf help Go Oes Oes *some

)ecei"er Oes Oes Oes)eple"in Go Oes Go

11

Creditors don9t et possession by %oreclos!reI p!rc"asers do



)epossession of 8ollateral

>imits on 3elf Help )epossession

11

8 i t ti



8ases interpreting

Breach of the 5eace>imits of E-@E self help

3alisbury >i"estoc% p.<=2

8hapa

121



122

bl



5roblem ,,.1

Jur ad"ice$ 4e( can&t use self help.

5roblem ,,.1. What if 4e( is secured?

What policy Iusties the di(erence?

123

Je%% isa$1Koan

5roblem ,, 2



5roblem ,,.2How do we repossess?

124

5roblem ,, 2




125

:wner

5roblem ,, 2




12-

Contractor

:wner

Contract

5roblem ,, 2




12

!bcontractor

Contractor

:wner

Contract

Contract

5roblem ,, 2




12

!bcontractor

Contractor

:wner

Contract

Contract

7i"ts int"e collateral(owners"ip)

5roblem ,, 2




a, o #uard. no fence

12

5roblem ,, 2




a, o #uard. no fence- Time of day?

130

5roblem ,, 2





- J to trespass?

131

5roblem ,, 2





- J to trespass?

- Pi"e prior notice?

132

5roblem ,, 2





- J to trespass?

- Pi"e prior notice?- f someone

obIects?

133

5roblem ,,.2





- J to trespass?


obIects?

- nstructions?

134

5roblem ,,.2





- J to trespass?


obIects?

- nstructions?

/, %ence. /ut no#uard

135

5roblem ,,.2





- J to trespass?


obIects?

- nstructions?

/, %ence. /ut no#uard

- J to trespass?

13-

5roblem ,,.2





- J to trespass?

- Pi"e prior notice?

- f someone obIects?

- nstructions?

/, %ence. /ut no #uard

- J to trespass?

- 8ut the loc%?

13

5roblem ,,.2





- J to trespass?

- Pi"e prior notice?- f someone obIects?

- nstructions?

/, %ence. /ut no #uard- J to trespass?

- 8ut the loc%?

- 5ic% tension wrench?13

5roblem ,,.2



5roblem ,,.2

13

c. !ard and %enceHow do we repossess>

a. No guard, no fence' #ime o% day>

' :K to trespass>

' ie prior notice>' 8% someone obLects>

' 8nstr!ctions>

b. Fence, but no guard' :K to trespass>

' C!t t"e loc>

' Pic, tension wrenc">

5roblem ,,.2



ob e

140

c. !ard and %ence

6"at "appens i% we as%or t"e do;er>

How do we repossess>


' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblem ,,.2



141

c. !ard and %ence


6"at i% we de%ra!d>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>




5roblem ,,.2



143

c. !ard and %ence


6"at i% we de%ra!d>

d. 8n debtor9s steel b!ildinPic t"e loc>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblem ,,.2



144

c. !ard and %ence


6"at i% we de%ra!d>


8% interr!pted> 7et!rn>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblem ,,.2



145

c. !ard and %ence


6"at i% we de%ra!d>



e. /nyt"in we s"o!ld p!t in t"esec!rity areement>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblem ,,.2



14-

c. !ard and %ence


6"at i% we de%ra!d>




reac" o% peace waier>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblem ,,.2



14

c. !ard and %ence


6"at i% we de%ra!d>




reac" o% peace waier>

7i"t o% entry>



' :K to trespass>


' 8nstr!ctions>


' C!t t"e loc>


5roblems ,,.6



How do we pre"ent repossession Ffor a wee% or two?

14

5roblems ,,.6




- What if the repossessors persist?

14

5roblems ,,.6




- What if the repossessors persist? Pun?

150

5roblems ,,.6





- s there an ethical problem? )ule 1.2

151

5roblems ,,.6






What if they bring the sheri(?

152

5roblems ,,.6







- 3elf help?- Writ of reple"in?

153

5roblems ,,.6







- 3elf help?- Writ of reple"in? 3hould we resist the sheri(?

15

5roblems ,,.6




- What if the repossessors persist? Pun?- s there an ethical problem? )ule 1.2



3hould we call sheri(?

1-0

5roblems ,,.6H d i Ff % ?






-

3elf help?- Writ of reple"in? 3hould we resist the sheri(?

3hould we call sheri(? FJMcers . . . cross the line if theyaMrmati"ely inter"ene to aid the repossessor.

Narcus

1-1

5roblems ,,.6H d i Ff % ?







3hould we call sheri(? FJMcers . . . cross the line ifthey aMrmati"ely inter"ene to aid therepossessor. Narcus

3hould we hide the bulldo'er?

1-2

5roblems ,,.6H d t i Ff % t ?







3hould we call sheri(? FJMcers . . . cross the line ifthey aMrmati"ely inter"ene to aid therepossessor. Narcus

3hould we hide the bulldo'er? Go$ Wis. 3tat. E,6.2=

1-3

5roblems ,,.6H d t i Ff % t ?







3hould we call sheri(? FJMcers . . . cross the line if theyaMrmati"ely inter"ene to aid the repossessor.

Narcus

3hould we hide the bulldo'er? Go$ Wis. 3tat. E,6.2=

s the istrict Attorney going to prosecute 3al for

hiding his own bulldo'er?1-4

5roblem 6.,



5roblem 6.,

f both sides are well ad"ised who wins?

1-5



5roblem 6.,



5roblem 6.,

f both sides are well ad"ised who wins? The debtor.

Winning strategy$ 3leep on the bulldo'er

1-

5roblem 6.,



ob e 6


Winning strategy$ 3leep on the bulldo'erf awa%ened debtor threatens "iolence repo is o"er

1-

5roblem 6.,




Winning strategy$ 3leep on the bulldo'er

f awa%ened debtor threatens "iolence repo is o"er

F+E-@E After default a secured party may ta%epossession of the collateral . . . . >egal strategy

nullies that law1-

Basic 8oncepts$ Accountsccount$ A right to payment of a monetary



obligation . . . for property sold or ser"ices

rendered 788 + E-12*a*2

10

Creditor Debtor

/cco!nt

Property,serices







rendered 788 + E-12*a*2ccount de/tor: means a person obligated on an

account 788 + E-12*a*6

12

Creditor /cco!nt

debtor /cco!nt

Property,serices





rendered 788 + E-12*a*2ccount de/tor: means a person obligated on an

account 788 + E-12*a*6

13

Debtor /cco!nt

debtor /cco!nt

ec!red

party

/cco!ntoan

Accounts financing: ellin or borrowin aainst a

ro!p o% acco!nts

5roblems ,,.=ow t$e parties do /usiness



ebtor sells a tractor on credit

ebtor sends in"oice copy to 3ecured party

3ecured party ad"ances @Q

>ater$

Account debtor pays ebtor

ebtor pays @Q to 3ecured

14

Debtor /cco!nt

debtor

#ractors

/cco!nt

ec!red

party

/cco!ntoan







>ater$



15

Debtor /cco!nt

debtor

#ractors

/cco!nt

ec!red

party

/cco!ntoan

6"at co!ld o wron







>ater$



1-

Debtor /cco!nt

debtor

#ractors

/cco!nt

ec!red

party

/cco!ntoan

6"at co!ld o wron

Debtor %aes inoices







>ater



1

:PE

easin

7ocwell

8nternat9l

Comp!ters

eases

ans

easesoan

8EComp!ters

Payment6"at co!ld o wron

Debtor %aes inoices







>ater$



1

Debtor /cco!nt

debtor

#ractors

/cco!nt

ec!red

party

/cco!ntoan

6"at co!ld o wron

Debtor %aes inoices

/cco!nt debtor pays Debtor b!t Debtor doesn9t pay ec!red

5roblem [email protected] =@



1

Deare Horne9s#ractors

/cco!nt

Girstban

/cco!ntoan



5roblem [email protected] =@Deare de%a!lts on loan



11

an sends noti%ication to Horne9s


/cco!nt

Girstban

oanPay Girstban, not Deare /cco!nt




12

an sends noti%ication to Horne9sHorne9s pays Deare


/cco!nt

Girstban

/cco!ntoanPay Girstban, not Deare




13

an sends noti%ication to Horne9sHorne9s pays Deare

Can Girstban mae Horne9spay twice>


/cco!nt

Girstban




5roblem [email protected] =@Deareassins

t



15

acco!nts

Deare

Girstban

/cco!ntoan

5roblem [email protected] =@Deareassins

t$1K warranty

l i



1-

Dearesells$42K

acco!nts claim accr!es

Deare 6ilson9s$1K

$42Kacco!nt

Girstban

/cco!ntoan

5roblem [email protected] =@Deare

d % lt

Deareassins

t$1K warranty

l i



1

de%a!lts

Dearesells$42K

acco!nts claim accr!es

Deare 6ilson9s$1K

$42Kacco!nt

Girstban

/cco!ntoan


d % ltan noti%ies

6il 9

Deareassins

t$1K warranty

l i



1

de%a!lts

Dearesells$42K

6ilson9sacco!nts claim accr!es

Deare 6ilson9s$1K

$42Kacco!nt

Girstban



d % ltan noti%ies

6il 9

Deareassins

t$1K warrantyclaim accr es



1

de%a!lts

Dearesells$42K

6ilson9sacco!nts claim accr!es

6ilson9sclaims onwarranty

Deare 6ilson9s$1K

$42Kacco!nt

Girstban



d % ltan noti%ies

6il 9an

Deareassins

t$1K warrantyclaim accr!es



10

de%a!lts

Dearesells$42K

6ilson9s


s!esacco!nts claim accr!es

Deare 6ilson9s$1K

$42Kacco!nt

Girstban



de%a!ltsan noti%ies

6ilson9sans!es

Deareassins

acco!nts$1K warrantyclaim accr!es



11

#o "ow m!c" isan entitled>

de%a!lts

Dearesells$42K

6ilson9s s!esacco!nts claim accr!es


Deare 6ilson9s$1K

$42Kacco!nt

Girstban

Pay Girstban, not Deareoan /cco!nt

5roblem [email protected] =@

788 + E ,,*a /T0he rights of an assignee are



788 + E-,,*a. /T0he rights of an assignee are

subIect to$*1 all terms of the agreement between theaccount debtor and assignor and any defense orclaim in recoupment arising from the transaction

that ga"e rise to the contractR and*2 any other . . . claim of the account debtoragainst the assignor which accrues before theaccount debtor recei"es a notication of the

assignment . . .

12

788 + E ,,*a /T0he rights of an assignee are

Problem 3.-.b, 5-



788 + E-,,*a. /T0he rights of an assignee are

subIect to$*1 all terms of the agreement between theaccount debtor and assignor and any defense orclaim in recoupment arising from the transaction

that ga"e rise to the contractR and*2 any other . . . claim of the account debtoragainst the assignor which accrues before theaccount debtor recei"es a notication of the

assignment . . .

13

Dearede%a!lts

an noti%ies6ilson9s

ans!es

Deareassins

acco!nts$1K warrantyclaim accr!es

Problem 3.-.b, 5-



#o "ow m!c" isan entitled>

$23K

de%a!lts

Deareells$42K

6ilson s

6arrantyclaimmade

s!esacco!nts claim accr!es

Deare 6ilson9s$1K

$42K

Girstban


Documents

Class 13 and 14 Slides