Secured Transactions Assignment 29

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Secured Transactions
Assignment 29
Lienors vs. Secured Creditors:
Future Advances
1
The Big Picture
Part Two: The Creditor Third Party Relationship
Chapter 9: Competitions for Collateral
Assignment 28: Lien Creditors vs. Secureds: The Basics
Assignment 29: Lien Creditors vs. Secured: Future Advances
Assignment 31: Preferences
Assignment 32: Secured Creditors vs. Secured Creditors
Assignment 36: Buyers vs. Secured Creditors
Land, Fixtures, Agriculture, and Minerals
2
Definitions
“Advance” means payment of money to borrower as a loan
3
Definitions
“Advance” means payment of money to borrower as a loan
“Future advance” means an advance made after (1) the initial
advance or (2) the note and security agreement are
signed.
4
Definitions
“Advance” means payment of money to borrower as a loan
“Future advance” means an advance made after (1) the initial
advance or (2) the note and security agreement are
signed.
“Non-advance” means an amount that was not advanced to
the borrower, but that the borrower is obligated to pay
5
Definitions
“Advance” means payment of money to borrower as a loan
“Future advance” means an advance made after (1) the initial
advance or (2) the note and security agreement are
signed.
“Non-advance” means an amount that was not advanced to
the borrower, but that the borrower is obligated to pay
Interest
6
Definitions
“Advance” means payment of money to borrower as a loan
“Future advance” means an advance made after (1) the initial
advance or (2) the note and security agreement are
signed.
“Non-advance” means an amount that was not advanced to
the borrower, but that the borrower is obligated to pay
Interest
Attorneys fees incurred in collection
7
Definitions
“Advance” means payment of money to borrower as a loan
“Future advance” means an advance made after (1) the initial
advance or (2) the note and security agreement are
signed.
“Non-advance” means an amount that was not advanced to
the borrower, but that the borrower is obligated to pay
Interest
Attorneys fees incurred in collection
Other expenses of the loan paid to third parties
8
Priority Rules
General rule (UCC and Real Estate law): All advances and nonadvances have the same priority. Shutze v. Credithrift.
9
Priority Rules
General rule (UCC and Real Estate law): All advances and nonadvances have the same priority. Shutze v. Credithrift.
UCC exception: Future advances have priority over intervening
liens only if made:
1. Within 45 days after lienor “became a lien creditor”
10
Priority Rules
General rule (UCC and Real Estate law): All advances and nonadvances have the same priority. Shutze v. Credithrift.
UCC exception: Future advances have priority over intervening
liens only if made:
1. Within 45 days after lienor “became a lien creditor”
2. Without knowledge of the lien, or
11
Priority Rules
General rule (UCC and Real Estate law): All advances and nonadvances have the same priority. Shutze v. Credithrift.
UCC exception: Future advances have priority over intervening
liens only if made:
1. Within 45 days after lienor “became a lien creditor”
2. Without knowledge of the lien, or
3. Pursuant to commitment entered into without
knowledge of the lien
12
Priority Rules
General rule (UCC and Real Estate law): All advances and nonadvances have the same priority. Shutze v. Credithrift.
UCC exception: Future advances have priority over intervening
liens only if made:
1. Within 45 days after lienor “became a lien creditor”
2. Without knowledge of the lien, or
3. Pursuant to commitment entered into without
knowledge of the lien
Real estate exception (minority rule): Future advances have
priority over intervening liens only if made:
2. Without knowledge of the lien, or
3. Pursuant to commitment without knowledge of the lien.
13
Priority Rules
Non-advances (real and personal property exceptions): A nonadvance has the priority of the advance to which it relates
14
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
15
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
How can Exchange bank refuse to permit a levy?
16
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
How can Exchange bank refuse to permit a levy?
Page 9: “An officer may force an entry into any enclosure
except the dwelling house of the judgment debtor in
order to levy . . . on the debtor’s goods . . . .”
17
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
How can Exchange bank refuse to permit a levy?
Page 9: “An officer may force an entry into any enclosure
except the dwelling house of the judgment debtor in
order to levy . . . on the debtor’s goods . . . .”
Page 8. “The sheriff’s duty is to execute the writ
according to the plaintiff’s instructions.
18
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
How can Exchange bank refuse to permit a levy?
Page 9: “An officer may force an entry into any enclosure
except the dwelling house of the judgment debtor in
order to levy . . . on the debtor’s goods . . . .”
Page 8. “The sheriff’s duty is to execute the writ
according to the plaintiff’s instructions. The writ is in the
‘exclusive control’ of the judgment creditor; the sheriff
must follow the creditor’s reasonable instructions
regarding the time and manner of making the levy . . . .”
19
Uni Imports v. Exchange
“The marshal’s service served the writ on Exchange, but
Exchange refused to turn over any of Aparcor’s assets,
contending that it had priority status.” Page 482.
How can Exchange bank refuse to permit a levy?
Page 9: “An officer may force an entry into any enclosure
except the dwelling house of the judgment debtor in
order to levy . . . on the debtor’s goods . . . .”
Page 8. “The sheriff’s duty is to execute the writ
according to the plaintiff’s instructions. The writ is in the
‘exclusive control’ of the judgment creditor; the sheriff
must follow the creditor’s reasonable instructions
regarding the time and manner of making the levy . . . .”
Answer: Soft levy or this “execution” is garnishment.
20
Problem 29.1, page 492
Carol loans $1K secured. BCA
gets $45K judgment lien
Assume boat worth about $32K.
What effect if Bob advances $31K?
1K
21
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Assume boat worth about $32K.
What effect if Bob advances $31K?
45K
1K
22
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
32K
45K
1K
23
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol doesn’t advance? 32K
45K
1K
24
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol doesn’t advance? 32K
BCA recovers $31K.
32K
45K
1K
1K
25
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol advances $31K? 32K
Will the new debt be secured?
45K
1K
26
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol advances $31K? 32K
Will the new debt be secured?
45K
Yes, if there is a security agreement.
1K
§9-203(b). [A] security interest is enforceable . . . only if . . .
(3)(A) the debtor has authenticated a security agreement . . .
27
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol advances $31K? 32K
Will the new debt be secured?
45K
Yes, if there is a security agreement.
What priority will it have?
1K
28
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
Boat is worth about $32K.
What result if Carol advances $31K? 32K
Will the new debt be secured?
45K
Yes, if there is a security agreement.
What priority will it have?
1K
9-317(a)(2). A security interest . . . is subordinate to . . . a person
that becomes a lien creditor before the earlier of the time
(A) the security interest . . . is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing
statement . . . is filed.
29
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
32K
30
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
32K
What title passes at the sale?
31
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
What title passes at the sale?
32K
32K
32K
Before
After
Buyer takes subject to $32K.
32
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
What title passes at the sale?
32K
32K
32K
Before
After
Buyer takes subject to $32K.
What can BCA expect from this sale?
33
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
What title passes at the sale?
32K
32K
32K
Before
After
Buyer takes subject to $32K.
What can BCA expect from this sale?
Nothing. Bob beat the execution!
34
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
What title passes at the sale?
Buyer takes subject to $32K.
What can BCA expect from this sale?
Nothing. Bob beat the execution!
32K
32K
32K
Before
After
What’s the policy for
allowing Carol to
advance with knowledge
of the lien?
35
Problem 29.1, page 492
Carol loans $1K secured. BCA gets
$45K judgment lien
45K
Boat is worth about $32K.
What result if Carol advances $31K? 32K
If Carol has a future advance
clause, her advance has priority
because made within 45 days.
What title passes at the sale?
Buyer takes subject to $32K.
What can BCA expect from this sale?
Nothing. Bob beat the execution!
32K
32K
32K
Before
After
What’s the policy for
allowing Carol to
advance with knowledge
of the lien? So secured
beats tax lien
36
Problem 29.1, page 492
Secured
Tax lien
SA
Future
advance
45 days
Notice of
tax lien
26 U.S.C. §6323(d). Even though notice of a [tax] lien has
been filed, such lien shall not be valid with respect to a
security interest that came into existence after tax lien
filing by reason of disbursements made before the 46th
day after the tax lien filing . . .
37
Problem 29.1, page 492
Secured
Tax lien
SA
Future
advance
45 days
Notice of
tax lien
26 U.S.C. §6323(d). Even though notice of a [tax] lien has
been filed, such lien shall not be valid with respect to a
security interest that came into existence after tax lien
filing by reason of disbursements made before the 46th
day after the tax lien filing . . . but only if such security
interest . . . is protected under local law against a
judgment lien arising, as of the time of the tax lien filing,
out of an unsecured obligation
38
Problem 29.1, page 492
Secured
Tax lien
SA
Future
advance
45 days
Notice of
tax lien
26 U.S.C. §6323(d). Even though notice of a [tax] lien has
been filed, such lien shall not be valid with respect to a
security interest that came into existence after tax lien
filing by reason of disbursements made before the 46th
day after the tax lien filing . . . but only if such security
interest . . . is protected under local law against a
judgment lien arising, as of the time of the tax lien filing,
out of an unsecured obligation
Future advance beats the tax lien . . . .
39
Problem 29.1, page 492
Secured
Judgment
Future
advance
SA
45 days
Levy
26 U.S.C. §6323(d). Even though notice of a [tax] lien has
been filed, such lien shall not be valid with respect to a
security interest that came into existence after tax lien
filing by reason of disbursements made before the 46th
day after the tax lien filing . . . but only if such security
interest . . . is protected under local law against a
judgment lien arising, as of the time of the tax lien filing,
out of an unsecured obligation
Future advance beats the tax lien provided it would beat a
judgment lien.
40
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
45K
32K
32K
?
Before
?
After
41
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
45K
32K
?
Before
?
After
42
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
32K
45K
Impossible to calculate.
1K
Before
1K
After
43
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien?
45K
32K
?
Before
?
After
44
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
45K
32K
?
Before
?
After
45
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
32K
45K
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
1K
Before
?
After
If we somehow found out it is $1K
now, does that help?
46
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
45K
32K
32K
32K
Before
After
If we somehow found out it is $1K
now, does that help? It could
change before the sale!
47
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
45K
32K
?
Before
?
After
If we somehow found out it is $1K
now, does that help? It could
change before the sale!
What do we do?
48
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
32K
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
45K
32K
?
Before
?
After
If we somehow found out it is $1K
now, does that help? It could
change before the sale!
What do we do? Scream for equity.
49
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
§9-625(a). If it is
established that a
secured party is not
proceeding in
accordance with this
article, a court may
order or restrain . . .
disposition of collateral
on appropriate terms
and conditions.
If we somehow found out it is $1K
now, does that help? It could
change before the sale!
What do we do? Scream for equity.
But see §9-625(a)!
50
Problem 29.2, page 492
We represent BCA. Sheriff’s sale is a
few days from now. Deficiency
may be collectible.
If BCA doesn’t know the amount of
Carol’s lien, what should BCA bid
at the sale?
Impossible to calculate.
How can we find out the amount of
Carol’s lien? §9-210?
If we somehow found out it is $1K
now, does that help? It could
change before the sale!
What do we do? Scream for equity.
But see §9-625(a)!
§9-625(a). If it is
established that a
secured party is not
proceeding in
accordance with this
article, a court may
order or restrain . . .
disposition of collateral
on appropriate terms
and conditions.
Daniel’s solution:
Delay the execution
sale 45 days and then
discover the balance
51
owing.
Problem 29.2, page 492
Uni Imports, page 485 (indented text) quoting the Article 9
drafters (1972):
It seems unfair to make it possible for a debtor and
secured party with knowledge of the judgment lien to
squeeze out a judgment creditor who has successfully
levied on a valuable equity subject to a security interest
52
Problem 29.2, page 492
Uni Imports, page 485 (indented text) quoting the Article 9
drafters (1972):
It seems unfair to make it possible for a debtor and
secured party with knowledge of the judgment lien to
squeeze out a judgment creditor who has successfully
levied on a valuable equity subject to a security interest
by permitting later enlargement of the security interest,
by an additional advance . . . .
53
Problem 29.2, page 492
Uni Imports, page 485 (indented text) quoting the Article 9
drafters (1972):
It seems unfair to make it possible for a debtor and
secured party with knowledge of the judgment lien to
squeeze out a judgment creditor who has successfully
levied on a valuable equity subject to a security interest
by permitting later enlargement of the security interest,
by an additional advance.
54
Home equity loans
110K
Home
equity
60K
55
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K
Home
equity
60K
56
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
Home equity loan (blue) permits frequent
advances and repayments
110K
30K
Home
equity
60K
57
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K
40K
Home equity loan (blue) permits frequent
advances and repayments
60K
58
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
Home equity loan (blue) permits frequent
advances and repayments
110K
10K
60K
59
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
Home equity loan (blue) permits frequent
advances and repayments
110K
30K
60K
60
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K
110K
15K
Home equity loan (blue) permits frequent
advances and repayments
30K
30K
The rule ignores the effect on subsequent
liens
60K
60K
61
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K 15K
50K
Home equity loan (blue) permits frequent
advances and repayments
The rule ignores the effect on subsequent
liens.
60K
62
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K 15K
50K
Home equity loan (blue) permits frequent
advances and repayments
The rule ignores the effect on subsequent
liens.
60K
Because the priority is assured, the home
equity lender doesn’t have to search
before each advance.
63
Home equity loans
General rule (Real Estate law): Future
advances and non-advances have
priority over intervening liens.
110K 15K
50K
Home equity loan (blue) permits frequent
advances and repayments
The rule ignores the effect on subsequent
liens.
60K
Because the priority is assured, the home
equity lender doesn’t have to search
before each advance.
General rule is great for home equity
lenders.
64
Home equity loans
Optional advance rule: If the future advance
is “optional” and made with knowledge of
the lien, the advance is subordinate.
110K
15K
30K
60K
65
Home equity loans
Optional advance rule: If the future advance
is “optional” and made with knowledge of
the lien, the advance is subordinate.
110K 20K
15K
30K
60K
66
Home equity loans
Optional advance rule: If the future advance
is “optional” and made with knowledge of
the lien, the advance is subordinate.
110K 20K
15K
Shutze: “Many Mississippians need to borrow
substantial sums with which to educate
their offspring. . . . They and their lenders
need the security of the knowledge that
their priority position will remain fixed to
the date of the original deed of trust . . . .
Any other view could imperil the student’s
education . . .”
30K
60K
67
Home equity loans
Optional advance rule: If the future advance
is “optional” and made with knowledge of
the lien, the advance is subordinate.
110K 20K
15K
Shutze: “Many Mississippians need to borrow
substantial sums with which to educate
their offspring. . . . They and their lenders
need the security of the knowledge that
their priority position will remain fixed to
the date of the original deed of trust . . . .
Any other view could imperil the student’s
education . . .”
30K
60K
Can home equity lenders live with the optional
advance rule?
68
Home equity loans
Optional advance rule: If the future advance
is “optional” and made with knowledge of
the lien, the advance is subordinate.
110K 20K
15K
Shutze: “Many Mississippians need to borrow
substantial sums with which to educate
their offspring. . . . They and their lenders
need the security of the knowledge that
their priority position will remain fixed to
the date of the original deed of trust . . . .
Any other view could imperil the student’s
education . . .”
30K
Can home equity lenders live with the optional
advance rule?
60K
Don’t lend with
knowledge of a
lien?
69
Problem 29.3, page 492
Mortgagee
Note, mortgage
$50K advance
70
Problem 29.3, page 492
Mortgagee
Judgment
Note, mortgage
$50K advance
Records
$100K
71
Problem 29.3, page 492
Mortgagee
Judgment
Note, mortgage
$50K advance
$25K
advance
Records
$100K
72
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
73
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
74
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Schutze rule applies.
75
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Schutze rule applies.
Mortgagee has actual knowledge
of the lien at time of future
advance
76
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Schutze rule applies.
Mortgagee has actual knowledge
of the lien at time of future
advance
As between Mortgagee and J, who
has priority?
77
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Schutze rule applies.
Mortgagee has actual knowledge
of the lien at time of future
advance
As between Mortgagee and J, who
has priority? Mortgagee
Attorneys
Fees $5K
Now
Judgment 100K
Mortgagee
for advances
90K
and nonadvances
78
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Optional advance rule applies.
79
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Optional advance rule applies.
Mortgagee has actual knowledge
of the lien at time of optional
advance
80
Problem 29.3, page 492
Note, mortgage
$25K
$50K advance
advance
Mortgagee
Interest $10K
Judgment
Records
$100K
Attorneys
Fees $5K
Now
Optional advance rule applies.
Mortgagee has actual knowledge
of the lien at time of optional
advance
As between Mortgagee and J, who
has priority?
81
Problem 29.3, page 492
Note, mortgage
$25K
Attorneys
$50K advance
advance Fees $5K
Mortgagee
Interest $10K
Judgment
Now
Records
$100K
Mortgagee for $25K
and associated non- 30K
Optional advance rule applies.
advances
Mortgagee has actual knowledge
of the lien at time of optional
Judgment 100K
advance
As between Mortgagee and J, who Mortgagee for $50K
has priority?
and associated non- 60K
advances
82
Problem 29.4, page 493
SA, filing,
$25K
$50K advance
advance
Secured
Interest $10K
45 days
Judgment
Levy
$100K
Attorneys
Fees $5K
Now
83
Problem 29.4, page 493
SA, filing,
$25K
$50K advance
advance
Secured
Interest $10K
45 days
Judgment
Levy
$100K
Attorneys
Fees $5K
Now
84
Problem 29.4, page 493
SA, filing,
$25K
$50K advance
advance
Secured
Interest $10K
45 days
Judgment
Levy
$100K
Attorneys
Fees $5K
Now
§9-323(b) rule applies.
85
Problem 29.4, page 493
SA, filing,
$25K
$50K advance
advance
Secured
Interest $10K
45 days
Judgment
Levy
$100K
Attorneys
Fees $5K
Now
§9-323(b) rule applies.
Secured has actual knowledge of
the lien at time of optional
advance
86
Problem 29.4, page 493
SA, filing,
$25K
$50K advance
advance
Secured
Interest $10K
45 days
Judgment
Levy
$100K
Attorneys
Fees $5K
Now
§9-323(b) rule applies.
Secured has actual knowledge of
the lien at time of optional
advance
As between Secured and J, who
has priority?
87
Problem 29.4, page 493
SA, filing,
$25K
Attorneys
$50K advance
advance Fees $5K
Secured
Interest $10K
45 days
Judgment
Now
Levy
$100K
Secured for $25K
30K
and associated
§9-323(b) rule applies.
non-advances
Secured has actual knowledge of
the lien at time of optional
Judgment 100K
advance
As between Secured and J, who
has priority?
Secured for $50K
60K
and associated
non-advances
88
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
89
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
90
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
1. Borrowing secured?
91
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
1. Borrowing secured?
2. Converting unsecured debt to secured?
92
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
1. Borrowing secured?
2. Converting unsecured debt to secured?
3. Establishing priorities for future loans?
93
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
1. Borrowing secured?
2. Converting unsecured debt to secured?
3. Establishing priorities for future loans?
b. What should we do?
94
Problem 29.5, page 493
Sheng
Creditors
Judgment
entered
FS FS FS
Levy?
3 months
Now
a. What is debtor, Conda Copper, doing?
1. Borrowing secured?
2. Converting unsecured debt to secured?
3. Establishing priorities for future loans?
b. What should we do?
Levy and then start discovery (or give up now).
95
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