Secured Transactions
Assignments 20 and 33
Land and Fixtures Recording
Systems
1
The relationship between Article 9 filing
and real estate recording
Property lies along a continuum from real to personal . . .
Real
Personal
2
The relationship between Article 9 filing
and real estate recording
Property lies along a continuum from real to personal . . .
Land
Real
Intermediate
Chattels
Personal
3
The relationship between Article 9 filing
and real estate recording
Real estate law
Land
Real
“Fixtures” 9-102(a)(41)
Intermediate
Chattels
Personal
9-334(b)
Real estate law governs goods sufficiently related to real
estate to be a “fixture” under real estate law.
4
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
Land
Real
Intermediate
UCC Article 9
Chattels
Personal
9-334(b)
UCC Article 9 permits the attachment and perfection of
security interests in “goods, including fixtures.”
5
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
Land
Real
“Ordinary
building
materials”
Intermediate
UCC Article 9
Chattels
Personal
9-334(b)
UCC Article 9 permits the attachment and perfection of
security interests in “goods, including fixtures.” But not
“ordinary building materials incorporated into an
improvement on land.”
6
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
Land
Real
“Ordinary
building
materials”
Intermediate
UCC Article 9
“Trade
fixtures” Chattels
Personal
9-334(b)
“Trade fixtures” is a term used to refer to store shelving and
display cases that are not part of the real estate.
7
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
Land
Real
“Ordinary
building
materials”
Intermediate
“Trade
fixtures” Chattels
Personal
9-334(b)
UCC Article 9
“Goods” 9-102(a)(44)
“Goods” means all things that are moveable when a security
interest attaches. “Goods” includes “(i) fixtures . . . .”
“Goods” includes “ordinary building materials incorporated into
an improvement on land” Comment 3 to § 9-334
8
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
Land
Real
“Ordinary
building
materials”
Intermediate
“Trade
fixtures” Chattels
Personal
“chattel financing
is preserved”
9-334(b)
UCC Article 9
“Goods” 9-102(a)(44)
“Goods” means all things that are moveable when a security
interest attaches. “Goods” includes “(i) fixtures . . . .”
“Goods” includes “ordinary building materials incorporated into
an improvement on land” Comment 3 to § 9-334
9
The relationship between Article 9 filing
and real estate recording
Real estate law
“Fixtures” 9-102(a)(41)
9-334(a)
“Trade
Intermediate
Land
“Ordinary
fixtures” Chattels
Readily
building
Personal
Real
removables
materials”
9-334(b)
UCC Article 9
“Goods” 9-102(a)(44)
UCC deference to real estate law is not complete. UCC seeks
to override as to “readily removable” fixtures § 9-334(e)(2)
10
Separate Filing Systems
Real estate
recording system
Article 9 filing system
1. Mortgages
1. Financing statements
2. Financing
statements filed as
fixture filings, 9502(b)
2. Financing statements
filed against fixtures,
9-501(a)(2).
3. Mortgages effective
as fixture filings
under 9-502(c)
3. Financing statements
against collateral,
including fixtures, of a
transmitting utility.
11
Separate Filing Systems
Real estate
recording system
1. Mortgages
Article 9 filing system
1. Financing statements
12
Separate Filing Systems
Real estate
recording system
1. Mortgages
Article 9 filing system
1. Financing statements
2. Financing
statements filed as
fixture filings, §9502(b)
13
Separate Filing Systems
Real estate
recording system
1. Mortgages
Article 9 filing system
1. Financing statements
2. Financing
statements filed as
fixture filings, §9502(b)
3. Mortgages effective
as fixture filings
under §9-502(c)
14
Separate Filing Systems
Real estate
recording system
Article 9 filing system
1. Mortgages
1. Financing statements
2. Financing
statements filed as
fixture filings, §9502(b)
2. Financing statements
filed against fixtures,
but not fixture filings
§9-501(a)(2).
3. Mortgages effective
as fixture filings
under §9-502(c)
15
Separate Filing Systems
Real estate
recording system
Article 9 filing system
1. Mortgages
1. Financing statements
2. Financing
statements filed as
fixture filings, §9502(b)
2. Financing statements
filed against fixtures,
but not fixture filings
§9-501(a)(2).
3. Mortgages effective
as fixture filings
under §9-502(c)
3. Financing statements
against transmitting
utilities, including
fixture filings.
16
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
Provide name of the secured party
3.
Indicate the collateral covered
4.
Indicate that it covers fixtures (so real estate searchers
will know what it is)
5.
Indicate it is to be filed in the real estate records (so
filing officer will know what to do with it)
6.
Describe the real property (so real estate searcher can
recognize it
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
17
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
Provide name of the secured party
3.
Indicate the collateral covered
4.
Indicate that it covers fixtures (so real estate searchers
will know what it is) [on the §9-521 addendum]
5.
Indicate it is to be filed in the real estate records (so
filing officer will know what to do with it)
6.
Describe the real property (so real estate searcher can
recognize it
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
18
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
Provide name of the secured party
3.
Indicate the collateral covered
4.
Indicate that it covers fixtures (so real estate searchers
will know what it is) [on the §9-521 addendum]
5.
Indicate it is to be filed in the real estate records (so
filing officer will know what to do with it) [§9-521form]
6.
Describe the real property (so real estate searcher can
recognize it
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
19
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
Provide name of the secured party
3.
Indicate the collateral covered
4.
Indicate that it covers fixtures (so real estate searchers
will know what it is) [on the §9-521 addendum]
5.
Indicate it is to be filed in the real estate records (so
filing officer will know what to do with it) [§9-521form]
6.
Describe the real property (so real estate searcher can
see its relevance) [§9-521 addendum]
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
20
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
Provide name of the secured party
3.
Indicate the collateral covered
4.
Indicate that it covers fixtures (so real estate searchers
will know what it is) [on the §9-521 addendum]
5.
Indicate it is to be filed in the real estate records (so
filing officer will know what to do with it) [§9-521form]
6.
Describe the real property (so real estate searcher can
see its relevance) [§9-521 addendum]
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner) [§9-521
21
addendum]
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
ProvideSecured
name of the secured party
Indicate Party
the collateral covered
3.
4.
Security
Indicate that
it covers fixtures (so real estate searchers
will knowinterest
what it is)
5.
Indicate
it isestate
to be filed in the real estate records (so
Real
filing officer
will know what to do with it)
owner
6.
Describe the real property (so real estate searcher can
recognize it)
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
22
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
ProvideSecured
name of the secured party
Indicate Party
the collateral covered
3.
4.
Security
Indicate that
it covers fixtures (so real estate searchers
will knowinterest
what it is)
5.
Indicate Fixture
it is to be filed in the realReal
estate
records (so
estate
Unrecorded
filing officer
will
know
what to do with
it)
owner
Owner
lease
Describe the real property (so real estate searcher can
recognize it)
6.
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
23
Financing statement which is filed as a
fixture filing: §9-502(b) formalities
1.
Provide name of the debtor
2.
ProvideSecured
name of the secured party
Mortgagee
Indicate Party
the collateral covered (searcher)
3.
4.
Security
Indicate that
it covers fixtures (so real estate searchers
Mortgage
will knowinterest
what it is)
5.
Indicate Fixture
it is to be filed in the realReal
estate
records (so
estate
Unrecorded
filing officer
will
know
what to do with
it)
owner
Owner
lease
Describe the real property (so real estate searcher can
recognize it)
6.
7.
Provide the name of a record owner (so it will be in the
chain of title if fixture owner is not land owner)
24
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Not a fixture, not permanently affixed (Christmas tree
case)
Mortgage reaches crops in some states (Comment 12)
Security interest in crops has priority over mortgage in
crops, 9-334(i), so file financing statement with SOS
25
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Not a fixture, not permanently affixed (Christmas tree
case)
Mortgage reaches crops in some states (Comment 12)
Security interest in crops has priority over mortgage in
crops, 9-334(i), so file financing statement with SOS
26
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Not a fixture, not permanently affixed (Christmas tree
case)
Mortgage reaches crops in some states (Comment 12)
Security interest in crops has priority over mortgage in
crops, 9-334(i), so file financing statement with SOS
27
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Not a fixture, not permanently affixed (Christmas tree
case)
Mortgage reaches crops in some states (Comment 12)
Security interest in crops has priority over mortgage in
crops, 9-334(i), so file financing statement with SOS
28
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Probably not a fixture, not permanently affixed. Need a
filing with SOS. (Christmas tree case)
Mortgage reaches crops in some states (Comment 12)
Security interest in crops has priority over mortgage in
crops, 9-334(i), so file financing statement with SOS
29
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Probably not a fixture, not permanently affixed. Need a
filing with SOS. (Christmas tree case)
May be fixture, so need fixture filing.
Mortgage reaches crops in some states (§9-334 Cmt.
12), which means it doesn’t reach them in others.
30
Problem 20.1, page 357
How do we perfect in these items of collateral:
a.
A “one-third interest in a 160-acre tract of land?”
Tenancy in common: Real estate mortgage
Trust or partnership: Financing statement in SOS office
b.
Pine trees growing in straight rows for easy harvesting?
Probably not a fixture, not permanently affixed. Need a
filing with SOS. (Christmas tree case)
May be fixture, so need fixture filing.
Mortgage reaches crops in some states (§9-334 Cmt.
12), which means it doesn’t reach them in others.
31
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Are the trees fixtures? Maybe “timber to be cut,” 9501(a)(1)(A).
Mortgage will reach trees unless we have decided to cut
them.
d.
Should the mortgage mention the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
32
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Mortgage will reach trees.
d.
Should the mortgage mention the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
33
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Mortgage will reach trees.
Can a UCC filing reach trees? Not if they are like
“ordinary building materials.”
Should the mortgage exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
34
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Mortgage will reach trees.
Can a UCC filing reach trees? Not if they are like
“ordinary building materials.”
d.
Should the mortgage mention the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
35
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Mortgage will reach trees.
Can a UCC filing reach trees? Not if they are like
“ordinary building materials.”
d.
Should the mortgage mention the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
36
Problem 20.1, page 357
How do we perfect in these items of collateral:
c.
Parcel of land with virgin growth of walnut trees?
Mortgage will reach trees.
Can a UCC filing reach trees? Not if they are like
“ordinary building materials.”
d.
Should the mortgage mention the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
37
Problem 20.1, page 357
How do we perfect in these items of collateral:
Secured Lendc. Parcel of land with virgin growth of walnut trees?
ing Partners
Are thenote
trees2 fixtures? Maybe “timber to be cut,” 9Promissory
501(a)(1)(A),
but see “goods” definition, 9-102(a)(44).
and security
interest
in theMortgage
mortgagewill reach trees unless we have decided to
cut them.Pacific
Promissory note Mark IV
1 and
mortgage
Partners
d. Should Interests
the mortgage
mention
the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
38
Problem 20.1, page 357
How do we perfect in these items of collateral:
Does Article 9
Secured Lendc. Parcel of land with virgin growth of walnut trees?
apply? §9-109(b)
ing Partners
Are thenote
trees2 fixtures? Maybe “timber to be cut,” 9Promissory
501(a)(1)(A),
but see “goods” definition, 9-102(a)(44).
and security
interest
in theMortgage
mortgagewill reach trees unless we have decided to
cut them.Pacific
Promissory note Mark IV
1 and
mortgage
Partners
d. Should Interests
the mortgage
mention
the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-308(e), 9-203(g)
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
39
Problem 20.1, page 357
How do we perfect in these items of collateral:
Secured Lendc. Parcel of land with virgin growth of walnut trees?
ing Partners
Are thenote
trees2 fixtures? Maybe “timber to be cut,” 9Promissory
501(a)(1)(A),
but see “goods” definition, 9-102(a)(44).
and security
interest
in theMortgage
mortgagewill reach trees unless we have decided to cut
them. Pacific
Promissory note Mark IV
1 and
mortgage
Partners
d. Should Interests
the mortgage
mention
the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-203(g), 9-308(e).
Take possession (instrument, 9-313(a)) and file with
SOS (account, 9-310(a))
40
Problem 20.1, page 357
How do we perfect in these items of collateral:
Secured Lendc. Parcel of land with virgin growth of walnut trees?
ing Partners
Are thenote
trees2 fixtures? Maybe “timber to be cut,” 9Promissory
501(a)(1)(A),
but see “goods” definition, 9-102(a)(44).
and security
interest
in theMortgage
mortgagewill reach trees unless we have decided to cut
them. Pacific
Promissory note Mark IV
1 and
mortgage
Partners
d. Should Interests
the mortgage
mention
the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-203(g), 9-308(e). How?
Take possession (instrument, 9-313(a)) and file with SOS
(account, 9-310(a))
41
Problem 20.1, page 357
How do we perfect in these items of collateral:
Secured Lendc. Parcel of land with virgin growth of walnut trees?
ing Partners
Are thenote
trees2 fixtures? Maybe “timber to be cut,” 9Promissory
501(a)(1)(A),
but see “goods” definition, 9-102(a)(44).
and security
interest
in theMortgage
mortgagewill reach trees unless we have decided to cut
them. Pacific
Promissory note Mark IV
1 and
mortgage
Partners
d. Should Interests
the mortgage
mention
the trees?
Maybe, but “include one, exclude the other.” (grass).
e.
Promissory note and the mortgage that secures it.
Perfect in the right to payment, 9-203(g), 9-308(e). How?
Take possession (instrument, 9-313(a)) and file with SOS
(account, 9-310(a))
42
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own?
Is the tower a fixture?
Is Pacific Cellular, Inc. a transmitting utility?
9-102(a)(80). Transmitting utility means a
person primarily engaged in the
business of:
(B) Transmitting communications electrically,
electromagnetically, or by light
43
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
Pacific
Interests
What does Pacific Interests own?
Is the tower a fixture?
Is Pacific Cellular, Inc. a transmitting utility?
Pacific
Cellular Inc.
9-102(a)(80). Transmitting utility means a
person primarily engaged in the
business of:
(B) Transmitting communications electrically,
Farmer
44
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own?
Is the tower a fixture?
Is Pacific Cellular, Inc. a transmitting utility?
Pacific
Interests
Stock
Pacific
Cellular Inc.
9-102(a)(80). Transmitting utility means a
person primarily engaged in the
business of:
(B) Transmitting communications electrically,
Farmer
45
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Farmer
46
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
We also want the tower. Is it a fixture?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Farmer
47
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
We also want the tower. Is it a fixture?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Who is the “debtor?”
Farmer
48
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
We also want the tower. Is it a fixture?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Who is the “debtor?” A transmitting utility?
Farmer
49
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
We also want the tower. Is it a fixture?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Who is the “debtor?” A transmitting utility?
9-102(a)(80). Transmitting utility means a
person primarily engaged in the
business of:
(B) Transmitting communications
electrically, electromagnetically, or by
light
Farmer
50
Problem 20.1, page 357
How do we perfect in:
f.
Cell phone tower?
What does Pacific Interests own? How do
we perfect a security interest in stock?
We also want the tower. Is it a fixture?
Pacific
Interests
Stock
Pacific
Cellular Inc.
Who is the “debtor?” A transmitting utility?
9-102(a)(80). Transmitting utility means a
person primarily engaged in the
business of:
(B) Transmitting communications
electrically, electromagnetically, or by
light
Farmer
51
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
Pacific
Cellular Inc.
Not
transmitting
utility
Farmer
52
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
Pacific
Cellular Inc.
Not
transmitting
utility
Farmer
53
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
Pacific
Cellular Inc.
Not
transmitting
utility
Farmer
54
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
State UCC
§9-501(b)
Pacific
Cellular Inc.
Not
transmitting
utility
Farmer
55
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
State UCC
§9-501(b)
Pacific
Cellular Inc.
Not
transmitting
utility
Farmer
56
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
Not
transmitting
utility
Fixture filing
in RE records
9-501(a)(1)
State UCC
§9-501(b)
Pacific
Cellular Inc.
Farmer
57
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
Not
transmitting
utility
Fixture filing
in RE records
9-501(a)(1)
State UCC
§9-501(b)
Pacific
Cellular Inc.
Farmer
58
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
State UCC
§9-501(b)
Not
transmitting
utility
Fixture filing State UCC
in RE records §9-501(a)(2)
9-501(a)(1)
Pacific
Cellular Inc.
Farmer
59
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
State UCC
§9-501(b)
Not
transmitting
utility
Fixture filing State UCC
in RE records §9-501(a)(2)
9-501(a)(1)
Pacific
Cellular Inc.
What do we file?
Farmer
60
Problem 20.1, page 357
How do we perfect in the tower if:
Fixture
Not fixture
Pacific
Interests
Stock
Transmitting
utility
State UCC
§9-501(b)
State UCC
§9-501(b)
Not
transmitting
utility
Fixture filing State UCC
in RE records §9-501(a)(2)
9-501(a)(1)
Pacific
Cellular Inc.
What do we file? (1) Local fixture filing and (2) SOS
indicating that it may cover fixtures of a transmitting
utility.
Farmer
61
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. 9-102(a)(80)
Are pipes fixtures? Probably yes. So we file under 9-501(b).
How do we perfect in the real property and easements?
Mortgages, 9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
62
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility?
§9-102(a)(80) “Transmitting utility” means a person primarily
engaged in the business of:
....
(C) transmitting goods by pipeline or sewer
....
63
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under 9-501(b).
How do we perfect in the real property and easements?
Mortgages, 9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
64
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under 9-501(b).
How do we perfect in the real property and easements?
Mortgages, 9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
65
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, 9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
66
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, 9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
67
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
68
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
69
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
70
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
71
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is 9-501(b)? Helps if the fixtures are attached to
someone else’s land.
72
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is §9-501(b)? Helps if the fixtures are attached
to someone else’s land.
73
Problem 20.1, page 357
How do we perfect in these items of collateral:
g.
Natural gas pipeline that runs through 119 counties in four
states?
Transmitting utility? Yes. §9-102(a)(80)(C)
Are pipes fixtures? Probably yes. So we file under §9-501(b).
How do we perfect in the real property and easements?
Mortgages, §9-334(a). Nightmare.
Can the mortgages include the pipes? Yes, automatically.
If we do mortgages, do we need fixture filings? No.
So what good is §9-501(b)? Helps if the fixtures are attached
to land or easements that won’t be collateral (example,
the cell phone tower).
74
Problem 20.1, page 357
Secured Lending
Partners, Inc.
Mortgagee on
the Mall
Security interest in
“store fixtures”
Pacific
Interests
Mortgage on the
Mall
Lease
Oaks Mall,
Ltd.
How do we perfect in the store fixtures?
75
Problem 20.1, page 357
Secured Lending
Partners, Inc.
Mortgagee on
the Mall
Security interest in
“store fixtures”
Pacific
Interests
Mortgage on the
Mall
Lease
Oaks Mall,
Ltd.
How do we perfect in the store fixtures?
Fixture filing and UCC filing
76
The Big Picture
Assignment 33: Secureds vs. Secureds: Land and Fixtures
Mortgage vs. Mortgage
Purchase money mortgage vs. Mortgage
Judgment lien vs. Mortgage
Mechanic’s lien vs. Mortgage
Fixture filing vs. Mortgage (also Construction Mortgage)
Purchase money fixture filing vs. Mortgage
77
The Big Picture
Assignment 33: Secureds vs. Secureds: Land and Fixtures
Mortgage vs. Mortgage
Purchase money mortgage vs. Mortgage
Judgment lien vs. Mortgage
Mechanic’s lien vs. Mortgage
Fixture filing vs. Mortgage (also Construction Mortgage)
Purchase money fixture filing vs. Mortgage
78
Priority Rules: Fixture Filing vs.
Ordinary Mortgage
.
79
Priority Rules: Fixture Filing vs.
Ordinary Mortgage
.§334(e). First to file (in the real property records).
80
Priority Rules: Fixture Filing vs.
Ordinary Mortgage
.§334(e). First to file (in the real property records).
In context, that means the mortgage will nearly always win:
81
Priority Rules: Fixture Filing vs.
Ordinary Mortgage
.§334(e). First to file (in the real property records).
In context, that means the mortgage will nearly always win:
Goods
Mortgage 1
Real estate
First fixture filing
opportunity
Mortgage 2
Goods
become
fixtures
82
Priority Rules: Fixture Filing vs.
Ordinary Mortgage
.§334(e). First to file (in the real property records).
In context, that means the mortgage will nearly always win:
Goods
Mortgage 1
Real estate
First fixture filing
opportunity
Mortgage 2
Goods
become
fixtures
The fixture filing is subordinate to Mortgage 1, prior to Mortgage 2.
83
Priority Rules: Purchase Money Fixture
Filing vs. Ordinary Mortgage
.
84
Priority Rules: Purchase Money Fixture
Filing vs. Ordinary Mortgage
.
§334(d).
A purchase money security interest in fixtures has
priority over an earlier-recorded mortgage if the fixture filing
is made before 20 days after the goods become fixtures
85
Priority Rules: Purchase Money Fixture
Filing vs. Ordinary Mortgage
.
§334(d).
A purchase money security interest in fixtures has
priority over an earlier-recorded mortgage if the fixture filing
is made before 20 days after the goods become fixtures
Goods
Mortgage 1
Real estate
Purchase money
fixture filing
Goods 20 days
become
fixtures
86
Priority Rules: Purchase Money Fixture
Filing vs. Ordinary Mortgage
.
§334(d).
A purchase money security interest in fixtures has
priority over an earlier-recorded mortgage if the fixture filing
is made before 20 days after the goods become fixtures
Goods
Mortgage 1
Real estate
Purchase money
fixture filing
Goods 20 days
become
fixtures
Purchase money
fixture filing has priority
over the mortgage
87
Priority Rules: Fixture Filing vs.
Construction Mortgage
.
88
Priority Rules: Fixture Filing vs.
Construction Mortgage
.§334(h). [A construction mortgage has priority over a fixture
filing] (unless the fixture filing is prior in time, §334(e)), if
1.
The construction mortgage is recorded before the goods
become fixtures and
2.
The goods become fixtures before the completion of
construction.
89
Priority Rules: Fixture Filing vs.
Construction Mortgage
.§334(h). [A construction mortgage has priority over a fixture
filing] (unless the fixture filing is prior in time, §334(e)), if
1.
The construction mortgage is recorded before the goods
become fixtures and
2.
The goods become fixtures before the completion of
construction.
Affixing
Construction
mortgage
End
construction
90
Priority Rules: Fixture Filing vs.
Construction Mortgage
.§334(h). [A construction mortgage has priority over a fixture
filing] (unless the fixture filing is prior in time, §334(e)), if
1.
The construction mortgage is recorded before the goods
become fixtures and
2.
The goods become fixtures before the completion of
construction.
PMSI
Affixing
Construction
mortgage
End
construction
This PMSI is subordinate
91
Priority Rules: Fixture Filing vs.
Construction Mortgage
.§334(h). [A construction mortgage has priority over a fixture
filing (unless the fixture filing is prior in time, §334(e))], if
1.
The construction mortgage is recorded before the goods
become fixtures and
2.
The goods become fixtures before the completion of
construction.
Affixing
Construction
mortgage
End
construction
92
Priority Rules: Fixture Filing vs.
Construction Mortgage
.§334(h). [A construction mortgage has priority over a fixture
filing (unless the fixture filing is prior in time, §334(e))], if
1.
The construction mortgage is recorded before the goods
become fixtures and
2.
The goods become fixtures before the completion of
construction.
Fixture filing
PMSI
Affixing
Construction
mortgage
End
construction
This fixture filing is prior, §334(e)
93
Problem 33.3, page 553
.
94
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
95
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
96
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
Is Folds perfected?
97
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
Is Folds perfected?
§9-501(a). [T]he office in which to file a financing statement . . .
is . . . the office of the Secretary of State in all other cases,
including a case in which the collateral is goods that are . .
. fixtures and the financing statement is not filed as a
fixture filing.
98
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
Is Folds perfected?
§9-501(a). [T]he office in which to file a financing statement . . .
is . . . the office of the Secretary of State in all other cases,
including a case in which the collateral is goods that are . .
. fixtures and the financing statement is not filed as a
fixture filing.
Between TIB and Folds, who has priority?
99
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
Is Folds perfected?
§9-501(a). [T]he office in which to file a financing statement . . .
is . . . the office of the Secretary of State in all other cases,
including a case in which the collateral is goods that are . .
. fixtures and the financing statement is not filed as a
fixture filing.
Between TIB and Folds, who has priority?
§9-334(e)(3). A perfected security interest in fixtures has
priority over a conflicting interest . . . obtained by legal or
equitable proceedings after the security interest was
100
perfected by any method permitted by this article.
Problem 33.3, page 553
1.
.
Folds sells mobile home that is a fixture, takes SI, makes a
non-fixture filing
2.
Debtor files bankruptcy
Is Folds perfected?
§9-501(a). [T]he office in which to file a financing statement . . .
is . . . the office of the Secretary of State in all other cases,
including a case in which the collateral is goods that are . .
. fixtures and the financing statement is not filed as a
fixture filing.
Between TIB and Folds, who has priority? Folds
§9-334(e)(3). A perfected security interest in fixtures has
priority over a conflicting interest . . . obtained by legal or
equitable proceedings after the security interest was
101
perfected by any method permitted by this article.
Problem 33.3, page 553
1. Folds sells fixture (mobile home) perfects by non-fixture filing
Folds
Goods perfects
Real estate
Goods
become
fixtures
102
Problem 33.3, page 553
1. Folds sells fixture (mobile home) perfects by non-fixture filing
2. Commercial Finance perfects by a fixture filing
Folds
Goods perfects
Commercial
perfects
Real estate
Goods
become
fixtures
103
Problem 33.3, page 553
1. Folds sells fixture (mobile home) perfects by non-fixture filing
2. Commercial Finance perfects by a fixture filing
3. Debtor files bankruptcy
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
104
Problem 33.3, page 553
1. Folds sells fixture (mobile home) perfects by non-fixture filing
2. Commercial Finance perfects by a fixture filing
3. Debtor files bankruptcy
As between Folds and Commercial, who is first?
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
105
Problem 33.3, page 553
1. Folds sells fixture (mobile home) perfects by non-fixture filing
2. Commercial Finance perfects by a fixture filing
3. Debtor files bankruptcy
As between Folds and Commercial, who is first? Neither §9334(c) or (e)(1) apply because a secured party is not an
“encumbrancer . . . of the related real property.” Folds
wins under §9-322(a)(1).
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
106
Problem 33.3, page 553
Is the holder of a security interest an “encumbrancer?” No.
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
107
Problem 33.3, page 553
Is the holder of a security interest an “encumbrancer?” No.
§9-102(a)(32). “Encumbrance” means a right, other than an
ownership interest, in real property. The term includes
mortgages and other liens on real property.
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
108
Problem 33.3, page 553
Is the holder of a security interest an “encumbrancer?” No.
§9-102(a)(32). “Encumbrance” means a right, other than an
ownership interest, in real property. The term includes
mortgages and other liens on real property.
§9-102(a)(52). “Lien creditor” means . . . a creditor that has
acquired a lien on the property involved by . . . levy . . . or
the like.
Folds
Goods perfects
Commercial
Debtor
perfects
bankruptcy
Real estate
Goods
become
fixtures
109
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
110
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
111
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
Who must authorize the work?
112
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
Who must authorize the work?
New York Lien Law §3, page 537: A contractor . . . who
performs services or furnishes materials . . . at the request of
the owner . . . or his agent . . . shall have a lien . . . .
113
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
Who must authorize the work?
New York Lien Law §3, page 537: A contractor . . . who
performs services or furnishes materials . . . at the request of
the owner . . . or his agent . . . shall have a lien . . . .
§2. The term “owner” . . . includes . . . a lessee for a term of
years . . . .
114
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
Who must authorize the work?
New York Lien Law §3, page 537: A contractor . . . who
performs services or furnishes materials . . . at the request of
the owner . . . or his agent . . . shall have a lien . . . .
§2. The term “owner” . . . includes . . . a lessee for a term of
years . . . .
2. Will a mechanic’s lien entitle Sauls to rip the system out?
115
Problem 33.5, page 554
a.
.
Sound City plans to install a sound system. No remodeling.
Wants to rip the system out if buyer doesn’t pay.
1. Will Sound City be entitled to a mechanic’s lien? Page 537.
Who must authorize the work?
New York Lien Law §3, page 537: A contractor . . . who
performs services or furnishes materials . . . at the request of
the owner . . . or his agent . . . shall have a lien . . . .
§2. The term “owner” . . . includes . . . a lessee for a term of
years . . . .
2. Will a mechanic’s lien entitle Sauls to rip the system out?
Right to foreclose, no right to remove.
116
Problem 33.5, page 554
b.
.
Does Sound City need the land owner’s signature for a
fixture filing?
117
Problem 33.5, page 554
b.
.
Does Sound City need the land owner’s signature for a
fixture filing?
No, §9-203(b)(3), §9-509(b). Just the “debtor.”
118
Problem 33.5, page 554
b.
.
Does Sound City need the land owner’s signature for a
fixture filing?
No, §9-203(b)(3), §9-509(b). Just the “debtor.”
Will a fixture filing give Sound City the right to remove?
§9-604(c). If a secured party . . . has priority over all owners
and encumbrancers . . . the secured party, after default, may
remove the collateral.
§9-334(d). A perfected security interest in fixtures has
priority over . . . encumbrancer or owner . . . if . . . the debtor
is in possession of the real estate and [the] purchase money
security interest is perfected within 20 days . . . .
119
Problem 33.5, page 554
b.
.
Does Sound City need the land owner’s signature for a
fixture filing?
No, §9-203(b)(3), §9-509(b). Just the “debtor.”
Will a fixture filing give Sound City the right to remove? Yes.
§9-604(c). If a secured party . . . has priority over all owners
and encumbrancers . . . the secured party, after default, may
remove the collateral.
§9-334(d). A perfected security interest in fixtures has
priority over . . . encumbrancer or owner . . . if . . . the debtor
is in possession of the real estate and [the] purchase money
security interest is perfected within 20 days . . . .
120
Problem 33.5, page 554
c.
.
Sound City plans to install the sound system in a building
presently under construction. Will a fixture filing give
Sound City the right to repossess after default?
121
Problem 33.5, page 554
c.
.
Sound City plans to install the sound system in a building
presently under construction. Will a fixture filing give
Sound City the right to repossess after default?
§9-334(h). A mortgage is a construction mortgage to the extent
that it secures an obligation incurred for the construction of
an improvement on land . . . if a recorded record of the
mortgage so indicates. . . .
122
Problem 33.5, page 554
c.
.
Sound City plans to install the sound system in a building
presently under construction. Will a fixture filing give
Sound City the right to repossess after default?
§9-334(h). A mortgage is a construction mortgage to the extent
that it secures an obligation incurred for the construction of
an improvement on land . . . if a recorded record of the
mortgage so indicates. . . . [A] security interest in fixtures is
subordinate to a construction mortgage if the mortgage is
recorded before the goods become fixtures and the goods
become fixtures before the completion of the construction.
123
Problem 33.5, page 554
c.
.
Sound City plans to install the sound system in a building
presently under construction. Will a fixture filing give
Sound City the right to repossess after default?
§9-334(h). A mortgage is a construction mortgage to the extent
that it secures an obligation incurred for the construction of
an improvement on land . . . if a recorded record of the
mortgage so indicates. . . . [A] security interest in fixtures is
subordinate to a construction mortgage if the mortgage is
recorded before the goods become fixtures and the goods
become fixtures before the completion of the construction.
Would Dub’s consent in writing to removal in the event of
default be of help? §9-334(f).
124
Problem 33.5, page 554
c.
.
Sound City plans to install the sound system in a building
presently under construction. Will a fixture filing give
Sound City the right to repossess after default?
§9-334(h). A mortgage is a construction mortgage to the extent
that it secures an obligation incurred for the construction of
an improvement on land . . . if a recorded record of the
mortgage so indicates. . . . [A] security interest in fixtures is
subordinate to a construction mortgage if the mortgage is
recorded before the goods become fixtures and the goods
become fixtures before the completion of the construction.
Would Dub’s consent in writing to removal in the event of
default be of help? §9-334(f).
Not unless Dub’s had a right to remove in its lease. The
construction mortgage holder’s consent is needed.
125