Asked by Jacob Lovins on May 17, 2024
Verified
According to the Uniform Commercial Code (UCC) ,a purchase money security interest (PMSI) exists in all but which of the following situations?
A) When a security interest is retained or taken by the seller of the collateral to secure part of the purchase price
B) When a security interest is retained or taken by the buyer of the collateral to secure the seller's fulfillment of an express or implied warranty
C) When a security interest is retained or taken by the seller of the collateral to secure all of the purchase price
D) When a security interest is retained or taken by a person who gives something of value to the debtor so that the debtor can gain rights to the collateral
E) When a security interest is retained or taken by a person who gives something of value to the debtor so that the debtor can gain use of the collateral
Uniform Commercial Code
A comprehensive set of laws governing all commercial transactions in the United States, designed to standardize and simplify transactions.
Purchase Money Security Interest (PMSI)
A legal claim that allows a lender to repossess or foreclose on property if the borrower defaults on the loan used to purchase the property.
Collateral
Property or assets that a borrower offers to a lender as security for a loan. If the borrower defaults, the lender may seize the collateral to recoup its losses.
- Comprehend the concept and characteristics of purchase money security interests under the UCC.
Verified Answer
CJ
Charles JamesMay 17, 2024
Final Answer :
B
Explanation :
According to Uniform Commercial Code (UCC)Section 9-103,a purchase money security interest (PMSI)exists when a security interest is retained or taken by: a)the seller of the collateral to secure part or all of the purchase price; or b)a person who gives something of value to the debtor so that the debtor can gain rights to or use of the collateral.
Learning Objectives
- Comprehend the concept and characteristics of purchase money security interests under the UCC.