Asked by Svetlana Brenner on May 28, 2024
Verified
Everett buys a new bicycle on credit from Bicycle City.Bicycle City has a security agreement for a purchase-money security interest in the bicycle but did not file a financing statement.Everett,however,discovers that he does not have enough money to pay his rent.Therefore,he sells the bicycle to his neighbor,Helen,who is unaware of Bicycle City's security interest in the bicycle.Everett fails to make payments on the bicycle,and Bicycle City seeks to repossess it.Discuss the rights and obligations of the parties.
Purchase-Money Security Interest
A legal claim or lien on an item of property that secures payment of the debt used to purchase the property.
Security Agreement
A legal contract that outlines the terms under which personal property is used as collateral for a loan, securing the repayment to the lender.
Financing Statement
A financing statement is a document filed by a secured party to give public notice of their interest in the personal property of a debtor, used to perfect a security interest under the Uniform Commercial Code.
- Acquire knowledge about the nature and features of purchase money security interests as delineated in the UCC.
- Explore the entitlements and commitments of individuals involved in transactions secured through personal assets.
Verified Answer
TK
Tedman KeddyJun 02, 2024
Final Answer :
Under the Uniform Commercial Code,so long as Helen,the buyer,was not aware of the security interest of Bicycle City,purchased the bicycle for her personal use,and purchased it before the secured party filed a financial statement,she acquires the bicycle free of the security interest.In this case,assuming Bicycle City did not file any type of financing statement,the bicycle is Helen's.
Learning Objectives
- Acquire knowledge about the nature and features of purchase money security interests as delineated in the UCC.
- Explore the entitlements and commitments of individuals involved in transactions secured through personal assets.