Does UCC apply to vehicles?

If you extend credit to a dealership, the UCC governs your rights to reclaim the dealership’s assets, including its inventory of motor vehicles, in the event the dealership does not or cannot repay the debt.

What is a purchase money security agreement?

The term purchase money security interest (PMSI) refers to a legal claim that allows a lender to either repossess property financed with its loan or to demand repayment in cash if the borrower defaults. It gives the lender priority over claims made by other creditors.

What is UCC purchase money security?

According to UCC Article 9, a purchase money security interest (PMSI) is a special type of security interest that enables those who finance a debtor’s acquisition of goods to acquire a first priority security interest in the purchase-money collateral.

Is a car loan a purchase money security interest?

The Ninth Circuit Court of Appeals found that a creditor does not have a purchase money security interest (PMSI) in the portion of the debtor’s car loan related to negative equity of a vehicle traded in at the time of a new vehicle purchase; thus, the negative equity portion of the claim may be bifurcated as unsecured.

What is a security interest on a car title?

The term “security interest” means an interest (including an interest established by a conditional sales contract, mortgage, equipment trust, or other lien or title retention contract, or lease) in a motor vehicle when the interest secures payment or performance of an obligation.

How do you perfect a security interest in a motor vehicle?

There are generally four ways for a creditor to perfect security interest on a collateral property:

1. Creating and filing a financing statement;
2. Establishing actual possession of the property;
3. Establishing control over the property; and.
4. Attaching a purchase money security interest on the property.

What are purchase money obligations?

(2) “purchase-money obligation” means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.

Can a car be a PMSI?

If an automobile is involved and qualifies as consumer goods and the transaction qualifies as a PMSI, the automatic perfection rule of UCC § 9-309(1) does not apply; the lien still must be noted on the title as a condition of perfection.

Is the UCC law?

The Uniform Commercial Code (UCC) is a comprehensive set of laws governing all commercial transactions in the United States. It is not a federal law, but a uniformly adopted state law. Uniformity of law is essential in this area for the interstate transaction of business.

How do you perfect a security interest in cash?

However, generally speaking, the primary ways for a secured party to perfect a security interest are:

1. by filing a financing statement with the appropriate public office.
2. by possessing the collateral.
3. by “controlling” the collateral; or.
4. it’s done automatically upon attachment of the security interest.

Is it illegal to sell a car under finance?

No, it’s not illegal to sell a car under finance. As per NSW Fair Trading’s guide for car buyers, making sure that the vehicle is not encumbered (under finance), stolen or de-registered is the responsibility of the buyer in a private sale.

How do I buy a car with encumbrances?

How do you actually buy a car that’s encumbered?

1. Ask the owner about financing. If the owner is open and honest about how the car is financed, it’s a good sign that they are genuine and that the car is worth pursuing further.
2. Do a PPSR check.
3. Where’s the VIN?
4. Negotiate the sale process.

What are security interests in a motor vehicle?

Security interests in motor and other titled vehicles. Banks and other lenders frequently provide financing to customers or dealers for the purchase of a titled motor vehicle. Lenders are aware that to perfect a lien on a titled motor vehicle the lender must note its lien on the face of the certificate of title.

What does it mean to sign a security agreement for a car?

When placing the car loan, you also sign a “security agreement.” This security agreement gives the bank a “Security Interest” in the “Collateral” or “Security Property” (the car). The security agreement gives the bank the right to go against the collateral (car) if you default.

When to use purchase money security interest in software?

(3) also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest. (c) [Purchase-money security interest in software.]

How to file a security interest in a car?

In other words, perfection of a security interest in the inventory of a car dealer is accomplished by filing a financing statement describing the collateral.