1

Secured TransactionsAssignment 29

Lienors vs. Secured Creditors:

Future Advances

2

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

3

Definitions“Advance” means payment of money to borrower as a loan

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.

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

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

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

8

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

9

Priority RulesGeneral rule (UCC and Real Estate law): All advances and non-

advances have the same priority. Shutze v. Credithrift.

10

Priority RulesGeneral rule (UCC and Real Estate law): All advances and non-

advances 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”

11

Priority RulesGeneral rule (UCC and Real Estate law): All advances and non-

advances 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

12

Priority RulesGeneral rule (UCC and Real Estate law): All advances and non-

advances 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 withoutknowledge of the lien

13

Priority RulesGeneral rule (UCC and Real Estate law): All advances and non-

advances 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 withoutknowledge 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.

14

Priority RulesNon-advances (real and personal property exceptions): A non-

advance has the priority of the advance to which it relates

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.

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?

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 . . . .”

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.

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 . . . .”

20

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.

21

Problem 29.1, page 492Carol loans $1K secured. BCA

gets $45K judgment lien

Assume boat worth about $32K.

What effect if Bob advances $31K?

1K

22

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Assume boat worth about $32K.

What effect if Bob advances $31K?

1K

45K

23

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

1K

45K32K

24

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol doesn’t advance?

1K

45K32K

25

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol doesn’t advance?

BCA recovers $31K.

1K

45K32K

1K

32K

26

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

Will the new debt be secured?

1K

45K32K

27

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

Will the new debt be secured?

Yes, if there is a security agreement. 1K

45K32K

§9-203(b). [A] security interest is enforceable . . . only if . . .

(3)(A) the debtor has authenticated a security agreement . . .

28

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

Will the new debt be secured?

Yes, if there is a security agreement.

What priority will it have?

1K

45K32K

29

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.

Problem 29.1, page 492Carol loans $1K secured. BCA gets

$45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

Will the new debt be secured?

Yes, if there is a security agreement.

What priority will it have?

1K

45K32K

30

Problem 29.1, page 492

32K

32K

45K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

If Carol has a future advance clause, her advance has priority because made within 45 days.

31

Problem 29.1, page 492

32K

32K

45K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

If Carol has a future advance clause, her advance has priority because made within 45 days.

What title passes at the sale?

32

32K

Problem 29.1, page 492

32K

Before After

32K

45K

32K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

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.

33

32K

Problem 29.1, page 492

32K

Before After

32K

45K

32K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

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?

34

32K

Problem 29.1, page 492

32K

Before After

32K

45K

32K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

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!

35

32K

Problem 29.1, page 492

32K

Before After

32K

45K

32K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

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!

What’s the policy for allowing Carol to advance with knowledge of the lien?

36

32K

Problem 29.1, page 492

32K

Before After

32K

45K

32K

Carol loans $1K secured. BCA gets $45K judgment lien

Boat is worth about $32K.

What result if Carol advances $31K?

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!

What’s the policy for allowing Carol to advance with knowledge of the lien? So secured beats tax lien

37

Problem 29.1, page 492

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 . . .

SA

Tax lien

Secured

Future advance

45 daysNotice oftax lien

38

Problem 29.1, page 492

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

SA

Tax lien

Secured

Future advance

45 daysNotice oftax lien

39

Problem 29.1, page 492

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 . . . .

SA

Tax lien

Secured

Future advance

45 daysNotice oftax lien

40

Problem 29.1, page 492

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.

SA

Judgment

Secured

Future advance

45 daysLevy

41

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

We represent BCA. Sheriff’s sale is a few days from now. Deficiency may be collectible.

42

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

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?

43

32K

Problem 29.2, page 492

Before After

32K

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.1K

45K

1K

44

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

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?

45

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

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?

46

32K

Problem 29.2, page 492

1KBefore After

32K

45K

?

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?

47

32K

Problem 29.2, page 492

32K

Before After

32K

45K

32K

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!

48

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

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?

49

32K

Problem 29.2, page 492

?

Before After

32K

45K

?

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.

50

Problem 29.2, page 492We 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.

51

Problem 29.2, page 492We 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 owing.

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

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

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.

55

Home equity loans

60K

110K

Home equity

56

Home equity loansGeneral rule (Real Estate law): Future

advances and non-advances have priority over intervening liens.

60K

110K

Home equity

57

Home equity loansGeneral rule (Real Estate law): Future

advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

60K

30K

110K

Home equity

58

Home equity loansGeneral rule (Real Estate law): Future

advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

60K

40K

110K

59

Home equity loansGeneral rule (Real Estate law): Future

advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

60K

10K

110K

60

Home equity loansGeneral rule (Real Estate law): Future

advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

60K

30K

110K

61

Home equity loans

60K

30K

110K

60K

15K

30K

110KGeneral rule (Real Estate law): Future advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

The rule ignores the effect on subsequent liens

62

Home equity loans

60K

15K

50K

110KGeneral rule (Real Estate law): Future advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

The rule ignores the effect on subsequent liens.

63

Home equity loans

60K

15K

50K

110KGeneral rule (Real Estate law): Future advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

The rule ignores the effect on subsequent liens.

Because the priority is assured, the home equity lender doesn’t have to search before each advance.

64

Home equity loans

60K

15K

50K

110KGeneral rule (Real Estate law): Future advances and non-advances have priority over intervening liens.

Home equity loan (blue) permits frequent advances and repayments

The rule ignores the effect on subsequent liens.

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.

65

Home equity loansOptional advance rule: If the future advance

is “optional” and made with knowledge of the lien, the advance is subordinate.

60K

15K

30K

110K

66

Home equity loansOptional advance rule: If the future advance

is “optional” and made with knowledge of the lien, the advance is subordinate.

60K

15K

30K

110K 20K

67

Home equity loansOptional advance rule: If the future advance

is “optional” and made with knowledge of the lien, the advance is subordinate.

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 . . .”

60K

15K

30K

110K 20K

68

Home equity loansOptional advance rule: If the future advance

is “optional” and made with knowledge of the lien, the advance is subordinate.

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 . . .”

Can home equity lenders live with the optional advance rule?

60K

15K

30K

110K 20K

69

Home equity loansOptional advance rule: If the future advance

is “optional” and made with knowledge of the lien, the advance is subordinate.

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 . . .”

Can home equity lenders live with the optional advance rule?

60K

15K

30K

110K 20K

Don’t lend with knowledge of a lien?

70

Problem 29.3, page 492 Note, mortgage$50K advance

Mortgagee

71

Problem 29.3, page 492

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

72

Problem 29.3, page 492

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

73

Problem 29.3, page 492 AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Interest $10K

74

Problem 29.3, page 492 AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

75

Problem 29.3, page 492

Schutze rule applies.

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

76

Problem 29.3, page 492

Schutze rule applies.

Mortgagee has actual knowledge of the lien at time of future advance

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

77

Problem 29.3, page 492

Schutze rule applies.

Mortgagee has actual knowledge of the lien at time of future advance

As between Mortgagee and J, who has priority?

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

78

Problem 29.3, page 492

Schutze rule applies.

Mortgagee has actual knowledge of the lien at time of future advance

As between Mortgagee and J, who has priority? Mortgagee

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

90K

100K

Mortgagee for advances and non-advances

Judgment

79

Problem 29.3, page 492

Optional advance rule applies.

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

80

Problem 29.3, page 492

Optional advance rule applies.

Mortgagee has actual knowledge of the lien at time of optional advance

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

81

Problem 29.3, page 492

Optional advance rule applies.

Mortgagee has actual knowledge of the lien at time of optional advance

As between Mortgagee and J, who has priority?

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

82

Problem 29.3, page 492

Optional advance rule applies.

Mortgagee has actual knowledge of the lien at time of optional advance

As between Mortgagee and J, who has priority?

AttorneysFees $5K

Records$100K

Note, mortgage$50K advance

Judgment

Mortgagee

$25Kadvance

Now

Interest $10K

60K

100K

Mortgagee for $50K and associated non-advances

Judgment

Mortgagee for $25K and associated non-advances

30K

83

45 days

Problem 29.4, page 493 AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K

84

45 days

Problem 29.4, page 493 AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K

85

Problem 29.4, page 493

§9-323(b) rule applies.

AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K45 days

86

Problem 29.4, page 493

§9-323(b) rule applies.

Secured has actual knowledge of the lien at time of optional advance

AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K45 days

87

Problem 29.4, page 493

§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?

AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K45 days

88

Problem 29.4, page 493

§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?

AttorneysFees $5K

Levy$100K

SA, filing,$50K advance

Judgment

Secured

$25Kadvance

Now

Interest $10K

60K

100K

Secured for $50K and associated non-advances

Judgment

Secured for $25K and associated non-advances

30K

45 days

89

Problem 29.5, page 493

Sheng

Creditors

Judgmententered Levy?

FSFSFS

3 months

Now

90

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

a. What is debtor, Conda Copper, doing?

Levy?

FSFSFS

3 months

Now

91

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

a. What is debtor, Conda Copper, doing?

1. Borrowing secured?

Levy?

FSFSFS

3 months

Now

92

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

a. What is debtor, Conda Copper, doing?

1. Borrowing secured?

2. Converting unsecured debt to secured?

Levy?

FSFSFS

3 months

Now

93

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

a. What is debtor, Conda Copper, doing?

1. Borrowing secured?

2. Converting unsecured debt to secured?

3. Establishing priorities for future loans?

Levy?

FSFSFS

3 months

Now

94

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

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?

FSFSFS

3 months

Now

95

Problem 29.5, page 493

Sheng

Creditors

Judgmententered

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).

Levy?

FSFSFS

3 months

Now