In this video, 20.04 – Secured Transactions – Review 1, test your knowledge of secured transactions with Roger Philipp, CPA, CGMA. The first question Roger answers concerns the attachment of a security interest. By applying the mnemonic PIG – property of the debtor, interest created, value given by the creditor – the correct answer choice becomes obvious.

The second question concerns the filing of a financing statement for a secured transaction – is a financing statement required for a security interest to be created? Is a filed financing statement valid for an indefinite period of time, provided continuation statements are filed on time? Find out as Roger discusses each answer option in detail.

The next two questions reinforce the secured transaction rule that a PMSI (Purchase Money Security Interest) in consumer goods automatically attaches and perfects the security interest, subject to the funding gap, when the buyer sells the security to a third party. Throughout the review, Roger emphasizes the importance of understanding how the property in the secured transaction was used in the hands of the seller and how it will be used in the hands of the buyer, such as whether it is used as inventory, consumer goods, or equipment, in applying the secured transaction rules.

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Preview the video transcript:

Welcome back! Let's answer some questions about secured transactions. Number one: /"Under the UCC Revised Article on Secured Transactions, which of the following events always prevents the creation of a security interest?/"

How do you attach? PIG, property, interest, receive value. /"Lack of written security agreement/" do you have to have an agreement or take possession? /"Lack of creditor's possession or agreement. Absence of debtor's rights./" Remember we said debtor's property. They have rights to it, yes, they must own it, or they must own it and take possession or make an agreement, and they must give a value. "D, Absence of creditor's present consideration, present, past, all of that is valid." Best answer, C.

Number two: "Under the UCC Secured Transactions Article, which of the following is correct regarding the filing of a financing statement? First, a financing statement must be filed before a lien on the security interest can occur." Hmm, a financing statement must be… So, a financing statement must be… In the correct order before a lien can occur? No, because a financing statement has nothing to do with a lien.

You then attach the following… /"After filing, a financing statement is valid for an indefinite period of time, provided that continuation statements are filed, are submitted on time/

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