Special Priority Rules for Proceeds from Sale of Collateral

The video tutorial explains the concept of priority in collateral and proceeds, focusing on how parties can claim interest in the proceeds from the sale of collateral. It covers the distinction between filing and non-filing collateral, emphasizing the importance of perfection in establishing priority. The tutorial also discusses how priority is determined in proceeds, highlighting the role of perfection through filing or possession.

What happens to the priority of a party in the original collateral when it is sold?

• The priority is shared with other parties.

• The priority is transferred to the proceeds.

• The priority is lost.

• The priority is nullified.

What is a characteristic of non-filing collateral?

• It is always in the form of cash.

• It does not require any security agreement.

• It can be perfected by filing.

• It requires possession or control for a security interest.

Which of the following is NOT an example of non-filing collateral?

• Certificates of deposit

• Depositary accounts

• Chattel paper

• Real estate

How can a party establish priority in the proceeds from the sale of non-filing collateral?

• By being the first to file a claim.

• By being the first to perfect the security interest in the proceeds.

• By having the largest original collateral.

• By negotiating with the debtor.

What must a party do to perfect their security interest in proceeds?

• File a lawsuit.

• Take possession or control of the proceeds.

• Share the proceeds with other parties.

• Wait for the debtor to default.