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2. . Debtor. Tax lien. PMSI. Securedparty. Seller. Buyer. Statutorylien. Judgmentlien. Bankruptcytrustee. Executionlien. Personal Property Competitors. . . . . . . . . . 3. Debtor. Tax lien. Purchasemoneymortgage. Mortgage. Seller. BFP forvalue. Mechanic'slien. Judgmentlien. Bankruptcytrustee.
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1. 1 Secured TransactionsAssignment 37 Statutory Liens Against Secured Creditors
2. 2
3. 3 Real Estate Competitors
4. 4
5. 5 Security interests Statutory liens Judicial liens
Article 9 SI Agricultural Judgment
Mortgages Mechanic’s Execution
Other SI Tax Attachment
Landlord’s Garnishment
Charging Equitable
Retaining
Hospital
Warehouse
6. 6 Statutory Lien Issues Does a lien exist? Read the statute.
How must the lienor perfect?
Read the statute
Does §9-310(a) require a financing statement (Ag lien?)
What is the lien’s priority?
Read the statute
Default rule for non-possessory lien: first in time
Default rule for possessory lien: ranks first, §9-333(b)
7. 7 Possessory Statutory Liens §9-333 (b) A possessory lien on goods has priority over a security interest . . . unless . . created by a statute that expressly provides otherwise
8. 8 Possessory Statutory Liens §9-333 (b) A possessory lien on goods has priority over a security interest . . . unless . . created by a statute that expressly provides otherwise
(a) “[P]ossessory lien” means an interest, other than a security interest or an agricultural lien:
(1) which secures payment . . . for services or materials furnished with respect to goods by a person in the ordinary course of the person’s business;
(2) which is created by statute or rule of law in favor of the person;
(3) whose effectiveness depends on . . . possession of the goods
9. 9 Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not)
10. 10 Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not)
Maine garage keeper’s lien, page 607
11. 11 Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not)
Maine garage keeper’s lien, page 607
Mechanic’s liens, Assignment 33
12. 12 Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not)
Maine garage keeper’s lien, page 607
Mechanic’s liens, Assignment 33
§9-310 imposes a filing requirement for “agricultural liens” (new in 2001).
13. 13 Filing requirements for statutory liens Hypo: Owner rents farmland to tenant who grows corn. Does landlord have a lien under Oregon statute, p. 609?
Probably yes. §9-102(a)(44). Corn is “chattels”
Is this landlord’s lien an agricultural lien?
§9-102(a)(5). Agricultural lien means an interest in farm products . . .
(A) which secures payment . . . for . . . rent . . . on real property leased to a debtor in connection with its farming operation
(B) which is created by statute in favor of a person that . . . leased real property to a debtor in connection with the debtor’s farming operation; and
(C) whose effectiveness does not depend on . . .possession
14. 14 Filing requirements for statutory liens Hypo: Owner rents farmland to tenant who grows corn. Does landlord have a lien under Oregon statute, p. 609?
Probably yes. §9-102(a)(44). Corn is “chattels”
Is this landlord’s lien an agricultural lien? Yes, landlord must file
§9-102(a)(5). Agricultural lien means an interest in farm products . . .
(A) which secures payment . . . for . . . rent . . . on real property leased to a debtor in connection with its farming operation
(B) which is created by statute in favor of a person that . . . leased real property to a debtor in connection with the debtor’s farming operation; and
(C) whose effectiveness does not depend on . . .possession
15. 15 Perishable Agricultural Commodities Act
16. 16 Perishable Agricultural Commodities Act
17. 17 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities,
18. 18 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities,
19. 19 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities
20. 20 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
21. 21 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
22. 22 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
23. 23 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
24. 24 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
25. 25 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
26. 26 Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders.
27. 27 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §541, §544(a)
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
28. 28 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §541, §544(a)
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
29. 29 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession?
30. 30 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
31. 31 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §541, §544(a)
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
32. 32 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §§541, 544, 545
33. 33 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §§541, 544, 545
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
34. 34 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §§541, 544, 545
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
35. 35 Problem 37.1.a, page 621 Does Morse have an Artisan’s lien? Yes. §3051
Does Morse have the right to retain possession? Yes. §3051
What is the trustee’s claim to the property? §§541, 544, 545
Can the trustee defeat Morse’s lien? No. §545(2). This statutory lien would defeat a purchaser under state law.
36. 36 Problem 37.1.a, page 621 §9-333(a) “[P]ossessory lien” means an interest, other than a security interest or an agricultural lien:
which secures payment . . . for services or materials furnished with respect to goods by a person in the ordinary course of the person’s business;
which is created by statute . . . in favor of the person;
whose effectiveness depends on .. . possession of the goods
(b) A possessory lien on goods has priority over a security interest . . . unless lien is created by a statute that expressly provides otherwise
37. 37 Problem 37.1.a, page 621 §9-333(a) “[P]ossessory lien” means an interest, other than a security interest or an agricultural lien:
which secures payment . . . for services or materials furnished with respect to goods by a person in the ordinary course of the person’s business;
which is created by statute . . . in favor of the person;
whose effectiveness depends on .. . possession of the goods
(b) A possessory lien on goods has priority over a security interest . . . unless lien is created by a statute that expressly provides otherwise
38. 38 Problem 37.1.b, page 621
39. 39 Problem 37.1.b, page 621
40. 40 Problem 37.1.b, page 621
41. 41 Problem 37.1.b, page 621
42. 42 Problem 37.1.b, page 621
43. 43 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
44. 44 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
45. 45 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“)
46. 46 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“)
Against what sources can Norman proceed?
47. 47 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“)
Against what sources can Norman proceed? What is Norman’s priority against Haunt’s accounts lender?
48. 48 Problem 37.1.b, page 621 Norman did not retain a security interest in the tomatoes
PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”
The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“)
Against what sources can Norman proceed? What is Norman’s priority against Haunt’s accounts lender? Norman is prior.
49. 49 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
50. 50 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
51. 51 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
52. 52 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
53. 53 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
54. 54 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
55. 55 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
56. 56 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
57. 57 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
58. 58 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
59. 59 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
60. 60 Problem 37.2, page 622 Jean grants $7K PMSI to GMAC
Without GMAC permission, Jean incurs $3.5K debt to Central for repairs
a. Does Central have a lien? Yes, worked at “request of legal possessor.” Also, §9-401(b).
b. With what priority? “Subject to . . . [GMAC] but only for charges in excess of $1,500 . . .”
61. 61 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
62. 62 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled.
63. 63 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
64. 64 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
Does the Illinois statute permit us to retain the will?
65. 65 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
Does the Illinois statute permit us to retain the will? No
66. 66 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
Does the Illinois statute permit us to retain the will? No
“Illinois common law recognizes an attorney retaining lien.
67. 67 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
Does the Illinois statute permit us to retain the will? No
“Illinois common law recognizes an attorney retaining lien. This lien allows an attorney to retain papers and property of a client until the attorney fees are paid or the client posts a security for payment.” Carrizales v. Board of Education, 2004 U.S. Dist. LEXIS (N.D. Ill.).”
68. 68 Problem 37.3, page 623 Client gave us his will. We did work for client; client hasn’t paid. Do we have to give his will back?
Rule 1.16(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practical to protect a client’s interest, such as . . . surrendering papers . . . to which the client is entitled. The lawyer may retain papers relating to the client to the extent permitted by other law.
Does the Illinois statute permit us to retain the will? No
“Illinois common law recognizes an attorney retaining lien. This lien allows an attorney to retain papers and property of a client until the attorney fees are paid or the client posts a security for payment.” Carrizales v. Board of Education, 2004 U.S. Dist. LEXIS (N.D. Ill.).” Is that fair?
69. 69 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed.
70. 70 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed. Against what does Oaks have a lien? (Oregon statute, page 609)
Equipment in store $25K
Inventory in store $25K
Fixtures in store $25K
Equipment removed $5K
Accounts not from store $10K
71. 71 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed. Against what does Oaks have a lien? (Oregon statute, page 609)
Equipment in store $25K Lien
Inventory in store $25K Lien
Fixtures in store $25K Lien
Equipment removed $5K Lien?
Accounts not from store $10K No lien
72. 72 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed. Against what does Oaks have a lien? (Oregon statute, page 609)
Equipment in store $25K Lien
Inventory in store $25K Lien
Fixtures in store $25K Lien
Equipment removed $5K Lien?
Accounts not from store $10K No lien
73. 73 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed. Against what does Oaks have a lien? (Oregon statute, page 609)
Equipment in store $25K Lien
Inventory in store $25K Lien
Fixtures in store $25K Lien
Equipment removed $5K Lien?
Accounts not from store $10K No lien
74. 74 Problem 37.4, page 623 a. Debtor owes $42K rent to Oaks Mall, store closed. Against what does Oaks have a lien? (Oregon statute, page 609)
Equipment in store $25K Lien
Inventory in store $25K Lien
Fixtures in store $25K Lien
Equipment removed $5K Lien?
Accounts not from store $10K No lien
75. 75 Problem 37.4, page 623
76. 76 Problem 37.4, page 623
77. 77 Problem 37.4, page 623
78. 78 Problem 37.4, page 623
79. 79 Problem 37.4, page 623
80. 80 Problem 37.4, page 623
81. 81 Problem 37.4, page 623
82. 82 Problem 37.4, page 623
83. 83 Problem 37.4, page 623
84. 84 Problem 37.4, page 623
85. 85 Problem 37.4, page 623
86. 86 Problem 37.5, page 624 In New Jersey, Massachusetts and Connecticut, clean up liens have priority over mortgages.
87. 87 Problem 37.5, page 624 In New Jersey, Massachusetts and Connecticut, clean up liens have priority over mortgages.
Governor wants to know how those laws are working.
88. 88 Problem 37.5, page 624 In New Jersey, Massachusetts and Connecticut, clean up liens have priority over mortgages.
Governor wants to know how those laws are working.
What questions do we ask?
89. 89 Problem 37.5, page 624 In New Jersey, Massachusetts and Connecticut, clean up liens have priority over mortgages.
Governor wants to know how those laws are working.
What questions do we ask?
Do debtors pollute?
Do debtors or the state clean up?
Does the state collect?
Can real property owners get loans?
What do loans cost?
90. 90 Problem 37.5, page 624 In New Jersey, Massachusetts and Connecticut, clean up liens have priority over mortgages.
Governor wants to know how those laws are working.
What questions do we ask?
Do debtors pollute?
Do debtors or the state clean up?
Does the state collect?
Can real property owners get loans?
What do loans cost?
Of whom do we ask the questions?