Purchase Money Security Interest in Consumer Goods

The video tutorial explains the concept of purchase money security interest in consumer goods, highlighting how it is automatically perfected without filing or possession. It discusses the limitations, such as when a debtor sells the goods to a third party who meets specific criteria, allowing them to take the goods free of the security interest. The tutorial also covers the conditions under which the purchaser can take the goods free and clear, emphasizing the need for the purchase to be for value and personal use.

What is a purchase money security interest (PMSI) in consumer goods?

• A type of loan for purchasing real estate

• An insurance policy for merchants

• A security interest that is automatically perfected without filing

• A government bond for consumer goods

Under what condition might a purchaser take consumer goods free and clear of a PMSI?

• If the goods are purchased as a gift

• If the goods are purchased with knowledge of the security interest

• If the goods are purchased without knowledge of the security interest

• If the goods are purchased for commercial use

What happens to the original secured party's interest if the debtor sells the goods to someone else?

• The secured party can repossess the goods

• The secured party must file a new security interest

• The secured party loses interest in the goods but may have priority in proceeds

• The secured party retains full interest in the goods

What must a purchaser provide to take consumer goods free and clear of a PMSI?

• Proof of commercial use

• Some form of value

• A notarized document

• A gift receipt

For what purpose must the goods be purchased to be free and clear of a PMSI?

• For resale

• For personal use

• For business use

• For gifting