Deck 5: Fixtures

Question 1

A purchase money security interest in fixtures does not arise automatically.

Answer 1

True

Question 2

Priority between an unperfected secured party and an unrecorded mortgage is first to file wins.

Answer 2

True

Question 3

Mortgages always take priority over purchase money security interests.

Answer 3

False

Question 4

Counters bolted to the floor in a department store would be considered fixtures.

Question 5

A lien creditor who has perfected his interest always takes priority over a secured party.

Question 6

The degree of annexation is always controlling in determining whether property is real or personal.

Question 7

A hot air heating system is probably an example of a fixture.

Question 8

The English rule with regard to trade fixtures was that all trade fixtures were real property.

Question 9

The higher the degree of ownership of the annexor, the more likely property attached to his premises will be treated as a fixture.

Question 10

Through agreement, parties to a contract may treat as fixtures those things that would normally be classified as personal property.

Question 11

The type of party who is seeking classification of a fixture as opposed to personal property is an irrelevant factor in that classification.

Question 12

Perfected secured parties can obtain priority over other parties by obtaining the other parties' consent.

Question 13

Article IX of the U.C.C. pertains to fixtures only.

Question 14

An Article IX security interest requires a written agreement for fixtures.

Question 15

A financing statement on a fixture is properly filed centrally.

Question 16

A financing statement must always have the signature of the debtor.

Question 17

A financing statement is effective for five years.

Question 18

In a landlord/tenant relationship, attached items are more likely to be treated as personal property.

Question 19

Trade fixtures are personal property.

Question 20

Proof of a PMSI is the burden of the creditor claiming priority.

Question 21

The failure to refile a financing statement after 5 years from the original filing does not affect the creditor's priority.

Question 22

A creditor who advances funds for a purchase of a fixture can never have priority over a previously recorded mortgage.

Question 23

A solar water heating system in a home is an example of a fixture.

Question 24

Growing crops are considered part of the real property.

Question 25

Washers and dryers are generally fixtures in homes.

Question 26

Emblements are naturally growing vegetation.

Question 27

Tenants whose crops aren't harvested prior to their lease termination lose their interest in those crops.

Question 28

Fixtures are land interests.

Question 29

A PMSI recorded on January 2, 2015, for an air conditioner affixed on December 31, 2015, takes priority over an existing mortgage recorded on June 1, 2009.

Question 30

Wall-to-wall carpeting in a residence is a fixture.

Question 31

A tenant's sign attached to its leased property in a strip mall is a fixture.

Question 32

Authentication is a requirement for an Article 9 security agreement.

Question 33

A financing statement must be authorized to be valid.

Question 34

An electronic agreement can satisfy the requirements for a security agreement.

Question 35

A debtor can create a valid security agreement through authentication.

Question 36

An Article 9 financing statement is valid for 10 years.

Question 37

An Article 9 financing statement can be renewed within the six-month period just prior to its expiration.

Question 38

Authentication under Article 9 requires a hard-copy signature.

Question 39

All Article 9 fixture perfections require the financing statement to be filed in the real property records.

Question 40

A secured party has priority over an unsecured party under Article 9.

Question 41

A subsequent perfected secured creditor cannot take priority over an already existing mortgage.

Question 42

A subsequent PMSI creditor cannot take priority over a prior perfected PMSI creditor.

Question 43

A secured creditor who removes its collateral from a property that is about to be foreclosed upon must pay the foreclosing creditor for the loss of value to the property that results from the removal.

Question 44

Secured and perfected creditors who finance home improvements after the property has already been mortgaged are second in line after the mortgage company.

Question 45

Mortgage companies cannot foreclosure until higher priority Article 9 secured creditors are paid.

Question 46

In determining assessed value of a property, appraisers tend to favor inclusion of items as fixtures.

Question 47

In determining reimbursement for real property damages by an insurer, courts tend to favor classifying property as a fixture.

Question 48

The effect of filing a financing statement in the incorrect filing office is losing perfection on the security interest.

Question 49

A financing statement for fixtures requires a filing in the property records.

Question 50

To obtain PMSI priority, a creditor must file the financing statement within 10 days of annexation of the personal property to the real property.

Question 51

Consumer PMSIs in fixtures do not need to be filed or recorded.

Question 52

Consumer PMSIs are exceptions to the first-in-time, first-in-right priorities.

Question 53

PMSI creditors have the right to remove their secured property from the real property prior to foreclosure by the mortgage company.

Question 54

A PMSI in consumer fixtures can be filed with property or personal property records and still be valid.

Question 55

PMSIs financing statements can be filed after annexation and still be valid.

Question 56

Which of the following is not required in a security agreement?

A) Authentication by the debtor
B) Description of the collateral
C) Address of the secured party
D) Evidence of a record

Question 57

Which of the following is not a PMSI creditor?

A) A bank lending a homeowner money for home improvements
B) A solar heat company financing a customer's purchase of solar panels
C) A cabinet company financing a tenant's purchase of cabinets for his apartment
D) An air conditioning company financing the purchase of a new air conditioner unit for a law office

Question 58

Who has priority over a secured party under the general rules?

A) A perfected secured party
B) A heating system purchased with a credit card
C) A non?secured party
D) An expired perfected security interest

Question 59

A perfected PMSI creditor has priority over:

A) Previously recorded mortgages.
B) Subsequently perfected PMSI creditors.
C) Subsequently recorded mortgages.
D) All mortgages.

Question 60

In a home sale, which of the following is most likely to be treated as a fixture?

A) A couch
B) A ceiling fan
C) A lawn mower
D) A Dyson vacuum

Question 61

Which factor will be controlling in determining whether an item is a fixture?

A) Intent
B) Degree of annexation
C) Whether it is a trade fixture
D) Relationship to property

Question 62

A bill of sale:

A) Passes title to a fixture.
B) Passes title to personal property.
C) Is part of a deed.
D) Cannot be part of a real estate transaction.

Question 63

Under Article IX, filing for fixtures is:

A) Generally local.
B) With the secretary of state.
C) Central.
D) No filing is required if there is a security agreement.

Question 64

If an item is classified as a trade fixture:

A) It is a fixture that passes with the land.
B) It is personal property.
C) It cannot be personal property.
D) It must be recorded to pass the land.

Question 65

First Federal financed the purchase of O's home and recorded a mortgage on September 12, 2020. O decided to build a swimming pool in the backyard. First Interstate loaned O $10,000 for the pool and recorded a mortgage on October 15, 2020. Who has priority?

A) First Federal
B) First Interstate
C) The Pool Company
D) First Federal and First Interstate share first priority

Question 66

First Federal financed the purchase of O's home and recorded a mortgage on September 12, 2020. O decided to build a swimming pool in the backyard. Suppose that First Interstate loaned O money for the purchase of a solar water heating system from The Solar Company. O purchased the system on February 1, 2021. Solar Experts installed the system on February 9, 2021. First Interstate filed a financing statement on February 8, 2021. Who has priority in the solar system?

A) First Federal
B) First Interstate
C) The Solar Company
D) Solar Experts

Question 67

Which of the following is not required for a valid financing statement for a fixture?

A) Name of the secured party
B) Name of debtor
C) Legal description of the property
D) Name of the county recorder

Question 68

Which of the following will not result in a PMSI in the creditor?

A) A store allowing a customer to purchase an air conditioner on credit
B) A farmer pledging his equipment as collateral
C) A loan for the purchase of a solar system
D) A bank loaning funds to a homeowner for the purchase of new kitchen cabinets

Question 69

Which of the following is most likely to be considered a fixture in a residential sale?

A) An in-floor central vacuum
B) Refrigerator
C) Sofa
D) Above-ground spa

Question 70

Which of the following is most likely to be considered a fixture in the sale of an apartment complex?

A) Desk in the rental office
B) Refrigerators in each apartment
C) Office computer
D) Swimming pool lounge chairs

Question 71

Carey leased his steak house from Consiglio. Carey would not buy the property, and Consiglio tripled the rent. Carey vacated the restaurant and took with him a walk-in freezer, a dishwasher and an air conditioner. Which of the following would be most significant in determining whether Carey could take the items with him?

A) The fact that he had put them there with Consiglio's permission
B) The fact that Consiglio wanted to sell the property
C) The fact that the items are trade fixtures
D) The amount of money Carey paid for the items

Question 72

Which of the following is not a factor in determining whether an item is a fixture?

A) Who attached the item
B) The relationship of the fixture to the property
C) The damage caused by removal
D) The cost of the item

Question 73

Jones, Inc., is purchasing a 24-unit motel from Ramona Dirkson. The rooms in the motel have beds, bed linens, chairs, towels, tables, lamps and televisions. The beds, lamps and televisions are bolted to the floors of the rooms because Ramona wanted to prevent guest thefts. If the parties fail to specify in their purchase and sale agreement, what items are likely to be considered fixtures?

A) The bed linens
B) The beds, lamps and television
C) Towels
D) All of the items will likely be fixtures because of their relationship to the property

Question 74

What is the difference between a fixture and a trade fixture?

A)There is no difference; both are fixtures
B)The owner is taxed on fixtures but no trade fixtures
C)A trade fixture is personal property
D)A trade fixture is real property

Question 75

When must a PMSI fixture creditor file a financing statement to take priority over previously perfected creditors?

A)Within 20 days of the fixture's annexation
B)Within 20 days of the fixture's purchase
C)Within 20 days of the creation of the security interest
D)Within 20 days of the debtor's signature

Question 76

Which of the following does not meet the Article 9 authentication requirement for a security interest?

A) E-mail
B) Fax
C) Signature
D) Voice mail message

Question 77

Which is the most important factor in determining whether an item is a fixture or personal property?

A)Degree of attachment
B)Who wants to know
C)Degree of land ownership
D)Agreement of the parties

Question 78

Jane borrowed money to purchase her home. The mortgage securing the loan for $263,000 was recorded on May 1, 2020. Jane entered into the following transactions:
Pool, second mortgage - July 1, 2020
Custom shutters purchased on credit with security interest filed - July 17, 2020 following installation on July 10, 2020
Which creditor has priority?

A) The mortgage lender
B) The pool company/second mortgage
C) The shutter company

Question 79

The following series of events/transactions occurred on Bert Easley's ranch:
March 3, 2016 - Bert buys the ranch for $900,000; gives a mortgage to First Interstate Bank (FIB) to secure the loan
April 12, 2018 - Bert gives First Federal (FF) a new mortgage (lower rate); FF pays off the FIB loan balance
August 17, 2020 - Bert installs wind power equipment and signs a security agreement with WP³ (the wind power seller); WP³ does not record a financing statement
If Bert defaults, what is the order of the creditor priorities?

A) FIB, FF, WP³
B) WP³, FF
C) WP³, FIB, FF
D) FF, WP³

Question 80

If a debtor defaults on payments to a PMSI perfected fixture creditor, what are the creditor's remedies?

A)None, the fixtures are part of the real property
B)The creditor can remove the fixtures
C)The creditor has rights of removal if there are no other creditors with interests in the property
D)The creditor can collect the debt from the other creditors with interests in the property