Lena borrows from Mac and Nicole, using the same collateral for both loans. Only Nicole has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is

Question

Lena borrows from Mac and Nicole, using the same collateral for both loans. Only Nicole has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is​

Quizplus · Accepted Answer

When an individual borrows money and uses the same collateral for multiple loans, the party with a perfected security interest has first priority to the collateral. In this case, only Nicole has a perfected security interest, so she has first rights to the collateral. Therefore, the correct answer is D, Nicole only.

Lena Borrows from Mac and Nicole, Using the Same Collateral