Business Law II Priority Steve owns a car. He decides that he needs a loan in or
ID: 2728450 • Letter: B
Question
Business Law II
Priority
Steve owns a car. He decides that he needs a loan in order to improve his house, so he goes to Liv. He agrees to give Liv a security interest in the car in exchange for $4,000. Two weeks later he decides that he needs more money.
He goes to Dane. He gives Dane a security interest in the car in exchange for $10,000. Dane files a financing statement to perfect the interest. A week after that Liv does the same. Eventually, Steve defaults in his payments. The car is repossessed, and it is sold for $3,000. How much money will Dane receive? How much money will Liv receive?
write statement inyour own words 500 word count
Explanation / Answer
The person who has first charge on the security, will get the amount out of realisation of such security irespective of who file the financing statement first.
Steve borrowed amount of $14,000. Out of this, $4,000 from Liv and $10,000 from Dane on security interest of car.
Realisation amount is $ 3,000 when car at the time of sale.
Here, Liv is holding first charge on the car. Hence, he will entitle to get the paymet out of realisation of own car even Dane filed the financing statement first.
Therefore, Liv will get $3,000 and Dane will get nothng out of realisation amount of car as he was holding second charge on the car.
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