Question

Question 4

a) In secured transactions–type legislation, such as the Personal Property Security Act, etc., what is the purpose of a registration?

b) Owen had borrowed money from a credit union to purchase a car, and the credit union had required a security against the car, which they registered under the Personal Property Security Act. As well, Owen's father guaranteed the loan. Some months later, Owen decided to go back to school, and he had to sell the car to do so. He returned to the credit union and, at his request, the credit union gave up the security they had against the vehicle, knowing that they still had the loan guaranteed by Owen's father. Explain the reason for this move.

Answer 1

A) In secured transactions–type legislation, such as the Personal Property Security Act, etc., what is the purpose of a registration?

Answer: The basic purpose of registration is to mark lien of banker/finance on the asset purchases through its finance. Thus in case of any defalut in loan repayment banker can take charge on that security and the owner cannot sell the same without bankers permission.

Other important purposes are:

(a) to determining the enforceability of a security interest against the debtor and third parties:

(b) to determining the priority between security interests in the same personal property:

(c) to determining the priority between a security interest in personal property and other interests in the same property (for example, the interest of a buyer of goods).

B) City union gave up the security as the loan was personally guarantted by Owen's father in addition to collateral security. Thus the banker can recover the loan residual from personal guarantor. i.e. Owen's father.