Difference between revisions of "Security Agreements"

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=== The Personal Property Security Act===
=== The Personal Property Security Act===
In the past few decades, many provinces have replaced their various security agreement laws with one comprehensive law. The BC law is called the [http://canlii.ca/t/8495 Personal Property Security Act]. It came into force on October 1, 1990.  
In the past few decades, many provinces have replaced their various security agreement laws with one comprehensive law. The BC law is called the [http://canlii.ca/t/8495 ''Personal Property Security Act'']. It came into force on October 1, 1990.  


This Act governs almost all personal property security transactions between creditors and individual consumers, and between creditors and businesses ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec2_smooth section 2]). It does not govern situations where the security is land (usually known legally as “real property”) or where the security agreement is governed by federal law ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec4_smooth section 4]). It is clear that security agreements (including those entered into by consumers), which would have been considered chattel mortgages or conditional sales agreements, are governed by the ''Personal Property Security Act''. In addition, some consumer-type transactions (such as leases of personal property for longer than one year) are now governed by the Act ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec3_smooth section 3]).
This Act governs almost all personal property security transactions between creditors and individual consumers, and between creditors and businesses ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec2_smooth section 2]). It does not govern situations where the security is land (usually known legally as “real property”) or where the security agreement is governed by federal law ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec4_smooth section 4]). It is clear that security agreements (including those entered into by consumers), which would have been considered chattel mortgages or conditional sales agreements, are governed by the ''Personal Property Security Act''. In addition, some consumer-type transactions (such as leases of personal property for longer than one year) are now governed by the Act ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec3_smooth section 3]).
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The definition for “'''consumer goods'''” is very important. Consumer goods are defined in the ''Personal Property Security Act'' as “goods that are used or acquired for use primarily for personal, family or household purposes” ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec1_smooth section 1]). This definition was new with the Act. The language of the previous statutes made it possible, in some instances, for unincorporated businesses (that is, proprietorships and partnerships) to have consumer-rights protections. The definition of consumer goods in the Act appears to have eliminated this possibility. Now only individuals using collateral for personal purposes as defined in the Act have those rights.
The definition for “'''consumer goods'''” is very important. Consumer goods are defined in the ''Personal Property Security Act'' as “goods that are used or acquired for use primarily for personal, family or household purposes” ([https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec1_smooth section 1]). This definition was new with the Act. The language of the previous statutes made it possible, in some instances, for unincorporated businesses (that is, proprietorships and partnerships) to have consumer-rights protections. The definition of consumer goods in the Act appears to have eliminated this possibility. Now only individuals using collateral for personal purposes as defined in the Act have those rights.


Like the security agreement laws it replaced, the Personal Property Security Act governs how a creditor acquires security rights over a debtor’s property and how those rights can be enforced if there is default. The Act also details how priority rights are decided when more than one secured party claims a security interest in a debtor’s property.  
Like the security agreement laws it replaced, the ''Personal Property Security Act'' governs how a creditor acquires security rights over a debtor’s property and how those rights can be enforced if there is default. The Act also details how priority rights are decided when more than one secured party claims a security interest in a debtor’s property.  


=== Creating security interests===
=== Creating security interests===
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