question archive First Bank loans Lila $1500 so that she may purchase a new computer for her office secretary
First Bank loans Lila $1500 so that she may purchase a new computer for her office secretary
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First Bank loans Lila $1500 so that she may purchase a new computer for her office secretary. Lila signs a security agreement and a financing statement which First Bank duly files. Two months later, Lila takes out a loan at Valley Bank and uses the computer as collateral. A security agreement and financing statement is then signed by Lila and filed by Valley Bank. Lila's secretary never uses the computer, so Lila puts an ad in the Athens News and sells the computer to Angie. If Lila defaults on the loans, whose interest in the computer has priority? Fully explain.
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in this case. in case Lila defaults the loan repayment, the Valley bank has the priority on the computer.
Step-by-step explanation
Lila used the computer as a collateral to the Valley Bank and therefore the bank has top priority on the computer to recover the loan dues in case she default the loan repayment.
Lila did not use the computer as a collateral while getting the loan from First Bank Loans and therefore the bank will not have a priority on the computer.
