First Bank loaned 400,000 to Thomas, taking a security interest in his yacht. Thomas defaulted on the loan and First Bank repossessed the boat. First Bank sold the yacht at a public sale. The sale yielded 50,000 more than the debt. First Bank
A) must pay Thomas the 50,000.
B) is entitled keep the 50,000.
C) must share the 50,000 equally with Thomas.
D) must pay the surplus to the Secretary of State.
Question 2
Great State Bank loans money to Seth, securing the loan with property owned by Seth. Great State Bank is advised by its attorney to file a financing statement. Great State Bank doesn't understand why it should spend the extra money for this filing, since Seth has told them that he has no other creditors. Why should Great State Bank file a financing statement?
A) There are criminal penalties for failing to file.
B) The financing statement allows Great State Bank to repossess the collateral on default without a court order.
C) The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral.
D) Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest.
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