76-3

76-3

June 30, 1976

Dear ______________:

This is in response to your letter of June 29, 1976, concerning loans secured by personal property.

Personal property to qualify as collateral for a secured obligation under Section 1223 of the Financial Code must meet the following requirements:

1. It must be of a kind not declared ineligible by the Superintendent;

2. It must have a market value of at least 15 percent greater than the obligation it secures;

3. It must be protected against the claims of subsequent third parties.

The Department has declared the following classes of personal property ineligible. This declaration of ineligibility is based on the practical consideration that such property is easily removed or transferred or is not readily identifiable.

1. Assigned accounts receivable, whether or not taken on a notification basis.

2. Assigned contracts covering services which are to be, or have been, performed – or covering property which is to be, or has been, manufactured.

3. Trust receipts covering all flooring, including automobiles, boats, appliances, machinery and equipment of any and all types.

4. Goods in trade or inventories, including goods covered by an inventory lien.

5. Tools and small implements.

6. Household furniture and appliances.

7. Furniture and fixtures in stores, offices, etc.

8. Growing crops.

9. Perishable commodities, unless warehoused and covered by a warehouse receipt.

Very truly yours,

CARL J. SCHMITT Superintendent of Banks

By

JOHN H. SHERMAN Senior Deputy

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