Michigan Collections Manager License Practice Test

A secured party with a priority lien can do what regarding fixtures?

1. Proceed without restrictions

2. Sell the fixtures immediately

3. Move only on personal properties

4. Remove collateral secured by fixtures if necessary

The correct answer is: Remove collateral secured by fixtures if necessary

A secured party with a priority lien holds a claim on the collateral that can include both personal property and fixtures attached to real estate. According to the Uniform Commercial Code (UCC), a secured party may have the right to remove collateral that is classified as a fixture, provided certain conditions are met. This typically involves considerations regarding how the fixture is affixed to the property and the rights of the property owner. In instances where it is necessary for the secured party to realize the value of the collateral—such as if the debtor defaults or abandons the property—the secured party may be allowed to remove the fixture. However, this also generally requires that the secured party follow proper legal procedures, as removal of fixtures from the property can affect the rights of the property owner. The option regarding moving only on personal properties does not apply, as this would exclude the secured party’s rights over fixtures. Selling the fixtures immediately or proceeding without restrictions contradicts the legal processes involved in lien enforcement and prioritization. Therefore, removing collateral secured by fixtures when necessary aligns with the secured party’s rights under the law, making it the correct answer.