Michigan Collections Manager License Practice Test

What rights does the transferee of collateral acquire once the collateral is disposed?

1. Received an assignment from the secured party

2. Accepted the transfer of the collateral

3. Is subrogated to the rights of a secured party

4. All of the above

The correct answer is: All of the above

When collateral is disposed of, the transferee acquires several important rights, which include a combination of what is outlined in the choices. Firstly, the transferee receives an assignment from the secured party, which means that any rights that the secured party had over the collateral can be transferred to the new owner. This ensures that the transferee is now vested with authority over the collateral and can enforce any claims or rights associated with it. Secondly, the act of accepting the transfer of the collateral implies that the transferee willingly takes ownership and responsibility for the collateral. This step is crucial because it establishes the legal relationship between the transferee and the collateral, enabling the transferee to act on it as an owner. Lastly, being subrogated to the rights of a secured party means that the transferee steps into the shoes of the secured party regarding claims or rights associated with the collateral. This legal doctrine allows the transferee to assert or enforce rights that may otherwise have rested solely with the original secured party, giving them comparable standing in pursuing any obligations related to the collateral. Given that the transferee acquires all these rights upon the disposition of the collateral, the choice encompassing all of these components accurately reflects the legal implications of the transaction.