DOES THE INTEREST SURVIVE THE DISPOSITION?

Question 1

Timing with PMSI priorities

Does the Interest Survive the Disposition?

Answer 1

If a person files a financing statement with respect to a purchase-money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arises between the time the security interest attaches and the time of filing

Question 2

When does a buyer “take possession”

Does the Interest Survive the Disposition?

Answer 2

The buyer “takes possession” when, after an inspection of the portion of the goods in the debtor’s possession, it would be apparent to the debtor that the debtor has acquired an interest in the goods taken as a whole.

Question 3

Effect of a sale of collateral

Does the Interest Survive the Disposition?

Answer 3

A security interest continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien

Question 4

When a buyer can get collateral free of any security interest
Does the Interest Survive the Disposition?

Answer 4

A buyer, other than a secured party, of tangible chattel paper, documents, goods, instruments, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
Knowledge means actual knowledge.

Question 5

When can a buyer get it without the security interest even with knowledge
Does the Interest Survive the Disposition?

Answer 5

A buyer in ordinary course of business, even if the interest is perfected and the buyer knows of its existence. Buyer in ordinary course of business means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind.

Question 6

Consumer goods exception for transfer of security interest

Does the Interest Survive the Disposition?

Answer 6

A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

Without knowledge of the security interest;

For value;

Primarily for the buyer’s personal, family, or household purposes; and

Before the filing of a financing statement covering the goods.