Fixtures & Accession

Question 1

What is a fixture?

Answer 1

Personal property attached to real property with the intent that it become a permanent part of the real estate (but not ordinary building materials).

Question 2

How do you perfect a security interest in fixtures?

Answer 2

1. File a fixture filing
2. In the office where a mortgage on the real estate would be filed
3. Follow the usual requirements for a financing statement
4. Reasonably identify the real estate
5. Show the name of the owner (if not the debtor).

Question 3

What are the rules for default on a security interest in a fixture?

Answer 3

If SI in fixture has priority, creditor may remove the fixture.

If debtor does not own the real estate, creditor must reimburse the owner of the property for the cost to repair damage from removal.

Question 4

Secured party vs. subsequent real estate interest

Answer 4

A security interest in fixtures has priority over any real estate interest that is recorded subsequent to the perfection of the security interest by fixture filing.

Question 5

Secured party vs. prior real estate interest

Answer 5

A prior real estate interest that is properly recorded has priority over a security interest that subsequently arises.

Exception: A PMSI wins if it’s perfected by a fixture filing before the goods become fixtures or within 20 days after.

Question 6

When is a fixture filing unnecessary?

Answer 6

Readily removable -

1. Factory/office machines,
2. Equipment not primarily used/leased for real estate
3. Replacements of domestic appliances that are consumer goods

**Any method of perfection will give these categories priority.

Question 7

What is accession?

Answer 7

Goods that are physically united with other goods in such a manner that the identity of the original goods is not lost (e.g., tires on a car).

Question 8

How is a security interest in accession perfected?

Answer 8

If an SI is perfected when the collateral becomes an accession, the SI remains perfected in the collateral.

Question 9

Special priority rule for vehicles & accessions

Answer 9

An SI in an accession is subordinate to an SI in a whole (e.g., car) which is perfected by compliance with the requirements of a certificate-of-title statute.

Question 10

Removal of an accession

Answer 10

A secured party may remove an accession from other goods if the SI in the accession has priority over the claims of every person having an interest in the whole.

Must pay cost of repair for an injury to the whole or other goods as a result of removal.