Fixtures and Accessions

Question 1

What is a fixture?

Answer 1

Not defined in the UCC

Georgia law: personalty attached to real estate** with the **intent that it become a permanent part of the real estate

NOTE: no security interest can exist in ordinary building materials incorporated into an improvement on land

Question 2

How is a security interest in a fixture perfected?

Answer 2

Generally, in the same manner as if the collateral were not a fixture

A fixture filing is necessary to obtain over certain real estate interests

• file in the office where a mortgage on the real estate would be filed
• same requirements as the financing statement plus

1. reasonably identify the real estate and
2. show the name of the real property owner

NOTE: so generally, file both a fixture filing and a financing statement

Question 3

What are the priority rules between a secured party and a subsequent real estate interest?

Answer 3

General rule: a security interest in fixtures has priority** **over any real estate interest** that arises **subsequent** to the **perfection of the security interest by fixture filing

Question 4

What are the priority rules of a secured party versus a prior real estate interest?

Answer 4

General rule: a prior real estate interest** that is **properly recorded** has **priority** **over a security interest that subsequently arises

Exception: PMSI takes priority over an earlier in time realty interest if

• it is perfected by a fixture filing before** the **goods become fixtures; or
• within 20 days thereafter

NOTE: a construction mortgage takes priority over a subsequent PMSI in fixtures even if the security interest is perfected by a fixture filing within 20 days of affixation

Question 5

When is a fixture filing unnecessary?

Answer 5

Readily removable:

• factory or office machines;
• equipment not primarily used or leased for use in the operation of the real estate; or
• replacements of domestic appliances which are consumer goods
• Any method of perfection before such goods becomes fixtures entitles the secured to take priority

Consent or disclaimer of security interest by the owner or encumbrancer of the real estate in an authenticated record will be sufficient

Question 6

What is an accession?

Answer 6

Goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

Question 7

How is a security interest in an accession perfected?

Answer 7

If the security interest is perfected when the collateral becomes an accession**, the security interest **remains perfected in the collateral.

Question 8

What are the priority rules regarding accessions?

Answer 8

General rule: incorporate the previous priority rules

NOTE: a security interest in an accession is subordinate to a security interest in the whole** which is **perfected** by **compliance** with the requirements of a **certificate of title statute

Question 9

What are the rules for physical injury upon the removal of the accession?

Answer 9

The secured party to the accession may remove if has priority** over every interest **in the whole

The secured party removing the accession is responsible for the cost of repair of any physical injury to the whole or the other goods

A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for performance of the obligation to reimburse.