Fixtures and Accessions

Question 1

Fixtures

Answer 1

Goods that have become so related to particular real property that an interest in them arises under real property law. Interests in fixtures may arise under both the Code and under the law of real estate.

Question 2

Perfecting Security Interests in Fixtures

Answer 2

To perfect a security interest in fixtures, a fixture filing must be made in the office where a mortgage on the real estate would be filed. A fixture filing financing statement must reasonably identify the real estate, and must show the name of the owner (in addition to the usual requirements for a financing statement).

Question 3

Secured Party (Fixture) v. 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

Secured Party (Fixture) v. 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: A purchase money security interest 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.

Question 5

Construction Mortgage

Answer 5

Takes priority over a subsequent purchase money security interest in fixtures even if the security interest is perfected by a fixture filing within 20 days of affixation.

Question 6

When Fixture Filing is Unnecessary

Answer 6

A secured party need not fixture file as to readily removable factory or office machines, or equipment that is not primarily used or leased for use in the operation of the real estate, or replacements of domestic appliances which are consumer goods.

Question 7

Accessions

Answer 7

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

Question 8

Perfection of Security Interest in Accessions

Answer 8

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

Question 9

Priority for Accessions

Answer 9

General rule: rules for priority previously discussed (first to file or perfect, special PMSI rules) apply to accessions.

Special priority rule: 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 10

Removal and Reimbursement for Physical Injury to the Whole

Answer 10

A secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole. BUT, is responsible for the cost of repair of any physical injury to the whole or other goods.