INTRODUCTION TO PRIORITY AND THE BASIC RULES OF PRIORITY & SPECIAL PRIORITY FOR THE PMSI Flashcards

1
Q

Priority – Three rules

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

(1) Conflicting perfected security interests rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest is first perfected, if there is no period thereafter when there is neither filing nor perfection;
(2) A perfected security interest has priority over a conflicting unperfected security interest;
(3) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Lien Creditor Definition

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

“Lien creditor” means: (A) a creditor that has acquired a lien on the property involved by attachment, levy, or the like; (B) an assignee for benefit of creditors from the time of assignment; (C) a trustee in bankruptcy from the date of the filing of the petition; or (D) a receiver in equity from the time of appointment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

When a lien creditor has priority

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

A lien creditor has priority when that person becomes a lien creditor before the earlier of the time: (A) the security interest or agricultural lien is perfected; or (B) one of the following conditions is met (with a financing statement covering the collateral is filed):
The debtor has authenticated a security agreement
The collateral is not a certificated security and is in the possession of the secured party pursuant to the debtor’s security agreement
The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party pursuant to the debtor’s security agreement; or
The collateral is deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, and the secured party has control pursuant to the debtor’s security agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Special rules for PMSI perfection

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in §9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Filing statement with PMSI perfection

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

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 arise between the time the security interest attaches and the time of filing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Factors for when a PMSI in inventory has priority

Introduction to Priority and the Basic Rules of Priority & Special Priority for the PMSI

A

A perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory if:

The purchase-money security interest is perfected when the debtor receives possession of the inventory;
The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

The holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and

The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly