Priorities Flashcards
Priority between unperfected SP’s
The first to ATTACH has priority
Priority between USP and PSP
Perfected generally prevails over and unperfected security interest.
priortiy between PSP’s
Rank by time of filing or perfection.
The earlier of when perfection is accomplished or the filing made covering the collateral.
Perfected by Control Priority
an SI perfected by control has priority REGARDLESS of timing over other perfected SI’s. For two ore more Controlled interests they rank based on timing of control.
Conflicting Security Interests in Deposit - Priority
All other rules apply including control priority. In addition
1) party that obtains control by putting account in their name has priority
2) the bank that maintains has priority except over 1.
PMSI’s
PSMI’s have superpriority if conditions are met.
Priority for PSMI in inventory
Superpriority if
1) perfected at the time the debtor gets possession
and
2) any other party with perfected SI in the same inventory receives written notification
Cosignor of Inventory
A cosignor’s interest in the consigned goods is PMSI in inventory. Must fulfill the PMSI in inventory requirements
Priority of PSMI in goods other than inventory and livestock
Ex. Equipment
has priority if perfected before or within 20 days after debtor receives possession of the goods.
Conflicting PSMI’s
1) Seller > lender
2) otherwise first secured party to file or perfect
Special Rules for Purchasers of Chattel Paper
IF purchased in good faith and gives new value then purchaser will have priority over
1) SI in chattel paper arising from proceeds of inventory
2) any other SI if purchased without knowledge that its purchase violated the rights of the secured party
Special Rules for Purchasers of Instruments
Priority over a perfected SI if purchaser gives value and takes possession in good faith without knowledge that the purchase violated the rights of the secured party
Priority in Proceeds Categories
Divided into
1) Filing Collateral
2) Non-filing collateral (possession or control)
Priority in Proceeds General Rule
a perfected SI in proceeds will have the same date of priority as the perfected SI in the original collateral as long as perfection of the SI in the proceeds extends beyond the 20-day temporary perfection period.
Priority in Non-Filing Collateral Proceeds
a SP has priority in the proceeds of non-filing collateral if
1) has priority in the original collateral
2) SI in proceeds is perfected
and 3) proceeds are cash or of the same type as the original collateral.
Filing Collateral as Proceeds of Non-filing collateral
first to file a financing statement covering the proceeds
SI in Fixtures
Generally between SI of fixture and and interest in real property the first party to file a fixture filing
SI in Accessions
first to file or perfect, PSMI superpriority
Exception - SI in the whole has priority to SI in acession
Effect of priority to fixture or accession
allowed to remove but must reimburse non-debtors for repairs due to removal
SI in Crops
perfected SI in crops has priority over interest in real property regardless of filing or perfection
USP vs. Buyer or Lessee
Buyer of collateral will have priority over USP if the buyer was without knowledge of SI, gives value and receives delivery
PSP vs. Buyer or Lessee
PSP has priority unless
1) secured party consents
2) buyer take in the ordinary course of business
3) consumer purchaser from a sonsumer has priority
4) buyer or lessee not in the ordinary course of business has priority over future advances after SP learns or 45 days
SP vs holder in due course of a negotiable instrument
Holder has priority over SP
SP vs. transferee of Money or Deposit Account funds
Any person takes money or check free of SI in the money unless in collusion with debtor
