Priorities

Question 1

Priority between unperfected SP’s

Answer 1

The first to ATTACH has priority

Question 2

Priority between USP and PSP

Answer 2

Perfected generally prevails over and unperfected security interest.

Question 3

priortiy between PSP’s

Answer 3

Rank by time of filing or perfection.

The earlier of when perfection is accomplished or the filing made covering the collateral.

Question 4

Perfected by Control Priority

Answer 4

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.

Question 5

Conflicting Security Interests in Deposit - Priority

Answer 5

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.

Question 6

PMSI’s

Answer 6

PSMI’s have superpriority if conditions are met.

Question 7

Priority for PSMI in inventory

Answer 7

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

Question 8

Cosignor of Inventory

Answer 8

A cosignor’s interest in the consigned goods is PMSI in inventory. Must fulfill the PMSI in inventory requirements

Question 9

Priority of PSMI in goods other than inventory and livestock

Answer 9

Ex. Equipment

has priority if perfected before or within 20 days after debtor receives possession of the goods.

Question 10

Conflicting PSMI’s

Answer 10

1) Seller > lender

2) otherwise first secured party to file or perfect

Question 11

Special Rules for Purchasers of Chattel Paper

Answer 11

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

Question 12

Special Rules for Purchasers of Instruments

Answer 12

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

Question 13

Priority in Proceeds Categories

Answer 13

Divided into

1) Filing Collateral
2) Non-filing collateral (possession or control)

Question 14

Priority in Proceeds General Rule

Answer 14

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.

Question 15

Priority in Non-Filing Collateral Proceeds

Answer 15

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.

Question 16

Filing Collateral as Proceeds of Non-filing collateral

Answer 16

first to file a financing statement covering the proceeds

Question 17

SI in Fixtures

Answer 17

Generally between SI of fixture and and interest in real property the first party to file a fixture filing

Question 18

SI in Accessions

Answer 18

first to file or perfect, PSMI superpriority

Exception - SI in the whole has priority to SI in acession

Question 19

Effect of priority to fixture or accession

Answer 19

allowed to remove but must reimburse non-debtors for repairs due to removal

Question 20

SI in Crops

Answer 20

perfected SI in crops has priority over interest in real property regardless of filing or perfection

Question 21

USP vs. Buyer or Lessee

Answer 21

Buyer of collateral will have priority over USP if the buyer was without knowledge of SI, gives value and receives delivery

Question 22

PSP vs. Buyer or Lessee

Answer 22

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

Question 23

SP vs holder in due course of a negotiable instrument

Answer 23

Holder has priority over SP

Question 24

SP vs. transferee of Money or Deposit Account funds

Answer 24

Any person takes money or check free of SI in the money unless in collusion with debtor

Question 25

USP vs Judicial Lien Creditor

Answer 25

Judicial Lein is superior if established before SI is perfected.
PMSI grace period exception - before judicial lein

Question 26

PSP vs. Judicial Lien Creditor

Answer 26

prior PSP has priority of judicial lien

Question 27

SP vs Possessory Lien Holder

Answer 27

Possessory Lien has priority as long as goods or services were provided in the ordinary course of business

Question 28

SP vs Article 2 Claimant

Answer 28

Article 2 claimant has priority so long as he retains possession of the goods.

Question 29

Priority Hierarchy 1-6

Answer 29

1) Buyer in ordinary course
2) holder in due course
3) tranferee of money or funds from deposit accounts
4) purchasers of chattel paper or instruments
5) possessory lien holder
6) article 2 claimant with possession

Question 30

Priority Hierarchy 7-11

Answer 30

7) PSMI
8) PSI and Judicial liens attached
9) purchaser who buys for value and receives delivery without notice of unperfected SI
10) USI (when attached)
11) Debtor