Priorities

Question 1

Secured and perfected v. Secured and perfected

Answer 1

First in time of filing

Question 2

Secured and unperfected v. Secured and unperfected

Answer 2

First to attach

Question 3

Perfected v. Unperfected

Answer 3

Perfected

Question 4

If a security interest covers an advance, when does perfection date from?

Answer 4

From the time the advance was made

Question 5

Secured v. claims in collateral

Answer 5

Secured

Question 6

PMSI v. Secured and perfected

Answer 6

PMSI (if perfected within 20 days after the debtor received possession of the collateral)

Question 7

PMSI v. PMSI

Answer 7

Seller PMSI takes priority over lender’s PMSI. Otherwise, first in time to file or perfect

Question 8

Unperfected v. Lien Creditor

Answer 8

Lien Creditor

Question 9

Perfected v. Lien Creditor

Answer 9

Perfected

Question 10

When will a security interest securing an advance have priority over a lien creditor?

Answer 10

If the advance was made within 45 days after the person became a lien creditor. If more than 45, only if the advance was made without knowledge of the lien

Question 11

Lien arising by operation of law v. Secured party

Answer 11

Lienholder unless statute provides otherwise

Question 12

Do security interests remain attached to collateral after the debtor transfers the property?

Answer 12

Yes, but there are some exceptions

Question 13

When will a security interest not remain attached after the collateral is transferred?

Answer 13

(1) Security interested is unperfected and buyer takes delivery of goods without actual knowledge of the security interest
(2) If buyer is a “buyer in ordinary course of business,” even if the interest is perfected
(3) The buyer is a consumer who is buying goods that are consumer goods in the hands of the seller and the security interest is not perfected by filing

Question 14

Real estate encumbrancer or purchaser v. Secured party with interest in fixture

Answer 14

Mortgagee or purchaser has priority

Question 15

When will a secured party with an interest in a fixture have priority over an encumbrancer or purchaser?

Answer 15

(1) Encumbrancer or purchaser consents to the security interest
(2) Secured party perfects its interest by filing a fixture filing before the encumbrancer or purchaser’s interest was recorded
(3) After the encumbrancer or purchaser’s interest was recorded, secured party had a PMSI and it was perfected by a fixture filing within 20 days
(4) Conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected

Question 16

What are accessions?

Answer 16

Goods that are firmly attached to other goods, such as tires attached to a car

Question 17

What is the general rule for priority of accessions?

Answer 17

Normal priority rules apply

Question 18

What is the exception to the accession rule?

Answer 18

Accessions to titled goods lose priority to a perfected security interest in the titled goods

Question 19

What are commingled goods?

Answer 19

Goods that are physically united with other goods in such a manner that their identity is lost in a product or mass, such as eggs and flour used to make a cake

Question 20

What happens to collateral that become commingled goods?

Answer 20

The security interest attaches to the resulting product or mass

Question 21

For what type of collateral must a secured party file a termination statement?

Answer 21

Consumer goods

Question 22

May a security interest be assigned?

Answer 22

Yes

Question 23

What interest does an assignee take?

Answer 23

Same interest as assignor