Priorities

Question 1

General Rule of Priorities

Answer 1

First in time, first in right

Question 2

Among unperfected security interests

Answer 2

first to attach

Question 3

among perfected security interest and unperfected interest

Answer 3

secured interest wins

Question 4

among 2 perfected security interests

Answer 4

first to file OR perfect interest
even if not attached at time filed

except chattel paper - party in possession has priority

Question 5

PMSI will prevail over other secured interest if

Answer 5

PMSI is perfected (filed) when debtor receives collateral or within 20 days

Question 6

Additional steps to obtain super-priority when collateral is inventory for a purchase money secured party

Answer 6

notify first secured party in writing that it expects to obtain PMSI in debtors collateral

must be perfected at time debtor receives possession of inventor - file on or before day

Question 7

What determines whether PMSI secured party needs notice or not

Answer 7

is it inventory or equipment

if inventory, notice is required and perfection on or by delivery

if equipment, within 20 days

Question 8

Lien Creditor

Answer 8

creditor that has acquired an interest in property by attachment or levy or is a trustee in bankruptcy

Question 9

lien creditor versus article 9 secured creditor

Answer 9

first in time, first in right

Question 10

PMSI vs lien creditor

Answer 10

PMSI if filed within 20 days will take priority over a lien creditor

Question 11

Buyer versus Secured Parties

General Rule

Answer 11

security interest survives sale of collateral

Question 12

Exceptions to general rule that security interest survives sale of collateral

Answer 12

secured party authorizes sale

Question 13

Buyer wins over unperfected secured interest

if

Answer 13

buyer pays value
takes delivery
without notice
take before perfecting interest

Question 14

Buyer in the Ordinary course of Business Rule

Buyer wins against perfected security interest

Answer 14

person who buys in good faith
without knowledge of the others interest
in the ordinary course of business
from a person in the business of selling goods of that kind

Question 15

Garage Sale Exception

Answer 15

pays value
without knowledge
before financing statement is filed

purchase of goods for personal or household use from someone who used them for that purpose will take free and clear of security interest if above are met

Question 16

Special Rules for Fixtures

Answer 16

generally first in time, first in right.

PMSI for fixtures - second in time first in right prevails.

Must make fixture filing within 20 days of fixture becoming attached to real estate to attain priority over a mortgage