Priorities Flashcards
Perfected Security Interest v. Perfected Security Interest
First in time to file or perfect takes priority
Perfected Security Interest v. Unperfected Security Interest
Perfected Security Interest Takes Priority
Unperfected Security Interest v. Unperfected Security Interest
1st to attach or become effective
Perfected Security Interest v. Lien Creditor
Perfected security interest takes priority over a lien creditor
Unperfected security interest v. lien creditor
- Lien creditor takes priority unless the security interest would be perfected but for the lack of transfer of value.
Statutory Lien Holder v. Perfected Security Interest
Statutory Lien Holder as long as:
1) The effectiveness of the lien depends on the lien holders possession of the goods
2) the lien secures payment or performance of an obligation for services or materials in the ordinary course or business (ie mechanics lien)
Future Advance v. Future Advance
The 1st to file, even if they have knowledge of the other lien
Future Advance v. Lien Creditor
- if the secured party’s future advance is made w/in 45 days of the lien arising, the secured party has priority
- advances made more than 45 days from the lien arising are subordinate to the lien creditor unless (i) the lien is made w/o knowledge of the lien or (ii) the advance is made pursuant to a commitment entered into w/o knowledge of the lien.
Buyer of Collateral v. Previously existing perfected security interest
- buyer takes subject to the security interest unless the secured party authorizes the sale
What are the exceptions to the rule of Buyer of Collateral v. Previously Perfected Security Interest
1) Buyer in the ordinary course of business. Buyer isn’t a purchaser in the ordinary course of business if they know that the item is subject to the rights of others.
2) Garage sale exception. consumer-consumer sale. Unless the secured party filed a financing statement covering the goods before the purchase occurred.
Buyer of Collateral v. Unperfected Security Interest
Buyer of Collateral takes subject to the security interest unless:
1) secured party authorizes
2) no knowledge
Buyer of Collateral v. Future Advances
Buyer takes free of future advance if the secured party had knowledge of the purchase when it made the future advance
- if the future advance is made more than 45 days since the purchase.
What is the general rule for PMSIs?
PMSIs are automatically perfected in consumer goods so long as the goods aren’t subject to a certificate of title law.
PMSI v. Lien Creditor
PMSI takes priority + has 20 day grace period starting when the debtor receives possession of the collateral to perfect.
PMSI for Goods other than inventory v. Regular Security Interest
A PMSI takes priority if its perfected w/in 20 days of debtor receiving the goods
PMSI in Inventory v. Regular Security Interest
PMSI in inventory will have priority if perfected before inventory is delivered to debtor and sent an authenticated notification of the PMSI to the other parties
Seller PMSI v. Lender PMSI
Seller PMSI wins.
Fixture Secured Party v. Interest in Real Property
- if fixture filing occurred b4 real property recorded then fixture filing
PMSI in Fixtures v. Real Property Interest
PMSI has priority if:
(i) security interest is perfected by a fixture filing before the goods become fixtures or w/in 20 days after the goods became fixtures. except if there is a construction mortgage in which case it has priority over a PMSI
Buyer in the Ordinary Course of Business Elements
1) Buys goods
2) In the ordinary course of business
3) from a merchant who is in the business of selling goods of that kind
4) In good faith
5) without knowledge that the sale violates the rights of another.
