Priorities

Question 1

Who has priority between two unperfected secured parties?

Answer 1

The first to attach.

Question 2

Who has priority between an perfected and unperfected party?

Answer 2

Generally the perfected interest prevails.

Question 3

Who has priority between perfected secured parties?

Answer 3

Conflicting perfected security interests rank in priority according to time of filing or perfection.

Question 4

What priority do PMSIs get?

Answer 4

They get special priority over After Acquired Collateral Financiers all else being equal

But only if, if the collateral is equipment they filed within 20 days after the sale.

If the collateral is inventory, then the PMSI holder takes precedent over the AACF holder if (i) the PMSI holder filed properly before the debtor took possession and (ii) notified the AACF holder of its interest.

Question 5

How do PMSIs in different categories of goods work>

Answer 5

1. Consumer goods = automatically perfected 2. Equipment = filing anytime within 20 days after the debtor gets possession of the collateral 3. Inventory = by the time the debtor gets possession of the chattel.

Question 6

Generally

Answer 6

BIOC PAC LC NOCie AUPie GUC

Question 7

How can a PMSI holder take priority over an AACF holder when the goods are equipment?

Answer 7

By filing within 20 days after the debtor takes possession of the goods.

Question 8

How can a PMSI holder take priority over an AACF holder when the goods are inventory?

Answer 8

The PMSI holder must

1. File properly before the debtor takes possession, and
2. Notify the AACF holder

Question 9

The garage sale rule

Answer 9

The second buyer takes the consumer goods free of the security interest if he buys without knowledge of it, for value, and before a financing statement covering the goods has been filed. This is often called the “garage sale” rule.