PRIORITIES

Question 1

General Rules under Article 9 in relation to priority

Answer 1

1. First in time, first in right
   UNPERFECTED SECURITY INTERESTS - First to attach
2. PERFECTED V. UNPERFECTED SECURITY - Perfected
3. PERFECTED SECURITY INTERESTS - Interest with earliest continuous filing or perfection

When collateral is an instrument or chattel paper, the secured party who perfects by taking possession will have priority

PMSI - Perfected PMSI will prevail over a conflicting interest if its perfected when the debtor receives possession of the collateral or within 20 days

PMSI will take priority over intervening lien creditor if its perfected within 20 days after debtor receives collateral

A subsequent lendor for Inventory takes priority if the party notifies the first party in an unauthenticated record that it expects a PSI in the debtor’s collateral AND the PMSI is perfected at the time the debtor gets possession

Question 2

Accessions

Answer 2

Refers to goods that are physically united with other godds in such a manner that the identity of the original goods is not lost

Security interest in accession is subordinate to a security interest in the whole which is perfected in compliance with the requirements of the certificate by title statute

Question 3

Commingled goods

Answer 3

Goods that are physically united in such a manner that their identity is lost.

Security interest will attach to item that is the result of commingling

For multiple SIs, they will rank equally in proportion to the value of the collateral at the time it became co mingled

Question 4

Buyers v. Secured Parties

Answer 4

Generally security interest survives the sale of collateral unless:

1. Secured party authorizes the sale free of the SI
2. Buyer is in the ordinary course of business
3. Garage Sale exception - Person buys goods for personal, family, or household use from someone who used the goods for that purchase
4. Chattel paper exception -

BIOCOB Requirements:

1. Purchase in good faith
2. without the knowledge the sale violtaes the rights to another person in the goods
3. in the ordinary course of business
4. and from the person in business in selling goods of that kind

GARAGE SALE Requirements:

1. Buys for value
2. Without knowledge of the security interest
3. Before a financing statement is filled

CHATTEL PAPER Requirements:

1. Buys in good faith during ordinary course of business
2. buyer gives value and takes possession or control of chattel paper
3. chattel paper does not indicate that it has been assigned to another party

Question 5

Fixture Priorities

Answer 5

When collateral consists of fixtures, the rule is the first in line, first in right for conflicts between secured party and mortgagee.

IF PMSI than the lendor has priority unless it has not been perfected.