Priority Flashcards
Priority b/w Secured Parties?
first to either file OR perfect (provided no period thereafter with no filing/perfection)
PMSI in Goods other than ____ & _____ has _________.
Inventory & Livestock; priority over conflicting SI in same goods or their proceeds IF interest is perfected BEFORE OR WITHIN 20 days after debtor receives possession
Priority b/w Unsecured Parties?
first to attach
Priority b/w Unperfected and Perfected Secured Parties?
Perfected security interest generally defeats unperfected security interest
Priority b/w Conflicting PMSIs?
1) Seller-financed PMSI prevails over financer-financed PMSI
2) Otherwise, 1st creditor to file OR perfect wins
What is PMSI Superpriority?
PMSIs superior to prior perfected security interests in same collateral under some conditions
What conditions needed for PMSI in Inventory & Livestock to have priority over conflicting SI in same inventory or proceeds of inventory that are chattel paper, instruments, or cash?
1) Perfected at time Debtor takes possession of inventory
2) Any secured party who’s filed their SI in same inventory receives authenticated notification of PMSI BEFORE debtor gets possession AND notification states PM party has/expects to take PMSI in inventory of Debtor described by kind OR type (effective for deliveries of same type of collateral for 5 yrs)
What are consignor’s interest in consigned goods considered?
PMSI in inventory
What’s unique about priority for SI perfected by control re Investment Property?
SI perfected by control has priority over SI perfected by any other method (rank according to time control obtained)
What’s unique about priority for SI perfected by control re Deposit Accounts?
SI perfected by control has priority over SI perfected by any other method (rank based on method: best is co-ownership, then maintaining account, then control agreement)
What’s the Authorized Sale exception (SP v. B/OT)?
If sale/lease of collateral authorized (express or implied from type of sale/conduct) by secured party free of SI, transferee takes free of SI
What’s the Unauthorized Sale exception (SP v. B/OT)?
Generally, a buyer in the ordinary course of business takes free of nonpossessory SI in goods created by the buyer’s seller (applies to lessees of goods too)
If a Debtor transfers money or deposit account funds to a person, that person takes _______ unless ______.
free of any security interest in the money/funds; transferee acts in collusion with debtor in violating secured party’s rights
Priority b/w Secured Party & Buyer/Other Transferee?
When buyer/lessee buys or leases something with SI on it, SI stays unless exception applies
-authorized sales
-unauthorized sales (B in ord. cou.)
-C2C sales
How is BIOC defined?
One who buys goods:
1) in good faith
2) w/o knowledge that sale violates rights of another person in goods AND
3) in the ordinary course of business from a seller in the business of selling goods of the kind purchased
Buyers or lessees NOT in the ordinary course of business ______ & ______.
take subject to perfected SI
AND
take free from unperfected SI unless they know of SI when they give value/take delivery UNLESS
1) future advances
2) grace period
For Consumer-to-Consumer Sales of consumer goods, buyer takes free of SI even if perfected IF _____.
buyer buys
1) w/o knowledge of SI
2) for value
3) for buyer’s own personal/family/home purposes
AND
4) before financing statement covering goods is filed
NOTE must be consumer goods in hands of both buyer & seller
Priority b/w Secured Party & Judicial Lien Creditor?
Judicial lien creditor has priority IF lien creditor attains such status BEFORE SI perfected; otherwise, SI prevails; also, SI prevails IF creditor obtained security agreement & filed financing statement (but didn’t attach/perfect) before judicial lien
What is the Future Advances exception?
For perfected future advance to have priority over judicial lien, future advance must be made
1) w/o knowledge of lien
2) w/i 45 days of lien arising
OR
3) pursuant to commitment entered into w/o knowledge of lien
Priority b/w Secured Party & Holder in Due Course or the Like?
Holder in due course of a negotiable instrument has priority over SI in the negotiable instrument
What is the PMSI Grace Period exception?
If secured party files financing statement with respect to PMSI within 20 days of Debtor receiving collateral, secured party has priority over judicial lien arising between time SI attaches and time of filing
Priority b/w Secured Party & Article 2 Claimant?
If Art. 2 grants buyer/seller possessory interest in goods, claimant prevails over secured party so long as Art. 2 claimant retains possession of goods
Priority b/w Secured Party & Possessory/Statutory Lien Holder?
Statutory LH prevails so long as goods/services provided in ordinary course of business AND collateral remains in lien holder’s possession
