Priority

Question 1

Secured Party v. Secured Party

Answer 1

general rule: the first to file OR perfect, whichever occurs first, has priority

Question 2

PMSI in Goods other than Inventory or Livestock

Answer 2

PMSI in such goods has priority over a conflicting S.I. in the same goods or its identifiable proceeds IF the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days thereafter

Question 3

PMSI in Inventory or Livestock (SP v. SP - Special Rule 2)

Answer 3

PMSI in inventory or livestock has priority over a conflicting S.I. in the same inventory or livestock (includes proceeds in chattel paper, instruments, and identifiable cash proceeds) IF, before debtor receives possession, the SP:

1) perfects, and 2) sends authenticated notice to holders of previously filed conflicting SI in the collateral
* notice must be within 5 years before debtor receives possession

Question 4

Seller-financed PMSI v. Financier-financed PMSI

Answer 4

Seller-financed has priority over Fin.-financed.

Question 5

Deposit Accounts

Answer 5

1) Is perfected by control has priority over SI perfected via proceeds
2) if all perfected by control -> ranked according to time control obtained

3) SP who is a co-owner on account has priority over all other SPs with control
4) Control by maintaining account has priority over all other SP w/control EXCEPT SP co-owner of account

Question 6

Secured Party v. Buyer of the Collateral

Answer 6

general rule: if you buy something w/a SI on it, the SI stays on it except:

1) authorized sale by SP
2) unauthorized sale -> buyer in ordinary course of business takes free of SI created by his seller - even if perfected buyer had knowledge
3) Buyers not in Ordinary Course of Business - take subject to SI but will be free from unperfected SI UNLESS they knew of it (mere knowledge is fatal here)
4) Garage Sale Rule - (consumer goods) buyer takes free even though perfected if bought w/o knowledge, for value, and for personal / family / household use UNLESS before purchase SP filed a financing statement

Question 7

SP v. Judgment Lien Holders

Answer 7

unperfected SI is subordinate to lien creditor unless perfected prior to party becoming the lien holder (timing is everything here)

Question 8

PMSI v. Lien Creditor

Answer 8

if SP files w/respect to PMSI w/in 20 days after the debtor receives possession of collateral -> priority over lien creditor which arose between time of SI attachment and filing

Question 9

SP v. Statutory Liens (Mechanics Lien, etc)

Answer 9

statutory liens beats even a perfected SI (very strong position)

Question 10

Future Advances

Answer 10

security agreement can secure present and future advances if security agreement contains a future advances clause.
FA must be made:
1) w/o knowledge of the lien, OR
2) w/in 45 days of the lien arising, OR
3) pursuant to commitment entered into w/o lien knowledge