Purchase Money Security Interests

Question 1

Purchase Money Security Interest (PMSI)

Answer 1

Two Kinds:

1) Secured party sells debtor collateral on credit and retains a security interest in the item sold (seller PMSI)
2) An enabling loan: a loan to a debtor that enables the debtor to buy specific collateral, and the creditor takes a security interest in the specific collateral (financer PMSI)

Note: the credit or loan proceeds must actually be used to acquire the collateral.

Question 2

PMSIs in Goods Other than Inventory or Livestock

Answer 2

A PMSI in such goods has priority over a conflicting security interest in the same goods or its proceeds if the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days

Question 3

PMSIs in Inventory or Livestock

Answer 3

A PMSI in inventory or livestock has priority over a conflicting security interest in the same inventory or livestock if, before the debtor receives possession of the inventory or livestock, the secured party 1) perfects, and 2) sends an authenticated notification to holders of previously filed conflicting security interests in the collateral.

Question 4

Conflicting PMSIs

Answer 4

A seller PMSI has priority over a financer PMSI

Question 5

PMSI v. Lien Creditor

Answer 5

If secured party files with respect to a PMSI within 20 days after the debtor receives possession of the collateral, he takes priority over the rights of a lien creditor which arises between the time the security interest attaches and the time of filing.