Secured Transactions - Priority among multiple security interests

Question 1

What happens when debtor defaults on a secured loan?

Answer 1

The secured party with the security interest will have claim of ownership of collateral.

Question 2

What is the general rule of priority among multiple interests?

Answer 2

First to perfect has priority
* watch for dates

Question 3

Who has priority when there are two unperfected security interests?

Answer 3

The first to attach the collateral has priority

Question 4

What priority is given to PMSI creditors?

Answer 4

They have super priority over other parties who perfected their interests first
* PMSIs are perfected when the debtor receives possession of collateral or within 20 days thereafter
* “second in time, first in right”

• BUT - they are subordinate to buyer in ordinary course

Question 5

Who has priority?: A perfected security interest or unprofected security interest?

Answer 5

Perfected Security interest prevails even if second in time

Question 6

Between two perfected security interests, who has priority?

Answer 6

the security interest who filed or perfected first

• BUT when collateral is instrument or chattel paper - secured party who perfects by taking possession has priority over one who perfects by filing