Priority Flashcards
secured party v. secured party
as between two perfected secured creditors, first to file or perfect (Whichever occurs first) has priority.
between two unperfected secured creditors, first to attach has priority
between perfected and unperfected, the perfected party has priority
purchase money security interests in goods other than inventory or livestock
PMSI in such goods has priority over conflicting security interest in same goods or identifiable proceeds if PMSI is perfected at time debtor received collateral or w/in 20 days
PMSI in inventory or livestock
PMSI has priority over conflict security interest if before debtor receives possession, secured party perfects and sends authenticated notification to holders of previously filed conflicting security interests in collateral. holder of conflicting interest must receive notice w/in 5 years before debtor receives possession (notice is effective for deliveries of same type of collateral for 5 years)
consignor’s interest in consigned goods is considered PMSI in inventory - so can acquire PMSI superpriority in consigned goods if complies with requirements
Conflicting PMSIs
seller-financed has priority over financer-financed PMSIs
priority rules for investment property
security perfected by control has priority over perfection by other methods
conflicting security interests perfected by control - rank according to time of obtaining control
security interest granted to debtor’s intermediary has priority over secured interest granted by debtor to another secured party
if none of. the above apply, first to file or perfect governs
priority rules for deposit accounts
security interest perfected by control has priority over interest perfected by proceeds
if conflicting interests perfected by control, rank according to time of obtaining control
secured party who has obtained control by putting deposit account in its own name has priority against all other secured parties with control
bank account that has control bc it maintains deposit account has priority over all others with control except for those with account in their name
purchaser of chattel paper
if purchaser in good faith gives new value and takes possession in ordinary course of business, purchaser will have priority over security interest arises merely as proceeds of inventory and any other security interest in chattel paper as long as chattel paper purchaser acquired its interest w/o knowledge that its purchase violated rights of secured party
purchaser of instruments
purchaser of an instrument has priority over perfected security interest in instrument f purchaser gives value and takes possession in good faith and w/o knowledge that purchase violate right of secured party
secured party v. buyer of collateral
general rule is that if you buy something with security interest, security interest stays on it
authorized sales
if sale is authorized by secured party to be free of security interest, buyer takes free of interest
implicitly authorized sales
sales of inventory to an ordinary consumer is implicitly authorized whenever a sale is not prohibited.
authorization by acquiescence
if agreement says debtor. cannot sell without consent of creditor, but creditor knows debtor is violating agreement and does nothing, the sales. become authorized by acquiescence
unauthorized sales
buyer in the ordinary course of business takes free of security interest created by his seller, even if interest is perfected and buyer knows of its existence
buyer in the ordinary course
person who buys goods ini good faith, without knowledge that sale violates rights of another person in the goods, and in the ordinary course from a person in the business of selling goods of the kind
buyers not in ordinary course
take subject to perfected security interests. take free from unperfected. interests unless they know of security interest
