Secured Parties v. Buyers

Question 1

Buyer v. Perfected SI

Answer 1

Generally, Unless the SP authorizes the sale of free and clear of it SI, a buyer takes subject to a perfected SI

Exceptions

1. BICOB
2. Garage Sale

Question 2

BICOB exception

Answer 2

A BICOB takes free of a SI if

1) The buyer buys goods from a merchant

2) In the ordinary course of business

3) In good faith and without knowledge that it violates the rights of others in the same goods

4) the seller is engaged in the business of selling goods of this kind and is not a pawn broker

Question 3

Garage sale exception

Answer 3

A buyer of consumer goods with take free of an SI, even if perfected it

1) The buyer buys consumer goods for value

2) For their own, personal, family, or household use

3) From a consumer seller

4) without knowledge of the SI, and

6) Unless SP has filed a financing statement covering the goods before the purchase occurred