Flashcards in Security Interests: Priorities Deck (3)
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1
Perfected Security Priority
Perfected security interest has priority over:
Unsecured creditors
Unperfected Security Interests
Lien Creditors
Judgement Creditors
Trustees in Bankruptcy
Perfected security interest does NOT have priority over:
Buyer in Ordinary Course of Business
- Buyer not OCB vs Perfected Secured: PS wins
- Buyer not OCB vs Secured: Buyer wins
- Buyer not OCB of consumer goods will win if:
- give value
- not know of secured party's security interest
- buy for personal use
- buy before secured party perfects by filing
*** these rules don't apply to negotiable instruments, securities, or documents***
2
Priority between Two Perfected Security Interests
GR: First to perfect
Except:
1. Inventory:
- PMSI secured party perfects &
- sends written notice of perfection
2. Collateral Other than Inventory:
PMSI has priority over previously perfected non-PMSI if PMSI perfects within 20 days of debtor taking possession of collateral. No notice required
3. Software
- same as inventory
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