- Consolidated Laws - Uniform Commercial Code
SUBPART 3. PRIORITY
Section 9--317. Interests That Take Priority over or Take Free of
Security Interest or Agricultural Lien.
(a) Conflicting security interests and rights of lien creditors. A
security interest or agricultural lien is subordinate to the rights of:
(1) a person entitled to priority under Section 9--322; and
(2) except as otherwise provided in subsection (e), a person that
becomes a lien creditor before the earlier of the time:
(A) the security interest or agricultural lien is perfected;
or
(B) one of the conditions specified in Section 9--203(b)(3)
is met and a financing statement covering the collateral
is filed.
(b) Buyers that receive delivery. Except as otherwise provided in
subsection (e), a buyer, other than a secured party, of tangible chattel
paper, documents, goods, instruments, or a security certificate takes
free of a security interest or agricultural lien if the buyer gives
value and receives delivery of the collateral without knowledge of the
security interest or agricultural lien and before it is perfected.
(c) Lessees that receive delivery. Except as otherwise provided in
subsection (e), a lessee of goods takes free of a security interest or
agricultural lien if the lessee gives value and receives delivery of the
collateral without knowledge of the security interest or agricultural
lien and before it is perfected.
(d) Licensees and buyers of certain collateral. A licensee of a
general intangible or a buyer, other than a secured party, of accounts,
electronic chattel paper, general intangibles, or investment property
other than a certificated security takes free of a security interest if
the licensee or buyer gives value without knowledge of the security
interest and before it is perfected.
(e) Purchase-money security interest. Except as otherwise provided in
Sections 9--320 and 9--321, if a person files a financing statement with
respect to a purchase-money security interest before or within 20 days
after the debtor receives delivery of the collateral, the security
interest takes priority over the rights of a buyer, lessee, or lien
creditor which arise between the time the security interest attaches and
the time of filing. The preceding sentence does not apply to cooperative
interests.
Section 9--318. No Interest Retained in Right to Payment That Is Sold;
Rights and Title of Seller of Account or Chattel Paper
with Respect to Creditors and Purchasers.
(a) Seller retains no interest. A debtor that has sold an account,
chattel paper, payment intangible, or promissory note does not retain a
legal or equitable interest in the collateral sold.
(b) Deemed rights of debtor if buyer`s security interest unperfected.
For purposes of determining the rights of creditors of, and purchasers
for value of an account or chattel paper from, a debtor that has sold an
account or chattel paper, while the buyer`s security interest is
unperfected, the debtor is deemed to have rights and title to the
account or chattel paper identical to those the debtor sold.
Section 9--319. Rights and Title of Consignee with Respect to Creditors
and Purchasers.
(a) Consignee has consignor`s rights. Except as otherwise provided in
subsection (b), for purposes of determining the rights of creditors of,
and purchasers for value of goods from, a consignee, while the goods are
in the possession of the consignee, the consignee is deemed to have
rights and title to the goods identical to those the consignor had or
had power to transfer.
(b) Applicability of other law. For purposes of determining the rights
of a creditor of a consignee, law other than this article determines the
rights and title of a consignee while goods are in the consignee`s
possession if, under this part, a perfected security interest held by
the consignor would have priority over the rights of the creditor.
Section 9--320. Buyer of Goods.
(a) Buyer in ordinary course of business. Except as otherwise provided
in subsection (e), a buyer in ordinary course of business, other than a
person buying farm products from a person engaged in farming operations,
takes free of a security interest created by the buyer`s seller, even if
the security interest is perfected and the buyer knows of its existence.
(b) Buyer of consumer goods. Except as otherwise provided in
subsection (e), a buyer of goods from a person who used or bought the
goods for use primarily for personal, family, or household purposes
takes free of a security interest, even if perfected, if the buyer buys:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer`s personal, family, or household
purposes; and
(4) before the filing of a financing statement covering the
goods.
(c) Effectiveness of filing for subsection (b). To the extent that it
affects the priority of a security interest over a buyer of goods under
subsection (b), the period of effectiveness of a filing made in the
jurisdiction in which the seller is located is governed by Section
9--316(a) and (b).
(d) Buyer in ordinary course of business at wellhead or minehead. A
buyer in ordinary course of business buying oil, gas, or other minerals
at the wellhead or minehead or after extraction takes free of an
interest arising out of an encumbrance.
(e) Possessory security interest not affected. Subsections (a) and (b)
do not affect a security interest in goods in the possession of the
secured party under Section 9--313.
Section 9--321. Licensee of General Intangible and Lessee of Goods in
Ordinary Course of Business.
(a) "Licensee in ordinary course of business." In this section,
"licensee in ordinary course of business" means a person that becomes a
licensee of a general intangible in good faith, without knowledge that
the license violates the rights of another person in the general
intangible, and in the ordinary course from a person in the business of
licensing general intangibles of that kind. A person becomes a licensee
in the ordinary course if the license to the person comports with the
usual or customary practices in the kind of business in which the
licensor is engaged or with the licensor`s own usual or customary
practices.
(b) Rights of licensee in ordinary course of business. A licensee in
ordinary course of business takes its rights under a nonexclusive
license free of a security interest in the general intangible created by
the licensor, even if the security interest is perfected and the
licensee knows of its existence.
(c) Rights of lessee in ordinary course of business. A lessee in
ordinary course of business takes its leasehold interest free of a
security interest in the goods created by the lessor, even if the
security interest is perfected and the lessee knows of its existence.
Section 9--322. Priorities among Conflicting Security Interests in and
Agricultural Liens on Same Collateral.
(a) General priority rules. Except as otherwise provided in this
section, priority among conflicting security interests and agricultural
liens in the same collateral is determined according to the following
rules:
(1) Conflicting perfected security interests and agricultural
liens rank according to priority in time of filing or
perfection. Priority dates from the earlier of the time a
filing covering the collateral is first made or the security
interest or agricultural lien is first perfected, if there is
no period thereafter when there is neither filing nor
perfection.
(2) A perfected security interest or agricultural lien has
priority over a conflicting unperfected security interest or
agricultural lien.
(3) The first security interest or agricultural lien to attach or
become effective has priority if conflicting security
interests and agricultural liens are unperfected.
(b) Time of perfection: proceeds and supporting obligations. For the
purposes of subsection (a)(1):
(1) the time of filing or perfection as to a security interest in
collateral is also the time of filing or perfection as to a
security interest in proceeds; and
(2) the time of filing or perfection as to a security interest in
collateral supported by a supporting obligation is also the
time of filing or perfection as to a security interest in the
supporting obligation.
(c) Special priority rules: proceeds and supporting obligations.
Except as otherwise provided in subsection (f), a security interest in
collateral which qualifies for priority over a conflicting security
interest under Section 9--327, 9--328, 9--329, 9--330, or 9--331 also
has priority over a conflicting security interest in:
(1) any supporting obligation for the collateral; and
(2) proceeds of the collateral if:
(A) the security interest in proceeds is perfected;
(B) the proceeds are cash proceeds or of the same type as the
collateral; and
(C) in the case of proceeds that are proceeds of proceeds,
all intervening proceeds are cash proceeds, proceeds of
the same type as the collateral, or an account relating
to the collateral.
(d) First-to-file priority rule for certain collateral. Subject to
subsection (e) and except as otherwise provided in subsection (f), if a
security interest in chattel paper, deposit accounts, negotiable
documents, instruments, investment property, or letter-of-credit rights
is perfected by a method other than filing, conflicting perfected
security interests in proceeds of the collateral rank according to
priority in time of filing.
(e) Applicability of subsection (d). Subsection (d) applies only if
the proceeds of the collateral are not cash proceeds, chattel paper,
negotiable documents, instruments, investment property, or
letter-of-credit rights.
(f) Limitations on subsections (a) through (e). Subsections (a)
through (e) are subject to:
(1) subsection (g) and the other provisions of this part;
(2) Section 4--210 with respect to a security interest of a
collecting bank;
(3) Section 5--118 with respect to a security interest of an
issuer or nominated person; and
(4) Section 9--110 with respect to a security interest arising
under Article 2 or 2-A.
(g) Priority under agricultural lien statute. A perfected agricultural
lien on collateral has priority over a conflicting security interest in
or agricultural lien on the same collateral if the statute creating the
agricultural lien so provides.
(h) Special priority rules: cooperative interests.
(1) With respect to all amounts secured, a cooperative
organization security interest has priority over all other
security interests in a cooperative interest.
(2) As to security interests in cooperative interests other than
cooperative organization security interests, Section
9--323(h) provides special rules for future advances.
Section 9--323. Future Advances.
(a) When priority based on time of advance. Except as otherwise
provided in subsection (c), for purposes of determining the priority of
a perfected security interest under Section 9--322(a)(1), perfection of
the security interest dates from the time an advance is made to the
extent that the security interest secures an advance that:
(1) is made while the security interest is perfected only:
(A) under Section 9--309 when it attaches; or
(B) temporarily under Section 9--312(e), (f), or (g); and
(2) is not made pursuant to a commitment entered into before or
while the security interest is perfected by a method other
than under Section 9--309 or 9--312(e), (f), or (g).
(b) Lien creditor. Except as otherwise provided in subsections (c) and
(h), a security interest is subordinate to the rights of a person that
becomes a lien creditor to the extent that the security interest secures
an advance made more than 45 days after the person becomes a lien
creditor unless the advance is made:
(1) without knowledge of the lien; or
(2) pursuant to a commitment entered into without knowledge of
the lien.
(c) Buyer of receivables. Subsections (a) and (b) do not apply to a
security interest held by a secured party that is a buyer of accounts,
chattel paper, payment intangibles, or promissory notes or a consignor.
(d) Buyer of goods. Except as otherwise provided in subsection (e), a
buyer of goods other than a buyer in ordinary course of business takes
free of a security interest to the extent that it secures advances made
after the earlier of:
(1) the time the secured party acquires knowledge of the buyer`s
purchase; or
(2) 45 days after the purchase.
(e) Advances made pursuant to commitment: priority of buyer of goods.
Subsection (d) does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the buyer`s purchase and
before the expiration of the 45 day period.
(f) Lessee of goods. Except as otherwise provided in subsection (g), a
lessee of goods, other than a lessee in ordinary course of business,
takes the leasehold interest free of a security interest to the extent
that it secures advances made after the earlier of:
(1) the time the secured party acquires knowledge of the lease;
or
(2) 45 days after the lease contract becomes enforceable.
(g) Advances made pursuant to commitment: priority of lessee of goods.
Subsection (f) does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the lease and before the
expiration of the 45 day period.
(h) Priority with respect to cooperative interests. The following
rules apply for purposes of determining under Section 9--322(a)(1) the
priority of a perfected security interest in a cooperative interest:
(1) Perfection of the security interest with respect to a future
advance dates from the time of the filing under Section
9--310(d) if all of the following are true:
(A) The security agreement states the maximum amount to be
advanced pursuant to commitment;
(B) The future advance is made pursuant to that commitment;
(C) The future advance plus the outstanding sum of any prior
advances is not more than the stated maximum amount; and
(D) The filed financing statement includes a cooperative
addendum disclosing that the security agreement contains
a commitment to make future advances.
(2) Except as provided in paragraph (1), perfection of the
security interest with respect to a future advance dates from
the time the advance is made.
(3) For purposes of paragraph (1), no amendment of a security
agreement shall adversely affect the priority of any other
security interest in the same cooperative interest that was
perfected prior to the amendment.
(4) This subsection applies only to advances made subsequent to
an initial advance.
Section 9--324. Priority of Purchase-money Security Interests.
(a) General rule: purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest
in goods other than inventory or livestock has priority over a
conflicting security interest in the same goods, and, except as
otherwise provided in Section 9--327, a perfected security interest in
its identifiable proceeds also has priority, if the purchase-money
security interest is perfected when the debtor receives possession of
the collateral or within 20 days thereafter.
(b) Inventory purchase-money priority. Subject to subsection (c) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in inventory has priority over a
conflicting security interest in the same inventory, has priority over a
conflicting security interest in chattel paper or an instrument
constituting proceeds of the inventory and in proceeds of the chattel
paper, if so provided in Section 9--330, and, except as otherwise
provided in Section 9--327, also has priority in identifiable cash
proceeds of the inventory to the extent the identifiable cash proceeds
are received on or before the delivery of the inventory to a buyer, if:
(1) the purchase-money security interest is perfected when the
debtor receives possession of the inventory;
(2) the purchase-money secured party sends an authenticated
notification to the holder of the conflicting security
interest;
(3) the holder of the conflicting security interest receives the
notification within five years before the debtor receives
possession of the inventory; and
(4) the notification states that the person sending the
notification has or expects to acquire a purchase-money
security interest in inventory of the debtor and describes
the inventory.
(c) Holders of conflicting inventory security interests to be
notified. Subsections (b)(2) through (4) apply only if the holder of
the conflicting security interest had filed a financing statement
covering the same types of inventory:
(1) if the purchase-money security interest is perfected by
filing, before the date of the filing; or
(2) if the purchase-money security interest is temporarily
perfected without filing or possession under Section
9--312(f), before the beginning of the 20-day period
thereunder.
(d) Livestock purchase-money priority. Subject to subsection (e) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in livestock that are farm products has
priority over a conflicting security interest in the same livestock,
and, except as otherwise provided in Section 9--327, a perfected
security interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected when the
debtor receives possession of the livestock;
(2) the purchase-money secured party sends an authenticated
notification to the holder of the conflicting security
interest;
(3) the holder of the conflicting security interest receives the
notification within six months before the debtor receives
possession of the livestock; and
(4) the notification states that the person sending the
notification has or expects to acquire a purchase-money
security interest in livestock of the debtor and describes
the livestock.
(e) Holders of conflicting livestock security interests to be
notified. Subsections (d)(2) through (4) apply only if the holder of
the conflicting security interest had filed a financing statement
covering the same types of livestock:
(1) if the purchase-money security interest is perfected by
filing, before the date of the filing; or
(2) if the purchase-money security interest is temporarily
perfected without filing or possession under Section
9--312(f), before the beginning of the 20-day period
thereunder.
(f) Software purchase-money priority. Except as otherwise provided in
subsection (g), a perfected purchase-money security interest in software
has priority over a conflicting security interest in the same
collateral, and, except as otherwise provided in Section 9--327, a
perfected security interest in its identifiable proceeds also has
priority, to the extent that the purchase-money security interest in the
goods in which the software was acquired for use has priority in the
goods and proceeds of the goods under this section.
(g) Conflicting purchase-money security interests. If more than one
security interest qualifies for priority in the same collateral under
subsection (a), (b), (d), or (f):
(1) a security interest securing an obligation incurred as all or
part of the price of the collateral has priority over a
security interest securing an obligation incurred for value
given to enable the debtor to acquire rights in or the use of
collateral; and
(2) in all other cases, Section 9--322(a) applies to the
qualifying security interests.
Section 9--325. Priority of Security Interests in Transferred
Collateral.
(a) Subordination of security interest in transferred collateral.
Except as otherwise provided in subsection (b), a security interest
created by a debtor is subordinate to a security interest in the same
collateral created by another person if:
(1) the debtor acquired the collateral subject to the security
interest created by the other person;
(2) the security interest created by the other person was
perfected when the debtor acquired the collateral; and
(3) there is no period thereafter when the security interest is
unperfected.
(b) Limitation of subsection (a) subordination. Subsection (a)
subordinates a security interest only if the security interest:
(1) otherwise would have priority solely under Section 9--322(a)
or 9--324; or
(2) arose solely under Section 2--711(3) or 2-A-508(5).
Section 9--326. Priority of Security Interests Created by New Debtor.
(a) Subordination of security interest created by new debtor. Subject
to subsection (b), a security interest created by a new debtor which is
perfected by a filed financing statement that is effective solely under
Section 9--508 in collateral in which a new debtor has or acquires
rights is subordinate to a security interest in the same collateral
which is perfected other than by a filed financing statement that is
effective solely under Section 9--508.
(b) Priority under other provisions; multiple original debtors. The
other provisions of this part determine the priority among conflicting
security interests in the same collateral perfected by filed financing
statements that are effective solely under Section 9--508. However, if
the security agreements to which a new debtor became bound as debtor
were not entered into by the same original debtor, the conflicting
security interests rank according to priority in time of the new
debtor`s having become bound.
Section 9--327. Priority of Security Interests in Deposit Account.
The following rules govern priority among conflicting security
interests in the same deposit account:
(a) A security interest held by a secured party having control of the
deposit account under Section 9--104 has priority over a conflicting
security interest held by a secured party that does not have control.
(b) Except as otherwise provided in subsections (c) and (d), security
interests perfected by control under Section 9--314 rank according to
priority in time of obtaining control.
(c) Except as otherwise provided in subsection (d), a security
interest held by the bank with which the deposit account is maintained
has priority over a conflicting security interest held by another
secured party.
(d) A security interest perfected by control under Section
9--104(a)(3) has priority over a security interest held by the bank with
which the deposit account is maintained.
Section 9--328. Priority of Security Interests in Investment Property.
The following rules govern priority among conflicting security
interests in the same investment property:
(a) A security interest held by a secured party having control of
investment property under Section 9--106 has priority over a security
interest held by a secured party that does not have control of the
investment property.
(b) Except as otherwise provided in paragraphs (c) and (d),
conflicting security interests held by secured parties each of which has
control under Section 9--106 rank according to priority in time of:
(1) if the collateral is a security, obtaining control;
(2) if the collateral is a security entitlement carried in a
securities account and:
(A) if the secured party obtained control under Section
8--106 (d) (1), the secured party`s becoming the person
for which the securities account is maintained;
(B) if the secured party obtained control under Section
8--106 (d) (2), the securities intermediary`s agreement
to comply with the secured party`s entitlement orders
with respect to security entitlements carried or to be
carried in the securities account; or
(C) if the secured party obtained control through another
person under Section 8--106 (d) (3), the time on which
priority would be based under this paragraph if the other
person were the secured party; or
(3) if the collateral is a commodity contract carried with a
commodity intermediary, the satisfaction of the requirement
for control specified in Section 9--106 (b) (2) with respect
to commodity contracts carried or to be carried with the
commodity intermediary.
(c) A security interest held by a securities intermediary in a
security entitlement or a securities account maintained with the
securities intermediary has priority over a conflicting security
interest held by another secured party.
(d) A security interest held by a commodity intermediary in a
commodity contract or a commodity account maintained with the commodity
intermediary has priority over a conflicting security interest held by
another secured party.
(e) A security interest in a certificated security in registered form
which is perfected by taking delivery under Section 9--313 (a) and not
by control under Section 9--314 has priority over a conflicting security
interest perfected by a method other than control.
(f) Conflicting security interests created by a broker, securities
intermediary, or commodity intermediary which are perfected without
control under Section 9--106 rank equally.
(g) In all other cases, priority among conflicting security interests
in investment property is governed by Sections 9--322 and 9--323.
(h) Subsections (a) through (g) do not apply to cooperative interests.
Section 9--329. Priority of Security Interests in Letter-of-credit
Right.
The following rules govern priority among conflicting security
interests in the same letter-of-credit right:
(a) A security interest held by a secured party having control of the
letter-of-credit right under Section 9--107 has priority to the extent
of its control over a conflicting security interest held by a secured
party that does not have control.
(b) Security interests perfected by control under Section 9--314 rank
according to priority in time of obtaining control.
Section 9--330. Priority of Purchaser of Chattel Paper or Instrument.
(a) Purchaser`s priority: security interest claimed merely as
proceeds. A purchaser of chattel paper has priority over a security
interest in the chattel paper which is claimed merely as proceeds of
inventory subject to a security interest if:
(1) in good faith and in the ordinary course of the purchaser`s
business, the purchaser gives new value and takes possession
of the chattel paper or obtains control of the chattel paper
under Section 9--105; and
(2) the chattel paper does not indicate that it has been assigned
to an identified assignee other than the purchaser.
(b) Purchaser`s priority: other security interests. A purchaser of
chattel paper has priority over a security interest in the chattel paper
which is claimed other than merely as proceeds of inventory subject to a
security interest if the purchaser gives new value and takes possession
of the chattel paper or obtains control of the chattel paper under
Section 9--105 in good faith, in the ordinary course of the purchaser`s
business, and without knowledge that the purchase violates the rights of
the secured party.
(c) Chattel paper purchaser`s priority in proceeds. Except as
otherwise provided in Section 9--327, a purchaser having priority in
chattel paper under subsection (a) or (b) also has priority in proceeds
of the chattel paper to the extent that:
(1) Section 9--322 provides for priority in the proceeds; or
(2) the proceeds consist of the specific goods covered by the
chattel paper or cash proceeds of the specific goods, even if
the purchaser`s security interest in the proceeds is
unperfected.
(d) Instrument purchaser`s priority. Except as otherwise provided in
Section 9--331(a), a purchaser of an instrument has priority over a
security interest in the instrument perfected by a method other than
possession if the purchaser gives value and takes possession of the
instrument in good faith and without knowledge that the purchase
violates the rights of the secured party.
(e) Holder of purchase-money security interest gives new value. For
purposes of subsections (a) and (b), the holder of a purchase-money
security interest in inventory gives new value for chattel paper
constituting proceeds of the inventory.
(f) Indication of assignment gives knowledge. For purposes of
subsections (b) and (d), if chattel paper or an instrument indicates
that it has been assigned to an identified secured party other than the
purchaser, a purchaser of the chattel paper or instrument has knowledge
that the purchase violates the rights of the secured party.
Section 9--331. Priority of Rights of Purchasers of Instruments,
Documents, and Securities under Other Articles;
Priority of Interests in Financial Assets and Security
Entitlements under Article 8.
(a) Rights under Articles 3, 7, and 8 not limited. This article does
not limit the rights of a holder in due course of a negotiable
instrument, a holder to which a negotiable document of title has been
duly negotiated, or a protected purchaser of a security. These holders
or purchasers take priority over an earlier security interest, even if
perfected, to the extent provided in Articles 3, 7, and 8.
(b) Protection under Article 8. This article does not limit the rights
of or impose liability on a person to the extent that the person is
protected against the assertion of a claim under Article 8.
(c) Filing not notice. Filing under this article does not constitute
notice of a claim or defense to the holders, or purchasers, or persons
described in subsections (a) and (b).
(d) Section not applicable to cooperative interests. Subsections (a),
(b), and (c) do not apply to cooperative interests.
Section 9--332. Transfer of Money; Transfer of Funds from Deposit
Account.
(a) Transferee of money. A transferee of money takes the money free of
a security interest unless the transferee acts in collusion with the
debtor in violating the rights of the secured party.
(b) Transferee of funds from deposit account. A transferee of funds
from a deposit account takes the funds free of a security interest in
the deposit account unless the transferee acts in collusion with the
debtor in violating the rights of the secured party.
Section 9--333. Priority of Certain Liens Arising by Operation of Law.
(a) "Possessory lien." In this section, "possessory lien" means an
interest, other than a security interest or an agricultural lien:
(1) which secures payment or performance of an obligation for
services or materials furnished with respect to goods by a
person in the ordinary course of the person`s business;
(2) which is created by statute or rule of law in favor of the
person; and
(3) whose effectiveness depends on the person`s possession of the
goods.
(b) Priority of possessory lien. A possessory lien on goods has
priority over a security interest in the goods unless the lien is
created by a statute that expressly provides otherwise.
Section 9--334. Priority of Security Interests in Fixtures and Crops.
(a) Security interest in fixtures under this article. A security
interest under this article may be created in goods that are fixtures or
may continue in goods that become fixtures. A security interest does not
exist under this article in ordinary building materials incorporated
into an improvement on land.
(b) Security interest in fixtures under real property law. This
article does not prevent creation of an encumbrance upon fixtures under
real property law.
(c) General rule: subordination of security interest in fixtures. In
cases not governed by subsections (d) through (h), a security interest
in fixtures is subordinate to a conflicting interest of an encumbrancer
or owner of the related real property other than the debtor.
(d) Fixtures purchase-money priority. Except as otherwise provided in
subsection (h), a perfected security interest in fixtures has priority
over a conflicting interest of an encumbrancer or owner of the real
property if the debtor has an interest of record in or is in possession
of the real property and:
(1) the security interest is a purchase-money security interest;
(2) the interest of the encumbrancer or owner arises before the
goods become fixtures; and
(3) the security interest is perfected by a fixture filing before
the goods become fixtures or within 20 days thereafter.
(e) Priority of security interest in fixtures over interests in real
property. A perfected security interest in fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real property
if:
(1) the debtor has an interest of record in the real property or
is in possession of the real property and the security
interest:
(A) is perfected by a fixture filing before the interest of
the encumbrancer or owner is of record; and
(B) has priority over any conflicting interest of a
predecessor in title of the encumbrancer or owner;
(2) before the goods become fixtures, the security interest is
perfected by any method permitted by this article and the
fixtures are readily removable:
(A) factory or office machines;
(B) equipment that is not primarily used or leased for use in
the operation of the real property; or
(C) replacements of domestic appliances that are consumer
goods;
(3) the conflicting interest is a lien on the real property
obtained by legal or equitable proceedings after the security
interest was perfected by any method permitted by this
article; or
(4) the security interest is:
(A) created in a manufactured home in a manufactured-home
transaction; and
(B) perfected pursuant to a statute described in Section
9--311(a)(2).
(f) Priority based on consent, disclaimer, or right to remove. A
security interest in fixtures, whether or not perfected, has priority
over a conflicting interest of an encumbrancer or owner of the real
property if:
(1) the encumbrancer or owner has, in an authenticated record,
consented to the security interest or disclaimed an interest
in the goods as fixtures; or
(2) the debtor has a right to remove the goods as against the
encumbrancer or owner.
(g) Continuation of paragraph (f)(2) priority. The priority of the
security interest under paragraph (f)(2) continues for a reasonable time
if the debtor`s right to remove the goods as against the encumbrancer or
owner terminates.
(h) Priority of construction mortgage. A mortgage is a construction
mortgage to the extent that it secures an obligation incurred for the
construction of an improvement on land, including the acquisition cost
of the land, if a recorded record of the mortgage so indicates. Except
as otherwise provided in subsections (e) and (f), a security interest in
fixtures is subordinate to a construction mortgage if a record of the
mortgage is recorded before the goods become fixtures and the goods
become fixtures before the completion of the construction. A mortgage
has this priority to the same extent as a construction mortgage to the
extent that it is given to refinance a construction mortgage.
(i) Priority of security interest in crops. A perfected security
interest in crops growing on real property has priority over a
conflicting interest of an encumbrancer or owner of the real property if
the debtor has an interest of record in or is in possession of the real
property.
(j) Subsection (i) prevails. Subsection (i) prevails over any
inconsistent provisions with this article or any other chapter of law.
Section 9--335. Accessions.
(a) Creation of security interest in accession. A security interest
may be created in an accession and continues in collateral that becomes
an accession.
(b) Perfection of security interest. If a security interest is
perfected when the collateral becomes an accession, the security
interest remains perfected in the collateral.
(c) Priority of security interest. Except as otherwise provided in
subsection (d), the other provisions of this part determine the priority
of a security interest in an accession.
(d) Compliance with certificate-of-title statute. A security interest
in an accession is subordinate to a security interest in the whole which
is perfected by compliance with the requirements of a
certificate-of-title statute under Section 9--311 (b).
(e) Removal of accession after default. After default, subject to Part
6, a secured party may remove an accession from other goods if the
security interest in the accession has priority over the claims of every
person having an interest in the whole.
(f) Reimbursement following removal. A secured party that removes an
accession from other goods under subsection (e) shall promptly reimburse
any holder of a security interest or other lien on, or owner of, the
whole or of the other goods, other than the debtor, for the cost of
repair of any physical injury to the whole or the other goods. The
secured party need not reimburse the holder or owner for any diminution
in value of the whole or the other goods caused by the absence of the
accession removed or by any necessity for replacing it. A person
entitled to reimbursement may refuse permission to remove until the
secured party gives adequate assurance for the performance of the
obligation to reimburse.
Section 9--336. Commingled Goods.
(a) "Commingled goods." In this section, "commingled goods" means
goods that are physically united with other goods in such a manner that
their identity is lost in a product or mass.
(b) No security interest in commingled goods as such. A security
interest does not exist in commingled goods as such. However, a security
interest may attach to a product or mass that results when goods become
commingled goods.
(c) Attachment of security interest to product or mass. If collateral
becomes commingled goods, a security interest attaches to the product or
mass.
(d) Perfection of security interest. If a security interest in
collateral is perfected before the collateral becomes commingled goods,
the security interest that attaches to the product or mass under
subsection (c) is perfected.
(e) Priority of security interest Except as otherwise provided in
subsection (f), the other provisions of this part determine the priority
of a security interest that attaches to the product or mass under
subsection (c).
(f) Conflicting security interests in product or mass If more than one
security interest attaches to the product or mass under subsection (c),
the following rules determine priority:
(1) A security interest that is perfected under subsection (d)
has priority over a security interest that is unperfected at
the time the collateral becomes commingled goods.
(2) If more than one security interest is perfected under
subsection (d), the security interests rank equally in
proportion to the value of the collateral at the time it
became commingled goods.
Section 9--337. Priority of Security Interests in Goods Covered by
Certificate of Title.
If, while a security interest in goods is perfected by any method
under the law of another jurisdiction, this state issues a certificate
of title that does not show that the goods are subject to the security
interest or contain a statement that they may be subject to security
interests not shown on the certificate:
(a) a buyer of the goods, other than a person in the business of
selling goods of that kind, takes free of the security interest if the
buyer gives value and receives delivery of the goods after issuance of
the certificate and without knowledge of the security interest; and
(b) the security interest is subordinate to a conflicting security
interest in the goods that attaches, and is perfected under Section
9--311 (b), after issuance of the certificate and without the
conflicting secured party`s knowledge of the security interest.
Section 9--338. Priority of Security Interest or Agricultural Lien
Perfected by Filed Financing Statement Providing
Certain Incorrect Information.
If a security interest or agricultural lien is perfected by a filed
financing statement providing information described in Section
9--516(b)(5) which is incorrect at the time the financing statement is
filed:
(a) the security interest or agricultural lien is subordinate to a
conflicting perfected security interest in the collateral to the extent
that the holder of the conflicting security interest gives value in
reasonable reliance upon the incorrect information; and
(b) a purchaser, other than a secured party, of the collateral takes
free of the security interest or agricultural lien to the extent that,
in reasonable reliance upon the incorrect information, the purchaser
gives value and, in the case of chattel paper, documents, goods,
instruments, or a security certificate, receives delivery of the
collateral.
Section 9--339. Priority Subject to Subordination.
This article does not preclude subordination by agreement by a person
entitled to priority.
