1. 1

2. 1. Classify the persons claiming the collateral. 2. Apply appropriate priority rules. 2

3. Lien creditor Unsecured (general) creditor who sued and obtained a lien. Trustee in bankruptcy. 3

4. Prevailing creditor is first to: Perfect, or Obtain lien. Problem 314 – p. 869 4

5. [House (any kind) vs. homeless] Secured creditor wins. 5

6. [straw house vs. straw house] First to attach wins. 6

7. [wood house vs. straw house] Perfected wins Temporal order irrelevant Knowledge that unperfected creditor first irrelevant Problem 315 – p. 870 7

8. 8

9. [wood house vs. wood house] First creditor who either: filed, or perfected. 9

10. Problem 316 – p.870 Problem 317 – p. 871 Problem 318 – p. 871 Problem 319 – p. 871 Problem 320 – p. 872 Dragnet clause 10

11. PMSI creditor can win (even though not first to file or first to perfect) if perfected within 20 days of when the debtor receives possession of the collateral. Problem 322 – p. 879 Problem 323 – p. 882 Problem 324 – p. 882 11

12. PMSI creditor can win (even though not first to file or first to perfect) if: 1. Perfected when the debtor receives possession of the inventory, and 12

13. PMSI creditor can win (even though not first to file or first to perfect) if: 2. Gives notice to holders of conflicting security interests before debtor receives possession of the inventory. Explain that creditor is getting PMSI. Describe the collateral. Notice is effective for five years. 13

14. Problem 325 – p. 883 Problem 326 – p.894 Problem 327 – p. 894 14

15. General Rule = First creditor to either: File, or Perfect. Exceptions: PMSI (equipment, consumer goods) Perfected within 20 days of debtors possession. PMSI (inventory, livestock) Perfected and notice to prior creditors by time of debtors possession. 15

16. If one creditor perfected by control, that creditor wins. Problem 328 – p. 896 16

17. Secured party with control prevails (only perfection method for deposit accounts). Problem 329 – p. 896 17

18. Secured creditor wins. 18

19. Presumption = Secured creditor wins. BUT, many exceptions so purchaser often wins. 19

20. Purchaser wins if purchaser is a buyer in the ordinary course of business. 20

21. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith Honest in fact, plus Observance of reasonable commercial standards. 21

22. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation OK to know about the security interest. 22

23. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation 3. Purchased goods that are not farm products Farm products are governed by the Federal Food Security Act. 23

24. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation 3. Purchased goods that are not farm products 4. Ordinary purchase (from inventory) business of selling goods of the kind But, not a pawn shop. 24

25. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation 3. Purchased goods that are not farm products 4. Ordinary purchase (from inventory) 5. Security interest created by seller Not a security interest created by the sellers seller. 25

26. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation 3. Purchased goods that are not farm products 4. Ordinary purchase (from inventory) 5. Security interest created by seller 6. New value Not to pay for a preexisting debt. 26

27. 27

28. Purchaser wins if purchaser is a buyer in the ordinary course of business. 1. Good faith 2. Without knowledge of security interest violation 3. Purchased goods that are not farm products 4. Ordinary purchase (from inventory) 5. Security interest created by seller 6. New value 7. Creditor not perfected by possession 28

29. Purchaser wins if purchaser is a buyer in the ordinary course of business. Problem 331 – p. 898 Problem 332 – p. 903 Problem 333 – p. 904 Problem 334 – p.909 Problem 341 – p. 925 29

30. HDC wins as takes free of all claims. Problem 335 – p. 910 30

31. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 31

32. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 32

33. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 2. Consumer goods in buyers hands 33

34. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 2. Consumer goods in buyers hands 3. Buyer has no knowledge of security interest 34

35. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 2. Consumer goods in buyers hands 3. Buyer has no knowledge of security interest 4. Buyer pays value 35

36. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 2. Consumer goods in buyers hands 3. Buyer has no knowledge of security interest 4. Buyer pays value 5. Creditor not perfected by possession 36

37. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. 1. Consumer goods in sellers hands 2. Consumer goods in buyers hands 3. Buyer has no knowledge of security interest 4. Buyer pays value 5. Creditor not perfected by possession 6. Creditors interest is unfiled prior to purchase 37

38. Purchaser wins if purchaser qualifies as a garage sale or e-Bay buyer. Problem 336 – p. 910 Problem 337(a) – p. 911 38

39. Purchaser wins if secured creditor unperfected at time of purchase if: 1. Purchaser paid value (not a gift), 39

40. Purchaser wins if secured creditor unperfected at time of purchase if: 1. Purchaser paid value (not a gift), 2. Purchaser took delivery of the collateral, and 40

41. Purchaser wins if secured creditor unperfected at time of purchase if: 1. Purchaser paid value (not a gift), 2. Purchaser took delivery of the collateral, 3. Purchaser had no knowledge of the security interest at time of delivery, and 41

42. 42

43. Purchaser wins if secured creditor unperfected at time of purchase if: 1. Purchaser paid value (not a gift), 2. Purchaser took delivery of the collateral, 3. Purchaser had no knowledge of the security interest at time of delivery, and 4. Creditor did not use PMSI 20-day grace period to perfect. 43

44. Purchaser wins if secured creditor unperfected at time of purchase if: Problem 337(b) – p. 911 Problem 338 – p. 911 44

45. Purchaser wins if secured creditor gave debtor permission to sell. Problem 337(c) – p. 911 45

46. 46

47. Statutory mechanics lien wins if: 1.Lien holder furnished services or materials with respect to the collateral, 47

48. Statutory mechanics lien wins if: 1.Lien holder furnished services or materials with respect to the collateral, 2. Furnishing was in ordinary course of business, and 48

49. Statutory mechanics lien wins if: 1.Lien holder furnished services or materials with respect to the collateral, 2. Furnishing was in ordinary course of business, and 3. Collateral is in possession of lien holder 49

50. Problem 347 – p. 936 50

51. Ordinary building materials transform from goods to real property so prior Article 9 interests are gone. 51

52. So related to the real estate that an interest in it arises under real estate law 52

53. General Rule – Secured creditor wins only if: 1. Perfected before the real estate interest is recorded, 53

54. General Rule – Secured creditor wins only if: 1. Perfected before the real estate interest is recorded, and 2. Perfected using a fixture filing [a financing statement that describes land and is filed in land records where land is located] 54

55. Special rule for purchase-money security interest – PMSI creditor can defeat a prior recorded real property interest if: 55

56. Special rule for purchase-money security interest – PMSI creditor can defeat a prior recorded real property interest if: 1. PMSI creditor perfected with fixture filing, 56

57. Special rule for purchase-money security interest – PMSI creditor can defeat a prior recorded real property interest if: 1. PMSI creditor perfected with fixture filing, 2. PMSI creditor perfected with 20 days of installation, and 57

58. Special rule for purchase-money security interest – PMSI creditor can defeat a prior recorded real property interest if: 1. PMSI creditor perfected with fixture filing, 2. PMSI creditor perfected with 20 days of installation, and 3. Real property interest is not a construction mortgage. 58

59. Special rule for purchase-money security interest Problem 349 – p. 941 Problem 353 – p. 946 Problem 354 – p. 946 59

60. Special rule for readily removable collateral: Factory or office machines Equipment not primarily used in the operation of the real property Replacements of consumer goods or domestic appliances. Perfected before became fixtures by any method defeats real property interest. 60

61. Special rule for readily removable collateral: Problem 350 – p. 942 Problem 352 – p. 946 61

62. Special rule for judicial liens: A security interest in fixtures that is perfected in any manner prevails over a later-acquired judicial lien. Problem 351 – p. 946 62

63. Special rule for transmitting utilities: Railroads, subways, etc. Electricity, phone, etc. Pipeline (water, sewer, oil, gas, etc.) Just one filling in Secretary of States office is needed. Problem 348 – p. 941 63

64. Perfected interest in crops defeats a real property interest. Problem 355 – p. 951 64

65. Problem 356 – p. 951 65

66. Goods physically united with other goods but identity of original goods not lost. 66

67. 67 New hard drive Notebook computer Normal priority rules apply between security interests in the whole (computer) and the accession (new hard drive).

68. 68 Creditor with COT perfection in the whole (car) prevails over creditor with security interest in the accession (engine). Problem 357 – p. 952 New engine car

69. 69 Goods combined so that they cannot be separated.

70. Security interests in the original goods are lost. But a security interest arises in the mass. If perfected in original, perfected in the mass. Priority rules in § 9-336(f) [not tested]. 70

71. 71

72. Lien covers all of taxpayers property. Elements of Federal Tax Lien: 1. Taxpayer fails to pay tax. 2. IRS makes demand for payment. 3. Taxpayer does not pay. 72

73. Creditor unperfected = tax lien prevails Creditor perfected before tax lien filed = creditor prevails. Tax lien filed before creditor perfected = tax lien prevails. Exception – PMSIs prevail over prior filed tax lien Problem 359 – p. 971 73

74. A creditor with an after-acquired property clause can prevail if: Security agreement entered into before tax lien filing, 74

75. A creditor with an after-acquired property clause can prevail if: Security agreement entered into before tax lien filing, Creditor without knowledge of tax lien when loan made, 75

76. A creditor with an after-acquired property clause can prevail if: Security agreement entered into before tax lien filing, Creditor without knowledge of tax lien when loan made, Debtor obtains the after-acquired property within 45 days of the tax lien filing, 76

77. A creditor with an after-acquired property clause can prevail if: Security agreement entered into before tax lien filing, Creditor without knowledge of tax lien when loan made, Debtor obtains the after-acquired property within 45 days of the tax lien filing, and Collateral is inventory, accounts receivable, or commercial paper (not equipment). 77

78. A creditor with an after-acquired property clause can prevail if: Security agreement entered into before tax lien filing, Creditor without knowledge of tax lien when loan made, Debtor obtains the after-acquired property within 45 days of the tax lien filing, and Collateral is inventory, accounts receivable, or commercial paper (not equipment). Problem 358 – p. 963 78

79. A secured creditor who was perfected before the tax lien was filed, will lose priority for future advances (not the prior advances) upon the first of: Secured creditor obtaining knowledge of the tax lien, or 45 days elapsing from the date of tax lien filing. Problem 360(a) – p. 972 79

80. Non-BIOCOB Lien Creditor 80

81. The buyer not in the ordinary course of business can prevail over future advances if either: The secured credit knows of the purchase, or 45 days have elapsed since the date of the purchase. Problem 360(b) – p. 972 81

82. The secured creditor will lose priority to a lien creditor for future advances after both: The secured creditor has knowledge of the lien, and 45 elapse from the date of the lien. Problem 360(c) – p. 972 82