1. Secured Transactions Assignment 28
Lienors vs. Secureds: The Basics

2. The Big Picture Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Chapter 8: The Concept of Priority
Chapter 9: Competitions for Collateral
Assignment 28: Lien Creditors vs Secureds: The Basics
Assignment 29: Lien Creditors vs Secured: Future Advances
Assignment 30: Trustees vs Secureds: The Strong Arm
Assignment 31: Trustees vs Secureds: Preferences
Assignment 32: Secureds vs. Secureds: Basics
Assignment 33: Secureds vs. Secureds: Land and Fixtures

3. The Big Picture Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Chapter 8: The Concept of Priority
Chapter 9: Competitions for Collateral
Assignment 28: Lien Creditors vs. Secureds: The Basics
Assignment 29: Lien Creditors vs. Secured: Future Advances
Assignment 31: Preferences
Assignment 32: Secured Creditors vs. Secured Creditors
Assignment 36: Buyers vs. Secured Creditors
Land, Fixtures, Agriculture, and Minerals

4. Article 9 Terminology
§9-102(a)(52). “Lien creditor” means a creditor that has acquired a lien on the property involved by attachment, levy, or the like
§9-102(a)(72). “Secured party” means a person in whose favor a security interest is created under a security agreement. (Excludes mortgages)
Security interests are contractual; liens are judicial.
The categories are mutually exclusive.
Security interest
Lien

5. Article 9 Terminology
§9-102(a)(52). “Lien creditor” means a creditor that has acquired a lien on the property involved by attachment, levy, or the like
§9-102(a)(72). “Secured party” means a person in whose favor a security interest is created under a security agreement. (Excludes mortgages)
Security interests are contractual; liens are judicial.
The categories are mutually exclusive.
Mortgage
Security interest
Lien
Statutory lien

6. Bankruptcy and Tax Code Terminology
§101(51): Security interest means a lien created by agreement. (Includes mortgages)
§101 (36): Judicial lien means lien obtained by judgment, levy, sequestration, or other legal or equitable process . . .
§101(53): Statutory lien means a lien arising by statute, but does not include security interest or judicial lien
§101(37) Lien means charge against property to secure payment
Lien
Lien
Judicial Lien
Security interest
Mortgage
Article 9 security interest
Statutory Lien

7. The Priority Rules
The system of priority is basically “first in time, first in right.”

8. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?

9. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Answer up until now: perfect

10. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Answer up until now: perfect
Answer now: the act specified by the rule governing that priority contest

11. Questions about applicable law
1. Distribution of foreclosure sale proceeds: Sale under an Article 9 security interest: 9-615(a) Sale under an execution lien: State execution statute, NY 5263(g) page 437 Sale under a real estate mortgage: state mortgage foreclosure law. But they all yield the same result. 2. Right to stop the sale. Probably don’t all yield the same result Second execution joins first execution sale Real estate foreclosures race

12. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Security interest
§9-322(a)
Priority date and time:
The earlier of perfection or filing
(perfection is the last of three attachment requirements and the perfection requirement)
The earlier of: perfection or filing

13. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Security interest
§9-322(a)
Priority date and time:
The earlier of perfection or filing
(perfection is the last of three attachment requirements and the perfection requirement)
The earlier of: perfection or filing

14. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(a)
Security interest
Priority date and time:
“becomes a lien creditor”
(majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC)
The earlier of (A) perfection or (B) filing and “one of the §9-203(b)(3) conditions is met”

15. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(a)
Security interest
Priority date and time:
“becomes a lien creditor”
(majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC)
The earlier of (A) perfection or (B) filing and “one of the §9-203(b)(3) conditions is met”

16. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(a)
Security interest
Priority date and time:
“becomes a lien creditor”
(majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC)
The earlier of (A) perfection or (B) filing and “one of the §9-203(b)(3) conditions is met”

17. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(a)
Security interest
Priority date and time:
Majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC
The earlier of (A) perfection or (B) filing and “one of the §9-203(b)(3) conditions is met”

18. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
State law
Priority date and time:
Majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC

19. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(e)
PMSI
Priority date and time:
Majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC
Attach, provided a financing statement is filed “within 20 days after” delivery

20. The Priority Rules
The system of priority is basically “first in time, first in right.”
Question: Precisely what must a creditor do first to be first?
Competitors:
Lien creditor
§9-317(e)
PMSI
Priority date and time:
Majority rule: levy; minority rules: deliver writ to sheriff or file judgment in UCC
Attachment, provided a financing statement is filed “within 20 days after” delivery

21. Purchase money priority
File
PMSI
Lien
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest

22. Purchase money priority
20 day grace
Delivery
File
PMSI
Lien
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral

23. Purchase money priority
20 day grace
Delivery
File
PMSI
Lien
Levy
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor

24. Purchase money priority
20 day grace
Delivery
Attachment
File
PMSI
Lien
Levy
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.

25. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy

26. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy
Who has priority?

27. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy
Who has priority? Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts.

28. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy
Who has priority? Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts.
Attachment
Filing
Security Interest
Judgment
Levy

29. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy
Who has priority? Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts.
Attachment
Filing
Security Interest
Judgment
Levy
Who has priority? Judgment. §9-317(a).

30. Problem 28.1.a, page 477 Mortgage granted Mortgage recorded Mortgage
Judgment
Levy
Who has priority? Mortgage in a majority of states. First created, subject to the recording statute. Judgments are not protected under most recording acts.
Attachment
Filing
Security Interest
Judgment
Levy
Who has priority? Judgment. §9-317(a).

31. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Phyllis
3/7

32. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Phyllis
3/10
3/7
Star
Levy

33. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
3/10
3/7
Star
3/11
Levy

34. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
3/10
3/7
Star
3/11
Now
Levy

35. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
3/10
3/7
Star
3/11
Now
Levy
Is Phyllis perfected?

36. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
3/10
3/7
Star
3/11
Now
Levy
Is Phyllis perfected? Depends on whether value has been given

37. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
lends
Phyllis
3/10
3/7
Star
3/11
Levy
Is Phyllis perfected? Depends on whether value has been given
If Phyllis disburses, does she have priority over Star?

38. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
lends
Phyllis
3/10
3/7
Star
3/11
Levy
Is Phyllis perfected? Depends on whether value has been given
If Phyllis disburses, does she have priority over Star?
§9-317(a)(2). A security interest is subordinate to a person that becomes a lien creditor before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

39. Financing statement filed
Problem 28.2, page 477
Financing statement filed
Security agreement
Note Search
Search
report
Phyllis
lends
Phyllis
3/10
3/7
Star
3/11
Levy
Is Phyllis perfected? Depends on whether value has been given
If Phyllis disburses, does she have priority over Star? Yes.
§9-317(a)(2). A security interest is subordinate to a person that becomes a lien creditor before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

40. Problem 28.3, page 478
Judgment
entered
Levy?
Sheng
RFT

41. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT Now
How could RFT get priority over Sheng?

42. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects
How could RFT get priority over Sheng?
How could RFT get a security interest?

43. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects
How could RFT get priority over Sheng?
How could RFT get a security interest?
Why would Conda Copper grant it?

44. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects
How could RFT get priority over Sheng?
How could RFT get a security interest?
Why would Conda Copper grant it?
Spite? Gratitude? Money? Grocer’s Supply protection?

45. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT files
How could RFT get priority over Sheng?
How could RFT get a security interest?
Why would Conda Copper grant it?
Spite? Gratitude? Money? Grocer’s Supply protection?
What if Conda Copper authorized a financing statement but not a security agreement?

46. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT files
How could RFT get priority over Sheng?
How could RFT get a security interest?
Why would Conda Copper grant it?
Spite? Gratitude? Money? Grocer’s Supply protection?
What if Conda Copper authorized a financing statement but not a security agreement?
Not enough. §9-317(a)(2).

47. Problem 28.3, page 478 Judgment entered Levy? Sheng RFT RFT perfects
How could RFT get priority over Sheng?
How could RFT get a security interest?
Why would Conda Copper grant it?
Spite? Gratitude? Money? Grocer’s Supply protection?
Points:
Secured creditor can establish rights faster than unsecured
Debtor can “auction” priority among the unsecureds.

48. Security agreement Financing
Problem 28.4, page 478
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor

49. Security agreement Financing
Problem 28.4, page 478
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Rule: “becomes a lien creditor at levy.”

50. Security agreement Financing
Problem 28.4, page 478
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Rule: “becomes a lien creditor at levy.”
9-317(a)(2). A security interest is subordinate to a person that becomes a lien creditor before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

51. Security agreement Financing
Problem 28.4, page 478
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Rule: “becomes a lien creditor at levy.”
9-317(a)(2). A security interest is subordinate to a person that [levies] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

52. Security agreement Financing
Problem 28.4, page 478
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1
Levy 2
Rule: “becomes a lien creditor at levy.”
9-317(a)(2). A security interest is subordinate to a person that [levies] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

53. Problem 28.4, page 478 Security agreement Financing statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1
Levy 2
Does this system beat the levies?
Rule: “becomes a lien creditor at levy.”
9-317(a)(2). A security interest is subordinate to a person that [levies] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

54. Problem 28.4, page 478 Security agreement Financing statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1
Levy 2
Does this system beat the levies?
Only if SA is signed before viewing the collateral
Rule: “becomes a lien creditor at levy.”
9-317(a)(2). A security interest is subordinate to a person that [levies] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

55. Security agreement Financing
Problem 28.4, page 472
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1 or Filing 1
Levy 2 or Filing 2
Rule: “becomes a lien creditor at levy or filing”
9-317(a)(2). A security interest is subordinate to a person that becomes a lien creditor before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

56. Security agreement Financing
Problem 28.4, page 472
Security agreement Financing
statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1 or Filing 1
Levy 2 or Filing 2
Rule: “becomes a lien creditor at levy or filing”
9-317(a)(2). A security interest is subordinate to a person that [levies or files] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

57. Problem 28.4, page 472 Security agreement Financing statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1 or Filing 1
Levy 2 or Filing 2
Does this system beat the levies and filings?
Rule: “becomes a lien creditor at levy or filing”
9-317(a)(2). A security interest is subordinate to a person that [levies or files] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

58. Problem 28.4, page 472 Security agreement Financing statement
Search report
View collateral
Close
loan
National
Execution
creditor
Levy 1 or Filing 1
Levy 2 or Filing 2
Does this system beat the levies and filings?
Yes. If Security Agreement signed before filing.
Rule: “becomes a lien creditor at levy or filing”
9-317(a)(2). A security interest is subordinate to a person that [levies or files] before the earlier of the time
(A) the security interest is perfected; or
(B) one of the conditions in §9-203(b)(3) is met and a financing statement is filed.

59. Purchase money priority
File
PMSI
Lien (or buyer)
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest

60. Purchase money priority
20 day grace
Delivery
File
PMSI
Lien (or buyer)
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral

61. Purchase money priority
20 day grace
Delivery
File
PMSI
Lien (or buyer)
Levy
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor

62. Purchase money priority
20 day grace
Delivery
Attachment
File
PMSI
Lien (or buyer)
Levy
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.

63. Problem 28.5, page 478
Orville
Judgment

64. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment

65. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment
Levy

66. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?

67. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply

68. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply
No, if boat is not consumer goods. BBW is unperfected.

69. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Delivery Note
BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply
No, if boat is not consumer goods. BBW is unperfected.
b. Is there anything BBW should do if it is unperfected?

70. Problem 28.5, page 478 Delivery Attachment 20 day grace File BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply
No, if boat is not consumer goods. BBW is unperfected.
b. Is there anything BBW should do if it is unperfected?
File the financing statement to obtain §9-317(e) priority

71. Problem 28.5, page 478 Delivery Attachment 20 day grace File BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply
No, if boat is not consumer goods. BBW is unperfected.
b. Is there anything BBW should do if it is unperfected?
File the financing statement to obtain §9-317(e) priority

72. Problem 28.5, page 478 Financing statement, not filed
Security agreement
Sale Note
Demand
possession
File
BBW
Orville
Judgment
Levy
Can BBW get the boat back from the sheriff right now?
Yes, if boat is consumer goods. BBW is prior perfected secured creditor, entitled to possession under Grocers Supply
No, if boat is not consumer goods. BBW is unperfected.
b. Is there anything BBW should do if it is unperfected?
File the financing statement to obtain §9-317(e) priority
Demand possession from sheriff

73. Problem 28.6, page 479 Financing statement, not filed
Security agreement, not signed
Sale Note
BBW
Orville
Judgment
Levy
Edith did not sign the security agreement.

74. Problem 28.6, page 479 Financing statement, not filed
Security agreement, not signed
Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand?

75. Problem 28.6, page 479 Financing statement, not filed
Security agreement, not signed
Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.

76. Problem 28.6, page 479 Financing statement, not filed
Security agreement, not signed
Sale Note
BBW
Now
Orville
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.
Should we get Edith’s signature now?

77. Problem 28.6, page 479 20 day grace Delivery Attachment File BBW
Orville
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.
Should we get Edith’s signature now? Yes, but too late for purchase money priority.
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.

78. Problem 28.6, page 479 20 day grace Delivery Attachment File BBW
Orville
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.
Should we get Edith’s signature now? Yes, but too late for purchase money priority.
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.

79. How about waiving the paper without saying when signed?
Problem 28.6, page 479
20 day grace
Delivery
Attachment
File
BBW
Orville
How about waiving the paper without saying when signed?
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.
Should we get Edith’s signature now? Yes, but too late for purchase money priority.
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.

80. How about waiving the paper without saying when signed?
Problem 28.6, page 479
20 day grace
Delivery
Attachment
File
BBW
Orville
How about waiving the paper without saying when signed?
Judgment
Levy
Edith did not sign the security agreement. Now where do we stand? No attachment, so unsecured.
Should we get Edith’s signature now? Yes, but too late for purchase money priority. Would a well-advised Edith sign?
§9-317(e). [I]f a person files a financing statement with respect to a purchase money security interest before or within 20 days after delivery of the collateral, the security interest takes priority over the rights of a lien creditor which arise between [attachment and] filing.