[goforCPA]

Hi all,

If you have a security interest perfected on day 2 and PMSI perfected on day 4, which one has priority?

Thanks

October 2011-May 2013. Did not loose any credit!!
AUD - 73, 79
REG - 86
FAR - 72, 83
BEC - 80, last one, DONE!!

[Anonymous]

I could be wrong but I thought a PMSI always had priority.

[Anonymous]

Is this for consumer goods?

[nolifecpa]

if both parties perfected then the first to file or perfect has priority

REG-65,71,74,73,70,74,79
BEC-60's,60's,69,71,76*,78
FAR-67,66,65,79
AUD-54,60's,65,83*,69,80
*expired

DONE

[Anonymous]

I found this and hope it helps.

The PMSI holds a favored position under UCC Article 9. If a transaction qualifies as a PMSI, the secured party can achieve a superior position even in relation to other secured parties that have perfected before it. A PMSI is generally a two-party transaction; the supplier or seller of goods retains a security interest for the purchase price.

When perfecting a PMSI, there are additional requirements pertaining to notification of prior secured parties and filing deadlines. In particular, these sections specify the requirements for PMSIs in inventory collateral and in non-inventory collateral:

Inventory – Security interest taken on goods that are being resold to another party for resale. (e.g., Sony sells stereos to Circuit City, who then resells to the general public; Black & Decker sells circular saws to Home Depot, who then resells to customers)

Non-Inventory (Equipment/Machinery) – Security interest taken on a specific piece of collateral and the debtor retains the equipment. (e.g., copier, refrigerator, forklift, printing press)

When inventory is used as collateral, the UCC requires four conditions to be met before a security interest can qualify as a PMSI:

The PMSI must be perfected at the time the debtor receives possession of the inventory.

The filer must give written notification to the holder of the conflicting perfected security interest in the debtor’s inventory.

The holder of the conflicting security interest must receive the notification no more than five years before the debtor receives the inventory.

The notification must state “that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.”

PMSI’s for non-inventory collateral can be achieved with less effort. The notification requirements do not apply.

[goforCPA]

Thank you …

This is not for consumer goods.

Kricket….your response is clear but the second sentence in the first paragraph contradicts “nolifecpa's” response above. This is why I was confused in the first place. Is it PMSI or perfection (if perfection hapenned first) that has the priority.

October 2011-May 2013. Did not loose any credit!!
AUD - 73, 79
REG - 86
FAR - 72, 83
BEC - 80, last one, DONE!!

[Roxwella]

First, I think your confusing yourself. A PMSI is simply another type of security interest, which actually requires its own filing in order to achieve perfection.

It is obviously a confusing topic. My understanding is that a PMSI (in non-inventory) filed (perfected) within 10 days is superior to all other claims (made before or after). I have seen at least 1 Wiley test question that involved this as an explanation, but honestly I have nowhere to point you in order to prove this. If Im wrong Id love to be corrected…but Im pretty sure this is how it works. Regarding PMSIs in inventory,

“The importance of a PMSI is that it provides the seller of goods on credit (“Seller”) with priority

over other creditors who have a conflicting security interest in the same goods. The typical situation for

Seller will be sales of goods on credit to a customer for the customer’s inventory when the customer’s

primary lender already has a perfected security interest in all of the customer’s subsequently-acquired

inventory (typically this will be in the form of a “blanket” security interest in after-acquired inventory,

equipment, accounts receivable, furnishings, etc.). If Seller follows the very specific steps to obtain a

PMSI for the goods that it is selling to the customer it will be able to trump the security interest of the

other creditors. A properly perfected PMSI will have superior rights to the specific inventory the Seller is

selling to that customer and to certain identifiable cash proceeds from the inventory over a conflicting

security interest in the same inventory.”

https://www.nationalcorp.com/ncr/file/index?filename=PMSI_SecurityInterests_Oct_08.pdf (also has an interesting example)

Its saying that it works the same way with inventory. Id just remember that a PMSI needs to be filed within 10 days of purchase of inventory (or non-inventory) in order to be properly perfected. A properly perfected PMSI beats all others, except a buyer in the regular course of business (but I will bet a dollar that they never put a buyer in the course of regular business into a question dealing with the power of a properly perfected PMSI).

Better be right, taking REG tomorrow! Pray for me my friends

[Author]

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