Also known as:identifiable proceed · traceable proceeds
Written by attorneys · grounded in primary & secondary sources — see below
Property received upon sale, exchange, lease, license, collection, or other disposition of collateral. A security interest attaches automatically to such property when it remains traceable to the original collateral even after commingling with other funds or assets.
Sources & Authorities
How it applies
Common Examples
2
Bank Traces Sale Proceeds
Isabelle Inman sold inventory subject to a security interest held by Ironwood Capital and deposited the cash into her operating account. The account already held unrelated deposits. Ironwood Capital established that the lowest intermediate balance after the deposit matched the sale amount. The security interest therefore attached to that portion of the account balance as identifiable proceeds.
PMSI Priority Extends to Cash
Insight Consulting financed Israel Irving's purchase of specialized equipment and perfected its purchase-money security interest by filing within twenty days after delivery. Irving later sold the equipment and deposited the cash into a general account. Insight Consulting's perfected interest in the identifiable cash proceeds took priority over an earlier blanket lien on Irving's assets.
Put it into practice
Test Yourself
10
Practice Questions5
· 7 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Casebooks
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Course Outlines
Study Supplements
Common questions
Frequently Asked
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How does a secured party prove that funds in a commingled account qualify as identifiable proceeds?+
The secured party may rely on tracing methods such as the lowest intermediate balance rule. Under that fiction, any balance remaining after withdrawals is treated as the traceable proceeds up to the amount originally deposited from the collateral.
Supporting sources
Does a purchase-money security interest automatically receive priority in identifiable proceeds of the collateral?+
Yes, provided the purchase-money interest is perfected in time. The superpriority rule in section 9-324(a) expressly extends to a perfected security interest in the identifiable proceeds of non-inventory goods.
Supporting sources
What happens to a security interest when collateral is sold and the proceeds are deposited into an account containing other funds?+
The security interest continues in the identifiable proceeds. The secured party must still prove traceability, but once that showing is made the interest attaches even though the funds have been commingled.
Supporting sources
Can a security interest in identifiable proceeds be perfected by the same filing that covers the original collateral?+
Yes. When the original collateral is perfected by filing, that filing ordinarily perfects the interest in cash proceeds for at least twenty days and often longer under the proceeds-perfection rules.
Supporting sources
Secured TransactionsApplicability and definitions (§ 9-101, et seq.) · Priority of consignments (§§ 9-103, 9-324)UBEIntermediate