Also known as: PMSIs · purchase money security interest · purchase-money security interest
Written by attorneys · grounded in primary & secondary sources — see below
A security interest in goods that secures the price of those goods or the value given to enable their acquisition. The interest arises when a seller retains or a financing agency provides funds for the specific property purchased by the debtor.
Progressive Healthcare sold manufacturing equipment to Parker Phillips on credit and retained a security interest in the machines. Progressive filed its financing statement eighteen days after Parker received delivery. A judgment creditor obtained a lien on the equipment twelve days after delivery. Progressive's interest takes priority over the lien because the filing occurred within the twenty-day window after delivery.
Pulse Media sold a home entertainment system to Portia Price on an installment contract. Pulse retained a security interest in the system to secure the unpaid balance. The system was consumer goods. Pulse's security interest perfected automatically upon attachment without any filing.
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Pacific Bank loaned funds to Preston Pratt to purchase a specialized lathe for his machine shop. The bank took a security interest in the lathe and perfected by filing on the day Preston received possession. An earlier secured party held a blanket filing on all of Preston's equipment. The bank's interest has priority in the lathe over the blanket filing.
Paragon Construction supplied inventory to Philip Powell under a credit arrangement that created a purchase-money security interest. Paragon perfected when Philip received the goods and sent timely signed notification to an earlier inventory lender. Paragon's interest has priority in the inventory over the earlier lender.
No filing is required. The security interest perfects automatically when it attaches if the collateral consists of consumer goods.
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The secured party must file before or within twenty days after the debtor receives delivery of the collateral. Filing within that window gives the PMSI priority over intervening lien creditors.
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The PMSI must be perfected when the debtor receives possession or within twenty days thereafter. Timely perfection grants the PMSI superpriority in the goods and their identifiable proceeds.
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The PMSI must be perfected when the debtor receives possession. The purchase-money secured party must also send signed notification to any conflicting inventory secured party before the debtor receives the goods.
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