Also known as: purchase money interest · purchase-money interests · purchase-money security interest
Written by attorneys · grounded in primary & secondary sources — see below
A security interest that secures an obligation incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral.
Pearl Porter bought manufacturing equipment on credit from Phoenix Technologies and granted it a security interest. Phoenix Technologies filed a financing statement nineteen days after Pearl received the equipment. A judgment creditor obtained a lien on the equipment twelve days after delivery but before the filing. Phoenix Technologies holds priority over the judgment creditor.
Pavel Petrov purchased a refrigerator for household use from Peak Performance on an installment contract that created a security interest in the appliance. Peak Performance did not file a financing statement. When Pavel later filed bankruptcy, Peak Performance retained its perfected status in the refrigerator.
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Patricia Patel financed the purchase of specialized assembly machinery from Premier Manufacturing with a loan secured by the equipment. Premier Manufacturing perfected its interest by filing the same day Patricia took possession. An earlier secured party held a blanket lien on all of Patricia's equipment. Premier Manufacturing takes priority in the machinery.
Preston Pratt obtained inventory financing from Precision Tools for a new line of tools. Precision Tools perfected when Preston received the goods and sent timely notification to an earlier inventory lender. The earlier lender held a conflicting security interest in all inventory. Precision Tools obtains priority in the new tools and their cash proceeds received before delivery to buyers.
A purchase-money security interest in consumer goods is perfected upon attachment without filing, subject to limited exceptions for titled goods.
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Filing a financing statement before or within twenty days after the debtor receives delivery of the collateral gives the purchase-money interest priority over intervening lien creditors.
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A perfected purchase-money security interest in goods other than inventory or livestock has priority if it is perfected when the debtor receives possession or within twenty days thereafter.
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The secured party must perfect when the debtor receives possession and send signed notification to holders of conflicting security interests describing the inventory.
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