purchase-money security interest in consumer goods
/PUR-chis muh-nee SEH-kyur-ih-tee IN-trest in kun-SOO-mer goods/·phrase
Also known as:purchase money security interest in consumer goods · PMSI in consumer goods · PMSI consumer goods
Written by attorneys · grounded in primary & secondary sources — see below
A security interest that arises when a seller or lender extends credit enabling a debtor to acquire consumer goods. The interest attaches when value is given, the debtor obtains rights in the collateral, and an authenticated security agreement describes the goods. It is perfected automatically upon attachment unless a certificate-of-title statute applies.
Sources & Authorities
How it applies
Common Examples
2
Laptop Sale to Engineer
Penelope Price purchased a gaming laptop from Paragon Construction on an installment plan for personal use at home. Paragon retained a purchase-money security interest in the laptop but never filed a financing statement. When a later creditor asserted a blanket lien over all of Price's personal property, Paragon's interest prevailed because it had perfected automatically at attachment.
Furniture Purchase by Associate
Pierce Patterson bought refurbished office furniture from Phoenix Technologies on credit for use in his apartment. Phoenix retained a purchase-money security interest and obtained a signed security agreement but filed nothing. When a bank with a prior blanket filing claimed the furniture after Patterson's default, Phoenix's automatically perfected interest gave it priority.
Put it into practice
Test Yourself
10
Practice Questions5
· 3 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Hornbooks
In re Manuel507 F.2d 990 (1975)
Common questions
Frequently Asked
4
When is a purchase-money security interest in consumer goods perfected?+
It is perfected automatically upon attachment. No financing statement or possession is required unless a certificate-of-title statute applies to the goods.
Supporting sources
Does occasional business use of household goods destroy consumer-goods classification?+
No. Classification turns on whether the goods are used or bought primarily for personal, family, or household purposes. Incidental professional use does not reclassify the goods as equipment.
Supporting sources
How does automatic perfection affect priority against a later-filed blanket lien?+
The automatically perfected purchase-money interest has priority because it was perfected first. The first-to-perfect rule favors the earlier perfected interest even if the later interest was filed.
Supporting sources
What must a seller do to obtain a purchase-money security interest?+
The seller must retain a security interest to secure the unpaid purchase price and the debtor must authenticate a security agreement describing the goods. Value must be given and the debtor must acquire rights in the collateral.
Supporting sources
Secured TransactionsRights of third parties; perfected and unperfected security interests; rules of priority (§ 9-301, et seq.) · Requirement of filing and steps to be taken for perfection (§§ 9-308 through 9-316; § 9-501, et seq.); assignment of security interest (§§ 9-514, 9-519)UBEFoundational