Also known as: standing timbers
Written by attorneys · grounded in primary & secondary sources — see below
Goods consisting of trees still rooted in the ground when a security interest attaches. The category applies only when the trees are subject to a conveyance or contract requiring that they be cut and removed.
Silverline Industries owns a forested tract and grants Summit Bank a security interest in a stand of pine trees. The parties execute a three-year harvest contract requiring Silverline to cut and deliver all logs to a paper mill. When Silverline defaults, the bank treats the trees as goods collateral. Because the timber is subject to a contract for cutting and removal, the security interest attaches and is perfected under the rules governing goods.
Stonehaven Properties operates a tree farm and grants Valley Bank a security interest in all farm products. The bank later claims standing timber on the property as farm products collateral. The timber remains rooted and is not yet subject to any harvest contract. Because the definition of farm products expressly excludes standing timber, the trees fall outside that category and are instead classified as goods only if a cutting contract exists.
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Standing timber qualifies as goods when it is to be cut and removed under a conveyance or contract for sale. The security interest must attach while the trees remain rooted, but the contract requirement moves the timber into the goods category rather than leaving it solely as real property.
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The statute expressly carves standing timber out of farm products to avoid overlap with the goods category. Timber becomes goods only when a cutting contract exists. Without that contract it remains outside both farm products and the goods definition for secured-transactions purposes.
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Once classified as goods, standing timber is perfected by filing a financing statement describing goods or by possession. The classification also determines which priority rules apply when competing creditors claim the same trees or their proceeds.
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