Article 9 — Secured Transactions · Section 9-322
Explore UCC § 9-322, which addresses the priority of security interests in personal property and the rights of creditors in secured transactions.
Source: U.C.C. § 9-322
UCC § 9-322 provides that a security interest is subordinate to a conflicting security interest in the same collateral if it is unperfected and the conflicting interest is perfected. A perfected security interest has priority over an unperfected security interest.
UCC § 9-322 determines which security interests have priority when multiple creditors have claims to the same collateral. Generally, a perfected security interest supersedes an unperfected interest, meaning that creditors with perfected security interests will be paid first from the collateral if a default occurs.
A security interest that has been made legally enforceable against third parties, typically through filing a financing statement or taking possession of the collateral.
A security interest that has not been legally enforced against third parties, often due to lack of filing or possession.
Example 1
A lender files a financing statement for a loan secured by a car. A second lender later lends money without filing a statement. If the borrower defaults, the first lender’s claim to the car takes priority.
Example 2
Two businesses secure loans with inventory. The first business files its financing statement, creating a perfected security interest, while the second does not. If both businesses default, the first lender recovers the inventory first.