Article 9 — Secured Transactions · Section 9-324
Understanding UCC § 9-324, which addresses the priority of a perfected security interest in goods that are subject to a security interest.
Source: U.C.C. § 9-324
§ 9-324. Priority of a Purchase Money Security Interest (PMSI). (a) A security interest in goods is a Purchase Money Security Interest (PMSI) if it is taken or retained by the seller of the goods to secure all or part of its price, or it is taken by a lender to secure a loan made to the debtor that enables the debtor to acquire the goods. (b) A Purchase Money Security Interest in goods has priority over a conflicting security interest in the same goods if the Purchase Money Security Interest is perfected when the debtor receives possession of the goods.
UCC § 9-324 provides that a Purchase Money Security Interest (PMSI) has priority over other security interests in the same goods, provided that the PMSI is perfected when the debtor takes possession of the goods. This gives sellers and lenders who finance the purchase of goods a stronger claim over those goods in the event of default.
A security interest in goods that enables the purchaser to acquire the goods, either by financing from the seller or from a lender.
A security interest that has been made legally enforceable against third parties, typically through filing with the appropriate authorities.
Example 1
A retailer sells a truck to a buyer and retains a security interest in the truck until it is paid off. This security interest is a PMSI and has priority over any other existing interests.
Example 2
A bank lends money to a customer specifically to purchase machinery and takes a security interest in that machinery. If the interest is perfected when the customer takes possession of the machinery, it stands in priority over any other secured debts.