What is a Purchase Money Security Interest (PMSI)?
A security interest in goods that secures the price of the goods or enables the debtor to acquire the goods.
What is PMSI super priority?
The ability of a PMSI to take priority over earlier-perfected security interests in the same collateral.
When does a PMSI in equipment get super priority?
If it is perfected within 20 days after the debtor receives possession of the equipment.
What happens if a PMSI in equipment is not perfected within 20 days?
It loses super priority and is ranked under the normal first-to-file-or-perfect rule.
When does a PMSI in inventory get super priority?
Only if the creditor (1) perfects before the debtor receives possession, and (2) sends authenticated notice to prior secured creditors before possession.
What must the PMSI inventory notice contain?
It must state that the creditor expects to acquire a PMSI in the debtor’s inventory.
Why are PMSIs in inventory treated more strictly than equipment?
Because inventory is quickly sold and prior lenders rely heavily on it as collateral.
Does a PMSI in consumer goods require filing to be perfected?
No. It is automatically perfected upon attachment (unless the goods require title filing, like cars).
Does a PMSI in livestock require notice to prior creditors?
Yes. Like inventory, it requires perfection before possession and notice to prior secured parties.
What is the general priority rule if PMSI requirements are not met?
First to file or perfect wins.
What is the key timing rule for PMSI in equipment?
20 days after debtor receives possession.
What is the key timing rule for PMSI in inventory?
Perfect and notify before debtor receives possession.
Can a PMSI defeat a previously perfected blanket lien?
Yes, if PMSI super priority requirements are satisfied.
What happens if a PMSI creditor fails to send notice in an inventory situation?
The PMSI loses super priority against prior secured creditors.
What is the memory trick for PMSI timing?
Equipment = 20 days. Inventory = Before possession + Notice.
What are the three requirements for attachment?
(1) Value given, (2) Debtor has rights in the collateral, (3) Authenticated security agreement describing collateral (or possession/control).
VCR
When is a security interest enforceable against the debtor?
When it attaches.
What is required to perfect a security interest?
Attachment + an additional step (usually filing, possession, or control).
FPAC
What is the default method of perfection?
Filing a financing statement.
What must a financing statement contain?
(1) Debtor name, (2) Secured party name, (3) Indication of collateral.
What is the general priority rule?
First to file or perfect wins.
What does a BIOC take free of?
A security interest created by the seller, even if perfected.
