UCC Article 9 Priority Rules - Lost Equipment Loan to Junior Lender After Perfection Mix-up
This is eating at me and I need to understand what went wrong. Had a $180K equipment financing deal that should have been bulletproof - we filed our UCC-1 first, debtor name was spot-on, collateral description covered all the machinery. But somehow a junior lender who filed 6 months AFTER us is claiming superior priority and threatening to seize the equipment. Their attorney is citing some UCC Article 9 priority rules that supposedly trump our earlier filing date. How is this even possible? I thought first-to-file always wins under the priority rules. The debtor is in default and now we're looking at a total loss because this other lender says they have a superpriority claim. Can someone explain how UCC Article 9 priority rules actually work? I'm clearly missing something fundamental here because this makes no sense.
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Aileen Rodriguez
First-to-file isn't always the winner under UCC Article 9 priority rules. There are several exceptions that can flip priority even with later filings. What type of collateral are we talking about specifically? And what's the other lender claiming as their basis for superior priority?
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Bruno Simmons
•Manufacturing equipment - lathes, presses, conveyor systems. The other lender is claiming something about purchase money security interest priority. But they financed this equipment 6 months after we already had our UCC-1 on file covering all business equipment.
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Zane Gray
•PMSI priority! That's probably what's happening here. UCC Article 9 priority rules give purchase money security interests special priority over earlier general liens, even if the PMSI was perfected later.
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Maggie Martinez
Oh man, you got hit by the PMSI superpriority rule. This is exactly why UCC Article 9 priority rules are so tricky. A purchase money security interest in equipment gets priority over a conflicting security interest if the PMSI is perfected within 20 days after the debtor receives possession. Doesn't matter that your UCC-1 was filed first.
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Bruno Simmons
•Wait, so even though we filed first and had a blanket lien on all equipment, they can jump ahead of us just because they financed the specific equipment purchase? That seems insane.
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Maggie Martinez
•Exactly. UCC Article 9 priority rules specifically protect purchase money lenders this way. The theory is that without their financing, that specific equipment wouldn't exist for you to have a lien on anyway.
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Alejandro Castro
•This is why I always check for potential PMSI issues before taking any security interest. UCC Article 9 priority rules have so many exceptions to the basic first-to-file rule.
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Monique Byrd
Had a similar nightmare last year. Thought our blanket UCC-1 protected us, but then learned about all these UCC Article 9 priority rules exceptions the hard way. Cost us $200K when a PMSI lender took our collateral. Now I use Certana.ai to upload all our UCC documents and cross-check for potential priority conflicts before we fund. Their system flags possible PMSI issues and other priority problems by analyzing the filing patterns.
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Bruno Simmons
•How does that help with priority issues? I thought those were just legal rules, not something software could catch.
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Monique Byrd
•It identifies when multiple lenders have filed against the same debtor and flags potential PMSI situations based on timing and collateral descriptions. Helps you spot priority risks before they become losses.
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Jackie Martinez
The UCC Article 9 priority rules have like 15 different exceptions to first-to-file. PMSI is just one of them. You've also got deposit account perfection rules, proceeds rules, fixture filing priorities... it's a mess honestly.
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Lia Quinn
•Don't forget buyers in ordinary course of business. That's another UCC Article 9 priority rule that can wipe out a perfected security interest completely.
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Haley Stokes
•And agricultural liens get special priority too under certain UCC Article 9 priority rules. It's not just about filing order.
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Asher Levin
This is why commercial lending is so risky. You think you understand UCC Article 9 priority rules and then get blindsided by some exception you never heard of. At least now you know for next time.
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Bruno Simmons
•Yeah, expensive lesson. Wish I'd known about PMSI priority before we funded this deal.
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Serene Snow
•Most lenders learn about UCC Article 9 priority rules the hard way unfortunately. The statute is not exactly user-friendly.
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Issac Nightingale
Quick question - did the PMSI lender actually perfect within the 20-day window? That's a strict requirement under UCC Article 9 priority rules. If they missed it, they lose the superpriority.
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Bruno Simmons
•Their UCC-1 shows a filing date 18 days after the equipment delivery date, so looks like they made the deadline.
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Issac Nightingale
•Darn. Yeah, they get PMSI priority then. UCC Article 9 priority rules are unforgiving on that timing requirement.
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Romeo Barrett
•Always worth double-checking those dates though. Sometimes the delivery date isn't what it appears to be on the surface.
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Marina Hendrix
I've been using Certana.ai's document verification tool to catch these priority issues early. You upload your UCC filings and it flags potential conflicts with other lenders' filings. Saved me from a similar PMSI disaster last month.
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Justin Trejo
•Does it actually analyze UCC Article 9 priority rules or just show you the filings?
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Marina Hendrix
•It identifies patterns that suggest priority conflicts - like multiple equipment financings against the same debtor with overlapping timeframes. Helps you spot the red flags.
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Alana Willis
The whole UCC Article 9 priority rules system needs an overhaul. Too many exceptions and special cases. First-to-file should mean first-to-file, period.
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Tyler Murphy
•But then purchase money lenders wouldn't finance equipment sales, and the whole economy would suffer. The PMSI priority rule serves an important purpose.
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Sara Unger
•Maybe, but it sure makes lending more complicated when you can't rely on filing order for priority.
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Butch Sledgehammer
Sorry this happened to you. UCC Article 9 priority rules can be brutal when you don't see them coming. At least you'll know to watch for PMSI issues on future deals.
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Bruno Simmons
•Thanks. Definitely learned my lesson about assuming first-to-file means first-in-right under these priority rules.
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Freya Ross
One more thing to check - make sure their UCC-1 actually describes the equipment correctly for PMSI priority. UCC Article 9 priority rules require the collateral description to be specific enough to identify the purchase money collateral.
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Bruno Simmons
•Their filing specifically lists the serial numbers of all the equipment they financed. Looks like they did their homework on the UCC Article 9 priority rules requirements.
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Leslie Parker
•Yeah, sounds like they knew exactly what they were doing with the PMSI priority claim.
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Sergio Neal
•Professional equipment lenders usually know UCC Article 9 priority rules inside and out. They have to in order to protect their interests.
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