UCC Article 9 Priority Rules - Which Statement is False About Secured Transaction Rankings?

Thanks! I think I'm getting confused about when filing vs perfection matters. So if I file a UCC-1 but haven't perfected yet, does that still give me priority over someone who perfects later?

Yes, filing alone can establish priority even before perfection is complete, as long as you eventually perfect. The key is the first to file OR perfect rule - whichever happens first.

Good point about PMSI timing! For equipment it's different than inventory - equipment PMSI just needs to be perfected within 20 days after debtor gets possession, but inventory PMSI needs notice to conflicting secured parties.

This is exactly the kind of detail I was missing. So PMSI rules vary by collateral type?

Exactly. And don't forget about deposit accounts and investment property - those have their own control-based priority rules that override the general first-to-file rule.

Yeah, buyers in ordinary course is a big exception. Even a perfected security interest in inventory loses to a buyer in ordinary course of business.

So an unperfected PMSI could beat a perfected non-PMSI security interest? That seems counterintuitive.

No, PMSI has to be perfected too. But a perfected PMSI can beat an earlier-filed non-PMSI security interest if the PMSI rules are followed.

That sounds useful for practice, but I'm more focused on understanding the theory right now for my exam.

Fair enough, but understanding how these rules play out in real filings can actually help with the theory. The tool shows you how different filing dates and perfection methods affect priority outcomes.

Good distinction. Real property recording acts vs UCC priority rules are definitely different systems.

I didn't realize those were different systems. That's probably why I was getting confused.

Right, and if you let your financing statement lapse, you lose priority to anyone who files while it's lapsed, even if you refile later.

So timing of continuation filings matters for maintaining perfection but not for priority determination?

Exactly. Your priority date is locked in when you first file (or perfect), as long as you maintain continuous perfection through timely continuations.

Future advances are so confusing. So some get priority from the original filing date and some don't?

Yes, it depends on timing and knowledge. Advances within 45 days get the original priority, and advances made without knowledge of intervening interests also get original priority.

This is why I always tell clients to be careful about revolving credit lines - the priority for future draws isn't always what you'd expect.

Good point. So priority rules have to account for different perfection methods, not just filing dates.

Exactly. And for some collateral types like deposit accounts, control is the only way to perfect, so filing dates don't matter for priority.

That's interesting. Are there cases where the actual records show different priority than what the rules suggest?

Sometimes filing errors or timing issues create gaps between theory and practice. The tool helps identify those discrepancies before they become problems.

This is really helpful. So I should look for absolute statements that ignore the exceptions?

Exactly. Article 9 priority is all about exceptions to the general rules. Any statement that ignores those exceptions is probably false.

Good advice. I'd add that statements about time limits are often false too - like saying PMSI has unlimited time to perfect for priority.