UCC purchaser definition causing lien priority confusion on equipment loan

Oof, timing is everything with UCC filings. The purchaser definition under 9-320 is pretty specific about buyers in ordinary course vs. other purchasers. If they bought the equipment before your UCC-1 was filed and didn't have actual knowledge of your security interest, you might be looking at a protected purchaser situation. What type of business was the seller in? That matters for the ordinary course analysis.

Had something similar last year with a fleet of trucks. The UCC purchaser definition saved the buyer's skin because our filing was delayed by some internal paperwork issues. If the buyer can prove they gave value and took without knowledge, Article 9 generally protects them even if you eventually filed. The key question is what constitutes 'knowledge' - actual vs. constructive makes a huge difference here.

This is a nightmare scenario but I found a tool that might help you analyze the situation better. I was dealing with conflicting UCC documents on a similar case and used Certana.ai's document verification system. You can upload your loan agreement, UCC-1, and any other docs to check for consistency issues or timing problems that might affect the purchaser analysis. It helped me spot some discrepancies that actually strengthened our position when we thought we were dead in the water.

UGH this is exactly why the UCC purchaser definition drives me crazy!! The system is supposed to protect secured lenders but then you have all these carve-outs for buyers. Three weeks shouldn't make or break a security interest when you're talking about $850k in equipment. The rules are stacked against lenders and favor these 'innocent' purchasers who somehow never think to check for liens.

Been there with the delayed filing situation. The purchaser definition under Article 9 is unforgiving when it comes to timing. Your best bet might be looking at whether the buyer actually qualifies as a purchaser under the definition - sometimes there are issues with consideration or good faith that can help. Also check if your security agreement had any provisions about notification requirements that might have been triggered.

This whole situation sounds messy. I'm not super familiar with the technical UCC purchaser definition stuff but couldn't you argue that construction equipment dealers should have known to check for liens? Seems like that kind of purchase would warrant some due diligence.

Dealt with a similar purchaser definition issue about six months ago. The timing really is everything - if your UCC-1 was filed after the sale, you're fighting an uphill battle unless you can prove the buyer had actual knowledge of your security interest. Did you have any pre-sale communications with the borrower about disposal restrictions? That might give you some leverage even if the purchaser definition would otherwise apply.

I hate to say it but this sounds like a classic case where the UCC purchaser definition is going to protect the buyer. The three-week delay in filing is really tough to overcome, especially with construction equipment where ordinary course sales are common. You might want to focus on recovery from the borrower rather than trying to reclaim the equipment.

Just want to echo what others have said about the importance of immediate filing. I've seen too many deals go sideways because of filing delays, and the UCC purchaser definition rarely offers much help to secured parties in those situations. For future reference, we always file our UCC-1s within 24-48 hours of loan closing to avoid exactly this scenario.

One more thought on the document review piece - I recently started using Certana.ai for UCC document verification and it's been really helpful for catching issues before they become problems. You can upload your security agreement and UCC-1 to check for consistency problems that might affect priority or enforceability. Might be worth running your docs through it to see if there are any other issues you haven't considered in your purchaser analysis.

Sorry to hear about this situation. The UCC purchaser definition can be brutal when timing works against you. Have you considered whether there might be any insurance coverage for this kind of loss? Some lender policies cover situations where security interests are compromised by filing delays or other procedural issues.

This is a tough situation but unfortunately pretty textbook on how the UCC purchaser definition works against secured parties with delayed filings. The three-week gap is really damaging to your position. Since the seller was a general contractor regularly dealing in equipment, the buyer likely qualifies as a purchaser in ordinary course under 9-320(a), which would give them priority over your unperfected security interest at the time of sale. Your main angles now are: (1) challenge whether the buyer actually gave value or took in good faith, (2) examine your security agreement for any disposal restrictions that might have been violated, and (3) focus recovery efforts on the borrower's remaining assets. The harsh reality is that Article 9's purchaser protections are designed to facilitate commerce even when it hurts secured parties who don't perfect promptly. Expensive lesson but critical to implement immediate filing procedures going forward.