§ 4-9-334 — Priority of security interests in fixtures and crops

(a) A security
interest under this article may be created in goods that are fixtures or may continue
in goods that become fixtures. A security interest does not exist under this article in
ordinary building materials incorporated into an improvement on land.

(b) This article does not prevent creation of an encumbrance upon fixtures
under real property law.

(c) In cases not governed by subsections (d) to (h) of this section, a security
interest in fixtures is subordinate to a conflicting interest of an encumbrancer or
owner of the related real property other than the debtor.

(d) Except as otherwise provided in subsection (h) of this section, a perfected
security interest in fixtures has priority over a conflicting interest of an
encumbrancer or owner of the real property if the debtor has an interest of record
in or is in possession of the real property and:

(1) The security interest is a purchase-money security interest;

(2) The interest of the encumbrancer or owner arises before the goods
become fixtures; and

(3) The security interest is perfected by a fixture filing before the goods
become fixtures or within twenty days thereafter.

(e) A perfected security interest in fixtures has priority over a conflicting
interest of an encumbrancer or owner of the real property if:

(1) The debtor has an interest of record in the real property or is in
possession of the real property and the security interest:

(A) Is perfected by a fixture filing before the interest of the encumbrancer or
owner is of record; and

(B) Has priority over any conflicting interest of a predecessor in title of the
encumbrancer or owner;

(2) Before the goods become fixtures, the security interest is perfected by
any method permitted by this article and the fixtures are readily removable:

(A) Factory or office machines;

(B) Equipment that is not primarily used or leased for use in the operation of
the real property; or

(C) Replacements of domestic appliances that are consumer goods;

(3) The conflicting interest is a lien on the real property obtained by legal or
equitable proceedings after the security interest was perfected by any method
permitted by this article; or

(4) The security interest is:

(A) Created in a manufactured home in a manufactured-home transaction;
and

(B) Perfected pursuant to a statute described in section 4-9-311 (a)(2).

(f) A security interest in fixtures, whether or not perfected, has priority over a
conflicting interest of an encumbrancer or owner of the real property if:

(1) The encumbrancer or owner has, in a signed record, consented to the
security interest or disclaimed an interest in the goods as fixtures; or

(2) The debtor has a right to remove the goods as against the encumbrancer
or owner.

(g) The priority of the security interest under paragraph (2) of subsection (f)
of this section continues for a reasonable time if the debtor's right to remove the
goods as against the encumbrancer or owner terminates.

(h) A mortgage is a construction mortgage to the extent that it secures an
obligation incurred for the construction of an improvement on land, including the
acquisition cost of the land, if a recorded record of the mortgage so indicates.
Except as otherwise provided in subsections (e) and (f) of this section, a security
interest in fixtures is subordinate to a construction mortgage if a record of the
mortgage is recorded before the goods become fixtures and the goods become
fixtures before the completion of the construction. A mortgage has this priority to
the same extent as a construction mortgage to the extent that it is given to
refinance a construction mortgage.

(i) A perfected security interest in crops growing on real property has priority
over a conflicting interest of an encumbrancer or owner of the real property if the
debtor has an interest of record in or is in possession of the real property.

Legislative History

Source: L. 2001: Entire article R&RE, p. 1366, � 1, effective July 1. L. 2023: (f)(1) amended, (SB 23-090), ch. 136, p. 557, � 69, effective August 7.