§ 9-324 — Priority of Purchase-money Security Interests

Section 9--324. Priority of Purchase-money Security Interests.\n (a) General rule: purchase-money priority. Except as otherwise\nprovided in subsection (g), a perfected purchase-money security interest\nin goods other than inventory or livestock has priority over a\nconflicting security interest in the same goods, and, except as\notherwise provided in Section 9--327, a perfected security interest in\nits identifiable proceeds also has priority, if the purchase-money\nsecurity interest is perfected when the debtor receives possession of\nthe collateral or within 20 days thereafter.\n * (b) Inventory purchase-money priority. Subject to subsection (c) and\nexcept as otherwise provided in subsection (g), a perfected\npurchase-money security interest in inventory has priority over a\nconflicting security interest in the same inventory, has priority over a\nconflicting security interest in chattel paper or an instrument\nconstituting proceeds of the inventory and in proceeds of the chattel\npaper, if so provided in Section 9--330, and, except as otherwise\nprovided in Section 9--327, also has priority in identifiable cash\nproceeds of the inventory to the extent the identifiable cash proceeds\nare received on or before the delivery of the inventory to a buyer, if:\n (1) the purchase-money security interest is perfected when the\n debtor receives possession of the inventory;\n (2) the purchase-money secured party sends an authenticated\n notification to the holder of the conflicting security\n interest;\n (3) the holder of the conflicting security interest receives the\n notification within five years before the debtor receives\n possession of the inventory; and\n (4) the notification states that the person sending the\n notification has or expects to acquire a purchase-money\n security interest in inventory of the debtor and describes\n the inventory.\n * NB Effective until June 3, 2026\n* (b) Inventory purchase-money priority. Subject to subsection (c) and\nexcept as otherwise provided in subsection (g), a perfected\npurchase-money security interest in inventory has priority over a\nconflicting security interest in the same inventory, has priority over a\nconflicting security interest in chattel paper or an instrument\nconstituting proceeds of the inventory and in proceeds of the chattel\npaper, if so provided in Section 9--330, and, except as otherwise\nprovided in Section 9--327, also has priority in identifiable cash\nproceeds of the inventory to the extent the identifiable cash proceeds\nare received on or before the delivery of the inventory to a buyer, if:\n (1) the purchase-money security interest is perfected when the\n debtor receives possession of the inventory;\n (2) the purchase-money secured party sends a signed notification\n to the holder of the conflicting security interest;\n (3) the holder of the conflicting security interest receives the\n notification within five years before the debtor receives\n possession of the inventory; and\n (4) the notification states that the person sending the\n notification has or expects to acquire a purchase-money\n security interest in inventory of the debtor and describes\n the inventory.\n * NB Effective June 3, 2026\n (c) Holders of conflicting inventory security interests to be\nnotified. Subsections (b)(2) through (4) apply only if the holder of\nthe conflicting security interest had filed a financing statement\ncovering the same types of inventory:\n (1) if the purchase-money security interest is perfected by\n filing, before the date of the filing; or\n (2) if the purchase-money security interest is temporarily\n perfected without filing or possession under Section\n 9--312(f), before the beginning of the 20-day period\n thereunder.\n * (d) Livestock purchase-money priority. Subject to subsection (e) and\nexcept as otherwise provided in subsection (g), a perfected\npurchase-money security interest in livestock that are farm products has\npriority over a conflicting security interest in the same livestock,\nand, except as otherwise provided in Section 9--327, a perfected\nsecurity interest in their identifiable proceeds and identifiable\nproducts in their unmanufactured states also has priority, if:\n (1) the purchase-money security interest is perfected when the\n debtor receives possession of the livestock;\n (2) the purchase-money secured party sends an authenticated\n notification to the holder of the conflicting security\n interest;\n (3) the holder of the conflicting security interest receives the\n notification within six months before the debtor receives\n possession of the livestock; and\n (4) the notification states that the person sending the\n notification has or expects to acquire a purchase-money\n security interest in livestock of the debtor and describes\n the livestock.\n * NB Effective until June 3, 2026\n* (d) Livestock purchase-money priority. Subject to subsection (e) and\nexcept as otherwise provided in subsection (g), a perfected\npurchase-money security interest in livestock that are farm products has\npriority over a conflicting security interest in the same livestock,\nand, except as otherwise provided in Section 9--327, a perfected\nsecurity interest in their identifiable proceeds and identifiable\nproducts in their unmanufactured states also has priority, if:\n (1) the purchase-money security interest is perfected when the\n debtor receives possession of the livestock;\n (2) the purchase-money secured party sends a signed notification\n to the holder of the conflicting security interest;\n (3) the holder of the conflicting security interest receives the\n notification within six months before the debtor receives\n possession of the livestock; and\n (4) the notification states that the person sending the\n notification has or expects to acquire a purchase-money\n security interest in livestock of the debtor and describes\n the livestock.\n * NB Effective June 3, 2026\n (e) Holders of conflicting livestock security interests to be\nnotified. Subsections (d)(2) through (4) apply only if the holder of\nthe conflicting security interest had filed a financing statement\ncovering the same types of livestock:\n (1) if the purchase-money security interest is perfected by\n filing, before the date of the filing; or\n (2) if the purchase-money security interest is temporarily\n perfected without filing or possession under Section\n 9--312(f), before the beginning of the 20-day period\n thereunder.\n (f) Software purchase-money priority. Except as otherwise provided in\nsubsection (g), a perfected purchase-money security interest in software\nhas priority over a conflicting security interest in the same\ncollateral, and, except as otherwise provided in Section 9--327, a\nperfected security interest in its identifiable proceeds also has\npriority, to the extent that the purchase-money security interest in the\ngoods in which the software was acquired for use has priority in the\ngoods and proceeds of the goods under this section.\n (g) Conflicting purchase-money security interests. If more than one\nsecurity interest qualifies for priority in the same collateral under\nsubsection (a), (b), (d), or (f):\n (1) a security interest securing an obligation incurred as all or\n part of the price of the collateral has priority over a\n security interest securing an obligation incurred for value\n given to enable the debtor to acquire rights in or the use of\n collateral; and\n (2) in all other cases, Section 9--322(a) applies to the\n qualifying security interests.\n