§ 9334 — Priority of security interests in fixtures and crops

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

(b) Security interest in fixtures under real property law.--This division does not prevent creation of an encumbrance upon fixtures under real property law.

(c) General rule: subordination of security interest in fixtures.--In cases not governed by subsections (d) through (h), 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) Fixtures purchase-money priority.--Except as otherwise provided in subsection (h), 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 20 days thereafter.

(e) Priority of security interest in fixtures over interests in real property.--A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if any of the following paragraphs apply:

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

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

(ii) 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 division and the fixtures are readily removable:

(i) factory or office machines;

(ii) equipment which is not primarily used or leased for use in the operation of the real property; or

(iii) replacements of domestic appliances which 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 division.

(4) The security interest is:

(i) created in a manufactured home in a manufactured-home transaction; and

(ii) perfected pursuant to a statute described in section 9311(a)(2) (relating to perfection of security interests in property subject to certain statutes, regulations and treaties).

(f) Priority based on consent, disclaimer or right to remove.--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) Continuation of subsection (f)(2) priority.--The priority of the security interest under subsection (f)(2) continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.

(h) Priority of construction mortgage.--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), 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) Priority of security interest in crops.--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

(July 1, 2024, P.L.450, No.41, eff. 60 days) 2024 Amendment.Act 41 amended subsec. (f). See section 1 of Act 41 in the appendix to this title for special provisions relating to findings and declarations. Cross References.Section 9334 is referred to in section 9109 of this title.