Legislation

Section 9--324. Priority of Purchase-money Security Interests.

(a) General rule: purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest
in goods other than inventory or livestock has priority over a
conflicting security interest in the same goods, and, except as
otherwise provided in Section 9--327, a perfected security interest in
its identifiable proceeds also has priority, if the purchase-money
security interest is perfected when the debtor receives possession of
the collateral or within 20 days thereafter.

* (b) Inventory purchase-money priority. Subject to subsection (c) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in inventory has priority over a
conflicting security interest in the same inventory, has priority over a
conflicting security interest in chattel paper or an instrument
constituting proceeds of the inventory and in proceeds of the chattel
paper, if so provided in Section 9--330, and, except as otherwise
provided in Section 9--327, also has priority in identifiable cash
proceeds of the inventory to the extent the identifiable cash proceeds
are received on or before the delivery of the inventory to a buyer, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the inventory;

(2) the purchase-money secured party sends an authenticated

notification to the holder of the conflicting security

interest;

(3) the holder of the conflicting security interest receives the

notification within five years before the debtor receives

possession of the inventory; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in inventory of the debtor and describes

the inventory.

* NB Effective until June 3, 2026
* (b) Inventory purchase-money priority. Subject to subsection (c) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in inventory has priority over a
conflicting security interest in the same inventory, has priority over a
conflicting security interest in chattel paper or an instrument
constituting proceeds of the inventory and in proceeds of the chattel
paper, if so provided in Section 9--330, and, except as otherwise
provided in Section 9--327, also has priority in identifiable cash
proceeds of the inventory to the extent the identifiable cash proceeds
are received on or before the delivery of the inventory to a buyer, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the inventory;

(2) the purchase-money secured party sends a signed notification

to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the

notification within five years before the debtor receives

possession of the inventory; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in inventory of the debtor and describes

the inventory.

* NB Effective June 3, 2026

(c) Holders of conflicting inventory security interests to be
notified. Subsections (b)(2) through (4) apply only if the holder of
the conflicting security interest had filed a financing statement
covering the same types of inventory:

(1) if the purchase-money security interest is perfected by

filing, before the date of the filing; or

(2) if the purchase-money security interest is temporarily

perfected without filing or possession under Section

9--312(f), before the beginning of the 20-day period

thereunder.

* (d) Livestock purchase-money priority. Subject to subsection (e) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in livestock that are farm products has
priority over a conflicting security interest in the same livestock,
and, except as otherwise provided in Section 9--327, a perfected
security interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the livestock;

(2) the purchase-money secured party sends an authenticated

notification to the holder of the conflicting security

interest;

(3) the holder of the conflicting security interest receives the

notification within six months before the debtor receives

possession of the livestock; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in livestock of the debtor and describes

the livestock.

* NB Effective until June 3, 2026
* (d) Livestock purchase-money priority. Subject to subsection (e) and
except as otherwise provided in subsection (g), a perfected
purchase-money security interest in livestock that are farm products has
priority over a conflicting security interest in the same livestock,
and, except as otherwise provided in Section 9--327, a perfected
security interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the livestock;

(2) the purchase-money secured party sends a signed notification

to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the

notification within six months before the debtor receives

possession of the livestock; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in livestock of the debtor and describes

the livestock.

* NB Effective June 3, 2026

(e) Holders of conflicting livestock security interests to be
notified. Subsections (d)(2) through (4) apply only if the holder of
the conflicting security interest had filed a financing statement
covering the same types of livestock:

(1) if the purchase-money security interest is perfected by

filing, before the date of the filing; or

(2) if the purchase-money security interest is temporarily

perfected without filing or possession under Section

9--312(f), before the beginning of the 20-day period

thereunder.

(f) Software purchase-money priority. Except as otherwise provided in
subsection (g), a perfected purchase-money security interest in software
has priority over a conflicting security interest in the same
collateral, and, except as otherwise provided in Section 9--327, a
perfected security interest in its identifiable proceeds also has
priority, to the extent that the purchase-money security interest in the
goods in which the software was acquired for use has priority in the
goods and proceeds of the goods under this section.

(g) Conflicting purchase-money security interests. If more than one
security interest qualifies for priority in the same collateral under
subsection (a), (b), (d), or (f):

(1) a security interest securing an obligation incurred as all or

part of the price of the collateral has priority over a

security interest securing an obligation incurred for value

given to enable the debtor to acquire rights in or the use of

collateral; and

(2) in all other cases, Section 9--322(a) applies to the

qualifying security interests.