How does one continue perfection of or permanently perfect a purchase money security interest in non-consumer goods?

A secured party who takes a PMSI in non-consumer goods has a grace period to file her financing statement. To establish permanent perfection beyond the temporary grace period, she must file the appropriate financing statement within 20 days of the purchaser receiving the asset. If the secured party files the financing statement during this period, her security interest is perfected and has priority from the date of the extension of credit. Her security interest also extends to any proceeds from a later sale of the assets. This is particularly important if the goods are inventory to the purchaser. Failing to file a financing statement within this period can cause the secured party to lose priority to conflicting secured parties or lien holders who later perfect their security interests in the collateral.

  • Relevant Law: 9-324(a)

Note: This rule is particularly important when the debtors assets are subject to an after-acquired collateral clause.

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Jason M. Gordon

Member | Co-Founder Law for Georgia, LLC

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