47-9330. Priority of purchaser of chattel paper or instrument

383 words·~2 min read·/az/title-47/47-9330

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed merely as proceeds of inventory subject to a security interest if:

1. In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 47-9105; and

2. The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.

B. A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 47-9105 in good faith, in the ordinary course of the purchaser's business and without knowledge that the purchase violates the rights of the secured party.

C. Except as otherwise provided in section 47-9327, a purchaser having priority in chattel paper under subsection A or B of this section also has priority in proceeds of the chattel paper to the extent that:

1. Section 47-9322 provides for priority in the proceeds; or

2. The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.

D. Except as otherwise provided in section 47-9331, subsection A, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

E. For purposes of subsections A and B of this section, the holder of a purchase money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

F. For purposes of subsections B and D of this section, if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.