§ 9-334. Priority of security interests in fixtures and crops.

700 words·~3 min read·/de/title-6/chapter-9/9-334

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

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

(b)Security interest in fixtures under real property law. — This Article 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:

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

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

(B)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 Article and the fixtures are readily removable:

(A)factory or office machines;

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

(C)replacements of domestic appliances that 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 Article; or

(4)the security interest is:

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

(B)perfected pursuant to a statute described in Section 9-311(a)(2).

(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)priority. — The priority of the security interest under subsection

(f)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.