41-09-37. (9-317) Interests that take priority over or take free of security interest or
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/nd/title-41/chapter-41-09-secured-transactions/41-09-37·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
agricultural lien.
1. A security interest or an agricultural lien is subordinate to the rights of:
a. A person entitled to priority under section 41-09-42; and
b. Except as otherwise provided in subsection 5, a person that becomes a lien
creditor before the earlier of the time:
(1)The security interest or agricultural lien is perfected; or
(2)One of the conditions specified in subdivision c of subsection 2 of section
41-09-13 is met and a financing statement covering the collateral is filed.
2. Except as otherwise provided in subsection 5, a buyer, other than a secured party, of
goods, instruments, tangible documents, or a certificated security takes free of a
security interest or agricultural lien if the buyer gives value and receives delivery of the
collateral without knowledge of the security interest or agricultural lien and before it is
perfected.
3. Except as otherwise provided in subsection 5, a lessee of goods takes free of a
security interest or agricultural lien if the lessee gives value and receives delivery of
the collateral without knowledge of the security interest or agricultural lien and before it
is perfected.
4. Subject to subsections 6 through 9, a licensee of a general intangible or a buyer, other
than a secured party, of collateral other than electronic money, goods, instruments,
tangible documents, or a certificated security takes free of a security interest if the
licensee or buyer gives value without knowledge of the security interest and before it is
perfected.
5. Except as otherwise provided in sections 41-09-40 and 41-09-41, if a person files a
financing statement with respect to a purchase-money security interest before or within
twenty days after the debtor receives delivery of the collateral, the security interest
takes priority over the rights of a buyer, lessee, or lien creditor which arise between the
time the security interest attaches and the time of filing.
6. A buyer, other than a secured party, of chattel paper takes free of a security interest if,
without knowledge of the security interest and before it is perfected, the buyer gives
value and:
a. Receives delivery of each authoritative tangible copy of the record evidencing the
chattel paper; and
b. If each authoritative electronic copy of the record evidencing the chattel paper
can be subjected to control under section 41-09-05, obtains control of each
authoritative electronic copy.
7. A buyer of an electronic document takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and,
if each authoritative electronic copy of the document can be subjected to control under
section 41-07-06, obtains control of each authoritative electronic copy.
8. A buyer of a controllable electronic record takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and
obtains control of the controllable electronic record.
9. A buyer, other than a secured party, of a controllable account or a controllable
payment intangible takes free of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and obtains control of the
controllable account or controllable payment intangible.