Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?
A) The security interest immediately terminates.
B) The security interest passes to the new buyer.
C) Regardless of whether the buyer is aware of the security interest, so long as the buyer purchases the good for his or her personal use, the security interest terminates if the sale to the new buyer is made before the original secured party files a financial statement.
D) As long as the buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financing statement, the new buyer obtains the good free of the security interest.
E) As long as the buyer is not aware of the security interest, purchases the good for personal use or resale, and purchases good before the secured party files a financial statement, the buyer obtains the good free of the security interest.

Question

Quizplus · Accepted Answer

The correct answer is D because it accurately describes a situation under Article 9 of the Uniform Commercial Code (UCC) where a buyer in the ordinary course of business or a consumer buyer can take goods free of a security interest if they buy without knowledge of the security interest, for personal use, and before the secured party files a financing statement.

Which of the Following Is True If a Buyer of a Consumer