Quiz 29: Secured Transactions
Security Interest: In the case of Citizens National Bank of Jessamine County v. Washington Mutual Bank, 309 S.E.3d 792 (2010), the Circuit Court issued a judgment in favor of Washington. The Court of Appeals reversed. The court considered the priority of competing liens and stated that a lis pendens did not disqualify subsequent liens, affect the priority of competing security interests, nor did it apply to real estate; it only applied to real property. The owner of the mobile home did not affix the home to the real estate under KRS 186A.297 , therefore it was real property, not real estate. Because the property in question was real property and Washington failed to perfect its lien under the mandates of KRS 186A.190 , its claim must give way to Citizens' perfected claim. Therefore, since Citizens' claim was perfected, it was senior to Washington's claim.
Priorities: Under the UCC 1-201(37) Mallon has a security interest in the generator it supplied to Redford as a secured party under UCC 9-102(a)(72). The generator is collateral under UCC 9-102(a)(12) and so long as Mallon files has filed its perfected security interest first under UCC 9-322(a)(1) , it will have priority in taking the collateral from Garfield. If Mallon's and Redford's liens were both perfected, then the first to file or take possession of the collateral has priority under UCC 9-322(a)(1). Under UCC 9-322(a)(3) , the first of unperfected security interests to attach has priority. An exception that Mallon needs to be aware of is under UCC 9-320(a) , wherein a buyer (Garfield) of goods in the ordinary course of the seller's (Redford) business, the buyer prevails over a secured party's (Mallon) interest, even if perfected and even if the buyer knows of the security interest.
Priority of Lien: In the case of Citizens National Bank of Jessamine County v. Washington Mutual Bank, 309 S.E.3d 792 (2010), the Circuit Court issued a judgment in favor of Washington. The Court of Appeals reversed. If the mobile had been affixed to the real estate under KRS 186A.297 , it would have converted to real estate, and become subject to the lis pendens that Washington subsequently filed. The mobile home would not have been converted of there were any liens against it at the time of the filing. Therefore, if the mobile home had been converted to real estate, it would have been subject to Washington's claim.