A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the:
A) purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward.
B) notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory.
C) holder of the competing security interest received notification within five years before the debtor receives the inventory.
D) purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory.

Question

Quizplus · Accepted Answer

The basic rule established by the Uniform Commercial Code is that when more than one security interest in the same collateral has been filed, the first security interest to be filed has priority over any that is filed later. An exception to the general priority rule is that a purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward.

A Purchase Money Security Interest in Noninventory Collateral Prevails Over