U.C.C. § 9-317 (Am. L. Inst. & Unif. L. Comm'n 1998) — Interests That Take Priority Over or Take Free of a Security Interest or Agricultural Lien — Reading Room

U.C.C. § 9-317 — Interests That Take Priority Over or Take Free of a Security Interest or Agricultural Lien

Editorial summary. Section 9-317 ranks unperfected security interests against certain third-party claimants. Lien creditors (including bankruptcy trustees under Bankruptcy Code § 544(a)) and buyers, lessees, and licensees of collateral who give value without knowledge of the security interest before perfection take free of the unperfected security interest.

Citation: U.C.C. § 9-317 (Am. L. Inst. & Unif. L. Comm'n 1998)Jurisdiction: United StatesEffective: 2001-07-01

Governing Rule

Codified text.

Editorial note. An unperfected security interest is subordinated to (i) a person entitled to priority under §§ 9-322 or 9-324; (ii) a person who becomes a lien creditor before perfection; and (iii) certain good-faith purchasers who give value without knowledge before perfection.

Bankruptcy Significance

Codified text.

Editorial note. The bankruptcy trustee's § 544(a) 'strong-arm' powers give the trustee the rights of a hypothetical lien creditor as of the petition date, making § 9-317(a)(2) the principal Article 9 provision defeating unperfected security interests in bankruptcy.

Cross References

Codified text.

Editorial note. See U.C.C. §§ 9-322 (priorities); 9-324 (PMSI priority); 11 U.S.C. § 544 (bankruptcy trustee's avoiding powers).

Revision history

1998-07-25 — Revised Article 9 promulgated.

Canonical source: https://www.law.cornell.edu/ucc/9/9-317