N.Y. Uniform Commercial Code Law § 9-324: Priority of Purchase-money Security Interests

Section 9--324. Priority of Purchase-money Security Interests.

(a) General rule: purchase-money priority. Except as otherwise

provided in subsection (g), a perfected purchase-money security interest

in goods other than inventory or livestock has priority over a

conflicting security interest in the same goods, and, except as

otherwise provided in Section 9--327, a perfected security interest in

its identifiable proceeds also has priority, if the purchase-money

security interest is perfected when the debtor receives possession of

the collateral or within 20 days thereafter.

(b) Inventory purchase-money priority. Subject to subsection (c) and

except as otherwise provided in subsection (g), a perfected

purchase-money security interest in inventory has priority over a

conflicting security interest in the same inventory, has priority over a

conflicting security interest in chattel paper or an instrument

constituting proceeds of the inventory and in proceeds of the chattel

paper, if so provided in Section 9--330, and, except as otherwise

provided in Section 9--327, also has priority in identifiable cash

proceeds of the inventory to the extent the identifiable cash proceeds

are received on or before the delivery of the inventory to a buyer, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the inventory;

(2) the purchase-money secured party sends a signed notification

to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the

notification within five years before the debtor receives

possession of the inventory; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in inventory of the debtor and describes

the inventory.

(c) Holders of conflicting inventory security interests to be

notified. Subsections (b)(2) through (4) apply only if the holder of

the conflicting security interest had filed a financing statement

covering the same types of inventory:

(1) if the purchase-money security interest is perfected by

filing, before the date of the filing; or

(2) if the purchase-money security interest is temporarily

perfected without filing or possession under Section

9--312(f), before the beginning of the 20-day period

thereunder.

(d) Livestock purchase-money priority. Subject to subsection (e) and

except as otherwise provided in subsection (g), a perfected

purchase-money security interest in livestock that are farm products has

priority over a conflicting security interest in the same livestock,

and, except as otherwise provided in Section 9--327, a perfected

security interest in their identifiable proceeds and identifiable

products in their unmanufactured states also has priority, if:

(1) the purchase-money security interest is perfected when the

debtor receives possession of the livestock;

(2) the purchase-money secured party sends a signed notification

to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the

notification within six months before the debtor receives

possession of the livestock; and

(4) the notification states that the person sending the

notification has or expects to acquire a purchase-money

security interest in livestock of the debtor and describes

the livestock.

(e) Holders of conflicting livestock security interests to be

notified. Subsections (d)(2) through (4) apply only if the holder of

the conflicting security interest had filed a financing statement

covering the same types of livestock:

(1) if the purchase-money security interest is perfected by

filing, before the date of the filing; or

(2) if the purchase-money security interest is temporarily

perfected without filing or possession under Section

9--312(f), before the beginning of the 20-day period

thereunder.

(f) Software purchase-money priority. Except as otherwise provided in

subsection (g), a perfected purchase-money security interest in software

has priority over a conflicting security interest in the same

collateral, and, except as otherwise provided in Section 9--327, a

perfected security interest in its identifiable proceeds also has

priority, to the extent that the purchase-money security interest in the

goods in which the software was acquired for use has priority in the

goods and proceeds of the goods under this section.

(g) Conflicting purchase-money security interests. If more than one

security interest qualifies for priority in the same collateral under

subsection (a), (b), (d), or (f):

(1) a security interest securing an obligation incurred as all or

part of the price of the collateral has priority over a

security interest securing an obligation incurred for value

given to enable the debtor to acquire rights in or the use of

collateral; and

(2) in all other cases, Section 9--322(a) applies to the

qualifying security interests.