400.9-334. Priority of security interests in fixtures and crops.
Priority of security interests in fixtures and crops.
400.9-334. (a) A security interest under this article may be createdin goods that are fixtures or may continue in goods that become fixtures.A security interest does not exist under this article in ordinary buildingmaterials incorporated into an improvement on land.
(b) This article does not prevent creation of an encumbrance uponfixtures under real property law.
(c) In cases not governed by subsections (d) through (h), a securityinterest in fixtures is subordinate to a conflicting interest of anencumbrancer or owner of the related real property other than the debtor.
(d) Except as otherwise provided in subsection (h), a perfectedsecurity interest in fixtures has priority over a conflicting interest ofan encumbrancer or owner of the real property if the debtor has an interestof record in or is in possession of the real property and:
(1) The security interest is a purchase-money security interest;
(2) The interest of the encumbrancer or owner arises before the goodsbecome fixtures; and
(3) The security interest is perfected by a fixture filing before thegoods become fixtures or within twenty days thereafter.
(e) A perfected security interest in fixtures has priority over aconflicting interest of an encumbrancer or owner of the real property if:
(1) The debtor has an interest of record in the real property or isin possession of the real property and the security interest:
(A) Is perfected by a fixture filing before the interest of theencumbrancer or owner is of record; and
(B) Has priority over any conflicting interest of a predecessor intitle of the encumbrancer or owner;
(2) Before the goods become fixtures, the security interest isperfected by any method permitted by this article and the fixtures arereadily removable:
(A) Factory or office machines;
(B) Equipment that is not primarily used or leased for use in theoperation of the real property; or
(C) Replacements of domestic appliances that are consumer goods;
(3) The conflicting interest is a lien on the real property obtainedby legal or equitable proceedings after the security interest was perfectedby any method permitted by this article; or
(4) The security interest is:
(A) Created in a manufactured home in a manufactured-hometransaction; and
(B) Perfected pursuant to a statute described in section400.9-311(a)(2).
(f) A security interest in fixtures, whether or not perfected, haspriority over a conflicting interest of an encumbrancer or owner of thereal property if:
(1) The encumbrancer or owner has, in an authenticated record,consented to the security interest or disclaimed an interest in the goodsas fixtures; or
(2) The debtor has a right to remove the goods as against theencumbrancer or owner.
(g) The priority of the security interest under subsection (f)continues for a reasonable time if the debtor's right to remove the goodsas against the encumbrancer or owner terminates.
(h) A mortgage is a construction mortgage to the extent that itsecures an obligation incurred for the construction of an improvement onland, including the acquisition cost of the land, if a recorded record ofthe mortgage so indicates. Except as otherwise provided in subsections (e)and (f), a security interest in fixtures is subordinate to a constructionmortgage if a record of the mortgage is recorded before the goods becomefixtures and the goods become fixtures before the completion of theconstruction. A mortgage has this priority to the same extent as aconstruction mortgage to the extent that it is given to refinance aconstruction mortgage.
(i) A perfected security interest in crops growing on real propertyhas priority over a conflicting interest of an encumbrancer or owner of thereal property if the debtor has an interest of record in or is inpossession of the real property.
(j) Subsection (i) prevails over any inconsistent provisions of otherstatutes.
(L. 2001 S.B. 288)Effective 7-01-01