§ 25-9-324. Priority of purchase-money security interests.
§25‑9‑324. Priority of purchase‑money security interests.
(a) General rule:purchase‑money priority. Except as otherwise provided in subsection (g)of this section, a perfected purchase‑money security interest in goodsother than inventory or livestock has priority over a conflicting securityinterest in the same goods, and, except as otherwise provided in G.S. 25‑9‑327,a perfected security interest in its identifiable proceeds also has priority,if the purchase‑money security interest is perfected when the debtorreceives possession of the collateral or within 20 days thereafter.
(b) Inventory purchase‑moneypriority. Subject to subsection (c) of this section and except as otherwiseprovided in subsection (g) of this section, a perfected purchase‑moneysecurity interest in inventory has priority over a conflicting securityinterest in the same inventory, has priority over a conflicting securityinterest in chattel paper or an instrument constituting proceeds of theinventory and in proceeds of the chattel paper, if so provided in G.S. 25‑9‑330,and, except as otherwise provided in G.S. 25‑9‑327, also haspriority in identifiable cash proceeds of the inventory to the extent theidentifiable cash proceeds are received on or before the delivery of the inventoryto a buyer, if:
(1) The purchase‑moneysecurity interest is perfected when the debtor receives possession of theinventory;
(2) The purchase‑moneysecured party sends an authenticated notification to the holder of theconflicting security interest;
(3) The holder of theconflicting security interest receives the notification within five yearsbefore the debtor receives possession of the inventory; and
(4) The notificationstates that the person sending the notification has or expects to acquire a purchase‑moneysecurity interest in inventory of the debtor and describes the inventory.
(c) Holders ofconflicting inventory security interests to be notified. Subdivisions (b)(2)through (b)(4) of this section apply only if the holder of the conflicting securityinterest had filed a financing statement covering the same types of inventory:
(1) If the purchase‑moneysecurity interest is perfected by filing, before the date of the filing; or
(2) If the purchase‑moneysecurity interest is temporarily perfected without filing or possession underG.S. 25‑9‑312(f), before the beginning of the 20‑day periodthereunder.
(d) Livestock purchase‑moneypriority. Subject to subsection (e) of this section and except as otherwiseprovided in subsection (g) of this section, a perfected purchase‑moneysecurity interest in livestock that are farm products has priority over aconflicting security interest in the same livestock, and, except as otherwiseprovided in G.S. 25‑9‑327, a perfected security interest in theiridentifiable proceeds and identifiable products in their unmanufactured statesalso has priority, if:
(1) The purchase‑moneysecurity interest is perfected when the debtor receives possession of thelivestock;
(2) The purchase‑moneysecured party sends an authenticated notification to the holder of theconflicting security interest;
(3) The holder of theconflicting security interest receives the notification within six monthsbefore the debtor receives possession of the livestock; and
(4) The notificationstates that the person sending the notification has or expects to acquire apurchase‑money security interest in livestock of the debtor and describesthe livestock.
(e) Holders ofconflicting livestock security interests to be notified. Subdivisions (d)(2)through (d)(4) of this section apply only if the holder of the conflictingsecurity interest had filed a financing statement covering the same types oflivestock:
(1) If the purchase‑moneysecurity interest is perfected by filing, before the date of the filing; or
(2) If the purchase‑moneysecurity interest is temporarily perfected without filing or possession underG.S. 25‑9‑312(f), before the beginning of the 20‑day periodthereunder.
(f) Software purchase‑moneypriority. Except as otherwise provided in subsection (g) of this section, aperfected purchase‑money security interest in software has priority overa conflicting security interest in the same collateral, and, except asotherwise provided in G.S. 25‑9‑327, a perfected security interestin its identifiable proceeds also has priority, to the extent that the purchase‑moneysecurity interest in the goods in which the software was acquired for use haspriority in the goods and proceeds of the goods under this section.
(g) Conflictingpurchase‑money security interests. If more than one security interestqualifies for priority in the same collateral under subsection (a), (b), (d),or (f) of this section:
(1) A security interestsecuring an obligation incurred as all or part of the price of the collateralhas priority over a security interest securing an obligation incurred for valuegiven to enable the debtor to acquire rights in or the use of collateral; and
(2) In all other cases,G.S. 25‑9‑322(a) applies to the qualifying security interests. (1945,c. 182, s. 4; c. 196, s. 4; 1955, c. 386, s. 2; 1961, c. 574; 1965, c. 700, s.1; 1975, c. 862, s. 7; 1979, c. 404, s. 1; 1997‑181, s. 8; 2000‑169,s. 1.)