AB111,103,2019 1. Is perfected by a fixture filing before the interest of the encumbrancer or
20owner is of record; and
AB111,103,2221 2. Has priority over any conflicting interest of a predecessor in title of the
22encumbrancer or owner;
AB111,103,2423 (b) Before the goods become fixtures, the security interest is perfected by any
24method permitted by this chapter and the fixtures are readily removable:
AB111,103,2525 1. Factory or office machines;
AB111,104,2
12. Equipment that is not primarily used or leased for use in the operation of the
2real property; or
AB111,104,33 3. Replacements of domestic appliances that are consumer goods;
AB111,104,64 (c) The conflicting interest is a lien on the real property obtained by legal or
5equitable proceedings after the security interest was perfected by any method
6permitted by this chapter; or
AB111,104,77 (d) The security interest is:
AB111,104,88 1. Created in a manufactured home in a manufactured-home transaction; and
AB111,104,99 2. Perfected pursuant to a statute described in s. 409.311 (1) (b) or (f).
AB111,104,12 10(6) Priority based on consent, disclaimer, or right to remove. A security
11interest in fixtures, whether or not perfected, has priority over a conflicting interest
12of an encumbrancer or owner of the real property if:
AB111,104,1413 (a) The encumbrancer or owner has, in an authenticated record, consented to
14the security interest or disclaimed an interest in the goods as fixtures; or
AB111,104,1615 (b) The debtor has a right to remove the goods as against the encumbrancer or
16owner.
AB111,104,19 17(7) Continuation of sub. (6) priority. The priority of the security interest under
18sub. (6) (b) continues for a reasonable time if the debtor's right to remove the goods
19as against the encumbrancer or owner terminates.
AB111,105,3 20(8) Priority of construction mortgage. A mortgage is a construction
21mortgage to the extent that it secures an obligation incurred for the construction of
22an improvement on land, including the acquisition cost of the land, if a recorded
23record of the mortgage so indicates. Except as otherwise provided in subs. (5) and
24(6), a security interest in fixtures is subordinate to a construction mortgage if a record
25of the mortgage is recorded before the goods become fixtures and the goods become

1fixtures before the completion of the construction. A mortgage has this priority to
2the same extent as a construction mortgage to the extent that it is given to refinance
3a construction mortgage.
AB111,105,7 4(9) Priority of security interest in crops. A perfected security interest in
5crops growing on real property has priority over a conflicting interest of an
6encumbrancer or owner of the real property if the debtor has an interest of record in
7or is in possession of the real property.
AB111,105,10 8409.335 Accessions. (1) Creation of security interest in accession. A
9security interest may be created in an accession and continues in collateral that
10becomes an accession.
AB111,105,13 11(2) Perfection of security interest. If a security interest is perfected when
12the collateral becomes an accession, the security interest remains perfected in the
13collateral.
AB111,105,16 14(3) Priority of security interest. Except as otherwise provided in sub. (4), the
15other provisions of this subchapter determine the priority of a security interest in an
16accession.
AB111,105,20 17(4) Compliance with certificate-of-title statute. A security interest in an
18accession is subordinate to a security interest in the whole which is perfected by
19compliance with the requirements of a certificate-of-title statute under s. 409.311
20(2).
AB111,105,24 21(5) Removal of accession after default. After default, subject to subch. VI,
22a secured party may remove an accession from other goods if the security interest in
23the accession has priority over the claims of every person having an interest in the
24whole.
AB111,106,9
1(6) Reimbursement following removal. A secured party that removes an
2accession from other goods under sub. (5) shall promptly reimburse any holder of a
3security interest or other lien on, or owner of, the whole or of the other goods, other
4than the debtor, for the cost of repair of any physical injury to the whole or the other
5goods. The secured party need not reimburse the holder or owner for any diminution
6in value of the whole or the other goods caused by the absence of the accession
7removed or by any necessity for replacing it. A person entitled to reimbursement
8may refuse permission to remove an accession until the secured party gives adequate
9assurance for the performance of the obligation to reimburse.
AB111,106,12 10409.336 Commingled goods. (1) Commingled goods. In this section,
11"commingled goods" means goods that are physically united with other goods in such
12a manner that their identity is lost in a product or mass.
AB111,106,15 13(2) No security interest in commingled goods as such. A security interest
14does not exist in commingled goods as such. However, a security interest may attach
15to a product or mass that results when goods become commingled goods.
AB111,106,17 16(3) Attachment of security interest to product or mass. If collateral becomes
17commingled goods, a security interest attaches to the product or mass.
AB111,106,20 18(4) Perfection of security interest. If a security interest in collateral is
19perfected before the collateral becomes commingled goods, the security interest that
20attaches to the product or mass under sub. (3) is perfected.
AB111,106,23 21(5) Priority of security interest. Except as otherwise provided in sub. (6), the
22other provisions of this subchapter determine the priority of a security interest that
23attaches to the product or mass under sub. (3).
AB111,107,3
1(6) Conflicting security interests in product or mass. If more than one
2security interest attaches to the product or mass under sub. (3), the following rules
3determine priority:
AB111,107,64 (a) A security interest that is perfected under sub. (4) has priority over a
5security interest that is unperfected at the time the collateral becomes commingled
6goods.
AB111,107,97 (b) If more than one security interest is perfected under sub. (4), the security
8interests rank equally in proportion to the value of the collateral at the time it
9became commingled goods.
AB111,107,14 10409.337 Priority of security interests in goods covered by certificate
11of title.
If, while a security interest in goods is perfected by any method under the
12law of another jurisdiction, this state issues a certificate of title that does not show
13that the goods are subject to the security interest or contain a statement that they
14may be subject to security interests not shown on the certificate:
AB111,107,18 15(1) A buyer of the goods, other than a person in the business of selling goods
16of that kind, takes free of the security interest if the buyer gives value and receives
17delivery of the goods after issuance of the certificate and without knowledge of the
18security interest; and
AB111,107,22 19(2) The security interest is subordinate to a conflicting security interest in the
20goods that attaches, and is perfected under s. 409.311 (2), after issuance of the
21certificate and without the conflicting secured party's knowledge of the security
22interest.
AB111,108,2 23409.338 Priority of security interest or agricultural lien perfected by
24filed financing statement providing certain incorrect information
. If a
25security interest or agricultural lien is perfected by a filed financing statement

1providing information described in s. 409.516 (2) (e) which is incorrect at the time the
2financing statement is filed:
AB111,108,6 3(1) The security interest or agricultural lien is subordinate to a conflicting
4perfected security interest in the collateral to the extent that the holder of the
5conflicting security interest gives value in reasonable reliance upon the incorrect
6information; and
AB111,108,11 7(2) A purchaser, other than a secured party, of the collateral takes free of the
8security interest or agricultural lien to the extent that, in reasonable reliance upon
9the incorrect information, the purchaser gives value and, in the case of chattel paper,
10documents, goods, instruments, or a security certificate, receives delivery of the
11collateral.
AB111,108,13 12409.339 Priority subject to subordination. This chapter does not preclude
13subordination by agreement by a person entitled to priority.
AB111,108,18 14409.340 Effectiveness of right of recoupment or setoff against deposit
15account. (1)
Exercise of recoupment or setoff. Except as otherwise provided in
16sub. (3), a bank with which a deposit account is maintained may exercise any right
17of recoupment or setoff against a secured party that holds a security interest in the
18deposit account.
AB111,108,22 19(2) Recoupment or setoff not affected by security interest. Except as
20otherwise provided in sub. (3), the application of this chapter to a security interest
21in a deposit account does not affect a right of recoupment or setoff of the secured party
22as to a deposit account maintained with the secured party.
AB111,109,2 23(3) When setoff ineffective. The exercise by a bank of a setoff against a
24deposit account is ineffective against a secured party that holds a security interest

1in the deposit account which is perfected by control under s. 409.104 (1) (c), if the
2setoff is based on a claim against the debtor.
AB111,109,6 3409.341 Bank's rights and duties with respect to deposit account.
4Except as otherwise provided in s. 409.340 (3), and unless the bank otherwise agrees
5in an authenticated record, a bank's rights and duties with respect to a deposit
6account maintained with the bank are not terminated, suspended, or modified by:
AB111,109,8 7(1) The creation, attachment, or perfection of a security interest in the deposit
8account;
AB111,109,9 9(2) The bank's knowledge of the security interest; or
AB111,109,10 10(3) The bank's receipt of instructions from the secured party.
AB111,109,16 11409.342 Bank's right to refuse to enter into or disclose existence of
12control agreement.
This chapter does not require a bank to enter into an
13agreement of the kind described in s. 409.104 (1) (b), even if its customer so requests
14or directs. A bank that has entered into such an agreement is not required to confirm
15the existence of the agreement to another person unless requested to do so by its
16customer.
AB111,109,1817 subchapter IV
18RIGHTS OF 3RD PARTIES
AB111,109,22 19409.401 Alienability of debtor's rights. (1) Other law governs
20alienability; exceptions.
Except as otherwise provided in sub. (2) and ss. 409.406,
21409.407, 409.408, and 409.409, whether a debtor's rights in collateral may be
22voluntarily or involuntarily transferred is governed by law other than this chapter.
AB111,109,25 23(2) Agreement does not prevent transfer. An agreement between the debtor
24and secured party which prohibits a transfer of the debtor's rights in collateral or
25makes the transfer a default does not prevent the transfer from taking effect.
AB111,110,4
1409.402 Secured party not obligated on contract of debtor or in tort.
2The existence of a security interest, agricultural lien, or authority given to a debtor
3to dispose of or use collateral, without more, does not subject a secured party to
4liability in contract or tort for the debtor's acts or omissions.
AB111,110,6 5409.403 Agreement not to assert defenses against assignee. (1) Value.
6In this section, "value" has the meaning provided in s. 403.303 (1).
AB111,110,10 7(2) Agreement not to assert claim or defense. Except as otherwise provided
8in this section, an agreement between an account debtor and an assignor not to assert
9against an assignee any claim or defense that the account debtor may have against
10the assignor is enforceable by an assignee that takes an assignment:
AB111,110,1111 (a) For value;
AB111,110,1212 (b) In good faith;
AB111,110,1413 (c) Without notice of a claim of a property or possessory right to the property
14assigned; and
AB111,110,1715 (d) Without notice of a defense or claim in recoupment of the type that may be
16asserted against a person entitled to enforce a negotiable instrument under s.
17403.305 (1).
AB111,110,20 18(3) When sub. (2) not applicable. Subsection (2) does not apply to defenses of
19a type that may be asserted against a holder in due course of a negotiable instrument
20under s. 403.305 (2).
AB111,110,25 21(4) Omission of required statement in consumer transaction. In a consumer
22transaction, if a record evidences the account debtor's obligation, law other than this
23chapter requires that the record include a statement to the effect that the rights of
24an assignee are subject to claims or defenses that the account debtor could assert
25against the original obligee, and the record does not include such a statement:
AB111,111,2
1(a) The record has the same effect as if the record had included such a
2statement; and
AB111,111,43 (b) The account debtor may assert against an assignee those claims and
4defenses that would have been available if the record had included such a statement.
AB111,111,8 5(5) Rule for individual under other law. This section is subject to law other
6than this chapter which establishes a different rule for an account debtor who is an
7individual and who incurred the obligation primarily for personal, family, or
8household purposes.
AB111,111,11 9(6) Other law not displaced. Except as otherwise provided in sub. (4), this
10section does not displace law other than this chapter which gives effect to an
11agreement by an account debtor not to assert a claim or defense against an assignee.
AB111,111,15 12409.404 Rights acquired by assignee; claims and defenses against
13assignee. (1)
Assignee's rights subject to terms, claims, and defenses; exceptions.
14Unless an account debtor has made an enforceable agreement not to assert defenses
15or claims, and subject to subs. (2) to (5), the rights of an assignee are subject to:
AB111,111,1816 (a) All terms of the agreement between the account debtor and assignor and
17any defense or claim in recoupment arising from the transaction that gave rise to the
18contract; and
AB111,111,2119 (b) Any other defense or claim of the account debtor against the assignor which
20accrues before the account debtor receives a notification of the assignment
21authenticated by the assignor or the assignee.
AB111,111,25 22(2) Account debtor's claim reduces amount owed to assignee. Subject to sub.
23(3) and except as otherwise provided in sub. (4), the claim of an account debtor
24against an assignor may be asserted against an assignee under sub. (1) only to reduce
25the amount the account debtor owes.
AB111,112,4
1(3) Rule for individual under other law. This section is subject to law other
2than this chapter which establishes a different rule for an account debtor who is an
3individual and who incurred the obligation primarily for personal, family, or
4household purposes.
AB111,112,12 5(4) Omission of required statement in consumer transaction. In a consumer
6transaction, if a record evidences the account debtor's obligation, law other than this
7chapter requires that the record include a statement to the effect that the account
8debtor's recovery against an assignee with respect to claims and defenses against the
9assignor may not exceed amounts paid by the account debtor under the record, and
10the record does not include such a statement, the extent to which a claim of an
11account debtor against the assignor may be asserted against an assignee is
12determined as if the record had included such a statement.
AB111,112,14 13(5) Inapplicability to health care insurance receivable. This section does not
14apply to an assignment of a health care insurance receivable.
AB111,112,20 15409.405 Modification of assigned contract. (1) Effect of modification on
16assignee.
A modification of or substitution for an assigned contract is effective
17against an assignee if made in good faith. The assignee acquires corresponding
18rights under the modified or substituted contract. The assignment may provide that
19the modification or substitution is a breach of contract by the assignor. This
20subsection is subject to subs. (2) to (4).
AB111,112,21 21(2) Applicability of sub. (1). Subsection (1) applies to the extent that:
AB111,112,2322 (a) The right to payment or a part thereof under an assigned contract has not
23been fully earned by performance; or
AB111,113,3
1(b) The right to payment or a part thereof has been fully earned by performance
2and the account debtor has not received notification of the assignment under s.
3409.406 (1).
AB111,113,7 4(3) Rule for individual under other law. This section is subject to law other
5than this chapter which establishes a different rule for an account debtor who is an
6individual and who incurred the obligation primarily for personal, family, or
7household purposes.
AB111,113,9 8(4) Inapplicability to health care insurance receivable. This section does not
9apply to an assignment of a health care insurance receivable.
AB111,113,20 10409.406 Discharge of account debtor; notification of assignment;
11identification and proof of assignment; restrictions on assignment of
12accounts, chattel paper, payment intangibles, and promissory notes
13ineffective. (1)
Discharge of account debtor; effect of notification. Subject to
14subs. (2) to (9), an account debtor on an account, chattel paper, or a payment
15intangible may discharge its obligation by paying the assignor until, but not after,
16the account debtor receives a notification, authenticated by the assignor or the
17assignee, that the amount due or to become due has been assigned and that payment
18is to be made to the assignee. After receipt of the notification, the account debtor may
19discharge its obligation by paying the assignee and may not discharge the obligation
20by paying the assignor.
AB111,113,22 21(2) When notification ineffective. Subject to sub. (8), notification is
22ineffective under sub. (1):
AB111,113,2323 (a) If it does not reasonably identify the rights assigned;
AB111,114,3
1(b) To the extent that an agreement between an account debtor and a seller of
2a payment intangible limits the account debtor's duty to pay a person other than the
3seller and the limitation is effective under law other than this chapter; or
AB111,114,64 (c) At the option of an account debtor, if the notification notifies the account
5debtor to make less than the full amount of any installment or other periodic
6payment to the assignee, even if:
AB111,114,87 1. Only a portion of the account, chattel paper, or payment intangible has been
8assigned to that assignee;
AB111,114,99 2. A portion has been assigned to another assignee; or
AB111,114,1010 3. The account debtor knows that the assignment to that assignee is limited.
AB111,114,15 11(3) Proof of assignment. Subject to sub. (8), if requested by the account debtor,
12an assignee shall seasonably furnish reasonable proof that the assignment has been
13made. Unless the assignee complies, the account debtor may discharge its obligation
14by paying the assignor, even if the account debtor has received a notification under
15sub. (1).
AB111,114,19 16(4) Term restricting assignment generally ineffective. Except as otherwise
17provided in sub. (5) and ss. 409.407 and 411.303, and subject to sub. (8), a term in an
18agreement between an account debtor and an assignor or in a promissory note is
19ineffective to the extent that it:
AB111,114,2320 (a) Prohibits, restricts, or requires the consent of the account debtor or person
21obligated on the promissory note to the assignment or transfer of, or the creation,
22attachment, perfection, or enforcement of a security interest in, the account, chattel
23paper, payment intangible, or promissory note; or
AB111,115,224 (b) Provides that the assignment or transfer or the creation, attachment,
25perfection, or enforcement of the security interest may give rise to a default, breach,

1right of recoupment, claim, defense, termination, right of termination, or remedy
2under the account, chattel paper, payment intangible, or promissory note.
AB111,115,4 3(5) Inapplicability of sub. (4) to certain sales. Subsection (4) does not apply
4to the sale of a payment intangible or promissory note.
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