AB111,98,108 2. If the secured party obtained control under s. 408.106 (4) (b), the securities
9intermediary's agreement to comply with the secured party's entitlement orders with
10respect to security entitlements carried or to be carried in the securities account; or
AB111,98,1311 3. If the secured party obtained control through another person under s.
12408.106 (4) (c), the time on which priority would be based under this subsection if the
13other person were the secured party; or
AB111,98,1714 (c) If the collateral is a commodity contract carried with a commodity
15intermediary, the satisfaction of the requirement for control specified in s. 409.106
16(2) (b) with respect to commodity contracts carried or to be carried with the
17commodity intermediary.
AB111,98,21 18(3) Priority of securities intermediary regarding entitlement or account.
19A security interest held by a securities intermediary in a security entitlement or a
20securities account maintained with the securities intermediary has priority over a
21conflicting security interest held by another secured party.
AB111,98,25 22(4) Priority of securities intermediary regarding contract or account. A
23security interest held by a commodity intermediary in a commodity contract or a
24commodity account maintained with the commodity intermediary has priority over
25a conflicting security interest held by another secured party.
AB111,99,4
1(5) Priority in certificated securities. A security interest in a certificated
2security in registered form which is perfected by taking delivery under s. 409.313 (1)
3and not by control under s. 409.314 has priority over a conflicting security interest
4perfected by a method other than control.
AB111,99,7 5(6) Priority of conflicting security interests; intermediaries. Conflicting
6security interests created by a broker, securities intermediary, or commodity
7intermediary which are perfected without control under s. 409.106 rank equally.
AB111,99,10 8(7) Priority of conflicting security interests; others. In all other cases,
9priority among conflicting security interests in investment property is governed by
10ss. 409.322 and 409.323.
AB111,99,13 11409.329 Priority of security interests in letter-of-credit right. The
12following rules govern priority among conflicting security interests in the same
13letter-of-credit right:
AB111,99,17 14(1) Control by secured party. A security interest held by a secured party
15having control of the letter-of-credit right under s. 409.107 has priority to the extent
16of its control over a conflicting security interest held by a secured party that does not
17have control.
AB111,99,19 18(2) Priority in time of control. Security interests perfected by control under
19s. 409.314 rank according to priority in time of obtaining control.
AB111,99,23 20409.330 Priority of purchaser of chattel paper or instrument. (1)
21Purchaser's priority: security interest claimed merely as proceeds. A purchaser
22of chattel paper has priority over a security interest in the chattel paper which is
23claimed merely as proceeds of inventory subject to a security interest if:
AB111,100,3
1(a) In good faith and in the ordinary course of the purchaser's business, the
2purchaser gives new value and takes possession of the chattel paper or obtains
3control of the chattel paper under s. 409.105; and
AB111,100,54 (b) The chattel paper does not indicate that it has been assigned to an identified
5assignee other than the purchaser.
AB111,100,12 6(2) Purchaser's priority: other security interests. A purchaser of chattel
7paper has priority over a security interest in the chattel paper which is claimed other
8than merely as proceeds of inventory subject to a security interest if the purchaser
9gives new value and takes possession of the chattel paper or obtains control of the
10chattel paper under s. 409.105 in good faith, in the ordinary course of the purchaser's
11business, and without knowledge that the purchase violates the rights of the secured
12party.
AB111,100,15 13(3) Chattel paper purchaser's priority in proceeds. Except as otherwise
14provided in s. 409.327, a purchaser having priority in chattel paper under sub. (1)
15or (2) also has priority in proceeds of the chattel paper to the extent that:
AB111,100,1616 (a) Section 409.322 provides for priority in the proceeds; or
AB111,100,1917 (b) The proceeds consist of the specific goods covered by the chattel paper or
18cash proceeds of the specific goods, even if the purchaser's security interest in the
19proceeds is unperfected.
AB111,100,24 20(4) Instrument purchaser's priority. Except as otherwise provided in s.
21409.331 (1), a purchaser of an instrument has priority over a security interest in the
22instrument perfected by a method other than possession if the purchaser gives value
23and takes possession of the instrument in good faith and without knowledge that the
24purchase violates the rights of the secured party.
AB111,101,3
1(5) Holder of purchase-money security interest gives new value. For
2purposes of subs. (1) and (2), the holder of a purchase-money security interest in
3inventory gives new value for chattel paper constituting proceeds of the inventory.
AB111,101,8 4(6) Indication of assignment gives knowledge. For purposes of subs. (2) and
5(4), if chattel paper or an instrument indicates that it has been assigned to an
6identified secured party other than the purchaser, a purchaser of the chattel paper
7or instrument has knowledge that the purchase violates the rights of the secured
8party.
AB111,101,16 9409.331 Priority of rights of purchasers of instruments, documents,
10and securities under other chapters; priority of interests in financial assets
11and security entitlements under ch. 408
. (1) Rights under chs. 403, 407, and 408
12not limited.
This chapter does not limit the rights of a holder in due course of a
13negotiable instrument, a holder to which a negotiable document of title has been duly
14negotiated, or a protected purchaser of a security. These holders or purchasers take
15priority over an earlier security interest, even if perfected, to the extent provided in
16chs. 403, 407, and 408.
AB111,101,19 17(2) Protection under ch. 408. This chapter does not limit the rights of or impose
18liability on a person to the extent that the person is protected against the assertion
19of an adverse claim under ch. 408.
AB111,101,22 20(3) Filing not notice. Filing under this chapter does not constitute notice of
21a claim or defense to the holders, or purchasers, or persons described in subs. (1) and
22(2).
AB111,102,2 23409.332 Transfer of money; transfer of funds from deposit account. (1)
24Transferee of money. A transferee of money takes the money free of a security

1interest unless the transferee acts in collusion with the debtor in violating the rights
2of the secured party.
AB111,102,6 3(2) Transferee of funds from deposit account. A transferee of funds from a
4deposit account takes the funds free of a security interest in the deposit account
5unless the transferee acts in collusion with the debtor in violating the rights of the
6secured party.
AB111,102,9 7409.333 Priority of certain liens arising by operation of law. (1)
8Possessory lien. In this section, "possessory lien" means an interest, other than a
9security interest or an agricultural lien:
AB111,102,1210 (a) Which secures payment or performance of an obligation for services or
11materials furnished with respect to goods by a person in the ordinary course of the
12person's business;
AB111,102,1313 (b) Which is created by statute or rule of law in favor of the person; and
AB111,102,1414 (c) Whose effectiveness depends on the person's possession of the goods.
AB111,102,17 15(2) Priority of possessory lien. A possessory lien on goods has priority over
16a security interest in the goods unless the lien is created by a statute that expressly
17provides otherwise.
AB111,102,22 18409.334 Priority of security interests in fixtures and crops. (1) Security
19interest in fixtures under this chapter.
A security interest under this chapter may
20be created in goods that are fixtures or may continue in goods that become fixtures.
21A security interest does not exist under this chapter in ordinary building materials
22incorporated into an improvement on land.
AB111,102,24 23(2) Security interest in fixtures under real property law. This chapter does
24not prevent creation of an encumbrance upon fixtures under real property law.
AB111,103,4
1(3) General rule: subordination of security interest in fixtures. In cases
2not governed by subs. (4) to (8), a security interest in fixtures is subordinate to a
3conflicting interest of an encumbrancer or owner of the related real property other
4than the debtor.
AB111,103,8 5(4) Fixtures purchase-money priority. Except as otherwise provided in sub.
6(8), a perfected security interest in fixtures has priority over a conflicting interest of
7an encumbrancer or owner of the real property if the debtor has an interest of record
8in or is in possession of the real property and:
AB111,103,99 (a) The security interest is a purchase-money security interest;
AB111,103,1110 (b) The interest of the encumbrancer or owner arises before the goods become
11fixtures; and
AB111,103,1312 (c) The security interest is perfected by a fixture filing before the goods become
13fixtures or within 20 days thereafter.
AB111,103,16 14(5) Priority of security interest in fixtures over interests in real property.
15A perfected security interest in fixtures has priority over a conflicting interest of an
16encumbrancer or owner of the real property if:
AB111,103,1817 (a) The debtor has an interest of record in the real property or is in possession
18of the real property and the security interest:
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.
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