AB111: Bill Text

AB111,83,13 409.316 Continued perfection of security interest following change in governing law. (1) General rule: effect on perfection of change in governing law. A security interest perfected pursuant to the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) remains perfected until the earliest of:

AB111,83,14 (a) The time perfection would have ceased under the law of that jurisdiction;

AB111,83,16 (b) The expiration of 4 months after a change of the debtor's location to another jurisdiction; or

AB111,83,18 (c) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

AB111,83,25 (2) Security interest perfected or unperfected under law of new jurisdiction. If a security interest described in sub. (1) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

AB111,84,4 (3) Possessory security interest in collateral moved to new jurisdiction. A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

AB111,84,6 (a) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

AB111,84,7 (b) Thereafter the collateral is brought into another jurisdiction; and

AB111,84,9 (c) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.

AB111,84,15 (4) Goods covered by certificate of title from this state. Except as otherwise provided in sub. (5), a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

AB111,84,20 (5) When sub. (4) security interest becomes unperfected against purchasers. A security interest described in sub. (4) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under s. 409.311 (2) or 409.313 are not satisfied before the earlier of:

AB111,84,23 (a) The time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

AB111,84,24 (b) The expiration of 4 months after the goods had become so covered.

AB111,85,6 (6) Change in jurisdiction of bank, issuer, nominated person, securities intermediary, or commodity intermediary. A security interest in deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of:

AB111,85,8 (a) The time the security interest would have become unperfected under the law of that jurisdiction; or

AB111,85,10 (b) The expiration of 4 months after a change of the applicable jurisdiction to another jurisdiction.

AB111,85,17 (7) Sub. (6) security interest perfected or unperfected under law of new jurisdiction. If a security interest described in sub. (6) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

AB111,85,21 409.317 Interests that take priority over or take free of security interest or agricultural lien. (1) Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:

AB111,85,22 (a) A person entitled to priority under s. 409.322; and

AB111,85,24 (b) Except as otherwise provided in sub. (5), a person that becomes a lien creditor before the earlier of the time:

AB111,85,25 1. The security interest or agricultural lien is perfected; or

AB111,86,2 2. One of the conditions specified in s. 409.203 (2) (c) is met and a financing statement covering the collateral is filed.

AB111,86,7 (2) Buyers that receive delivery. Except as otherwise provided in sub. (5), a buyer, other than a secured party, of tangible chattel paper, documents, goods, instruments, or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

AB111,86,11 (3) Lessees that receive delivery. Except as otherwise provided in sub. (5), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

AB111,86,16 (4) Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, general intangibles, or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

AB111,86,22 (5) Purchase-money security interest. Except as otherwise provided in ss. 409.320 and 409.321, if a person files a financing statement with respect to a purchase-money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.

AB111,87,2 409.318 No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers. (1) Seller retains no interest. A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.

AB111,87,7 (2) Deemed rights of debtor if buyer's security interest unperfected. For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.

AB111,87,13 409.319 Rights and title of consignee with respect to creditors and purchasers. (1) Consignee has consignor's rights. Except as otherwise provided in sub. (2), for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

AB111,87,18 (2) Applicability of other law. For purposes of determining the rights of a creditor of a consignee, law other than this chapter determines the rights and title of a consignee while goods are in the consignee's possession if, under this subchapter, a perfected security interest held by the consignor would have priority over the rights of the creditor.

AB111,87,23 409.320 Buyer of goods. (1) Buyer in ordinary course of business. Except as otherwise provided in sub. (5), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

AB111,88,2 (2) Buyer of consumer goods. Except as otherwise provided in sub. (5), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

AB111,88,3 (a) Without knowledge of the security interest;

AB111,88,4 (b) For value;

AB111,88,5 (c) Primarily for the buyer's personal, family, or household purposes; and

AB111,88,6 (d) Before the filing of a financing statement covering the goods.

AB111,88,10 (3) Effectiveness of filing for sub. (2). To the extent that it affects the priority of a security interest over a buyer of goods under sub. (2), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by s. 409.316 (1) and (2).

AB111,88,13 (4) Buyer in ordinary course of business at wellhead or minehead. A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

AB111,88,16 (5) Possessory security interest not affected. Subsections (1) and (2) do not affect a security interest in goods in the possession of the secured party under s. 409.313.

AB111,88,25 409.321 Licensee of general intangible and lessee of goods in ordinary course of business. (1) Licensee in ordinary course of business. In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.

AB111,89,4 (2) Rights of licensee in ordinary course of business. A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

AB111,89,8 (3) Rights of lessee in ordinary course of business. A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence.

AB111,89,13 409.322 Priorities among conflicting security interests in and agricultural liens on same collateral. (1) General priority rules. Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

AB111,89,18 (a) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection.

AB111,89,20 (b) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien.

AB111,89,22 (c) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.

AB111,89,24 (2) Time of perfection: proceeds and supporting obligations. For the purposes of sub. (1) (a):

AB111,90,2 (a) The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and

AB111,90,5 (b) The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.

AB111,90,9 (3) Special priority rules: proceeds and supporting obligations. Except as otherwise provided in sub. (6), a security interest in collateral which qualifies for priority over a conflicting security interest under s. 409.327, 409.328, 409.329, 409.330, or 409.331 also has priority over a conflicting security interest in:

AB111,90,10 (a) Any supporting obligation for the collateral; and

AB111,90,11 (b) Proceeds of the collateral if:

AB111,90,12 1. The security interest in proceeds is perfected;

AB111,90,13 2. The proceeds are cash proceeds or of the same type as the collateral; and

AB111,90,16 3. In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.

AB111,90,22 (4) First-to-file priority rule for certain collateral. Subject to sub. (5) and except as otherwise provided in sub. (6), if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

AB111,90,25 (5) Applicability of sub. (4). Subsection (4) applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.

AB111,91,1 (6) Limitations on subs. (1) to (5). Subsections (1) to (5) are subject to:

AB111,91,2 (a) Subsection (7) and the other provisions of this subchapter;

AB111,91,3 (b) Section 404.210 with respect to a security interest of a collecting bank;

AB111,91,5 (c) Section 405.118 with respect to a security interest of an issuer or nominated person; and

AB111,91,7 (d) Section 409.110 with respect to a security interest arising under ch. 402 or 411.

AB111,91,10 (7) Priority under agricultural lien statute. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

AB111,91,15 409.323 Future advances. (1) When priority based on time of advance. Except as otherwise provided in sub. (3), for purposes of determining the priority of a perfected security interest under s. 409.322 (1) (a), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

AB111,91,16 (a) Is made while the security interest is perfected only:

AB111,91,17 1. Under s. 409.309 when it attaches; or

AB111,91,18 2. Temporarily under s. 409.312 (5), (6), or (7); and

AB111,91,21 (b) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under s. 409.309 or 409.312 (5), (6), or (7).

AB111,91,25 (2) Lien creditor. Except as otherwise provided in sub. (3), a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless the advance is made:

AB111,92,1 (a) Without knowledge of the lien; or

AB111,92,2 (b) Pursuant to a commitment entered into without knowledge of the lien.

AB111,92,5 (3) Buyer of receivables. Subsections (1) and (2) do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.

AB111,92,8 (4) Buyer of goods. Except as otherwise provided in sub. (5), a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

AB111,92,9 (a) The time the secured party acquires knowledge of the buyer's purchase; or

AB111,92,10 (b) Forty-five days after the purchase.

AB111,92,14 (5) Advances made pursuant to commitment: priority of buyer of goods. Subsection (4) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the 45-day period.

AB111,92,17 (6) Lessee of goods. Except as otherwise provided in sub. (7), a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

AB111,92,18 (a) The time the secured party acquires knowledge of the lease; or

AB111,92,19 (b) Forty-five days after the lease contract becomes enforceable.

AB111,92,23 (7) Advances made pursuant to commitment: priority of lessee of goods. Subsection (6) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.

AB111,93,5 409.324 Priority of purchase-money security interests. (1) General rule: purchase-money priority. Except as otherwise provided in sub. (7), 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 s. 409.327, 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.

AB111,93,14 (2) Inventory purchase-money priority. Subject to sub. (3) and except as otherwise provided in sub. (7), 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 s. 409.330, and, except as otherwise provided in s. 409.327, also has priority in identifiable cash proceeds of the inventory to the extent that the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

AB111,93,16 (a) The purchase-money security interest is perfected when the debtor receives possession of the inventory;

AB111,93,18 (b) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

AB111,93,20 (c) The holder of the conflicting security interest receives the notification within 5 years before the debtor receives possession of the inventory; and

AB111,93,23 (d) 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.

AB111,94,3 (3) Holders of conflicting inventory security interests to be notified. Subsection (2) (b) to (d) applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

AB111,94,5 (a) If the purchase-money security interest is perfected by filing, before the date of the filing; or

AB111,94,8 (b) If the purchase-money security interest is temporarily perfected without filing or possession under s. 409.312 (6), before the beginning of the 20-day period thereunder.