{"id":32660,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/purchase-money-security-interest.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"purchase-money-security-interest","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/finance\/purchase-money-security-interest.html","title":{"rendered":"Purchase Money Security Interest"},"content":{"rendered":"
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Color Leasing 3, L.C. v. Federal Deposit Insurance Corporation<\/i>, 975 F. Supp. 177 (D.R.I. 6\/30\/97). PURCHASE MONEY SECURITY INTEREST – As we have noted many times, it is crucial that the secured party providing purchase money security financing for equipment file its UCC-1 within the statutory grace period in order to obtain priority over existing blanket liens and intervening creditors. In most cases, this means that a lessor in a direct finance lease or a secured lender must file within 20 days (10-15 days in some states) or be subject to a "floating lien" in favor of the lessee's\/debtor's bank.<\/p>

Keeping this in mind, the Color Leasing<\/i> case illustrates an important point: The grace period begins to run when the lessee\/debtor receives POSSESSION of the collateral, but only possession under a claim of ownership. In Color Leasing<\/i>, the lessee was leasing the collateral and then exercised a purchase option, executing a promissory note in favor of the lessor. Physical "possession" started long before the lessor filed its UCC-1; however, "possession" as a debtor\/owner of equipment did not occur until just before the UCC was filed.<\/p>

The court ruled in favor of the lessor and against a bank which had a floating lien against the assets of the lessee\/debtor. This case is consistent with Commerce Union Bank v. John Deere Industrial Equipment Company<\/i>, 387 So.2d 787 (Ala. 1980).<\/p><\/div>","protected":false},"excerpt":{"rendered":"

Color Leasing 3, L.C. v. Federal Deposit Insurance Corporation, 975 F. Supp. 177 (D.R.I. 6\/30\/97). PURCHASE MONEY SECURITY INTEREST – As we have noted many times, it is crucial that the secured party providing purchase money security financing for …<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_categories":[6479,6482],"class_list":["post-32660","corporate","type-corporate","status-publish","hentry","corporate_categories-finance","corporate_categories-finance__other-finance"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate\/32660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=32660"}],"wp:term":[{"taxonomy":"corporate_categories","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_categories?post=32660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}