The core issue here is determining the priority of a purchase money security interest (PMSI) against a prior perfected security interest in after-acquired inventory. Under Virginia Code § 8.9A-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the PMSI holder must give an authenticated notification to any holder of a conflicting security interest in that inventory. This notification must be sent before the financing statement covering the inventory is filed by the PMSI holder. The notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and must describe the inventory by item or type. In this scenario, “Apparel Emporium” granted a security interest to “Capital Corp” in all its existing and after-acquired inventory, which Capital Corp perfected by filing. Later, “Fashion Finance” provided financing for new inventory to Apparel Emporium, creating a PMSI in that new inventory. Fashion Finance perfected its PMSI by filing its financing statement. However, to gain priority over Capital Corp’s prior perfected security interest in after-acquired inventory, Fashion Finance was required to send the requisite notification to Capital Corp *before* filing its own financing statement. Since Fashion Finance sent the notification *after* filing, it failed to satisfy the conditions for PMSI priority over Capital Corp’s pre-existing perfected security interest in the after-acquired inventory. Therefore, Capital Corp’s security interest has priority.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account held by a Virginia-based business. Under Virginia Code § 8.9A-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in Virginia Code § 8.9A-104 and generally requires the secured party to obtain the bank’s agreement to comply with the secured party’s instructions concerning the deposit account, or by becoming the bank’s customer with respect to the deposit account, or by the bank’s acknowledging that it will hold the deposit account for the secured party’s benefit. In this case, the loan agreement and promissory note provide a security interest in the deposit account. However, the secured party, Capital Corp., merely filed a UCC-1 financing statement. Filing is generally effective for perfection in most types of collateral, but Virginia Code § 8.9A-312(a) explicitly states that for deposit accounts, control is required for perfection. A UCC-1 filing does not grant control over a deposit account. Therefore, Capital Corp.’s security interest is unperfected. When a debtor files for bankruptcy, an unperfected security interest is generally subordinate to the rights of a trustee in bankruptcy, who has the status of a hypothetical lien creditor under 11 U.S.C. § 544. The trustee can avoid the unperfected security interest. Consequently, Capital Corp. will not have priority over the bankruptcy estate regarding the funds in the deposit account. The trustee will be able to take the deposit account free of Capital Corp.’s claim.

In Virginia, under Article 9 of the Uniform Commercial Code, a secured party’s rights upon default are generally determined by the terms of the security agreement and the UCC. Specifically, Part 6 of Article 9 outlines the rules for disposition of collateral. A secured party can take possession of the collateral without judicial process if it can be done without breaching the peace. Virginia UCC § 9-609 permits this. After taking possession, the secured party may dispose of the collateral by sale, lease, license, or other disposition. The disposition must be commercially reasonable. Proceeds from the disposition are applied first to expenses of repossession and sale, then to satisfaction of the secured obligation. Any surplus belongs to the debtor or a subordinate secured party. If the collateral is consumer goods and the debtor has paid at least sixty percent of the cash price or fifty percent of the secured obligation, the secured party must dispose of the collateral within ninety days after taking possession, unless the debtor waives this right after default. Failure to do so can result in liability for damages. The question focuses on the secured party’s immediate actions post-default and the general requirements for disposition, not a specific calculation of deficiency or surplus, but the conceptual framework of what a secured party can do.

Under Virginia’s Uniform Commercial Code Article 9, the perfection of a security interest in certain types of collateral requires specific filing procedures. For accounts, chattel paper, and general intangibles, perfection is generally achieved by filing a financing statement in the appropriate jurisdiction. However, the question pertains to goods that are permanently attached to real property, known as fixtures. Virginia Code Section 8.9A-334 addresses security interests in fixtures. Perfection of a security interest in fixtures requires a fixture filing, which is a filing of a financing statement in the office where a mortgage on the affected real property would be recorded. This filing must also meet specific requirements, including identifying the collateral as fixtures or as related to the affected real property. A standard UCC financing statement filed in the general UCC filing office (typically with the Clerk of the State Corporation Commission in Virginia for most non-consumer goods) would not perfect a security interest in fixtures against a subsequent purchaser of the real property or a creditor with a conflicting interest in the real property. Therefore, to achieve priority against such parties, the secured party must make a fixture filing. The scenario describes a security interest in specialized manufacturing equipment that has become affixed to the real property of a factory. The secured party filed a standard UCC-1 financing statement with the Clerk of the State Corporation Commission. This filing is insufficient to perfect the security interest against a subsequent buyer of the factory, who would have an interest in the real property. The correct method for perfection against such a buyer is a fixture filing.

The scenario involves a secured party, AgriCorp, filing a financing statement to perfect its security interest in a crop of soybeans grown by farmer Elias Thorne in Virginia. A financing statement must generally include the name of the debtor, the name of the secured party, and an indication of the collateral. Under Virginia Code § 8.9A-502(a), a financing statement is sufficient if it provides the information required by § 8.9A-502(b). Section 8.9A-502(b) specifies that a financing statement must contain the debtor’s name, the secured party’s name, and an indication of the collateral. For agricultural collateral, specifically crops, the financing statement must also include a description of the real estate concerned. Virginia Code § 8.9A-502(b)(3) mandates that for crops growing or to be grown, the financing statement must indicate the crops and describe the real property on which they are growing or to be grown. Elias Thorne is the debtor, AgriCorp is the secured party, and the collateral is the soybean crop. The financing statement filed by AgriCorp lists Elias Thorne as the debtor and AgriCorp as the secured party. It accurately describes the collateral as “all soybeans grown or to be grown on the real property located at 123 Farm Road, Culpeper County, Virginia.” This description satisfies the requirements for perfecting a security interest in crops under Virginia law, as it identifies the debtor, secured party, collateral, and the real estate where the crops are located. Therefore, AgriCorp’s security interest is perfected as of the date of filing.

Under Virginia’s Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally requires no filing to be perfected. However, this general rule has a critical exception for motor vehicles, which are typically subject to certificate of title statutes. Virginia Code § 8.9A-311(a) states that the perfection of a security interest in goods subject to a certificate of title statute is governed by the law of the jurisdiction where the certificate of title is issued. Virginia Code § 46.2-600 et seq. governs the titling of motor vehicles in Virginia. Perfection of a security interest in a motor vehicle typically occurs by notation on the certificate of title. Therefore, even if a lender takes a PMSI in a car, a consumer good, perfection would require compliance with Virginia’s motor vehicle titling provisions, not just possession or a PMSI-specific filing exception. The question asks about the most effective method of perfection for a lender taking a PMSI in a car, which is a consumer good. While possession can perfect certain security interests, it is not the primary or most effective method for a motor vehicle in Virginia due to the certificate of title statute. Filing a financing statement under Article 9 is generally required for perfection of security interests in goods other than consumer goods (unless an exception applies), but for motor vehicles, title notation is paramount.

The question concerns the priority of security interests when a debtor defaults on multiple obligations secured by the same collateral. In Virginia, as under Article 9 of the Uniform Commercial Code, the general rule for priority among secured parties is “first in time, first in right,” meaning the secured party who files a financing statement first or perfects its security interest first generally has priority. However, this rule is subject to exceptions. Here, two security interests are perfected by filing. The first security interest was granted by Coastal Cruises Inc. to Maritime Bank on January 15, 2023, and Maritime Bank filed its financing statement on January 20, 2023. The second security interest was granted by Coastal Cruises Inc. to Chesapeake Capital LLC on February 1, 2023, and Chesapeake Capital LLC filed its financing statement on February 5, 2023. Both security interests attach to the same collateral, the fleet of pleasure crafts. When Coastal Cruises Inc. defaults on both loans, the priority is determined by the order of perfection. Since Maritime Bank perfected its security interest by filing on January 20, 2023, and Chesapeake Capital LLC perfected its security interest by filing on February 5, 2023, Maritime Bank’s security interest has priority over Chesapeake Capital LLC’s security interest because it was perfected earlier. Therefore, Maritime Bank has the right to repossess and sell the collateral first to satisfy its debt. Chesapeake Capital LLC would only have a claim to any remaining proceeds after Maritime Bank’s secured debt is fully satisfied.

The core issue here is the perfection of a security interest in a deposit account. Under Virginia’s Uniform Commercial Code (UCC) § 8.9A-312(b), a security interest in a deposit account can only be perfected by control. Control is achieved when the secured party is the bank in which the deposit account is maintained, or when the secured party obtains the bank’s agreement that the bank will comply with instructions from the secured party directing the disposition of the funds in the account without the debtor’s consent. In this scenario, while AgriCorp has a security agreement and has taken possession of the certificates of deposit (which are instruments), the deposit account itself is the collateral. The perfection of a security interest in a deposit account requires the secured party to have control over that account. AgriCorp’s actions of merely having a security agreement and possessing the CDs does not grant them control over the deposit account as defined by UCC § 8.9A-104. Without control, AgriCorp’s security interest in the deposit account is unperfected. When a debtor files for bankruptcy, unperfected security interests are subordinate to the rights of the bankruptcy trustee, who has the status of a hypothetical lien creditor under 11 U.S.C. § 544. Therefore, the bankruptcy trustee can avoid AgriCorp’s unperfected security interest in the deposit account. The perfection of the security interest in the CDs themselves, as instruments, would likely be by possession, but the question specifically asks about the deposit account.

The core issue here is the priority of a security interest in after-acquired inventory when a financing statement was filed before the debtor acquired the inventory. Under Virginia’s Uniform Commercial Code, specifically § 8.9A-320, a buyer in the ordinary course of business takes free of a security interest created by their seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer also knows that the sale is in ordinary course of bulk or otherwise is not in the ordinary course of the business of the seller. However, this protection is for buyers of inventory. Here, the transaction involves the debtor acquiring inventory and granting a security interest in it. The question focuses on the perfection and priority of the lender’s security interest against a subsequent perfected security interest in the same collateral. Under Virginia Code § 8.9A-310, a security interest is generally perfected when it has attached and a financing statement has been filed or possession of the collateral is taken. The lender filed a financing statement covering “all inventory, now owned or hereafter acquired” before the debtor acquired any inventory. This filing perfects the security interest in all inventory, including after-acquired inventory, as soon as it is acquired by the debtor and the security interest attaches. A subsequent lender, “Creditor B,” also filed a financing statement covering the debtor’s inventory. Under Virginia Code § 8.9A-322, general rules of priority state that perfected security interests rank according to the order of filing or perfection. If both security interests are perfected by filing, the first to file prevails. Since the initial lender filed its financing statement before Creditor B filed its financing statement, the initial lender has priority in the after-acquired inventory. The fact that the inventory was acquired after the initial filing is contemplated by the “hereafter acquired” language in the financing statement and is a standard feature of inventory financing. The initial lender’s security interest attaches to the after-acquired inventory when the debtor acquires rights in it, and because the financing statement was already filed, the security interest is perfected at that point. Creditor B’s later filing means its security interest is subordinate to the initial lender’s perfected security interest. Therefore, the initial lender’s security interest has priority.

Under Virginia’s Uniform Commercial Code, specifically Article 9, a security interest is perfected when a financing statement has been filed. For a security interest in general intangibles, which includes intellectual property like patents and copyrights, the proper place to file a financing statement is with the State Corporation Commission. This filing puts the world on notice of the secured party’s claim. If a secured party fails to file a financing statement, their security interest may be unperfected. In the event of default and the debtor’s insolvency, an unperfected security interest is generally subordinate to the rights of a lien creditor, such as a bankruptcy trustee or a receiver appointed by a court. A lien creditor obtains their rights by operation of law, and perfection is the key to establishing priority against such creditors. Therefore, the failure to file a financing statement for a security interest in general intangibles in Virginia leaves the secured party vulnerable to claims from lien creditors who acquire their interests without knowledge of the unperfected security interest.

Under Virginia’s Article 9, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection to gain priority over other secured parties. Perfection of a PMSI in inventory is typically achieved by filing a financing statement before the debtor receives possession of the inventory, and by giving notice to any existing secured parties who have filed against the same collateral. Virginia Code § 8.9A-324(b) outlines the specific requirements for PMSI priority in inventory. The secured party must have a PMSI, perfect it by filing, and the filing must occur before the debtor receives possession of the inventory. Additionally, the PMSI secured party must have given an authenticated notification to any other secured party who previously filed a financing statement covering the same inventory. This notification must be sent within a specific timeframe, and the other secured party must have received it. The critical element here is the timely notification to the prior secured party, ensuring they are aware of the new PMSI in inventory. Without this notification, the PMSI, despite being perfected by filing, may not achieve superpriority over the prior perfected security interest in the same inventory. Therefore, the correct course of action for a PMSI holder in inventory to ensure superpriority involves both timely filing and proper notification to prior secured creditors.

Under Virginia’s Article 9, when a secured party has a perfected security interest in collateral, and that collateral is sold or disposed of in a transaction not authorized by the secured party, the security interest generally continues in the collateral. This is known as the “original collateral rule” or the “continuity of perfection” principle. The buyer or transferee takes the collateral subject to the existing perfected security interest unless the buyer qualifies for a specific exception. One such exception is found in Virginia Code Section 8.9A-317(b), which protects certain buyers from unperfected security interests. However, for a perfected security interest, the general rule is that the security interest continues in the collateral unless the secured party authorized the disposition free of the security interest. Virginia Code Section 8.9A-307(a) specifies that a buyer in the ordinary course of business takes free of a security interest created by the seller, but this protection does not extend to buyers of farm products from a person engaged in farming operations, nor does it generally protect against security interests created by a seller who is not the debtor. In this scenario, the security interest was perfected by filing. The sale to Ms. Gable was not authorized by the secured party, and she is not a buyer in the ordinary course of business from the debtor who is selling goods of that kind in that manner, as the debtor is a manufacturer of custom furniture, not a retailer. Therefore, the security interest continues in the dining tables.

The core issue here is the perfection of a security interest in accounts that are part of a sale of a business. Under Virginia’s Uniform Commercial Code (UCC) § 9-109(a)(3), a security interest is created in a “sale of accounts.” UCC § 9-309(2) states that a security interest in favor of a buyer of accounts… which is perfected by notification to the account debtor is generally effective against subsequent purchasers and perfected. However, UCC § 9-310(a) generally requires filing a financing statement to perfect a security interest. A critical exception exists in UCC § 9-310(b)(1), which states that filing is not required to perfect a security interest in collateral that is subject to a statute, regulation, or treaty described in UCC § 9-311(a). UCC § 9-311(a) pertains to perfection by compliance with applicable law. In Virginia, there is no specific statute or regulation that dictates a filing system for the perfection of security interests in accounts arising from a sale of a business that would supersede the general UCC rules. Therefore, while the sale of accounts creates a security interest, and notification to the account debtor is a method of perfection, the most universally accepted and robust method for establishing priority against third parties, including subsequent purchasers and creditors, is filing a UCC-1 financing statement in accordance with UCC § 9-501. The notification to the account debtor perfects the security interest against that specific account debtor but does not necessarily establish priority against other secured parties or purchasers who may have a prior perfected interest or who perfect later. Filing a financing statement provides notice to the world and establishes priority under UCC § 9-322. Therefore, filing a financing statement is the correct and most comprehensive method for perfection in this scenario.

The core issue here is determining the proper place for filing a financing statement to perfect a security interest in a vehicle that is titled in Virginia. Under Virginia Code § 8.9A-307(p), if a security interest is perfected by a certificate of title, the law of the jurisdiction that issued the certificate of title governs perfection. In this scenario, the vehicle is titled in Virginia. Therefore, perfection is governed by Virginia law, which requires filing a financing statement with the Virginia State Corporation Commission to perfect a security interest in most types of collateral, including vehicles not covered by specific titling provisions that dictate a different perfection method. While Virginia has specific provisions for perfection of security interests in motor vehicles that are typically noted on the certificate of title itself, the question asks about the filing of a financing statement generally. For collateral that is not subject to a certificate of title system that mandates notation, the general rule under Virginia’s Article 9 is to file with the State Corporation Commission. Since the question specifically asks about filing a financing statement, and not about perfection via notation on a certificate of title, the State Corporation Commission is the correct filing office for general collateral perfection. The Uniform Commercial Code, as adopted in Virginia, generally requires filing with the central filing office, which for most goods is the State Corporation Commission. The Virginia DMV handles titling and registration, but for Article 9 purposes, the State Corporation Commission is the designated filing office for financing statements unless a specific exception applies.

In Virginia, the perfection of a security interest in a deposit account is generally accomplished by control, as defined under Virginia Code § 8.9A-104. Control is achieved when the secured party is the depositary bank, the depositary bank agrees to act on the secured party’s instructions, or the secured party becomes the assignee of the deposit account. Virginia Code § 8.9A-312(b) specifies that a security interest in a deposit account as-is, other than a deposit account that is a supporting obligation for other collateral, can only be perfected by control. If the secured party has not obtained control over the deposit account, their security interest remains unperfected against a buyer of funds from the deposit account that is not a buyer in the ordinary course of business, and against a transferee of the deposit account or a commodity customer. Furthermore, a perfected security interest in a deposit account has priority over an unperfected security interest in the same account. When a secured party perfects by control, and another secured party also has control, priority is determined by the order of obtaining control, unless otherwise agreed. The question posits a scenario where a security interest is granted in a deposit account, but no steps are taken to perfect it. Subsequently, another secured party perfects its interest in the same account by control. In this situation, the perfected security interest will have priority over the unperfected one. The key is that perfection by control is the exclusive method for perfecting a security interest in a deposit account in Virginia, and an unperfected security interest yields to a perfected one.

The scenario involves a buyer of goods, “Artisan Furnishings LLC,” who purchased inventory on credit from “Woodland Crafts Inc.” Woodland Crafts Inc. has a purchase money security interest (PMSI) in the inventory. The key issue is whether Artisan Furnishings LLC’s subsequent filing of a bankruptcy petition affects Woodland Crafts Inc.’s ability to enforce its security interest against the inventory. Under Virginia’s Uniform Commercial Code (UCC) Article 9, a PMSI in inventory is perfected when the secured party (Woodland Crafts Inc.) files a financing statement and gives notification to the other inventory creditors. Assuming Woodland Crafts Inc. properly perfected its PMSI before Artisan Furnishings LLC filed for bankruptcy, its security interest is generally superior to the claims of the bankruptcy estate, which stands in the shoes of a hypothetical lien creditor. A bankruptcy filing does not automatically invalidate a perfected security interest. The trustee in bankruptcy has the power to avoid certain transfers and obligations, but a properly perfected PMSI in inventory, established prior to bankruptcy, is typically not avoidable by the trustee as a preference or fraudulent transfer. Therefore, Woodland Crafts Inc. can likely repossess and sell the inventory to satisfy its debt, subject to bankruptcy court procedures. The perfection of the PMSI is critical. Virginia Code § 8.9A-317(a)(2) states that a security interest is subordinate to the rights of a buyer of goods that receives delivery of the goods after the security interest is perfected, unless the buyer has notice of the security interest. However, this applies to buyers of goods from the debtor, not to the debtor’s own inventory. The bankruptcy trustee, however, is treated as a lien creditor under 11 U.S.C. § 544(a), and a perfected security interest generally has priority over a lien creditor. The question asks about the secured party’s rights against the debtor’s estate in bankruptcy. A perfected PMSI in inventory is generally not affected by the debtor’s bankruptcy filing in terms of its priority. The secured party retains its rights to the collateral.

Under Virginia’s Article 9, a purchase money security interest (PMSI) in consumer goods generally achieves automatic perfection upon attachment. However, there is a critical exception for inventory. For inventory, a secured party must file a financing statement to perfect its security interest, even if it is a PMSI. Furthermore, to maintain priority over other secured parties who may also have perfected security interests in the same collateral, the secured party with the PMSI in inventory must also provide notification to existing secured parties. This notification must be sent before the debtor receives possession of the inventory. This rule ensures that other creditors are aware of the PMSI in inventory and can make informed decisions about extending further credit. The scenario involves a secured party financing inventory for a retail business in Virginia. The security interest taken is a PMSI. Perfection requires filing a financing statement and, to gain priority over prior perfected security interests in the same inventory, providing notice to those prior secured parties before the debtor receives the inventory. Without filing and proper notification, the PMSI in inventory would not be perfected and would likely be subordinate to prior perfected security interests.

The scenario involves a secured party, Piedmont Bank, that has a perfected security interest in a debtor’s inventory. The debtor, Appalachian Furnishings, files for bankruptcy. A key issue in bankruptcy is how a secured creditor’s rights are treated concerning collateral that is subject to a perfected security interest. Under Virginia’s Uniform Commercial Code (UCC) Article 9, a security interest in inventory is generally perfected by filing a financing statement. When a debtor files for bankruptcy, the bankruptcy estate generally takes the debtor’s property subject to existing perfected security interests. Therefore, Piedmont Bank’s perfected security interest in Appalachian Furnishings’ inventory remains valid and enforceable against the bankruptcy trustee. The trustee, representing the bankruptcy estate, cannot simply claim the inventory free and clear of Piedmont Bank’s lien. Instead, the trustee must either allow Piedmont Bank to repossess and sell the collateral, or the trustee may propose a plan to cure the default and pay off the secured debt. The bankruptcy court’s role is to administer the estate according to the Bankruptcy Code, which respects valid pre-bankruptcy security interests. The trustee’s powers, such as the “strong-arm clause” under 11 U.S.C. § 544, allow the trustee to avoid certain unperfected transfers, but they do not invalidate properly perfected security interests. Therefore, Piedmont Bank retains its secured status and its right to the collateral, subject to the procedures of the bankruptcy court.

The core issue here is the priority of a purchase money security interest (PMSI) in inventory against a prior perfected security interest in after-acquired inventory. Under Virginia’s Uniform Commercial Code § 8.9A-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory, including after-acquired inventory, provided certain conditions are met. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the PMSI holder must give an authenticated notification to any prior secured party that claims an interest in the inventory described in the notification. This notification must state that the PMSI holder expects to acquire a PMSI in inventory of the type described and must be sent within a reasonable time before the debtor receives possession of the inventory. In this scenario, AgriCorp perfected its security interest in all of Farmer Giles’ current and after-acquired inventory on January 1st. On March 15th, CropSolutions acquired a PMSI in the new harvest inventory. CropSolutions perfected its PMSI on April 1st. Critically, CropSolutions did not notify AgriCorp of its intent to acquire a PMSI in the harvest inventory before Farmer Giles received possession. Therefore, AgriCorp’s prior perfected security interest in after-acquired inventory will have priority over CropSolutions’ PMSI because the notification requirement of § 8.9A-324(b) was not satisfied. The timing of perfection is crucial, but the lack of notification to the prior secured party is the fatal flaw for CropSolutions’ priority claim against AgriCorp.

In Virginia, when a secured party has a perfected security interest in collateral and that collateral is sold, exchanged, or otherwise disposed of in a transaction not authorized by the secured party, the security interest generally continues in the collateral unless the secured party authorized the disposition free of the security interest. This is governed by Virginia Code § 8.9A-315(a)(1). However, a buyer of goods takes free of a security interest if the buyer is a buyer in ordinary course of business (BIOC) and buys without knowledge that the sale is in violation of the security agreement. Virginia Code § 9-320(a) (as adopted in Virginia) provides that a buyer in ordinary course of business takes goods free of a security interest even though the security interest is perfected and even though the buyer knows of the perfection, unless the buyer knows that the sale is in violation of some term in the security agreement not dealing with the transfer of title or possession. In this scenario, the sale of the antique grandfather clock by “Timeless Treasures” to “Antique Appraisals Inc.” was an authorized sale by the debtor, which implies the secured party implicitly or explicitly authorized the disposition. However, even if the sale was not authorized, if “Antique Appraisals Inc.” is a buyer in ordinary course of business and purchased the clock without knowledge that the sale violated the terms of the security agreement, their interest would generally be superior to the prior perfected security interest. The key here is the authorization of the sale by the debtor, which is a common exception. If Timeless Treasures was authorized to sell the clock, the security interest attaches to the proceeds. Virginia Code § 8.9A-315(d)(1) states that a security interest attaches to any identifiable proceeds of collateral. The security interest in the clock transferred to the proceeds of the sale. Therefore, the security interest continues in the cash proceeds received by Timeless Treasures from Antique Appraisals Inc.

The core issue here is determining the priority of a security interest in a vehicle that has been moved to Virginia from another state. Under UCC § 9-307, perfection of a security interest in a motor vehicle is typically governed by the certificate of title laws of the state where the vehicle is located. Virginia’s Certificate of Title Act, specifically Virginia Code § 46.2-600, requires that a security interest in a vehicle be noted on the certificate of title to be perfected against third parties. If a secured party properly perfects its security interest in a vehicle in State A, and that vehicle is subsequently brought into Virginia, the secured party generally has a grace period to re-perfect its interest in Virginia by having the lien noted on the Virginia certificate of title. However, if the secured party fails to re-perfect within the specified time frame, or if the debtor voluntarily obtains a new certificate of title in Virginia without noting the existing lien, the security interest may become unperfected as against a buyer who gives value and receives delivery of the vehicle without knowledge of the security interest. In this scenario, the security interest was perfected in North Carolina, and the vehicle was moved to Virginia. The debtor obtained a new Virginia title without noting the North Carolina lien. A subsequent buyer in Virginia, who has no knowledge of the prior lien and gives value, will take the vehicle free of the unperfected security interest. Therefore, the security interest held by First National Bank is subordinate to the rights of the buyer.

The core issue revolves around the priority of a purchase money security interest (PMSI) in inventory against a prior perfected security interest in after-acquired inventory. Under Virginia Code § 8.9A-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: (1) the PMSI creditor must be perfected when the debtor receives possession of the inventory; (2) the PMSI creditor must give an authenticated notification to any prior secured party of record whose security interest covers the inventory; and (3) the notification must be sent before the filing of a financing statement covering the inventory. In this scenario, Sterling Corp. has a prior perfected security interest in all of LuminaTech’s inventory, including after-acquired inventory. NovaTech then extends credit to LuminaTech for the purchase of new electronic components, intending to create a PMSI in that specific inventory. For NovaTech’s PMSI to have priority, it must perfect its security interest and provide the required notification to Sterling Corp. The perfection of a PMSI in inventory requires filing a financing statement. Crucially, the notification to Sterling Corp. must be sent *before* NovaTech files its financing statement. If NovaTech files its financing statement and *then* sends the notification, or if it sends the notification after filing, it fails to meet the statutory requirements for PMSI priority in inventory. Therefore, NovaTech’s PMSI would be subordinate to Sterling Corp.’s prior perfected security interest. The calculation is not mathematical but conceptual: the timing of the notification relative to the filing is paramount for PMSI priority in inventory. If the notification is sent after the filing, the PMSI does not gain priority over the prior perfected security interest.

The core issue here is the priority of security interests when a debtor defaults and the collateral is inventory that has been transferred to a buyer in the ordinary course of business. Under Virginia’s Article 9, a buyer in the ordinary course of business (BIOC) takes free of a security interest created by the seller, even if the BIOC has knowledge of the security interest, unless the buyer knows the sale is outside the ordinary course of business. Virginia Code § 8.9A-320 is the governing statute. The security agreement between AgriCorp and Farmer Giles created a security interest in the farm’s entire inventory of soybeans. AgriCorp properly perfected its security interest by filing a financing statement. However, when Farmer Giles sold a portion of this inventory to Produce Distributors Inc., a company that regularly buys soybeans from Farmer Giles, Produce Distributors Inc. qualifies as a BIOC. The sale was a typical transaction within the normal course of Farmer Giles’s business. Therefore, Produce Distributors Inc. takes the soybeans free and clear of AgriCorp’s security interest. AgriCorp’s security interest attaches to the proceeds of the sale, if any, but not to the soybeans themselves in the hands of Produce Distributors Inc. The notification requirement mentioned in some contexts for BIOC protection is generally related to consumer goods collateral where the secured party has possession or the buyer has knowledge of the security interest and it is a consumer transaction. Here, the collateral is inventory, and the buyer is a commercial entity. The key is the ordinary course of business nature of the sale.

In Virginia, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in deposit accounts is a critical aspect of secured transactions. Unlike many other types of collateral, a security interest in a deposit account can only be perfected by control. Control is established when the secured party has obtained the rights of a bank with respect to the deposit account. This is typically achieved through a control agreement with the bank where the deposit account is maintained, or by the secured party becoming the bank’s customer with respect to the deposit account. Filing a financing statement is generally insufficient to perfect a security interest in a deposit account itself, although it may be effective for proceeds of the deposit account. The question probes the understanding of the exclusive perfection method for deposit accounts in Virginia, emphasizing that filing alone does not grant perfection. Therefore, the scenario where a secured party only files a financing statement against a debtor’s deposit account at a Virginia bank would result in an unperfected security interest.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Virginia Code § 8.9A-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory, including after-acquired inventory, if certain conditions are met. The key conditions for a PMSI in inventory to have superpriority are: (1) the PMSI must be perfected by filing a financing statement before the debtor receives possession of the inventory; and (2) the PMSI secured party must send an authenticated notification to any holder of a conflicting security interest who has filed a financing statement covering the inventory (or is known to have a security interest in the inventory) before the date of the 20-day period specified in § 8.9A-320(a) for a buyer of goods in ordinary course of business. In this case, AgriBank perfected its security interest in all of Farmer Giles’ existing and after-acquired farm equipment by filing on January 1, 2023. Clover Capital then acquired a PMSI in a new tractor delivered to Farmer Giles on March 15, 2023. Clover Capital filed its financing statement on March 10, 2023, and sent the required notification to AgriBank on March 12, 2023. Since Clover Capital filed its financing statement before Farmer Giles received possession of the tractor and provided notice to AgriBank before the expiration of the 20-day grace period under § 8.9A-320(a) (which is irrelevant here as AgriBank’s interest is a security interest, not a buyer’s interest, but the notice timing is critical for PMSI priority), Clover Capital’s PMSI in the tractor has priority over AgriBank’s earlier perfected security interest. The critical timing for notice under § 8.9A-324(b) is that the notification must be sent to any secured party whose financing statement covers the inventory and who has filed a financing statement covering the inventory before the filing of the PMSI’s financing statement, or within twenty days after the debtor receives possession of the inventory. Here, AgriBank had filed before Clover Capital. Clover Capital filed on March 10, 2023, and sent notice on March 12, 2023. The tractor was delivered on March 15, 2023. The notice was sent before delivery, which is permissible and satisfies the notice requirement to any prior perfected secured party. Therefore, Clover Capital’s PMSI has priority.

The scenario involves a purchase money security interest (PMSI) in equipment. Under Virginia Code § 8.9A-317, a buyer of goods takes free of a security interest that is not perfected if the buyer receives delivery of the goods and gives value and receives notification of the existence of the security interest, unless the security interest is perfected and a financing statement covering the goods has been filed. However, a buyer in the ordinary course of business (BIOC) takes free of a security interest created by the seller even though the security interest is perfected. Here, “FarmTools Inc.” is the secured party, “AgriSupplies LLC” is the debtor and seller, and “Plowman’s Paradise Farms” is the buyer. AgriSupplies LLC sold equipment to Plowman’s Paradise Farms. FarmTools Inc. had a perfected security interest in AgriSupplies LLC’s inventory, which included this equipment. Plowman’s Paradise Farms is a buyer of equipment. The key question is whether Plowman’s Paradise Farms qualifies as a buyer in the ordinary course of business from AgriSupplies LLC. AgriSupplies LLC is a supplier of farm equipment, and Plowman’s Paradise Farms is a farm that buys equipment. Thus, AgriSupplies LLC is in the business of selling farm equipment, and Plowman’s Paradise Farms is buying equipment in the ordinary course of that business. Therefore, Plowman’s Paradise Farms, as a BIOC, takes the equipment free of FarmTools Inc.’s perfected security interest in AgriSupplies LLC’s inventory, even though FarmTools Inc.’s security interest was perfected. The fact that Plowman’s Paradise Farms did not receive notification of FarmTools Inc.’s security interest is irrelevant because it is a BIOC. The filing of a financing statement by FarmTools Inc. is also irrelevant to a BIOC.

The scenario involves a purchase money security interest (PMSI) in inventory. In Virginia, as under the general provisions of UCC Article 9, a PMSI in inventory is perfected by filing a financing statement before the debtor receives possession of the inventory. Furthermore, for a PMSI in inventory to have priority over a previously perfected security interest in the same inventory, the PMSI holder must satisfy specific notification requirements. Specifically, under Virginia Code § 8.9A-324(b), the PMSI holder must give an authenticated notification to any holder of a conflicting security interest who has filed a financing statement covering the goods in which the PMSI is claimed and whose filing has neither expired nor been terminated. This notification must be sent within a specific timeframe before the debtor receives possession of the inventory. The notification must state that the sender has or expects to acquire a PMSI in inventory of the debtor and describe the inventory. In this case, the first secured party, Capital Bank, perfected its security interest in all of Aurora Corp’s inventory by filing on January 15th. The second secured party, Dominion Lenders, acquired a PMSI in Aurora Corp’s new inventory and filed on February 1st. However, Dominion Lenders failed to send the required notification to Capital Bank before Aurora Corp received the new inventory. Consequently, Dominion Lenders’ PMSI in the inventory, despite being filed after Capital Bank’s, will not have priority over Capital Bank’s pre-existing perfected security interest. The priority is determined by the general rule of first-to-file, as the specific exception for PMSI in inventory priority, which requires notification, was not met. Therefore, Capital Bank retains priority.

In Virginia, the perfection of a security interest in a vehicle typically requires both the filing of a financing statement and notation of the lien on the certificate of title. However, Article 9 of the Uniform Commercial Code, as adopted in Virginia, provides specific rules for when a security interest in a vehicle is perfected. Virginia Code § 8.9A-311(a) states that a secured party may perfect a security interest in goods covered by a certificate of title by taking the actions required by the law of the jurisdiction under whose certificate of title the goods are covered. For vehicles, this generally means complying with Virginia’s Certificate of Title Act. Under this Act, the secured party must file the security interest with the Department of Motor Vehicles (DMV) for notation on the certificate of title. If the debtor has possession of the certificate of title, the secured party must send the certificate of title to the DMV for notation. If the debtor does not have possession, the secured party can file a separate application for title with the lien noted. The perfection is effective when the DMV receives the necessary documents and properly notes the lien. Filing a financing statement with the State Corporation Commission under UCC § 8.9A-310 is generally not sufficient to perfect a security interest in a vehicle that is subject to a certificate of title statute. Therefore, when a vehicle is titled in Virginia, the exclusive method of perfection is by compliance with the Certificate of Title Act, which involves notation on the title itself.

The core issue in this scenario is determining the priority of security interests when a buyer of goods purchases them free of a prior perfected security interest under UCC § 9-320. In Virginia, as in most states adopting the Uniform Commercial Code, a buyer in the ordinary course of business (BIOC) takes free of a security interest created by their seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. Here, “Artisan Appliances” is a merchant that sells appliances in the ordinary course of its business. “Prime Finance Corp.” has a perfected security interest in Artisan Appliances’ inventory. When “Brenda’s Boutique” purchases a refrigerator from Artisan Appliances for its use, not for resale, Brenda’s Boutique is a buyer of goods, but not a buyer in the ordinary course of business because the goods are not being acquired for resale. UCC § 9-320(a) specifically applies to buyers in the ordinary course of business. However, UCC § 9-320(b) provides a similar protection for a buyer of consumer goods who buys for value and uses them for personal, family, or household purposes if the secured party has perfected its security interest by filing a fixture filing. This exception does not apply here as the refrigerator is not a fixture. Therefore, the general rule for buyers not in the ordinary course of business applies. A buyer of goods from a seller who is a merchant selling such goods takes free of a security interest granted by another person that secures a obligation of the seller, unless the buyer knows that the sale is in violation of the security agreement. However, this exception is for security interests granted by *another person*. In this case, the security interest was granted by Artisan Appliances itself. The key provision here is UCC § 9-320(a), which protects a BIOC. Since Brenda’s Boutique is not buying for resale, she is not a BIOC under the primary definition of UCC § 1-201(9). Therefore, her purchase is subject to Prime Finance Corp.’s perfected security interest in Artisan Appliances’ inventory. Prime Finance Corp. can repossess the refrigerator from Brenda’s Boutique. The fact that Prime Finance Corp. perfected its security interest in Artisan Appliances’ inventory means its interest is established against third parties, including subsequent purchasers who do not qualify for a special exception. Brenda’s Boutique’s purchase of a refrigerator for her own use, rather than for resale, removes her from the protection afforded to a buyer in the ordinary course of business under UCC § 9-320(a).

In Virginia, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is achieved by control. Control over a deposit account is established when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the agreement of the bank with which the deposit account is maintained to comply with the secured party’s instructions concerning the deposit account. This is a mandatory requirement for perfection and cannot be substituted by filing a financing statement. Filing a financing statement is generally sufficient for perfection of most types of collateral, but deposit accounts are specifically excluded from the general filing rules for perfection purposes. Therefore, even if a financing statement is filed correctly, without control, the security interest in the deposit account remains unperfected. The question describes a scenario where a financing statement was filed but control was not obtained. Consequently, the security interest is unperfected.