In Tennessee, under Article 9 of the Uniform Commercial Code, a security interest is perfected by filing a financing statement in the appropriate public office, typically with the Secretary of State. This filing provides notice to third parties of the secured party’s claim on the collateral. For goods that are classified as fixtures, meaning they become so related to particular real property that an interest in them arises under real property law, perfection is achieved by filing a fixture filing. A fixture filing is a financing statement that indicates it covers fixtures and that it is to be filed for record in the real property records. It must also contain a sufficient description of the real property to which the fixtures are affixed. The filing must be made in the office designated by Tennessee law for the recording of mortgages on real property. The financing statement must also satisfy the requirements for a fixture filing, including identifying the debtor and secured party, and indicating the collateral. The effectiveness of a fixture filing is generally governed by real property law regarding priority, but the UCC rules on perfection and priority still apply. The key distinction is that the filing location and the description of the collateral must align with real property recording requirements for fixtures. Therefore, a standard UCC-3 continuation statement, which is used to continue the effectiveness of a financing statement for general chattel, would not be the correct method for continuing perfection of a security interest in fixtures. Instead, a continuation statement must be filed that meets the requirements for a fixture filing, including the proper indexing in the real property records.

The Tennessee Uniform Commercial Code, specifically Article 9, governs secured transactions. When a debtor defaults on a secured obligation, the secured party has certain rights regarding the collateral. One crucial aspect is the disposition of collateral after repossession. Section 9-610 of the UCC, as adopted in Tennessee, permits a secured party to sell or otherwise dispose of the collateral in a commercially reasonable manner. This includes public or private sales. The proceeds from the disposition are applied first to the reasonable expenses of repossession and sale, then to the satisfaction of the secured obligation. Any surplus is generally returned to the debtor, and any deficiency is owed by the debtor. The question revolves around the proper notification requirements for a disposition of collateral. Section 9-611 of the UCC mandates that a secured party must send a reasonable authenticated notification of disposition to the debtor and certain other parties, including secondary obligors and other secured parties who have filed financing statements or are known to have an interest in the collateral. The notification must generally be sent a specified number of days before the disposition, although the exact timeframe can depend on the circumstances and is subject to interpretation of “reasonable.” The core principle is that the notification must be sent in a timely manner to allow interested parties to take appropriate action, such as arranging to redeem the collateral or participating in the sale. Therefore, the critical factor is the secured party’s adherence to the notification requirements outlined in Tennessee’s UCC Article 9 before conducting the disposition.

The core issue revolves around the perfection of a security interest in a deposit account. Under Tennessee’s UCC Article 9, specifically TCA § 47-9-304, 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 to comply with the secured party’s instructions regarding the deposit account, or when the secured party becomes the assignee of the deposit account. In this scenario, the collateral is a deposit account held at First National Bank of Nashville. The security agreement is between Music City Manufacturing, Inc. (debtor) and Harmony Finance, LLC (secured party). Harmony Finance has filed a UCC-1 financing statement covering “all assets” of Music City Manufacturing, Inc. Filing a financing statement is generally sufficient for perfection of many types of collateral, but it is explicitly not sufficient for perfection of a security interest in a deposit account. TCA § 47-9-304(a) states that a security interest in deposit accounts can only be perfected by control. Since Harmony Finance has not obtained control over the deposit account at First National Bank of Nashville, its security interest in the deposit account is unperfected. Therefore, if Music City Manufacturing, Inc. were to file for bankruptcy, a bankruptcy trustee would have a superior claim to the deposit account as a hypothetical lien creditor under 11 U.S.C. § 544, which grants the trustee the rights of a judgment lien creditor. The filing of a UCC-1 is irrelevant for perfection of a deposit account.

The scenario involves a secured party, “Appalachian Equipment Finance” (AEF), and a debtor, “Smoky Mountain Manufacturing” (SMM). AEF financed SMM’s purchase of specialized industrial weaving machinery. AEF properly perfected its security interest in the machinery by filing a UCC-1 financing statement in Tennessee, the jurisdiction where SMM is located. Subsequently, SMM relocated its primary place of business to North Carolina, and then to Virginia, without notifying AEF of these moves. AEF’s security interest remains perfected in Tennessee for a period of time, but its perfection may lapse in the new jurisdictions if AEF fails to take appropriate action. Under Tennessee Code Annotated § 47-9-316, perfection of a security interest continues for a period of four months after a change of the debtor’s location to a new jurisdiction. After this four-month period, the security interest is unperfected unless it is perfected in the new jurisdiction. If AEF does not file a new financing statement in Virginia within four months of SMM’s relocation to Virginia, its security interest will become unperfected in Virginia. Therefore, to maintain its priority over other creditors in Virginia, AEF must file a new financing statement in Virginia within the specified four-month window. The question tests the understanding of the rules governing perfection of security interests when a debtor moves between states, specifically focusing on the duration of continued perfection and the requirement for re-perfection. This is a crucial aspect of secured transactions law as it dictates the secured party’s ability to maintain its priority against subsequent claims.

In Tennessee, when a secured party has a security interest in collateral that includes fixtures, the perfection of that security interest is governed by specific rules under Article 9 of the Uniform Commercial Code as adopted in Tennessee. For fixtures, a security interest is perfected by filing a fixture filing. A fixture filing is a UCC-1 financing statement that is filed in the real property records, rather than the usual UCC filing office. This filing must describe the collateral as fixtures or otherwise indicate that it is to be filed in the real property records. The filing must also identify the real property to which the fixtures are attached. Under Tennessee law, a fixture filing is effective against subsequent purchasers of the real property and encumbrancers of the real property from the time of filing. However, there is a special rule for fixtures that are readily removable factory or office machines or readily removable replacements for domestic appliances. For these specific types of collateral, a security interest can be perfected by a standard UCC-1 filing in the general UCC filing office, and this perfection is effective against subsequent purchasers of the real property. This exception is designed to accommodate the common practice of financing such equipment which may be considered fixtures but are frequently moved or replaced. Therefore, if the collateral in question is indeed readily removable factory machinery, a standard UCC filing would be the appropriate method for perfection against subsequent purchasers of the real property.

Under Tennessee law, specifically Tennessee Code Annotated § 47-9-310, a secured party must file a financing statement in order to perfect its security interest in most types of collateral. This filing typically occurs in the office of the Secretary of State for goods located in Tennessee. However, there are exceptions to the general filing rule. For instance, if the collateral is goods covered by a certificate of title, perfection is achieved by notation on the certificate of title, not by filing a financing statement. Similarly, for certain types of collateral like deposit accounts, letter-of-credit rights, and investment property, perfection is typically achieved by control, not filing. When a security interest is perfected by filing, the financing statement must contain specific information, including the name of the debtor, the name of the secured party, and an indication of the collateral covered. The effectiveness of the filing depends on its compliance with these requirements and its timely submission to the correct filing office. If a financing statement contains a seriously misleading error, such as an incorrect debtor name that renders it seriously misleading, the filing may be ineffective to perfect the security interest against a buyer of goods that receives delivery of the goods after the financing statement had been filed but before the error was corrected. The concept of “seriously misleading” is crucial in determining the validity of a filing.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Tennessee’s UCC Article 9, a security interest in accounts is generally perfected by filing a financing statement in the appropriate jurisdiction, which for accounts is typically the jurisdiction where the debtor is located. However, when accounts are sold as part of a sale of a business, the UCC provides specific rules. Specifically, under Tennessee Code Annotated § 47-9-109(d)(3), Article 9 does not apply to the sale of accounts or chattel paper as part of a sale of a business out of which they arose. This exclusion means that the transaction is governed by common law principles and any applicable statutes outside of Article 9, rather than the filing and perfection requirements of Article 9. Therefore, no UCC-1 financing statement is required to perfect the interest in these accounts because the transaction falls outside the scope of Article 9. The focus shifts from perfection by filing to the effectiveness of the sale agreement itself in transferring ownership of the accounts. The purchaser of the business, and thus the accounts, acquires ownership rights upon the completion of the sale as per the contract, without the need for a public filing under Article 9 to establish priority against third parties.

In Tennessee, when a secured party has a security interest in a motor vehicle that is subject to a certificate of title statute, perfection of that security interest is governed by the certificate of title provisions, not by filing a UCC-1 financing statement. Tennessee Code Annotated § 55-3-105(b) specifically states that a security interest in a vehicle of a type for which a certificate of title is required is perfected by compliance with the certificate of title law of Tennessee. This means the secured party must have its lien noted on the certificate of title issued by the Tennessee Department of Revenue. Filing a UCC-1 financing statement would be an ineffective method of perfection for such collateral. Therefore, the secured party’s failure to have the lien noted on the certificate of title means the security interest is unperfected. An unperfected security interest is subordinate to the rights of a buyer in the ordinary course of business who takes possession of the collateral without knowledge of the security interest.

The scenario involves a security interest in inventory. In Tennessee, as under Article 9 of the Uniform Commercial Code, a buyer in the ordinary course of business takes free of a security interest created by the 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 business of the secured party and is not in the ordinary course of the business of the seller. This exception is very narrow and generally applies only when the buyer is colluding with the seller to defeat the secured party’s interest. In this case, the buyer, “Crafty Creations,” is a retailer purchasing inventory from “Artisan Goods,” a manufacturer. Artisan Goods has granted a security interest in its inventory to “Bank of Nashville.” Bank of Nashville has properly perfected its security interest. Crafty Creations purchases the unique handcrafted pottery in the ordinary course of Artisan Goods’ business. The critical factor is whether Crafty Creations had knowledge that the sale was not in the ordinary course of Artisan Goods’ business and that it was for the purpose of avoiding the security interest. The facts state Crafty Creations purchased the pottery in the ordinary course of Artisan Goods’ business and had no knowledge that the sale was outside the ordinary course of Artisan Goods’ business or that the sale was to a buyer that knew the sale was in ordinary course of business of the secured party and is not in the ordinary course of the business of the seller. Therefore, Crafty Creations takes the inventory free of Bank of Nashville’s security interest. The explanation of the calculation is that there is no calculation required, but rather an application of UCC § 9-320(a) as adopted in Tennessee. This section provides that a buyer in ordinary course of business takes free of a security interest unless the buyer knows that the sale is not in the ordinary course of the business of the seller or knows that the sale is in ordinary course of business of the secured party and is not in the ordinary course of the business of the seller. Since Crafty Creations purchased in the ordinary course of Artisan Goods’ business and had no knowledge of any facts that would negate this protection, the security interest does not attach to the pottery in their hands.

In Tennessee, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally attaches automatically upon creation and the debtor’s possession of the collateral. However, for a PMSI in inventory, perfection is required to establish priority. The scenario involves a Tennessee-based furniture retailer, “Magnolia Home Furnishings,” which purchases inventory on credit from a supplier, “Oakwood Furniture Manufacturers,” located in North Carolina. Oakwood retains a security interest in the inventory to secure payment. Magnolia Home Furnishings is a merchant that sells goods to consumers. For Oakwood to have priority over other creditors of Magnolia, including a later-filed secured party whose security interest covers all of Magnolia’s assets, Oakwood must perfect its PMSI in the inventory. Perfection of a PMSI in inventory requires filing a financing statement before or within a specified period after the debtor receives possession of the inventory, and also providing notice to any existing secured parties. In this specific case, Oakwood’s security interest in the inventory is a PMSI. Since the collateral is inventory held by Magnolia, a merchant, perfection by filing is necessary to ensure priority against subsequent perfected security interests. Without filing, Oakwood’s unperfected PMSI would be subordinate to a perfected security interest of another creditor. The UCC 9-324(b) specifically addresses PMSI in inventory, requiring not only perfection but also that the secured party give new value, the debtor receives possession of the inventory, and the financing statement is filed and the notification is sent to the other secured party before the debtor receives possession of the inventory. The key is that for inventory, perfection is mandatory for priority against after-acquired property clauses or other perfected security interests.

The core issue in this scenario revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Tennessee’s Uniform Commercial Code (UCC) Article 9, a security interest in accounts is generally perfected by filing a financing statement. However, there is a specific exclusion for the sale of accounts, contract rights, or chattel paper as part of a sale of a business out of which they arose. This exclusion means that such a transaction is typically treated as a true sale, not a secured transaction, and therefore does not require a UCC filing for perfection. The rationale behind this exclusion is to avoid cluttering the public record with filings for transactions that are not intended to create a security interest in favor of a lender, but rather represent a transfer of ownership of receivables as part of a going concern. Therefore, if the transfer of accounts from “Memphis Manufacturing” to “Nashville Distribution” was a bona fide sale of accounts as part of the sale of the business, no UCC-1 financing statement would be required for perfection of the buyer’s interest in those accounts. The buyer’s ownership interest is established by the sales agreement itself.

The core issue in this scenario revolves around the perfection of a security interest in intangible collateral, specifically a deposit account, under Tennessee’s Article 9. Tennessee law, in alignment with Revised Article 9 of the Uniform Commercial Code, generally requires a secured party to obtain control over a deposit account to perfect its security interest. Control is typically achieved by becoming the bank’s customer with respect to the deposit account, or by having the bank acknowledge that it will follow the secured party’s instructions concerning the account. In this case, the security agreement grants a security interest in the deposit account, and the financing statement filed in Tennessee correctly identifies the collateral. However, the critical missing element for perfection against a subsequent bona fide purchaser or a competing secured party is the establishment of control. Merely filing a financing statement is insufficient for perfection in deposit accounts. The bank, as the depositary institution, holds the account. Without the bank’s acknowledgement of the secured party’s control, or the secured party becoming the customer of record for that account, the security interest remains unperfected. Therefore, even with a properly filed financing statement, the absence of control means the security interest is not perfected against third parties who might acquire rights in the account.

The core issue here is determining the proper place to file a financing statement to perfect a security interest in a motor vehicle that is titled in Tennessee. Under Tennessee Code Annotated § 47-9-303(b), perfection of a security interest in goods covered by a certificate of title is governed by the law of the jurisdiction that issued the certificate of title. In this scenario, the vehicle is titled in Tennessee. Therefore, Tennessee law dictates the perfection method. Tennessee Code Annotated § 47-9-311(b) specifies that to perfect a security interest in goods covered by a certificate of title, a financing statement must be filed and the security interest must be noted on the certificate of title. However, the statute further clarifies that the filing of a financing statement alone is not sufficient for perfection when a certificate of title is required. The security interest is perfected when it is noted on the certificate of title. While a financing statement might be filed in conjunction with the title notation process, the act of noting the security interest on the certificate of title is the operative step for perfection in this context, as per the specific rules for titled goods in Article 9. Filing a financing statement with the Secretary of State, which is the general rule for perfection of security interests in goods under Article 9, is superseded by the certificate of title provisions for vehicles. Therefore, the proper place to perfect the security interest in the described vehicle is by notation on the Tennessee certificate of title.

In Tennessee, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in inventory receives special priority. To maintain this priority, the secured party must satisfy specific requirements. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the secured party must send an authenticated notification to any other secured party who has filed a financing statement covering the same inventory, or who has perfected a security interest in the same inventory. This notification must state that the sender has or expects to acquire a PMSI in inventory of the debtor and must describe the inventory. The notification must be sent within twenty-five days before the debtor receives possession of the inventory. If these conditions are met, the PMSI in inventory will generally have priority over conflicting security interests in the same inventory, even if the other secured party perfected earlier or filed a financing statement. The question asks about the priority of a PMSI in inventory when the secured party fails to send the required notification to a prior perfected secured party. Without the notification, the PMSI loses its superpriority status over the previously perfected security interest. Therefore, the prior perfected security interest will have priority.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Tennessee’s Uniform Commercial Code, specifically Article 9, a secured party that has a PMSI in inventory must satisfy two primary requirements to maintain its priority over other secured parties and buyers. First, the PMSI must be perfected by filing a financing statement before or within twenty days after the debtor receives possession of the inventory. Second, the secured party must give a specific type of notification to any holder of a conflicting security interest in the same inventory, or to a buyer of the inventory, if that holder has filed a financing statement covering the inventory and the notification is sent before the filing of the financing statement. The notification must state that the sender has or will acquire a PMSI in inventory of the debtor and describe the inventory. In this case, “Farm Equipment Finance” (FEF) has a PMSI in the tractors. They filed their financing statement on March 15th. “AgriBank” also has a security interest and filed on March 1st. For FEF to have priority over AgriBank’s earlier-filed security interest, FEF must have provided the required notification to AgriBank before AgriBank filed its financing statement. Since FEF filed on March 15th and AgriBank filed on March 1st, FEF’s filing occurred after AgriBank’s. Therefore, FEF needed to notify AgriBank before FEF’s filing. As FEF failed to provide this notification to AgriBank before its March 15th filing, FEF’s PMSI in the inventory will not have priority over AgriBank’s earlier-filed security interest. The perfection of FEF’s PMSI is achieved by filing, but priority is determined by the notification requirement in conjunction with the filing date relative to other perfected interests.

In Tennessee, when a secured party has a security interest in collateral and that collateral is disposed of, the secured party’s rights generally follow the collateral. This principle is known as “perfection follows the collateral.” If a buyer in the ordinary course of business purchases goods from a seller who is in the business of selling goods of that kind, the buyer generally takes the goods free of a security interest created by the seller, even if the security interest is perfected. This is a fundamental exception to the general rule that a perfected security interest attaches to collateral regardless of its transfer. In this scenario, the farm equipment was purchased by a buyer in the ordinary course of business from a dealer who regularly sold such equipment. Therefore, the security interest of First National Bank, which was perfected against the dealer, would generally not follow the collateral into the hands of this buyer. The buyer’s purchase is a protected transaction under Article 9 of the Uniform Commercial Code, as adopted in Tennessee. The key is that the buyer obtained the goods from a merchant dealing in goods of that kind, in good faith and without knowledge that the sale violated the security agreement.

The core issue here is determining the proper classification of the collateral and the corresponding perfection requirements under Tennessee’s Article 9. The scenario involves a business, “Appalachian Artisans,” which is a manufacturer of handcrafted furniture. They are obtaining financing from “Mountain State Bank.” The collateral in question is described as “all inventory, including raw materials, work-in-progress, and finished goods, used or held for use in the manufacturing and sale of furniture.” Inventory is explicitly defined in UCC § 9-102(a)(48) as goods held by a person for sale or lease or to be furnished under a contract of service. Furthermore, UCC § 9-102(a)(44) defines “goods” to include all things which are movable when a security interest attaches. Since Appalachian Artisans is a manufacturer and the furniture is held for sale, this clearly falls under the definition of inventory. Perfection of a security interest in inventory is typically achieved by filing a financing statement under UCC § 9-310(a). While possession can be a method of perfection for certain types of collateral, it is not the primary or most effective method for inventory due to its constant turnover and the need for the debtor to sell it. A purchase money security interest (PMSI) in inventory requires both filing and notification to other secured parties with a conflicting interest in the inventory, as per UCC § 9-324(b). However, the question asks about the general perfection method for inventory, not specifically a PMSI. Therefore, filing a financing statement with the Tennessee Secretary of State is the generally applicable and required method for perfection of a security interest in inventory. The other options are either incorrect methods of perfection for inventory or apply to different types of collateral. A security interest in accounts receivable, for instance, is perfected by filing, but the collateral here is inventory. Possession is generally not practical for inventory. A security agreement alone does not perfect a security interest; it creates the security interest, but perfection requires an action like filing or possession.

The core issue here revolves around the perfection of a security interest in accounts, specifically in the context of a Tennessee lender. Under Tennessee Code Annotated § 47-9-301(1)(d) and § 47-9-308(a), a security interest in accounts is generally perfected by filing a financing statement. However, § 47-9-309(2) provides an exception for “a sale of accounts or chattel paper.” This exception means that if the transaction is a true sale of accounts, the security interest in those accounts is automatically perfected and does not require filing. The question hinges on whether the transaction between Bridgestone Tire Company and the Tennessee factoring company constitutes a true sale or a secured loan disguised as a sale. A key indicator of a true sale is the transfer of ownership and the associated risks and rewards. In this scenario, the factoring company purchased the accounts outright, bearing the risk of non-payment and receiving the benefit of any early payment discounts. Bridgestone relinquished control and ownership of these accounts. The “recourse” provision mentioned is a critical factor. If the recourse is limited and truly covers only a breach of warranty regarding the accounts themselves (e.g., that they represent genuine sales), it may still be consistent with a sale. However, if the recourse is broad, requiring Bridgestone to repurchase uncollectible accounts, it leans towards a secured transaction. The Tennessee Code, consistent with the broader UCC Article 9, focuses on the substance of the transaction. Given that the factoring company purchased the accounts for a percentage of their face value and bore the risk of collection, and the recourse was limited to specific representations about the accounts’ validity, this strongly suggests a true sale. Therefore, the security interest is automatically perfected under § 47-9-309(2). No further action, such as filing a financing statement, is required for perfection in Tennessee for a sale of accounts.

In Tennessee, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in deposit accounts is generally accomplished 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 instructions from the secured party directing the disposition of the funds in the deposit account. Filing a financing statement is not sufficient to perfect a security interest in deposit accounts. Therefore, when a secured party has not obtained control over the deposit account, their security interest remains unperfected. In the scenario presented, the secured party, “Music City Motors,” has filed a financing statement covering the inventory of “Nashville Sound Systems,” which includes a deposit account. However, Music City Motors has not obtained control over this deposit account as defined by UCC § 9-104. Without control, the security interest in the deposit account is unperfected. A subsequent buyer of the deposit account would take free of an unperfected security interest. Thus, the subsequent buyer, “Memphis Music Distributors,” who purchased the deposit account without knowledge of Music City Motors’ security interest and without giving value, would still prevail over the unperfected security interest because the statute prioritizes purchasers over unperfected secured creditors in this context. The correct action for Music City Motors to perfect its security interest in the deposit account would have been to obtain control from Nashville Sound Systems and the depository bank.

The core issue here involves the priority of security interests when a debtor has granted multiple security interests in the same collateral, and one of those interests is in a “purchase-money security interest” (PMSI). In Tennessee, as under Article 9 of the Uniform Commercial Code generally, a PMSI in inventory generally has priority over a conflicting security interest in the same inventory if certain conditions are met. Specifically, for inventory, a PMSI holder must satisfy two primary requirements to achieve superpriority: 1) the PMSI must be perfected when the debtor receives possession of the inventory, and 2) the PMSI holder must give an authenticated notification to any holder of a conflicting security interest in that inventory. The notification must be sent before the debtor receives possession of the inventory. In this scenario, “Appliance Emporium” has a PMSI in the new refrigerators. “Capital Finance” has a prior perfected security interest in all of Appliance Emporium’s inventory. Appliance Emporium receives the refrigerators on March 1st. To maintain its PMSI superpriority, Appliance Emporium must perfect its interest and notify Capital Finance before March 1st. The facts state that Appliance Emporium filed its financing statement on February 28th, which perfects its PMSI. However, it sent the notification to Capital Finance on March 5th, which is *after* the debtor received possession of the inventory. Therefore, Appliance Emporium’s PMSI in the refrigerators will not have priority over Capital Finance’s earlier perfected security interest in the same inventory. The question asks about the priority of Capital Finance’s security interest. Since Capital Finance had a prior perfected security interest in all of Appliance Emporium’s inventory, and Appliance Emporium failed to satisfy the notification requirements for its PMSI *before* the debtor received possession, Capital Finance’s security interest remains superior. Therefore, Capital Finance’s security interest in the refrigerators will have priority.

The core issue here revolves around the perfection of a security interest in accounts that arise from the sale of goods by a merchant in Tennessee. Under Tennessee Code Annotated § 47-9-308, a security interest in a deposit account can only be perfected by control. However, the question specifies that the collateral is “accounts” derived from the sale of inventory. Article 9 of the Uniform Commercial Code, as adopted in Tennessee, distinguishes between different types of collateral and their perfection methods. For accounts, perfection is typically achieved by filing a financing statement, unless an exception applies. The scenario describes a lender taking a security interest in “all accounts receivable” of a retail clothing store in Memphis, Tennessee. The UCC § 9-309(2) provides an exception for “a security interest created by an assignee of accounts which does not alone and in the regular course of business assign a significant part of the outstanding accounts of the assignor.” This is often referred to as the “casual or isolated” assignment exception. However, the facts state that the lender is taking a security interest in *all* accounts receivable of the store, which implies a regular course of business and a significant portion, if not all, of the outstanding accounts. Therefore, the general rule of filing applies. Perfection of a security interest in accounts requires filing a financing statement in the appropriate jurisdiction, which for a business like a retail store in Tennessee, would typically be with the Tennessee Secretary of State. The exception for deposit accounts is irrelevant here as the collateral is accounts, not deposit accounts. The concept of “control” is primarily relevant for deposit accounts, investment property, and certain other types of collateral, but not for general accounts receivable. The purchase money security interest (PMSI) rules relate to acquiring new collateral and are not directly applicable to the perfection method for accounts in this context. The explanation of perfection for accounts focuses on the filing requirement under UCC § 9-310. The specific wording of UCC § 9-309(2) regarding casual or isolated assignments is important, but the facts presented suggest this exception does not apply because the assignment is of “all accounts receivable,” indicating it is not casual or isolated.

The core issue in this scenario is the priority of security interests when a debtor defaults and the collateral is subject to multiple claims. Under Tennessee law, specifically Article 9 of the Uniform Commercial Code, 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. This is a fundamental protection afforded to facilitate commerce. In this case, “Magnolia Motors” is a merchant that sells vehicles, and “Countryside Cars” is a buyer in the ordinary course of business because it purchased the truck in good faith and without knowledge that the sale violated the security agreement between “Magnolia Motors” and “First National Bank.” The security interest held by “First National Bank” was created by “Magnolia Motors” (the seller). Therefore, when “Countryside Cars” purchased the truck from “Magnolia Motors,” it took the truck free of the bank’s security interest. “First National Bank” would retain its security interest in the proceeds of the sale from “Magnolia Motors,” but its claim against the collateral itself is extinguished by the sale to a buyer in the ordinary course.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Tennessee law, specifically Tennessee Code Annotated § 47-9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. The lender, “Appalachian Finance,” has a perfected security interest in all of “Mountain Manufacturing’s” existing and after-acquired inventory. “Bespoke Components Inc.” then sells raw materials to Mountain Manufacturing on credit, retaining a security interest in those raw materials. This constitutes a PMSI in inventory. To maintain priority over Appalachian Finance’s prior perfected security interest, Bespoke Components Inc. must satisfy the requirements of § 47-9-324. These requirements include: (1) the PMSI must be perfected when the debtor receives possession of the inventory; and (2) the PMSI lender must give an authenticated notification to any other secured party whose claim was perfected before the date of filing of the PMSI financing statement. The notification must state that the PMSI lender expects to acquire a security interest in inventory of the debtor, describe the inventory, and specify the names of the debtor and the secured party. Furthermore, the notification must be sent within six months before the debtor receives possession of the inventory. In this case, Bespoke Components Inc. perfected its security interest on March 1st, which was before Mountain Manufacturing received possession of the raw materials. However, it failed to send the required notification to Appalachian Finance before Mountain Manufacturing received possession of the collateral. Therefore, Bespoke Components Inc.’s PMSI in the raw materials will not have priority over Appalachian Finance’s prior perfected security interest. The notification requirement is crucial for PMSI holders in inventory to gain priority over earlier perfected security interests.

In Tennessee, 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. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted in Tennessee. The secured party’s rights follow the collateral unless a specific exception applies. For instance, if the disposition was authorized by the secured party, or if the buyer was a buyer in the ordinary course of business who took free of the security interest, the security interest might not continue. However, in this scenario, the sale was not authorized, and the buyer is not described as a buyer in the ordinary course of business. Therefore, the security interest persists in the tractor. The secured party can then proceed against the tractor in the hands of the new owner, the farmer from Mississippi, to enforce the security interest. The UCC, as adopted in Tennessee, prioritizes the rights of a perfected secured party over subsequent transferees of the collateral when the transfer is unauthorized. The concept of “perfection” is crucial here, as an unperfected security interest has even weaker claims against third parties. Tennessee law, consistent with the UCC, aims to provide certainty and predictability in commercial transactions, and the continuation of a perfected security interest in unauthorized dispositions is a cornerstone of this framework. The secured party’s diligence in perfecting their interest in Tennessee grants them significant rights, even when the collateral moves across state lines.

The core issue here is the perfection of a security interest in accounts that arise from the sale of goods by a merchant in inventory. Under Tennessee’s version of UCC Article 9, specifically Tenn. Code Ann. § 47-9-307(1), a buyer in the ordinary course of business takes free of a security interest created by the 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 ordinary course of business, unless the buyer knows that the sale is in violation of the security agreement. However, this protection generally applies to the buyer of goods, not to a lender who takes a security interest in the seller’s accounts receivable. In this scenario, “Artisan Furnishings,” a Tennessee furniture retailer, granted a security interest in its inventory and all after-acquired accounts receivable to “Capital Bank.” Capital Bank properly perfected its security interest by filing a UCC-1 financing statement in Tennessee. Subsequently, “Bohemian Home Decor,” a business in Georgia, purchased a large quantity of furniture from Artisan Furnishings. Bohemian Home Decor paid for the furniture and received delivery. Artisan Furnishings subsequently defaulted on its loan with Capital Bank. Capital Bank seeks to enforce its security interest against the accounts receivable that arose from Bohemian Home Decor’s purchase. The question is whether Capital Bank’s perfected security interest in Artisan Furnishings’ accounts receivable is subordinate to Bohemian Home Decor’s claim or status. Bohemian Home Decor is a buyer of goods from inventory. Under Tenn. Code Ann. § 47-9-320(a), a buyer in ordinary course of business takes free of a security interest that attaches to goods unless the buyer knows that the sale is in violation of the security agreement. However, this rule protects buyers of *goods*, not buyers of *accounts*. Bohemian Home Decor, by purchasing the furniture, became a debtor of Artisan Furnishings with respect to the payment obligation, which constitutes an account. Capital Bank’s security interest attached to these accounts as after-acquired property. The critical distinction is that Bohemian Home Decor’s status as a buyer in ordinary course of business protects it against Capital Bank’s security interest in the *inventory* it purchased, but it does not automatically discharge Capital Bank’s security interest in the *account* created by the sale of that inventory. Unless Bohemian Home Decor can establish a specific statutory exception or a contractual release from Capital Bank, Capital Bank’s perfected security interest in the accounts receivable generated from the sale of its collateral (the inventory) remains effective against Bohemian Home Decor, which now owes the account to Artisan Furnishings. There is no provision in Article 9 that states a buyer of goods takes free of a security interest in the resulting account receivable simply by virtue of being a buyer in ordinary course of business. The protection is against the goods themselves. Therefore, Capital Bank’s security interest in the account receivable is superior.

In Tennessee, under Article 9 of the Uniform Commercial Code, a security interest in accounts receivable is generally perfected by filing a financing statement. However, there is an exception for “assignments of accounts” that do not, in the aggregate, involve a significant portion of the outstanding accounts of the assignor. This is known as the “casual or isolated sale” exception or, more precisely, the exception for assignments that do not transfer a “significant part” of the assignor’s accounts. Specifically, Tennessee Code Annotated § 47-9-109(d)(4) states that Article 9 does not apply to the sale of accounts or chattel paper as part of a sale of the business out of which they arose. More relevant to perfection, Tennessee Code Annotated § 47-9-309(2) provides that a security interest in a security, or a certificated security in registered form, that is delivered to the secured party pursuant to § 47-9-313 can be perfected without filing. However, the scenario involves accounts, not securities. The perfection of a security interest in accounts typically requires filing a financing statement in the jurisdiction where the debtor is located. For a business located in Tennessee, this means filing with the Tennessee Secretary of State. While there are exceptions for certain types of collateral or transactions, an assignment of a significant portion of a business’s accounts receivable to secure a loan is not one of them. Therefore, to have a perfected security interest against third parties, the lender must file a financing statement. The explanation of the calculation would be as follows: The question asks about perfection of a security interest in accounts. Article 9 of the UCC, as adopted in Tennessee, generally requires filing a financing statement to perfect a security interest in accounts. There is no calculation needed to determine the perfection method for accounts, as it is a matter of statutory compliance. The UCC’s framework dictates the perfection requirements based on the type of collateral and the nature of the transaction. The specific provision governing perfection of accounts is found in Tennessee Code Annotated § 47-9-310(a), which states that “except as otherwise provided in subsection (b), the following rules apply: (1) a security interest in goods, chattel paper, a negotiable instrument, or a certificated security may be perfected by possession; and (2) a security interest in money or a certificated security in registered form may be perfected by registration of a transfer to the secured party or by delivery to the secured party pursuant to Section 47-9-313.” Crucially, accounts are not listed as collateral that can be perfected by possession or registration. Therefore, the default method of filing a financing statement applies. The scenario involves a loan secured by accounts, which falls under the general rule for perfection of security interests in accounts.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Tennessee law, specifically Tennessee Code Annotated § 47-9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets certain requirements. These requirements include: (1) the PMSI is perfected when the debtor receives possession of the inventory; (2) the PMSI secured party gives an authenticated notification to any other secured party whose security interest is known to the PMSI secured party or who has filed a financing statement covering the goods in question before the filing deadline for the PMSI; and (3) the notification is sent within a specific timeframe before the debtor receives possession of the inventory. In this case, “Glowworm Lighting” filed its financing statement on January 15th. “BrightBeam Manufacturing” perfected its PMSI on February 1st, the same day the debtor received possession. Crucially, BrightBeam did not send any notification to Glowworm Lighting before the debtor received possession of the inventory. Therefore, BrightBeam’s PMSI in the inventory is subordinate to Glowworm Lighting’s previously perfected security interest. The priority is determined by the order of perfection when the PMSI notification requirement is not met.

In Tennessee, the perfection of a security interest in a motor vehicle, as defined by Tennessee Code Annotated § 55-1-101, typically requires notation on the certificate of title rather than filing a UCC-1 financing statement. This is governed by Tennessee Code Annotated § 47-9-311(b), which states that compliance with a certificate of title statute is the method of perfection for such goods. The certificate of title statute in Tennessee, specifically Tennessee Code Annotated § 55-3-101 et seq., mandates that security interests in motor vehicles be noted on the certificate of title issued by the Tennessee Department of Revenue. Therefore, if a lender fails to have the security interest noted on the certificate of title for a vehicle registered in Tennessee, their security interest is unperfected against a buyer who gives value and receives delivery of the collateral without knowledge of the security interest, as per Tennessee Code Annotated § 47-9-317(b). The filing of a UCC-1 financing statement would be ineffective for perfection in this scenario, as the exclusive method for perfection is title notation. The consequence of not following the statutory method is that the security interest remains unperfected and vulnerable to claims from subsequent purchasers who meet the criteria of a buyer in ordinary course of business or a buyer of consumer goods.

In Tennessee, 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. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted in Tennessee. The secured party’s rights follow the collateral unless a specific exception applies. One such exception is found in UCC § 9-315(a)(1), which states that a security interest continues in collateral notwithstanding sale, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest. Furthermore, UCC § 9-315(a)(2) specifies that a security interest attaches to any identifiable proceeds of the collateral. Therefore, if the secured party has a perfected security interest in the antique tractor, and it is sold without authorization, the security interest remains attached to the tractor in the hands of the buyer, and also attaches to any proceeds received from the sale, such as cash or another item of property received in exchange for the tractor. The question specifies that the sale was not authorized, and there is no indication that the buyer qualified for any buyer-in-ordinary-course exceptions or that the security interest was otherwise released.

The core issue in this scenario revolves around the perfection of a security interest in accounts that arise from the sale of goods by a seller located in Tennessee to buyers located in various other states, and the subsequent assignment of those accounts to a financing company also in Tennessee. Under Tennessee’s Uniform Commercial Code (UCC) Article 9, specifically Tenn. Code Ann. § 47-9-301, perfection of a security interest in accounts is generally achieved by filing a financing statement in the jurisdiction where the debtor is located. For a business, this is typically its chief executive office. However, Tenn. Code Ann. § 47-9-307 addresses the location of debtors for purposes of perfection. When a debtor is a registered organization (like a corporation), its location is the jurisdiction whose law governs its internal affairs (i.e., its place of incorporation). In this case, “AgriCorp,” the seller of the goods, is incorporated and has its chief executive office in Tennessee. The financing company, “Harvest Finance,” also has its chief executive office in Tennessee. The security interest attaches to the accounts when AgriCorp has rights in the collateral, value has been given, and a security agreement is in place. To be perfected against third parties, Harvest Finance must file a financing statement. Tenn. Code Ann. § 47-9-310 mandates that filing is generally required to perfect a security interest. The proper place to file a financing statement to perfect a security interest in accounts is the jurisdiction where the debtor (AgriCorp) is located. Since AgriCorp is located in Tennessee, the financing statement should be filed in Tennessee. The fact that the accounts arise from sales to buyers in other states does not change the location of the debtor for perfection purposes, nor does it automatically require filings in those other states for accounts. The perfection is governed by the law of the jurisdiction where the debtor is located. Therefore, a UCC-1 financing statement filed in Tennessee is sufficient to perfect Harvest Finance’s security interest in AgriCorp’s accounts.