Under South Carolina’s Article 9 of the Uniform Commercial Code, when a secured party has a perfected security interest in collateral and that collateral is sold in the ordinary course of business to a buyer who is not aware that the sale is in violation of the security agreement, that buyer takes free of the security interest. This is often referred to as the “buyer in the ordinary course of business” rule. The core of this protection lies in the buyer’s good faith and lack of knowledge that the sale violates the secured party’s rights. The secured party’s recourse in such a situation is typically against the debtor for breach of the security agreement, not against the buyer who acquired the collateral in good faith. The perfection of the security interest is relevant for priority against other creditors and transferees, but it does not automatically mean a buyer in the ordinary course of business is subject to it. The buyer’s status as a “buyer in the ordinary course of business” is a specific statutory exception to the general rule that a security interest continues in collateral even after sale. This protection is vital for the smooth functioning of commerce, allowing businesses to purchase inventory without exhaustive due diligence into every prior security interest.

The question revolves around the priority of security interests when a debtor defaults on multiple obligations secured by the same collateral. In South Carolina, as governed by UCC Article 9, the general rule for determining priority among secured parties is the “first-to-file-or-perfect” rule. This means that a security interest is senior if its financing statement was filed first or if it was perfected before another security interest attached and was unperfected. However, this rule has exceptions, particularly concerning purchase money security interests (PMSIs). A PMSI in inventory generally has priority over a conflicting security interest in the same inventory if the PMSI requirements are met: it must be perfected when the debtor receives possession of the inventory, and the secured party must give an authenticated notification to any secured party whose financing statement covers the inventory within five years before the debtor receives possession of the inventory. In this scenario, Al’s Appliances financed the inventory for Beatrice’s Boutique, creating a PMSI in the specific goods sold. Al filed a financing statement on January 15th. Carol’s Credit Union had a prior perfected security interest in all of Beatrice’s present and future inventory, having filed its financing statement on January 1st. Beatrice received possession of the new inventory financed by Al on January 10th. For Al’s PMSI to have priority over Carol’s prior perfected security interest in the same inventory, Al must satisfy the notification requirement under UCC § 9-324(b). This requires Al to notify Carol of its PMSI in the inventory within five years before Beatrice received possession of the inventory. Since Al’s notification to Carol occurred on January 12th, which is after Beatrice received possession of the inventory on January 10th, Al failed to comply with the notification requirement. Therefore, Carol’s earlier perfected security interest has priority.

South Carolina’s Article 9 of the Uniform Commercial Code governs secured transactions. When a debtor defaults on a secured obligation, the secured party has rights to repossess and dispose of the collateral. The disposition of collateral must be commercially reasonable, which is a fundamental principle under UCC § 9-610. This reasonableness is judged by the totality of the circumstances and is not a fixed standard. Factors considered include the method of disposition, the terms of the disposition, the manner of advertising, the amount obtained, and the number of bids received. A private sale is permissible, but it must be conducted in a way that maximizes the value of the collateral. If a secured party fails to conduct a commercially reasonable sale, it can result in a deficiency judgment being reduced or even barred, as per UCC § 9-626. This reduction is typically by the amount by which the secured party suffered loss due to the failure to comply with commercial reasonableness. In this scenario, the secured party chose a private sale, which is allowed. However, the lack of any advertising and the sale to an insider without any attempt to solicit other bids would likely render the sale commercially unreasonable. The UCC does not mandate a specific formula for calculating the deficiency reduction in such cases; instead, it often relies on a rebuttable presumption that the collateral was worth the amount of the debt. Therefore, the secured party may be barred from recovering any deficiency if they cannot prove the sale was commercially reasonable.

The question concerns the priority of security interests in goods that are accessioned to other goods. Under South Carolina Code Section 36-9-334, a security interest in goods that are accessioned to other goods generally has priority over a security interest in the whole, provided that the security interest in the accession was perfected when the goods became accessions. However, there are exceptions. Specifically, subsection (e) of Section 36-9-334 states that a security interest in a readily removable component part of a motor vehicle or in readily removable equipment of a type not ordinarily used or leased for personal, family, or household purposes, which has priority over a security interest in the whole, continues to have priority in the component part or equipment even if that part or equipment becomes an accession. The scenario describes a specialized piece of industrial machinery, not a motor vehicle, and the security interest was perfected after the machinery became an accession. Therefore, the perfected security interest in the machinery that became an accession will not have priority over the pre-existing perfected security interest in the main industrial unit. The prior perfected security interest in the entire industrial unit takes precedence.

The core issue in this scenario revolves around the perfection of a security interest in accounts, specifically in the context of a business operating across state lines. Under South Carolina’s Uniform Commercial Code, Article 9, the location of collateral is a primary factor in determining the proper place to file a financing statement for perfection. For accounts, the UCC generally dictates that perfection is achieved by filing a financing statement in the jurisdiction where the debtor is located. South Carolina Code Section 36-9-301 defines the location of a debtor. For a registered organization like a corporation, its location is its chief executive office or, if it has no chief executive office, its place of incorporation. In this case, “Coastal Builders Inc.” is incorporated and has its chief executive office in South Carolina. Therefore, for perfection of its security interest in accounts, Coastal Builders Inc. must file its financing statement in South Carolina. Filing in North Carolina, where some of the accounts may arise or be collected, would not be the correct jurisdiction for initial perfection of a security interest in accounts when the debtor is located in South Carolina. The UCC prioritizes the debtor’s location for accounts, not the location of the accounts themselves or the location of payment. This ensures a predictable and centralized filing system for secured parties. Consequently, Coastal Builders Inc.’s failure to file in South Carolina means its security interest in the accounts is unperfected against a subsequent buyer of those accounts that takes possession for value and without notice, or against a bankruptcy trustee.

In South Carolina, under Article 9 of the Uniform Commercial Code, a security interest in deposit accounts is generally perfected by control. Control over a deposit account is achieved 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 account. Filing a financing statement is not sufficient for perfection of a security interest in a deposit account. The scenario describes a situation where the secured party, Coastal Bank, has a security interest in the deposit accounts of Maritime Enterprises. Coastal Bank has taken possession of the original deposit account statements and has received an agreement from Maritime Enterprises acknowledging Coastal Bank’s control. However, the critical factor for perfection in deposit accounts is the bank’s agreement to act on the secured party’s instructions. While possession of statements and an agreement from the debtor are good practice, they do not substitute for the bank’s explicit agreement to the secured party’s control as defined in UCC § 9-104. Therefore, Coastal Bank has not perfected its security interest solely through these actions. Perfection requires the bank maintaining the deposit account to agree to follow the secured party’s instructions without Coastal Bank becoming the bank where the account is maintained, which is not stated. The most effective method for perfection in this context, given the provided facts, is for Coastal Bank to obtain the agreement of the depositary bank to comply with its instructions.

The question concerns the priority of security interests when a debtor defaults and multiple creditors have claims against the same collateral. Specifically, it tests the understanding of purchase-money security interests (PMSIs) and their perfection requirements, as well as the priority rules for after-acquired property clauses. In this scenario, Coastal Bank has a perfected security interest in all of “Sea Breeze” restaurant’s equipment, including after-acquired equipment, via a financing statement filed on January 15, 2023. This establishes Coastal Bank as a secured party with a broad claim. On March 1, 2023, Maritime Marine provided a new industrial oven to Sea Breeze, taking a purchase-money security interest in that specific oven. To maintain its PMSI priority, Maritime Marine must have both: (1) a valid security agreement granting the interest, and (2) perfected its security interest. Perfection for a PMSI in equipment generally requires filing a financing statement. The question implies that Maritime Marine did not file a financing statement until April 10, 2023. Under South Carolina law, specifically UCC § 9-324, a PMSI in goods other than inventory or livestock has priority over a conflicting security interest in the same goods if the PMSI is perfected by filing no later than 20 days after the collateral comes into possession of the debtor. However, the more general rule under UCC § 9-317(e) states that an unperfected security interest is subordinate to the rights of a buyer of goods that buys for value and receives delivery of the collateral without knowledge of the security interest or rights of the secured party. More importantly, UCC § 9-317(a)(2) states that a security interest is subordinate to the rights of a person that becomes a secured party of record for the same collateral before the security interest is perfected. Coastal Bank’s security interest was perfected on January 15, 2023. Maritime Marine’s PMSI was not perfected until April 10, 2023. Therefore, Coastal Bank’s prior perfected security interest has priority over Maritime Marine’s subsequently perfected PMSI in the oven, despite it being a PMSI. The “grace period” for PMSI perfection (20 days) is relevant, but Maritime Marine failed to meet even that deadline. The after-acquired property clause in Coastal Bank’s original security agreement attaches to the oven as soon as Sea Breeze acquires it, and Coastal Bank’s prior perfection gives it priority. The correct answer is that Coastal Bank’s perfected security interest in after-acquired equipment takes priority over Maritime Marine’s unperfected purchase-money security interest in the oven.

In South Carolina, under Article 9 of the Uniform Commercial Code, the priority of security interests is generally determined by the order of filing a financing statement. However, certain purchase money security interests (PMSIs) in inventory have specific perfection and priority rules. A PMSI grants the secured party a security interest in goods acquired by the debtor, and the secured party has given value to enable the debtor to acquire those goods. For inventory, a PMSI is perfected when it is perfected on or before the time the debtor receives possession of the inventory. Crucially, for a PMSI in inventory to have priority over a previously perfected security interest held by another secured party, the PMSI holder must satisfy two additional requirements: (1) the PMSI must be perfected when the debtor receives possession of the inventory, and (2) the PMSI secured party must give an authenticated notification to any other secured party who has previously filed a financing statement covering the same inventory. This notification must specify that the PMSI holder expects to acquire a PMSI in inventory of the debtor and describe the inventory. The notification must be sent within a reasonable time before or after the debtor receives possession of the inventory. If these requirements are met, the PMSI in inventory will have priority over any conflicting security interest in the same inventory.

The core issue in this scenario revolves around the perfection of a security interest in deposit accounts under South Carolina’s Article 9. South Carolina, like most states, has specific rules for perfection in deposit accounts, which are generally governed by control. Under SC Code Section 36-9-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is achieved under SC Code Section 36-9-104(a) when the secured party becomes the bank’s customer with respect to the deposit account, or when the secured party has the right to direct the disposition of the deposit account. In this case, Charleston Bank has a perfected security interest in the general intangibles of Coastal Builders, which includes their accounts receivable. However, their security interest in the specific deposit account at Palmetto State Bank was not perfected by control. While the debtor granted Charleston Bank a security interest in the deposit account, it did not obtain control. The deposit account is a distinct type of collateral. Greenville Credit Union, by taking possession of the deposit account through a control agreement with Coastal Builders and Palmetto State Bank, has perfected its security interest in the deposit account. Therefore, Greenville Credit Union’s perfected security interest in the deposit account takes priority over Charleston Bank’s unperfected security interest in that same deposit account, even though Charleston Bank may have a prior perfected security interest in the general intangibles that generated the funds within the account. The priority rules for deposit accounts emphasize perfection by control.

The scenario involves a purchase money security interest (PMSI) in inventory. Under South Carolina law, specifically UCC § 9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI requirements are met. These requirements include: 1) the security interest must be a purchase money security interest; 2) the secured party must give new value to enable the debtor to acquire the inventory; 3) the debtor must acquire possession of the inventory; and 4) the PMSI holder must satisfy the notification requirements of UCC § 9-324(b). This section requires that the PMSI holder send an authenticated notification to any secured party who has filed a financing statement covering the same or substantially similar inventory, or who is known by the PMSI holder to have a security interest in the collateral, and the notification must be received within six months before the debtor receives possession of the inventory. If the conflicting security interest is perfected by filing, the notification must be received before the filing of the financing statement by the other secured party. In this case, Sterling Bank perfected its security interest in all of Horizon’s inventory on January 15th. Apex Corp. then acquired a PMSI in new inventory and filed its financing statement on February 1st. Apex Corp. sent its notification to Sterling Bank on February 10th. Since Apex Corp.’s notification was sent *after* Sterling Bank had already filed its financing statement, Apex Corp. fails to meet the notification requirement under UCC § 9-324(b) for gaining priority over Sterling Bank’s prior perfected security interest in the same inventory. Therefore, Sterling Bank’s prior perfected security interest takes priority.

Under South Carolina law, specifically Article 9 of the Uniform Commercial Code, when a secured party has a perfected security interest in collateral, and that collateral is sold by the debtor to a buyer who is not expected to use the collateral in the ordinary course of their business, the buyer takes the collateral subject to the perfected security interest. This is because the buyer does not qualify for the special protection afforded to ordinary course buyers under SC Code Section 36-9-320. In such a scenario, the secured party retains their rights against the collateral even in the hands of the new owner. The buyer’s failure to purchase free of the security interest means the secured party can repossess the collateral upon default. The debtor’s personal obligation to repay the debt remains, but the secured party’s ability to recover the collateral itself is paramount in this situation.

The core issue in this scenario revolves around the priority of security interests when a debtor defaults on multiple secured obligations. In South Carolina, as under Article 9 of the Uniform Commercial Code, the general rule for determining priority among competing secured parties is the “first-to-file or first-to-perfect” rule, as codified in SC Code Ann. § 36-9-322. Perfection is typically achieved by filing a financing statement or, in some cases, by possession or control. In this case, Sterling Bank filed its financing statement covering all of Vance’s equipment on January 15, 2022. This filing perfected Sterling Bank’s security interest in that equipment. Subsequently, Palmetto Capital made a loan to Vance and took a purchase-money security interest in the same equipment, filing its financing statement on February 1, 2022. Since Sterling Bank’s security interest was already perfected by filing before Palmetto Capital’s filing, Sterling Bank generally has priority. However, a purchase-money security interest (PMSI) can gain superpriority over prior perfected security interests in the same collateral if certain conditions are met. SC Code Ann. § 36-9-324 specifically addresses PMSI priority. For equipment, a PMSI holder has priority over a conflicting security interest in the same equipment if the PMSI is perfected when the debtor receives possession of the collateral or within a specified grace period. In this instance, Palmetto Capital’s security interest is a PMSI. To determine priority, we must consider if Palmetto Capital met the requirements for PMSI superpriority. The statute requires that the PMSI be perfected and that the secured party give an authenticated notification to any prior secured party of record whose financing statement covers the collateral. This notification must be sent before the filing of the financing statement. Since Palmetto Capital filed its financing statement on February 1, 2022, it would have needed to notify Sterling Bank of its PMSI prior to that date. The problem states that Palmetto Capital did not notify Sterling Bank of its PMSI. Without this notification, Palmetto Capital’s PMSI does not achieve superpriority over Sterling Bank’s prior perfected security interest. Therefore, Sterling Bank, having perfected its security interest first, maintains priority.

The core issue here is determining the proper place to file a financing statement to perfect a security interest in a general intangible that is owned by a registered organization and has its chief executive office in South Carolina. Under South Carolina Code Section 36-9-301(1) and 36-9-307(e), for a general intangible owned by a registered organization, the location of the debtor’s organization is the jurisdiction where it is organized. A registered organization, as defined in South Carolina Code Section 36-9-102(a)(70), includes a corporation, limited liability company, or similar entity. The question states that “Apex Innovations, LLC,” a limited liability company, is organized under the laws of Delaware. Therefore, to perfect a security interest in the general intangible, the financing statement must be filed in Delaware, which is the jurisdiction where Apex Innovations, LLC is organized. Filing in South Carolina, where the chief executive office is located, would be incorrect for this type of collateral and debtor. South Carolina Code Section 36-9-301(3) specifies that for general intangibles, the location of the debtor is the jurisdiction of organization if the debtor is a registered organization.

The core issue here is determining the priority of security interests in after-acquired property when a purchase money security interest (PMSI) is involved. In South Carolina, as under general Article 9 of the Uniform Commercial Code, a PMSI in inventory generally has priority over a conflicting security interest in the same inventory if the PMSI holder meets specific notification requirements. Specifically, under South Carolina Code Section 36-9-324(b), a secured party with a PMSI in inventory has priority over a conflicting security interest in that inventory if, before the debtor receives possession of the inventory, the secured party with the PMSI gives notification in accordance with Section 36-9-320(c) to any other secured party who has filed a financing statement covering the inventory. Section 36-9-320(c) requires that the notification be sent to any secured party who has filed a financing statement covering the same type of inventory or has perfected its security interest otherwise. In this scenario, Coastal Bank had a perfected security interest in all of “Fashions Galore’s” inventory, including after-acquired inventory. “Chic Threads,” by providing financing for specific new inventory and taking a PMSI in that inventory, can achieve priority over Coastal Bank’s earlier perfected security interest in the same collateral. However, to maintain this priority, Chic Threads must have satisfied the notification requirements of Section 36-9-324(b). The question implies that Chic Threads provided financing and took a PMSI. The critical factor for priority against Coastal Bank’s prior general inventory security interest is the notification to Coastal Bank *before* Fashions Galore received possession of the new inventory. If Chic Threads sent the required notification to Coastal Bank before Fashions Galore received the new shipment of designer dresses, then Chic Threads’ PMSI in those dresses would have priority. Without evidence of this notification, Coastal Bank’s earlier perfected security interest would generally prevail. Assuming Chic Threads properly notified Coastal Bank, its PMSI would take precedence.

The core issue here revolves around the priority of security interests when a debtor defaults and multiple parties have claims to the same collateral. In South Carolina, as under Article 9 of the Uniform Commercial Code, the general rule for priority is “first in time, first in right,” which is determined by the time of filing a financing statement or the time a security interest is perfected, whichever occurs first. However, there are exceptions, particularly concerning purchase money security interests (PMSIs). A PMSI in inventory generally requires both a purchase money security interest and perfection by filing. Furthermore, to have priority over a buyer of inventory, the secured party must have perfected its security interest before the buyer received possession of the inventory. In this scenario, First National Bank of Charleston perfected its security interest in all of “Coastal Crafts” inventory on January 15th. This perfection establishes its priority. Southern Suppliers then obtained a PMSI in the specific woodworking equipment and raw lumber inventory sold to Coastal Crafts. For Southern Suppliers’ PMSI to have priority over First National Bank’s earlier perfected security interest, Southern Suppliers would generally need to perfect its PMSI and provide notice to First National Bank before the collateral was delivered to Coastal Crafts, or under specific rules for PMSIs in inventory. Since Southern Suppliers did not file a financing statement or otherwise perfect its interest until March 1st, and the collateral was delivered to Coastal Crafts on February 1st, First National Bank’s earlier perfection gives it priority over Southern Suppliers’ later-perfected PMSI concerning the raw lumber. The woodworking equipment, being equipment and not inventory in the same sense as raw materials for production, would also be subject to the general perfection rules. First National Bank’s January 15th filing predates Southern Suppliers’ March 1st filing for both the lumber and the equipment. Therefore, First National Bank has priority over the raw lumber and the woodworking equipment.

In South Carolina, the priority of a purchase money security interest (PMSI) in inventory is established by perfection and notice. Under South Carolina Code Section 36-9-324(b), 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 secured party with the PMSI must give an authenticated notice to any other secured party who has filed a financing statement covering the inventory or who has perfected a security interest in the inventory before the date of the filing made by the PMSI secured party. This notice must state that the PMSI secured party expects to acquire a security interest in inventory of the type the debtor acquires, including after-acquired inventory. The notice must be sent within a reasonable time before the debtor receives possession of the inventory. The filing of a financing statement by the PMSI lender is also a prerequisite for perfection. Therefore, for a PMSI in inventory to take priority over a previously perfected security interest in the same inventory, the PMSI lender must perfect its interest and provide the requisite notice to the prior secured party before the debtor receives possession of the inventory.

This scenario tests the priority rules under South Carolina’s Article 9 concerning the perfection of security interests in deposit accounts. When a bank has a security interest in a deposit account maintained with itself, perfection is achieved automatically upon attachment, as per S.C. Code Ann. § 36-9-310(e). This automatic perfection means the bank does not need to file a financing statement or take possession of the account to establish its priority. Therefore, the bank’s security interest is perfected at the moment it attaches. The question requires understanding that a bank’s security interest in a deposit account held by that bank is perfected by control, which is automatically established when the bank is the bank with which the deposit account is maintained. This contrasts with other types of collateral where filing or possession is typically required for perfection. The bank’s status as a depositary bank provides it with a unique method of perfection for security interests in those specific accounts.

The core issue here revolves around the perfection of a security interest in accounts receivable. Under South Carolina’s Article 9 of the Uniform Commercial Code, perfection of a security interest in accounts is generally accomplished by filing a financing statement. However, South Carolina law, like many other states, recognizes an exception for certain “new value” transactions. Specifically, if a secured party gives new value to a debtor who is in possession of collateral, and the security interest is in general intangibles or accounts, and the secured party obtains possession of the collateral, then the security interest is perfected. In this scenario, the bank obtained possession of the account records, which effectively constitutes possession of the accounts themselves for perfection purposes. This possession predates the filing of any financing statement by Apex Factors. Therefore, the bank’s security interest in the accounts is perfected from the moment of possession, even without filing. The question tests the understanding of perfection by possession for certain types of collateral, specifically accounts, under South Carolina law, and how it interacts with the general rule of filing. The bank’s perfection is effective upon taking possession of the account records, which occurred prior to Apex Factors’ filing.

The core issue here is the priority of security interests when a debtor defaults and collateral is repossessed. In South Carolina, as under Article 9 of the UCC, a perfected purchase money security interest (PMSI) generally has priority over a prior perfected security interest in the same collateral. However, the perfection requirements for a PMSI in inventory are more stringent than for other types of collateral. Specifically, under South Carolina Code Section 36-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the inventory if certain conditions are met. These conditions include that the PMSI creditor must have perfected its security interest when the debtor received possession of the inventory. Furthermore, the PMSI creditor must give an authenticated notification to any prior secured party that the debtor will be receiving inventory from the PMSI creditor, and this notification must be sent before the debtor receives possession of the inventory. If these notification requirements are not met, the PMSI in inventory may not achieve automatic priority over the earlier perfected security interest. In this scenario, Cypress Bank had a prior perfected security interest in all of “Carolina Collectibles'” inventory. “Coastal Capital LLC” later acquired a PMSI in new inventory. For Coastal Capital’s PMSI to have priority over Cypress Bank’s prior perfected security interest in the new inventory, Coastal Capital would have needed to perfect its interest and, crucially, provide authenticated notification to Cypress Bank *before* Carolina Collectibles received possession of the new inventory. The facts state that Coastal Capital perfected its interest but do not mention any notification to Cypress Bank prior to delivery. Therefore, Cypress Bank’s prior perfected security interest likely retains priority over the new inventory.

The core issue here is the perfection of a security interest in accounts that are part of a sale of a business. Under South Carolina’s Article 9 of the Uniform Commercial Code, specifically SC Code Ann. § 36-9-309, certain security interests are automatically perfected without filing. These include a security interest created by an assignment of a health-care-insurance receivable to the person that provided the health-care goods or services. However, the security interest in the accounts of “Coastal Properties Management,” which operates a real estate brokerage and property management firm, does not fall into this category of automatically perfected interests. Instead, the assignment of these accounts to “Atlantic Capital Group” constitutes a security interest in general intangibles or accounts. To achieve perfection against third-party claims, Atlantic Capital Group must file a financing statement in accordance with SC Code Ann. § 36-9-310. The perfection of a security interest in accounts generally requires filing a financing statement, unless another method of perfection is specified for a particular type of account that is not applicable here. Therefore, Atlantic Capital Group’s failure to file a financing statement means its security interest is unperfected. An unperfected security interest is subordinate to the rights of a lien creditor, such as a judgment creditor who has levied on the collateral. In this scenario, “Charleston Bank” obtained a judgment against Coastal Properties Management and initiated a levy, effectively becoming a lien creditor. Since Atlantic Capital Group’s security interest was unperfected at the time of the levy, Charleston Bank’s lien has priority over Atlantic Capital Group’s claim to the accounts. The question asks about the priority of Charleston Bank’s claim against Atlantic Capital Group’s security interest. Because Atlantic Capital Group did not file a financing statement to perfect its security interest in the accounts, its interest is unperfected. Under South Carolina law, an unperfected security interest is subordinate to the rights of a lien creditor. Charleston Bank, by obtaining a judgment and levying on the accounts, became a lien creditor. Therefore, Charleston Bank’s claim to the accounts takes priority over Atlantic Capital Group’s unperfected security interest. The correct answer is that Charleston Bank’s claim to the accounts has priority.

The scenario involves a purchase money security interest (PMSI) in equipment. Under South Carolina law, specifically SC Code Ann. § 36-9-317(a)(1), a security interest is subordinate to a conflicting interest of a lien creditor or buyer of goods, other than a secured party or buyer of goods that obtains an interest before the security interest is perfected. However, SC Code Ann. § 36-9-324(a) provides that a perfected PMSI in equipment has priority over a conflicting security interest in the same equipment if the PMSI is perfected when the debtor receives possession of the collateral or within twenty days thereafter. In this case, Sterling Equipment, Inc. has a PMSI in the drilling rig. The security agreement was properly executed on January 15th. The financing statement was filed on January 25th. The debtor received possession of the drilling rig on January 20th. The twenty-day grace period for perfection of a PMSI in equipment begins on the date the debtor receives possession of the collateral. Therefore, Sterling Equipment, Inc. had until February 9th (January 20th + 20 days) to perfect its PMSI. Since the financing statement was filed on January 25th, which is within this twenty-day period, Sterling’s PMSI is perfected on time and takes priority over any unperfected security interest or lien that arose before perfection. The question implies that Citadel Bank’s security interest was perfected later or was unperfected when Sterling’s PMSI was perfected. Thus, Sterling’s PMSI has priority.

The scenario involves a purchase money security interest (PMSI) in inventory. In South Carolina, as governed by UCC Article 9, a PMSI holder must satisfy specific perfection requirements to gain priority over other secured parties and buyers. For inventory, perfection requires filing a financing statement before the debtor receives possession of the inventory and providing notification to any existing secured parties of record who have filed financing statements covering the same type of collateral. The question asks about the priority of the financing company’s security interest. The financing company filed its financing statement on June 1st and provided notification to Bank of Charleston on June 5th. Bank of Charleston had a prior perfected security interest in all of the debtor’s existing and after-acquired inventory, having filed its financing statement on May 15th. The debtor received possession of the new inventory on June 7th. The financing company’s security interest is a PMSI because it financed the acquisition of the new inventory. To have priority over Bank of Charleston’s prior perfected security interest in after-acquired inventory, the financing company must have perfected its PMSI. Perfection of a PMSI in inventory requires filing a financing statement and giving notice to any prior secured party of record. The financing company filed its statement on June 1st and notified Bank of Charleston on June 5th. Bank of Charleston’s prior filing on May 15th makes it a secured party of record. The debtor received possession of the inventory on June 7th. Under UCC § 9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder complies with the requirements of UCC § 9-312(c) and (d). Specifically, for inventory, the PMSI holder must file a financing statement before the debtor receives possession of the inventory and must give the required notification to any prior secured party. The financing company filed on June 1st, which was before the debtor received possession on June 7th. The financing company also notified Bank of Charleston on June 5th, which was before the debtor received possession. Therefore, the financing company’s PMSI is perfected and has priority over Bank of Charleston’s earlier-filed security interest in the after-acquired inventory.

The question concerns the perfection of a security interest in a deposit account under South Carolina’s Article 9. Under South Carolina Code Section 36-9-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in South Carolina Code Section 36-9-104(a). Perfection by control can be achieved in three ways: (1) the secured party is the bank in which the deposit account is maintained; (2) the secured party obtains the account debtor’s (the bank’s) agreement to comply with the secured party’s instructions directing disposition of the funds in the account; or (3) the secured party becomes the “bank’s” nominee. In this scenario, the deposit account is with First National Bank of Charleston. Apex Lending is the secured party. Apex Lending is not the bank where the deposit account is maintained. Apex Lending has obtained an authenticated agreement from the debtor, Coastal Properties LLC, to have control. However, South Carolina Code Section 36-9-104(a)(2) requires the agreement of the bank (the depositary bank) to comply with the secured party’s instructions, not just the debtor’s agreement. Filing a financing statement is not a method of perfection for deposit accounts as original collateral. Therefore, Apex Lending has not yet perfected its security interest. The correct answer is that Apex Lending has not perfected its security interest because it lacks control over the deposit account as required by South Carolina Code Section 36-9-312(b).

The scenario involves a purchase money security interest (PMSI) in inventory. In South Carolina, as under the Uniform Commercial Code (UCC) generally, a PMSI in inventory requires a specific notification procedure for perfection to be effective against other secured parties. Specifically, under South Carolina Code Section 36-9-324(b), a secured party with a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. One of these critical conditions is that the PMSI must be perfected when the debtor receives possession of the inventory. Furthermore, the secured party must have given an authenticated notification of the PMSI to any other secured party who had filed a financing statement covering the same types of goods before the date of the filing of the financing statement covering the PMSI. This notification must be provided within a specific timeframe before the debtor receives possession of the inventory. The notification requirement under Section 36-9-324(b)(2) mandates that the notification must be sent by the secured party with the PMSI to any secured party who has filed a financing statement covering the collateral before the date of the filing of the financing statement for the PMSI. Crucially, the notification must be received by the conflicting secured party before the debtor receives possession of the inventory. Therefore, for Carolina Textiles to maintain its priority over the inventory financed by Palmetto Bank, it must ensure its PMSI was perfected by filing and that it provided the required notification to Palmetto Bank, which had a prior filed financing statement covering inventory, and this notification must have been received by Palmetto Bank prior to Carolina Textiles’ debtor, Coastal Apparel, receiving the inventory. If Carolina Textiles filed its financing statement but failed to provide the requisite notification to Palmetto Bank before Coastal Apparel received the inventory, its PMSI would be subordinate to Palmetto Bank’s earlier perfected security interest in the same inventory.

The core issue in this scenario revolves around the perfection of a security interest in an account, specifically an account arising from the sale of goods by a manufacturer. Under South Carolina’s UCC Article 9, perfection of a security interest in accounts is generally achieved by filing a financing statement in the appropriate jurisdiction. The debtor, Palmetto Textiles Inc., is located in South Carolina. Therefore, the initial filing should have been made in South Carolina. When a secured party fails to perfect its security interest, its claim to the collateral is subordinate to the claims of other perfected secured parties and, importantly, to the rights of a buyer of goods that receives delivery of the collateral without knowledge of the security interest. However, the question asks about the status of the security interest against a subsequent buyer of the *account* itself, not the goods that generated the account. A buyer of an account is generally considered to have taken free of an unperfected security interest in that account unless the buyer has knowledge of the security interest. The UCC distinguishes between buyers of goods and buyers of accounts. For accounts, perfection is typically required to provide notice to subsequent purchasers. In this case, Carolina Factors Inc. has an unperfected security interest in Palmetto Textiles Inc.’s accounts. Charleston Holdings LLC purchases these accounts. Since Carolina Factors Inc. did not file a financing statement in South Carolina, its security interest remains unperfected. Charleston Holdings LLC, as a buyer of accounts, takes the accounts free of Carolina Factors Inc.’s unperfected security interest because it is a buyer of chattel paper or an account, and perfection is generally required to defeat such a buyer. The UCC § 9-317(a)(1) states that an unperfected security interest is subordinate to the rights of a person that becomes a buyer of goods, chattel paper, or a buyer of accounts, chattel paper, or other general intangibles, unless that buyer knows of the security interest. Here, Charleston Holdings LLC is a buyer of accounts. Since Carolina Factors Inc.’s security interest is unperfected, Charleston Holdings LLC, as a buyer of those accounts, takes them free of that unperfected security interest.

The scenario involves a purchase money security interest (PMSI) in inventory. Under South Carolina law, specifically UCC § 9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. The secured party claiming PMSI in inventory must satisfy two main requirements: first, the PMSI must be perfected when the debtor receives possession of the inventory; and second, the PMSI secured party must give an authenticated notification to any other secured party who has filed a financing statement covering the same inventory or has a perfected security interest in the same inventory. This notification must be sent within a specific timeframe, which is generally twenty-five days before the debtor receives possession of the inventory. In this case, Carolina Equipment Financing (CEF) perfected its security interest in all of Apex Manufacturing’s inventory on January 15th. NewGen Capital then acquired a PMSI in Apex’s new inventory of specialized welding machines and filed its financing statement on February 1st. Crucially, NewGen Capital sent its notification to CEF on January 20th, which is within the twenty-five-day window prior to Apex receiving the welding machines on February 10th. Therefore, NewGen Capital’s PMSI has priority over CEF’s earlier perfected security interest in the specific inventory of welding machines.

In South Carolina, when a secured party has a purchase money security interest (PMSI) in inventory, that interest generally has priority over conflicting security interests in the same inventory, provided certain conditions are met. For a PMSI in inventory to maintain its priority, the secured party must perfect its security interest by filing a financing statement before the debtor receives possession of the inventory. Additionally, the secured party must notify any other secured party who has previously filed a financing statement covering the same collateral or who has perfected a security interest in the same collateral, and that notification must be received by the other secured party within a specific timeframe. Under South Carolina Code Section 36-9-324(b), this notification must be sent by the PMSI secured party to any secured party of record whose name appears on the UCC-1 filing of the debtor and who has filed a financing statement covering the same inventory. This notification must be received by the competing secured party within twenty days after the debtor receives possession of the inventory. The notification must also state that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describe the inventory. Failure to provide this notification within the prescribed timeframe means the PMSI in inventory will not have priority over the earlier perfected security interest. Therefore, if a secured party perfected its interest in all of the debtor’s inventory on January 1st, and another secured party acquired a PMSI in the same inventory and delivered it to the debtor on January 15th, but did not send the required notification until January 30th, the PMSI secured party would not have priority over the earlier perfected security interest. The notification must be received within twenty days of the debtor receiving possession, meaning by February 4th in this scenario. Since the notification was sent on January 30th, it was received within the twenty-day window. However, the question states the notification was sent *after* the twenty-day period had already passed, making it ineffective. The critical element is the *receipt* of the notification by the competing secured party within the twenty-day window.

The question concerns the perfection of a security interest in a deposit account under South Carolina’s Article 9. Under South Carolina Code Section 36-9-312(a), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in South Carolina Code Section 36-9-104. For a deposit account, 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. In this scenario, the secured party, Coastal Bank, has obtained an authenticated agreement from the debtor, Palmetto Farms, that grants Coastal Bank control over the specified deposit account. This agreement, which signifies the bank’s consent to follow Coastal Bank’s instructions concerning the account, is the method by which perfection is achieved for this type of collateral. Filing a financing statement is generally ineffective for deposit accounts as original collateral. Therefore, Coastal Bank’s security interest is perfected through control established by the agreement with the depositary bank.

The scenario involves a purchase money security interest (PMSI) in inventory. A PMSI grants the secured party special priority rights. For a PMSI in inventory to have priority over a prior perfected security interest in the same collateral, specific requirements must be met under South Carolina’s Article 9 of the Uniform Commercial Code. These requirements include: 1) the security interest must be a purchase money security interest; 2) it must be perfected when the debtor receives possession of the inventory; and 3) the secured party must give notification in accordance with South Carolina Code Section 36-9-324(b) to any secured party whose security interest is filed before the date of the filing of the financing statement covering the inventory. This notification must be sent within a specified timeframe before the debtor receives possession of the inventory. The debtor receiving possession of the inventory is the trigger for the perfection requirement. The notification to prior secured parties is crucial for establishing PMSI priority over those parties. In this case, the financing statement was filed on January 15th, the debtor received possession on January 20th, and notification was sent on January 10th. Since notification was sent prior to the debtor receiving possession, and the security interest was perfected by filing on January 15th (which is before the debtor received possession on January 20th), the PMSI holder will have priority over the earlier filed general security interest. The critical date for perfection of a PMSI in inventory is when the debtor receives possession. The notification must be sent within the five years before the debtor receives possession, and it must state that the debtor expects to acquire inventory on which the PMSI holder has or will have a security interest. The notification requirement is met as it was sent before possession.

The core issue in this scenario revolves around the perfection of a security interest in deposit accounts under South Carolina’s Article 9. South Carolina Code Section 36-9-312(b) states that a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in South Carolina Code Section 36-9-104. For a deposit account, control is achieved 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. In this case, Carolina Bank perfected its security interest in the deposit account by having control, as it is the bank where the deposit account is held. The filing of a financing statement is generally not sufficient for perfection of security interests in deposit accounts. Therefore, Carolina Bank’s security interest is perfected.