The core issue here revolves around the perfection of a security interest in a deposit account under New York’s Article 9. Under UCC § 9-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in UCC § 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 bank’s agreement to comply with the secured party’s instructions regarding the deposit account. In this scenario, the security agreement between Aurora Corp. and Beacon Bank grants Beacon Bank a security interest in Aurora Corp.’s deposit account. Beacon Bank is the depositary bank for this account. Therefore, Beacon Bank has obtained control over the deposit account by virtue of being the bank with which the account is maintained. This control constitutes perfection of Beacon Bank’s security interest in the deposit account. The filing of a financing statement is generally not required for perfection of security interests in deposit accounts as original collateral (UCC § 9-309(3)). While a security agreement is necessary to create the security interest, perfection is achieved through control.

In New York, under UCC § 9-310(a), a security interest is perfected when it has attached and when a financing statement has been filed or possession or control has been obtained, as specified in § 9-310(b). However, there are several exceptions to the filing requirement for perfection. Specifically, UCC § 9-309 lists certain types of collateral for which perfection is automatic without filing. These include, among others, a security interest in a “letter-of-credit right” as defined in § 5-102(a)(10). A letter-of-credit right is a right to payment or performance under a letter of credit, whether or not the beneficiary has presented or is entitled to presentation. UCC § 9-102(a)(52) defines “letter-of-credit right” for Article 9 purposes. Perfection of a security interest in a letter-of-credit right is achieved by control under UCC § 9-314(a). Control is established under UCC § 9-107 when the secured party is the issuer of the letter of credit, the nominated person of the issuer, or the advisor of the issuer, and the issuer, nominated person, or advisor agrees to act on the applicant’s behalf to comply with § 9-107. Therefore, the security interest in the letter-of-credit right is perfected through control, not by filing a financing statement. Filing a financing statement for a letter-of-credit right is ineffective for perfection.

In New York, a secured party’s rights upon a debtor’s default are significantly impacted by the perfection status of their security interest. If a security interest is unperfected, the secured party is subordinate to a buyer of goods who takes possession of the collateral in the ordinary course of business, as per New York UCC § 9-320. This is because perfection is generally required to establish priority against such buyers. Furthermore, an unperfected security interest is also subordinate to a lien creditor and a trustee in bankruptcy, who are considered to have rights in the collateral from the moment they acquire their status, unless the secured party has already perfected their interest before that point. New York UCC § 9-317(a)(2) and § 9-317(b) outline these priorities. The key here is that an unperfected secured party cannot assert their security interest against these categories of third parties who have superior claims or rights. Therefore, the unperfected secured party loses their priority against a buyer in the ordinary course of business, a lien creditor, and a trustee in bankruptcy.

The core issue here revolves around the perfection of a security interest in intangible collateral, specifically deposit accounts, under New York’s Article 9. Under UCC § 9-104(a)(1), a security interest in a deposit account as original collateral can only be perfected by control. UCC § 9-104(a)(2) also states that a security interest in a deposit account as proceeds of other collateral can only be perfected by control, unless the deposit account is uncertificated security or commodity 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 depositary bank and the depositary bank agrees to comply with the secured party’s instructions concerning the deposit account. In this scenario, Ms. Anya Sharma has a perfected security interest in the accounts receivable of “Artisan Crafts LLC” and has taken possession of the tangible evidence of those receivables. However, Artisan Crafts LLC also maintains a deposit account at “Capital City Bank” into which these receivables are deposited. The security agreement grants a security interest in the accounts receivable and “all proceeds thereof.” A deposit account is considered proceeds of accounts receivable. Since the deposit account is not an uncertificated security or a commodity account, perfection in the deposit account as proceeds requires control. Simply taking possession of the tangible evidence of the accounts receivable does not grant control over the deposit account. Without obtaining control over the deposit account held at Capital City Bank, Ms. Sharma’s security interest in the funds deposited into that account as proceeds is unperfected. Therefore, any other secured party who obtains control over the deposit account would have priority. If Mr. Ben Carter has a valid security interest in the deposit account and has obtained control, his interest would be prior to Ms. Sharma’s unperfected security interest in the deposit account.

The core issue here is determining the priority of competing security interests in after-acquired property. Under New York’s UCC Article 9, a security interest in after-acquired property generally attaches when the debtor acquires rights in the collateral. However, the perfection of that security interest is crucial for establishing priority against third parties. In this scenario, both Bank A and Bank B have security interests in inventory, including after-acquired inventory. Bank A perfected its security interest by filing a financing statement on January 15, 2023. Bank B attempted to perfect its security interest by filing a financing statement on March 10, 2023. The key event is the debtor acquiring rights in the new inventory. The new inventory was delivered on March 1, 2023. At this point, the debtor acquired rights in the collateral. The rule for priority among perfected security interests is generally first in time, first in right, based on the time of filing or perfection. Since Bank A perfected its security interest on January 15, 2023, and this perfection covered after-acquired inventory, its security interest attached and was perfected in the new inventory as soon as it was acquired by the debtor on March 1, 2023. Bank B’s filing on March 10, 2023, occurred after Bank A’s perfection. Therefore, Bank A has priority over Bank B with respect to the new inventory. This principle is reinforced by UCC § 9-322(a)(1), which states that the first to file or perfect has priority. In New York, this applies to after-acquired property as well, provided the security agreement covers it and the filing is made appropriately.

The core issue here is determining the proper place to file a financing statement for a security interest in a “general intangible” as defined under New York’s UCC Article 9. New York UCC § 9-301(1)(c) states that for goods, instruments, negotiable documents, tangible chattel paper, or certificated securities, the location of the collateral dictates perfection. However, for accounts, general intangibles, and other specific types of collateral, perfection is generally governed by the law of the jurisdiction where the debtor is located. New York UCC § 9-307(1) clarifies that the location of the debtor is the key for perfection of security interests in general intangibles. Section 9-106 defines a general intangible as a general catch-all for personal property, including things in action, that is not excluded by other definitions. In this scenario, the “right to receive payment from future software licensing agreements” constitutes a general intangible. The debtor, “Innovate Solutions Inc.,” is located in New York, as its chief executive office and place of incorporation are both in New York. Therefore, under New York UCC § 9-307(1), the financing statement must be filed in New York to perfect the security interest. Filing in Delaware, where the licensing agreements are to be performed, would be ineffective for perfection against a conflicting security interest under New York law, as the debtor’s location controls. The correct filing location for perfection of a security interest in a general intangible is the jurisdiction where the debtor is located, which is New York in this case.

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 New York’s Article 9, when accounts are sold outright, this transaction is treated as a sale of chattel paper or accounts, not a secured transaction, for purposes of perfection. However, the UCC, including New York’s adoption, generally treats the assignment of accounts as a secured transaction unless it is a “casual and isolated” sale of accounts that is not part of a bulk sale. In this case, the sale of accounts is a significant portion of the business being sold, thus not casual or isolated. Perfection of a security interest in accounts is typically achieved by filing a financing statement. While possession is a method of perfection for certain collateral, it is not applicable to accounts. A purchase money security interest (PMSI) in accounts does not require a filing to be perfected against the account debtor, but it does require filing to be effective against other secured parties and purchasers. The question asks about the most effective means of establishing priority against other creditors. Filing a financing statement in the appropriate jurisdiction (New York, where the debtor is located) is the standard and most robust method for perfecting a security interest in accounts and establishing priority. Therefore, filing a UCC-1 financing statement with the New York Department of State is the correct and most effective method to establish priority for the security interest in the accounts. The sale of a business that includes accounts as a primary asset necessitates a proper filing to secure the assignee’s interest against subsequent claims.

The core issue here revolves around the perfection of a security interest in certain types of intangible collateral, specifically deposit accounts, and the priority rules that apply when multiple parties have claims. Under New York’s UCC Article 9, a security interest in a deposit account as original collateral can only be perfected by control. Control is established when the secured party is the bank with which the deposit account is maintained, or when the debtor has agreed in writing that the bank will comply with the secured party’s instructions regarding the deposit account. In this scenario, Sterling Bank perfected its security interest in the deposit account by control, as it is the bank where the account is held. This perfection is effective automatically upon attachment. However, the question then introduces a subsequent security interest granted to Capital Finance. Capital Finance’s attempt to perfect its interest in the same deposit account without obtaining control is insufficient. While filing a financing statement is generally the method for perfecting security interests in many types of collateral, it is not effective for perfecting a security interest in a deposit account as original collateral. Therefore, Capital Finance’s security interest, despite their filing, remains unperfected with respect to the deposit account. When a security interest in a deposit account is perfected by control, that control generally grants the secured party priority over other secured parties, including those who have filed financing statements but lack control. Sterling Bank’s control establishes its perfected status and priority. Capital Finance’s unperfected security interest in the deposit account cannot take priority over Sterling Bank’s perfected security interest. Thus, Sterling Bank has the superior claim to the funds in the deposit account.

In New York, under UCC § 9-310, a security interest is generally subordinate to a conflicting security interest or agricultural lien that is perfected when the conflicting security interest or lien attaches. However, there are several exceptions. One significant exception is found in UCC § 9-322(a)(1), which states that a perfected security interest generally has priority over an unperfected security interest. Another key exception relates to purchase-money security interests (PMSIs). Under UCC § 9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met, including perfection and notification to the prior secured party. Specifically, the PMSI must be perfected when the debtor receives possession of the inventory, and the secured party must have given new value and the debtor must have received possession of the collateral within a specified period. Furthermore, UCC § 9-324(b) addresses PMSIs in inventory where the secured party has perfected its interest and the debtor has received possession of the inventory, provided that the secured party gives new value and the debtor receives possession of the inventory before the expiration of the ten-day period provided in Section 9-304(d). In this scenario, the security interest in inventory held by Sterling Bank is perfected on January 15th. The purchase money security interest granted to Capitol Finance for the new inventory is perfected on January 20th. Because Capitol Finance’s security interest is a PMSI in inventory and it was perfected before the debtor received possession of the inventory, and Sterling Bank’s prior perfected security interest was in after-acquired inventory, Capitol Finance’s PMSI will generally take priority over Sterling Bank’s interest in the newly acquired inventory. This priority is established by UCC § 9-324(a), which grants a PMSI holder priority over a conflicting security interest in the same collateral if the PMSI is perfected when the debtor receives possession of the collateral or within a twenty-day period after the debtor receives possession. In this specific case, Capitol Finance perfected its PMSI on January 20th, which is after Sterling Bank’s perfection but before the debtor received possession of the inventory, thus satisfying the conditions for PMSI priority in inventory under New York law.

The core issue here is the perfection of a security interest in accounts that are part of a sale of a business. Under New York’s UCC Article 9, when accounts are sold, this constitutes an outright sale, not a secured transaction, unless the seller retains an interest in the accounts or the proceeds thereof. However, the UCC also addresses sales of accounts as a type of collateral. Specifically, Section 9-109(a)(3) states that Article 9 applies to a sale of accounts, chattel paper, payment intangibles, or promissory notes. Therefore, a security interest in accounts arising from the sale of a business is governed by Article 9. To perfect such a security interest, a secured party must file a financing statement or take possession of the accounts. Filing is generally the method for perfection for accounts. The financing statement must provide the names of the debtor and the secured party and indicate the collateral covered. For accounts, the description can be general, such as “all accounts.” The question implies that the financing statement was filed. The critical point is whether the filing was effective against a subsequent buyer of those same accounts. A buyer of accounts generally takes free of an unperfected security interest. However, if the security interest is perfected by filing, a subsequent buyer takes subject to that perfected security interest. Therefore, if the financing statement was properly filed in New York, and described the accounts, the security interest would be perfected. A subsequent buyer of those accounts would be on notice of the perfected security interest and would take subject to it. The filing of a financing statement perfects a security interest in accounts. The correct answer hinges on the effectiveness of this filing.

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 merchant located in New York, where the financing statement was filed in California. Under New York UCC § 9-301(1), the law of the jurisdiction where the debtor is located governs the perfection of a security interest in accounts. New York UCC § 9-307(b)(1) further clarifies that for a registered organization that is organized under the law of a state, the debtor is located in that state. Since the merchant is a New York corporation, it is located in New York for purposes of Article 9. Therefore, to perfect a security interest in the merchant’s accounts, the secured party must file a financing statement in New York. Filing in California, where the buyer is located, is irrelevant for perfection of accounts arising from sales by a New York-based merchant. The buyer’s location is relevant for perfection in goods that are covered by a certificate of title, or for goods that are fixtures, but not for accounts. Consequently, the security interest in the accounts is unperfected because the filing was made in the wrong jurisdiction.

In New York, under UCC Article 9, the perfection of a security interest in a deposit account is governed by specific rules. A security interest in a deposit account as original collateral 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 debtor has agreed to the bank’s disposition of the deposit account. If the secured party is not the bank, control can also be established through a tri-party agreement where the bank agrees to follow the secured party’s instructions regarding the deposit account without further consent from the debtor. This control must be maintained continuously for perfection. Once control is established, the security interest is perfected. A lapse in control, such as the bank releasing the account from the control agreement, would generally lead to a lapse in perfection. Therefore, for a security interest in a deposit account to remain perfected, continuous control by the secured party is paramount.

The question revolves around the perfection of a security interest in deposit accounts under New York’s Article 9. Under UCC § 9-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in UCC § 9-104. For a deposit account, control is typically achieved when the secured party is the bank with which the deposit account is maintained, or when the debtor has agreed to the bank’s disposition of the funds in the account (a “control agreement”). In this scenario, “FinCorp” has a security interest in the deposit account held at “MetroBank.” MetroBank is the bank where the deposit account is maintained. Therefore, MetroBank has control over the deposit account simply by virtue of being the depositary bank. FinCorp’s filing a financing statement is relevant for perfection in many types of collateral but is explicitly stated as not being sufficient for perfection in deposit accounts under UCC § 9-312(b). The filing of a financing statement perfects a security interest in accounts (general intangibles), but not specifically deposit accounts, which are treated as a distinct category of collateral. The existence of a control agreement is a method to achieve control, but it is not the *only* method. When the secured party is the bank maintaining the account, that bank has control without a separate agreement specifically for that purpose, as its status as the depositary bank grants it control. Thus, FinCorp’s security interest is perfected by MetroBank’s control.

The core issue here revolves around the perfection of a security interest in accounts, specifically in the context of New York law and Article 9 of the UCC. Under UCC § 9-309(2), a security interest in a “supporting obligation” is automatically perfected if the security interest in the “related account” is perfected. A supporting obligation is defined in UCC § 9-102(a)(77) as a letter of credit, guaranty, or other accommodation that supports payment or performance of an account, chattel paper, document, general intangible, instrument, or investment property. Here, the promissory note serves as a direct promise to pay the debt owed by Zenith Corp. to Aurora Inc., thus functioning as a supporting obligation for the account Zenith Corp. owes Aurora Inc. Since Aurora Inc. has perfected its security interest in the account by filing a financing statement that sufficiently describes the collateral (the account), its security interest in the supporting obligation (the promissory note) is automatically perfected. No separate filing is required for the promissory note itself if it is considered a supporting obligation to an account. The UCC prioritizes the perfection of the primary collateral. Therefore, Aurora Inc.’s security interest in the promissory note is perfected through its perfection in the underlying account.

In New York, the perfection of a security interest in deposit accounts is governed by UCC § 9-312(b). Generally, a security interest in a deposit account as original collateral can only be perfected by control. Control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with instructions directing disposition of the funds in the account. UCC § 9-104(a) defines control in this context. If a secured party has control, its security interest is automatically perfected. Therefore, if “SecureLend Corp.” obtained control over the deposit account held at “Metropolitan Bank” by having Metropolitan Bank agree to follow SecureLend Corp.’s instructions, its security interest is perfected at the moment control is established. The filing of a financing statement is not the method for perfecting a security interest in deposit accounts as original collateral; control is exclusive.

In New York, under UCC § 9-317(a)(2), a buyer of goods takes free of a security interest that is not perfected if the buyer receives delivery of the collateral without knowledge of the security interest and for value. However, this protection does not extend to a buyer of consumer goods who buys for value, receives delivery of the collateral, and has no knowledge of any security interest in the collateral, unless the buyer has received notice of the security interest from the secured party by means of a filing or by specific notification of the security interest. UCC § 9-320(a) provides that a buyer in ordinary course of business takes free of a security interest even if the security interest is perfected. A buyer in ordinary course of business is defined in UCC § 1-201(9) as a person that buys goods in good faith, without knowledge that the sale violates the rights of the secured party, and from a person in the business of selling goods of that kind. In this scenario, Amelia buys a vintage motorcycle from “Cruiser Classics,” a dealership that sells motorcycles. This sale is in the ordinary course of business for Cruiser Classics. Amelia pays value and receives delivery of the motorcycle. She has no knowledge that the sale violates any security interest held by “Velocity Finance Corp.” Therefore, Amelia qualifies as a buyer in ordinary course of business and takes the motorcycle free of Velocity Finance Corp.’s security interest, regardless of whether that interest was perfected. The fact that Velocity Finance Corp. had filed a financing statement is irrelevant to Amelia’s status as a buyer in ordinary course of business.

The core issue here revolves around the perfection of a security interest in accounts that arise from the sale of goods by a merchant located in New York, where the debtor is also located in New York. Under New York UCC § 9-307(1), a buyer of goods that receives delivery from a seller that is a merchant of those goods takes the goods free of a security interest created by the seller, even if the security interest is perfected and the buyer has knowledge of it, unless the buyer also knows that the sale is in violation of the security agreement. This protection extends to the buyer of the goods themselves. However, the question asks about the perfection of a security interest in the *accounts* that arise from these sales. New York UCC § 9-310(1) generally states that a filed financing statement is not required to perfect a security interest in collateral, but this is subject to exceptions. One significant exception is found in § 9-309, which lists security interests that are perfected when they attach. However, accounts are not listed as a category that is automatically perfected upon attachment. For accounts, perfection typically requires filing a financing statement. The scenario describes a secured party perfecting its interest in accounts by filing a financing statement in New York, which is the correct jurisdiction for filing when both the debtor and the collateral (accounts arising from sales of goods by a New York merchant) are located in New York, as per New York UCC § 9-301 and § 9-307. The filing of the financing statement provides notice to third parties. The question implies a potential conflict with the buyer of goods taking free of the security interest. However, the buyer of goods takes free of the security interest in the *goods*, not necessarily in the *proceeds* of those goods (which are the accounts). The secured party’s perfected security interest in the accounts attaches to the accounts as they arise, and the filing provides perfection against other creditors and purchasers of those accounts. Therefore, the filing in New York is the proper method for perfecting the security interest in the accounts. The calculation is not mathematical but conceptual. The correct method for perfecting a security interest in accounts in New York, when the debtor is located in New York and the accounts arise from the sale of goods by a New York merchant, is by filing a financing statement in New York.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account. Under New York’s UCC Article 9, a security interest in a deposit account can only be perfected by the secured party taking “control” of the account. Control is typically achieved in one of three ways: (1) the secured party becomes the depositary bank with respect to the deposit account; (2) the secured party obtains the agreement of the depositary bank to comply with instructions directing the disposition of the funds in the account; or (3) the secured party obtains the depositary bank’s acknowledgement that it is the secured party that is entitled to the funds. In this case, while “First National Bank of Albany” has a security agreement and has filed a financing statement, neither of these actions establishes control over the deposit account held by “Capital City Holdings LLC” at “Hudson Valley Bank.” Filing is generally ineffective for perfection in deposit accounts. Therefore, First National Bank of Albany’s security interest is unperfected with respect to the deposit account. The question asks about the effect of First National Bank of Albany’s actions. Since filing is not a method of perfection for deposit accounts, and no other method of establishing control was utilized, the security interest remains unperfected. The consequence of an unperfected security interest is that it is subordinate to the rights of a lien creditor, such as a trustee in bankruptcy, or a buyer of the collateral in the ordinary course of business. In this context, without control, First National Bank of Albany’s claim to the funds in the deposit account is inferior to the rights of a subsequent party who might establish a superior claim or to the bankruptcy estate if the debtor were to file for bankruptcy.

In New York, when a secured party has a perfected security interest in collateral, and that collateral is sold, exchanged, or otherwise disposed of in a transaction that is not authorized by the secured party, the security interest generally continues in the collateral under New York UCC § 9-315(a)(1). This means the original secured party’s rights remain attached to the collateral even after it changes hands, unless specific exceptions apply. One such exception is found in New York UCC § 9-315(a)(1)(A), which states that the security interest does not continue if the disposition is authorized by the secured party in the security agreement or otherwise. Another key exception, relevant to the scenario, is found in New York UCC § 9-315(a)(1)(B), which addresses situations where the secured party knows the disposition is to occur and either receives a notification of the date of disposition and consents to the disposition free of the security interest or the collateral is of a type that is not to be filed and is consumer goods. However, the most common and broadly applicable rule is that the security interest continues. Therefore, without any indication of authorization or a specific statutory exception applying, the perfected security interest in the specialized industrial machinery remains with the machinery even after its sale to a new buyer in a transaction not authorized by the secured party.

In New York, a secured party’s rights upon a debtor’s default are governed by Article 9 of the Uniform Commercial Code. When a debtor defaults on a loan secured by inventory, the secured party has several options for disposition of the collateral. The secured party may repossess the inventory and sell it at a public or private sale. The disposition must be commercially reasonable. New York UCC § 9-610(b) requires that every aspect of the disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. Section 9-611 outlines notice requirements to the debtor and other interested parties before disposition. The secured party must send a reasonable authenticated notification of disposition to the debtor and any secondary obligors. Additionally, notice must be sent to other secured parties or lienholders who have filed financing statements or are otherwise known to the secured party. The notice must describe the debtor and the collateral, state the method of disposition, and provide other information as specified in the statute. Failure to provide proper notice can result in a deficiency judgment being barred or reduced. The proceeds of the disposition are applied first to the reasonable expenses of repossession and sale, then to the satisfaction of the secured obligation. Any surplus is returned to the debtor, and any deficiency is paid by the debtor. The question asks about the *initial* step a secured party must take after default and before disposition. This involves providing notice.

The scenario involves a purchase money security interest (PMSI) in inventory. Under New York’s Article 9 of the Uniform Commercial Code, a PMSI holder in inventory must satisfy specific notification requirements to maintain priority over earlier perfected security interests. Specifically, New York UCC § 9-324(b) requires that the PMSI creditor give an authenticated notification to any secured party who has perfected a security interest in that inventory or its proceeds before the filing of the PMSI creditor’s financing statement. This notification must be sent within a specific timeframe, typically before the debtor receives possession of the inventory. The purpose of this notification is to alert prior secured parties to the existence of the PMSI in their collateral, allowing them to take appropriate action. In this case, even though Amalgamated Bank had a prior perfected security interest in all of Beta Corp’s inventory and gave value, and CrediCorp perfected its PMSI in the new inventory by filing, CrediCorp failed to provide the required notification to Amalgamated Bank. This failure to notify means CrediCorp’s PMSI will not have priority over Amalgamated Bank’s existing perfected security interest in the inventory. Therefore, Amalgamated Bank retains its priority.

In New York, under UCC § 9-310, a security interest is generally subordinate to a conflicting security interest or agricultural lien that has been perfected when the debtor received possession of the collateral. However, UCC § 9-317(a)(2) provides an exception for purchase money security interests (PMSIs) in ordinary goods. A PMSI in goods, other than certificated securities, documents, goods covered by a document, instruments, investment property, or money, is perfected when it attaches. This perfected PMSI has priority over a conflicting security interest in the same goods if the PMSI is perfected when the debtor receives possession of the collateral or within a specified grace period thereafter, as defined by the UCC. Crucially, for goods that are not inventory, a PMSI holder does not need to file a financing statement to achieve this priority over a prior perfected security interest if the PMSI is perfected by the time the debtor receives possession of the collateral. The scenario describes a PMSI in equipment. For equipment, perfection by filing is generally required for a PMSI to take priority over a prior perfected security interest, unless the collateral is of a type that can be perfected by possession. However, UCC § 9-317(e) addresses the priority of a PMSI in equipment against a buyer or lessee. It states that a buyer or lessee of goods, other than a fixture or a manufactured home, takes free of a security interest or agricultural lien if the buyer or lessee receives delivery of the collateral without knowledge of the security interest or agricultural lien and for value. This rule applies even if the PMSI is perfected. The question asks about priority against a buyer, not another secured party. Therefore, the buyer takes free of the unperfected security interest, regardless of whether it was a PMSI, if they meet the criteria of receiving delivery without knowledge and for value. Since the security interest was not perfected by filing or possession, it is unperfected. A buyer in the ordinary course of business, or a buyer for value without knowledge of the unperfected security interest, generally takes free of such an interest. In this case, the buyer acquired the equipment for value and without knowledge of the unperfected security interest, thus taking free of it. The correct answer is that the buyer takes free of the security interest.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account under New York’s UCC Article 9. Section 9-312(b) of the UCC, as adopted in New York, specifies that a security interest in a deposit account can only be perfected by control. Control is defined in Section 9-104. For a deposit account, control is typically achieved when the secured party becomes the “customer” of the bank with respect to the deposit account, or when the bank agrees to comply with the secured party’s instructions regarding the account without the debtor’s further consent. In this case, Aurora Bank, as the secured party, obtained control by entering into a control agreement with the depositary bank (which is also Aurora Bank, but the principle remains the same: Aurora Bank, in its capacity as secured party, has control over the deposit account held at Aurora Bank, in its capacity as depositary bank). This control agreement establishes Aurora Bank’s right to direct 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, as per Section 9-312(b)(1). Therefore, Aurora Bank’s security interest is perfected due to its possession of control over the deposit account, irrespective of whether a financing statement was filed or if the debtor retained possession of any account statements. The priority of Aurora Bank’s security interest is established by its perfection through control, as it is the only method of perfection for deposit accounts.

In New York, the perfection of a security interest in deposit accounts is governed by Article 9 of the Uniform Commercial Code. Specifically, UCC § 9-312(b) states that a security interest in a deposit account as collateral can only be perfected by control. Control is defined in UCC § 9-104 as the bank’s agreement to comply with the secured party’s instructions regarding the deposit account, or if the secured party is the bank itself, by becoming the customer of the bank with respect to the deposit account. A secured party can obtain control by becoming the owner of the funds in the account, or by entering into a control agreement with the bank and the debtor. Filing a financing statement is generally insufficient for perfection in deposit accounts. Therefore, for a security interest in a deposit account to be perfected against third parties, the secured party must have obtained control over the account. Without control, the security interest remains unperfected and vulnerable to claims by other creditors or a bankruptcy trustee.

Under New York’s Uniform Commercial Code (UCC) Article 9, a secured party’s rights upon a debtor’s default are multifaceted. When a debtor defaults on a secured obligation, the secured party generally has the right to take possession of the collateral. This right is often referred to as repossession. However, this repossession must be conducted without a “breach of the peace.” New York UCC § 9-609 outlines the secured party’s rights and limitations in this regard. A breach of the peace is a significant concept that can invalidate the secured party’s actions and lead to liability. Factors considered in determining a breach of the peace include the level of force used, the presence of the debtor or their representatives, the location of the repossession, and whether the repossession involves entry into a secured party’s dwelling or business premises without consent. If a secured party breaches the peace during repossession, they may be liable for conversion or other torts. Following lawful repossession, the secured party must dispose of the collateral in a commercially reasonable manner, as prescribed by UCC § 9-610, and provide notice to the debtor and other specified parties. The proceeds from the disposition are applied to the secured obligation, expenses of repossession and disposition, and any surplus is returned to the debtor.

The core issue here is the priority of security interests when a debtor moves collateral from one state to another and the secured party fails to reperfect. Under New York’s UCC § 9-316(a), if a security interest is perfected in one jurisdiction and then the collateral is brought into another jurisdiction, the perfection continues for a period of four months. If the secured party fails to file a new financing statement in the new jurisdiction within that four-month period, the security interest becomes unperfected in the new jurisdiction as against a purchaser of the collateral who gives value and receives delivery after the expiration of the four months. New York UCC § 9-316(b) further clarifies that perfection in the new jurisdiction must be in accordance with the law of the new jurisdiction. In this scenario, the security interest was perfected in New Jersey. The collateral, a specialized piece of manufacturing equipment, was then moved to New York. The secured party, “Capital Finance Corp.,” had four months from the date the equipment was brought into New York to file a continuation statement or a new financing statement in New York to maintain its perfection. Since Capital Finance Corp. did not file in New York within this four-month period, and “Precision Manufacturing Inc.” purchased the equipment for value and took possession after the four-month period had expired, Capital Finance Corp.’s security interest is subordinate to Precision Manufacturing Inc.’s claim. The relevant period for determining perfection in the new jurisdiction is four months from the time the collateral is first brought into New York. After this period, unless a new filing is made in New York, the security interest is unperfected against a buyer for value who takes possession.

Under New York’s Article 9, the perfection of a security interest in accounts is generally achieved by filing a financing statement in the jurisdiction of the debtor’s chief executive office. However, UCC § 9-307(a) provides that the law of the jurisdiction where the debtor is located governs perfection. For a registered organization like a corporation, its location is its jurisdiction of organization, as per UCC § 9-307(b)(1). If a security interest is granted in accounts and the debtor is a New York corporation with its chief executive office in New York, the law of New York governs perfection. UCC § 9-501(a)(1) dictates that the proper place to file a financing statement to perfect a security interest in accounts is in the filing office of the state in which the debtor is located. Since the debtor is a New York corporation, it is located in New York. Therefore, filing a financing statement in the New York Department of State is the correct method for perfecting the security interest in the accounts. The question hinges on understanding the interplay between the debtor’s location for perfection purposes and the specific filing requirements for accounts under New York’s UCC Article 9. The key is that the “location of the debtor” for a registered organization is its state of incorporation, not necessarily where its chief executive office is located, although in this scenario, both are New York.

The core issue here revolves around the perfection of a security interest in a deposit account under New York’s UCC Article 9. Section 9-304 of the UCC, as adopted in New York, states that 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 account, without the debtor’s consent (a “tri-party” control agreement). Alternatively, control can be established if the debtor deposits the account into an account in the secured party’s name. In this scenario, the security agreement grants a security interest in the debtor’s deposit account. However, the secured party, “Capital Lending Corp.,” has not obtained control over the deposit account held at “Metro Bank.” Merely having a security agreement and filing a financing statement is insufficient for perfection in deposit accounts. Filing is effective for general intangibles and other collateral types, but not for deposit accounts. Therefore, Capital Lending Corp.’s security interest is unperfected. An unperfected security interest is subordinate to the rights of a lien creditor, such as a trustee in bankruptcy, who obtains a lien on the collateral without knowledge of the unperfected security interest. Section 9-317(a)(2) of the UCC in New York addresses this, stating that an unperfected security interest is subordinate to the rights of a lien creditor. The bankruptcy trustee, by operation of law, becomes a lien creditor upon the filing of the bankruptcy petition. Thus, the trustee’s rights in the deposit account would take priority over Capital Lending Corp.’s unperfected security interest.

The core issue here is determining the proper place to file a financing statement for a security interest in a certificated security that is held by a securities intermediary. Under New York’s Uniform Commercial Code (UCC) § 9-305, when a certificated security is delivered to a securities intermediary, the secured party’s control is established by complying with UCC § 8-106. Specifically, UCC § 9-313(a) states that perfection of a security interest in a certificated security in registered form other than by delivery occurs when the secured party has control. UCC § 9-313(b) further clarifies that perfection of a security interest in a certificated security in registered form that is delivered to the secured party occurs when the security certificate is delivered to the secured party. However, the question specifies the security is held by a securities intermediary. In such a scenario, UCC § 9-312(a) dictates that a security interest in investment property, which includes certificated securities held by intermediaries, is perfected when control is obtained. UCC § 9-314(a) states that perfection of a security interest in investment property is achieved by control. UCC § 9-314(b) then specifies that control is obtained over a certificated security, if the security certificate is delivered to the secured party, or if the intermediary acknowledges that it holds for the secured party’s benefit. UCC § 9-305 addresses the perfection of security interests in certificated securities held by intermediaries by requiring control. UCC § 9-313(f) states that a security interest in a certificated security may be perfected by control. New York UCC § 9-313(f) specifies that perfection of a security interest in a certificated security by control occurs when the secured party obtains control. New York UCC § 9-313(f) further states that a security interest in a certificated security in registered form is perfected when the secured party has control. UCC § 9-314(a) states that perfection of a security interest in investment property is achieved by control. UCC § 9-314(b) specifies that control is obtained over a certificated security if the security certificate is delivered to the secured party, or if the securities intermediary acknowledges that it holds for the secured party’s benefit. Therefore, the most appropriate method for perfection in this situation, where the certificated security is held by a securities intermediary, is by obtaining control, which is achieved through the intermediary’s acknowledgment.

Under New York’s Uniform Commercial Code (UCC) Article 9, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection. Attachment occurs when the debtor receives rights in the collateral, the secured party gives value, and a security agreement describing the collateral is in place. Perfection, which establishes priority against third parties, for inventory typically requires filing a financing statement in the appropriate jurisdiction, which for most businesses is the New York Department of State. However, UCC § 9-324(b) provides a special priority rule for PMSIs in inventory. This rule states that a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI requirements are met and the PMSI holder gives an authenticated notification to any other secured party who previously filed a financing statement covering the inventory. This notification must be sent before the filing of the PMSI financing statement. In this scenario, Apex Corp’s security interest attached and was perfected by filing. When Zenith Corp acquired its PMSI, it attached its security interest. To gain priority over Apex Corp’s existing perfected security interest, Zenith Corp needed to satisfy the requirements of UCC § 9-324(b). This includes filing its financing statement and, crucially, sending authenticated notification to Apex Corp *before* filing its own financing statement. Since Zenith Corp sent the notification *after* filing its financing statement, it failed to meet the statutory prerequisite for priority under the PMSI in inventory rule. Therefore, Apex Corp, having filed first and not being properly notified before Zenith’s filing, retains its priority.