In Minnesota, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally achieved by control. Control over a deposit account is established when the secured party is the bank with which the deposit account is maintained, or when the depositary bank, the secured party, and the debtor have entered into a control agreement. A control agreement is a written agreement whereby the depositary bank agrees to comply with instructions from the secured party directing the disposition of the funds in the deposit account without further consent from the debtor. This control is exclusive and provides the secured party with the ability to enforce its rights against the collateral. Therefore, for a secured party to have a perfected security interest in a deposit account, it must obtain control, typically through a control agreement with the bank where the account is held, or by being the depositary bank itself. Without control, a security interest in a deposit account remains unperfected, making it vulnerable to claims by other creditors, including a trustee in bankruptcy.

This question tests the understanding of the priority rules concerning purchase money security interests (PMSIs) in inventory under Minnesota’s Article 9. A PMSI grants the secured party special priority rights if certain conditions are met. For inventory, the secured party must perfect its security interest by filing a financing statement and, crucially, provide notification to any existing secured party with a prior perfected security interest in the same collateral before the debtor receives possession of the inventory. The notification must be in writing and reasonably identify the goods covered by the PMSI. If these steps are taken, the PMSI holder’s security interest in the inventory will have priority over a previously perfected security interest in that same inventory, even if the prior secured party’s interest attached first. In this scenario, Aurora Bank had a prior perfected security interest in all of Glacier Manufacturing’s inventory. Nordic Corp. acquired a PMSI in new inventory. To maintain its priority, Nordic Corp. had to file its financing statement and notify Aurora Bank in writing before Glacier Manufacturing received the inventory. Assuming Nordic Corp. properly filed and provided the required written notification to Aurora Bank, its PMSI in the new inventory will have priority over Aurora Bank’s earlier perfected security interest in that specific inventory. Therefore, Nordic Corp. would have priority.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Minnesota Statutes Section 336.9-324, 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 must have perfected its security interest when the debtor received possession of the inventory. Furthermore, the PMSI holder must have given an authenticated notification to any other secured party whose previously filed financing statement covers the inventory. This notification must be sent within six months before the debtor receives possession of the inventory covered by the PMSI. In this case, Northern Bank’s security interest was perfected on January 15th, which predates the debtor’s receipt of the new inventory on February 1st. However, Northern Bank’s notification was sent on January 20th, which is within the six-month window prior to the debtor receiving possession of the inventory. Therefore, Northern Bank’s PMSI has priority over the previously perfected security interest of Midwest Financial. The key is that the notification must be sent *before* the debtor receives possession, and the perfection of the PMSI must occur when the debtor receives possession. Here, the notification was sent before, and perfection would occur upon delivery of the inventory.

The core issue here is the proper perfection of a security interest in a deposit account. Under Minnesota Statutes § 336.9-312(a), a security interest in a deposit account can only be perfected by control. Control is defined in Minnesota Statutes § 336.9-104(a) as generally meaning that the secured party is the bank’s customer with respect to the deposit account, or the secured party has agreed with the bank that the bank will comply with instructions from the secured party concerning the deposit account without the debtor’s consent. In this scenario, Northstar Bank holds a perfected security interest in all of Artisan’s assets, including its deposit accounts, because it has possession of the account through its control agreement with Artisan. The agreement explicitly states Northstar Bank will comply with instructions from Northstar Bank (itself, as secured party) regarding the account. This establishes Northstar Bank’s control. When Central State Bank later attempts to take a security interest in the same deposit account and files a financing statement, this action is insufficient for perfection because filing is not a permissible method of perfecting a security interest in a deposit account. Therefore, Northstar Bank retains its perfected security interest.

The core issue in this scenario revolves around the perfection of a security interest in a motor vehicle titled in Minnesota. Under Minnesota Statutes Chapter 336, Article 9, a security interest in a vehicle that requires a certificate of title is generally perfected by notation on the certificate of title itself, rather than by filing a UCC-1 financing statement. The perfection occurs when the secured party delivers the required documents to the appropriate state office for titling and registration. In this case, Acme Equipment Finance delivered the security agreement and the certificate of title to the Minnesota Department of Public Safety, Vehicle Services division. This act constitutes the perfection of their security interest. The subsequent filing of a UCC-1 financing statement by Zenith Capital is ineffective for perfecting a security interest in this titled vehicle because it is not the prescribed method under Minnesota law for such collateral. Zenith Capital’s interest would therefore be unperfected as against Acme Equipment Finance, which properly perfected its security interest by notation on the certificate of title.

Under Minnesota Statutes § 336.9-317, a buyer in ordinary course of business takes free of a security interest that attaches to the goods after the security interest is perfected. However, this protection does not extend to a buyer who knows that the sale is in ordinary course of business of the person to whom the possession of the goods is entrusted. Minnesota Statutes § 336.9-320(a) generally states that a buyer in ordinary course of business takes free of a security interest even if the security interest is perfected and even if the buyer knows of the perfection. The critical distinction here lies in the knowledge of the buyer regarding the seller’s entrustment of the goods to a merchant who is not the secured party. If the buyer knows the seller is a merchant who has been entrusted with possession of goods that are subject to a security interest, and the buyer purchases those goods, the buyer’s status as a buyer in ordinary course of business does not automatically grant them freedom from that security interest. In this scenario, the buyer’s knowledge of the entrustment is key. If the buyer had no knowledge that the goods were subject to a security interest or that the seller was merely entrusted with possession by a third party (the secured party), then the buyer in ordinary course would take free. However, the question specifies the buyer’s awareness of the entrustment, which triggers the exception. Therefore, the buyer takes subject to the perfected security interest held by First National Bank of Duluth.

Under Minnesota Statutes § 336.9-310(b)(3), a security interest in deposit accounts is generally only perfected by control. Control is established when the secured party is the bank in which the deposit account is maintained, or when the debtor has agreed in writing that the bank will comply with instructions from the secured party directing the disposition of the funds in the deposit account, or when the secured party obtains control over the deposit account through other means as defined in § 336.9-104. In this scenario, North Star Bank has a perfected security interest in the deposit account held by Aurora Enterprises at First National Bank because North Star Bank is the bank where the deposit account is maintained. This provides North Star Bank with control over the deposit account, which is the exclusive method for perfecting a security interest in such collateral under Article 9 of the Uniform Commercial Code as adopted in Minnesota. Other methods of perfection, such as filing a financing statement, are ineffective for deposit accounts. Therefore, North Star Bank’s security interest is perfected.

In Minnesota, under Article 9 of the Uniform Commercial Code, the concept of “attachment” is a prerequisite for a security interest to be enforceable against the debtor. Attachment occurs when a security interest becomes enforceable against the debtor. This typically requires three elements: value has been given, the debtor has rights in the collateral, and there is an authenticated security agreement describing the collateral. The question involves a scenario where a debtor grants a security interest in inventory to a lender. The lender provides financing (value). The debtor, a retailer in Duluth, Minnesota, has possession and control over the inventory, thus having rights in the collateral. The crucial element here is the authenticated security agreement. The scenario states that the parties discussed the terms and the debtor verbally agreed to grant the security interest. However, under Minnesota Statutes § 336.9-203(b)(3)(A), a security interest is generally enforceable against the debtor only if the debtor authenticates a security agreement that provides a description of the collateral. While there are exceptions, such as possession or control of the collateral by the secured party, in this case, the collateral is inventory, which is typically not possessed by the lender. Therefore, the lack of an authenticated security agreement means the security interest has not attached. Attachment is distinct from perfection, which determines priority against third parties. Without attachment, the security interest is not even valid against the debtor. The question tests the understanding of the essential elements for attachment under Minnesota law, specifically the requirement of an authenticated security agreement when the secured party does not have possession or control of the collateral.

The core issue revolves around the perfection of a security interest in a deposit account. Under Minnesota Statutes Section 336.9-312(a), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in Minnesota Statutes Section 336.9-104(a) and generally means that the secured party is the depositary bank, the depositary bank agrees to follow the instructions of the secured party, or the secured party becomes the customer of the depositary bank with respect to the deposit account. In this scenario, although First State Bank has a written security agreement and a filed financing statement, neither action grants it control over the deposit account held at Northwood Bank. Filing is generally ineffective for perfection in deposit accounts as original collateral. Therefore, First State Bank’s security interest is unperfected. When a buyer in the ordinary course of business purchases goods that are collateral for a security interest, that buyer takes free of the security interest even if perfected, unless the buyer knows the purchase will violate the terms of the security agreement. However, this exception does not apply to the sale of the deposit account itself. The deposit account is not “goods” in the context of a buyer in the ordinary course of business defense. Consequently, the perfected security interest of Second National Bank, which has control over the deposit account, will have priority over the unperfected security interest of First State Bank.

The question pertains to the perfection of security interests in deposit accounts under Minnesota’s Article 9 of the UCC. Perfection in deposit accounts is generally achieved exclusively through control. Minnesota Statutes § 336.9-312(b)(1) states that a security interest in a deposit account as collateral is perfected only by the secured party’s control over the deposit account. Control is defined in Minnesota Statutes § 336.9-104. This control can be established in three ways: (1) the secured party is the bank in which the deposit account is maintained; (2) the secured party has obtained the account debtor’s (the bank’s) agreement to comply with the secured party’s instructions directing the disposition of the funds in the account; or (3) the secured party becomes the “remitter” of the deposit account, meaning the secured party causes the bank to change the account into an account in the secured party’s name. In this scenario, while the loan agreement establishes a security interest, and a UCC-1 financing statement is filed, neither of these actions, on their own, perfects a security interest in a deposit account. Filing is ineffective for deposit accounts. Therefore, without demonstrating control, the security interest remains unperfected. The scenario does not indicate that the bank is the secured party, nor that the bank has agreed to follow the secured party’s instructions, nor that the account has been transferred to the secured party’s name. Thus, the security interest is unperfected.

The core issue here is the priority of security interests when a debtor transfers collateral subject to an existing security interest. Under Minnesota Statutes § 336.9-316(a), a security interest that remains perfected after a disposition of collateral continues to be perfected and has the same priority status it had before the disposition. However, this rule is subject to exceptions. Minnesota Statutes § 336.9-316(a)(2) provides that a security interest that is perfected when collateral is transferred by a debtor to a new debtor in Minnesota, and remains perfected in the original jurisdiction, remains perfected in Minnesota for only one year after the transfer. If the financing statement would have ceased to be effective under the law of the jurisdiction where the collateral was located before the transfer more than one year before the transfer, the security interest is not perfected. In this scenario, the collateral (a specialized manufacturing machine) was located in Wisconsin when the security interest was perfected. The debtor then moved the collateral to Minnesota. The security interest was perfected in Wisconsin. The question implies that the financing statement filed in Wisconsin would have remained effective for a period beyond the transfer to Minnesota. However, the critical point is that the security interest’s perfection in Minnesota is governed by Article 9’s rules concerning the perfection of security interests in collateral that has been moved into Minnesota. Minnesota Statutes § 336.9-316(a)(2) states that if collateral is transferred and the secured party perfects in the new jurisdiction within a certain timeframe, the perfection continues. If the secured party does not perfect in the new jurisdiction within the allowed period, the security interest becomes unperfected in the new jurisdiction. Here, the secured party failed to file a new financing statement in Minnesota within the one-year grace period after the collateral was moved from Wisconsin to Minnesota. Therefore, the security interest became unperfected in Minnesota after the one-year period expired. Consequently, when the new creditor in Minnesota properly files a financing statement covering the same collateral, their security interest will have priority because the first creditor’s security interest is no longer perfected. The relevant timeframe for perfection after a move of collateral into Minnesota is dictated by § 336.9-316(a)(2), which allows for continued perfection for one year if the security interest was perfected in the original jurisdiction. After that year, if no new filing is made in Minnesota, the security interest loses its perfected status. The subsequent creditor’s proper filing in Minnesota establishes their perfected security interest.

The core issue revolves around the perfection of a security interest in collateral that is subject to a purchase-money security interest (PMSI) and the priority rules that apply when a subsequent lender attempts to secure an interest in the same collateral. In Minnesota, as under Article 9 of the Uniform Commercial Code, a PMSI generally has priority over conflicting security interests in the same goods if it is perfected within a specific timeframe. For inventory, this perfection must occur before the debtor receives possession of the inventory. For non-inventory collateral, the PMSI must be perfected within 20 days after the debtor receives possession. In this scenario, Bank A has a perfected security interest in all of Farmer McGregor’s existing and after-acquired farm equipment. This is a broad, floating lien. AgriFinance Corp. then provides a loan to Farmer McGregor to purchase a new combine harvester, taking a PMSI in that specific piece of equipment. For AgriFinance Corp.’s PMSI to have priority over Bank A’s earlier perfected security interest in after-acquired equipment, AgriFinance must properly perfect its PMSI. The critical perfection step for a PMSI in equipment is filing a financing statement. The perfection is effective from the time of filing. The question states that AgriFinance Corp. filed its financing statement on October 15th. Bank A’s security interest was perfected on September 1st. The combine was delivered to Farmer McGregor on October 5th. For AgriFinance’s PMSI to have priority over Bank A’s security interest in the combine, AgriFinance’s perfection must relate back to a time before Bank A’s perfection or occur within the statutory grace period for PMSI perfection in non-inventory collateral, which is 20 days after the debtor receives possession. Since the combine was delivered on October 5th, the 20-day period would extend to October 25th. AgriFinance filed on October 15th, which falls within this 20-day window. Therefore, AgriFinance’s PMSI is perfected and has priority over Bank A’s security interest in the combine. The explanation of priority between a PMSI and a prior perfected security interest in after-acquired property hinges on the timing of perfection. Under Minn. Stat. § 336.9-324, a PMSI in goods other than inventory has priority over a conflicting security interest in the same goods if the PMSI is perfected within 20 days after the debtor receives possession of the collateral. Here, Farmer McGregor received possession of the combine on October 5th. AgriFinance Corp. filed its financing statement on October 15th. This filing occurred within the 20-day period following delivery. Consequently, AgriFinance’s PMSI in the combine is perfected and takes priority over Bank A’s earlier perfected security interest in after-acquired farm equipment, specifically concerning the combine. The key is that the PMSI holder acted within the statutory window to establish its priority.

The core issue here revolves around the perfection of a security interest in a deposit account. Under Minnesota Statutes Section 336.9-312(b), a security interest in a deposit account can only be perfected by control. Control is defined in Minnesota Statutes Section 336.9-104(a) as either becoming the bank’s customer with respect to the deposit account, or entering into a control agreement with the bank. A mere notification to the bank of the security interest, without the bank agreeing to act on the secured party’s instructions, does not establish control. Therefore, even though Aurora Bank received notice of the security agreement and the collateral description, without a signed control agreement from the bank acknowledging Aurora Bank’s control, or Aurora Bank becoming the bank’s customer for that account, its security interest remains unperfected. This leaves Aurora Bank vulnerable to other secured parties who may have perfected their interests, or to the debtor’s bankruptcy trustee. The notification alone does not satisfy the perfection requirements for deposit accounts.

The core issue here is determining when a security interest attaches to collateral. Attachment occurs when a security agreement is in place, value has been given, and the debtor has rights in the collateral. In Minnesota, under UCC § 9-203(b), a security interest attaches when these three elements are met. The scenario describes a situation where a financing statement has been filed, which perfects a security interest but does not, by itself, cause attachment. Attachment is an internal agreement between the debtor and creditor. The financing statement’s filing is a public notice mechanism. The question revolves around the timing of attachment relative to the filing of the financing statement and the debtor’s acquisition of rights. The debtor, an artist named Anya, enters into a security agreement with North Star Bank for a loan. The collateral is her future artwork. The bank files a financing statement before Anya completes any artwork. Anya then creates several paintings. The security interest attaches when Anya obtains rights in the paintings she creates, provided value has been given by the bank and a valid security agreement exists. The filing of the financing statement is a step towards perfection, but attachment itself hinges on the debtor having rights in the collateral. Therefore, the security interest attaches to the paintings as Anya creates them and gains rights in them, not at the time of the loan or the filing of the financing statement. This is because the collateral is after-acquired property (future artwork). The bank’s security interest will attach to each painting as Anya creates it and thus acquires rights in it.

The core issue revolves around the priority of security interests when a debtor defaults on multiple obligations secured by the same collateral. In Minnesota, as under Article 9 of the UCC, priority is generally determined by the order of filing or perfection. However, certain types of collateral and transactions have specific rules. Here, the collateral is farm products. A security interest in farm products is perfected when a financing statement is filed. The initial security agreement between AgriBank and Farmer Giles, perfected by filing on January 15, 2023, establishes AgriBank’s prior claim. The subsequent loan from Harvest Capital, also secured by farm products and perfected by filing on February 20, 2023, is junior to AgriBank’s interest because AgriBank filed first. The critical point is that a buyer in the ordinary course of business exception does not apply to farm products in the possession of a farmer. Therefore, even though a buyer might purchase the corn in the ordinary course of farming operations, they would not take the collateral free of AgriBank’s perfected security interest. This is a key distinction from general inventory. Minnesota Statutes § 336.9-320(a) explicitly states that a buyer in ordinary course of business of farm products takes subject to a security interest created by the seller, unless the buyer is a producer-seller of the farm products. Since the question does not indicate the buyer is a producer-seller, AgriBank’s prior perfected security interest prevails against the buyer. AgriBank can therefore repossess the collateral from the buyer.

Under Minnesota Statutes Chapter 336, Article 9, the perfection of a security interest in certain types of collateral requires specific filing actions. For deposit accounts, which are generally not subject to levy or process by a secured party, perfection is achieved solely by control. Control over a deposit account is established when the secured party is the bank in which the deposit account is maintained, or when the secured party obtains the agreement of the bank in which the deposit account is maintained that the bank will comply with instructions from the secured party directing the disposition of funds in the account without the consent of the debtor. This is a strict rule, and filing a financing statement alone is insufficient to perfect a security interest in a deposit account. Therefore, for a security interest in a deposit account to be perfected, the secured party must have control.

The core issue here revolves around the perfection of a security interest in collateral that is located in multiple states. Minnesota’s Article 9, consistent with the Uniform Commercial Code (UCC) as adopted in Minnesota, generally follows the principle that the law of the jurisdiction where the collateral is located at the time of attachment governs perfection. However, for goods that are covered by a certificate of title, such as vehicles, the UCC specifies that perfection is governed by the law of the jurisdiction that issues the certificate of title. In this scenario, the collateral, a fleet of specialized agricultural drones, is manufactured in California but is primarily operated and stored in Minnesota. Critically, the drones are also equipped with GPS tracking and remote operation capabilities that allow for their use and management from a central hub in North Dakota. The security agreement was properly executed and attached in Minnesota. To perfect its security interest, the secured party, AgriFinancing Corp., filed a UCC-1 financing statement in Minnesota. However, the drones are also subject to registration and titling requirements under Minnesota law, similar to motor vehicles, which are handled by the Minnesota Department of Public Safety. The question implies that the drones are treated as titled goods under Minnesota law. Under UCC § 9-301 and § 9-303 (as adopted in Minnesota), if goods are covered by a certificate of title issued under a statute of a jurisdiction that requires indication of a security interest on the certificate as a condition of perfection, then the UCC generally defers to that statute for perfection. Minnesota Statutes § 336.9-303(c) specifically addresses this, stating that the law of the jurisdiction issuing the certificate of title governs perfection. If the drones are indeed considered “titled goods” in Minnesota, then filing a financing statement with the Minnesota Secretary of State would be insufficient for perfection. Instead, perfection would require notation of the security interest on the certificate of title issued by Minnesota. The fact that the drones can be operated from North Dakota is a potential complication, but for titled goods, the location of the certificate of title is paramount. Since AgriFinancing Corp. only filed a UCC-1 financing statement in Minnesota and did not ensure notation on any certificates of title for the drones, its security interest is unperfected. This unperfected status makes the security interest subordinate to any buyer of the collateral that takes possession and gives value, especially if that buyer takes possession without knowledge of the security interest. Furthermore, if a bankruptcy proceeding were initiated by the debtor, the trustee would have a superior claim to the unperfected collateral. Therefore, AgriFinancing Corp.’s security interest is unperfected because it failed to comply with the perfection requirements for titled goods in Minnesota, which mandate notation on the certificate of title.

The core issue here revolves around the perfection of a security interest in a deposit account under Minnesota’s Article 9. Minnesota, like most states, follows the general UCC rule that a security interest in a deposit account can only be perfected by control. Control is defined in Minnesota Statutes § 336.9-104 to mean that the secured party is the bank’s customer with respect to the deposit account, or the secured party has agreed with the bank that the bank will comply with its instructions concerning the deposit account without further prompt by the secured party. In this scenario, while Northwood Bank has a security agreement and a filed financing statement, it does not have control over the deposit account. The deposit account remains solely in the name of the debtor, Maplewood Enterprises, and the bank has not entered into a control agreement with Northwood Bank. Therefore, Northwood Bank’s security interest in the deposit account is unperfected. Under Minnesota Statutes § 336.9-317, an unperfected security interest is subordinate to the rights of a person entitled to priority under Minnesota Statutes § 336.9-322, which includes a buyer of collateral or a lien creditor. In this case, the bankruptcy trustee, as a hypothetical lien creditor, will have priority over Northwood Bank’s unperfected security interest in the deposit account. The filing of a financing statement is generally effective for perfection of security interests in deposit accounts, but not the exclusive method; control is the exclusive method for perfection of security interests in deposit accounts.

The core issue here is the perfection of a security interest in accounts that arise from the sale of goods by a merchant located in Minnesota, where the buyer is also located in Minnesota. Under Minnesota Statutes Section 336.9-307(a), a buyer in ordinary course of business takes goods free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence. Accounts are generally considered proceeds of inventory. When inventory is sold to a buyer in ordinary course, that buyer takes the goods free of any security interest in the inventory. The security interest in the accounts that arise from that sale is a security interest in proceeds. However, the buyer of the goods is not subject to the seller’s security interest. The question then becomes whether the security interest in the accounts *as proceeds* is automatically perfected. Under Minnesota Statutes Section 336.9-315(d), a security interest in proceeds is automatically perfected if the security interest in the original collateral is perfected, but this perfection ceases to be automatic after 20 days unless the proceeds are of a type that can be perfected by filing in the same office as the original collateral and the filing covers the proceeds, or the proceeds have been acquired with a commercial tort claim. Accounts are generally perfected by filing. However, the exception under 336.9-307(a) is crucial. A buyer in ordinary course of business takes free of the security interest. The accounts generated by the sale of inventory to such a buyer are proceeds of that inventory. While a security interest in proceeds is generally automatically perfected under 336.9-315(d) if the original collateral is perfected, the critical factor here is that the buyer of the goods received them free of the security interest. The security interest in the accounts that arise from the sale to such a buyer is still subject to the fact that the underlying transaction allowed the buyer to take the goods free of the security interest. The UCC prioritizes the buyer in ordinary course of business. Therefore, the secured party’s security interest in the accounts arising from the sale of inventory to a buyer in ordinary course of business, where both parties are in Minnesota, would not be enforceable against that buyer of the goods, and thus the accounts generated by that sale, as proceeds, would not be subject to the perfected security interest in the inventory in the hands of the account debtor (the buyer of the goods). The security interest in the accounts is only valid if the account debtor (the buyer of the goods) has knowledge of the security interest or if the account debtor is not a buyer in ordinary course. In this scenario, the buyer of the goods is a buyer in ordinary course. Thus, the secured party’s security interest in the accounts arising from this sale is not enforceable against the buyer of the goods, and the secured party cannot claim the accounts from the buyer of the goods. The question asks about the enforceability of the security interest in the accounts against the buyer of the goods. Since the buyer of the goods is a buyer in ordinary course of business, they take the goods free of the security interest. This principle extends to the proceeds of those goods, which are the accounts in this case, as against the buyer of the goods. Therefore, the security interest in the accounts is not enforceable against the buyer of the goods.

In Minnesota, when a secured party has a security interest in collateral that includes both goods that are fixtures and goods that are not fixtures, the perfection and priority rules differ. For goods that are not fixtures, perfection is typically achieved by filing a financing statement in the appropriate jurisdiction. For fixtures, however, perfection requires filing a fixture filing, which is a financing statement that indicates it covers fixtures and is filed in the office where a mortgage on the real property would be recorded. Minnesota Statutes Section 336.9-501(a)(1) specifies that the proper place to file an initial financing statement in order to perfect a security interest in collateral, including goods that are or may become fixtures, is in the office designated for the filing of a mortgage on the related real property. Furthermore, Minnesota Statutes Section 336.9-515(d) states that a filed financing statement covering fixtures is effective for a period of 30 years, unlike the standard 5-year effectiveness for other types of collateral, unless a continuation statement is filed within the applicable period. Therefore, a security interest in collateral that includes both non-fixture goods and fixtures requires a dual approach to perfection and has different enforceability periods for the fixture portion.

The question probes the effectiveness of a purchase-money security interest (PMSI) in preventing a security interest from attaching to after-acquired inventory under Minnesota’s UCC Article 9. A PMSI generally has priority over other security interests in the same collateral. However, the concept of “after-acquired property” clauses in security agreements is crucial. A PMSI in inventory is perfected when the secured party files a financing statement and gives notification to other secured parties of record who have filed against the same collateral. In Minnesota, as in most jurisdictions following the UCC, a PMSI in inventory is typically granted priority over a prior-filed general security interest in after-acquired inventory, provided the PMSI requirements are met. This priority is designed to encourage financing of new inventory. The explanation focuses on the statutory framework that allows a PMSI to trump an after-acquired property clause, particularly in the context of inventory, by satisfying the notification and filing requirements. The priority afforded to a PMSI in inventory is a fundamental principle of Article 9, ensuring that a lender financing new inventory can secure its interest against pre-existing claims on the debtor’s overall inventory.

The question concerns the priority of a purchase money security interest (PMSI) in inventory when it is acquired by a buyer in the ordinary course of business from a seller who also has a security interest in that inventory. Under Minnesota Statutes § 336.9-320, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. In this scenario, Aurora Corp. is a buyer in the ordinary course of business of inventory from Boreal Manufacturing. Boreal Manufacturing granted a PMSI to Capital Funding in its inventory. Aurora Corp. purchased the inventory from Boreal Manufacturing. The critical element is whether Aurora Corp. had knowledge that the sale was in violation of Capital Funding’s security agreement. The facts state that Aurora Corp. was unaware of the specific terms of the security agreement between Boreal Manufacturing and Capital Funding, and there is no indication that the sale was conducted in a manner that would put Aurora Corp. on notice of a violation. Therefore, Aurora Corp. takes the inventory free of Capital Funding’s security interest. This is a fundamental principle protecting ordinary course buyers to ensure the smooth flow of commerce.

The question tests the understanding of the priority rules governing purchase money security interests (PMSIs) in inventory under Minnesota’s Article 9. A PMSI in inventory is perfected when the secured party has possession or control of the collateral, and the debtor has possession of the collateral, and the secured party has filed a financing statement before the debtor receives possession of the inventory. However, for inventory, a secured party with a PMSI must also give an authenticated notification to any secured party or lienholder who has previously filed a financing statement covering the same goods or has perfected a security interest in the same goods. This notification must be sent before the debtor receives possession of the inventory. In this scenario, Aurora Bank’s PMSI in the specialized manufacturing equipment (which is inventory for the manufacturer) is perfected by filing. However, to maintain its priority over any prior perfected security interest in the same collateral, Aurora Bank must also notify any existing secured party who has filed a financing statement covering the same goods. Since Aurora Bank did not provide such notification to Northwood Capital before Northwood Capital perfected its security interest, Aurora Bank’s PMSI in the inventory is subordinate to Northwood Capital’s perfected security interest. The core concept here is the special notification requirement for PMSIs in inventory to maintain priority against prior filings. The timing of perfection for both parties is also crucial, but the failure to notify is the decisive factor in establishing priority in this specific situation. The Minnesota UCC § 336.9-324(b) explicitly outlines this notification requirement for inventory PMSIs.

In Minnesota, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally does not need to be filed to be perfected. However, this general rule has exceptions. One significant exception pertains to goods that are or become fixtures. If a security interest in collateral is perfected by fixture filing, then the rules regarding priorities for fixtures apply. A PMSI in fixtures is generally subordinate to a conflicting interest of a person who has a prior perfected security interest in the real property or a prior perfected interest in the fixtures. However, a PMSI in fixtures *can* have priority over a prior encumbrancer of the real property if the PMSI is perfected by a fixture filing before the goods become fixtures or within ten days thereafter. In the scenario presented, the collateral is a specialized industrial oven, which is clearly intended to become a fixture. The security agreement grants a PMSI. The creditor filed a financing statement, but this filing was a standard UCC-1 financing statement, not a fixture filing. Under Minnesota Statutes Section 336.9-334(d), a perfected PMSI in fixtures has priority over a conflicting interest of an owner of the real property if the PMSI is perfected by a fixture filing before the goods become fixtures or within ten days after they become fixtures. Since the filing was not a fixture filing, it did not meet the perfection requirement for PMSI priority over the real property owner’s interest. Therefore, the security interest is unperfected as to the fixtures. The prior perfected security interest in the real property, held by Northwood Bank, takes priority.

The core issue here is the perfection of a security interest in a deposit account. Under Minnesota Statutes Section 336.9-104, a security interest in a deposit account can only be perfected by control. Control is defined in Minnesota Statutes Section 336.9-104(a) as the bank’s agreement to comply with the secured party’s instructions regarding the deposit account without further consent by the debtor. In this scenario, the bank has not entered into such an agreement with Nordic Bank. Instead, Nordic Bank has only filed a UCC-1 financing statement. Filing is generally a method of perfection for many types of collateral, but it is explicitly excluded as a method for perfecting a security interest in a deposit account under Minnesota law, as per Minnesota Statutes Section 336.9-312(b)(1). Therefore, Nordic Bank’s security interest in the deposit account held at First State Bank is unperfected.

In Minnesota, the perfection of a security interest in a deposit account as original collateral requires the secured party to obtain control over the deposit account. Control is achieved when the secured party is the bank in 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 concerning the balance of the deposit account, or when the secured party becomes the assignee of the deposit account. The question asks about a scenario where a secured party has a perfected security interest in a debtor’s deposit account. The critical element for perfection of a security interest in a deposit account under Minnesota Statutes Section 336.9-312(b)(1) is that the secured party must have obtained control over the deposit account. Filing a financing statement alone is insufficient for perfection in deposit accounts. Therefore, the secured party’s perfection hinges on having control, which is established by being the bank, having a control agreement, or being the assignee.

This scenario tests the concept of perfection and priority of security interests in Minnesota under Article 9 of the Uniform Commercial Code. A purchase money security interest (PMSI) in inventory generally has priority over other security interests, provided certain conditions are met. For a PMSI in inventory to have priority, the secured party must have perfected its interest by filing a financing statement and, importantly, must have given notification to any other secured party who had previously filed a financing statement covering the same inventory or who was known by the PMSI holder to have an existing security interest in the inventory. This notification must be sent before the debtor receives possession of the inventory. In this case, Aurora Bank has a perfected security interest in all of Everbright’s inventory. Zenith Corp. is attempting to obtain a PMSI in new inventory to be supplied to Everbright. Zenith Corp. files its financing statement on June 1st. However, to gain priority over Aurora Bank’s pre-existing perfected security interest, Zenith Corp. must also provide notification to Aurora Bank *before* Everbright receives the inventory. The facts state Zenith Corp. sent notification on June 5th, which is *after* Everbright received the inventory on June 3rd. Therefore, Zenith Corp.’s PMSI will not have priority over Aurora Bank’s prior perfected security interest in the inventory. Aurora Bank’s security interest remains superior because Zenith Corp. failed to satisfy the notification requirement for PMSI priority in inventory before the debtor received possession.

The question revolves around the perfection of a security interest in a deposit account. Under Minnesota Statutes Section 336.9-312(a), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in Minnesota Statutes Section 336.9-104. Perfection by control typically involves the secured party being the depositary bank, or by entering into a control agreement with the debtor and the depositary bank, or by becoming the depositary bank’s customer with respect to the deposit account. Filing a financing statement is generally not sufficient for perfection of a security interest in a deposit account. Therefore, when the secured party, North Star Bank, only filed a financing statement and did not obtain control over the deposit account held at First National Bank, its security interest in the deposit account remained unperfected. In the event of the debtor’s bankruptcy, an unperfected security interest is subordinate to the rights of a trustee in bankruptcy, who has the status of a lien creditor under federal bankruptcy law and Minnesota Statutes Section 336.9-317(a)(2). Consequently, North Star Bank’s unperfected security interest in the deposit account would not be effective against the bankruptcy trustee.

The core issue revolves around the perfection of a security interest in a deposit account under Minnesota’s Article 9. Minnesota Statute § 336.9-104(a)(1) explicitly states that Article 9 does not apply to the creation or transfer of an interest in or an assignment of a deposit account, except as provided in Minnesota Statute § 336.9-313(b) and Minnesota Statute § 336.9-315(a)(1). Minnesota Statute § 336.9-313(a)(1) clarifies that a security interest in deposit accounts can only be perfected by control. Control is defined in Minnesota Statute § 336.9-104(a) as obtaining the bank’s agreement to comply with the secured party’s instructions without the bank’s further consent. When a debtor deposits funds into a “special account” that is clearly identified as collateral for a loan and the bank is notified and agrees to hold the funds for the secured party’s benefit, this constitutes control. The debtor’s ability to withdraw funds from this account without the secured party’s consent would negate control. Therefore, if the bank has not agreed to comply with the secured party’s instructions regarding the funds in the deposit account, and the debtor retains unrestricted access, the security interest is unperfected.

Under Minnesota Statutes § 336.9-317, a buyer in ordinary course of business takes free of a security interest that attaches to the goods after the security interest is perfected by filing or possession. However, this protection does not extend to a buyer who has knowledge that the sale is in violation of a security agreement. In this scenario, the security interest of “AgriFinancing Solutions” attached to the harvested grain when it was in possession of the debtor, “Prairie Harvest Farms.” AgriFinancing Solutions then perfected its security interest by filing a UCC-1 financing statement in Minnesota. The subsequent sale of the grain to “Grain Traders Inc.” occurred after perfection. Crucially, the question states that Grain Traders Inc. had actual knowledge that the sale was in violation of the security agreement between Prairie Harvest Farms and AgriFinancing Solutions. Therefore, Grain Traders Inc. does not take the grain free of AgriFinancing Solutions’ perfected security interest. The security interest remains attached and enforceable against Grain Traders Inc. because of their knowledge of the violation.