The question probes the priority of a purchase money security interest (PMSI) in inventory against a prior perfected security interest in after-acquired inventory. Under Hawaii Revised Statutes (HRS) §490:9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include that the PMSI must be perfected when the debtor receives possession of the inventory. Furthermore, the PMSI holder must have given an authenticated notification to any prior secured party whose financing statement covers the inventory. This notification must state that the PMSI holder expects to acquire a PMSI in inventory of the debtor and describe the inventory by item or type. This notification must be sent before the debtor receives possession of the inventory. If these requirements are satisfied, the PMSI holder will have priority over the earlier perfected security interest in the inventory, even if the earlier secured party also has a security interest in after-acquired inventory. In this scenario, the Bank of Honolulu had a perfected security interest in all of Kai Manu’s inventory, including after-acquired inventory. Kai Manu then obtained a loan from Island Finance to purchase new fishing nets, which constitute inventory. Island Finance properly perfected its PMSI in the nets. For Island Finance to have priority over the Bank of Honolulu’s prior perfected security interest in the same inventory, Island Finance must have given the required notification to the Bank of Honolulu before Kai Manu received possession of the nets. Assuming Island Finance provided this notification, its PMSI in the nets would take priority.

In Hawaii, as under the Uniform Commercial Code (UCC) Article 9, the perfection of a security interest in a deposit account is generally accomplished 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 to comply with instructions from the secured party with respect to the deposit account without the debtor’s consent. This is outlined in Hawaii Revised Statutes (HRS) § 490:9-104. Unlike other collateral types where filing a financing statement is a primary method of perfection, for deposit accounts, control is the exclusive method of perfection. Therefore, a secured party who has a security interest in a deposit account but has not obtained control has an unperfected security interest. This distinction is critical in priority disputes, particularly when other creditors may have claims against the debtor’s assets. The UCC prioritizes perfection, and for deposit accounts, control is the sole route to achieving that status.

Hawaii Revised Statutes (HRS) §490:9-317(a)(2) addresses the priority of certain security interests. Specifically, it states that a buyer of goods acquires free of a security interest that has attached to the goods if the buyer gives value and receives delivery of the collateral without knowledge of the security interest and before its effective financing statement is filed. In this scenario, Keola, a buyer in the ordinary course of business, purchased a surfboard from “Surf’s Up Hawaii,” a merchant dealing in goods of that kind. Keola paid value for the surfboard and took possession. The security interest held by “Ocean Finance Co.” had attached to the surfboard, which was inventory of “Surf’s Up Hawaii.” However, Ocean Finance Co. had not yet filed an effective financing statement covering the surfboard. Under HRS §490:9-320, a buyer in the ordinary course of business takes free of a security interest created by their seller, even if the security interest is perfected, unless the buyer knows the sale is in violation of the security interest. While HRS §490:9-317(b) deals with other buyers, HRS §490:9-320 is more specific to buyers in the ordinary course of business. Since Keola qualifies as a buyer in the ordinary course of business and Ocean Finance Co. had not filed an effective financing statement prior to Keola’s purchase and receipt of the surfboard, Keola takes the surfboard free of Ocean Finance Co.’s security interest. The key is that the security interest was created by the seller (Surf’s Up Hawaii), and Keola’s status as a buyer in the ordinary course of business provides a shield against unperfected or even perfected security interests under specific circumstances, including when the seller is in possession of the collateral and the buyer receives delivery without knowledge of the security interest.

The core issue here is the perfection of a security interest in a deposit account. Under Hawaii Revised Statutes (HRS) § 490:9-304, a security interest in a deposit account can only be perfected by control. Control is defined in HRS § 490:9-104. For a deposit account, control is achieved when the secured party is the bank where 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, Maui Marine Bank has a security interest in the deposit account held by Pacific Fishing Co. at Island Bank. Maui Marine Bank perfected its security interest by taking control of the deposit account. This control was established through Island Bank’s agreement to follow Maui Marine Bank’s instructions concerning the account. The perfection is effective against third parties, including other creditors of Pacific Fishing Co. The filing of a financing statement, while generally required for perfection of security interests in personal property, is explicitly not a method of perfection for deposit accounts under HRS § 490:9-309(2). Therefore, the filing by Maui Marine Bank is superfluous for perfection purposes but does not invalidate their control-based perfection. The question asks about the *effectiveness* of Maui Marine Bank’s security interest against a subsequent lien creditor. Since Maui Marine Bank achieved perfection through control, its security interest is effective against a lien creditor who obtains rights in the collateral after perfection. A lien creditor, such as the IRS in this case, generally takes subject to perfected security interests. The IRS’s levy creates a lien, but this lien is subordinate to Maui Marine Bank’s already perfected security interest.

In Hawaii, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally accomplished by control. Section 9-314 of the UCC, as adopted in Hawaii, specifies that a security interest in a deposit account as collateral is perfected when the secured party obtains control over the deposit account. Control is defined in Section 9-104. For a bank where the deposit account is maintained, control is established when the bank becomes the “customer” with respect to the deposit account, or enters into a control agreement with the debtor and the secured party. If the secured party is not the bank where the deposit account is held, control is achieved when the bank agrees to follow the secured party’s instructions regarding the deposit account without further consent from the debtor. This control mechanism is crucial because deposit accounts are considered “deposit accounts” under Article 9, and unlike other general intangibles, perfection by control is the exclusive method for perfection. Filing a financing statement is insufficient on its own to perfect a security interest in a deposit account. Therefore, the secured party must ensure they have obtained control as defined by the UCC to establish their perfected security interest against other creditors or purchasers.

The question revolves around the concept of perfection of a security interest in goods that are to become fixtures. Article 9 of the Uniform Commercial Code, as adopted in Hawaii, specifies the method for perfecting a security interest in fixtures. Perfection is the legal process by which a secured party establishes its rights in collateral against third parties. For fixtures, which are goods that have become so related to particular real property that an interest in them arises under real property law, perfection is achieved by filing a fixture filing. A fixture filing is a financing statement that indicates it covers fixtures and includes a description of the real property to which the fixtures are affixed. This filing must be made in the office where a mortgage on the real property would be recorded. The UCC also provides for a special priority rule for fixtures, allowing a secured party to obtain priority over prior real property interests if the fixture filing is made before the interest otherwise becomes perfected under real property law. The scenario describes a lender taking a security interest in specialized machinery intended for installation in a resort hotel in Maui, Hawaii. This machinery qualifies as a fixture once installed. To ensure its security interest is superior to subsequent claims against the real property, the lender must perfect its interest by filing a fixture filing. This filing must be made in the appropriate real property records office in Hawaii. The timing of this filing is crucial; it must occur before the goods become fixtures or within a specific grace period thereafter to maintain priority against prior encumbrances. In this context, the lender’s action of filing a standard UCC-1 financing statement with the Hawaii Secretary of State is insufficient for perfecting a security interest in fixtures. A fixture filing requires specific additional information and a different filing location. Therefore, the lender has not properly perfected its security interest in the fixtures.

The core issue here is the perfection of a security interest in a deposit account, which is a controllable financial asset under Article 9 of the Uniform Commercial Code. Hawaii Revised Statutes Chapter 490, Article 9, specifically addresses secured transactions. For deposit accounts, perfection is achieved by control, as defined in HRS § 490:9-104. Control 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 with which the deposit account is maintained to comply with instructions from the secured party directing disposition of the funds without further consent from the debtor. HRS § 490:9-314 further clarifies that perfection of a security interest in deposit accounts can only be achieved by control. Filing a financing statement is generally insufficient for perfection in deposit accounts, as the UCC prioritizes control for these types of assets to ensure certainty and prevent conflicting claims. Therefore, even though a financing statement was filed, without control over the deposit account, the security interest remains unperfected.

The scenario involves a purchase money security interest (PMSI) in inventory. A PMSI arises when a secured party gives value to enable the debtor to acquire rights in collateral, and the collateral is in fact acquired, and the value given is in fact used for that purpose. In Hawaii, as in other states following Article 9 of the UCC, a PMSI holder in inventory must satisfy specific requirements to maintain priority over other secured parties. These requirements include filing a financing statement and, crucially, providing notification to any existing secured party who has filed a financing statement covering the same collateral or is known by the PMSI holder to have a security interest in the collateral. The notification must be sent before the debtor receives possession of the inventory. The notification must describe the inventory by item or type. The notification is effective for five years from the date it is sent. In this case, Kai secured a loan from Aloha Bank and granted Aloha Bank a security interest in all of Kai’s inventory. Aloha Bank properly filed a financing statement. Later, Maui Credit extended financing to Kai to purchase new inventory and took a PMSI in that new inventory. Maui Credit filed its financing statement after Aloha Bank’s filing. To gain priority over Aloha Bank’s perfected security interest in the same inventory, Maui Credit, as a PMSI holder in inventory, must have sent an authenticated notification to Aloha Bank that described the inventory by item or type before Kai received possession of the inventory. Since the facts state that Maui Credit did not send any notification to Aloha Bank, Maui Credit’s PMSI in the new inventory is subordinate to Aloha Bank’s perfected security interest. Therefore, Aloha Bank has priority.

The core issue here revolves around the perfection of a security interest in a deposit account, specifically in the context of Hawaii’s Article 9. Under Hawaii Revised Statutes (HRS) §490:9-304(a), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in HRS §490:9-104. For a deposit account, control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the agreement of the bank with which the deposit account is maintained, or when the secured party becomes the “entitlement holder” of the deposit account if it is a securities account. In this scenario, “Aloha Auto Finance” (AAF) has a security interest in the deposit account of “Island Imports LLC.” AAF filed a financing statement, which is the proper method for perfecting security interests in most types of collateral, but HRS §490:9-301(a)(1) explicitly states that filing is not effective to perfect a security interest in deposit accounts. Therefore, filing alone is insufficient. AAF also sent a notice to the bank where Island Imports LLC held its account. While notice is a component of obtaining control in some situations, it is not sufficient on its own to establish control unless coupled with the bank’s agreement to act on the secured party’s instructions (as per HRS §490:9-104(a)(2)). Without evidence of such an agreement or AAF becoming the entitlement holder, their security interest remains unperfected. Consequently, if a bankruptcy petition is filed, the trustee, under the strong-arm clause (11 U.S.C. §544), can avoid unperfected security interests. Therefore, AAF’s security interest is unperfected because they failed to obtain control of the deposit account as required by Hawaii’s Article 9.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Hawaii Revised Statutes (HRS) § 490:9-324, a secured party with a PMSI in inventory has priority over a conflicting security interest in the same inventory, provided certain conditions are met. These conditions include filing a financing statement before or within twenty days after the debtor receives possession of the inventory, and that the secured party gives an authenticated notification to any other secured party whose financing statement covers the inventory before the debtor receives possession of the inventory. In this case, Kaimana Corp. perfected its security interest in all of Kairos LLC’s inventory by filing on January 15th. Aloha Bank also has a perfected security interest in Kairos LLC’s inventory, filed on January 10th. Kaimana Corp. then finances new inventory for Kairos LLC, creating a PMSI. For Kaimana Corp.’s PMSI to have priority over Aloha Bank’s earlier perfected security interest, Kaimana Corp. must satisfy the notification requirement of HRS § 490:9-324(b). This requires Kaimana Corp. to send an authenticated notification to Aloha Bank stating that Kaimana Corp. expects to acquire a PMSI in Kairos LLC’s inventory and describing the inventory. This notification must be sent before Kairos LLC receives possession of the inventory. Since Kaimana Corp. sent the notification on January 20th, after Kairos LLC had already received possession of the inventory on January 18th, Kaimana Corp. failed to meet the statutory requirement for PMSI priority in inventory. Therefore, Aloha Bank, having the earlier filed and perfected security interest, retains its priority. The correct answer is that Aloha Bank’s security interest has priority.

The core issue here is the perfection of a security interest in goods that are to become fixtures. Under Hawaii Revised Statutes (HRS) Chapter 490, Article 9, a security interest in fixtures is governed by specific rules. Perfection of a security interest in fixtures requires filing a fixture filing in the real property records. The filing must describe the real property concerned and name the record owner or record lessee of that property. The financing statement must also identify the collateral as fixtures or describe the goods that are or are to become fixtures. In this scenario, Kai’s financing statement was filed in the Hawaii state UCC filing office, which is the correct venue for most personal property security interests, but not for fixtures. Furthermore, the financing statement did not describe the real property or name the record owner of the resort property. Therefore, Kai’s security interest in the custom-made lounge chairs, which are intended to become fixtures, is unperfected against subsequent purchasers of the real property for value. Under HRS §490:9-334, a perfected security interest in fixtures has priority over a conflicting interest of an owner or lessee of the real property, but only if the security interest is perfected by a fixture filing before the interest of the owner or lessee is recorded. Since Kai’s filing was not a fixture filing and did not meet the requirements for one, it does not establish priority.

The question revolves around the concept of perfection of a security interest in goods that are to become fixtures. Under Hawaii Revised Statutes (HRS) §490:9-334, a security interest in goods that are or are to become fixtures is subordinate to the conflicting interest of an encumbrancer or owner of the real property if the security interest does not meet certain criteria. Specifically, for a security interest in fixtures to have priority over a conflicting interest in the real property, it must be perfected by a fixture filing. A fixture filing is a financing statement that covers goods that are or are to become fixtures and is filed in the office where a mortgage on the real property would be filed or recorded. Furthermore, HRS §490:9-313(d) states that a security interest in fixtures, whether perfected before or after the goods become fixtures, is subordinate to the conflicting interest of a subsequent encumbrancer or owner of the real property if the encumbrancer or owner is a “bona fide purchaser” (BFP) of the real property or a holder of a prior encumbrance of record and gives value for the transaction, and the BFP or holder of the prior encumbrance has no notice of the security interest. In this scenario, the lender perfected its security interest in the specialized restaurant equipment by filing a standard UCC-1 financing statement in the Hawaii Secretary of State’s office. This filing is generally sufficient for perfection of security interests in personal property. However, when the collateral is or is to become fixtures, a fixture filing is required for priority against real property interests. Since the lender did not make a fixture filing, its security interest in the equipment, which has become affixed to the restaurant building, is subordinate to the rights of the subsequent buyer of the real property who qualifies as a bona fide purchaser without notice of the lender’s unperfected (as to fixtures) security interest. The buyer of the restaurant, having purchased the real property without notice of the lender’s security interest and having a recorded interest in the real property, will take the property free of the lender’s security interest in the fixtures because the lender failed to make a proper fixture filing as required by HRS §490:9-334. The lender’s filing was effective for the equipment as personal property, but once it became a fixture, a fixture filing was necessary to achieve priority against subsequent real property purchasers.

In Hawaii, as in other US states governed by Article 9 of the Uniform Commercial Code, the perfection of a security interest in certain types of collateral requires specific actions beyond the mere existence of a security agreement. For deposit accounts, Hawaii Revised Statutes § 490:9-312(b) and § 490:9-314(a) are critical. Perfection in a deposit account as original collateral can only be achieved through “control” as defined in HRS § 490:9-104. Control is typically established when the secured party becomes the customer of the bank with respect to the deposit account, or when the bank agrees to act on the secured party’s instructions concerning the account. Filing a financing statement is generally insufficient for perfection in deposit accounts when the secured party is not the bank itself. Therefore, if Malia’s security interest in Kai’s checking account is to be perfected, she must obtain control over that account. Filing a UCC-1 financing statement alone does not grant control and thus does not perfect her security interest in the deposit account itself. While a security agreement creates the security interest, perfection is the process that establishes priority against third parties.

In Hawaii, when a secured party intends to file a financing statement to perfect a security interest in collateral, the proper filing location is crucial. Article 9 of the Uniform Commercial Code, as adopted by Hawaii, specifies that for most types of collateral, including general intangibles and accounts, the financing statement must be filed in the office of the lieutenant governor, which serves as the central filing office for the state of Hawaii. This central filing system is designed to provide notice to third parties regarding the existence of security interests. The specific filing office is determined by the location of the debtor. For a registered organization, such as a corporation or limited liability company, that is organized under the laws of Hawaii, the relevant jurisdiction for filing is Hawaii itself. Therefore, the financing statement should be filed in the central filing office of Hawaii. This aligns with the general principle of filing in the jurisdiction where the debtor is located, as defined by UCC § 9-307. The lieutenant governor’s office in Hawaii is designated as the central repository for UCC filings.

The question concerns the perfection of a security interest in accounts, specifically in the context of Hawaii law and Article 9 of the Uniform Commercial Code. Under UCC § 9-310(a), a financing statement must be filed to perfect a security interest in most types of collateral, including accounts. Hawaii has adopted Article 9 of the UCC. Therefore, to establish a perfected security interest in the accounts receivable of Aloha Enterprises, a financing statement must be filed. The correct place to file a financing statement for accounts is generally the jurisdiction where the debtor is located. For a registered organization like a corporation, this is typically its jurisdiction of incorporation, which is Hawaii in this scenario. Filing in the debtor’s chief executive office or principal place of business is relevant for other collateral types or if the debtor is not a registered organization. Perfection by possession is not applicable to accounts. Control is relevant for deposit accounts, investment property, and electronic chattel paper, but not for general accounts.

In Hawaii, as under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally does not require a security agreement to be filed to be perfected. However, perfection is automatic upon attachment. For other types of collateral, such as inventory or equipment, filing is typically required for perfection, even for PMSIs. The question concerns a “consumer good” as defined in UCC § 9-102(a)(23), which are goods primarily used for personal, family, or household purposes. When a secured party finances the purchase of such goods for a debtor’s personal use, and the security interest is a PMSI, perfection occurs automatically without the need for filing a financing statement. This automatic perfection is a key feature of PMSIs in consumer goods, distinguishing them from other security interests that require affirmative steps like filing or possession for perfection. The rationale is to facilitate consumer credit by simplifying the perfection process for lenders providing purchase money for everyday items. Therefore, the security interest in the washing machine, a consumer good, is perfected automatically upon attachment, meaning no further action like filing is needed.

The core issue here is determining the proper place to file a financing statement for a security interest in a limited liability company’s (LLC) membership interests, which are considered “general intangibles” under Hawaii’s Uniform Commercial Code (UCC) Article 9. Hawaii UCC § 9-301(1)(c) states that for a certificated security, the law of the jurisdiction where the security certificate is located governs. However, LLC membership interests are typically uncertificated. Hawaii UCC § 9-301(3) provides that for a general intangible, the law of the jurisdiction where the debtor is located governs. Hawaii UCC § 9-307(e) clarifies that for an organization like an LLC, its location is its chief executive office. Therefore, if the debtor LLC’s chief executive office is in Honolulu, Hawaii, the financing statement must be filed in the Hawaii state central filing office. Filing in Delaware, where the LLC may be incorporated or organized, would be incorrect if the chief executive office is elsewhere. The question asks about the proper filing for a security interest in the LLC membership interests, which are general intangibles. The UCC mandates perfection in the debtor’s location, which for an organization is its chief executive office. Assuming the chief executive office is in Honolulu, Hawaii, the filing must occur in Hawaii.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Hawaii Revised Statutes (HRS) § 490:9-324, a secured party with a PMSI in inventory has priority over a conflicting security interest in the same inventory, provided certain conditions are met. The primary condition for maintaining this priority against other secured parties is that the PMSI holder must have perfected its security interest by filing a financing statement *before* the debtor receives possession of the inventory. Additionally, the PMSI holder must notify any other secured party who has filed a financing statement covering the same inventory or has a perfected security interest in the collateral, and that notification must be received by the other secured party within five years before the debtor receives possession of the inventory. In this case, Kai’s initial filing for the restaurant equipment was perfected. However, when Kai later financed the inventory with a PMSI, the crucial step was the timing of the perfection of this new PMSI. The question states that Kai filed the financing statement for the inventory *after* the debtor received possession of the inventory. This late filing means Kai’s PMSI in the inventory is not perfected at the time the debtor obtained possession, and therefore, it cannot gain the superpriority afforded to PMSIs in inventory over a previously perfected security interest in the same collateral. The prior perfected security interest held by Aloha Bank would therefore have priority over Kai’s unperfected PMSI in the inventory. The concept being tested is the strict timing requirements for perfecting a PMSI in inventory to achieve superpriority, as outlined in Article 9 of the UCC as adopted in Hawaii.

The core issue here is the perfection of a security interest in fixtures under Hawaii’s UCC Article 9. HRS § 490:9-334 addresses fixtures, specifying that a security interest in goods that are or become fixtures is effective against subsequent purchasers of the real property if the financing statement covering the fixtures is filed before the interest of the subsequent purchaser of the real property is recorded. In this scenario, Kai secures a loan from Kiana using the specialized photovoltaic system as collateral. Kiana properly files a financing statement covering the photovoltaic system as a fixture with the appropriate Hawaii bureau of conveyances on January 15th. Subsequently, Lani purchases the real property on February 1st, and her deed is recorded on February 5th. Since Kiana’s fixture filing predates Lani’s recordation of her interest in the real property, Kiana’s security interest has priority. HRS § 490:9-334(d) is the controlling provision, stating that such a filing is effective against a subsequent encumbrancer or purchaser of the real property. The fact that the photovoltaic system is a fixture is crucial, as it links the personal property collateral to the real estate. Lani’s status as a purchaser of the real property means she is subject to prior perfected security interests in fixtures if the filing requirements are met. Kiana’s timely filing establishes her priority over Lani’s subsequently recorded interest.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account under Hawaii’s Article 9. Hawaii Revised Statutes Section 490:9-304(a) specifies that the principal method for perfecting a security interest in a deposit account is by control. Control is defined in Hawaii Revised Statutes Section 490:9-104(a) and generally means the secured party is the bank in which the deposit account is maintained, or the debtor has agreed to a control agreement with the secured party that allows the secured party to charge the deposit account to the secured party’s order. In this case, the security agreement only grants a security interest; it does not establish control by the secured party (Kona Corp) over the deposit account held at Maui Bank. Furthermore, no separate control agreement was executed between Kona Corp and Maui Bank, nor did Kona Corp become the bank itself. Therefore, Kona Corp’s security interest in the deposit account remains unperfected. An unperfected security interest is subordinate to a perfected security interest. The trustee, representing the bankruptcy estate, has priority over unperfected security interests. Therefore, the trustee can avoid Kona Corp’s unperfected security interest.

The core issue here is determining the proper place for filing a financing statement to perfect a security interest in a deposit account. Hawaii Revised Statutes (HRS) §490:9-304(a) specifies that the proper filing location for perfection of a security interest in a deposit account is with the filing office in the jurisdiction where the depositary bank is located. HRS §490:9-104(a) defines a deposit account as an account maintained with a bank, and HRS §490:9-307(p) addresses the location of the bank for the purpose of determining the jurisdiction of perfection. Since the depositary bank for the collateral is located in California, the financing statement must be filed with the Secretary of State of California. Filing in Hawaii, where the debtor is located, or with the Hawaii Department of Commerce and Consumer Affairs, would be ineffective for perfecting a security interest in the deposit account itself, as HRS §490:9-301(a) states that an unperfected security interest is subordinate to the rights of a person that secures an interest in the collateral without knowledge of the security interest and for value. Perfection in deposit accounts is achieved through control, not filing, but HRS §490:9-312(b) requires filing to perfect a security interest in deposit accounts if the secured party has not obtained control. However, the question specifies filing a financing statement. HRS §490:9-304(a) clarifies that perfection of a security interest in a deposit account is accomplished by control, and if filing is required, it must be in the jurisdiction of the bank’s location. Therefore, the correct action is to file in California.

The core issue here revolves around the perfection of a security interest in intangible collateral, specifically accounts. Under Hawaii’s Uniform Commercial Code (UCC) Article 9, perfection of a security interest in accounts is generally achieved by filing a financing statement. However, UCC § 9-310(a) states that a financing statement must be filed to perfect all security interests except as otherwise provided in UCC § 9-310(b). UCC § 9-310(b)(2) provides an exception for a security interest in accounts that is perfected by control under UCC § 9-104. Control is typically achieved through an agreement where the secured party obtains the right to direct the disposition of the deposit account, or in the case of electronic chattel paper, by control as defined in UCC § 9-105. For general intangible collateral like accounts, perfection by control is not a standard method as it is for deposit accounts or investment property. Therefore, the filing of a financing statement is the primary and most common method for perfecting a security interest in accounts. The scenario describes a security interest in accounts, which are classified as general intangibles under UCC Article 9. Hawaii follows the general UCC rules for perfection. Perfection of a security interest in accounts is achieved by filing a financing statement in accordance with UCC § 9-310(a) and § 9-312(a). There is no automatic perfection for accounts, nor is perfection typically achieved through possession or control in the manner of deposit accounts or investment property. The exception for control in § 9-310(b)(2) pertains to control over deposit accounts or electronic chattel paper, not general accounts. Therefore, the proper method for perfection in this scenario is the filing of a financing statement.

Hawaii Revised Statutes Chapter 490, Article 9 governs secured transactions. When a debtor defaults on a secured obligation, the secured party generally has the right to repossess the collateral. However, this right is not absolute and must be exercised in a commercially reasonable manner. HRS § 490:9-609 outlines the procedures for repossession. It permits repossession without judicial process if it can be done without breach of the peace. A breach of the peace is a violation of public order and can occur through physical force, threats, or even unauthorized entry into a dwelling. If a secured party breaches the peace during repossession, they may be liable for damages. Furthermore, HRS § 490:9-610 requires that any disposition of collateral after repossession must also be commercially reasonable. This means the secured party must take actions that a reasonable person would consider appropriate under the circumstances to obtain the best possible price for the collateral. This includes aspects like advertising, the method of sale, and the terms of the sale. The failure to conduct a commercially reasonable disposition can lead to a deficiency judgment being reduced or even barred. In this scenario, the secured party’s actions of entering the debtor’s private residence without consent and disabling the vehicle in a way that could cause further damage, especially if it involves unauthorized entry into a locked garage, would likely constitute a breach of the peace under Hawaii law. Consequently, the secured party’s subsequent sale of the collateral would be tainted by this initial wrongful act, potentially impacting their ability to recover a deficiency from the debtor. The question tests the understanding of the interplay between the right to repossess and the obligation to avoid breaching the peace, as well as the requirement for commercially reasonable disposition of collateral under Hawaii’s UCC Article 9.

The core issue here revolves around the perfection of a security interest in accounts that are subject to a federal statute governing priority, specifically the Federal Aviation Act of 1958, which preempts Article 9 of the UCC for certain aircraft-related collateral. In Hawaii, as in other states, the UCC governs secured transactions. However, when a federal statute provides a comprehensive scheme for the creation, perfection, and priority of security interests in a specific type of collateral, that federal scheme generally preempts state UCC provisions. The Federal Aviation Act establishes a national system for recording transfers and encumbrances on aircraft with the Federal Aviation Administration (FAA). A security interest in an aircraft, including its component parts and related accounts generated from its use, is perfected by filing a notice of the security interest with the FAA, not by filing a financing statement with the Hawaii Department of Commerce and Consumer Affairs under UCC § 9-310. Therefore, even though the collateral includes accounts, the overarching federal regulatory framework for aircraft dictates the perfection method. The UCC’s general rules regarding accounts would apply in the absence of such federal preemption. However, because the security agreement covers an aircraft and the accounts are directly tied to its operation, the federal perfection requirements for aircraft take precedence. The UCC’s filing requirements for accounts, typically a UCC-1 financing statement filed in the jurisdiction where the debtor is located (Hawaii, in this case), would be ineffective for perfection purposes when the collateral is an aircraft subject to federal law. The proper method for perfecting a security interest in collateral subject to a federal recording statute is to comply with that federal statute’s recording requirements.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Hawaii Revised Statutes (HRS) § 490:9-109(a)(3), Article 9 applies to a sale of accounts. HRS § 490:9-309(a) states that a security interest in accounts is automatically perfected upon attachment. Attachment occurs when value is given, the debtor has rights in the collateral, and a security agreement exists. In this scenario, the security agreement was in place, value was given through the purchase of the business, and the seller had rights in the accounts. Therefore, the security interest in the accounts automatically perfected at the moment of attachment. The filing of a financing statement is not required for perfection of a security interest in accounts that arise from the sale of a business, which is treated as a sale of accounts under Article 9. While a financing statement would typically be required to perfect a security interest in accounts as original collateral, the specific exclusion for sales of accounts under HRS § 490:9-109(a)(3) and the automatic perfection rule under HRS § 490:9-309(a) are controlling. The buyer’s security interest in the accounts is therefore perfected from the outset without the need for filing.

This scenario involves determining the priority of a security interest in a fixture. Under Hawaii Revised Statutes (HRS) § 490:9-334, a perfected security interest in fixtures has priority over a conflicting interest of an owner of the real property, except for a “fixture filing” made before the interest of the real property owner is recorded. The key here is that the security interest in the restaurant equipment was perfected by a fixture filing on January 15, 2023. The mortgage on the real property was recorded on February 1, 2023. Since the fixture filing occurred *before* the mortgage was recorded, the security interest in the equipment, which has become a fixture, takes priority over the later-recorded mortgage. The financing statement for the equipment was filed correctly and provided notice of the security interest in the collateral, which now includes the fixtures. Therefore, the lender with the perfected security interest in the restaurant equipment has priority over the bank’s mortgage with respect to that equipment.

The core issue here revolves around the perfection of a security interest in accounts, specifically under Hawaii’s UCC Article 9. When a secured party files a financing statement, it generally perfects a security interest in all of the debtor’s present and future accounts. Hawaii Revised Statutes (HRS) §490:9-308(a) states that a security interest in accounts is perfected by filing. HRS §490:9-310(a) further clarifies that filing a financing statement is generally the method of perfection for security interests in accounts. The financing statement must provide an adequate description of the collateral. In this scenario, the initial filing by Aloha Bank covered “all accounts receivable of the Debtor.” This description is sufficiently broad to encompass both existing and subsequently arising accounts. Therefore, Aloha Bank’s security interest in the new accounts generated after the initial filing is already perfected by virtue of its prior proper filing, assuming no other intervening perfected security interests or statutory liens. The subsequent filing by Maui Credit Union, while covering “all present and future accounts,” would be junior to Aloha Bank’s perfected security interest in the new accounts because Aloha Bank’s perfection predates Maui Credit Union’s filing. This principle is fundamental to understanding priority in secured transactions, where the first to file or perfect generally has priority.

The question concerns the priority of security interests when a debtor has pledged the same collateral to multiple secured parties. Under Hawaii Revised Statutes Chapter 490 (Uniform Commercial Code Article 9), perfection is key to establishing priority. A security interest is perfected when it has attached and when all applicable steps for perfection have been taken. For a security interest in deposit accounts, the exclusive methods of perfection are control or, in some limited circumstances, the secured party being the bank in which the deposit account is maintained. A security interest in general intangibles is perfected by filing a financing statement. In this scenario, Pacific Bank obtained a security interest in Kai’s inventory and general intangibles, perfecting it by filing a financing statement in Hawaii. This filing perfects the interest in the general intangibles. Subsequently, Island Credit Union obtained a security interest in Kai’s deposit account, perfecting it by obtaining control over the account. Finally, Aloha Bank obtained a security interest in Kai’s general intangibles and deposit account. Aloha Bank perfected its security interest in the general intangibles by filing a financing statement in Hawaii. However, Aloha Bank did not obtain control over the deposit account. When determining priority between competing security interests in the same collateral, Article 9 generally follows a “first to file or perfect” rule. However, specific rules apply to different types of collateral. For deposit accounts, control is the primary method of perfection and generally dictates priority. Since Island Credit Union has control over the deposit account, its security interest in the deposit account has priority over Aloha Bank’s unperfected security interest in the deposit account (perfection requires control, and Aloha Bank did not obtain control). For the general intangibles, both Pacific Bank and Aloha Bank filed financing statements. The priority between them is determined by the order of filing. Pacific Bank filed first. Therefore, Pacific Bank has priority over Aloha Bank with respect to the general intangibles. The question asks about the priority of security interests in the deposit account. Island Credit Union perfected its security interest in the deposit account by control, which is the exclusive method for perfection in Hawaii. Aloha Bank attempted to perfect its security interest in the deposit account but failed to obtain control. Therefore, Island Credit Union’s security interest in the deposit account has priority.

The core issue here is determining the priority of a purchase-money security interest (PMSI) in inventory against a prior perfected security interest in after-acquired inventory. Under Hawaii Revised Statutes (HRS) § 490:9-324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: 1) the PMSI must be perfected when the debtor receives possession of the inventory; 2) the secured party must give an authenticated notification to any prior secured party of record whose financing statement covers the inventory; and 3) the notification must be received by the prior secured party before the debtor receives possession of the inventory. In this scenario, Kai Corporation has a perfected security interest in all of Aloha Enterprises’ inventory, including after-acquired inventory. On January 15th, Hana Bank obtains a PMSI in new inventory and files a financing statement on January 16th. Aloha Enterprises receives possession of the new inventory on January 17th. Crucially, Hana Bank sent its notification to Kai Corporation on January 18th, which is *after* Aloha Enterprises received possession of the inventory. Therefore, Hana Bank’s PMSI notification was not received by Kai Corporation before Aloha Enterprises obtained possession of the inventory. This failure to meet the notification timing requirement of HRS § 490:9-324(b) means Hana Bank’s PMSI does not have priority over Kai Corporation’s existing perfected security interest in the inventory. Kai Corporation’s security interest, being perfected first and not subordinated by a timely PMSI notification, retains its priority.

The scenario involves a debtor, “Maui Marine Gear Inc.,” located in Hawaii, granting a security interest in its inventory of specialized nautical equipment to “Kona Capital LLC.” Kona Capital LLC properly files a financing statement in Hawaii. Subsequently, Maui Marine Gear Inc. also operates a branch in California and sells some of its inventory to “San Francisco Sails,” a buyer in the ordinary course of business, who takes possession of the goods in California. Article 9 of the Uniform Commercial Code, as adopted in Hawaii, governs this transaction. The core issue is the perfection and priority of the security interest against a buyer in the ordinary course of business. Under UCC § 9-320, a buyer in the ordinary course of business takes free of a security interest created by the seller, even if the security interest is perfected, unless the buyer knows that the sale is in violation of the security agreement. This protection is fundamental to the smooth functioning of commerce, particularly for businesses that regularly sell inventory. Since San Francisco Sails is a buyer in the ordinary course of business and acquired possession of the goods in California, and there is no indication they had knowledge of Kona Capital LLC’s security interest violating the terms of the security agreement, their interest generally takes priority over Kona Capital LLC’s security interest in the purchased inventory. The filing of the financing statement by Kona Capital LLC perfects its security interest against subsequent creditors and purchasers, but it does not typically prevent a buyer in the ordinary course of business from taking free of that interest under these circumstances. The governing law for determining the status of the buyer in ordinary course is generally the law of the jurisdiction where the sale occurs and possession is taken, which in this case is California, and California also follows the UCC principles that protect buyers in the ordinary course. Therefore, San Francisco Sails takes the inventory free of Kona Capital LLC’s security interest.