In Maryland, under UCC Article 9, when a secured party has a perfected security interest in collateral and that collateral is sold in the ordinary course of business by the debtor, the buyer generally takes the collateral free of the security interest. This is known as the “buyer in ordinary course of business” exception. For this exception to apply, the buyer must purchase the goods in good faith, without knowledge that the sale is in violation of the security agreement, and from a person who is in the business of selling goods of that kind. UCC § 9-320 specifically addresses this. The security interest held by Chesapeake Capital, which was perfected against the inventory of Bay State Marine, would not follow the boat into the hands of an ordinary course buyer, such as Ms. Anya Sharma, who purchased the vessel for personal use from Bay State Marine, a dealership in the business of selling boats, in good faith and without knowledge of Chesapeake Capital’s security interest. Therefore, Chesapeake Capital’s security interest is cut off by Ms. Sharma’s purchase.

The question revolves around the perfection of a security interest in accounts, specifically in the context of a business operating in Maryland and encountering a bankruptcy filing. Under Maryland’s Uniform Commercial Code (UCC) Article 9, perfection of a security interest in accounts is generally achieved by filing a financing statement in the jurisdiction where the debtor is located. For a business entity, this is typically the state of its chief executive office. However, there is a significant exception for the sale of accounts, which is treated as a financing transaction for the purposes of Article 9. In this scenario, “Acme Widgets Inc.” sold its accounts receivable to “CrediCorp Funding LLC.” The UCC specifically states that a security interest in accounts can be perfected by filing. When Acme Widgets Inc. files for bankruptcy, the trustee’s rights are generally those of a hypothetical lien creditor. CrediCorp Funding LLC’s security interest in the accounts would be perfected if it filed a financing statement in Maryland, as Acme Widgets Inc. is located there. The question implies that CrediCorp Funding LLC took steps to perfect its interest. If CrediCorp Funding LLC filed its financing statement in Maryland before Acme Widgets Inc. filed for bankruptcy, its perfected security interest would generally have priority over the bankruptcy trustee’s interest. The trustee, as a lien creditor, has priority over unperfected security interests. Since CrediCorp Funding LLC’s perfection is tied to filing in Maryland, and the sale of accounts is a secured transaction under Article 9, the correct method of perfection is filing. The question tests the understanding of perfection requirements for accounts and the priority rules in bankruptcy. The key is that a sale of accounts is treated as a secured transaction, and perfection is achieved by filing a financing statement in the debtor’s location, which is Maryland in this case.

The core issue here is determining the proper place to file a financing statement to perfect a security interest in a debtor’s accounts, specifically when the debtor is a business entity organized under the laws of Maryland and its chief executive office is located in Maryland. Under Maryland UCC § 9-307, for a general intangible (which includes accounts), perfection is generally achieved by filing a financing statement in the jurisdiction where the debtor is located. Maryland UCC § 9-307(b) defines the location of a debtor that is a registered organization as its jurisdiction of organization. Since the debtor is a Maryland-registered entity, its location is Maryland. Therefore, the correct place to file a financing statement to perfect a security interest in its accounts is with the Maryland Secretary of State. This ensures that the secured party’s interest is properly established against third parties who may also have claims against the debtor’s assets. The UCC’s emphasis on filing in the debtor’s location for intangible assets aims to provide a predictable and centralized system for perfecting security interests, reducing confusion and promoting commercial certainty.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Maryland UCC § 9-309(3), a security interest in a payment intangible or chattel paper that is sold can be perfected without filing if the secured party obtains possession of the collateral. However, accounts are treated differently. Maryland UCC § 9-310(a) generally requires filing a financing statement to perfect a security interest in accounts, unless an exception applies. The exception for sale of accounts is found in Maryland UCC § 9-109(a)(3), which states that Article 9 applies to a sale of accounts. Perfection of a security interest in accounts arising from a sale of those accounts is governed by the general rules of perfection for accounts, which typically involves filing a financing statement. While the sale of accounts itself is covered by Article 9, the perfection method for the buyer of those accounts is not automatically perfected upon sale without further action. Specifically, perfection in accounts is generally achieved by filing a financing statement in the jurisdiction where the account debtor is located. There is no automatic perfection for a sale of accounts as there might be for certain other types of collateral like a “transfer of a payment intangible or a participation in a payment intangible” under § 9-309(3) if the secured party obtains control. Accounts are not payment intangibles. Therefore, without filing a financing statement, the buyer’s security interest in the accounts is unperfected.

The core issue here is the priority of security interests when collateral is transferred. Maryland’s UCC Article 9, specifically § 9-316, addresses the effect of a change in the location of collateral on a security interest’s perfection and priority. When collateral is moved from one jurisdiction to another, the perfection of a security interest continues for a period of time, but to maintain its status against purchasers and other creditors in the new jurisdiction, a new filing is generally required within a specified timeframe. In this scenario, Anya perfected her security interest in the specialized manufacturing equipment in Delaware, which is a state that has adopted Article 9 of the UCC. The perfection was effective for a period of four months after the collateral was brought into Maryland, according to § 9-316(d). This provision states that if specified goods are included in a certificate of title issued under a certificate of title statute of another jurisdiction under circumstances requiring notation on the certificate of title, and the goods are removed from that jurisdiction and a security interest is perfected under the law of the other jurisdiction, then the security interest remains perfected in Maryland for a period of twenty days after the secured party receives possession of the certificate of title. However, if the goods are not covered by a certificate of title, the perfection remains effective until the expiration of one year after the collateral has been brought into Maryland, or until the security interest perfects under Maryland law, whichever occurs first. Since the equipment is not typically titled, the one-year rule applies. Anya’s security interest was perfected in Delaware. The equipment was brought into Maryland on January 1st. Anya then filed a financing statement in Maryland on October 1st of the same year. The one-year period for continued perfection without a new filing in Maryland would expire on January 1st of the following year. Therefore, Anya’s filing on October 1st occurred well within the one-year period. As a result, her security interest remains perfected and has priority over any unperfected security interests or those perfected after her initial perfection in Delaware, provided she meets the requirements of § 9-316. The critical point is that her perfection in Delaware continued for one year in Maryland because the goods were not titled. Her filing in Maryland on October 1st, within that year, ensures her continued perfected status. If she had not filed by January 1st of the following year, her perfection would have lapsed. Since she filed before that date, her security interest remains perfected and has priority from the date of her initial perfection in Delaware.

The scenario involves a purchase money security interest (PMSI) in inventory. In Maryland, as under Revised Article 9 of the UCC, a PMSI in inventory is perfected by filing a financing statement. However, to ensure priority over other secured parties, including those with previously perfected security interests in after-acquired inventory, the secured party with the PMSI must also provide notification to any holder of a conflicting security interest who has filed a financing statement covering the inventory *before* the date of the filing of the PMSI lender’s financing statement. This notification must be sent before the debtor receives possession of the inventory. This is often referred to as the “notice-filing” requirement for PMSI in inventory. The notification must state that the PMSI lender expects to acquire a PMSI in inventory of the debtor, describing the inventory and the secured party. If the conflicting secured party has filed a financing statement covering the same inventory, the PMSI holder must send this notice to that party. In this case, Sterling Bank had a prior perfected security interest in all of Equinox Corp’s inventory, including after-acquired inventory. For Apex Finance to have priority over Sterling Bank’s security interest in the new inventory, Apex Finance, as the PMSI holder, needed to provide the required notification to Sterling Bank before Equinox Corp received the new inventory. Since Apex Finance failed to provide this notice, Sterling Bank retains its priority in the new inventory.

No calculation is needed for this question as it tests conceptual understanding of secured transactions. The Uniform Commercial Code (UCC) Article 9 governs secured transactions in personal property and fixtures. A key aspect of Article 9 is the perfection of a security interest, which generally establishes the secured party’s rights against third parties. In Maryland, as in most states that have adopted Article 9, perfection is typically achieved by filing a financing statement in the appropriate public office. However, there are alternative methods of perfection. For certain types of collateral, possession by the secured party can serve as a method of perfection. This is particularly relevant for tangible collateral like goods, negotiable documents, and instruments. If a secured party has possession of the collateral, they are generally deemed to have a perfected security interest without the need for filing a financing statement. This rule is designed to provide clear notice to potential creditors that the collateral is subject to a security interest. The rationale is that possession itself serves as a form of public notice, akin to filing. Therefore, when a secured party takes possession of collateral that can be perfected by possession, their security interest is immediately perfected. This perfection is effective against subsequent creditors and purchasers. The UCC also specifies when filing is the exclusive method of perfection, and when possession is an alternative or exclusive method. For collateral like certificated securities, perfection is typically achieved by control, which often involves possession. For deposit accounts and letter-of-credit rights, perfection is generally only by control, and filing is ineffective. For instruments and negotiable documents, perfection can be by possession or filing, but possession is generally the more robust method for ensuring priority.

The scenario involves a security interest in a “farm product” which is defined under Maryland UCC § 9-102(a)(34) as goods in the possession of a debtor engaged in farming operations that are crops or livestock or supplies used or produced in farming operations. A buyer in the ordinary course of business of farm products takes free of a security interest created by the seller, even if the security interest is perfected and the buyer knows of its existence, unless the buyer is a buyer of farm products in ordinary course of business from a person engaged in farming operations. This exception is specifically limited by Maryland UCC § 9-320(a) which states that a buyer in ordinary course of business of tangible chattel paper, chattel paper evidenced by a record, or a negotiable document of title, or a promissory note in favor of a holder in due course, takes free of a security interest or agricultural lien even if the security interest is perfected and the buyer knows of its existence. However, the critical distinction here is that the UCC does not grant the same protection to a buyer of farm products from a farmer when the security interest was created by the farmer. Instead, Maryland law, specifically § 9-320(e), provides a mechanism for protection for buyers of farm products. This section states that a buyer of farm products takes free of a security interest if the buyer receives from the seller a written notice of the secured party’s name and address and the buyer has not received from the secured party a written notice of the secured party’s claim. In this case, the buyer, Ms. Anya Sharma, received a written notice of the secured party’s claim from Chesapeake Farm Credit, detailing their security interest. Therefore, she cannot take the corn free of the perfected security interest. The perfected security interest held by Chesapeake Farm Credit remains attached to the corn, even though it was sold to a buyer in the ordinary course of business, because Ms. Sharma was notified of the security interest prior to the purchase.

In Maryland, when a secured party has a perfected security interest in collateral and that collateral is sold, exchanged, or otherwise disposed of in a transaction not authorized by the secured party, the security interest generally continues in the collateral unless the secured party authorized the disposition free of the security interest. This is codified in Maryland Code, Commercial Law § 9-315(a)(1). This principle protects the secured party’s rights against subsequent transferees, even if the disposition was unauthorized. However, 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 is a critical exception under Maryland Code, Commercial Law § 9-320(a). If the disposition is authorized, the security interest generally attaches to any identifiable proceeds of the collateral under Maryland Code, Commercial Law § 9-315(a)(2). In the scenario presented, the unauthorized disposition means the security interest persists unless an exception applies. The key is that the security interest continues in the collateral itself.

This scenario involves determining the proper place to file a financing statement to perfect a security interest in a mobile home that is not titled as a motor vehicle. Under Maryland’s Uniform Commercial Code (UCC) Article 9, the general rule for perfection of security interests in goods is filing a financing statement in the appropriate jurisdiction. However, UCC § 9-303(b) specifies that if a certificate of title statute of a state requires indication on a certificate of title of the security interest in order to perfect the interest, the perfection is governed by the certificate of title statute. Maryland’s Certificate of Title for Manufactured Homes Act requires that a security interest in a manufactured home be noted on the certificate of title for that home. Since the mobile home is not titled as a motor vehicle, but is a manufactured home, and Maryland law mandates notation on its certificate of title for perfection, filing a financing statement with the Maryland Secretary of State is not the correct method for perfection. The correct method is to ensure the security interest is properly noted on the certificate of title itself, as this is the exclusive method of perfection for such goods under Maryland law.

The core issue here revolves around the priority of a security interest in after-acquired property when a bankruptcy petition is filed. Under Maryland’s UCC Article 9, a security agreement can grant a security interest in existing and after-acquired inventory. For such a security interest to be perfected, a financing statement must be filed. The filing of the financing statement perfects the security interest in all collateral covered by the agreement, including after-acquired property, from the date of filing. However, bankruptcy proceedings introduce specific rules, particularly regarding the treatment of certain prepetition claims. In this scenario, Chesapeake Bank’s security interest in all of Acme Corp’s inventory, including after-acquired inventory, was perfected by filing its financing statement on January 15, 2023. This perfection extends to inventory acquired by Acme Corp after that date. When Acme Corp filed for bankruptcy on March 1, 2023, Chesapeake Bank had a perfected security interest in all inventory then held by Acme Corp, as well as any inventory acquired thereafter. A critical concept in bankruptcy law, especially concerning secured creditors, is the treatment of the debtor’s property as a bankruptcy estate. Under Section 544 of the Bankruptcy Code, the bankruptcy trustee has the rights of a hypothetical judicial lien creditor as of the commencement of the case. However, this power is subject to validly perfected security interests that existed before the bankruptcy filing. Chesapeake Bank’s perfected security interest in the after-acquired inventory predates the bankruptcy filing. Furthermore, Section 552(a) of the Bankruptcy Code generally cuts off the pre-petition security interest’s reach into property acquired by the debtor after the commencement of the case, unless the security agreement extends to proceeds of prepetition collateral or the acquired property is proceeds of prepetition collateral. In this case, the security agreement explicitly covered after-acquired inventory. Section 552(b) allows a security interest to extend to proceeds of collateral acquired before the commencement of the case, and also to collateral acquired after the commencement of the case if the security agreement covers it and it is “cash proceeds” of prepetition collateral or otherwise provided for by the security agreement. Here, the security agreement specifically covered after-acquired inventory, and the financing statement was properly filed. Therefore, Chesapeake Bank’s perfected security interest in all inventory, including that acquired after the filing of the financing statement and before the bankruptcy petition, remains valid and has priority over the bankruptcy estate’s general unsecured claims. The bankruptcy filing does not retroactively impair Chesapeake Bank’s perfected security interest in inventory that Acme Corp acquired between January 15, 2023, and March 1, 2023. The bank’s claim to this inventory is secured.

In Maryland, when a secured party has a perfected security interest in collateral, and that collateral is sold, exchanged, or otherwise disposed of in a transaction that is not authorized by the secured party, the security interest generally continues in the collateral. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted by Maryland. The UCC’s approach prioritizes the secured party’s rights in the collateral itself, even after an unauthorized disposition. However, there are specific exceptions. One significant exception, particularly relevant to consumer goods transactions, is found in UCC § 9-320, which protects certain buyers of goods from the continuation of a security interest. For buyers of ordinary goods in the ordinary course of business, their purchase generally cuts off a security interest created by a seller who is a merchant dealing in goods of that kind. This protection is not absolute and depends on the buyer not knowing that the sale violates the terms of the security agreement. In this scenario, the buyer is a consumer purchasing a vehicle from a dealership, which is a merchant in vehicles. The security interest was perfected by the bank. Unless the buyer had actual knowledge that the sale to them was prohibited by the security agreement, their purchase would likely render the security interest ineffective against them. The question hinges on the application of the buyer in ordinary course of business exception. The bank’s perfected security interest would continue in the vehicle if the dealership’s sale was not authorized. However, the buyer purchased the vehicle from a licensed dealership, which is a merchant of vehicles, and assuming the buyer did not have knowledge of the violation of the security agreement, the buyer in ordinary course of business protection under Maryland UCC § 9-320 would likely apply, cutting off the bank’s security interest. Therefore, the bank’s security interest would not continue in the vehicle in the hands of this buyer.

The core issue here revolves around the perfection of a security interest in accounts, specifically in the context of a multi-state transaction governed by Maryland’s Article 9. When a debtor is located in one state and the collateral (accounts, which are intangible rights to payment) is managed or controlled from another, Maryland’s UCC § 9-307 dictates the location of the debtor for perfection purposes. Maryland law, like most jurisdictions adopting Revised Article 9, defines the location of a debtor. For an organization that is not a registered organization, its location is its chief executive office. A registered organization, such as a corporation, is located in the jurisdiction where it is registered to do business. In this scenario, “Innovate Solutions Inc.” is incorporated in Delaware, making Delaware its location for Article 9 purposes. Therefore, to perfect a security interest in Innovate Solutions Inc.’s accounts, the secured party must file a financing statement in Delaware, as per Maryland UCC § 9-311(a). Filing in Maryland, where the debtor’s chief executive office is located, would be ineffective if the debtor is considered located in Delaware due to its incorporation. The filing must be made in the jurisdiction of the debtor’s location, which is determined by the debtor’s organizational structure and place of incorporation or chief executive office. Since Delaware is the state of incorporation, it dictates the proper filing location for perfection of a security interest in the debtor’s accounts.

The core issue revolves around the perfection of a security interest in accounts, specifically in the context of a multi-state transaction governed by Maryland’s Article 9. When a debtor’s chief executive office is located in Maryland, and collateral (accounts) is located in various states, the proper place to file a financing statement to perfect the security interest is generally the jurisdiction where the debtor is located. Under Maryland Code, Commercial Law § 9-307, a debtor’s location is determined by its chief executive office. If the debtor’s chief executive office is in Maryland, then Maryland law governs the perfection of the security interest in accounts. Therefore, a financing statement filed in Maryland would be the correct method for achieving perfection against third parties. Filing in a state where some of the accounts might be physically located, but not where the debtor’s chief executive office is situated, would not be the primary method for perfection under Article 9 when dealing with intangible collateral like accounts. The Uniform Commercial Code, as adopted in Maryland, prioritizes the debtor’s location for perfection of security interests in accounts, reflecting the intangible nature of this collateral. This approach simplifies perfection by focusing on a single, determinable location for the debtor, rather than requiring multiple filings across numerous jurisdictions where accounts might arise or be collected.

The scenario involves a purchase money security interest (PMSI) in inventory. In Maryland, as under the general provisions of UCC Article 9, a PMSI in inventory generally requires both attachment and perfection to have priority over other secured parties and buyers. Perfection of a PMSI in inventory requires filing a financing statement and, crucially, providing notification to any existing secured parties who have previously filed financing statements covering the same collateral. This notification must be sent before the debtor receives possession of the inventory. The notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and must describe the inventory and the secured party. If a prior secured party has a properly perfected security interest in the debtor’s inventory, the PMSI holder must provide this notification to gain superpriority. Without this notification, the PMSI holder’s interest in the inventory will be subordinate to the prior perfected security interest. In this case, Sterling Bank has a prior perfected security interest in all of Equinox Corp’s inventory. Zenith Corp acquired a PMSI in new inventory delivered to Equinox Corp. For Zenith Corp to have priority over Sterling Bank’s existing security interest in that new inventory, Zenith Corp must have satisfied the notification requirements of UCC § 9-324(b) prior to Equinox Corp receiving possession of the inventory. Since the facts state Zenith Corp did not send the required notification, its PMSI is subordinate to Sterling Bank’s prior perfected security interest. Therefore, Sterling Bank’s security interest in the new inventory has priority.

The scenario involves a dispute over the priority of a security interest in inventory held by a business in Maryland. Sterling Corp. perfected its security interest in all of “Acme Widgets Inc.’s” present and after-acquired inventory by filing a financing statement on January 15, 2023, in Maryland. On March 10, 2023, Sterling Corp. also took possession of a specific batch of widgets as additional collateral. On April 5, 2023, Harbor Bank extended a loan to Acme Widgets Inc. and obtained a purchase-money security interest in a new shipment of specialized widgets, which were delivered to Acme Widgets Inc. on April 10, 2023. Harbor Bank promptly filed a financing statement on April 12, 2023, also in Maryland. The question is about the priority between Sterling Corp. and Harbor Bank regarding the specialized widgets delivered on April 10, 2023. Under Maryland UCC § 9-324(a), a purchase-money secured party (PMSI) has priority over a conflicting security interest in inventory if certain conditions are met. The PMSI must have priority in the same inventory, the PMSI must be perfected when the debtor receives possession of the inventory, and the financing statement must be filed before the debtor receives possession of the inventory. Furthermore, the PMSI must give an authenticated notification to any other secured party that claims an interest in that inventory, and the notification must be received within five years before the debtor receives possession of the inventory. In this case, Harbor Bank has a PMSI in the specialized widgets. The widgets were delivered to Acme Widgets Inc. on April 10, 2023. Harbor Bank filed its financing statement on April 12, 2023. Sterling Corp. had a prior perfected security interest in after-acquired inventory, filed on January 15, 2023. Sterling Corp.’s taking possession of a separate batch of widgets on March 10, 2023, does not affect the priority regarding the new shipment of specialized widgets. The critical element for Harbor Bank’s PMSI priority is whether it provided notification to Sterling Corp. and filed its financing statement *before* Acme Widgets Inc. received possession of the specialized widgets. Harbor Bank filed its financing statement on April 12, 2023, which is *after* Acme Widgets Inc. received possession of the specialized widgets on April 10, 2023. While Harbor Bank has a PMSI, its failure to file before the debtor received possession means it does not satisfy the requirements for PMSI priority over Sterling Corp.’s prior perfected security interest in after-acquired inventory under Maryland UCC § 9-324(a). The notification requirement is also crucial, but the filing timing is dispositive here. Therefore, Sterling Corp.’s prior perfected security interest in after-acquired inventory generally takes priority over Harbor Bank’s PMSI in this specific shipment of specialized widgets because Harbor Bank did not file its financing statement before the debtor received possession.

The core issue here revolves around the perfection of a security interest in a deposit account. Under Maryland’s UCC Article 9, a security interest in a deposit account can only be perfected by control. Control is defined in Section 9-104 of the UCC. For a deposit account, control is typically achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with the secured party’s instructions regarding the account, without the debtor’s consent. In this scenario, the debtor, “Bayview Builders Inc.,” granted a security interest in its operating deposit account at “Chesapeake National Bank” to “Atlantic Capital LLC.” Atlantic Capital LLC filed a UCC-1 financing statement. However, filing is not the method of perfection for deposit accounts. Without having obtained control over the deposit account, Atlantic Capital LLC’s security interest is unperfected. When a subsequent creditor, like “Harbor Freight Solutions,” obtains a security interest in the same collateral and perfects it by control, Harbor Freight Solutions will have priority. Since Chesapeake National Bank is the depositary bank and has not entered into a control agreement with Atlantic Capital LLC, and Atlantic Capital LLC has not otherwise obtained control, its security interest remains unperfected. Harbor Freight Solutions, by taking steps to obtain control (implied by its ability to assert priority), has a perfected security interest. Therefore, Harbor Freight Solutions has priority over the unperfected security interest of Atlantic Capital LLC. The filing of a UCC-1 financing statement by Atlantic Capital LLC is irrelevant for perfection of a security interest in a deposit account, as control is the exclusive method.

In Maryland, as under the Uniform Commercial Code (UCC) generally, a purchase money security interest (PMSI) in consumer goods is automatically perfected upon attachment. This means no filing of a financing statement is required for perfection. Article 9 distinguishes between different types of collateral, and consumer goods are defined as goods primarily used or bought for use primarily for personal, family, or household purposes. The scenario involves a commercial loan secured by inventory and equipment, and a separate PMSI in a specific piece of equipment. While the commercial lender’s security interest in the equipment would require filing for perfection against third parties, the PMSI holder’s interest is automatically perfected. Therefore, the PMSI holder has priority over the equipment, even though the commercial lender has a security interest in all of the debtor’s assets. The critical point is that automatic perfection for PMSIs in consumer goods bypasses the general filing requirements for perfection. Since the item in question is a piece of equipment used in a business, it is not a consumer good. However, the question tests the understanding of PMSI perfection rules more broadly, and the automatic perfection of a PMSI in consumer goods is a key exception to the filing rule. If the item were a consumer good, the PMSI would be automatically perfected. The question, however, is designed to see if the student understands that even without filing, a PMSI can have priority. The scenario describes a PMSI in equipment, which, for perfection purposes, generally requires filing. However, the question is framed to test the understanding of the *priority* rules related to PMSIs, not necessarily the perfection method for equipment. The priority of a PMSI is established against other secured creditors, including those who have filed. A PMSI generally takes priority over a prior-filed security interest in the same collateral if the PMSI is perfected within a specified period after the debtor receives possession of the collateral. In this case, the PMSI is in equipment, and the PMSI holder files their financing statement within the statutory window. This timely filing ensures their priority over the earlier-filed general security interest in the equipment. The correct answer hinges on the general rule of PMSI priority, which is that a PMSI can achieve priority over prior-in-time security interests if properly perfected.

The scenario involves a purchase money security interest (PMSI) in inventory. In Maryland, as governed by UCC Article 9, a PMSI in inventory requires both attachment and perfection. Attachment occurs when the debtor receives rights in the collateral, the secured party gives value, and a security agreement is in place describing the collateral. Perfection, which is crucial for priority against other creditors, is achieved by filing a financing statement. For inventory, UCC Section 9-312(c) specifically addresses PMSI priority. A PMSI lender in inventory generally has priority over a prior-filed general security interest in the same inventory if the PMSI lender files a financing statement covering the inventory before the debtor receives possession of the inventory. Furthermore, UCC Section 9-324(b) states that a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI requirements are met, including the requirement that the financing statement be filed before the debtor receives possession of the inventory. The key here is the timing of the filing relative to the debtor’s receipt of possession. Since Creditor A filed its financing statement before any inventory was delivered to the debtor, and Creditor B’s PMSI was perfected by filing before the debtor received the goods, Creditor B’s PMSI has priority over Creditor A’s prior-filed general security interest in that inventory. The explanation does not involve any mathematical calculations.

The core issue revolves around the perfection of a security interest in accounts, specifically in the context of a multi-state transaction governed by Maryland’s UCC Article 9. When a debtor is located in one state and the collateral (accounts) is generated in another, determining the proper jurisdiction for filing a financing statement is crucial. Maryland’s UCC § 9-301(1) establishes that the law of the jurisdiction where the debtor is located governs perfection of a security interest in accounts. Maryland’s UCC § 9-307(b) defines the location of a debtor. For a registered organization, like a corporation, its location is the jurisdiction under whose law it is organized. In this scenario, “TechSolutions Inc.” is incorporated in Delaware. Therefore, to perfect its security interest in the accounts generated by TechSolutions Inc., “Capital Finance Corp.” must file its financing statement in Delaware, as that is the jurisdiction where the debtor is located. Filing in Maryland, where the accounts are generated but the debtor is not located, would be ineffective for perfection against third parties. The concept of “location of the debtor” is paramount in multi-state secured transactions to ensure a uniform and predictable system for establishing priority.

In Maryland, under UCC § 9-310, a security interest is generally subordinate to a lien for services or materials furnished with respect to goods subject to the security interest, provided the lien arises by statute or rule of law. This priority is contingent upon the lienholder retaining possession of the goods. The rationale behind this rule is to encourage those who improve or maintain collateral to do so without fear of losing their claim to a prior secured party. Such liens are often referred to as “artisans’ liens” or “possessory liens.” For this priority to apply, the services must have been rendered while the lienholder was in possession of the collateral. The secured party’s interest, even if perfected, is subject to these statutory possessory liens. Therefore, the mechanic’s lien, arising from services provided while the vehicle was in the mechanic’s possession, takes priority over the previously perfected security interest in the vehicle.

Under Maryland’s Uniform Commercial Code (UCC) Article 9, when a secured party has a perfected security interest in collateral, and that collateral is sold in a transaction not authorized by the secured party, the secured party generally retains its security interest in the collateral even after the sale. This principle is known as the “ordinary course of business” exception, which protects buyers who purchase goods in the ordinary course of business from a seller who is in the business of selling goods of that kind. However, this protection does not extend to buyers who purchase collateral that is subject to a purchase-money security interest (PMSI) if the buyer has knowledge of the security interest. In this scenario, the diagnostic imaging equipment is the collateral. The secured party, MedFinance Corp., has a perfected security interest in this equipment. The sale to Imaging Solutions LLC occurred at a public auction, which is not a transaction typically considered a sale in the ordinary course of business from a merchant who regularly sells such equipment. Furthermore, the question implies that Imaging Solutions LLC may have had some awareness of MedFinance Corp.’s interest, or at least the circumstances of the sale were not entirely transparent, suggesting the ordinary course exception might not apply. Even if the sale were considered to be in the ordinary course of business, UCC § 9-320(a) in Maryland (as in most states) states that a buyer in the ordinary course of business takes free of a security interest created by the seller, but not necessarily a security interest created by someone else or one that is not from the seller’s inventory being sold in the normal course. Here, the sale is at a public auction, and the key is whether the buyer took free of the security interest. Generally, a buyer at a foreclosure sale or a similar disposition where the secured party is enforcing its rights would take free of subordinate security interests, but this is a private sale by the debtor, not a disposition by the secured party. Therefore, MedFinance Corp.’s perfected security interest continues to attach to the equipment in the hands of Imaging Solutions LLC. The correct answer is that MedFinance Corp.’s security interest remains perfected in the equipment.

The core issue here is the perfection of a security interest in accounts that arise from the sale of goods by a seller who is not located in Maryland but is shipping those goods into Maryland. Under Maryland’s Uniform Commercial Code (UCC) Article 9, the law governing perfection generally follows the location of the debtor. For accounts, the UCC § 9-307(a) generally states that the law of the jurisdiction where the debtor is located governs perfection and priority. In this scenario, the debtor, “Coastal Crafts,” is located in Delaware. Therefore, for the security interest in Coastal Crafts’ accounts to be perfected, the financing statement must be filed in Delaware, the jurisdiction of the debtor’s location. Maryland UCC § 9-301(1)(a) and § 9-307(a) are the relevant provisions. Filing in Maryland would be ineffective for perfection of a security interest in accounts where the debtor is located in Delaware, unless Maryland law specifically dictates otherwise for this type of transaction, which it does not for general accounts. The perfection of a security interest in accounts is typically governed by the debtor’s location, not the location of the collateral or the transaction. Therefore, the filing in Maryland is insufficient to perfect the security interest against a subsequent buyer of those accounts.

In Maryland, when a secured party has a perfected security interest in collateral and that collateral is sold, exchanged, or otherwise disposed of in a transaction covered by Article 9, the security interest generally continues in the collateral unless the secured party authorized the disposition free of the security interest. This is governed by Maryland Code, Commercial Law § 9-315(a)(1). However, if the disposition is authorized, the security interest attaches to any identifiable proceeds of the collateral. Under Maryland Code, Commercial Law § 9-315(d)(1), a security interest in proceeds is automatically perfected if the security interest in the original collateral was perfected and the proceeds are collateral in which a security interest may be perfected by filing in the office in which the security interest in the original collateral was perfected, and the proceeds are not covered by a filed financing statement covering the original collateral. In this scenario, the financing statement filed in Maryland perfects the security interest in the original equipment. When the equipment is sold to a buyer in ordinary course of business in Maryland, the buyer takes free of the security interest if the disposition was authorized. However, the security interest generally continues in the equipment itself unless otherwise agreed. If the secured party authorized the sale, the security interest attaches to the proceeds. The question specifies that the secured party’s interest in the original equipment was perfected in Maryland. The sale of the equipment to a buyer in ordinary course of business in Maryland, absent specific authorization to sell free of the lien, means the security interest continues in the equipment. If the secured party had authorized the sale, their interest would attach to the proceeds, and the perfection rules for proceeds would apply. However, the core principle is that the security interest continues in the collateral unless the disposition was authorized free of the security interest. Since the question does not state the disposition was authorized free of the security interest, the security interest remains attached to the equipment.

The core issue in this scenario revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Maryland’s Uniform Commercial Code (UCC) Article 9, a security interest in accounts is generally perfected by filing a financing statement. However, there are specific rules for certain types of transactions. A sale of accounts is typically treated as a secured transaction, and the security interest in those accounts must be perfected. The UCC clarifies that a security interest in accounts is perfected by filing a financing statement that covers accounts. In this case, while the sale of the business includes the accounts receivable, the buyer, “BaltiMore Bikes,” has not filed a financing statement to perfect its interest in these accounts. The lender, “Chesapeake Capital,” however, has filed a financing statement covering “all accounts” of “Harbor Cycles,” which would include the accounts generated from the sale of the business. Therefore, Chesapeake Capital’s prior and properly filed financing statement establishes its perfected security interest in the accounts. The sale of the business itself does not automatically perfect the buyer’s interest in the accounts; perfection requires adherence to UCC filing requirements. Because Chesapeake Capital filed first and its filing covers the accounts in question, it has priority over BaltiMore Bikes’ unperfected interest.

This question probes the nuances of perfection of security interests in fixtures under Maryland’s UCC Article 9, specifically focusing on the priority rules when a fixture filing is made. Under Maryland Code, Commercial Law § 9-334, a secured party with a perfected security interest in fixtures has priority over subsequent possessors of the real property. However, the timing of the fixture filing relative to the acquisition of an interest in the real property is crucial. If the security interest is perfected *before* the goods become fixtures, the secured party generally has priority over subsequent purchasers or encumbrancers of the real property. Conversely, if the security interest is perfected *after* the goods become fixtures, priority is typically determined by whether the real property encumbrancer has a prior perfected interest in the real property itself. In this scenario, the mortgage was recorded on May 1st, establishing a prior perfected interest in the real property. The filing of the fixture financing statement for the HVAC system, which is a fixture, occurred on May 15th. Since the mortgage holder’s interest in the real property was perfected prior to the fixture filing, the mortgage holder’s interest generally takes precedence over the security interest in the HVAC system, unless an exception applies. Article 9, § 9-334(d) in Maryland specifies that a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the fixture filing is made before the interest of the encumbrancer or owner is of record. Here, the mortgage was recorded before the fixture filing. Therefore, the mortgage holder’s interest has priority. The calculation is conceptual, not numerical: Priority is determined by the order of perfection of the real property interest versus the fixture filing. Mortgage perfected May 1st. Fixture filing perfected May 15th. Since May 1st precedes May 15th, the mortgage holder has priority.

The core issue here revolves around the perfection of a security interest in accounts, specifically those arising from the sale of goods in the ordinary course of business, and the interplay between UCC § 9-307 and UCC § 9-310 in Maryland. When a secured party has a properly perfected security interest in a debtor’s accounts, and that debtor then sells goods that generate new accounts, the original secured party’s interest generally continues in those new accounts under UCC § 9-315(a)(1). However, UCC § 9-307(a) addresses the rights of buyers in the ordinary course of business (BIOC) who take free of a security interest created by their seller, unless the BIOC knows the sale is in violation of the security interest. In this scenario, “Artisan’s Furnishings,” the debtor, sells furniture to various customers, creating accounts. “Capital Lending Corp.” has a perfected security interest in Artisan’s Furnishings’ accounts. “Premier Paints Inc.” supplies paint to Artisan’s Furnishings, and Artisan’s Furnishings uses this paint to create the furniture it sells. Premier Paints Inc. has a purchase money security interest (PMSI) in the paint and the proceeds thereof, including accounts generated from the sale of furniture made with that paint. Under UCC § 9-310(a), perfection by filing is generally required for a security interest to be perfected. However, UCC § 9-310(b) provides exceptions, notably for purchase money security interests in inventory that are perfected in accordance with UCC § 9-312. More importantly, UCC § 9-307(a) states that a buyer in the ordinary course of business takes goods free of a security interest created by their seller even though the security interest is perfected, unless the buyer knows that the sale is in violation of the security interest. The customers who purchased the furniture from Artisan’s Furnishings are buyers in the ordinary course of business. Their purchase of the furniture, which generates the accounts, means they take the furniture free of Capital Lending Corp.’s security interest. The security interest held by Capital Lending Corp. attaches to the accounts as proceeds of the inventory. However, the critical point is that the customers are BIOC and take the furniture free of Capital Lending’s security interest. The question then becomes whether Premier Paints Inc.’s security interest in the accounts derived from the sale of furniture made with its paint is superior. Premier Paints Inc. has a PMSI in the paint and the proceeds. To have priority over Capital Lending Corp. in the accounts, Premier Paints Inc. would need to satisfy the requirements of UCC § 9-324 for PMSI priority in proceeds. UCC § 9-324(a) generally grants PMSI priority in collateral and its proceeds if the PMSI is perfected when the debtor receives possession of the collateral or within a certain time frame. In the case of accounts as proceeds, UCC § 9-324(a) requires that the PMSI in the original collateral (the paint) be perfected and that the PMSI be perfected in the accounts, or that the accounts are proceeds of inventory subject to the PMSI and the PMSI in the inventory has priority. Capital Lending Corp.’s security interest is in all accounts. Premier Paints Inc.’s security interest is in the paint and its proceeds, which would include the accounts generated from the sale of furniture made with that paint. The priority between Capital Lending Corp. and Premier Paints Inc. in the accounts is determined by UCC § 9-322, which generally provides that first-to-file or first-to-perfect has priority. Capital Lending Corp. perfected its security interest in all accounts by filing. Premier Paints Inc. has a PMSI in the paint and its proceeds. For Premier Paints to have priority in the accounts generated from the sale of furniture made with its paint, it must have perfected its PMSI in the paint and satisfied the conditions for PMSI priority in proceeds under UCC § 9-324. UCC § 9-324(b) specifically addresses PMSI in inventory and its proceeds. It states that a PMSI in inventory has priority over a conflicting security interest in the inventory and in identifiable proceeds of the inventory if the PMSI is perfected when the debtor receives possession of the inventory and the PMSI in the inventory has priority over the conflicting security interest. Crucially, UCC § 9-324(b)(2) states that a perfected PMSI in inventory also has priority in identifiable proceeds of the inventory, provided that the proceeds are identifiable cash proceeds or instruments or deposit accounts or chattel paper that are subject to the security interest. Accounts are not listed as a category that automatically receives PMSI priority in proceeds under this subsection without further action. However, UCC § 9-324(a) is broader. If Premier Paints perfected its PMSI in the paint, and the furniture made with that paint is considered proceeds of the paint, then Premier Paints would have priority in those proceeds if it also perfected its interest in the accounts. The crucial distinction is that Capital Lending’s interest is in *all* accounts. Premier Paints’ interest is in accounts *derived from the sale of furniture made with its paint*. If Premier Paints filed its financing statement covering the paint and its proceeds, and that filing put Capital Lending on notice of its claim to the accounts, then Premier Paints could have priority. Let’s re-examine the scenario and the specific wording of the UCC. Capital Lending Corp. has a perfected security interest in all of Artisan’s Furnishings’ accounts. Premier Paints Inc. has a PMSI in the paint and its proceeds. Artisan’s Furnishings uses the paint to make furniture and sells it to customers, generating accounts. The customers are BIOC and take the furniture free of Capital Lending’s security interest. The question is about the priority in the accounts themselves. Capital Lending’s security interest attaches to the accounts as soon as they are created. Premier Paints’ security interest attaches to the paint and then to the proceeds, which include the accounts. Under UCC § 9-322, Capital Lending, having perfected first (assuming it filed before Premier Paints perfected its PMSI), would generally have priority in the accounts. However, UCC § 9-324(a) grants PMSI priority in collateral and its proceeds. If Premier Paints perfected its PMSI in the paint, and the accounts are proceeds of that paint, then Premier Paints can have priority in those accounts if it also perfects its security interest in the accounts. The key is whether Premier Paints’ PMSI in the paint, when perfected, extends priority to the accounts as proceeds. UCC § 9-324(a) states that a PMSI in collateral has priority in collateral and its proceeds. Accounts are proceeds of the furniture, which are arguably proceeds of the paint. For Premier Paints to have priority in the accounts, it must have perfected its PMSI in the paint and the financing statement must cover the accounts or the proceeds. If Premier Paints’ initial filing covered the paint and “all proceeds,” and this filing predated Capital Lending’s filing in the accounts, then Premier Paints would have priority. However, if Capital Lending filed first in the accounts, then Premier Paints needs to demonstrate a basis for PMSI priority over that earlier filing. The correct answer hinges on the specific perfection and filing dates and the scope of the financing statements. Assuming Capital Lending perfected its security interest in all accounts by filing on January 1st. Premier Paints perfected its PMSI in the paint on February 1st, with a financing statement covering the paint and “all proceeds.” Artisan’s Furnishings receives the paint on February 5th, uses it to make furniture, and sells the furniture, creating accounts on March 1st. In this scenario, Capital Lending has priority in the accounts because it filed first. Premier Paints’ PMSI in the paint does not automatically grant it priority in the accounts as proceeds if a prior perfected security interest exists in those accounts, unless Premier Paints’ filing also covered accounts and was made before Capital Lending’s filing. However, the question asks about the outcome of Premier Paints’ security interest in the accounts. If Premier Paints has a perfected PMSI in the paint, and the accounts are proceeds of that paint, then UCC § 9-324(a) grants priority to the PMSI in the proceeds if the PMSI is perfected when the debtor receives possession of the collateral (the paint) and the PMSI has priority in the collateral. If Premier Paints filed its financing statement covering the paint and its proceeds before Capital Lending filed its financing statement covering the accounts, Premier Paints would have priority. Let’s consider the scenario where Premier Paints perfected its PMSI in the paint on January 1st, with a filing covering the paint and proceeds. Capital Lending perfected its security interest in all accounts on February 1st. Artisan’s Furnishings received the paint on February 5th, manufactured furniture, and created accounts on March 1st. In this case, Premier Paints has priority in the accounts because its PMSI in the paint and proceeds was perfected before Capital Lending’s filing in the accounts. The accounts are proceeds of the furniture, which are proceeds of the paint. UCC § 9-324(a) grants PMSI priority in proceeds. The calculation is conceptual, not numerical. It involves applying the priority rules under Article 9 of the UCC, specifically UCC § 9-322 (general priority rules) and UCC § 9-324 (PMSI priority). The key is to determine which security interest attached and was perfected first, and whether the PMSI exception applies to the proceeds (accounts). If Premier Paints perfected its PMSI in the paint and its proceeds (including accounts) *before* Capital Lending perfected its security interest in the accounts, then Premier Paints will have priority in those accounts. Final Answer Derivation: The question asks about the priority of Premier Paints’ security interest in the accounts. Under UCC § 9-324(a), a PMSI in collateral generally has priority in its proceeds. If Premier Paints’ PMSI in the paint was perfected, and its financing statement covered proceeds, and this perfection occurred before Capital Lending’s perfection in the accounts, then Premier Paints has priority in the accounts generated from the sale of furniture made with its paint. Therefore, Premier Paints’ perfected PMSI in the paint, which extends to its proceeds, would take priority over Capital Lending’s subsequently perfected security interest in the accounts. Premier Paints Inc. has priority in the accounts generated from the sale of furniture made with its paint because its perfected purchase money security interest in the paint extends to its proceeds, and its perfection occurred before Capital Lending Corp. perfected its security interest in the accounts. This is in accordance with Maryland UCC § 9-324(a), which grants priority to a PMSI in collateral and its proceeds if the PMSI is perfected when the debtor receives possession of the collateral and the PMSI has priority in the collateral. The accounts are considered proceeds of the furniture, which are in turn proceeds of the paint. Capital Lending Corp.’s security interest in all accounts, while perfected, is junior to Premier Paints’ PMSI in the accounts that are proceeds of the paint, assuming Premier Paints complied with the perfection and filing requirements for its PMSI and its financing statement covered proceeds.

Under Maryland’s Uniform Commercial Code, Article 9, the perfection of a security interest in a deposit account is 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 that the bank will comply with instructions from the secured party directing the disposition of the funds in the deposit account. If the secured party is not the bank, obtaining control requires a tri-party agreement among the debtor, the secured party, and the bank where the account is held, whereby the bank agrees to follow the secured party’s instructions. This control is exclusive of the debtor’s ability to direct the disposition of funds without the secured party’s consent. Therefore, for a secured party other than the depositary bank to perfect its security interest in a deposit account, it must obtain the bank’s agreement to follow its instructions.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Maryland’s Uniform Commercial Code (UCC) Article 9, specifically § 9-309(3), a security interest in a supporting obligation for an account, chattel paper, a document, a letter-of-credit right, a negotiable instrument, or investment property is automatically perfected if the security interest in the underlying account, chattel paper, document, letter-of-credit right, negotiable instrument, or investment property is perfected. However, this provision applies to the supporting obligation itself, not the primary collateral. In this scenario, the security interest is in the accounts receivable generated by the sale of the bakery business. A sale of accounts is explicitly covered by UCC § 9-109(a)(3), which states that Article 9 applies to a sale of accounts. For a security interest in accounts to be perfected, a financing statement must be filed in accordance with § 9-310(a) and § 9-501(a). Filing is the standard method for perfecting security interests in accounts, unless an exception applies. The question presents a situation where a secured party has a security interest in the accounts of a business. The sale of the business itself is not the primary collateral; rather, the accounts generated from the business’s operations are the collateral. While § 9-309(3) deals with supporting obligations, the accounts themselves require a filing for perfection. The fact that the accounts are generated by the sale of a business does not create an automatic perfection exception for the accounts themselves. Therefore, to have a perfected security interest in these accounts against third-party claims, the secured party must file a financing statement. Without filing, the security interest remains unperfected, making it subordinate to subsequent perfected security interests or the rights of a buyer of the accounts that gives value and receives delivery of the chattel paper or account without knowledge of the security interest.

Under Maryland’s Uniform Commercial Code (UCC) Article 9, when a secured party has a perfected security interest in collateral and that collateral is sold, exchanged, or otherwise disposed of in a transaction that is not authorized by the secured party, the security interest generally continues in the collateral unless the secured party authorized the disposition free of the security interest. This principle is known as the “first in time, first in right” rule for perfection and the continuation of security interests. However, if the disposition is authorized, the security interest typically attaches to any identifiable proceeds of the collateral. If the disposition is unauthorized, the secured party’s rights are generally preserved in the original collateral, and if the collateral is exchanged for new property, the security interest may also attach to that new property as proceeds under UCC § 9-315. In this scenario, since Elara did not authorize the sale of the vintage automobile to Reginald, her perfected security interest in the automobile continues. The automobile itself remains subject to Elara’s security interest, regardless of its new ownership by Reginald. The security interest follows the collateral.