The core issue here revolves around the perfection of a security interest in accounts that arise from the sale of goods by a merchant located in North Dakota. Under North Dakota Century Code Section 41-09-301 (UCC § 9-301), a security interest in accounts is generally perfected by filing a financing statement. However, there’s a specific exception for certain “account debtors” under UCC § 9-302(3)(a) and North Dakota Century Code Section 41-09-302(3)(a), which relates to perfection by other statutes. In this scenario, the accounts arise from the sale of farm products by a farmer. While UCC § 9-302(3)(a) exempts security interests that are perfected under federal law from UCC filing requirements, the sale of farm products typically does not fall under a federal perfection scheme that preempts UCC filing for accounts arising from such sales. The farmer’s location in North Dakota is crucial, as it dictates the governing law. The financing statement, if filed, would be filed in the central filing office of North Dakota. The question is about the *initial* perfection. A security interest in accounts is perfected by filing a financing statement unless an exception applies. The sale of farm products does not create an exception that negates the need for filing to perfect an interest in the resulting accounts, unlike certain specific federal statutes or possessory security interests. Therefore, filing a financing statement in North Dakota is the proper method for perfecting the security interest in the accounts generated from the sale of the farmer’s crops. The scenario describes a security interest granted by a farmer in North Dakota in accounts arising from the sale of farm products. Perfection of a security interest in accounts, under North Dakota law (which follows UCC Article 9), is typically achieved by filing a financing statement. While certain security interests are automatically perfected or perfected by possession, accounts are generally not among those categories unless they are part of a sale of a business or a sale of accounts, which is not indicated here. The key is that the accounts arise from the sale of farm products, and North Dakota’s UCC Article 9 does not provide a specific exemption from filing for perfection of security interests in such accounts. Therefore, the secured party must file a financing statement in North Dakota to perfect its security interest in these accounts.

The core issue in this scenario is the priority of security interests when a debtor moves collateral from one state to another. North Dakota’s Article 9, specifically concerning the perfection of security interests and the law governing them, dictates that if a security interest is perfected in one jurisdiction and the collateral is moved to another, the perfection generally continues for a limited period. Under UCC § 9-316(a)(2), perfection of a security interest that has attached and is effective against the debtor and a secured party has priority over a conflicting security interest in the collateral, provided that the security interest is perfected under the law of the jurisdiction where the collateral is located immediately after it ceases to be in the other jurisdiction, and the perfection continues until the expiration of four months after the collateral has been moved to the new jurisdiction or until the perfection lapses, whichever occurs first. In this case, First National Bank of Bismarck perfected its security interest in the combine in North Dakota on January 1, 2023. The combine was moved to Montana on July 1, 2023. The four-month grace period from the move would expire on November 1, 2023. Since Second State Bank of Montana filed its financing statement in Montana on October 15, 2023, which is within the four-month period following the move, First National Bank of Bismarck’s security interest remains perfected in Montana for the purposes of priority against Second State Bank of Montana. Therefore, First National Bank of Bismarck retains its priority.

The determination of whether a transaction creates a security interest hinges on the intent of the parties and the economic realities of the arrangement, as codified in North Dakota Century Code Section 41-09-101(37). A sale of accounts, chattel paper, payment intangibles, or promissory notes is considered a secured transaction, regardless of whether the seller retains recourse. However, the UCC distinguishes between a true sale and a security interest by examining factors such as whether the seller retains an equity interest in the receivables, the seller’s obligation to cure defects, and the seller’s right to repurchase the assets. In the scenario presented, the agreement’s structure, particularly the retention of a significant portion of the residual value by the seller and the seller’s ongoing operational involvement, strongly suggests that the transaction is intended to secure a loan rather than effectuate a true sale of the accounts. North Dakota law, mirroring the UCC, emphasizes that if the economic substance of the transaction is to provide financing, it will be treated as a secured transaction, even if it is labeled as a sale. The seller’s continuing liability for collection and the potential for the buyer to demand repurchase based on performance metrics further indicate a financing arrangement. Therefore, the transaction is classified as a secured transaction.

The core issue here is the priority of security interests when a debtor transfers collateral. Under North Dakota Century Code (NDCC) § 41-09-317, a buyer of goods takes free of a security interest if the buyer is a buyer in ordinary course of business (BIOC) and receives delivery of the collateral without knowledge of the security interest. A BIOC is defined in NDCC § 41-01-02(9) as a person that buys goods in good faith, without knowledge that the sale violates the rights of the secured party or other person in the collateral, and from a person in the business of selling goods of that kind. In this scenario, “AgriSupplies Inc.” is a merchant in the business of selling farm equipment, and it purchased the tractor from “FarmMechanics LLC,” which is also in the business of selling farm equipment. AgriSupplies paid the full purchase price and had no knowledge that FarmMechanics was selling collateral subject to a security interest held by “DakotaCredit Union.” Therefore, AgriSupplies qualifies as a BIOC and takes the tractor free of DakotaCredit Union’s security interest. DakotaCredit Union’s security interest remains perfected against FarmMechanics, but it is cut off by the BIOC. The UCC’s perfection rules are designed to provide notice to subsequent parties; however, specific exceptions, like the BIOC rule, exist to facilitate commerce.

In North Dakota, as in most states adopting Article 9 of the Uniform Commercial Code, a secured party’s rights upon a debtor’s default are governed by Part 6 of Article 9. Specifically, if a secured party has possession of collateral, such as a vehicle that was collateral for a loan, and the debtor defaults, the secured party may dispose of the collateral. The disposition must be conducted in a commercially reasonable manner. A commercially reasonable disposition includes selling the collateral at a public auction, private sale, or by lease, provided that the method, manner, time, place, and other aspects of the disposition are reasonable. When a secured party disposes of collateral, they must send a reasonable authenticated notification of disposition to the debtor and any secondary obligors, and in cases where the collateral is owned by someone other than the debtor or is subject to a security interest held by another secured party that has filed a financing statement or is known by the secured party to exist, notification must be sent to those parties as well. This notification informs them of the impending disposition and provides sufficient information to enable them to protect their interests. Following the disposition, the secured party must apply the proceeds of the disposition in a specific order: first, to the reasonable expenses of retaking, holding, preparing for disposition, and disposing of the collateral, and to attorney’s fees and legal expenses if provided for in the security agreement and permitted by law. Second, to satisfy the satisfaction of the obligations secured by the security interest under which the disposition was made. Third, to satisfy the satisfaction of any subordinate security interests or agricultural liens if a sufficient authenticated record of the claim is received by the secured party before the distribution of the proceeds. Any remaining surplus is returned to the debtor, and any deficiency is owed by the debtor to the secured party. In this scenario, the secured party, North Dakota Farm Credit Services, properly repossessed the combine harvester from the debtor, Agri-Producers LLC, due to default on the loan. They then held a public auction, which is a commercially reasonable method of disposition. The sale generated $150,000. The expenses associated with repossession and sale were $10,000. The outstanding principal balance of the loan was $120,000, with accrued interest of $5,000. There was also a subordinate lienholder, Pioneer Bank, whose claim was properly perfected and known to North Dakota Farm Credit Services. Pioneer Bank’s claim was $20,000. The distribution of proceeds would be as follows: 1. Expenses: $10,000 2. Secured debt owed to North Dakota Farm Credit Services: $120,000 (principal) + $5,000 (interest) = $125,000 Total applied to North Dakota Farm Credit Services: $10,000 + $125,000 = $135,000 Total proceeds from sale: $150,000 Amount applied to North Dakota Farm Credit Services: $135,000 Remaining for subordinate lienholder: $150,000 – $135,000 = $15,000 Since Pioneer Bank’s claim is $20,000, they will receive the remaining $15,000. The remaining $5,000 ($20,000 – $15,000) of Pioneer Bank’s claim would be a deficiency for Pioneer Bank. The debtor, Agri-Producers LLC, would owe this $5,000 deficiency to Pioneer Bank. North Dakota Farm Credit Services has no further claim against Agri-Producers LLC, as their secured debt has been satisfied.

In North Dakota, as governed by Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally requires no filing to be perfected. However, this automatic perfection is lost if the secured party later acquires possession of the goods. When a secured party has a PMSI in consumer goods and that PMSI is automatically perfected, and then the debtor defaults, the secured party can repossess the collateral. If the secured party chooses to repossess the collateral, and the collateral is consumer goods, the secured party is generally not required to dispose of the collateral in a commercially reasonable manner if the debtor has paid at least sixty percent of the cash price or sixty percent of the obligation secured, whichever is greater. This is a specific exception to the general rules regarding disposition of repossessed collateral found in North Dakota Century Code Section 41-09-32 (UCC 9-620). The key here is that the secured party has a PMSI in consumer goods and has met the threshold for disposition without a sale. The explanation does not involve any calculations, but rather the application of specific North Dakota UCC provisions concerning PMSIs and disposition of repossessed consumer goods.

The core issue here revolves around the perfection of a security interest in a vehicle titled in North Dakota. Under North Dakota Century Code § 41-09-30 (UCC § 9-307), a security interest in a vehicle that requires a certificate of title is perfected by compliance with the certificate of title statute. North Dakota’s certificate of title law, specifically North Dakota Century Code Chapter 39-04, mandates that a security interest in a vehicle must be noted on the certificate of title to be perfected. Filing a UCC-1 financing statement with the Secretary of State, while generally the method for perfecting security interests in personal property, is insufficient for vehicles that require titling. The security agreement itself does not perfect the interest; perfection requires the proper notation on the certificate of title, which is typically accomplished by the secured party submitting the certificate of title, along with the application for notation, to the North Dakota Department of Transportation. Therefore, even though AgriBank has a valid security agreement with the debtor, its failure to have the lien noted on the vehicle’s North Dakota certificate of title means its security interest is unperfected. This unperfected status makes AgriBank vulnerable to claims from other parties, such as a buyer in the ordinary course of business or a lien creditor.

The scenario involves a secured party, Prairie Harvest Farms, holding a security interest in agricultural equipment. They perfected this interest by filing a financing statement in North Dakota. Subsequently, a debtor, Dakota Grain Processors, defaults on its obligations. A crucial element is that Dakota Grain Processors also has a prior perfected security interest in substantially all of its assets, including after-acquired inventory, granted to Bank of the Plains. This prior security interest was perfected by filing in North Dakota. The dispute arises over a specific piece of agricultural equipment that was originally purchased by Prairie Harvest Farms and then leased to Dakota Grain Processors. However, Dakota Grain Processors then acquired ownership of this equipment through a separate transaction, and it became part of their inventory. Under North Dakota’s version of UCC Article 9, when a debtor acquires goods that are already subject to a purchase-money security interest in the hands of the seller (or a secured party that financed the seller’s acquisition of the goods), and that purchase-money security interest is perfected, the rights of the secured party are generally superior to those of a prior general security interest holder, even if the prior interest covers after-acquired property. This is due to the purchase-money priority rules. In this case, although Bank of the Plains had a prior perfected security interest in Dakota Grain Processors’ assets, Prairie Harvest Farms’ security interest in the specific piece of equipment, if it was a purchase-money security interest and was properly perfected at the time Dakota Grain Processors acquired it, would generally take priority over Bank of the Plains’ earlier, non-purchase-money security interest in that specific asset. The key is whether Prairie Harvest Farms’ interest in the equipment, as it relates to Dakota Grain Processors’ acquisition, qualifies as a purchase-money security interest and was perfected in a timely manner relative to Dakota Grain Processors taking possession or control. Assuming Prairie Harvest Farms’ security interest in the equipment was a purchase-money security interest and was perfected by filing prior to or within the applicable grace period after Dakota Grain Processors acquired the equipment, it would have priority over Bank of the Plains’ earlier, broad security interest in that specific item of equipment. The broader security interest of Bank of the Plains, while perfected, does not automatically trump a properly perfected purchase-money security interest in the collateral itself, especially when that collateral is later acquired by the debtor.

The core issue here is determining the proper place of filing a financing statement for collateral that is a fixture. North Dakota Century Code § 41-09-37(1)(e) specifies that for fixtures, the financing statement must be filed in the office where a mortgage on the real property would be recorded. This ensures that a party searching the real property records for encumbrances on the land will also discover the security interest in the fixtures attached to that land. The financing statement must also contain certain information as prescribed by § 41-09-50, including the name of the debtor, the name of the secured party, an indication of the collateral, and, crucially for fixtures, an indication that it covers fixtures and provides the record owner of the real property. The question asks about the *correct* filing location. Filing in the office of the Secretary of State of North Dakota, as per § 41-09-37(1)(b), is generally for collateral other than fixtures or timber to be cut or as-minerals. Filing with the county recorder of the county where the real property is located, as per § 41-09-37(1)(e), is the correct method for fixtures. The scenario describes a debtor, Prairie Grain LLC, granting a security interest in a grain storage silo, which is a fixture, to Secured Lending Corp. The silo is located in Cass County, North Dakota. Therefore, the financing statement must be filed with the Cass County Recorder.

The core issue here is the priority of security interests when a debtor moves collateral into a new jurisdiction and the secured party fails to refile within the applicable grace period. North Dakota, like other states, adopts Article 9 of the UCC. Under UCC § 9-316(d), if a secured party with a perfected security interest in collateral has a security interest in that collateral perfected in one jurisdiction, and then the collateral is brought into another jurisdiction, the security interest remains perfected for a period of four months after the collateral’s arrival in the new jurisdiction. If the secured party files a financing statement in the new jurisdiction before the expiration of that four-month period, the perfection continues without interruption. However, if the secured party fails to file in the new jurisdiction within this four-month window, the security interest becomes unperfected as against a purchaser of the collateral that gives value and receives delivery of the collateral after the expiration of the four-month period. In this scenario, Prairie Holdings, Inc. perfected its security interest in the construction equipment in Montana. The equipment was then moved to North Dakota. Prairie Holdings, Inc. had a four-month period from the date the equipment entered North Dakota to perfect its security interest in North Dakota by filing a financing statement. The question states that the equipment was moved to North Dakota on January 1st. The buyer, Bakken Builders, LLC, purchased the equipment on May 15th. This is five months after the equipment entered North Dakota. Since Prairie Holdings, Inc. did not file a financing statement in North Dakota within the four-month grace period, its security interest became unperfected on May 1st. Bakken Builders, LLC, a purchaser who gave value and received delivery of the collateral after the expiration of the four-month period, takes the collateral free of Prairie Holdings, Inc.’s unperfected security interest. Therefore, Bakken Builders, LLC has superior rights to the equipment.

The core issue here is determining the proper method for a secured party to perfect its security interest in a motor vehicle that is subject to a certificate of title. Under North Dakota law, which largely follows Article 9 of the Uniform Commercial Code, perfection of a security interest in goods covered by a certificate of title is accomplished by notation on the certificate of title, not by filing a financing statement. Specifically, North Dakota Century Code Section 39-05-33 governs the perfection of security interests in motor vehicles. This statute dictates that a security interest is perfected when the secured party’s name and address, the debtor’s name and address, and a description of the vehicle are noted on the certificate of title, and the certificate is presented to the appropriate state agency for recording. Filing a UCC-1 financing statement in the central filing system, as would be done for most other types of collateral like inventory or equipment, is ineffective for perfection in this scenario. Therefore, the secured party’s failure to follow the certificate of title notation procedure means its security interest is unperfected. An unperfected security interest is subordinate to the rights of a buyer in the ordinary course of business, as well as to the rights of a lien creditor or a trustee in bankruptcy.

In North Dakota, 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 to a buyer, the buyer generally takes the collateral free of the security interest. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted in North Dakota. The rationale behind this rule is to facilitate commerce by ensuring that buyers in the ordinary course of business can acquire goods without the burden of investigating the chain of title for security interests. This protection extends to buyers who purchase goods from a merchant who deals in goods of that kind, even if the merchant’s inventory is subject to a security interest. The buyer must not have knowledge that the sale is in violation of the security agreement. The security interest is thus transferred to the proceeds of the sale, as per North Dakota Century Code Section 41-09-32. This concept is often referred to as the “buyer in ordinary course of business” exception. The perfection of the security interest, while crucial for priority against other creditors, does not prevent a buyer in the ordinary course of business from taking free of that interest.

The core issue here revolves around the perfection of a security interest in a deposit account, specifically concerning the method of control under North Dakota’s Article 9. North Dakota Century Code Section 41-09-102(1)(35) defines “control” over a deposit account as having obtained control under Section 41-09-104(1)(e). Section 41-09-104(1)(e) outlines three ways to gain control: (1) by becoming the bank’s customer with respect to the deposit account; (2) by entering into a control agreement with the bank and the debtor, in which the bank agrees to comply with the secured party’s instructions regarding the deposit account without further consent from the debtor; or (3) by becoming the bank’s customer with respect to the deposit account by means of an account in the secured party’s name. In this scenario, the secured party, Prairie Holdings LLC, only has an agreement with the debtor, Bison Farms Inc., that names Prairie Holdings as the beneficiary of the account. This agreement does not involve the bank directly in a manner that grants Prairie Holdings control. The bank is not a party to this agreement, and it has not agreed to follow Prairie Holdings’ instructions without Bison Farms’ consent. Therefore, Prairie Holdings has not established control over the deposit account under North Dakota law. The debtor retains control because the bank continues to take instructions from Bison Farms. Perfection of a security interest in a deposit account requires control. Without control, the security interest is unperfected.

The scenario involves a debtor, Prairie Harvest Farms LLC, in North Dakota, granting a security interest in its inventory and equipment to Secured Lender Co. to secure a loan. Prairie Harvest Farms LLC subsequently obtains additional financing from Agricultural Credit Bank, also secured by its farm products. The critical issue is the priority of security interests when collateral is farm products and the secured parties have filed financing statements. Under North Dakota Century Code (NDCC) § 41-09-319, a perfected security interest in farm products takes priority over a security interest in the same farm products that is perfected only by filing. However, NDCC § 41-09-320 provides that a buyer of farm products in ordinary course of business takes free of a security interest created by the seller even if the security interest is perfected and the buyer knows the description. Here, Agricultural Credit Bank perfected its security interest in farm products by filing. Secured Lender Co. also perfected its security interest by filing. When Prairie Harvest Farms LLC sells its corn, which is a farm product, to Grain Merchant Inc., a buyer in the ordinary course of business, Grain Merchant Inc. takes the corn free of any security interest created by Prairie Harvest Farms LLC, regardless of whether Secured Lender Co. or Agricultural Credit Bank had perfected their interests. The perfection status of the lenders is irrelevant to the buyer’s status as a buyer in ordinary course of business under NDCC § 41-09-320. Therefore, Grain Merchant Inc. takes the corn free of both security interests.

The core issue here revolves around the perfection of a security interest in a deposit account. Under North Dakota Century Code (NDCC) § 41-09-102(28), a deposit account is a general intangible. However, NDCC § 41-09-104(1)(l) specifically excludes security interests in deposit accounts that a bank maintains for its customers from Article 9, unless the security interest is acquired by a secured party that is the bank itself. This exclusion is a critical exception. When a bank takes a security interest in a deposit account held by its customer, it perfects that interest automatically by control, as defined in NDCC § 41-09-106(1). Control is achieved when the bank is the bank with which the deposit account is maintained. Therefore, the bank in Bismarck, North Dakota, has a perfected security interest in the deposit account it holds for Prairie Enterprises LLC without needing to file a financing statement or take possession. The filing of a financing statement by AgriCredit Corp. is ineffective to perfect a security interest in the deposit account itself, although it may be effective to perfect a security interest in the proceeds of the deposit account. However, the question specifically asks about the security interest in the deposit account.

This question tests the understanding of perfection and priority rules concerning agricultural liens in North Dakota, specifically when a security interest in crops is also involved. Under North Dakota Century Code § 41-09-102(a)(5) and § 41-09-319, an agricultural lien on crops is a lien that arises by statute for services or supplies furnished to a debtor in connection with the debtor’s farming operation. Such liens are automatically perfected when they arise. However, the priority of an agricultural lien is generally determined by the time of attachment. North Dakota Century Code § 41-09-322(a)(1) states that the first to file a financing statement or perfect, other than by possession, has priority. But for agricultural liens, North Dakota Century Code § 41-09-322(a)(1) specifically addresses their priority relative to security interests in crops. An agricultural lien on crops has priority over a conflicting security interest in the crops if the lien arises before the security interest is perfected. In this scenario, the seed supplier’s lien arose on March 1st, when the seeds were supplied, and it is automatically perfected at that time. The bank’s security interest attached on March 15th and was perfected by filing on March 20th. Since the agricultural lien arose and was perfected before the bank’s security interest attached and was perfected, the agricultural lien takes priority. The core principle is that statutory liens for agricultural inputs often have super-priority to encourage the supply chain for farming.

The core issue here revolves around the perfection of a security interest in accounts. Under North Dakota Century Code (NDCC) § 41-09-316 (UCC § 9-316), a security interest that has been perfected remains perfected notwithstanding a change in the law of a jurisdiction governing perfection. However, this section primarily addresses the continuation of perfection when collateral is moved across state lines or when the governing law changes. The more pertinent provision for determining perfection of accounts is NDCC § 41-09-301 (UCC § 9-301), which deals with the necessity of filing for perfection. For accounts, NDCC § 41-09-310(2)(a) (UCC § 9-310(2)(a)) specifies that filing a financing statement is not necessary for perfection of a security interest in accounts. Instead, perfection of a security interest in accounts is achieved automatically upon attachment. Attachment, as defined in NDCC § 41-09-203 (UCC § 9-203), occurs when the secured party gives value, the debtor has rights in the collateral, and there is a security agreement authenticated by the debtor that describes the collateral. In this scenario, “Agri-Fin Corp.” has a security agreement with “Prairie Harvest Farms” that grants a security interest in all of Prairie Harvest Farms’ accounts. Agri-Fin Corp. has also provided value to Prairie Harvest Farms. Prairie Harvest Farms, as a farming operation in North Dakota, clearly has rights in its accounts. The critical point is that for accounts, perfection is automatic upon attachment and does not require a filing in North Dakota, nor does the governing law of another state where the debtor might have some minor business presence retroactively invalidate the automatically perfected security interest in North Dakota accounts. The fact that Agri-Fin Corp. did not file a financing statement in North Dakota or any other state is irrelevant for the perfection of its security interest in accounts. The security interest attached and was perfected automatically. Therefore, Agri-Fin Corp.’s security interest in Prairie Harvest Farms’ accounts is perfected.

The core issue here revolves around the perfection of a security interest in collateral that is subject to a certificate of title, specifically in the context of North Dakota law. Under North Dakota Century Code (NDCC) § 41-09-30 (UCC § 9-303), a security interest in goods covered by a certificate of title is perfected by compliance with the certificate of title statute of the jurisdiction under whose certificate of title the goods are covered. North Dakota’s certificate of title statute for vehicles is found in NDCC Chapter 39-04. Perfection of a security interest in a vehicle is achieved by noting the lien on the certificate of title itself, as mandated by NDCC § 39-04-24. Filing a UCC-1 financing statement in the general UCC filing system, as would be done for most other types of collateral, is generally ineffective for vehicles covered by a certificate of title. Therefore, for a security interest in a vehicle that has been issued a North Dakota certificate of title, the proper method of perfection is to have the lien noted on that certificate of title. A filing in the general UCC records would not provide notice or perfect the security interest in this specific type of collateral.

The core issue revolves around the perfection of a security interest in a certificated security held by a securities intermediary. Under North Dakota Century Code § 41-09-313 (UCC § 9-313), a security interest in a certificated security is generally perfected when the secured party has possession of the certificated security. However, UCC § 9-313(c) provides an exception: if the certificated security is delivered to a securities intermediary (like a bank or broker) for the purpose of holding it for the benefit of the secured party, and the intermediary acknowledges that it holds for the benefit of the secured party, the security interest is perfected. In this scenario, AgriCorp delivered the stock certificates to First National Bank, a securities intermediary. First National Bank then issued a safekeeping receipt to AgriCorp explicitly stating it held the certificates for AgriCorp’s benefit. This safekeeping receipt, acting as an acknowledgment by the intermediary that it holds the collateral for the secured party’s benefit, perfects AgriCorp’s security interest. The perfection is effective from the time the intermediary has possession and acknowledges holding for the secured party’s benefit, which occurred when the receipt was issued. Therefore, AgriCorp’s security interest is perfected.

The core issue here revolves around the perfection of a security interest in accounts, specifically in the context of North Dakota’s adoption of Article 9 of the Uniform Commercial Code. Under UCC § 9-309(2), a security interest in a security entitlement, securities account, or commodity account is generally perfected by control. However, the question pertains to accounts, which are defined under UCC § 9-102(a)(2) as a right to payment for goods sold or leased or services rendered. UCC § 9-310(a) states that a security interest is automatically perfected if it is a purchase-money security interest in investment property. This is not the case here. UCC § 9-312(a) generally requires filing a financing statement to perfect a security interest in accounts. However, UCC § 9-309(2) provides an exception for certain accounts. Specifically, it states that a security interest in a supporting obligation for a security entitlement or securities account is perfected by control of the supporting obligation. More broadly, UCC § 9-309(3) states that a security interest in a deposit account is perfected by control. Accounts are not deposit accounts. Therefore, filing is the general rule. However, UCC § 9-309(2) creates an exception: a security interest in an account consisting of a right to payment of less than a specified amount (which is a de minimis threshold that may vary by state but is not generally a bright-line rule for all accounts) or in a portion of an existing account that is the subject of a sale of accounts, chattel paper, payment intangibles, or promissory notes will be perfected automatically. This automatic perfection applies if the secured party receives the payment directly from the account debtor. In this scenario, the agreement between AgriCorp and GrainCo explicitly states that GrainCo will remit payments directly to AgriCorp. This direct remittance by the account debtor is the critical factor for automatic perfection under UCC § 9-309(2) for an account that is not a sale of accounts. The key is that the account itself is not the collateral being sold, but rather a general intangible or account that is securing a debt. When the account debtor pays the secured party directly, this constitutes automatic perfection for the security interest in that account. No calculation is needed for this question, as it tests the understanding of perfection rules under Article 9 of the UCC. The concept tested is automatic perfection for certain types of accounts when specific conditions are met, particularly direct payment by the account debtor. The North Dakota UCC follows the general principles of Article 9.

In North Dakota, as in most states following Article 9 of the Uniform Commercial Code, a security interest is perfected by filing a financing statement. This filing typically occurs in the public records of the jurisdiction where the debtor is located. For a registered organization like a corporation, its location is generally determined by the law under which it is organized. North Dakota Century Code § 41-09-35(1)(b) specifies that for a registered organization, its location is the jurisdiction whose law governs its internal affairs. If a security interest is granted in collateral that is covered by a certificate of title, perfection is achieved by notation on the certificate of title, as per North Dakota Century Code § 41-09-31(1). However, for general intangibles and other collateral not covered by a certificate of title, filing is the primary method of perfection. A lapse in perfection, such as failing to continue a filing before its expiration, can render the security interest unperfected. When a security interest becomes unperfected, it generally loses its priority over subsequent lienholders and purchasers. The UCC provides a grace period for continuation statements, but if the continuation is not filed within the prescribed time, the perfection lapses at the end of the initial five-year period. A security interest that is unperfected is subordinate to the rights of a person that becomes a secured party or obtains a lien on the collateral after the lapse. This subordination is a fundamental principle of Article 9, ensuring that those who properly perfect their interests gain priority.

The scenario describes a situation involving a purchase money security interest (PMSI) in inventory. Under North Dakota Century Code (NDCC) § 41-09-102(1)(oo), a purchase money security interest is defined. For inventory, a security interest is a purchase money security interest if it is taken by the seller of the inventory, or by a person who gives new value to enable the debtor to acquire rights in, or the use of, the inventory, if the debtor uses the value for that purpose. NDCC § 41-09-312(3) governs the priority of a PMSI in inventory. To have priority over a conflicting security interest in the same inventory, the holder of the PMSI must satisfy several conditions. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the secured party must give an authenticated notice to any other secured party who has filed a financing statement covering the inventory. This notice must state that the secured party expects to acquire a PMSI in inventory of the debtor and must describe the inventory by item or type. This notice must be sent before the debtor receives possession of the inventory covered by the PMSI. Finally, the notice must be received by the other secured party within five years before the debtor receives possession of the inventory. In this case, AgriBank perfected its security interest in all of Dakota Ag’s existing and after-acquired inventory on January 15, 2023. Farm Credit Services of North Dakota filed a financing statement on February 1, 2023, covering all of Dakota Ag’s inventory. Farm Credit Services of North Dakota is therefore a secured party who has filed a financing statement covering the inventory before the PMSI holder’s filing. For Farm Credit Services of North Dakota’s PMSI to have priority, it must have provided the required notification to AgriBank before Dakota Ag received possession of the inventory. Since Farm Credit Services of North Dakota did not send any notification to AgriBank prior to Dakota Ag receiving possession of the inventory on March 1, 2023, its PMSI is not perfected with the required priority over AgriBank’s earlier perfected security interest. Therefore, AgriBank retains priority.

The scenario involves a purchase money security interest (PMSI) in inventory. Under North Dakota Century Code (NDCC) § 41-09-317(1), a buyer of goods that receives possession of the goods, and who buys in the ordinary course of business, takes the goods free of a security interest even if the security interest is perfected and even though the buyer knows of the perfection. This protection extends to buyers of inventory. However, NDCC § 41-09-324(1) provides that a PMSI in inventory has priority over a conflicting security interest in the same inventory, provided that the PMSI holder gives the required notification to any other secured party who has filed a financing statement covering the inventory or is known by the PMSI holder to have an interest in the inventory. The notification must be in writing and must state that the PMSI holder expects to acquire a PMSI in inventory of the debtor, including after-acquired inventory. This notification must be sent before the debtor receives possession of the inventory. In this case, Agritech Solutions has a perfected security interest in all of the farm equipment inventory of Prairie Harvest Equipment. AgriCorp extends credit to Prairie Harvest Equipment for the purchase of new tractors and properly perfects its PMSI in these tractors. Crucially, AgriCorp fails to send the required notification to Agritech Solutions before Prairie Harvest Equipment received the tractors. Therefore, Prairie Harvest Equipment, as a buyer in the ordinary course of business, takes the tractors free of Agritech Solutions’ prior perfected security interest. However, AgriCorp’s PMSI is in the tractors themselves, not the general inventory of Prairie Harvest Equipment. The question is about the priority of AgriCorp’s PMSI against Agritech’s existing security interest in the inventory. NDCC § 41-09-324(1) dictates that a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI lender gives notice to other secured parties. Since AgriCorp did not provide the required notification to Agritech Solutions, its PMSI in the tractors does not automatically take priority over Agritech’s existing security interest in Prairie Harvest Equipment’s inventory. Thus, Agritech’s prior perfected security interest in all of Prairie Harvest Equipment’s inventory, including the newly acquired tractors, would likely prevail over AgriCorp’s unperfected or improperly perfected PMSI in that specific inventory. The key is the failure to provide the statutory notice to the prior secured party. Therefore, Agritech’s security interest in the tractors remains superior.

The core issue in this scenario revolves around the priority of security interests when a debtor defaults and the collateral is located in North Dakota. A purchase money security interest (PMSI) generally has priority over a conflicting security interest in the same collateral if the PMSI is perfected within a specific timeframe. In North Dakota, as per UCC § 9-317(e), a security interest is subordinate to a buyer of goods if the buyer gives value and receives delivery of the collateral without knowledge of the security interest and before the security interest is perfected. However, this rule applies to buyers, not to other secured parties. For a PMSI in inventory, perfection must generally occur before the debtor receives possession of the inventory. Furthermore, UCC § 9-324(b) states that a perfected PMSI in inventory has priority over a conflicting security interest in the same inventory if, among other things, the PMSI secured party gives notification to any other secured party who previously filed a financing statement covering the inventory. This notification must be sent before the debtor receives possession of the inventory. In this case, AgriBank’s security interest was perfected first by filing. Prairie Farm Credit then obtained a PMSI in the farm equipment. For Prairie Farm Credit’s PMSI to have priority over AgriBank’s earlier perfected security interest, it needed to perfect its interest and provide notification to AgriBank before the debtor received possession of the equipment. Since Prairie Farm Credit perfected its PMSI after AgriBank had already filed and did not provide the required notification to AgriBank prior to the debtor taking possession of the equipment, its PMSI is subordinate to AgriBank’s perfected security interest. Therefore, AgriBank’s security interest has priority.

The core issue here revolves around the perfection of a security interest in collateral that is not tangible personal property but rather an intangible, specifically a general intangible that is a payment intangible. Under North Dakota Century Code (NDCC) § 41-09-317 (UCC § 9-317), a buyer of goods, a lessee of goods, or a licensee of general intangibles takes the interest free of a security interest to the extent that the buyer, lessee, or licensee receives delivery of the collateral without knowledge of the security interest and for value. However, this protection does not extend to purchasers of chattel paper or instruments. More critically for this scenario, NDCC § 41-09-310 (UCC § 9-310) states that perfection by filing is generally required for a security interest to be effective against a person who prevails over unperfected security interests. For general intangibles, perfection is achieved by filing a financing statement. NDCC § 41-09-313 (UCC § 9-313) outlines when filing is required to perfect a security interest. Filing is the exclusive method of perfection for general intangibles, with limited exceptions not applicable here. The question specifies that the lender filed a financing statement. The critical factor is whether the filing was sufficient to provide notice to subsequent transferees of the payment intangible. NDCC § 41-09-501 (UCC § 9-501) details the requirements for a financing statement. A financing statement must provide the name of the debtor, the name of the secured party, and an indication of the collateral. For payment intangibles, the indication of collateral is crucial. The scenario states the financing statement indicated “all payment intangibles.” This is a sufficient description under NDCC § 41-09-504 (UCC § 9-504), which allows for indication of collateral by type. Therefore, the filing provides notice to subsequent purchasers of the payment intangible. The subsequent purchaser of the payment intangible, even if they paid value and did not have actual knowledge, takes the interest subject to the perfected security interest because the filing constitutes constructive notice. The protection afforded by NDCC § 41-09-317 to buyers of goods or lessees of goods does not apply to purchasers of general intangibles in this context. Thus, the lender’s security interest remains perfected and enforceable against the subsequent purchaser.

The core issue in this scenario revolves around the perfection of a security interest in collateral that is located in a different jurisdiction than the debtor’s location at the time of attachment. Under North Dakota’s Article 9, specifically focusing on the rules for determining the location of the debtor and the proper place to file a financing statement, the general rule is that the law of the jurisdiction where the debtor is located governs perfection. North Dakota adopts the Uniform Commercial Code (UCC) as its Article 9. For a registered organization, such as a corporation, the debtor is located at its registered office. If the debtor has multiple places of business, it is located at its chief executive office. In this case, AgriCorp is a North Dakota corporation, meaning its registered office is in North Dakota. Therefore, for perfection purposes, AgriCorp is located in North Dakota. The security agreement attached, and the collateral (farm equipment) is located in Montana. However, the UCC’s choice of law rules for perfection prioritize the debtor’s location. Filing a financing statement in Montana, where the collateral is physically located, would be incorrect for perfecting a security interest in a North Dakota registered organization’s collateral unless North Dakota law dictated otherwise for this specific type of collateral or situation, which it does not in this general context. Perfection is achieved by filing a financing statement in the jurisdiction where the debtor is located. Since AgriCorp is a North Dakota corporation, its location for Article 9 purposes is North Dakota. Thus, the financing statement must be filed in North Dakota to perfect the security interest.

The core issue in this scenario revolves around the perfection of a security interest in a vehicle that is titled in North Dakota. Under North Dakota Century Code Section 41-09-30(3)(b), which aligns with UCC § 9-303(b), a security interest in goods covered by a certificate of title is perfected by complying with the certificate of title statute. North Dakota’s certificate of title law, specifically North Dakota Century Code Chapter 39-04, requires that a security interest be noted on the certificate of title to be effective against third parties. The filing of a financing statement with the Secretary of State, while generally the method for perfecting security interests in personal property, is insufficient for perfection when the collateral is a vehicle subject to a certificate of title statute. Therefore, even though the lender filed a UCC-1 financing statement in North Dakota, because the vehicle is titled in North Dakota and the security interest was not noted on the certificate of title, the lender’s security interest is unperfected. This unperfected status means the lender is subordinate to subsequent purchasers of the vehicle who take possession without knowledge of the security interest, and crucially, to a bankruptcy trustee who has the rights of a hypothetical lien creditor.

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 North Dakota Century Code § 41-09-102(1)(a), a security interest is automatically perfected when it attaches to certain types of collateral, including accounts, but this automatic perfection generally applies to a “casual or isolated transaction” not made in the ordinary course of business of the secured party. However, when the transaction involves the sale of a business or substantially all of its assets, and the seller is transferring accounts as part of that sale, the treatment of those accounts under Article 9 of the Uniform Commercial Code requires careful consideration. Specifically, North Dakota Century Code § 41-09-109(1) defines a “security interest” broadly to include any interest of a buyer of accounts, chattel paper, or a payment intangible or a person that sells an account, chattel paper, or payment intangible, which is subject to this chapter. This means that even though the transaction is a sale of accounts, it is still governed by Article 9. The critical element for establishing priority and enforceability against third parties is the filing of a financing statement. North Dakota Century Code § 41-09-310(1) states that, except as otherwise provided, the filing of a financing statement is required to perfect a security interest. While there are exceptions to the filing requirement, such as for purchase-money security interests in consumer goods, or certain limited transactions, the sale of accounts as part of a business sale generally does not fall into these exceptions. In this case, “Prairie Goods Inc.” is selling its business, which includes its accounts receivable, to “Dakota Holdings LLC.” Dakota Holdings LLC is acquiring these accounts as part of the sale. To ensure its security interest in these accounts is perfected and to establish priority against other potential creditors or purchasers, Dakota Holdings LLC must file a financing statement in accordance with North Dakota law. Without filing, its interest, while valid between the parties, is unperfected and vulnerable to claims from third parties who may have a perfected security interest or who are buyers of the accounts for value, without notice of the security interest, and in ordinary course of the seller’s business. The filing serves as public notice of Dakota Holdings LLC’s interest.

The scenario involves a purchase money security interest (PMSI) in inventory. Under North Dakota Century Code § 41-09-319, a perfected PMSI in inventory has priority over a prior perfected security interest in the same inventory. For this priority to be effective, the PMSI lender must satisfy several conditions. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the PMSI lender must give an authenticated notification to any prior secured party of record. This notification must state that the PMSI lender expects to acquire a PMSI in inventory of the debtor and must describe the inventory. This notification is effective for five years. In this case, AgriBank had a prior perfected security interest in all of Farmer Giles’s farm equipment and inventory. Harvest Finance provided financing for new seed inventory to Farmer Giles, thus acquiring a PMSI in that seed inventory. Harvest Finance perfected its PMSI on January 15th, and Farmer Giles received possession of the seed inventory on January 20th. Harvest Finance sent its notification to AgriBank on January 10th, prior to perfection and receipt of collateral. This notification correctly described the expected collateral. Therefore, Harvest Finance’s PMSI in the seed inventory has priority over AgriBank’s prior perfected security interest.

The core issue here is determining the proper place to file a financing statement for collateral that is a fixture under North Dakota law. Article 9 of the Uniform Commercial Code (UCC), as adopted in North Dakota, addresses fixture filings. Specifically, North Dakota Century Code (NDCC) Section 41-09-40 (UCC Section 9-401) dictates that for fixtures, the financing statement must be filed in the office where a mortgage on the real property would be recorded. This is typically the office of the register of deeds in the county where the real property is located. The collateral in question is custom-built cabinetry and shelving permanently attached to the walls of a commercial building. Such items are considered fixtures. Therefore, the secured party must file the financing statement in the office of the register of deeds for the county where the building is situated, not with the Secretary of State, which is generally for personal property.