In Ohio, as under the Uniform Commercial Code (UCC) Article 9, a purchase money security interest (PMSI) in consumer goods generally does not need to be filed to be perfected. This is a key exception to the general rule that filing a financing statement is necessary for perfection. However, the definition of “consumer goods” is crucial: goods that are used or bought for use primarily for personal, family, or household purposes. If the goods are used in a business, even if that business is small or operated from a home, they are not considered consumer goods for the purpose of this automatic perfection rule. Therefore, if the antique grandfather clock was purchased by Ms. Albright for use in her small antique shop, it would not qualify as consumer goods, and to maintain perfection against a competing buyer in the ordinary course of business, filing would be necessary. The prompt states the clock was bought for use in her “antique shop,” which clearly indicates a commercial rather than personal or household purpose. Thus, a security interest in such an item, even if a PMSI, would require filing for perfection against certain third parties, including a buyer in the ordinary course of business.

The core issue revolves around the priority of security interests when collateral is transferred. Under Ohio Revised Code Section 1309.315(A)(1), a security interest in collateral continues in the collateral when it is sold, exchanged, leased, licensed, or otherwise disposed of, and it also continues in any identifiable proceeds of the collateral. However, the perfection of the security interest in the proceeds is governed by Ohio Revised Code Section 1309.315(C). Specifically, if the security interest in the original collateral was perfected, the security interest in the proceeds is perfected if the proceeds are collateral in which a security interest may be perfected by filing in the jurisdiction in which the proceeds are located, and the financing statement covers the proceeds, or the proceeds are not covered by a financing statement covering the original collateral but are described in the financing statement or the security interest in the proceeds is perfected otherwise. In this scenario, Amelia’s security interest in the printing press was perfected by filing in Ohio. The printing press is then leased to “PrintRight,” a company operating solely within Indiana. The lease payments are the proceeds of the original collateral. For Amelia’s security interest in the lease payments (as proceeds) to remain perfected without further action, the original financing statement must cover these proceeds and the lease payments must be of a type where perfection can be achieved by filing in Indiana, and the financing statement must be filed in Indiana. Since Amelia’s original filing was in Ohio and did not automatically cover proceeds perfected by filing in another state, and no new filing was made in Indiana, her perfection in the lease payments as proceeds is likely to lapse after a certain period unless specific conditions are met. Under Ohio Revised Code Section 1309.315(D)(1), a security interest in proceeds in which a security interest attaches automatically remains perfected if the security interest in the original collateral was perfected, the proceeds are collateral in which a security interest may be perfected by filing in the jurisdiction in which the proceeds are located, and the financing statement covering the original collateral also covers proceeds of the collateral, or the proceeds are not covered by the financing statement, but the security interest in the proceeds is perfected otherwise. However, the more relevant provision for continuing perfection in proceeds is Ohio Revised Code Section 1309.315(E)(2), which states that a security interest in proceeds remains perfected for a period of 20 days after the collateral is acquired, if the security interest in the proceeds is perfected before the expiration of the 20-day period. If the proceeds are of the type where perfection requires filing and the financing statement covering the original collateral does not adequately cover the proceeds or is not filed in the correct jurisdiction for the proceeds, a new filing is required in the new jurisdiction. Given that Amelia’s security interest was perfected in Ohio and the proceeds (lease payments) are generated from collateral located and leased in Indiana, and no new filing was made in Indiana, Amelia’s security interest in the lease payments will remain perfected for 20 days after PrintRight acquires the printing press. After this 20-day period, Amelia’s security interest in the lease payments will become unperfected unless she files a new financing statement in Indiana that covers the lease payments as proceeds. Therefore, to maintain perfection beyond the initial 20 days, a new filing in Indiana is necessary.

The core issue in this scenario is the priority of security interests when a debtor defaults and collateral is involved. Under Ohio’s Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in equipment generally has priority over a prior perfected security interest in the same collateral, provided certain conditions are met. Specifically, for equipment, the PMSI holder must have perfected its security interest by filing a financing statement before or within twenty days after the debtor receives possession of the collateral. Furthermore, the PMSI holder must have given an authenticated notification to any prior secured party whose financing statement covers the collateral and who has filed or is perfected by possession. This notification must be given before the debtor receives possession of the collateral. In this case, Apex Corp. filed its financing statement on January 15th, perfecting its PMSI in the new milling machine. This filing occurred within the twenty-day grace period after the debtor took possession on January 5th. Apex Corp. also sent an authenticated notification to the Bank of Ohio on January 3rd, which was before the debtor received possession. The Bank of Ohio’s prior perfected security interest in all present and after-acquired equipment is subordinate to Apex Corp.’s PMSI because Apex Corp. met the statutory requirements for PMSI priority in equipment. Therefore, Apex Corp. has priority regarding the milling machine.

The core issue here revolves around the perfection of a security interest in accounts. Under Ohio Revised Code Section 1309.310(a), a security interest is perfected when it has attached and when a financing statement has been filed. However, Ohio Revised Code Section 1309.309(2) provides an exception for certain security interests in accounts. Specifically, it states that the filing of a financing statement is not required to perfect a security interest in accounts that, when taken together, constitute a significant part of the outstanding accounts of the assignor. This is often referred to as the “casual or isolated sale” exception for accounts, though the statutory language focuses on whether the accounts constitute a significant part of the outstanding accounts. In this scenario, the sale of a single account receivable for \$50,000, which represents 80% of all of Mr. Abernathy’s outstanding accounts, clearly meets the criteria of being a significant part of the outstanding accounts. Therefore, the security interest in this account is automatically perfected upon attachment, and no separate filing is necessary. The perfection of the security interest in the account is effective from the time it attaches, which is when value is given, the debtor has rights in the collateral, and the security agreement is in place. The fact that it is an account and constitutes a significant portion of the debtor’s outstanding accounts means it is automatically perfected.

The core issue here revolves around the perfection of a security interest in goods that are to become fixtures. Under Ohio Revised Code Section 1309.334, a security interest in fixtures is governed by specific rules. To achieve priority over subsequent encumbrancers of the real property and holders of existing interests in the real property, a secured party must file a fixture filing. A fixture filing is a UCC financing statement that includes specific information, notably identifying the real property and indicating that it covers fixtures. The filing must also be made in the office where a mortgage on the real property would be filed or recorded. Furthermore, for priority against subsequent purchasers or encumbrancers of the real property, the fixture filing must be made before the goods become fixtures. In this scenario, the debtor, a home builder in Columbus, Ohio, granted a security interest to a lumber supplier for lumber to be used in constructing homes. The lumber is clearly intended to become part of the real property. The lumber supplier filed a standard UCC financing statement with the Ohio Secretary of State, which is appropriate for general inventory but insufficient for fixtures. The supplier failed to make a fixture filing in the local county recorder’s office, which is the correct office for real property encumbrances. The subsequent mortgage lender filed its mortgage in the county recorder’s office and properly recorded it. Because the lumber supplier did not make a fixture filing in the appropriate local office before the lumber was installed as part of the homes, its security interest in the lumber, once it became a fixture, is subordinate to the mortgage lender’s interest in the real property. The lumber supplier’s filing with the Secretary of State only perfects its interest in the lumber as general inventory, not as a fixture attached to the real estate. Therefore, the mortgage lender has priority.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Ohio Revised Code Section 1309.324, a PMSI in inventory has priority over a conflicting security interest in the same inventory, provided certain conditions are met. The conditions for PMSI priority in inventory include: (1) the PMSI must be perfected by filing a financing statement before the debtor receives possession of the inventory; (2) the secured party must give an authenticated notification to any other secured party who has filed a financing statement covering the same inventory or who has a perfected security interest in the inventory before the date of the notification; and (3) the notification must be sent within the time specified by Ohio Revised Code Section 1309.324(b). For inventory, this notification must be sent within twenty days before the debtor receives possession of the inventory. In this case, Apex Bank perfected its security interest on March 1st. Zenith Corp. extended credit for inventory and filed its financing statement on March 15th. Zenith Corp. also sent notification to Apex Bank on March 10th, which is within the twenty-day window prior to the debtor receiving possession of the inventory on March 25th. Therefore, Zenith Corp.’s PMSI in the inventory has priority over Apex Bank’s earlier perfected security interest. The perfection of Apex Bank’s security interest on March 1st is relevant for establishing the “earlier perfected security interest” to which notification must be given, but it does not defeat Zenith Corp.’s PMSI priority due to Zenith’s timely filing and notification.

When a secured party has a perfected security interest in collateral, and that collateral is disposed of, sold, leased, or licensed, the security interest generally continues in the collateral. This is established under Ohio Revised Code Section 4909.315(A)(1). This principle is often referred to as the “continuity of perfection” or “anti-artifact” rule. The secured party’s rights follow the collateral, even if the debtor transfers possession or ownership, unless the secured party authorized the disposition free of the security interest or the buyer is a buyer in the ordinary course of business under specific UCC provisions that cut off the security interest. In this scenario, the security interest in the specialized milling equipment, perfected by filing, continues in the hands of the buyer, Mr. Henderson, as the sale was not authorized by Secured Lender Inc. free of its security interest, nor does Mr. Henderson qualify as a buyer in the ordinary course of business in a manner that would divest the security interest under the relevant UCC provisions. Therefore, Secured Lender Inc. retains its perfected security interest in the milling equipment.

In Ohio, 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’s security interest generally continues in the collateral. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted in Ohio. The concept is often referred to as the “limited effect of disposition” or that a security interest “follows the collateral.” Unless the secured party authorized the disposition free of the security interest, or the buyer qualifies for protection under specific UCC provisions (such as a buyer in the ordinary course of business under Ohio Revised Code \(4901.01(A)(9)\) who purchases from a person in the business of selling goods of that kind), the security interest remains attached to the goods. The buyer in the ordinary course of business exception is a key limitation, but it requires the buyer to purchase in good faith and without knowledge that the sale violates the secured party’s rights. If the sale was unauthorized and the buyer does not meet the criteria for a buyer in the ordinary course of business, the secured party can repossess the collateral from the buyer. The perfection of the security interest is crucial here; an unperfected security interest would have different priority rules. The scenario presented involves a sale not authorized by the secured party, and the subsequent buyer’s status is paramount. Since the question specifies a sale not authorized by the secured party, and does not provide facts to establish the buyer as a buyer in the ordinary course of business, the security interest continues.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account. Under Ohio Revised Code Section 1309.314, a security interest in a deposit account can only be perfected by control. Control is achieved when the secured party is the bank in which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with the secured party’s instructions regarding the deposit account. In this case, AgriBank perfected its security interest in the borrower’s accounts by having the borrower’s accounts at AgriBank itself, thus establishing control. However, when the borrower pledges the same accounts to FarmCredit as collateral for a new loan, and FarmCredit files a UCC-1 financing statement but does not obtain control over the deposit accounts, its security interest remains unperfected with respect to those specific accounts. Ohio Revised Code Section 1309.317(a)(1) states that an unperfected security interest is subordinate to the rights of a person who becomes a buyer of goods or a licensee of general intangibles or a buyer of accounts, chattel paper, or commercial tort claims that obtains possession of the collateral, unless the buyer or licensee knows of the security interest. More importantly for this scenario, Ohio Revised Code Section 1309.317(a)(2) clarifies that an unperfected security interest is subordinate to the rights of a perfected secured party. Since AgriBank has control, its security interest is perfected. FarmCredit, by failing to obtain control, has an unperfected security interest in the deposit accounts. Therefore, AgriBank’s perfected security interest takes priority over FarmCredit’s unperfected security interest in the deposit accounts.

The core issue in this scenario is the priority of security interests when collateral is transferred. In Ohio, as under Article 9 of the Uniform Commercial Code, a buyer of goods takes the goods free of a security interest created by the seller if the buyer is a buyer in ordinary course of business (BIOC), unless the buyer knows that the sale is in violation of the security agreement and the sale is not authorized by the secured party. A BIOC is defined as a person that buys goods in good faith, without knowledge that the sale violates the rights of, or is subject to, a security interest of a seller that is a merchant of goods of that kind. Here, “Artisan’s Furnishings,” a merchant of furniture, sold a dining set to Mr. Henderson. Artisan’s Furnishings had granted a purchase money security interest (PMSI) in its inventory to “Capital Bank.” Mr. Henderson purchased the dining set in good faith and without knowledge that the sale was unauthorized or violated Capital Bank’s security interest. Therefore, Mr. Henderson, as a BIOC, takes the dining set free of Capital Bank’s security interest. Capital Bank’s recourse would be against Artisan’s Furnishings for breach of the security agreement, not against Mr. Henderson’s collateral. The perfection of Capital Bank’s security interest in the inventory is relevant for its priority against other creditors of Artisan’s Furnishings, but not against a BIOC purchasing from the debtor.

In Ohio, as under the Uniform Commercial Code (UCC) Article 9, the concept of “after-acquired property” allows a secured party to obtain a security interest in property that the debtor acquires after the security agreement is executed. This is particularly relevant for inventory and equipment financing. A security interest generally attaches to after-acquired property when the debtor acquires rights in that property, provided the security agreement covers it. For purchase-money security interests (PMSIs) in inventory, perfection must occur before the debtor receives possession of the inventory. If a secured party has a perfected security interest in all of a debtor’s inventory, including after-acquired inventory, and the debtor later obtains new inventory on consignment, that consigned inventory is typically treated as if it were purchased by the debtor for purposes of the security interest, unless the consignor takes specific steps to protect its interest. However, the UCC distinguishes between a true lease and a security interest disguised as a lease. In Ohio, the determination of whether a transaction creates a lease or a security interest is based on the economic realities of the transaction, specifically whether the lessee has an option to purchase the goods for nominal consideration at the end of the lease term. If the lessee is bound to take ownership or has an option to purchase for nominal consideration, it is generally considered a security interest. Therefore, if the lease agreement in Ohio effectively transfers ownership of the printing press to “Inkwell Innovations” for a nominal sum at the end of the term, it would be classified as a secured transaction, and “PrintFast Solutions'” security interest would attach to the printing press upon its acquisition by “Inkwell Innovations” if properly perfected.

The question concerns the priority of security interests when a buyer of goods in Ohio receives a security interest from the seller to secure the repayment of the purchase price. This is a purchase money security interest (PMSI) in favor of the buyer. Under Ohio Revised Code Section 1309.324, a PMSI in goods other than inventory has priority over a conflicting security interest in the same goods if the PMSI is perfected within twenty days after the debtor receives possession of the collateral. In this scenario, Anya, the buyer, receives possession of the specialized manufacturing equipment on March 1st. Her security interest, though a PMSI, was not perfected by filing a financing statement until March 25th. This perfection date is twenty-five days after Anya received possession. Since this period exceeds the twenty-day grace period provided by Ohio law for PMSI perfection to gain superpriority over prior perfected security interests, Anya’s PMSI is subordinate to the earlier perfected security interest held by Capital Bank. Capital Bank’s security interest, perfected on February 15th, attached to after-acquired property of the debtor, including the equipment Anya purchased. Therefore, Capital Bank’s prior perfected security interest has priority.

In Ohio, a secured party’s rights upon default are governed by Article 9 of the Uniform Commercial Code. When a debtor defaults on a secured obligation, the secured party generally has the right to take possession of the collateral. This right is often referred to as repossession. However, this right is not absolute and must be exercised without breaching the peace. A breach of the peace occurs when the secured party’s actions during repossession are likely to cause public disturbance or violence. Factors contributing to a breach of the peace can include entering the debtor’s dwelling without consent, using excessive force, or involving third parties in a manner that creates a confrontation. The Ohio UCC, specifically \(5301.51\), emphasizes that a secured party may repossess the collateral without judicial process if it can be done without breach of the peace. If repossession cannot be achieved without breaching the peace, the secured party must seek a court order. The question asks about the immediate recourse for a secured party when repossession without judicial process would likely lead to a breach of the peace. This scenario dictates that direct repossession is not permissible. The secured party’s next step is to obtain a court order to compel the delivery of the collateral. This ensures that the repossession process is conducted lawfully and without disrupting public order. Therefore, seeking a court order for possession is the appropriate action.

Under Ohio Revised Code Section 1309.310, a secured party must file a termination statement when there is no outstanding secured obligation and no commitment to make advances, incur obligations, or otherwise give value. This statement is filed to release the collateral from the security interest. The UCC generally provides for a reasonable time after the obligation is satisfied for the filing of this statement. If the secured party fails to file the termination statement within a specified period (typically 30 days after the obligation is satisfied and a request is made), the secured party may be liable for any loss caused to the debtor or any person that the debtor, within that period, furnishes collateral to or enters into a transaction with. The question tests the understanding of the secured party’s obligation to file a termination statement after the satisfaction of the secured debt and the consequences of failure to do so, focusing on the timing and the debtor’s right to demand such a filing.

In Ohio, under Article 9 of the Uniform Commercial Code, a purchase money security interest (PMSI) in consumer goods generally has superpriority. However, this superpriority is typically established by perfection, which usually involves filing a financing statement or, in the case of consumer goods, possession or automatic perfection for certain types of collateral. The scenario describes a situation where a lender, “Acme Finance,” finances the purchase of a printing press for “Inkwell Press,” a business in Ohio. This printing press is clearly not a consumer good; it is equipment used in a business. Acme Finance fails to file a financing statement. Another creditor, “Graphite Bank,” has a prior perfected security interest in all of Inkwell Press’s equipment. When Inkwell Press defaults, Graphite Bank seeks to repossess the printing press. Under UCC § 9-324, a PMSI in equipment generally has priority over a conflicting security interest in the same equipment if the PMSI is perfected by filing within a specific timeframe. Since Acme Finance did not file a financing statement, its security interest in the printing press is unperfected. An unperfected security interest is subordinate to a perfected security interest. Therefore, Graphite Bank’s prior perfected security interest in all of Inkwell Press’s equipment, including the printing press, will take priority over Acme Finance’s unperfected PMSI. The key concept here is the requirement of perfection for a PMSI to achieve superpriority over a prior perfected security interest, and the general rule that unperfected security interests are subordinate to perfected ones.

The core issue here is determining the priority of competing security interests in inventory. Under Ohio’s version of UCC Article 9, a buyer in the ordinary course of business (BIOC) takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in ordinary course of bulk or otherwise not in ordinary course of business. In this scenario, “Artisan Goods Inc.” is a manufacturer of handcrafted furniture and “Ohio Bank” has a perfected security interest in all of Artisan Goods Inc.’s inventory. “Bespoke Interiors LLC” is a retail furniture store that regularly purchases furniture for resale from manufacturers like Artisan Goods Inc. Therefore, Bespoke Interiors LLC qualifies as a buyer in the ordinary course of business. Their purchase of furniture from Artisan Goods Inc. is a regular inventory transaction for both parties. The fact that Bespoke Interiors LLC may have known about Ohio Bank’s security interest is irrelevant to their status as a BIOC, as long as they did not know the sale was outside the ordinary course of business (e.g., a bulk sale). Consequently, Bespoke Interiors LLC takes the furniture free and clear of Ohio Bank’s security interest. The perfection of Ohio Bank’s security interest is significant for other potential creditors or purchasers of the collateral, but it does not defeat the rights of a BIOC in the ordinary course of business.

In Ohio, when a secured party has a perfected security interest in collateral and the debtor defaults, the secured party has several options for disposition of the collateral. One primary method is to conduct a commercially reasonable disposition of the collateral. This means the secured party must sell, lease, license, or otherwise dispose of the collateral in a commercially reasonable manner. This includes aspects like the method, manner, time, place, and other terms of the disposition. If the secured party fails to conduct a commercially reasonable disposition, they may be liable for damages. The proceeds from the disposition are applied first to the reasonable expenses of repossession and disposition, then to the satisfaction of the secured obligation. Any surplus is paid to the debtor or junior secured parties. A secured party may also retain the collateral in satisfaction of the obligation, subject to certain notice and objection requirements. The question asks about the most direct and common enforcement mechanism following default and the secured party’s intent to recover the debt through disposition. The scenario describes a perfected security interest in inventory. The secured party’s immediate goal is to recover the outstanding debt. Selling the inventory is a standard and direct method to achieve this. Therefore, disposing of the collateral through a sale is the most fitting action described.

In Ohio, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in fixtures is governed by specific rules to ensure priority against subsequent purchasers of the real property. A secured party must file a financing statement in the real property records of the county where the affected real estate is located. This financing statement must also meet the requirements of perfection for fixtures, which includes identifying the collateral as fixtures and describing the real property. The filing must occur before the goods become fixtures or within a specified period after they become fixtures to gain priority. If the secured party properly files a fixture filing and the collateral is attached to the real property, their security interest will generally have priority over subsequent encumbrancers or purchasers of the real property. However, if the filing is made after the goods are affixed and a prior encumbrancer of the real property is not notified, that prior encumbrancer may retain priority. The question tests the understanding of the specific filing requirements for fixture collateral in Ohio to establish priority against real property interests. The correct approach involves a fixture filing in the real property records, which is distinct from a standard UCC filing in the Secretary of State’s office for general intangible or equipment collateral. The timing of this filing relative to the affixation of the goods and the rights of existing real property encumbrancers is crucial for determining priority.

In Ohio, as under the Uniform Commercial Code (UCC) Article 9, the priority of security interests is generally determined by the order of filing a financing statement or perfection by other means. When a secured party has a purchase money security interest (PMSI) in inventory, that interest generally has priority over other security interests in the same collateral, provided certain conditions are met. For a PMSI in inventory to have priority over a prior perfected security interest, the secured party must have perfected its interest in the inventory, and any other secured party that has perfected an interest in the same inventory must receive notification of the PMSI holder’s intent to acquire an interest in that inventory within a specific timeframe before the debtor receives possession of the inventory. Ohio law, consistent with UCC § 9-324(b), requires this notification to be sent within five years before the debtor receives possession of the inventory. This notification requirement is crucial for establishing the PMSI holder’s priority over earlier perfected security interests in the same inventory. Therefore, if the notification was sent six years prior, it would not satisfy the statutory requirement for establishing priority over the previously perfected security interest.

In Ohio, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in a deposit account is generally achieved by control. Control over a deposit account is established when the secured party is the bank in which the deposit account is maintained, or when the secured party obtains the agreement of the bank in which the deposit account is maintained to comply with instructions from the secured party directing the disposition of the funds in the account without further consent from the debtor. The debtor’s location for determining the correct jurisdiction for filing a financing statement is generally the state of the debtor’s chief executive office. For a registered organization like a corporation, this is typically the state of its incorporation. If the debtor is a registered organization, its location is the jurisdiction where it is organized. Therefore, if a debtor is incorporated in Delaware, and the secured party has a security interest in the debtor’s deposit account held at a bank in Ohio, the perfection of the security interest in the deposit account requires control. Filing a financing statement in Ohio would perfect a security interest in other types of collateral, such as inventory or equipment, but not a deposit account. The depositary bank’s agreement to follow the secured party’s instructions is the method of achieving control when the secured party is not the depositary bank itself.

The core issue in this scenario revolves around the perfection of a security interest in an account that is part of a larger sale of accounts, chattel paper, contract rights, or other general intangibles. Under Ohio Revised Code Section 1309.301(A)(1) and 1309.309(2), a security interest in a “payment intangible” or a “general intangible” that is not a sale of accounts or chattel paper can be perfected by filing a financing statement. However, when the transaction constitutes a sale of accounts, the buyer of the accounts takes the accounts free of any security interest created by the seller in those accounts, provided the buyer is a buyer in ordinary course of business. Ohio Revised Code Section 1309.318(E) states that a buyer of accounts, chattel paper, payment intangibles, or promissory notes that buys for value and takes possession of the collateral or the account is deemed to have taken the collateral free of a security interest created by the seller. In this case, the sale of the accounts by Buckeye Services to Crimson Holdings is a sale, not merely the creation of a security interest in the accounts. Crimson Holdings purchased the accounts for value and took possession of them. Therefore, Crimson Holdings’ interest in the accounts is not subject to a security interest created by Buckeye Services in those same accounts, even if a financing statement was filed by another party. The filing of a financing statement by Zenith Finance against Buckeye Services for all present and future accounts is a valid step for perfecting a security interest, but it does not grant Zenith Finance priority over a buyer of accounts in the ordinary course of business who takes possession. The UCC distinguishes between a security interest in accounts and a sale of accounts. When there is a sale of accounts, the buyer, if they qualify as a buyer in ordinary course and take possession, generally takes free of prior security interests in those accounts created by the seller. Therefore, Crimson Holdings, as a buyer of accounts for value and in possession, has priority over Zenith Finance’s security interest.

In Ohio, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in accounts is generally achieved by filing a financing statement in the appropriate jurisdiction. However, there is a significant exception for “certain accounts” where perfection is automatic and no filing is required. This exception applies to a sale of accounts, which is treated as a true sale of a payment intangible or a general intangible, rather than a secured transaction, if the seller does not retain any residual interest in the accounts sold. When a business sells its accounts receivable to a factor, and the sale is structured as a true sale, the factor’s security interest in those accounts is automatically perfected. This means the factor does not need to file a financing statement under Ohio UCC § 9-309(3) to establish priority against other creditors of the seller. The rationale is that such sales are not intended to be subject to the notice filing system of Article 9, as they are considered a transfer of ownership rather than a pledge of collateral. Therefore, if a business in Ohio sells its accounts to a factoring company, and it is a true sale with no retained interest by the seller, the factoring company’s security interest is automatically perfected without the need for filing.

In Ohio, under Article 9 of the Uniform Commercial Code, the perfection of a security interest in deposit accounts is a critical concept for secured parties. Unlike many other types of collateral, perfection in deposit accounts can only be achieved through control, as defined in Ohio Revised Code Section 1309.104. This means the secured party must obtain the right to direct the disposition of the funds in the account. Filing a financing statement is insufficient for perfection in deposit accounts. When a debtor grants a security interest in a deposit account to a secured party, and subsequently grants a security interest in the same deposit account to a second secured party, the priority between these two secured parties is determined by who first obtained control. If both secured parties obtain control, the first to gain control generally has priority. However, the UCC also provides specific rules regarding control obtained by a bank in which the deposit account is maintained. A bank that maintains a deposit account for a debtor has control over that account as a secured party if it has not agreed otherwise. If a bank has control and another secured party also obtains control, the bank generally has priority over the other secured party unless the other secured party also has control and has a specific agreement with the bank. In this scenario, assuming both parties have valid security agreements and the collateral is indeed a deposit account located in Ohio, the question hinges on the method of perfection. Since filing is ineffective for deposit accounts, only control establishes perfection and determines priority.

In Ohio, a secured party’s rights upon a debtor’s default are governed by Article 9 of the Uniform Commercial Code. When a debtor defaults on a secured obligation, the secured party generally has the right to take possession of the collateral without judicial process if this can be done without breach of the peace. This is often referred to as repossession. If repossession cannot be achieved without a breach of the peace, the secured party must pursue judicial remedies, such as replevin. Following repossession, the secured party must dispose of the collateral in a commercially reasonable manner. This includes providing reasonable notification of the disposition to the debtor and any other secured party or lienholder of record. The proceeds from the disposition are applied first to the expenses of repossession and disposition, then to the satisfaction of the secured obligation, and any remaining surplus is turned over to the debtor. If there is a deficiency, the debtor generally remains liable for it. The question centers on the initial steps a secured party can take after default, specifically concerning the method of taking possession of collateral. The scenario describes a situation where the collateral is located on the debtor’s business premises, and the debtor has explicitly refused entry. Attempting to enter the premises against the debtor’s will, even if the secured party has a right to the collateral, would likely constitute a breach of the peace under Ohio law and UCC § 9-609. Therefore, the secured party cannot forcibly enter the debtor’s business premises to repossess the collateral. Instead, the secured party must seek a judicial order to compel the debtor to allow access or to seize the collateral.

The core issue revolves around the perfection of a security interest in accounts receivable generated from the sale of goods by a manufacturer located in Ohio, where the buyer is also located in Ohio. Under Ohio Revised Code Section 1309.301, a security interest in accounts is generally perfected by filing a financing statement in the jurisdiction where the debtor is located. For a registered organization, such as a corporation, its location is its jurisdiction of organization. Therefore, if the manufacturer is an Ohio corporation, the proper place to file a financing statement to perfect its security interest in its accounts receivable generated from sales to Ohio buyers is with the Ohio Secretary of State. The UCC’s rules on perfection prioritize filing in the debtor’s location for general intangibles and accounts, ensuring a clear public record for potential creditors. The fact that the goods were also shipped from Ohio to Ohio buyers does not alter the perfection requirements for the accounts themselves, which are intangible rights to payment. The focus remains on the location of the debtor for perfection purposes under Article 9 of the UCC.

Under Ohio Revised Code Section 1309.310, a secured party must file a termination statement when there is no outstanding secured obligation and no commitment by the secured party to make advances, incur obligations, or otherwise give value. The termination statement is filed in the filing office where the financing statement was filed. This filing effectively indicates that the security interest is extinguished. The question focuses on the specific timing and conditions for filing such a statement in Ohio, highlighting that the absence of any outstanding obligation or commitment is the trigger, regardless of whether the debtor has formally requested it. The UCC generally favors the prompt release of collateral once the debt is satisfied to promote the free flow of commerce and prevent clouds on title. Therefore, a secured party’s proactive filing of a termination statement upon satisfaction of the debt is a key aspect of compliance with Article 9 of the UCC as adopted in Ohio.

The scenario involves a buyer in the ordinary course of business purchasing inventory from a merchant who has granted a security interest in that inventory to a lender. Under Ohio Revised Code Section 1309.320, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. The key is that the buyer is purchasing inventory in the ordinary course of business from a merchant who is in the business of selling that type of goods. The security agreement between the manufacturer and the dealer granted a security interest in the dealer’s inventory. When the dealer sells this inventory to a customer who is a buyer in the ordinary course of business, that customer takes the goods free and clear of the manufacturer’s security interest. The fact that the customer might have had notice of the security interest is generally irrelevant if the sale is in the ordinary course of business. The manufacturer’s recourse would be against the dealer for breaching the security agreement.

The core issue in this scenario revolves around the perfection of a security interest in a deposit account. Under Ohio Revised Code Section 1309.314, a security interest in a deposit account as collateral can only be perfected by control. Control is defined in Ohio Revised Code Section 1309.104. For a deposit account, control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the agreement of the bank with which the deposit account is maintained to comply with the secured party’s instructions concerning the deposit account. In this case, Acme Corp has a security agreement with Beta LLC and has filed a financing statement. However, filing is not a method of perfection for deposit accounts. Acme Corp’s failure to obtain control over Beta LLC’s deposit account at First National Bank means its security interest is unperfected with respect to that specific collateral. Therefore, when Gamma Corp, which has obtained control over the deposit account by becoming the bank with which the deposit account is maintained (or by having an agreement with the bank to follow its instructions), subsequently takes possession of the collateral, its perfected security interest will have priority over Acme Corp’s unperfected security interest in the deposit account. This priority rule is a fundamental aspect of Article 9 of the Uniform Commercial Code, emphasizing the exclusive perfection method for deposit accounts.

The scenario involves a purchase money security interest (PMSI) in inventory. Under Ohio Revised Code Section 1309.324, a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include: (1) the PMSI creditor perfects its security interest by filing a financing statement before the debtor receives possession of the inventory; and (2) the PMSI creditor sends an authenticated notification to any other secured party that has filed a financing statement covering the same inventory or has perfected its security interest in the same inventory, and that notification states that the sender has or expects to acquire a PMSI in inventory of the debtor and describes or describes the inventory. This notification must be sent within six months before the debtor receives possession of the inventory. In this case, AgriBank filed its financing statement on January 15, 2023, and provided notice to FarmCorp on February 1, 2023, which is within the six-month window before the debtor, Harvest Farms, received the seed inventory on March 1, 2023. FarmCorp’s earlier filing on January 10, 2023, does not defeat AgriBank’s PMSI priority because AgriBank properly perfected its PMSI in inventory and provided the required notification. The priority for inventory PMSIs is designed to facilitate financing of new inventory, allowing suppliers who provide that inventory to obtain priority over earlier, general-purpose lenders.

In Ohio, 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 is governed by Ohio Revised Code Section 1309.315(A)(1). However, there is a crucial exception under Ohio Revised Code Section 1309.320(A) which states that 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 and even if the buyer knows of the perfection. A buyer in the ordinary course of business is defined in Ohio Revised Code Section 1301.201(9) as a person that buys goods in good faith, without knowledge that the sale violates the rights of the secured party, and that is a buyer of goods from a person who is in the business of selling goods of that kind. In this scenario, the antique dealer, being in the business of selling antiques, is the seller. The customer purchasing the grandfather clock from the dealer is a buyer in the ordinary course of business. Even though the security interest was perfected, the customer’s purchase of the clock, a good, from a dealer in goods of that kind, in good faith and without knowledge that the sale violated the secured party’s rights, cuts off the perfected security interest. Therefore, the secured party’s security interest is terminated with respect to the grandfather clock.