The core issue here revolves around the perfection of a security interest in a deposit account under Pennsylvania’s UCC Article 9. According to UCC § 9-312(b) and § 9-104, 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 instructions regarding the deposit account. In this scenario, the security agreement between Lehigh Valley Bancorp and Steel City Manufacturing creates the security interest, and the filing of a financing statement is generally the method for perfecting security interests in most types of collateral. However, deposit accounts are explicitly excluded from the general perfection rules by filing. Lehigh Valley Bancorp, by taking possession of the deposit account and having the bank acknowledge its control through an authenticated record, has established control. Therefore, Lehigh Valley Bancorp’s security interest is perfected. Steel City Manufacturing’s filing of a financing statement, while effective for other collateral, is insufficient for perfecting a security interest in a deposit account. The UCC prioritizes control over filing for deposit accounts to ensure clarity and prevent competing claims on these highly liquid assets. This aligns with the principle that perfection for deposit accounts is achieved through the control prong of UCC § 9-314.

The question pertains to the perfection of a security interest in deposit accounts under Pennsylvania’s UCC Article 9. Perfection in deposit accounts is generally achieved by control, as defined in UCC § 9-104. Control is established when the secured party becomes the customer of the bank with respect to the deposit account, or when the secured party obtains the right to direct the disposition of the deposit account without the debtor’s consent. UCC § 9-312(b) states that a security interest in a deposit account as collateral can only be perfected by control. Filing a financing statement is not sufficient for perfection of a security interest in a deposit account, although it may be effective for other types of collateral. Therefore, for a security interest in a deposit account to be perfected, the secured party must have obtained control over the account.

In Pennsylvania, when a secured party is seeking to repossess collateral after a default, the Uniform Commercial Code (UCC) Article 9, as adopted by Pennsylvania, governs the process. Specifically, Section 9609 outlines the secured party’s rights. The core principle is that a secured party may take possession of the collateral without judicial process if this can be done without breach of the peace. The concept of “breach of the peace” is critical and is determined by the totality of the circumstances, focusing on whether the secured party’s actions would tend to cause violence or public disturbance. Factors considered include the location of repossession (e.g., a private driveway versus a public street), the time of day, the use of force or threats, the involvement of third parties, and the debtor’s objections. If a secured party breaches the peace during repossession, they may be liable for conversion or other torts. Furthermore, if the collateral is fixtures or is so closely related to real property that removal would cause substantial harm to the real property, the secured party may need to proceed under real property law, which typically involves judicial foreclosure. In such cases, simply taking possession without judicial process would likely constitute a breach of the peace and be unlawful. Therefore, the ability to repossess without judicial process is contingent upon the feasibility of doing so peacefully and without causing damage to the realty.

The scenario involves a purchase money security interest (PMSI) in equipment. A PMSI grants the secured party special priority rights. For a PMSI in equipment to have priority over a prior perfected security interest in the same collateral, the PMSI lender must satisfy specific requirements under Pennsylvania’s UCC Article 9. These requirements include filing a financing statement before or within twenty days after the debtor receives possession of the collateral, and the financing statement must sufficiently describe the collateral and indicate that it covers after-acquired property if applicable. Furthermore, the PMSI lender must provide notification to any prior secured party who has filed a financing statement covering the same equipment or has perfected a security interest in it, and this notification must be received by the prior secured party within six months before the debtor receives possession of the collateral. In this case, the prior secured party, Keystone Bank, perfected its security interest in all of the debtor’s existing and after-acquired equipment on January 15, 2023. The new lender, Allegheny Credit, extended credit for new equipment and perfected its PMSI on March 1, 2023. Allegheny Credit failed to provide the required notification to Keystone Bank within the six-month window preceding the debtor’s receipt of the new equipment. Therefore, Allegheny Credit’s PMSI, despite being a purchase money security interest, will not have priority over Keystone Bank’s prior perfected security interest in the new equipment. The collateral will be subject to Keystone Bank’s prior claim.

The core issue in this scenario revolves around the perfection of a security interest in a motor vehicle, specifically a tractor, under Pennsylvania law. Article 9 of the Uniform Commercial Code (UCC) governs secured transactions, but UCC § 9-311(a) and § 9-311(b) explicitly state that compliance with a certificate of title statute is the method of perfection for goods covered by such a statute. In Pennsylvania, motor vehicles, including tractors used in agriculture, are subject to titling requirements under the Pennsylvania Vehicle Code. Therefore, a security interest in a tractor that is subject to titling requirements must be perfected by notation on the certificate of title. Filing a UCC-1 financing statement is generally ineffective for perfection of such collateral. The security agreement between Farmer Giles and AgriBank creates the security interest, but perfection is a separate step. AgriBank’s attempt to perfect by filing a UCC-1 financing statement in the general UCC filing system of Pennsylvania is insufficient for a titled vehicle. The correct method would have been to deliver the certificate of title, application for notation, and any required fees to the Pennsylvania Department of Transportation (PennDOT) for endorsement. Without this notation, AgriBank’s security interest is unperfected against a buyer in the ordinary course of business, such as the subsequent purchaser, Ms. Henderson, who buys the tractor without knowledge of AgriBank’s security interest. Consequently, Ms. Henderson takes the tractor free of AgriBank’s unperfected security interest.

The question concerns the perfection of a security interest in a deposit account under Pennsylvania’s Uniform Commercial Code, Article 9. Specifically, it probes the method by which a secured party gains control over a deposit account to achieve perfection. Under UCC § 9-312(b) and § 9-104, perfection of a security interest in a deposit account can only be achieved by control. Control is defined in UCC § 9-104 and generally means that the secured party is the bank in which the deposit account is maintained, or the secured party has agreed with the bank in which the deposit account is maintained that the bank will comply with the secured party’s instructions regarding the deposit account. Filing a financing statement alone is insufficient for perfection in deposit accounts. Taking possession of the account passbook is also not a recognized method for perfecting a security interest in a deposit account under Article 9. Therefore, the only method that would result in perfection of the security interest in the deposit account is obtaining control.

The core issue here revolves around the perfection of a security interest in certain types of collateral and the priority of competing claims. In Pennsylvania, as under Article 9 of the UCC, the perfection of a security interest in accounts is generally achieved by filing a financing statement. However, there are exceptions. Under UCC § 9-310(a), a security interest is perfected unless this Article provides that another method of perfection is required. UCC § 9-312(a) states that a perfected security interest generally has priority over an unperfected security interest. UCC § 9-109(a)(3) specifies that Article 9 applies to accounts. For accounts, filing is the primary method of perfection. UCC § 9-310(b)(3) states that filing is not required to perfect a security interest in accounts that does not alone, or in conjunction with other value given, aggregate at any time more than $5,000 in total value, unless the accounts constitute “health-care insurance receivables.” In this scenario, the total value of the accounts is $7,500, which exceeds the $5,000 threshold. Furthermore, these are not health-care insurance receivables. Therefore, a financing statement must be filed to perfect the security interest in these accounts. Since the security interest in the accounts was not perfected by filing, and there is no other applicable exception, it remains unperfected. A subsequent buyer of accounts who gives value and receives delivery of the accounts for new value, without knowledge of the unperfected security interest, takes the accounts free of that security interest under UCC § 9-317(a)(1). The buyer of the accounts, Commonwealth Acquisitions LLC, purchased the accounts for value and, presumably, took possession or control (delivery of accounts in this context implies taking control or possession of the accounts themselves, which is how one would deal with accounts). As an unperfected security interest is subordinate to the rights of a buyer of accounts that gives value and receives delivery of the collateral, Commonwealth Acquisitions LLC’s claim to the accounts is superior.

The core issue here is the priority of a security interest in after-acquired inventory when a financing statement has been filed but the debtor subsequently moves its principal place of business to another state. Under Pennsylvania’s UCC Article 9, specifically concerning the perfection of security interests in inventory, a secured party must ensure their financing statement is properly filed. When a debtor moves its chief executive office or principal place of business to a different jurisdiction, the perfection of a security interest in goods that have become fixtures or are covered by a certificate of title is governed by specific rules. However, for general inventory, the rule is that perfection continues for a period of four months after a change of the debtor’s location. If a financing statement covering inventory is filed in Pennsylvania, and the debtor subsequently moves its principal place of business to Delaware, the Pennsylvania filing generally remains effective for four months. During this four-month period, a creditor in Delaware would typically need to search the records in Pennsylvania to discover the existing perfected security interest. After the four-month period, if no new financing statement is filed in Delaware, the security interest would generally become unperfected in Delaware. However, the question specifies that the financing statement was filed in Pennsylvania, and the debtor’s principal place of business is in Pennsylvania, but the inventory is located in Delaware. This scenario tests the interplay between the location of the debtor and the collateral. For inventory, the proper place to file a financing statement is generally in the jurisdiction where the debtor is located, not where the inventory is located. Pennsylvania UCC § 9-307(a) states that the law of the jurisdiction where the debtor is located governs perfection and priority concerning goods that are part of inventory. Since the debtor’s principal place of business is in Pennsylvania, and the financing statement was filed there, the security interest in the inventory, even if located in Delaware, is perfected in Pennsylvania. The question then becomes about the priority of a subsequent creditor in Delaware. A creditor in Delaware who searches Pennsylvania records would discover the prior perfected security interest. Therefore, the Pennsylvania filing is effective to perfect the security interest against a subsequent buyer of inventory in Delaware. The key is that the perfection is tied to the debtor’s location for inventory.

This scenario involves determining the priority of a security interest in inventory. The core issue is whether a financing statement filed by “Capital Funding Corp.” properly perfected its security interest in the inventory of “Keystone Manufacturing LLC” in Pennsylvania. Keystone Manufacturing granted a security interest in its present and after-acquired inventory to Capital Funding Corp. on January 15, 2023. Capital Funding Corp. filed a financing statement on January 20, 2023, which described the collateral as “all inventory, including raw materials, work-in-progress, and finished goods, owned by Keystone Manufacturing LLC.” On February 1, 2023, Keystone Manufacturing entered into a separate agreement with “Regional Bank” for a loan, granting Regional Bank a security interest in its accounts receivable. Regional Bank filed a financing statement on February 5, 2023, describing the collateral as “all accounts receivable of Keystone Manufacturing LLC.” The question then presents a situation where Keystone Manufacturing sells a portion of its inventory to “Direct Sales Inc.” on credit, and Direct Sales Inc. subsequently defaults on its payment to Keystone Manufacturing, creating an account receivable for Keystone. The critical question is the priority of any security interest in this account receivable. Under Pennsylvania’s UCC Article 9, a security interest attaches when value is given, the debtor has rights in the collateral, and there is an authenticated security agreement. Perfection occurs upon filing a financing statement, possession, or control. Capital Funding Corp.’s security interest attached and was perfected by filing on January 20, 2023, covering inventory. Regional Bank’s security interest attached and was perfected by filing on February 5, 2023, covering accounts receivable. When inventory is sold, the security interest in the inventory generally continues in the proceeds of that inventory. UCC § 9-315 states that a security interest in collateral continues in any identifiable proceeds of the collateral. Accounts receivable generated from the sale of inventory are considered proceeds. Therefore, Capital Funding Corp.’s security interest in the inventory would extend to the accounts receivable that arose from the sale of that inventory. The priority between competing security interests is generally determined by the order of filing or perfection, as per UCC § 9-322. Capital Funding Corp. perfected its security interest in the inventory on January 20, 2023. Regional Bank perfected its security interest in accounts receivable on February 5, 2023. Since Capital Funding Corp.’s security interest in the inventory attaches to the proceeds (accounts receivable) and was perfected *before* Regional Bank perfected its security interest in accounts receivable, Capital Funding Corp. has priority in the account receivable that originated from the sale of its inventory. The description in Capital Funding Corp.’s financing statement covers “all inventory,” and the proceeds of that inventory are automatically covered by the security agreement and financing statement under UCC § 9-315, unless explicitly excluded. Therefore, Capital Funding Corp. has priority in the account receivable generated from the sale of its inventory.

This question probes the concept of attachment and perfection in Pennsylvania secured transactions, specifically concerning the priority of a purchase money security interest (PMSI) in inventory against a prior filed general security interest. Under Pennsylvania’s UCC Article 9, a security interest attaches when value is given, the debtor has rights in the collateral, and a security agreement is in authenticated record. Perfection, on the other hand, establishes priority against third parties. For a PMSI in inventory, special rules apply. Section 9324 of the Pennsylvania UCC (42 Pa. C.S. § 9324) outlines the requirements for a PMSI to have priority over a conflicting security interest in the same inventory. To gain this priority, the PMSI lender must satisfy several conditions. First, the security interest must be a purchase money security interest. Second, it must be perfected when the debtor receives possession of the inventory. Third, the secured party must give an authenticated notification to any other secured party who has filed a financing statement covering the inventory or is known by the PMSI lender to have a security interest in the inventory. This notification must be sent within a specific timeframe before the debtor receives possession of the inventory. If these conditions are met, the PMSI in inventory will generally have priority over a previously filed, non-PMSI security interest.

The core issue here revolves around the perfection of a security interest in a deposit account held by a debtor. Under Pennsylvania’s UCC Article 9, a security interest in a deposit account can only be perfected by control. Control is established when the secured party is the bank in which the deposit account is maintained, or when the debtor has agreed to the bank’s disposition of the funds in the account, or when the secured party becomes the beneficiary of the deposit account. In this scenario, the security agreement grants a security interest in all of Amelia’s deposit accounts. The collateral is located in Pennsylvania. The secured party, “First State Bank,” has possession of the deposit account agreement but has not taken any further action to gain control over the specific deposit account held at “Community Trust Bank.” Specifically, First State Bank has not become the bank with which the account is maintained, nor has it obtained an authenticated agreement from Amelia specifically directing Community Trust Bank to comply with its instructions regarding the account. Therefore, First State Bank has an unperfected security interest in the deposit account. When a bankruptcy petition is filed, the debtor’s assets become property of the bankruptcy estate. A trustee in bankruptcy has the status of a lien creditor from the moment of filing the petition. A lien creditor generally has priority over unperfected security interests. Thus, the bankruptcy trustee, holding the status of a lien creditor in Pennsylvania, will have priority over First State Bank’s unperfected security interest in Amelia’s deposit account. The fact that the security agreement mentions the deposit account and that First State Bank has possession of the agreement does not substitute for the requirement of control for perfection of a security interest in a deposit account. The perfection is achieved by control, not by the existence of the security agreement or possession of related documents alone.

The question concerns the perfection of a security interest in a deposit account under Pennsylvania’s UCC Article 9. Perfection in a deposit account is generally achieved solely by the secured party’s control over the account. Control is established when the secured party is the bank with which the deposit account is maintained, or when the debtor authenticates a security agreement granting control, and the bank agrees to follow the secured party’s instructions regarding the deposit account. In this scenario, while Apex Bank has a security agreement and possession of the certificate of deposit (which is a type of deposit account), the critical element for perfection against third-party claims is control. Apex Bank’s possession of the CD, coupled with the authenticated security agreement, establishes control under UCC § 9-104 and § 9-314. Without control, Apex Bank’s security interest is unperfected and subordinate to a perfected security interest or a buyer of the collateral. The filing of a financing statement is generally not sufficient to perfect a security interest in a deposit account. Therefore, Apex Bank’s security interest is perfected because it has control over the deposit account.

The question revolves around the perfection of a security interest in a deposit account under Pennsylvania’s UCC Article 9. A deposit account is generally considered “cash proceeds” of collateral. When a secured party has a perfected security interest in the original collateral, that perfection typically extends to identifiable cash proceeds. However, UCC § 9-315(d) outlines specific rules for perfection in deposit accounts that contain proceeds. It states that a security interest in a deposit account that contains only proceeds of other collateral is perfected if the secured party has control over the deposit account. Alternatively, if the deposit account contains proceeds of other collateral and also other funds, a security interest in the deposit account as proceeds is perfected by: (1) the secured party’s control over the deposit account, or (2) the filing of a financing statement that covers the deposit account as original collateral, or (3) the secured party having a perfected security interest in the deposit account as original collateral. In this scenario, the security interest in the inventory was perfected by filing. When the inventory was sold, it generated cash proceeds deposited into a new account. For the security interest in these cash proceeds to remain perfected in the deposit account, the secured party must either have control over the deposit account or have filed a financing statement that covers the deposit account itself as original collateral. Simply having a perfected security interest in the original collateral (inventory) does not automatically perfect the security interest in the deposit account containing the proceeds without meeting one of these additional requirements. Therefore, the secured party must establish control over the deposit account to maintain perfection in the proceeds held therein.

No calculation is required for this question. The effectiveness of a purchase money security interest (PMSI) in inventory under Pennsylvania’s Article 9 of the Uniform Commercial Code hinges on timely and proper perfection. For inventory, perfection requires filing a financing statement that sufficiently describes the collateral and names the debtor accurately. Crucially, a PMSI holder in inventory must notify any existing secured party whose security interest covers the same inventory, provided that the existing secured party has already perfected its interest. This notification must occur before the debtor receives possession of the inventory. This “notification” requirement is a key differentiator for PMSI in inventory compared to other types of collateral, aiming to give prior secured parties an opportunity to respond or adjust their position. Failure to provide this notice means the PMSI will not have priority over the prior perfected security interest in the same inventory. The notification must be in writing and identify the secured party by name and address and the collateral. The notification is effective for five years from the date it is sent.

The question concerns the perfection of a security interest in deposit accounts under Pennsylvania’s Article 9. Under UCC § 9-312(b), a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in UCC § 9-104. For a deposit account, control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with the secured party’s instructions regarding the deposit account. UCC § 9-313(a) states that perfection by control is not a lapse in perfection. Therefore, if a secured party has control, its security interest remains perfected even if it loses possession of the authenticated record of control. The scenario describes a secured party, Keystone Bank, which has a security interest in a deposit account and has obtained control by having the debtor, Penn Enterprises, deposit funds into an account at Keystone Bank and agreeing to follow Keystone Bank’s instructions. Subsequently, Penn Enterprises grants a second security interest in the same deposit account to Liberty Financial. Liberty Financial also obtains control by entering into a control agreement with Penn Enterprises and the depositary bank, which is also Keystone Bank. Since both parties have control, the priority is determined by UCC § 9-327(1), which states that among competing secured parties that have control, the first to obtain control generally has priority. However, in this specific scenario, Keystone Bank already had control by virtue of being the depositary bank. The subsequent control agreement by Liberty Financial does not divest Keystone Bank of its control. UCC § 9-104(a)(1) defines control where the secured party is the bank itself. UCC § 9-104(a)(2) defines control where the secured party becomes entitled to charge the deposit account to its order. Liberty Financial’s control is established through a control agreement under UCC § 9-104(a)(2). The critical point is that Keystone Bank’s initial control, as the depositary bank, predates Liberty Financial’s control obtained via a control agreement. Therefore, Keystone Bank has priority.

The core issue here revolves around the perfection of a security interest in accounts that are part of a sale of a business. Under Pennsylvania’s UCC Article 9, a security interest in accounts is generally perfected by filing a financing statement. However, UCC § 9-109(c)(3) specifies that Article 9 does not apply to the sale of accounts or chattel paper as part of a sale of the business out of which they arose. This exclusion is significant because it means that the sale of accounts in this context is treated as a true sale, not a secured transaction, and therefore, perfection under Article 9 through filing is not required for the buyer of the accounts to have ownership rights against third parties. The buyer’s ownership is established by the agreement itself. While a buyer of accounts may choose to file a financing statement to provide notice and protect against certain claims, it is not a prerequisite for the perfection of their ownership interest in the accounts as a sale of a business. Therefore, the buyer of the accounts has priority over the subsequent lender who attempts to perfect a security interest in the same accounts. The subsequent lender’s security interest attaches to the accounts only to the extent that the seller of the business retained any rights in those accounts after the sale. Since the entire business, including its accounts, was sold, the seller retained no rights to which the subsequent lender’s security interest could attach.

This scenario involves the priority of security interests when a debtor defaults on multiple secured loans. The key issue is determining which secured party has the superior claim to the collateral, specifically a piece of specialized manufacturing equipment. In Pennsylvania, under Article 9 of the Uniform Commercial Code, perfection of a security interest is generally achieved by filing a financing statement. However, for certain types of collateral, such as goods covered by a certificate of title, perfection occurs by noting the interest on the certificate. For fixtures, perfection requires filing a fixture filing in the real property records. The scenario presents a situation where a lender perfected its security interest in the equipment by filing a UCC-1 financing statement in Pennsylvania. A subsequent lender also perfected its security interest in the same equipment, but its perfection method is described as “otherwise perfected.” This implies a valid method of perfection under Article 9. When determining priority between two perfected security interests in the same collateral, the general rule is that the first to file or perfect has priority. In this case, the first lender filed its UCC-1. The second lender perfected its interest. Assuming the second lender’s perfection was also valid and occurred after the first lender’s filing, the first lender’s earlier filing establishes its priority. Therefore, the lender who filed the UCC-1 financing statement first would have the superior claim to the manufacturing equipment. The question tests the understanding of the “first-to-file-or-perfect” rule and the various methods of perfection under Article 9, particularly in the context of specialized equipment that might be considered a fixture or subject to other perfection rules, but the scenario simplifies it to a standard UCC filing.

This scenario involves a conflict between a purchase money security interest (PMSI) and a previously perfected security interest in after-acquired inventory. Under Pennsylvania’s Uniform Commercial Code Article 9, a PMSI grants special priority rights to a seller or lender who finances the acquisition of goods. To maintain this priority, several steps must be taken. First, the PMSI must be perfected by filing a financing statement. Second, the financing statement must describe the collateral, which in this case is the inventory. Crucially, for inventory, the PMSI holder must also give notice to any other secured party who has previously filed a financing statement covering the same type of collateral. This notice must be in writing and received by the other secured party before the debtor receives possession of the inventory. The purpose of this notice is to alert prior secured parties of the new, superior interest. Without proper notification to Sterling Bank, which held a prior perfected security interest in all of Apex Corp’s inventory, the PMSI held by Keystone Capital will not have priority over Sterling Bank’s claim to the specific inventory financed by Keystone Capital. Therefore, Sterling Bank retains its superior position.

The scenario involves a purchase money security interest (PMSI) in equipment. Under Pennsylvania’s Uniform Commercial Code (UCC) Article 9, a PMSI grants the secured party special priority rights. To maintain this priority against other creditors, including a prior perfected secured party with a general security interest in all of the debtor’s assets, the PMSI creditor must satisfy specific filing requirements. First, the PMSI must attach to the collateral. This occurs when the debtor receives value, the debtor has rights in the collateral, and a security agreement is in place that sufficiently describes the collateral. In this case, the security agreement between Apex Equipment and Penn Manufacturing clearly describes the lathes. Second, perfection is crucial for priority. For equipment, perfection is typically achieved by filing a financing statement. Section 9317(a)(2) of the Pennsylvania UCC states that a perfected PMSI in goods generally has priority over a conflicting interest in the same goods of a secured party whose security interest was perfected before the PMSI was perfected. However, there is a grace period for PMSI perfection. Section 9324(a) specifies that a PMSI in equipment retains its priority over a conflicting security interest in the same collateral if the PMSI is perfected by filing no later than 20 days after the debtor receives possession of the collateral. In this case, Apex Equipment filed its financing statement on March 15th, which is 20 days after Penn Manufacturing received possession of the lathes on February 24th. This filing falls within the statutory grace period. Therefore, Apex Equipment’s PMSI in the lathes is perfected and takes priority over the earlier perfected security interest of First National Bank.

The core issue here revolves around the perfection of a security interest in a deposit account. Under Pennsylvania’s UCC Article 9, 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 debtor has agreed to the bank’s disposition of the funds in the account, or when the secured party obtains the bank’s acknowledgment of the debtor’s right to direct disposition of the funds. In this scenario, Anya’s Bank has a security interest in the deposit account held at City National Bank. Anya’s Bank has filed a financing statement and taken possession of the account statements, but neither of these actions grants perfection in a deposit account. Filing is generally effective for perfection of security interests in most types of collateral, but it is explicitly excluded as a method of perfection for deposit accounts. Possession is also not a method of perfection for deposit accounts. Without control, Anya’s Bank’s security interest is unperfected. Therefore, when another creditor, Apex Corp, obtains a security interest in the same deposit account and perfects it by taking control (by becoming the bank where the account is held), Apex Corp’s perfected security interest will have priority over Anya’s Bank’s unperfected security interest. This priority is established by UCC Section 9-327, which states that the first to obtain control has priority.

The core issue here concerns the priority of security interests when a buyer in the ordinary course of business purchases collateral from a seller who is in the business of selling goods of that kind. Under Pennsylvania’s Uniform Commercial Code (UCC) Article 9, specifically § 9-320, a buyer in the ordinary course of business takes free of a security interest created by the seller, even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer knows that the sale is in violation of the security agreement. In this scenario, Anya’s Artistry is a merchant dealing in paintings, and Bartholomew purchases a painting from Anya’s Artistry. Bartholomew is therefore a buyer in the ordinary course of business. The security interest held by Capital Bank was created by Anya’s Artistry, the seller. Since Bartholomew purchased the painting in the ordinary course of business and there is no indication that he knew the sale was in violation of Capital Bank’s security agreement, his interest in the painting is superior to Capital Bank’s security interest. Capital Bank’s recourse would be against Anya’s Artistry for breach of the security agreement, not against Bartholomew for possession of the painting. The fact that Capital Bank had a purchase money security interest (PMSI) is relevant to its perfection, but it does not override the buyer-in-ordinary-course exception under § 9-320. The perfection of Capital Bank’s security interest, while valid against Anya’s Artistry and other creditors, does not extend to defeating the rights of a buyer in the ordinary course of business who takes free of such security interests.

The core issue here revolves around the perfection of a security interest in a deposit account under Pennsylvania’s UCC Article 9. Under UCC § 9-104(a)(1), a security interest in a deposit account as collateral 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 debtor has agreed in writing that the bank will comply with the secured party’s instructions regarding the deposit account (UCC § 9-104(a)(2)). In this scenario, the security agreement grants a security interest in “all of debtor’s assets,” which includes the deposit account. However, the secured party, Keystone Bank, only filed a financing statement. Filing is generally the method for perfecting security interests in most types of collateral, but UCC § 9-312(b) specifically states that filing is not effective to perfect a security interest in deposit accounts. Therefore, Keystone Bank’s security interest in the deposit account remains unperfected. A subsequent secured party, First State Bank, which obtained control over the deposit account by becoming the bank of deposit and having the debtor agree in writing to follow its instructions, has a perfected security interest. Under UCC § 9-327, a perfected security interest in a deposit account has priority over an unperfected security interest. Thus, First State Bank’s security interest has priority.

The core issue here is determining the proper place to file a financing statement to perfect a security interest in a certificate of title for a vehicle. Under Pennsylvania law, and consistent with UCC Article 9, when a certificate of title is required for goods, perfection of a security interest in those goods is generally accomplished by compliance with the certificate of title statute. Pennsylvania’s Vehicle Code, specifically 75 Pa. C.S. § 1132, dictates that the security interest must be noted on the certificate of title itself, which is maintained by the Department of Transportation. Filing a financing statement with the Department of State, as is typical for general intangible collateral or goods not subject to a certificate of title statute, is insufficient for perfection in this specific scenario. Therefore, the security interest is unperfected against a buyer in the ordinary course of business who takes possession of the vehicle without knowledge of the security interest.

In Pennsylvania, the perfection of a security interest in a deposit account is governed by UCC § 9-312 and § 9-314. Generally, a security interest in a deposit account can only be perfected by control. Control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with instructions directing the disposition of the funds in the account, or when the secured party becomes the assignee of the deposit account. When a security interest is perfected by control, it is generally considered the highest form of perfection and provides strong priority. In this scenario, the security interest in the deposit account was perfected by control when the bank, as the secured party, became the depository institution for the account. This direct control means the bank has priority over any unperfected security interests and generally over other perfected security interests in the same collateral, unless specific statutory exceptions apply. Therefore, the bank’s security interest has priority.

The core issue revolves around the perfection of a security interest in certain types of collateral. In Pennsylvania, under UCC Article 9, the perfection of a security interest in deposit accounts, letter-of-credit rights, and certificated securities is generally achieved by control. For deposit accounts, control is established when the secured party becomes the bank’s customer with respect to the deposit account, or when the secured party obtains the right to direct the disposition of the deposit account without the debtor’s further consent. A mere assignment of the account as collateral, without establishing control as defined by Article 9, does not perfect the security interest against a buyer of the account that receives delivery or a competing secured party that has control. Therefore, even though Amity Bank took a security interest in the deposit account, its failure to obtain control means its security interest is unperfected against a subsequent buyer of the account that took delivery. The deposit account is considered “cash proceeds” of the inventory, and the security interest in the inventory continues in its proceeds. However, the perfection of the security interest in the deposit account itself is separate from the perfection in the inventory. Since Amity Bank’s security interest in the deposit account was unperfected, it is subordinate to the rights of a buyer of the account who took delivery. The question states that Keystone acquired the deposit account by taking delivery. Therefore, Keystone’s rights as a buyer of the account are superior to Amity Bank’s unperfected security interest in the deposit account.

This scenario involves a purchase money security interest (PMSI) in inventory and the priority rules under Pennsylvania’s UCC Article 9. A PMSI grants the secured party special priority rights. For a PMSI in inventory to have priority over a prior perfected security interest in the same inventory, specific steps must be taken. These steps, as outlined in UCC § 9-324(b) and its Pennsylvania commentary, require the PMSI holder to perfect its security interest and provide an authenticated notification to any prior secured party of record that they expect to take delivery of inventory covered by the PMSI. This notification must be sent before the debtor receives possession of the inventory. In this case, Aurora Bank has a prior perfected security interest in all of “Widgets Inc.’s” present and future inventory. “Gadget Corp.” subsequently sells widgets to Widgets Inc. on credit, retaining a PMSI in those specific widgets. Gadget Corp. perfects its security interest by filing a financing statement. However, to maintain priority over Aurora Bank’s existing perfected security interest, Gadget Corp. must also send authenticated notification to Aurora Bank that it expects to deliver widgets, and this notification must be received by Aurora Bank before Widgets Inc. receives the inventory. Without this notification, Aurora Bank’s prior perfected security interest will generally have priority over Gadget Corp.’s PMSI in the inventory. The perfection by filing alone is insufficient to overcome the prior perfected security interest in this inventory context.

The core issue here revolves around the perfection of a security interest in accounts, specifically whether filing a financing statement is sufficient for perfection against a buyer of those accounts. Under Pennsylvania’s Uniform Commercial Code (UCC) Article 9, specifically § 9-310(a), perfection of a security interest generally requires filing a financing statement. However, § 9-309(2) provides an exception for certain assignments of accounts that are perfected automatically without filing. This exception applies to assignments of accounts which do not, in the aggregate, constitute a significant portion of the outstanding accounts of the assignor. In this scenario, the aggregate value of the assigned accounts is \$75,000, which is stated to be a significant portion of the assignor’s total outstanding accounts, valued at \$500,000. Since the assigned accounts represent \( \frac{\$75,000}{\$500,000} \times 100\% = 15\% \) of the total outstanding accounts, and 15% is generally considered a significant portion, the automatic perfection exception under § 9-309(2) does not apply. Therefore, to achieve perfection against a subsequent buyer of those accounts, the secured party must have filed a financing statement in accordance with § 9-310(a). The question states that no financing statement was filed. Consequently, the security interest is unperfected. Under § 9-317(a)(1), an unperfected security interest is generally subordinate to the rights of a buyer of accounts that buys the accounts for value, gives value, and receives delivery of the accounts, unless the buyer has knowledge of the unperfected security interest. Assuming the buyer meets these criteria and has no knowledge, the buyer takes the accounts free of the unperfected security interest.

The core issue here is determining the proper place to file a financing statement to perfect a security interest in a certificated security that is physically located in Pennsylvania, owned by a Pennsylvania resident, and the debtor has agreed that the security interest is perfected by control. Under Pennsylvania’s UCC Article 9, specifically § 9-305, perfection of a security interest in certificated securities that are held by a securities intermediary on behalf of the debtor is achieved by control. However, when the certificated security is delivered to the secured party or its agent, perfection occurs upon taking delivery. More directly, § 9-312(a) states that perfection of a security interest in certificated securities, uncertificated securities, and security entitlements is governed by the rules in Part 3 of Article 9. Section 9-313(a) specifies that the law of the jurisdiction where the collateral is located governs perfection and priority of a security interest in certificated securities. Since the certificated security is physically located in Pennsylvania, and the debtor is a Pennsylvania resident, and the agreement specifies perfection by control, the secured party must obtain control of the certificated security. For certificated securities, control is typically achieved by possession or delivery to the secured party or its agent, as outlined in § 9-106. Therefore, the secured party must possess the certificated security in Pennsylvania to perfect its interest. Filing a financing statement is generally not the method for perfecting a security interest in certificated securities.

The core issue here revolves around the perfection of a security interest in a deposit account under Pennsylvania’s Article 9. Under UCC § 9-104, a security interest in a deposit account can only be perfected by control. Control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the bank’s agreement to comply with instructions from the secured party regarding the account, without the account debtor’s (in this case, the depositor’s) consent. In this scenario, the security agreement grants a security interest in the deposit account to Creditor Corp. However, the deposit account is held at Keystone Bank, and the agreement between Depositor LLC and Keystone Bank does not grant Creditor Corp. control. Depositor LLC retains the right to withdraw funds and direct the bank. Therefore, Creditor Corp. has an unperfected security interest in the deposit account. Perfection is crucial for priority against third parties. Without control, Creditor Corp.’s security interest is subordinate to any perfected security interests and potentially to a buyer of the deposit account that takes possession or control. The filing of a financing statement is generally not sufficient to perfect a security interest in a deposit account, as per UCC § 9-312(b)(1). The UCC specifically mandates control for perfection in deposit accounts.

Pennsylvania’s Uniform Commercial Code (UCC) Article 9 governs secured transactions. When a buyer of goods has rights in the collateral before the secured party has given value, a purchase-money security interest (PMSI) can still be perfected. A PMSI is a security interest that is taken by the seller of collateral to secure its price, or by a person who gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact used for that purpose. In Pennsylvania, perfection of a PMSI in goods other than inventory or livestock requires filing a financing statement and, in most cases, possession or control. For inventory, a PMSI is perfected by filing a financing statement before the debtor receives possession of the inventory. The key to the scenario is that the security interest is granted *before* the debtor obtains possession of the goods. This timing is crucial for PMSI perfection in inventory. The filing must occur when the debtor has possession or control, or when the debtor can transfer rights in the collateral. Since the security interest is granted to secure the purchase price of inventory, and the financing statement is filed before the debtor receives possession, the secured party has a perfected PMSI. The question tests the understanding of PMSI perfection requirements for inventory, specifically the timing of the filing relative to the debtor’s possession. The correct answer reflects the proper method and timing for perfecting a PMSI in inventory under Pennsylvania law.