N.D. Cent. Code § 41-09-45
(9-325) Priority of security interests in transferred collateral
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) Except as otherwise provided in subsection 2, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if: The debtor acquired the collateral subject to the security interest created by the other person;
(1) Except as otherwise provided in subsection 2, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if: The debtor acquired the collateral subject to the security interest created by the other person;
(2) The security interest created by the other person was perfected when the debtor acquired the collateral; and
(2) The security interest created by the other person was perfected when the debtor acquired the collateral; and
(3) There is no period thereafter when the security interest is unperfected.
(3) There is no period thereafter when the security interest is unperfected.
(4) Subsection 1 subordinates a security interest only if the security interest: Otherwise would have priority solely under subsection 1 of section 41-09-42 or section 41-09-44; or
(4) Subsection 1 subordinates a security interest only if the security interest: Otherwise would have priority solely under subsection 1 of section 41-09-42 or section 41-09-44; or
(5) Arose solely under subsection 3 of section 41-02-90 or subsection 5 of section 41-02.1-56.
(5) Arose solely under subsection 3 of section 41-02-90 or subsection 5 of section 41-02.1-56.
(6) Taking Subject to Perfected Security Interest. Consider the following scenario:
(7) Taking Subject to Unperfected Security Interest. This section applies only if the security interest in the transferred collateral was perfected when the transferee acquired the collateral. See subsection (a)(2). If this condition is not met, then the normal priority rules apply.
(8) Taking Subject to Perfected Security Interest that Becomes Unperfected. This section applies only if the security interest in the transferred collateral did not become unperfected at any time after the transferee acquired the collateral. See subsection (a)(3). If this condition is not met, then the normal priority rules apply.
(9) Unusual Situations. The appropriateness of the rule of subsection (a) is most apparent when it works to subordinate security interests having priority under the basic priority rules of Section 9-322(a) or the purchase-money priority rules of Section 9-324. The rule also works properly when applied to the security interest of a buyer under Section 2-711(3) or a lessee under Section 2A-508(5). However, subsection (a) may provide an inappropriate resolution of the “double debtor” problem in some of the wide variety of other contexts in which the problem may arise. Although subsection (b) limits the application of subsection (a) to those cases in which subordination is known to be appropriate, courts should apply the rule in other settings, if necessary to promote the underlying purposes and policies of the Uniform Commercial Code. See Section 1-102(1).
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.