Buyers of Goods. A buyer of goods who purchases in the ordinary course of business takes free of a perfected security interest granted by the seller even if the buyer has knowledge of the security interest. The exception to this rule is a buyer of farm products. See, UCC §9- 320(a). Likewise, a similar rule exists for a purchaser of goods from a consumer. In that case, the buyer takes free of a perfected security interest if the buyer purchases goods, without knowledge of a prior security interest for value and for a consumer purpose before a Financing Statement is filed. This rule comes into play where the security interest in the consumer goods is a PMSI which perfects upon attachment and where no filing occurs. Once a filing occurs, then a purchaser from a consumer cannot take free and clear of a security interest, PMSI or otherwise. The lesson here is that the secured creditor in consumer goods, despite any automatic perfection, is well warned to also perfect by immediate filing of a Financing Statement. See, UCC §9-320 (a) and (b). As an additional exception to the rights of a buyer, if the security interest is perfected by the secured creditor’s possession, then the buyer of the goods does not take free of the security interest. See, UCC §9-320(e). This includes circumstances in which the secured creditor is deemed to be in possession of the collateral even if actual possession is in the hands of a third party.
