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(810 ILCS 5/9-324) (Text of Section before amendment by P.A. 103-1036) Sec. 9-324. Priority of purchase-money security interests. (a) General rule: purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest in
goods
other than inventory or livestock has priority over a conflicting security
interest in
the same goods, and, except as otherwise provided in Section 9-327, a perfected
security interest in its identifiable proceeds also has priority, if the
purchase-money
security interest is perfected when the debtor receives possession of the
collateral or
within 20 days thereafter. (b) Inventory purchase-money priority. Subject to subsection (c)
and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in inventory has priority over a conflicting security
interest in the
same inventory, has priority over a conflicting security interest in chattel paper or
an instrument constituting proceeds of the inventory and in proceeds of the chattel
paper, if so provided in Section 9-330, and, except as otherwise provided in Section
9-327, also has priority in identifiable cash proceeds of the inventory to the extent
the identifiable cash proceeds are received on or before the delivery of the
inventory to a buyer, if: (1) the purchase-money security interest is perfected |
| when the debtor receives possession of the inventory;
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(2) the purchase-money secured party sends an
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| authenticated notification to the holder of the conflicting security interest;
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(3) the holder of the conflicting security interest
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| receives the notification within five years before the debtor receives possession of the inventory; and
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(4) the notification states that the person sending
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| the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.
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(c) Holders of conflicting inventory security interests to be
notified. Subsections (b)(2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
inventory:
(1) if the purchase-money security interest is
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| perfected by filing, before the date of the filing; or
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(2) if the purchase-money security interest is
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| temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
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(d) Livestock purchase-money priority. Subject to subsection (e)
and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in livestock that are farm products has priority over a conflicting
security interest in the same livestock, and, except as otherwise provided in Section
9-327, a perfected security interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
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| when the debtor receives possession of the livestock;
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(2) the purchase-money secured party sends an
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| authenticated notification to the holder of the conflicting security interest;
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(3) the holder of the conflicting security interest
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| receives the notification within six months before the debtor receives possession of the livestock; and
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(4) the notification states that the person sending
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| the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.
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(e) Holders of conflicting livestock security interests to be
notified. Subsections (d)(2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
livestock:
(1) if the purchase-money security interest is
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| perfected by filing, before the date of the filing; or
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(2) if the purchase-money security interest is
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| temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
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(f) Software purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest in software
has priority over a conflicting security interest in the same collateral, and, except as
otherwise provided in Section 9-327, a perfected security interest in its identifiable
proceeds also has priority, to the extent that the purchase-money security interest in
the goods in which the software was acquired for use has priority in the goods and
proceeds of the goods under this Section.
(g) Conflicting purchase-money security interests. If more than
one security interest qualifies for priority in the same collateral under
subsection
(a), (b), (d), or (f):
(1) a security interest securing an obligation
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| incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and
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(2) in all other cases, Section 9-322(a) applies to
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| the qualifying security interests.
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(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-324. Priority of purchase-money security interests.
(a) General rule: purchase-money priority. Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.
(b) Inventory purchase-money priority. Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in Section 9-330, and, except as otherwise provided in Section 9-327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:
(1) the purchase-money security interest is perfected
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| when the debtor receives possession of the inventory;
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|
(2) the purchase-money secured party sends a signed
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| notification to the holder of the conflicting security interest;
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(3) the holder of the conflicting security interest
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| receives the notification within five years before the debtor receives possession of the inventory; and
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(4) the notification states that the person sending
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| the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.
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|
(c) Holders of conflicting inventory security interests to be notified. Subsections (b)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:
(1) if the purchase-money security interest is
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| perfected by filing, before the date of the filing; or
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|
(2) if the purchase-money security interest is
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| temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
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|
(d) Livestock purchase-money priority. Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in Section 9-327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
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| when the debtor receives possession of the livestock;
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|
(2) the purchase-money secured party sends a signed
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| notification to the holder of the conflicting security interest;
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(3) the holder of the conflicting security interest
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| receives the notification within six months before the debtor receives possession of the livestock; and
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(4) the notification states that the person sending
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| the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.
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(e) Holders of conflicting livestock security interests to be notified. Subsections (d)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:
(1) if the purchase-money security interest is
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| perfected by filing, before the date of the filing; or
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|
(2) if the purchase-money security interest is
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| temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
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(f) Software purchase-money priority. Except as otherwise provided in subsection (g), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this Section.
(g) Conflicting purchase-money security interests. If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d), or (f):
(1) a security interest securing an obligation
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| incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and
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(2) in all other cases, Section 9-322(a) applies to
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| the qualifying security interests.
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(Source: P.A. 103-1036, eff. 1-1-25.)
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