Question

Roth and Dixon both claim a security interest in the same collateral. Roth's security interest attached on January 1, Year 1, and was perfected by filing on March 1, Year 1. Dixon's security interest attached on February 1, Year 1, and was perfected on April 1, Year 1, by taking possession of the collateral. Which of statements is correct?

Answer 1

Roth has priority over Dixon in the security interest, having both attached and perfected his interest before Dixon did, in accordance with the UCC.

Step-by-step explanation:

When Roth and Dixon both claim a security interest in the same collateral, the priority of their secured interests is determined by the rules set forth in Article 9 of the Uniform Commercial Code (UCC). Since Roth's security interest attached on January 1, Year 1, and was perfected by filing on March 1, Year 1, Roth has gained priority over Dixon since perfection and attachment have both been established. Dixon's security interest may have attached on February 1, Year 1, but since it was perfected after Roth's—on April 1, Year 1, by taking possession of the collateral—Roth's perfected interest has priority over Dixon's according to the UCC's "first to file or perfect" rule. Therefore, the correct statement is that Roth has a priority in the claimed security interest over Dixon's interest.