Printable Format84-9-303. Law governing perfection and priority of security interests in goods covered by a certificate of title. (a) Applicability of section. This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.
(b) When goods covered by certificate of title. Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.
(c) Applicable law. The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title.
History: L. 2000, ch. 142, § 23; July 1, 2001.
KANSAS COMMENT, 1996
This section does not vary from the 1995 Official Text, and is the same as the prior provision. When property becomes subject to a security interest, the security interest has "attached." (See 84-9-203.) Attachment requires three "steps" or "events": agreed upon possession by the secured party or a signed security agreement describing the collateral, the passing of value and the debtor having rights in the collateral. An attached security interest is enforceable against the debtor even though it is not perfected. Kansas State Bank v. Overseas Motosport, Inc., 222 K. 26, 563 P.2d 414 (1977). A perfected security interest may be subordinate to some competing security interests (e.g., those filed earlier or purchase money interests under 84-9-312), but generally after perfection the secured party is protected against creditors, purchasers and the debtor's trustee in bankruptcy. If steps for perfection (normally, filing or possession) have been taken in advance, the security interest is perfected at the moment it attaches. A wise creditor will consider filing a financing statement before the credit is extended, so that its priority will run from the earliest possible date.
Subsection (2) simply provides that, once a security interest is perfected, it is continuously perfected even though it is subsequently perfected in some other way. For example, a creditor with possession can file a financing statement against the collateral and then relinquish possession to the debtor and does not lose its continuously perfected status.
Revisor's Note:
Former section 84-9-303 was repealed by L. 2000, ch. 142, § 155 and the number reassigned to the current text.
Law Review and Bar Journal References:
Perfection of security interests discussed with respect to "floor plan financing" under article 9 of UCC, Charles H. Oldfather, 14 K.L.R. 571, 589, 590 (1966).
"Revised Article 9 in Kansas," Hon. John K. Pearson, 51 K.L.R. 769, 834 (2003).
CASE ANNOTATIONS
1. Mentioned in discussion of commercial security interest priority over federal tax liens; circumstancesnecessary for priority. Donald v. Madison Industries, Inc., 483 F.2d 837, 843, 844.
2. Bankruptcy proceeding; past due secured note; to determine whether impermissible preference given, date of transfer was date value given; claim not secured. E. F. Corporation v. Smith, 496 F.2d 826, 828, 831.
3. Financing statement failed to satisfy statutory requirements; security interest not perfected until bank took actual possession. Transport Equipment Co. v. Guaranty State Bank, 518 F.2d 377, 382.
4. Mentioned in discussing priorities under conflicting security interests. Allis-Chalmers Cred. Corp. v. Cheney Investment, Inc., 227 Kan. 4, 7, 605 P.2d 525.
5. Unless security interest attaches, contentions concerning perfection irrelevant. First Nat'l Bank of Gaylord v. Autrey, 9 Kan. App. 2d 96, 98, 673 P.2d 448 (1984).
6. Statute contemplates existence of security agreement before security interest perfected; previously filed financing statement alone insufficient. J.I. Case Credit Corp. v. Foos, 11 Kan. App. 2d 185, 187, 717 P.2d 1064 (1986).
7. Land description in security agreement covering crops sufficient for security interest to maintain conversion action for unauthorized sale. U.S. v. Smoky Valley Bean, Inc., 673 F. Supp. 1551, 1554 (1987).
8. Priority between right of setoff and perfected security interest examined. Bank of Kansas v. Hutchinson Health Services, Inc., 13 Kan. App. 2d 421, 425, 773 P.2d 660 (1989).
9. Inadequate land description of growing crops in security interest does not merge with reasonable identification in financing statement to perfect security interest. Garst Seed Co. v. Wilson, 17 Kan. App. 2d 130, 133, 833 P.2d 138 (1992).