Colorado Code
Part 3 - Perfection and Priority
§ 4-9-325. Priority of Security Interests in Transferred Collateral





(1) Otherwise would have priority solely under section 4-9-322 (a) or 4-9-324; or
(2) Arose solely under section 4-2-711 (3) or 4-2.5-508 (5).

Source: L. 2001: Entire article R&RE, p. 1362, § 1, effective July 1.






Example 1: A owns an item of equipment subject to a perfected security interest in favor of SP-A. A sells the equipment to B, not in the ordinary course of business. B acquires its interest subject to SP-A's security interest. See Sections 9-201, 9-315(a)(1). Under this section, if B creates a security interest in the equipment in favor of SP-B, SP-B's security interest is subordinate to SP-A's security interest, even if SP-B filed against B before SP-A filed against A, and even if SP-B took a purchase-money security interest. Normally, SP-B could have investigated the source of the equipment and discovered SP-A's filing before making an advance against the equipment, whereas SP-A had no reason to search the filings against someone other than its debtor, A.
Example 2: A owns an item of equipment subject to an unperfected security interest in favor of SP-A. A sells the equipment to B, who gives value and takes delivery of the equipment without knowledge of the security interest. B takes free of the security interest. See Section 9-317(b). If B then creates a security interest in favor of SP-B, no priority issue arises; SP-B has the only security interest in the equipment.
Example 3: The facts are as in Example 2, except that B knows of SP-A's security interest and therefore takes the equipment subject to it. If B creates a security interest in the equipment in favor of SP-B, this section does not determine the relative priority of the security interests. Rather, the normal priority rules govern. If SP-B perfects its security interest, then, under Section 9-322(a)(2), SP-A's unperfected security interest will be junior to SP-B's perfected security interest. The award of priority to SP-B is premised on the belief that SP-A's failure to file could have misled SP-B.
Example 4: As in Example 1, A owns an item of equipment subject to a perfected security interest in favor of SP-A. A sells the equipment to B, not in the ordinary course of business. B acquires its interest subject to SP-A's security interest. See Sections 9-201, 9-315(a)(1). B creates a security interest in favor of SP-B, and SP-B perfects its security interest. This section provides that SP-A's security interest is senior to SP-B's. However, if SP-A's financing statement lapses while SP-B's security interest is perfected, then the normal priority rules would apply, and SP-B's security interest would become senior to SP-A's security interest. See Sections 9-322(a)(2), 9-515(c).

Structure Colorado Code

Colorado Code

Title 4 - Uniform Commercial Code

Article 9 - Secured Transactions

Part 3 - Perfection and Priority

§ 4-9-301. Law Governing Perfection and Priority of Security Interests

§ 4-9-302. Law Governing Perfection and Priority of Agricultural Liens

§ 4-9-303. Law Governing Perfection and Priority of Security Interests in Goods Covered by a Certificate of Title

§ 4-9-304. Law Governing Perfection and Priority of Security Interests in Deposit Accounts

§ 4-9-305. Law Governing Perfection and Priority of Security Interests in Investment Property

§ 4-9-306. Law Governing Perfection and Priority of Security Interests in Letter-of-Credit Rights

§ 4-9-307. Location of Debtor

§ 4-9-308. When Security Interest or Agricultural Lien Is Perfected - Continuity of Perfection

§ 4-9-309. Security Interest Perfected Upon Attachment

§ 4-9-310. When Filing Required to Perfect Security Interest or Agricultural Lien - Security Interests and Agricultural Liens to Which Filing Provisions Do Not Apply

§ 4-9-311. Perfection of Security Interests in Property Subject to Certain Statutes, Regulations, and Treaties

§ 4-9-312. Perfection of Security Interests in Chattel Paper, Deposit Accounts, Documents, Goods Covered by Documents, Instruments, Investment Property, Letter-of-Credit Rights, and Money - Perfection by Permissive Filing - Temporary Perfection Witho...

§ 4-9-313. When Possession by or Delivery to Secured Party Perfects Security Interest Without Filing

§ 4-9-314. Perfection by Control

§ 4-9-315. Secured Party's Rights on Disposition of Collateral and in Proceeds

§ 4-9-316. Effect of Change in Governing Law

§ 4-9-317. Interests That Take Priority Over or Take Free of Security Interest or Agricultural Lien

§ 4-9-318. No Interest Retained in Right to Payment That Is Sold - Rights and Title of Seller of Account or Chattel Paper With Respect to Creditors and Purchasers

§ 4-9-319. Rights and Title of Consignee With Respect to Creditors and Purchasers

§ 4-9-320. Buyer of Goods

§ 4-9-321. Licensee of General Intangible and Lessee of Goods in Ordinary Course of Business

§ 4-9-322. Priorities Among Conflicting Security Interests in and Agricultural Liens on Same Collateral

§ 4-9-323. Future Advances

§ 4-9-324. Priority of Purchase-Money Security Interests

§ 4-9-325. Priority of Security Interests in Transferred Collateral

§ 4-9-326. Priority of Security Interests Created by New Debtor

§ 4-9-327. Priority of Security Interests in Deposit Account

§ 4-9-328. Priority of Security Interests in Investment Property

§ 4-9-329. Priority of Security Interests in Letter-of-Credit Right

§ 4-9-330. Priority of Purchaser of Chattel Paper or Instrument

§ 4-9-331. Priority of Rights of Purchasers of Instruments, Documents, and Securities Under Other Articles - Priority of Interests in Financial Assets and Security Entitlements Under Article 8

§ 4-9-332. Transfer of Money - Transfer of Funds From Deposit Account

§ 4-9-333. Priority of Certain Liens Arising by Operation of Law

§ 4-9-334. Priority of Security Interests in Fixtures and Crops

§ 4-9-335. Accessions

§ 4-9-336. Commingled Goods

§ 4-9-337. Priority of Security Interests in Goods Covered by Certificate of Title

§ 4-9-338. Priority of Security Interest or Agricultural Lien Perfected by Filed Financing Statement Providing Certain Incorrect Information

§ 4-9-339. Priority Subject to Subordination

§ 4-9-340. Effectiveness of Right of Recoupment or Set-Off Against Deposit Account

§ 4-9-341. Bank's Rights and Duties With Respect to Deposit Account

§ 4-9-342. Bank's Right to Refuse to Enter Into or Disclose Existence of Control Agreement