TITLE 28

COMMERCIAL TRANSACTIONS

CHAPTER 9

SECURED TRANSACTIONS

PART 3.

PERFECTION AND PRIORITY

28-9-320.  Buyer of goods. (a) Except as otherwise provided in subsection (e) of this section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. A buyer who, in the ordinary course of business, buys farm products from a person engaged in farming operations or a commission merchant or selling agent who in the ordinary course of business sells farm products for a person engaged in farming operations shall take and sell free of a security interest created by his seller, even though the security interest is perfected and the buyer or commission merchant or selling agent knows of the existence of such interest, if he has registered with the secretary of state pursuant to section 28-9-523(h) and the security interest is not listed on the most recent master list or cumulative supplement distributed by the secretary of state pursuant to section 28-9-523(i), unless he has received written notification, as that term is used in applicable federal law and regulation, of the security interest from the secretary of state, his seller or the secured party.

(b)  Except as otherwise provided in subsection (e) of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(1)  Without knowledge of the security interest;

(2)  For value;

(3)  Primarily for the buyer’s personal, family or household purposes; and

(4)  Before the filing of a financing statement covering the goods.

(c)  To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b) of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by section 28-9-316(a) and (b).

(d)  A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

(e)  Subsections (a) and (b) of this section do not affect a security interest in goods in the possession of the secured party under section 28-9-313.

History:

[28-9-320, added 2001, ch. 208, sec. 2, p. 740.]