#51 · 2026-09-26 · Legal term

Purchase money security interest

Answer: Purchase‑money security interest. Under U.C.C. § 9‑103, it arises when goods or software secure an obligation that is the price or value enabling the debtor to acquire the collateral. Article 9 grants special priority if timely perfected: equipment/other goods within 20 days; inventory/livestock require contemporaneous perfection and authenticated notice. A PMSI in consumer goods perfects automatically upon attachment, except for certificate‑of‑title goods. See U.C.C. §§ 9‑103, 9‑324, 9‑309 (state enactments may vary).

Rule to remember

Purchase‑money security interest (PMSI): a security interest in goods or software that secures an obligation incurred as the price or enabling funds to acquire that collateral, enjoying special priority if statutory perfection and notice steps are met. See U.C.C. §§ 9‑103, 9‑324, 9‑309.

Key elements and checks

The obligation is the price of the collateral or value given to enable acquisition, and the value is in fact so used. U.C.C. § 9‑103(a)(2).
Collateral acquired (goods/software) secures that enabling obligation. U.C.C. § 9‑103(a)(1), (b).
Priority for goods other than inventory/livestock if perfected when debtor receives possession or within 20 days. U.C.C. § 9‑324(a).
Inventory (and livestock) priority requires contemporaneous perfection and authenticated advance notice to conflicting filers. U.C.C. § 9‑324(b)–(e).
Automatic perfection for PMSIs in consumer goods upon attachment, except where certificate‑of‑title statutes apply. U.C.C. § 9‑309(1).
In non‑consumer‑goods transactions, refinancing or additional collateral does not by itself destroy PMSI status; secured party bears the burden to establish extent. U.C.C. § 9‑103(f), (g).

In the source’s words

“"purchase-money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral”
§ 9-103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF PAYMENTS; BURDEN OF ESTABLISHING. | Uniform Commercial Code | US Law | LII / Legal Information Institute

“if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.”
§ 9-324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS. | Uniform Commercial Code | US Law | LII / Legal Information Institute

State enactments of Article 9 are widely uniform but not identical. Always check the state’s UCC text and certificate‑of‑title statutes, which can displace automatic perfection for certain consumer goods (e.g., vehicles).

Purchase money security interest

Rule to remember

Key elements and checks

In the source’s words

Sources