SECTION 679.1031. Purchase-money security interest; application of payments; burden of establishing.
Latest version.
1(1) 2In this section, the term:
7(a) 8“Purchase-money collateral” means goods or software that secures a purchase-money obligation incurred with respect to that collateral.
25(b) 26“Purchase-money obligation” means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.
71(2) 72A security interest in goods is a purchase-money security interest:
82(a) 83To the extent that the goods are purchase-money collateral with respect to that security interest;
98(b) 99If the security interest is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and
143(c) 144Also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.
173(3) 174A security interest in software is a purchase-money security interest to the extent that the security interest also secures a purchase-money obligation incurred with respect to goods in which the secured party holds or held a purchase-money security interest if:
214(a) 215The debtor acquired interest in the software in an integrated transaction in which the debtor acquired an interest in the goods; and
237(b) 238The debtor acquired interest in the software for the principal purpose of using the software in the goods.
256(4) 257The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.
279(5) 280If the extent to which a security interest is a purchase-money security interest depends on the application of a payment to a particular obligation, the payment must be applied:
309(a) 310In accordance with any reasonable method of application to which the parties agree;
323(b) 324In the absence of the parties’ agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or
352(c) 353In the absence of an agreement to a reasonable method and a timely manifestation of the obligor’s intention, in the following order:
3751. 376To obligations that are not secured; and
3832. 384If more than one obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.
407(6) 408A purchase-money security interest does not lose its status as such, even if:
421(a) 422The purchase-money collateral also secures an obligation that is not a purchase-money obligation;
435(b) 436Collateral that is not purchase-money collateral also secures the purchase-money obligation; or
448(c) 449The purchase-money obligation has been renewed, refinanced, consolidated, or restructured.
459(7) 460A secured party claiming a purchase-money security interest has the burden of establishing the extent to which the security interest is a purchase-money security interest.
