Priority of liens arising by attachment or levy on, security interests in, and other claims to goods

84-2a-307. Priority of liens arising by attachment or levy on, security interests in, and other claims to goods. (1) Except as otherwise provided in K.S.A. 84-2a-306, a creditor of a lessee takes subject to the lease contract. (2) Except as otherwise provided in subsection (3) and in K.S.A. 84-2a-306 and 84-2a-308 and amendments thereto, a creditor of a lessor takes subject to the lease contract unless the creditor holds a lien that attached to the goods before the lease contract became enforceable. (3) Except as provided in K.S.A. 2025 Supp. 84-9-317, 84-9-321 and 84-9-323 and amendments thereto, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor. History: L. 1991, ch. 295, § 37; L. 2000, ch. 142, § 144; July 1, 2001. KANSAS COMMENT, 1996 1. This section, together with section 84-2a-306, addresses the priorities of creditors of the lessee and the lessor. Subsection (1) provides that a creditor (defined broadly in section 84-1-201(12) as including a general, secured, and lien creditor) of the lessee takes subject to the lease contract. The only exception is a lien creditor that qualifies under section 84-2a-306. The term "lessee" includes a sublessee (84-2a-103(1)(n)), and so under this subsection the creditor of a sublessee is subject to both the prime lease and the sublease. 2. Subsection (2) provides that, in general, a creditor of the lessor takes subject to the lease contract. It is derived from section 84-9-301. Again, creditor is defined broadly. See 84-1-201(12). Because the term "lessor" includes a sublessor (84-2a-103(1)(p)), this section also applies to disputes between the creditor of a sublessor and the prime lessor or a sublessee. Subsection (2) contains three exceptions, however. Under paragraph (2)(a), the creditor of a lessor does not take subject to the lease when the creditor has a lien that attached to the goods before the lease contract became enforceable. A lien is "a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest." See 84-2a-103(1)(r). Under paragraph (2)(b), the creditor of a lessor does not take subject to the lease when the creditor has a security interest in the goods and the lessee both (1) knew of the security interest when it received the goods and (2) did not give value. Under paragraph (2)(c), the creditor of a lessor does not take subject to the lease when the creditor has a security interest in the goods that was perfected before the lease contract was enforceable. 3. Subsections (3) and (4) set out two exceptions that further alter the rights of the creditor of a lessor. Under subsection (3), a lessee in the ordinary course of business (defined in 84-2a-103(1)(o)) takes its leasehold interest free of any security interest created by the lessor, regardless of whether the security interest is perfected or the lessee knows of it. Subsection (3) is based on section 84-9-307(1); for further discussion, see 1996 Kansas Comments to 84-9-307. Under subsection (4), any other lessee takes its leasehold interest free of any security interest to the extent the security interest secures certain future advances. Subsection (4) is based on section 84-9-307(3); for further discussion, see 1996 Kansas Comments to 84-9-307.