Chapter 25

Except as otherwise provided in G.S. 25-9-303 through G.S. 25-9-306.2, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral: (1) Except as otherwise provided in this section, w…

While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products. (2000-169, s. 1.)

(a) Applicability of section. - This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor. (b) When goods covered by certifica…

(a) Law of Bank's Jurisdiction Governs. - The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank even if the transaction does not bear any relatio…

(a) General Rules for Governing Law. - Except as otherwise provided in subsection (c) of this section, the following rules apply: (1) While a security certificate is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonp…

(a) Governing law: issuer's or nominated person's jurisdiction. - Subject to subsection (c) of this section, the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a securi…

(a) Chattel Paper Evidenced by Authoritative Electronic Copy. - Except as provided in subsection (d) of this section, if chattel paper is evidenced only by an authoritative electronic copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritati…

(a) General Rules for Governing Law. - Except as provided in subsection (b) of this section, the local law of the controllable electronic record's jurisdiction specified in G.S. 25-12-107(c) and (d) governs perfection, the effect of perfection or nonperfection, and the priority o…

(a) "Place of business." - In this section, "place of business" means a place where a debtor conducts its affairs. (b) Debtor's location: general rules. - Except as otherwise provided in this section, the following rules determine a debtor's location: (1) A debtor who is an indiv…

(a) Perfection of security interest. - Except as otherwise provided in this section and G.S. 25-9-309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in G.S. 25-9-310 through G.S. 25-9-316 have been satisfied. A security …

The following security interests are perfected when they attach: (1) A purchase-money security interest in consumer goods, except as otherwise provided in G.S. 25-9-311(b) with respect to consumer goods that are subject to a statute or treaty described in G.S. 25-9-311(a); (2) An…

(a) General Rule for Perfection by Filing. - Except as otherwise provided in subsection (b) of this section and G.S. 25-9-312(b), a financing statement must be filed to perfect all security interests and agricultural liens. (b) Exceptions When Filing Not Necessary. - The filing o…

(a) Security interest subject to other law. - Except as otherwise provided in subsection (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to: (1) A statute, regulation, or treaty of the Unite…

Perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, negotiable documents, goods covered by documents, instruments, investment property, letter-of-credit rights, and money; p…

(a) Perfection by Possession or Delivery. - Except as otherwise provided in subsection (b) of this section, a secured party may perfect a security interest in goods, instruments, negotiable tangible documents, or tangible money by taking possession of the collateral. A secured pa…

(a) Perfection by Control. - A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights may be perfected by control of t…

(a) Perfection by Possession and Control. - A secured party may perfect a security interest in chattel paper by taking possession of each authoritative tangible copy of the record evidencing the chattel paper and obtaining control of each authoritative electronic copy of the elec…

(a) Disposition of collateral: continuation of security interest or agricultural lien; proceeds. - Except as otherwise provided in this Article and in G.S. 25-2-403(b): (1) A security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exch…

(a) General Rule for Effect on Perfection of Change in Governing Law. - A security interest perfected pursuant to the law of the jurisdiction designated in G.S. 25-9-301(1), 25-9-305(c), 25-9-306.1(d), or 25-9-306.2(b) remains perfected until the earliest of the following: (1) Th…

(a) Conflicting Security Interests and Rights of Lien Creditors. - A security interest or agricultural lien is subordinate to the rights of both of the following: (1) A person entitled to priority under G.S. 25-9-322. (2) Except as otherwise provided in subsection (e) of this sec…

(a) Seller retains no interest. - A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold. (b) Deemed rights of debtor if buyer's security interest unperfected. - For purposes of…

(a) Consignee has consignor's rights. - Except as otherwise provided in subsection (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consign…

(a) Buyer in ordinary course of business. - 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 t…

(a) "Licensee in ordinary course of business". - In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intang…

(a) General priority rules. - Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules: (1) Conflicting perfected security interests and agricultural li…

(a) When Priority Based on Time of Advance. - Except as otherwise provided in subsection (c) of this section, for purposes of determining the priority of a perfected security interest under G.S. 25-9-322(a)(1), perfection of the security interest dates from the time an advance is…

(a) General Rule for Purchase-Money Priority. - Except as otherwise provided in subsection (g) of this section, a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except…

(a) Priority over conflicting security interests. - Except as otherwise provided in subsections (c), (d), and (e) of this section, if the requirements of subsection (b) of this section are satisfied, a perfected production-money security interest in production-money crops has pri…

(a) Subordination of security interest in transferred collateral. - Except as otherwise provided in subsection (b) of this section, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if: (1) The debtor ac…

(a) Subordination of security interest created by new debtor. - Subject to subsection (b) of this section, a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that …

A security interest in a controllable account, controllable electronic record, or controllable payment intangible held by a secured party having control of the account, electronic record, or payment intangible has priority over a conflicting security interest held by a secured pa…

The following rules govern priority among conflicting security interests in the same deposit account: (1) A security interest held by a secured party having control of the deposit account under G.S. 25-9-104 has priority over a conflicting security interest held by a secured part…

The following rules govern priority among conflicting security interests in the same investment property: (1) A security interest held by a secured party having control of investment property under G.S. 25-9-106 has priority over a security interest held by a secured party that d…

The following rules govern priority among conflicting security interests in the same letter-of-credit right: (1) A security interest held by a secured party having control of the letter-of-credit right under G.S. 25-9-107 has priority to the extent of its control over a conflicti…

(a) Purchaser's Priority; Security Interest Claimed Merely as Proceeds. - A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed merely as proceeds of inventory subject to a security interest if both of the following requirements a…

Priority of rights of purchasers of controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments, and securities under other Articles; priority of interests in financial assets and security entitlements and protection against as…

(a) Transferee of Tangible Money. - A transferee of tangible money takes the money free of a security interest if the transferee receives possession of the money without acting in collusion with the debtor in violating the rights of the secured party. (b) Transferee of Funds from…

(a) "Possessory lien." - In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien: (1) Which secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary c…

(a) Security Interest in Fixtures Under this Article. - A security interest under this Article may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this Article in ordinary building materials incorporate…

(a) Creation of security interest in accession. - A security interest may be created in an accession and continues in collateral that becomes an accession. (b) Perfection of security interest. - If a security interest is perfected when the collateral becomes an accession, the sec…

(a) "Commingled goods." - In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass. (b) No security interest in commingled goods as such. - A security interest does not exist in c…

If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this State issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security int…

If a security interest or agricultural lien is perfected by a filed financing statement providing information described in G.S. 25-9-516(b)(5) which is incorrect at the time the financing statement is filed: (1) The security interest or agricultural lien is subordinate to a confl…

This Article does not preclude subordination by agreement by a person entitled to priority. (1965, c. 700, s. 1; 1975, c. 862, s. 7; 2000-169, s. 1.) Subpart 4. Rights of Banks.

(a) Exercise of recoupment or setoff. - Except as otherwise provided in subsection (c) of this section, a bank with which a deposit account is maintained may exercise any right of recoupment or setoff against a secured party that holds a security interest in the deposit account. …

Except as otherwise provided in G.S. 25-9-340(c), and unless the bank otherwise agrees in a signed record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by any of the following: (1) The creation, a…

This Article does not require a bank to enter into an agreement of the kind described in G.S. 25-9-104(a)(2), even if its customer so requests or directs. A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person un…

(a) Other law governs alienability; exceptions. - Except as otherwise provided in subsection (b) of this section and G.S. 25-9-406, 25-9-407, 25-9-408, and 25-9-409, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other t…

The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions. (1961, c. 574; 1965, c. 700, s. 1; 1975, c.…

(a) "Value." - In this section, "value" has the meaning provided in G.S. 25-3-303(a). (b) Agreement not to assert claim or defense. - Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim o…