§ 9330 Purchaser Priority Over Security Interest

(a) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if both of the following conditions are satisfied: (1) In good faith and in the ordinary course of the purchaser’s business, the purchaser gives new value, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9105 of each authoritative electronic copy of the record evidencing the chattel paper. (2) The authoritative copies of the record evidencing the chattel paper do not indicate that the chattel paper has been assigned to an identified assignee other than the purchaser. (b) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9105 of each authoritative electronic copy of the record evidencing the chattel paper in good faith, in the ordinary course of the purchaser’s business, and without knowledge that the purchase violates the rights of the secured party. (c) Except as otherwise provided in Section 9327, a purchaser having priority in chattel paper under subdivision (a) or (b) also has priority in proceeds of the chattel paper to the extent that either of the following applies: (1) Section 9322 provides for priority in the proceeds. (2) The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser’s security interest in the proceeds is unperfected. (d) Except as otherwise provided in subdivision (a) of Section 9331, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party. (e) For purposes of subdivisions (a) and (b), the holder of a purchase money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory. (f) For purposes of subdivisions (b) and (d), if the authoritative copies of the record evidencing chattel paper or an instrument indicate that the chattel paper or instrument has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party. (Amended by Stats. 2023, Ch. 210, Sec. 51. (SB 95) Effective January 1, 2024.)