When two secured parties have perfected interests in the same collateral, which party has priority?

When two secured parties have perfected interests in the same collateral, which party has priority?

• A. The first to file or perfect
• B. The second to file
• C. Pro rata among perfected
• D. Equal priority

Answer: (A)

Priority among perfected security interests in the same collateral is determined by who perfected first. Perfection occurs when the security interest is attached and the creditor has taken the steps to perfect—typically by filing a financing statement, or by possession/control for certain kinds of collateral. The party whose perfection date comes earlier has the superior claim to the collateral. If two parties perfect on the same date, many exam contexts treat it as a tie, but the standard rule emphasized is that the earlier perfection governs. This is why the party that is first to file or perfect holds priority.

Priority among perfected security interests in the same collateral is determined by who perfected first. Perfection occurs when the security interest is attached and the creditor has taken the steps to perfect—typically by filing a financing statement, or by possession/control for certain kinds of collateral. The party whose perfection date comes earlier has the superior claim to the collateral. If two parties perfect on the same date, many exam contexts treat it as a tie, but the standard rule emphasized is that the earlier perfection governs. This is why the party that is first to file or perfect holds priority.