CHAPTER 12.04. Priority

• Jurisdiction: United States

12.04. Priority

The general rule of priority in security interests in fixtures is that a security interest in fixtures is subordinate to a conflicting interest of a mortgagee or owner of the related real property other than the debtor.¹⁷ Certain limited exceptions exist. The most important exception is purchase money priority. If the security interest is a purchase money security interest,¹⁸ and the purchase money security interest is perfected before the goods become fixtures, the purchase money security interest will have priority over a conflicting interest in the real property.¹⁹

With a few exceptions,²⁰ a security interest in fixtures is subordinate to a construction mortgage that has been recorded before the property becomes fixtures and where the property became fixtures before completion of the construction.²¹ Moreover, a mortgage that is not itself a construction mortgage but is for a loan that refinances a construction mortgage has the same superior priority.²² For purposes of the security interest in personal property that is to become fixtures, a construction mortgage is one that secures an obligation for the construction of improvements, indicates that it is such a mortgage, and is recorded.²³

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Notes:

^[17] 6 Del. C. § 9-334(c).

^[18] See 6 Del. C. § 9-103.

^[19] 6 Del. C. § 9-334(d).

^[20] See 6 Del. C. § 9-334(e), (f).

^[21] 6 Del. C. § 9-334(h).

^[22] Id.

^[23] Id.