                                 CODE OF VIRGINIA

PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS (§ 8.9A-324)

a. General rule; purchase-money priority. Except as otherwise provided in
subsection (g), 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 as otherwise provided in &#xA7; 8.9A-327, a perfected
security interest in its identifiable proceeds also has priority, if the
purchase-money security interest is perfected when the debtor receives
possession of the collateral or within twenty days thereafter.

b. Inventory purchase-money priority. Subject to subsection (c) and except as
otherwise provided in subsection (g), a perfected purchase-money security
interest in inventory has priority over a conflicting security interest in the
same inventory, has priority over a conflicting security interest in chattel
paper or an instrument constituting proceeds of the inventory and in proceeds of
the chattel paper, if so provided in § 8.9A-330, and, except as otherwise
provided in § 8.9A-327, also has priority in identifiable cash proceeds of the
inventory to the extent the identifiable cash proceeds are received on or before
the delivery of the inventory to a buyer, if:

   1. the purchase-money security interest is perfected when the debtor receives
   possession of the inventory;

   2. the purchase-money secured party sends a signed notification to the holder
   of the conflicting security interest;

   3. the holder of the conflicting security interest receives the notification
   within five years before the debtor receives possession of the inventory; and

   4. the notification states that the person sending the notification has or
   expects to acquire a purchase-money security interest in inventory of the
   debtor and describes the inventory.

c. Holders of conflicting inventory security interests to be notified.
Subsections (b) (2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
inventory:

   1. if the purchase-money security interest is perfected by filing, before the
   date of the filing; or

   2. if the purchase-money security interest is temporarily perfected without
   filing or possession under &#xA7; 8.9A-312 (f), before the beginning of the
   twenty-day period thereunder.

d. Livestock purchase-money priority. Subject to subsection (e) and except as
otherwise provided in subsection (g), a perfected purchase-money security
interest in livestock that are farm products has priority over a conflicting
security interest in the same livestock, and, except as otherwise provided in §
8.9A-327, a perfected security interest in their identifiable proceeds and
identifiable products in their unmanufactured states also has priority, if:

   1. the purchase-money security interest is perfected when the debtor receives
   possession of the livestock;

   2. the purchase-money secured party sends a signed notification to the holder
   of the conflicting security interest;

   3. the holder of the conflicting security interest receives the notification
   within six months before the debtor receives possession of the livestock; and

   4. the notification states that the person sending the notification has or
   expects to acquire a purchase-money security interest in livestock of the
   debtor and describes the livestock.

e. Holders of conflicting livestock security interests to be notified.
Subsections (d) (2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
livestock:

   1. if the purchase-money security interest is perfected by filing, before the
   date of the filing; or

   2. if the purchase-money security interest is temporarily perfected without
   filing or possession under &#xA7; 8.9A-312 (f), before the beginning of the
   twenty-day period thereunder.

f. Software purchase-money priority. Except as otherwise provided in subsection
(g), a perfected purchase-money security interest in software has priority over
a conflicting security interest in the same collateral, and, except as otherwise
provided in &#xA7; 8.9A-327, a perfected security interest in its identifiable
proceeds also has priority, to the extent that the purchase-money security
interest in the goods in which the software was acquired for use has priority in
the goods and proceeds of the goods under this section.

g. Conflicting purchase-money security interests. If more than one security
interest qualifies for priority in the same collateral under subsection (a),
(b), (d), or (f):

   1. a security interest securing an obligation incurred as all or part of the
   price of the collateral has priority over a security interest securing an
   obligation incurred for value given to enable the debtor to acquire rights in
   or the use of collateral; and

   2. in all other cases, &#xA7; 8.9A-322 (a) applies to the qualifying security
   interests.

HISTORY: Code 1950, § 43-27; 1964, c. 219, § 8.9-312; 1966, c. 557; 1973, c.
509; 1983, c. 204; 1984, c. 613; 1996, c. 216; 2000, c. 1007; 2024, c. 652.