If a security interest is perfected but thereafter becomes commingled with other goods that also have perfected security interest ultimately resulting in a product or mass and loss of identity,how does the security interest rank?

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Quizplus · Accepted Answer

When a security interest is perfected but later commingled with other goods, resulting in a product or mass of goods with no identity, the UCC provides for a pro-rata distribution of the value of the commingled goods among the secured parties, based on the ratio that the cost of the goods to which each security interest originally attached bears to the cost of the total product or mass. This means that the security interests rank equally according to their proportionate share of the value of the commingled goods, rather than being determined by the order in which they were perfected or chosen.

If a Security Interest Is Perfected but Thereafter Becomes Commingled