A. Except as otherwise provided in subsection E of this section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.

Terms Used In Arizona Laws 47-9320

  • Encumbrance: means a right, other than an ownership interest, in real property. See Arizona Laws 47-9102
  • Farm products: means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and that are:

    (a) Crops grown, growing or to be grown, including:

    (i) Crops produced on trees, vines and bushes; and

    (ii) Aquatic goods produced in aquacultural operations;

    (b) Livestock, born or unborn, including aquatic goods produced in aquacultural operations;

    (c) Supplies used or produced in a farming operation; or

    (d) Products of crops or livestock in their unmanufactured states. See Arizona Laws 47-9102

  • Financing statement: means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement. See Arizona Laws 47-9102
  • Goods: means all things that are movable when a security interest attaches. See Arizona Laws 47-9102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
  • Secured party: means :

    (a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

    (b) A person that holds an agricultural lien;

    (c) A consignor;

    (d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;

    (e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or

    (f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. See Arizona Laws 47-9102

B. Except as otherwise provided in subsection E of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family or household purposes takes free of a security interest, even if perfected, if the buyer buys:

1. Without knowledge of the security interest;

2. For value;

3. Primarily for the buyer’s personal, family or household purposes; and

4. Before the filing of a financing statement covering the goods.

C. To the extent that it affects the priority of a security interest over a buyer of goods under subsection B of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by section 47-9316, subsections A and B.

D. A buyer in ordinary course of business buying oil, gas or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

E. Subsections A and B of this section do not affect a security interest in goods in the possession of the secured party under section 47-9313.

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