Subpart 3. Priority  

    (810 ILCS 5/9-317) (from Ch. 26, par. 9-317)
    Sec. 9-317. Interests that take priority over or take free of security interest or agricultural lien.
    (a) Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:
        (1) a person entitled to priority under Section

    (810 ILCS 5/9-318) (from Ch. 26, par. 9-318)
    Sec. 9-318. No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers.
    (a) Seller retains no interest. A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.
    (b) Deemed rights of debtor if buyer's security interest unperfected. For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-319)
    Sec. 9-319. Rights and title of consignee with respect to creditors and purchasers.
    (a) Consignee has consignor's rights. Except as otherwise provided in subsection (b), for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.
    (b) Applicability of other law. For purposes of determining the rights of a creditor of a consignee, law other than this Article determines the rights and title of a consignee while goods are in the consignee's possession if, under this Part, a perfected security interest held by the consignor would have priority over the rights of the creditor.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-320)
    Sec. 9-320. Buyer of goods and farm products.
    (a) Buyer in ordinary course of business. Except as otherwise provided in subsections (e) and (f), a buyer in the ordinary course of business 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.
    (b) Buyer of consumer goods. Except as otherwise provided in subsection (e), 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

    (810 ILCS 5/9-320.1)
    Sec. 9-320.1. Liability of commission merchant or selling agent engaged in sale of livestock or other farm products to holder of security interest.
    (a) A commission merchant or selling agent who sells a farm product for others shall be subject to a security interest created by the seller in such farm product if:
        (1) within one year before the sale of the farm

    (810 ILCS 5/9-320.2)
    Sec. 9-320.2. Notice to seller of farm products. A commission merchant or selling agent who sells farm products for others, and any person buying farm products in the ordinary course of business from a person engaged in farming operations, shall post at each licensed location where the merchant, agent, or person buying farm products in the ordinary course of business does business a notice that shall read as follows:

    (810 ILCS 5/9-321)
    Sec. 9-321. Licensee of general intangible and lessee of goods in ordinary course of business.
    (a) "Licensee in ordinary course of business." In this Section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.
    (b) Rights of licensee in ordinary course of business. A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.
    (c) Rights of lessee in ordinary course of business. A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-322)
    Sec. 9-322. Priorities among conflicting security interests in and agricultural liens on same collateral.
    (a) General priority rules. Except as otherwise provided in this Section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:
        (1) Conflicting perfected security interests and

    (810 ILCS 5/9-323)
    Sec. 9-323. Future advances.
    (a) When priority based on time of advance. Except as otherwise provided in subsection (c), for purposes of determining the priority of a perfected security interest under Section 9-322(a)(1), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:
        (1) is made while the security interest is perfected

    (810 ILCS 5/9-324)
    Sec. 9-324. Priority of purchase-money security interests.
    (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 Section 9-327, 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 20 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 Section 9-330, and, except as otherwise provided in Section 9-327, 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

    (810 ILCS 5/9-325)
    Sec. 9-325. Priority of security interests in transferred collateral.
    (a) Subordination of security interest in transferred collateral. Except as otherwise provided in subsection (b), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:
        (1) the debtor acquired the collateral subject to the

    (810 ILCS 5/9-326)
    Sec. 9-326. Priority of security interests created by new debtor.
    (a) Subordination of security interest created by new debtor. Subject to subsection (b), a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of Section 9-316(i)(1) or 9-508 is subordinate to a security interest in the same collateral which is perfected other than by such a filed financing statement.
    (b) Priority under other provisions; multiple original debtors. The other provisions of this Part determine the priority among conflicting security interests in the same collateral perfected by filed financing statements described in subsection (a). However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.
(Source: P.A. 97-1034, eff. 7-1-13.)

    (810 ILCS 5/9-327)
    Sec. 9-327. Priority of security interests in deposit account. The following rules govern priority among conflicting security interests in the same deposit account:
    (1) A security interest held by a secured party having control of the deposit account under Section 9-104 has priority over a conflicting security interest held by a secured party that does not have control.
    (2) Except as otherwise provided in paragraphs (3) and (4), security interests perfected by control under Section 9-314 rank according to priority in time of obtaining control.
    (3) Except as otherwise provided in paragraph (4), a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.
    (4) A security interest perfected by control under Section 9-104(a)(3) has priority over a security interest held by the bank with which the deposit account is maintained.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-328)
    Sec. 9-328. Priority of security interests in investment property. The following rules govern priority among conflicting security interests in the same investment property:
    (1) A security interest held by a secured party having control of investment property under Section 9-106 has priority over a security interest held by a secured party that does not have control of the investment property.
    (2) Except as otherwise provided in paragraphs (3) and (4), conflicting security interests held by secured parties each of which has control under Section 9-106 rank according to priority in time of:
        (A) if the collateral is a security, obtaining

    (810 ILCS 5/9-329)
    Sec. 9-329. Priority of security interests in letter-of-credit right. The following rules govern priority among conflicting security interests in the same letter-of-credit right:
        (1) A security interest held by a secured party

    (810 ILCS 5/9-329.1)
    Sec. 9-329.1. Priority of Security Interests in Beneficial Interest in an Illinois Land Trust. The following rules govern priority among conflicting security interests in the same beneficial interest in an Illinois land trust:
        (1) A security interest held by a secured party

    (810 ILCS 5/9-330)
    Sec. 9-330. Priority of purchaser of chattel paper or instrument.
    (a) Purchaser's priority: security interest claimed merely as proceeds. A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:
        (1) in good faith and in the ordinary course of the

    (810 ILCS 5/9-331)
    Sec. 9-331. Priority of rights of purchasers of instruments, documents, and securities under other Articles; priority of interests in financial assets and security entitlements under Article 8.
    (a) Rights under Articles 3, 7, and 8 not limited. This Article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, and 8.
    (b) Protection under Article 8. This Article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8.
    (c) Filing not notice. Filing under this Article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b).
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-332)
    Sec. 9-332. Transfer of money; transfer of funds from deposit account.
    (a) Transferee of money. A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.
    (b) Transferee of funds from deposit account. A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-333)
    Sec. 9-333. Priority of certain liens arising by operation of law.
    (a) "Possessory lien." In this Section, "possessory lien" means an interest, other than a security interest or an agricultural lien:
        (1) which secures payment or performance of an

    (810 ILCS 5/9-334)
    Sec. 9-334. Priority of security interests in fixtures and crops.
    (a) Security interest in fixtures under this Article. A security interest under this Article may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this Article in ordinary building materials incorporated into an improvement on land.
    (b) Security interest in fixtures under real-property law. This Article does not prevent creation of an encumbrance upon fixtures under real property law.
    (c) General rule: subordination of security interest in fixtures. In cases not governed by subsections (d) through (h), a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.
    (d) Fixtures purchase-money priority. Except as otherwise provided in subsection (h), a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:
        (1) the security interest is a purchase-money

    (810 ILCS 5/9-335)
    Sec. 9-335. Accessions.
    (a) Creation of security interest in accession. A security interest may be created in an accession and continues in collateral that becomes an accession.
    (b) Perfection of security interest. If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.
    (c) Priority of security interest. Except as otherwise provided in subsection (d), the other provisions of this Part determine the priority of a security interest in an accession.
    (d) Compliance with certificate-of-title statute. A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate-of-title statute under Section 9-311(b).
    (e) Removal of accession after default. After default, subject to Part 6, a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.
    (f) Reimbursement following removal. A secured party that removes an accession from other goods under subsection (e) shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of any physical injury to the whole or the other goods. The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.
(Source: P.A. 91-893, eff. 7-1-01.)

    (810 ILCS 5/9-336)
    Sec. 9-336. Commingled goods.
    (a) "Commingled goods." In this Section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass.
    (b) No security interest in commingled goods as such. A security interest does not exist in commingled goods as such. However, a security interest may attach to a product or mass that results when goods become commingled goods.
    (c) Attachment of security interest to product or mass. If collateral becomes commingled goods, a security interest attaches to the product or mass.
    (d) Perfection of security interest. If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under subsection (c) is perfected.
    (e) Priority of security interest. Except as otherwise provided in subsection (f), the other provisions of this Part determine the priority of a security interest that attaches to the product or mass under subsection (c).
    (f) Conflicting security interests in product or mass If more than one security interest attaches to the product or mass under subsection (c), the following rules determine priority:
        (1) A security interest that is perfected under

    (810 ILCS 5/9-337)
    Sec. 9-337. Priority of security interests in goods covered by certificate of title. If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this State issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:
        (1) a buyer of the goods, other than a person in the

    (810 ILCS 5/9-338)
    Sec. 9-338. Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information. If a security interest or agricultural lien is perfected by a filed financing statement providing information described in Section 9-516(b)(5) which is incorrect at the time the financing statement is filed:
        (1) the security interest or agricultural lien is

    (810 ILCS 5/9-339)
    Sec. 9-339. Priority subject to subordination. This Article does not preclude subordination by agreement by a person entitled to priority.
(Source: P.A. 91-893, eff. 7-1-01.)