What Maryland Farmers Need To Know About Security Interests

What happens if there is more than one perfected security interest in the same collateral? Perfected security interests, including agricultural liens, rank according to priority in time of filing.[i]  Although some states have adopted laws giving agricultural liens priority over other types of perfected security interests, in Maryland agricultural liens have the same priority status as other types of security interests.  Because priority of security interests is dictated by time of filing, failure to file a financing statement will render a security interest junior to any other creditor that first perfects a security interest in the same collateral.  This is referred to as “first in time, first in right.”

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What Maryland Farmers Need To Know About Security Interests

When a farmer enters into a credit transaction, for example the purchase of a piece of farm equipment, and secures the transaction by granting the lender a right in the farmer’s crops or livestock a security interest is created.  A security interest is defined as the limited right in specific property or collateral of the debtor that allows the creditor to take the property should the debtor fail to fulfill his credit obligation.  In Maryland, security interests and transactions involving security interests referred to as secured transactions are governed by the Article 9 of the Uniform Commercial Code (UCC) as amended and adopted by the Maryland Code, Commercial Law Article, Title 9. 

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