To obtain a PMSI on equipment, within how many days must the UCC financing statement be filed?

To obtain a PMSI on equipment, within how many days must the UCC financing statement be filed?

• A. 20 days
• B. 30 days
• C. 60 days
• D. 90 days

Answer: (A)

The key idea is how a purchase money security interest (PMSI) in equipment is perfected to get priority. For a PMSI in equipment, perfection is achieved by filing a financing statement, and there’s a tight timing rule to preserve the PMSI’s special priority over other secured parties. You must file the financing statement within 20 days after the debtor takes possession of the equipment (i.e., after the equipment is delivered or paid for with the loan proceeds). Filing within this window ensures the PMSI maintains its enhanced priority against later- or concurrently-filed claims. If you miss that 20-day window, the PMSI may still be perfected, but you lose the targeted PMSI priority in favor of other creditors who have perfected first or filed earlier. So the 20-day deadline is the critical timing rule that makes the PMSI in equipment truly enjoy its preferred status. The longer timeframes listed in the other options do not provide that same protected priority.

The key idea is how a purchase money security interest (PMSI) in equipment is perfected to get priority. For a PMSI in equipment, perfection is achieved by filing a financing statement, and there’s a tight timing rule to preserve the PMSI’s special priority over other secured parties.

You must file the financing statement within 20 days after the debtor takes possession of the equipment (i.e., after the equipment is delivered or paid for with the loan proceeds). Filing within this window ensures the PMSI maintains its enhanced priority against later- or concurrently-filed claims. If you miss that 20-day window, the PMSI may still be perfected, but you lose the targeted PMSI priority in favor of other creditors who have perfected first or filed earlier.

So the 20-day deadline is the critical timing rule that makes the PMSI in equipment truly enjoy its preferred status. The longer timeframes listed in the other options do not provide that same protected priority.