Basic Uniform Commercial Code

Purchase-Money Security Interest

UCC § 9-103(b)

2. A security interest in goods is a purchase-money security interest:
   1. to the extent that the goods are purchase-money collateral with respect to that security interest;
   2. if the security interest is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase- money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and
   3. also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.

TL;DR: Someone gave you money to buy something, and you used the money to buy it.

Purchase-money security interests in goods other than inventory or livestock take over previously-filed security interests as long as the PMSI perfects within 20 days of the purchaser taking possession. UCC § 9-324(a).

• PMSIs only take over other security interests in inventory acquired after perfection. UCC § 9-324(b).

Sellers with PMSIs prevail over lenders with PMSIs.