1997 Minnesota Statutes

     336.9-313 Priority of security interests in fixtures. 

    (1) In this section and in the provisions of part 4 of this 
 article referring to fixture filing, unless the context 
 otherwise requires 

    (a) goods are "fixtures" when they become so related to 
 particular real estate that an interest in them arises under 
 real estate law. 

    (b) a "fixture filing" is the filing in the office where a 
 mortgage on the real estate would be filed or recorded of a 
 financing statement covering goods which are or are to become 
 fixtures and conforming to the requirements of subsection (5) of 
 section 336.9-402 except in the case of a fixture filing by a 
 transmitting utility, which shall be governed by subsection (5) 
 of section 336.9-401. 

    (c) a mortgage is a "construction mortgage" to the extent 
 that it secures an obligation incurred for the construction of 
 an improvement on land including the acquisition cost of the 
 land, if the recorded writing so indicates. 

    (2) A security interest under this article may be created 
 in goods which are fixtures or may continue in goods which 
 become fixtures, but no security interest exists under this 
 article in ordinary building materials incorporated into an 
 improvement on land. 

    (3) This article does not prevent creation of an 
 encumbrance upon fixtures pursuant to real estate law. 

    (4) A perfected security interest in fixtures has priority 
 over the conflicting interest of an encumbrancer or owner of the 
 real estate where 

    (a) the security interest is a purchase money security 
 interest, the interest of the encumbrancer or owner arises 
 before the goods become fixtures, the security interest is 
 perfected by a fixture filing before the goods become fixtures 
 or within 20 days thereafter, and the debtor has an interest of 
 record in the real estate or is in possession of the real 
 estate; or 

    (b) the security interest is perfected by a fixture filing 
 before the interest of the encumbrancer or owner is of record, 
 the security interest has priority over any conflicting interest 
 of a predecessor in title of the encumbrancer or owner, and the 
 debtor has an interest of record in the real estate or is in 
 possession of the real estate; or 

    (c) the fixtures are readily removable factory or office 
 machines or readily removable replacements of domestic 
 appliances which are consumer goods, and before the goods become 
 fixtures the security interest is perfected by any method 
 permitted by this article; or 

    (d) the conflicting interest is a lien on the real estate 
 obtained by legal or equitable proceedings after the security 
 interest was perfected by any method permitted by this article. 

    (5) A security interest in fixtures, whether or not 
 perfected, has priority over the conflicting interest of an 
 encumbrancer or owner of the real estate where 

    (a) the encumbrancer or owner has consented in writing to 
 the security interest or has disclaimed an interest in the goods 
 as fixtures; or 

    (b) the debtor has a right to remove the goods as against 
 the encumbrancer or owner.  If the debtor's right terminates, 
 the priority of the security interest continues for a reasonable 
 time. 

    (6) Notwithstanding paragraph (a) of subsection (4) but 
 otherwise subject to subsections (4) and (5), a security 
 interest in fixtures is subordinate to a construction mortgage 
 recorded before the goods become fixtures if the goods become 
 fixtures before the completion of the construction.  To the 
 extent that it is given to refinance a construction mortgage, a 
 mortgage has this priority to the same extent as the 
 construction mortgage. 

    (7) In cases not within the preceding subsections, a 
 security interest in fixtures is subordinate to the conflicting 
 interest of an encumbrancer or owner of the related real estate 
 who is not the debtor. 

    (8) When the secured party has priority over all owners and 
 encumbrancers of the real estate, the secured party may, on 
 default, subject to the provisions of part 5, remove collateral 
 from the real estate but the secured party must reimburse any 
 encumbrancer or owner of the real estate who is not the debtor 
 and who has not otherwise agreed for the cost of repair of any 
 physical injury, but not for any diminution in value of the real 
 estate caused by the absence of the goods removed or by any 
 necessity for replacing them.  A person entitled to 
 reimbursement may refuse permission to remove until the secured 
 party gives adequate security for the performance of this 
 obligation. 

    HIST: 1965 c 811 s 336.9-313; 1976 c 135 s 22; 1986 c 444; 
 1989 c 31 s 1