2000 Minnesota Statutes

     336.9-313 When possession by or delivery to secured 
  party perfects security interest without filing. 

    (a)    Perfection by possession or delivery.  Except as 
 otherwise provided in subsection (b), a secured party may 
 perfect a security interest in negotiable documents, goods, 
 instruments, money, or tangible chattel paper by taking 
 possession of the collateral.  A secured party may perfect a 
 security interest in certificated securities by taking delivery 
 of the certificated securities under section 336.8-301. 

    (b)    Goods covered by certificate of title.  With 
 respect to goods covered by a certificate of title issued by 
 this state, a secured party may perfect a security interest in 
 the goods by taking possession of the goods only in the 
 circumstances described in section 336.9-316(e). 

    (c)    Collateral in possession of person other than 
 debtor.  With respect to collateral other than certificated 
 securities and goods covered by a document, a secured party 
 takes possession of collateral in the possession of a person 
 other than the debtor, the secured party, or a lessee of the 
 collateral from the debtor in the ordinary course of the 
 debtor's business, when: 

    (1) the person in possession authenticates a record 
 acknowledging that it holds possession of the collateral for the 
 secured party's benefit; or 

    (2) the person takes possession of the collateral after 
 having authenticated a record acknowledging that it will hold 
 possession of collateral for the secured party's benefit. 

    (d)    Time of perfection by possession; continuation of 
 perfection.  If perfection of a security interest depends upon 
 possession of the collateral by a secured party, perfection 
 occurs no earlier than the time the secured party takes 
 possession and continues only while the secured party retains 
 possession. 

    (e)    Time of perfection by delivery; continuation of 
 perfection.  A security interest in a certificated security in 
 registered form is perfected by delivery when delivery of the 
 certificated security occurs under section 336.8-301 and remains 
 perfected by delivery until the debtor obtains possession of the 
 security certificate. 

    (f)    Acknowledgment not required.  A person in 
 possession of collateral is not required to acknowledge that it 
 holds possession for a secured party's benefit. 

    (g)    Effectiveness of acknowledgment; no duties or 
 confirmation.  If a person acknowledges that it holds 
 possession for the secured party's benefit: 

    (1) the acknowledgment is effective under subsection (c) or 
 section 336.8-301(a), even if the acknowledgment violates the 
 rights of a debtor; and 

    (2) unless the person otherwise agrees or law other than 
 this article otherwise provides, the person does not owe any 
 duty to the secured party and is not required to confirm the 
 acknowledgment to another person. 

    (h)    Secured party's delivery to person other than 
 debtor.  A secured party having possession of collateral does 
 not relinquish possession by delivering the collateral to a 
 person other than the debtor or a lessee of the collateral from 
 the debtor in the ordinary course of the debtor's business if 
 the person was instructed before the delivery or is instructed 
 contemporaneously with the delivery: 

    (1) to hold possession of the collateral for the secured 
 party's benefit; or 

    (2) to redeliver the collateral to the secured party. 

    (i)    Effect of delivery under subsection (h); no duties 
 or confirmation.  A secured party does not relinquish 
 possession, even if a delivery under subsection (h) violates the 
 rights of a debtor.  A person to which collateral is delivered 
 under subsection (h) does not owe any duty to the secured party 
 and is not required to confirm the delivery to another person 
 unless the person otherwise agrees or law other than this 
 article otherwise provides. 

    HIST: 2000 c 399 art 1 s 33 

*   NOTE:  This section, as added by Laws 2000, chapter 399, 
*article 1, section 33, is effective July 1, 2001.  Laws 2000, 
*chapter 399, article 1, section 130. 

*   NOTE:  Minnesota Statutes 1998, section 336.9-313, which 
*reads as follows, is repealed July 1, 2001.  Laws 2000, chapter 
*399, article 1, section 130. 

*   "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."