If, while a security interest in goods is perfected by any method under the law of another jurisdiction, the District issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:

1. (1) A buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and
2. (2) The security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under § 28:9-311(b), after issuance of the certificate and without the conflicting secured party’s knowledge of the security interest.

Uniform Commercial Code Comment

2. Protection for Buyers and Secured Parties. This section affords protection to certain good-faith purchasers for value who are likely to have relied on a “clean” certificate of title, i.e., one that neither shows that the goods are subject to a particular security interest nor contains a statement that they may be subject to security interests not shown on the certificate. Under this section, a buyer can take free of, and the holder of a conflicting security interest can acquire priority over, a security interest that is perfected by any method under the law of another jurisdiction. The fact that the security interest has been reperfected by possession under Section 9-313 does not of itself disqualify the holder of a conflicting security interest from protection under paragraph (2).

1. Source. Derived from former Section 9-103(2)(d).

History

Oct. 26, 2000, D.C. Law 13-201, § 101, 47 DCR 7576