Opinion ID: 2188372
Heading Depth: 1
Heading Rank: 3

Heading: LBG'S Failure to Perfect its Security Interest

Text: Because the heating and air-conditioning units were fixtures and part of the real estate, they became subject to Key Bank's mortgages pursuant to section 9-313. Key Bank's first mortgage takes priority over LBG's security interest in the units unless LBG's security interest falls within one of the exceptions found in section 9-313. [5] 11 M.R.S.A. § 9-313(7) (Supp. 1991). The only relevant exception in this case is section 9-313(4)(a), which states: (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 10 days thereafter, and the debtor has an interest of record in the real estate or is in possession of the real estate. The security interest of LBG was a purchase money security interest. 11 M.R.S.A. § 9-107 (1964). The record clearly demonstrates, however, that it was not properly perfected and does not otherwise come within any recognized exception that would give it priority over Key Bank's first mortgage. [6] A security interest is perfected when it has attached [7] and all of the applicable steps required for perfection have been taken. 11 M.R.S.A. § 9-303(1) (1964). [8] To perfect a security interest in a fixture, the secured party must file a fixture filing. 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 section 9-402, subsection (5). 11 M.R.S.A. § 9-313(1)(b) (Supp. 1991). Section 9-402(5) (Supp.1991) requires that, in addition to the general requirements for financing statements set forth in section 9-402(1) (the name and signature of the debtor, the name and address of the secured party and a description of the collateral), the fixture filing must contain a description of the real estate and, if the debtor does not have an interest of record in the real estate, the financing statement must show the name of a record owner.  11 M.R.S.A. § 9-402(5) (emphasis added). [9] In this case, LBG's financing statement was correctly filed in the York County Registry of Deeds, identified the debtor as Grand Beach Inn, Inc., William J. DiBiase, Jr., President, and contained a description of the real estate that we assume is adequate. Because it failed to identify DiBiase as the record owner of the property, however, the financing statement does not comply with section 9-402(5). As a general rule, a financing statement is sufficient if, in all the circumstances, the filing would give a title searcher sufficient notice to justify placing a duty upon the searcher to make further inquiry concerning the possible lien. In the Matters of Reeco Elec. Co., 415 F.Supp. 238, 240 (D.Me.1976). In this case, the financing statement was indexed under Grand Beach Inn, Inc. A title searcher would not be expected to check the index for Grand Beach Inn, Inc. at a time when the property is owned by DiBiase. Because LBG failed to perfect its security interest in the heating and air-conditioning units pursuant to section 9-402(5), the rights of Key Bank as mortgage holder of the real estate to which the units are affixed take priority over LBG's unperfected security interest. [10] The entry is: Judgment affirmed. All concurring.