Document ID: chunk:federal_register_of_legislation:C2024C00719:section:68
Version: federal_register_of_legislation:C2024C00719
Segment Type: section
Provision Reference: s 68
Character Range: 158501–161174

68  Priority when there is a break in the perfection of the transferor‑granted interest
 (1) The transferor‑granted interest in the transferred collateral has priority (except as mentioned in subsection (2)) if:
 (a) the transferred collateral is not registered with a serial number (see subsection (4)); and
 (b) the interest was perfected by registration immediately before the transfer; and
 (c) the interest becomes unperfected; and
Note: See subsection 34(3) for one situation in which a security interest may become unperfected following a transfer of collateral.
 (d) the interest is later re‑perfected; and
 (e) a notice is given (whether before or after the interest is re‑perfected as mentioned in paragraph (d)) to all other secured parties who have a registration that describes the transferred collateral; and
 (f) the notice is given in accordance with subsection (5); and
 (g) the interest has been continuously perfected since it was re‑perfected as mentioned in paragraph (d).
 (2) However, the transferee‑granted interest has priority if:
 (a) subsection (1) applies in relation to the transferor‑granted interest; and
 (b) the transferee‑granted interest is perfected immediately before the transferor‑granted security is re‑perfected as mentioned in paragraph (1)(d); and
 (c) the transferee acquires the collateral without actual or constructive knowledge that the acquisition constitutes a breach of the security agreement that provides for the transferor‑granted interest; and
 (d) the transferee‑granted interest secures performance of an advance made, or an obligation incurred, by the transferee's secured party before:
 (i) the transferor‑granted interest is re‑perfected as mentioned in paragraph (1)(d); and
 (ii) the notice is given under paragraph (1)(e);
but only to the extent of the advance or obligation.
 (3) Subsection (2) applies despite section 58 (priority of advances).
 (4) For the purposes of this section, the transferred collateral is registered with a serial number at a particular time only if a search of the register by reference to that time and by reference only to the serial number of the collateral is capable of disclosing the registration.
 (5) A notice is given in accordance with this subsection if:
 (a) the notice is in the approved form; or
 (b) the notice:
 (i) states that the secured party expects to perfect a security interest in the transferred collateral; and
 (ii) contains a description of the transferred collateral; and
 (iii) sets out the effect of subsections (1) and (2).

Division 5—Priority of creditors, and purchasers of negotiable instruments, chattel paper and negotiable documents of title