In a commercial loan setting, bankers are used to thinking of the raw materials, work in process, and products held by people for sale or lease as inventory. The Uniform Commercial Code in section 26-1-9.1-102 specifically codifies this perception. (more…)
Posts Tagged ‘farm products’
Grain is Not Inventory
Tuesday, August 2nd, 2011Down on the Farm – Notice of Security Interest to Buyers of Farm Products
Thursday, March 17th, 2011Secured lenders need to be aware that they must provide a notice to buyers of farm products if the buyer is to take the farm products subject to the lender’s security interest. Failure of the secured lender to send such a notice to the buyer will not obligate the buyer to deliver proceeds of the sale to the secured lender and the secured lender could miss out on the opportunity to collect such proceeds before they are in the hands of the debtor. Of course, the secured lender would still have a security interest in such proceeds, but if they are in the hands of the debtor, they may no longer exist when the secured lender seeks to collect them. (more…)
Grain is Not Inventory
Friday, March 5th, 2010In a commercial loan setting, bankers are used to thinking of the raw materials, work in process, and products held by people for sale or lease as inventory. The Uniform Commercial Code in section 26-1-9.1-102 specifically codifies this perception.
There is, however, an important exception to this designation. If your borrower is a farmer, grain and seed will not be included in the definition of inventory. This is because the definition of inventory specifically excludes farm products. The term “farm products” is defined as not only crops growing in the field, but also, without limitation, crops grown or to be grown and supplies used or produced in a farming operation.
Although revised Article 9 has simplified the process of taking a security interest in agricultural products, these liens do still differ in application from liens on ordinary equipment and inventory.
Author: Andrew C. Ozete (bio)
Phone: 812.452.3582
email: aozete@bamberger.com