Practical Law Glossary Item 1-382-3725 (Approx. 3 pages)
Glossary
Purchase-Money Security Interest (PMSI)
A special type of security interest provided for under the Uniform Commercial Code (UCC) that enables a seller who sells goods on credit to obtain a superpriority security interest in the goods to secure the buyer's obligation to pay the deferred purchase price. This is possible even if the goods constitute after-acquired property of the buyer subject to a previously perfected security interest in favor of a third party, such as the buyer's asset-based lender (UCC § 9-324).
PMSI also enable a third-party lender (such as a bank) who lends money to a borrower for the express purpose of enabling the borrower to purchase specified goods to obtain a superpriority security interest in the goods if the buyer uses the credit to purchase them.