Perspectives

How a PMSI Can Put You First In Line for Payment

News WFJ Law Firm

When you finance or lease heavy equipment, you’re taking a risk-especially if the customer defaults or goes bankrupt. A Purchase Money Security Interest (PMSI) is one of the most powerful tools available to protect your investment and ensure you have top priority in recovering your equipment or getting paid.

A PMSI gives you a “super-priority” status, even over other creditors who previously filed a security interest. But here’s the catch: you only get that priority if you follow the rules to the letter.

If the equipment is inventory, such as parts or rental fleet assets, you must:

  • File a UCC-1 financing statement before the customer takes possession
  • Send authenticated notice to all other secured parties who have an interest in the same type of inventory.

If you’re financing equipment (like a bulldozer or excavator sold for long-term use), you have a bit more flexibility:

  • File the UCC-1 within 20 days after the customer receives the equipment
  • No notice to other creditors is required

Failing to meet these deadlines or skipping the notice step can cost you your priority status-meaning another creditor could take possession of the very equipment you financed.

This is where legal guidance becomes critical. 

Working with a trusted law firm ensures that your filings are done properly, your notices are sent on time, and your interests are protected at every step. It’s not just about paperwork-it’s about protecting your bottom line.

Don’t leave your priority to chance. 

Partner with a legal team that understands the nuances of PMSIs and the unique risks faced by heavy equipment dealers. The right legal strategy today could be the reason you recover your equipment tomorrow.

 

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