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As enacted
Contents

Part V · Priorities

36. General rules governing priority

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

The following general rules of priority shall apply to security rights in the same collateral:-

(a)

priority between security rights perfected by registration shall be determined by the date of registration, regardless of the date of perfection;

(b)

priority between a security right perfected by registration and a security right perfected by possession shall be determined by whether the financing statement was registered before possession; and

(c)

priority between unperfected security rights shall be determined by the date of the creation of such security rights.

(2)

For the purpose of subsection (1)-

(a)

a continuously perfected security right shall be treated at all times as if perfected by the method by which it was originally perfected; and

(b)

the time of registration, possession or perfection of a security right in the original collateral, shall be the time of such registration, possession or perfection of the security right in its proceeds.

(3)

The transferee of a security right shall acquire the same priority with respect to the security right as the transferor had, at the time of the transfer.

(4)

Subject to the provisions of subsection (5), the priority which a security right has under subsection (1) shall also apply to all future advances.

(5)

A perfected security right has priority over the interest of a judgment creditor referred to in paragraph (b) of subsection (1) of section 5, only to the extent of-

(a)

advances made before the judgment creditor registers the notice of judgment referred to in that paragraph;

(b)

advances made before the secured party has knowledge of the registration of the notice of judgment referred to in that paragraph;

(c)

advances made in accordance with a statutory requirement or a legally binding obligation owing to a person other than the debtor, entered into by the secured party before acquiring the knowledge referred to in paragraph (b); and

(d)

reasonable costs and expenses incurred by the secured party for the protection, preservation, maintenance or repair of the collateral.

Part VI

Registration

Part VII

General Provisions

Part VIII

Repeals and Savings

Part IX

Interpretation