This Part deals with how to work out the priority between competing security interests in collateral (and in some cases, other kinds of interests).

Priority rules are relevant when the same personal property is subject to 2 or more security interests. If the debtor defaults, the rules determine the order of priority in which the various secured parties can enforce their security interests under Chapter 4.

Division 2 sets out the default rules that apply if this Act provides no other way of determining that priority.

Unless otherwise provided:

               (a)     perfected interests have priority over unperfected interests; and

               (b)     priority between perfected interests amongst themselves, and unperfected interests amongst themselves, is determined on a first‑in‑time basis.

The Division contains other rules of general application (such as the priority that applies to the proceeds of collateral). Security interests perfected by control have the highest priority.

Division 3 deals with the priority rules that apply when one of the security interests is a perfected purchase money security interest. These interests are exceptions to the first‑in‑time rule (except for certain security interests in an account dealt with in section 64). A perfected purchase money security interest that is granted to a seller, lessor or consignor takes priority over a perfected purchase money security interest that is granted to others.

Division 4 deals with priority of security interests in transferred collateral where a transferor and a transferee have both granted security interests in the transferred collateral. Provided the transferor‑granted security interest has remained perfected, that security interest will take priority.

Division 5 deals with the priority of certain creditors who have their debts repaid. The priority of those who purchase negotiable instruments, chattel paper and negotiable documents of title is also dealt with. Generally, the purchaser's interest will take priority over a security interest in the negotiable instrument, chattel paper or negotiable document of title.

Division 6 deals with priority between other kinds of interests (such as interests that arise under law, interests of execution creditors and security interests held by ADIs).