Construction mortgages always have priority over mechanics' liens ...

[ap345]

Construction mortgages always have priority over mechanics' liens in beginning construction states.
  Indicate whether the statement is true or false

Question 2

King Electronics, a retailer of video equipment, sold two DVRs to Larson, a psychologist, for use in her professional practice, which was located in her home. The sale to Larson was made on credit. King retained a security interest in the DVRs sold but did not file a financing statement. Mills, another creditor of Larson, has asserted that his lien on the two DVRs is superior to King's security interest. Is he right? As you decide, remember to classify the DVRs as collateral in the hands of King and Larson.

[carolinefletcherr]

Answer to Question 1

FALSE

Answer to Question 2

Judgment will be for Mills. The DVRs are inventory in the hands of King and equipment in the hands of Larson. King must file a financing statement to perfect its security interest in the DVRs. Because of King's failure to file a financing statement covering the two DVRs sold to Larson on credit, Mills has a right that is superior to King's right in the collateral.