In a situation with multiple perfected secured parties, who has priority?

In a scenario involving multiple perfected secured parties, priority is generally determined by the principle of "first to file or perfect." This rule establishes that among competing security interests, the secured party who first either files their financing statement or perfects their security interest through other means (such as possession or control) is granted priority over others. This principle promotes clarity and certainty in secured transactions, enabling creditors to assess their position relative to one another based on the timing of their actions.

The concept prioritizes the diligence of secured parties; thus, those who act promptly and in compliance with the law are rewarded with a stronger claim against the collateral in the event of default. This system not only protects the rights of the secured parties but also provides a clear framework for resolving disputes over collateral rights.

The other choices do not reflect the legal standards governing priority among secured parties. Financial backing, the age of the security agreement, or the amount of collateral provided do not influence priority under the Uniform Commercial Code (UCC). These factors may be relevant in assessing the general creditworthiness or negotiation leverage of secured parties, but they do not determine the order of priority regarding security interests.