What criteria must be satisfied for a consumer buyer to take free of a security interest under the garage sale rule?

For a consumer buyer to take free of a security interest under the garage sale rule, the essential criteria is that the buyer must purchase the goods for personal use and without knowledge of the existing security interest. This principle is rooted in protecting consumers during casual or informal transactions, allowing them to acquire goods free of any underlying claims from secured parties, provided they are unaware of such claims at the time of purchase.

This protection emphasizes a key element of consumer transactions: the need for buyers to feel secure in their purchases without complex inquiries into prior security interests. It reflects the intention to encourage commerce and consumer trust in sales conducted in non-commercial settings, like garage sales or similar informal transactions.

In contrast, the other options do not fulfill the criteria necessary for a buyer to take free of a security interest. For instance, purchasing at an auction does not inherently provide the same protections, as those transactions typically involve more formalized processes and disclosures. Similarly, buying goods for resale would not qualify for this consumer protection, as the garage sale rule is focused on personal use. Lastly, while having a receipt is often a good practice, it does not impact the priority of the security interest unless it is directly related to the buyer’s knowledge of it at the time of the purchase