Also known as: identifiable cash proceed · cash proceeds · identifiable proceeds
Written by attorneys · grounded in primary & secondary sources — see below
Cash received upon the sale or other disposition of collateral that a secured party can trace to the original collateral even after commingling with other funds. Identification persists when the cash remains in a deposit account or satisfies the statutory tracing conditions that prevent loss of the security interest.
Ivy Ibarra granted a security interest in her equipment to Island Manufacturing. After default Island located the cash Ivy received from selling one machine and deposited it into her operating account. The funds remained identifiable cash proceeds because Island could trace them directly to the original collateral.
Ines Ibarra bought specialized machinery from Insight Consulting under a purchase-money financing agreement that Insight perfected within twenty days of delivery. When Ines sold the machinery and deposited the cash into her account Insight asserted priority over another secured party in those identifiable cash proceeds.
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Perfection in identifiable cash proceeds continues automatically when the original security interest was perfected. The interest remains perfected beyond the twenty-day period without further action by the secured party.
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Commingling does not destroy identifiability when the cash can still be traced to the original collateral under the UCC tracing rules. The statute expressly preserves the security interest in such funds.
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A perfected purchase-money security interest in identifiable cash proceeds of non-inventory goods receives the same priority as the interest in the original collateral when the PMSI is perfected timely.
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