Perfection And Priority: Dealing With Serial Numbered Goods

Lenders should be aware that when taking security in certain goods with serial numbers in Canada, the rules regarding registration of financing statements vary across provincial jurisdictions; a detail that, if overlooked, could impact the priority of the lender's security interest.

In Ontario, where the collateral includes motor vehicles (as defined in Ontario's Personal Property Security Regulation 56/07), including the vehicle identification number will provide the lender with protections against: (i) purchasers or lessors of a motor vehicle that is proceeds and classified as consumer goods, and (ii) purchasers of a motor vehicle classified as equipment sold other than in the ordinary course of business of the seller.