Discuss how the process of an item becoming a fixture can interfere with the priority of creditors in secured transactions.

A fixture is an item of personal property that has become affixed to the building or land and becomes part of that real property. Students have to demonstrate not only knowledge of the difference between real and personal property, but also what a fixture is. Then they should discuss debt and security. When an item of personal property is used as security for a loan, it is covered by a security interest. Registration gives the secured creditor first claim on that item of personal property. But when it becomes part of the real property, what happens to that creditor's security? If there is a mortgage on the real property or if the real property is sold to an innocent purchaser, what happens to the claim of the secured creditor? In fact, the effect varies with the jurisdiction. This is one of the matters that is solved by the Personal Property Security Act. Students should at least demonstrate an understanding of the various forms of property and of the nature of the problem that arises when a chattel used as security becomes affixed to real property.