Escrow & Title
In New York, which of the following best describes a 'purchase money security interest' (PMSI) in the context of co-op financing?
AA mortgage on real property granted by the buyer to the seller
BA security interest in the co-op shares and proprietary lease granted to the lender who financed the purchase of those shares✓ Correct
CA lien filed by a contractor who installed improvements in the co-op unit
DA title insurance policy on the co-op shares
Explanation
Because a NYC co-op unit involves the purchase of personal property (shares + proprietary lease), the financing is not a real property mortgage but rather a loan secured by a security interest in the shares and lease under UCC Article 9. The lender files a UCC-1 financing statement (not a mortgage) to perfect this security interest.
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