14-9-313. PRIORITY OF SECURED INTERESTS IN FIXTURES.

1. In this section and in the provisions of Part 4 of this Chapter referring to fixture filing, unless the context otherwise requires
   1. Goods are “fixtures” only when they become so related to particularly real estate by virtue of permanent affixation thereto that a legally enforceable deed to the real estate would transfer title to goods. Fixtures become real estate whenever
      1. their removal causes damages to the real estate which could only be repaired at a cost exceeding the value of the fixtures, excluding from such computation any diminution in value of the real estate caused by the absence of the fixtures removed or by any necessity of replacing them, or
      2. they are improvements.
   2. A “fixture filing” is the filing in the office where a mortgage on the real estate would be filed or recorded, of a financing statement covering goods which are or are to become fixtures and conforming to the requirements of Section 402.
   3. A mortgage is a “construction mortgage” to the extent that it secures an obligation incurred for the construction of or an improvement on land, including the acquisition cost of the land, if the recorded writing so indicates.
2. A security interest under this Chapter may be created in goods which are fixtures or may continue in goods which become fixtures, but no security interest exists under this Chapter in ordinary building materials incorporated into an improvement on land.
3. This Chapter does not prevent the creation of an encumbrance upon fixtures pursuant to real estate law; provided, however, that an encumbrance upon real estate of the Rosebud Sioux Tribe or an individual which is held in trust by the United States or subject to a restriction against alienation pursuant to federal law, shall be valid only if it is approved by the Secretary of the Interior or his duly authorized representative.
4. A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real estate where
   1. The security interest is a purchase money security interest, the interest of the encumbrancer or owner arises before the goods becomes fixtures, the security interest is perfected by a fixture filing before the goods become fixtures or within 10 days thereafter, and the debtor has an interest of record in the real estate or is in possession of the real estate; or
   2. The security interest is perfected by a fixture filing before the interest of the encumbrance or owner is of record, the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the debtor has an interest of record in the real estate or is in possession of the real estate; or
   3. The fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances which are consumer goods, and before the goods become fixtures the security interest is perfected by any method permitted by this Chapter; or
   4. The conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this Chapter.
5. A security interest in fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate where(a) The encumbrancer or owner has consented in writing to the security interest or has disclaimed an interest in the goods as fixtures; or
   1. The debtor has a right to remove the goods as against the encumbrancer or owner. If the debtor’s right terminates, the priority of the security interest continues for a reasonable time.
6. Notwithstanding paragraph (a) of subsection (4) but otherwise subject to subsections (4) and (5), a security interest in fixtures is subordinate to a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent that it is given to refinance a construction mortgage, a mortgage has this priority to the same extent as the construction mortgage.
7. In cases not within the preceding subsections, a security interest in fixtures is subordinate to the conflicting interest of an encumbrance or owner of the related real estate who is not the debtor.
8. When the secured party has priority over all owners and encumbrances of the real estate, he may, on default, subject to the provisions of Part 5, remove his collateral from the real estate but he must reimburse any encumbrancer or owner of the real estate who is not the debtor and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permissions to remove until the secured party gives adequate security for the performance of this obligation.