Mike Wolfe is a “picker” who owns an antique shop. He predominantly finds his inventory driving across the country in rural areas negotiating with antique collectors. Some of the collectors contact him interested in selling items, while others he finds while “freestyling.” Wolfe almost exclusively buys antiques from people’s homes, yards, or outbuildings. A lot of the people he buys from are borderline hoarders.
After hearing horror stories from other pickers, Wolfe comes into your law office and asks you about the chances that an item he buys from a collector could be repossessed from him before he can sell it. Some of his customers have also been asking him similar questions and he wants to know what he should tell them.
Wolfe explains that he has an aversion to debt. Therefore, he started his business using cash, working his way up from a small dealer to owning his current store.
What is your advice?
1. Wolfe may take the antiques subject to security interests, but customers buying from him do not because they are “buyers in the ordinary course of business.”
2. Both Wolfe and his customers take free of any possible security interests because they are “buyers in the ordinary course of business.”
3. Both Wolfe and his customers will take free of any possible security interests because of the so-called “garage sale exception.”
4. Both Wolfe and his customers may take subject to existing security interests.