What happens if a secured party files a PMSI after 20 days?

In the context of a Purchase Money Security Interest (PMSI) under UCC Article 9, if a secured party files their security interest after the 20-day grace period, they risk losing their special priority status over other creditors when it comes to the collateral. The 20-day period allows a PMSI holder to maintain priority over conflicting security interests, but this is contingent upon the PMSI being perfected by filing within that timeframe.

If the secured party files after this 20-day window, they will typically be subordinated to a buyer in the ordinary course who acquires the goods without knowledge of the security interest. The notion here is that buyers in the ordinary course of business are protected by the law to encourage commerce and ensure that they can purchase goods without the concern of hidden encumbrances, while the secured party's delayed filing puts them at a disadvantage.

Therefore, the correct choice reflects a fundamental principle in secured transactions, where timely perfection of a PMSI is critical for maintaining the intended priority rights over the collateral.