Retention of Title (Romalpa Clause) in Secured Transactions under UCC Article 9

1. Introduction

Retention of title clauses – often called Romalpa clauses after an English case – are contractual provisions in sales agreements whereby the seller retains ownership of goods until the buyer fulfills certain obligations, typically full payment of the price​

The primary purpose is to protect the unpaid seller if the buyer becomes insolvent: by reserving title, the seller hopes to reclaim the goods rather than being left as an unsecured creditor​

​Such clauses are widely used in many jurisdictions, but their legal effectiveness varies. This article provides a detailed analysis of retention of title clauses in the context of U.S. law, with a focus on Article 9 of the Uniform Commercial Code (UCC).

We will examine the role and enforceability of these clauses as security interests, discuss key statutory provisions and judicial interpretations, and consider practical implications for creditors and debtors.

Comparisons with international approaches (especially English and other common-law systems) will be included to highlight the distinctive U.S. treatment of Romalpa clauses.

2 What Is a Retention of Title (Romalpa) Clause?

A retention of title (ROT) clause (or reservation of title clause) is an agreement that the seller retains legal ownership of the goods until the buyer’s obligations (usually payment) are met​.

In effect, the buyer may take possession of the goods, but title remains vested in the seller until the condition (payment in full, or other agreed obligation) is satisfied​.

This arrangement is intended to give the seller extra protection: if the buyer defaults or goes bankrupt before paying, the seller, as the owner of the goods, could reclaim them instead of standing in line as an unsecured creditor.

ROT clauses became prominent through the 1976 English Court of Appeal decision Aluminium Industrie Vaassen BV v. Romalpa Aluminium Ltd [1976] 1 WLR 676, which upheld a clause allowing the seller to retain title and even claim proceeds of resale in certain circumstances​.

Since then, such clauses are commonly referred to as “Romalpa clauses” in many jurisdictions, especially in the UK and Commonwealth countries.

2.1 Types of Retention of Title Clauses

Over time, businesses have used various formulations of retention of title clauses to extend protection. Common types include:

• Simple ROT: Title to the specific goods remains with the seller until the purchase price for those goods is paid​.

• All Sums (All Monies) ROT: Title in the goods remains with the seller until all outstanding debts owed by the buyer to that seller (not just the price of particular goods) are paid​.

• Proceeds ROT: If the buyer resells the goods, the seller’s rights extend to the proceeds of resale (sometimes via a trust over proceeds)​.

• Expanded or Manufacturing ROT: The clause purports to cover goods that are mixed, processed, or incorporated into other products, sometimes giving the seller an interest in the resulting product​.

These extended forms aim to give sellers greater security, but they also raise legal complications. Courts in many countries have been wary of broad ROT clauses and often recharacterize them as security interests (such as charges) that require compliance with secured transactions or company charge registration laws​

For example, UK courts have held that an ROT clause attempting to cover goods not yet manufactured or to cover proceeds of sale may be treated as a registrable charge and void if not registered​.

The result is that while simple clauses (covering identified delivered goods until their price is paid) are usually enforceable, “extended” ROT clauses (covering all debts or proceeds) often fail unless the formal requirements for security interests are met​.

2.2 Terminology in U.S. Law

In the United States and Canada, contracts with retention of title are typically known as conditional sales agreements.​

Historically, a conditional sale allowed the seller to retain title as security until payment. Modern U.S. law, however, does not treat ROT clauses as an exotic or unique concept – instead, it subsumes them under the law of secured transactions.

As discussed next, the UCC treats a seller’s reservation of title as creating a security interest rather than an absolute ownership right​

Consequently, ROT clauses in the U.S. must comply with Article 9 of the UCC to be effective against third parties.

3. Retention of Title under U.S. Law: The UCC Framework

In contrast to English law (which still permits contractual title reservation under the Sale of Goods Act 1979, s19), the United States uses a functional approach to security interests​. All transactions that in substance secure an obligation are treated uniformly.

UCC Article 9 (Secured Transactions) provides a comprehensive scheme governing creation, perfection, and priority of security interests in personal property, regardless of the form of the transaction.

This approach explicitly includes retention of title arrangements.

In short, under U.S. law a retention of title clause is not a magic bullet that allows a seller to circumvent secured transactions law – it is simply one form of a security interest.

3.1 Retention of Title = Security Interest

The UCC is unambiguous on this point. UCC Article 2-401(1), which addresses passing of title in sales, states that “Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest.”.​

Similarly, UCC Article 1-201(b)(35) (general definitions) provides that the term “security interest” includes the interest of a seller “retaining or reserving title to delivered goods under UCC 2-401”, i.e. a Romalpa clause is treated as a security interest.​

The official rationale is that Article 2 of the UCC deals with rights and remedies between seller and buyer without regard to title, while questions of property rights against third parties are left to Article 9​.​

In other words, calling an arrangement a “retention of title” will not allow a seller to evade the rules of secured transactions; the UCC looks at the substance (a seller financing the buyer’s purchase and retaining an interest in the goods as collateral) rather than the form.

The consequence of this characterisation is critical: a seller who sells goods on credit retaining title until payment is legally a secured party holding a security interest in the goods.

The buyer, despite not having “title,” is treated as owning the goods for most purposes, but subject to the seller’s security interest.

The seller’s interest – often termed a purchase money security interest (PMSI) when it arises from the sale of the collateral – must comply with Article 9’s requirements to be enforceable and to have priority over other creditors​.

3.2 Attachment in Retention of Title: Enforceability Between Seller and Buyer

For a security interest to be enforceable against the debtor (buyer), it must attach (UCC Article  9-203). In a typical ROT transaction, attachment is straightforward.

The buyer and seller’s agreement (the sales contract or invoice containing the ROT clause) functions as the security agreement – it indicates the seller’s retained interest in the goods (collateral) to secure payment (the obligation)​.

Attachment requires that:

1. Value has been given (delivery on credit is value)
2. The debtor has rights in the collateral (the buyer gains possessory rights in the goods),
3. Either the debtor authenticated a security agreement describing the collateral, or the secured party has control/possession when applicable (for goods, a signed agreement describing the goods suffices).

In an ROT sale, these conditions are met once the goods are delivered and the agreement is signed: the buyer has possession (rights in the goods) and the contract itself evidences the security interest in those goods.

Thus, the ROT clause gives the seller an attached security interest in the goods up to the amount of the unpaid price.

Between the seller and buyer, this means the seller can rely on secured party remedies upon the buyer’s default. If the buyer fails to pay, the seller (as a secured creditor) has the right to repossess the goods or otherwise enforce the security interest under Article 9’s default rules (UCC Articles 9-609, 9-610, etc.).

Notably, the seller’s retention of title does not automatically revest ownership in the seller upon default; it is treated like any security interest – the seller must either get the buyer’s agreement or follow lawful repossession and foreclosure procedures to retake the goods or dispose of them​

The UCC rejects any concept of “automatic rescission” based on title – unless the contract expressly provides for rescission, the seller’s remedy is that of a secured party, not an outright owner by operation of law​.

3.3 Perfection in in Retention of Title: Protecting the Interest Against Third Parties

While attachment ensures the clause is enforceable against the buyer, perfection is required to protect the seller’s interest against claims of other creditors, a bankruptcy trustee, or a buyer from the debtor.

Perfection typically requires the secured party to file a financing statement (UCC-1) in the appropriate state filing office (usually the state of the debtor’s location) describing the collateral (the goods).

There are some exceptions – for example, PMSIs in consumer goods are automatically perfected upon attachment (UCC  9-309(1)).

However, in most commercial settings (inventory, equipment, etc.), the seller must file to perfect its ROT security interest. Retaining title on paper is not enough; without perfection, the seller’s interest is vulnerable.

If the seller does not perfect the security interest, it is effective against the buyer but generally subordinate to other parties’ claims. Notably, an unperfected security interest is subordinate to:

3.3.1 A lien creditor or bankruptcy trustee

Under UCC 9-317(a) and the Bankruptcy Code, a bankruptcy trustee (or debtor-in-possession) has the status of a hypothetical judicial lien creditor as of the bankruptcy filing.

Such a lien creditor will have priority over any unperfected security interest. In practical terms, if the buyer files for bankruptcy and the seller has not perfected its retained title interest, the bankruptcy estate (for the benefit of general creditors) takes the goods free of the seller’s interest​.

The seller becomes merely an unsecured creditor for the unpaid price. This was exemplified in Matter of Samuels & Co. (5th Cir. 1976), where a seller delivered cattle under a purported cash-sale/retention arrangement but failed to properly perfect; a lender with a perfected security interest and the bankruptcy trustee prevailed over the unpaid seller’s title claim​.

The court confirmed that Article 9’s priority rules trump an unpaid seller’s reservation of title – a seller’s retention-of-title “argument was clearly a loser” because title’s location is irrelevant to priority once Article 9 applies​.

3.3.2 Prior perfected secured creditors

If the buyer already granted a security interest in its after-acquired inventory or equipment to a lender, that lender’s interest can attach to the goods when the buyer acquires them.

A seller who retains title but does not perfect is in danger of losing priority to such a lender who has perfected.

Again, the ROT seller’s interest is treated as a security interest that was unperfected, while the lender’s floating lien is perfected – the lender will have priority.

U.S. case law is replete with examples of sellers losing to prior bank liens when they neglected to file. Courts uniformly hold that once the goods are delivered, a retention-of-title seller’s interest exists only as an Article 9 security interest, so a prior perfected Article 9 interest has precedence​.

3.3.3 Buyers in ordinary course of business

Even if perfected, a security interest can be cut off by a buyer in ordinary course of business (BIOC) under UCC 9-320(a).

If the original buyer (debtor) is allowed to resell the goods (common if the goods are inventory), a good-faith purchaser from that buyer will generally take the goods free of the ROT seller’s security interest, even if the purchaser knows of the interest (provided they don’t know the sale violates a security agreement)​.

The original seller’s interest would then attach to the proceeds of that resale (UCC 9-315). This means that a Romalpa clause cannot assure the seller repossession of the actual goods once they’ve been sold downstream in the ordinary course; instead, the seller’s protection shifts to whatever proceeds the original buyer received.

Perfection of the security interest will help the seller claim those proceeds (cash or accounts receivable) under Article 9’s rules on proceeds, but identifying and recovering proceeds can be challenging in practice.

In summary, under Article 9 perfection is crucial for a retention of title clause to have teeth beyond the immediate buyer-seller relationship. Without perfection, the seller’s reserved interest may be defeated by other creditors or by subsequent purchasers​.

Most often, trade sellers who use ROT clauses but fail to file find themselves as unsecured creditors if the buyer becomes insolvent – the very outcome the ROT clause was meant to avoid.

4. Purchase Money Security Interest (PMSI) Priority

The UCC does, however, offer a powerful advantage to sellers who properly perfect their security interest: the purchase money security interest priority rules.

A seller’s ROT security interest in goods sold on credit is by definition a PMSI in goods, since it is a security interest taken by the seller to secure the price of collateral that was sold to the debtor (UCC 9-103(b)(1)).

Article 9 gives PMSIs a super-priority over earlier-filed security interests in the same goods, provided the PMSI is perfected and certain conditions are met:

(a) For equipment and other non-inventory goods, the rule is simple: a perfected PMSI has priority over conflicting interests in the same goods as long as the PMSI is perfected within 20 days of the debtor receiving the collateral (UCC 9-324(a)).

So a seller who files a financing statement promptly after delivery (within 20 days) will trump a prior floating lien on after-acquired equipment.

(b) For inventory (and livestock), the PMSI rules are stricter. The PMSI must be perfected before the debtor receives possession of the inventory, and the PMSI holder must send an authenticated notification to any holder of a conflicting security interest in inventory, informing them of the PMSI before the debtor receives the inventory (UCC 9-324(b)).

In practice, a seller with a retention of title clause on inventory should file a UCC-1 and give written notice to prior inventory lenders before delivering the goods.

If these steps are taken, the seller’s PMSI in the inventory will have priority over the prior perfected inventory lien. If the seller fails to meet these timing and notice requirements, its interest will be subordinate to the earlier lender’s security interest in inventory.

The PMSI priority is a critical feature for vendors. It means that an ROT seller who follows Article 9’s rules can achieve a first-priority lien in the goods sold, even if the buyer had pre-existing secured debt.

This is analogous in effect to the Romalpa clause’s goal – giving the seller a claim to the goods ahead of the buyer’s other creditors – but it is accomplished through the transparent, regulated mechanism of Article 9.

U.S. courts in ROT cases often point out that the seller could have protected itself by filing, and if it did not, the loss of priority is the seller’s own doing, not a failing of the law​

In other words, U.S. law does allow a form of “retention of title” security to prevail, but only for diligent sellers who perfect their interest.

5. Key Judicial Decisions in the U.S. on the UCC’s Treatment of Retention of Title

American case law consistently reinforces the UCC’s treatment of ROT clauses. Some leading judicial interpretations include:

5.1 Matter of Samuels & Co., Inc., 510 F.2d 139 (5th Cir. 1975)

This influential case involved ranchers who sold cattle to a meat packing company under what was intended as a cash transaction (no payment, no transfer of title).

The buyer went bankrupt after delivery without paying, and a financing company (CIT) held a perfected floating lien on the buyer’s inventory (including the cattle).

The unpaid sellers argued they had never transferred title (a kind of implied ROT). The Fifth Circuit, en banc, held that UCC 2-401 made the sellers’ retained title at best a security interest, which they had not perfected.

Therefore, the perfected Article 9 security interest took priority over the unpaid sellers’ rights. ​The court adopted the view that Article 9’s goal is to invalidate secret title reservations as against third parties, requiring compliance with filing requirements.

Samuels is often cited for the principle that a seller’s reservation of title cannot defeat a duly perfected security interest or the bankruptcy trustee’s strong-arm powers​.

It also clarified that even a “cash sale” reservation (where the intent is no title passes until cash is paid) is subject to UCC 2-401’s rule and thus to Article 9 if goods were delivered.

Unpaid cash sellers must use reclamation rights or Article 9 – they cannot simply retain ownership outside the UCC’s framework.

5.2 In re Federals, Inc., (6th Cir. 1977)

In this case, a supplier delivered goods to a buyer with a contract clause stating title remained with the seller until payment.

The Sixth Circuit found that under the UCC, this clause created a security interest, and because the seller did not perfect, the seller’s interest was subordinate to the bankruptcy trustee.

The court emphasised that the location of title is irrelevant under Article 9 and that to secure priority the seller needed to file a financing statement (mirroring the Samuels rationale).

5.3 Maryott v. Oconto Cattle Co, 607 N.W.2d 820 (2000) Nebraska Supreme Court

This case involved a dispute between a seller who claimed to have reserved title in cattle and a lender (Farm Credit) with a perfected security interest in the buyer’s livestock.

The court reaffirmed that UCC Article 2-401 “specifically limits a seller’s ability to reserve title once possession is surrendered…even when title is reserved, the effect…is the retention of a security interest.”​

The seller’s reservation of title did not give him automatic ownership of the cattle upon non-payment; rather, it was an unperfected security interest, and Farm Credit’s perfected interest had priority​.

The Nebraska court, citing Samuels, underscored that Article 9 cannot be circumvented by contract language – “the contract…did not provide for revesting of title on nonpayment except as a security interest, and a reservation of title does not automatically give [the seller] rights to the collateral superior to a perfected secured party”​.

Maryott thus illustrates how state courts uniformly interpret ROT clauses in line with the UCC: as conditional sales subject to secured transactions law.

6. What Creditors and Debtors Need to Know About Retention of Title

The U.S. approach to retention of title has significant practical implications for both sellers (creditors) and buyers (debtors):

6.1 ROT Implications for Seller-Creditors

A supplier selling goods on credit can still seek the protection that a Romalpa clause is meant to offer – but must do so within the Article 9 system. In practice, this means the seller should:

6.1.1 Document the security interest clearly

The contract or invoice should explicitly state that the seller retains a security interest (or title as security) in the goods until payment is complete.

This doubles as the security agreement for Article 9 purposes. Clear drafting puts the buyer and any reviewing court on notice of the intended security arrangement.

6.1.2 Perfect the security interest

Typically, this involves filing a UCC-1 financing statement quickly after or just before delivering the goods. The financing statement need only briefly describe the collateral (e.g., “all [specified goods] sold by X to Debtor, pursuant to retention of title”) and is filed with the state Secretary of State (for most debtors).

The cost and effort of filing are relatively minimal, especially compared to the risk of losing one’s rights by not filing.

If the goods are of a type covered by a certificate of title (e.g. vehicles) – UCC Article 9-303, or if the transaction is a fixture or timber, the seller must follow the relevant perfection method (title notation or real estate filing).

Sellers of inventory should also send the required PMSI notice to any known secured inventory lender of the buyer, prior to delivery, to preserve PMSI super-priority.

6.1.3 Monitor and enforce diligently

Even after perfection, a ROT seller should remain vigilant. If the buyer defaults, the seller (as a secured party) can repossess the goods (peacefully if possible, under UCC 9-609) or invoke judicial process, and then sell or otherwise dispose of them to satisfy the debt.

The seller must follow Article 9’s foreclosure rules, including the requirement of commercial reasonableness and notice of sale (UCC 9-610 et seq.), unless these are effectively and lawfully waived.

The seller should also be aware of the goods’ status – if the buyer is reselling them, the seller’s interest may be cut off, leaving a claim to proceeds.

Thus, including terms that require the buyer to segregate proceeds or not commingle goods can be practically helpful, though such terms by themselves won’t override the UCC rules that protect “buyer in the course of business” purchasers​.

6.1.4 Understand limitations

Despite having a security interest, the seller’s control is not absolute. For instance, if the buyer files bankruptcy, the seller’s right to reclaim the goods is subject to the automatic stay.

The seller would need relief from stay to repossess, or else can file a secured claim. Moreover, if the seller somehow failed to perfect properly, bankruptcy will likely treat them as unsecured.

Sellers should also know about UCC 2-702 (the right of an unpaid seller to reclaim goods within 10 days of buyer’s receipt if the buyer was insolvent), which is a limited remedy and subordinate to the rights of good faith purchasers or secured creditors (UCC 2-702(3)).

In essence, a retention of title clause does not give the seller any greater rights than a secured creditor; they are secured creditors, with all the accompanying requirements and constraints. Therefore, a retention of title clause must be treated as a secured transaction in the U.S.

Sellers can achieve near-equivalent protection to owning the goods by obtaining a perfected PMSI, but that entails embracing Article 9’s registration formalities.

Many trade creditors in the U.S. actually forego ROT clauses and sell on open credit unsecured, or they take other security (like personal guarantees or letters of credit) due to the administrative burden of filing.

However, for high-value sales or repetitive transactions, the extra step of filing can be well worth it to avoid being an unsecured creditor in the event of buyer insolvency.

6.2 ROT Implications for Buyer-Debtors

From the buyer’s perspective, a retention of title clause means that although they may have possession of the goods and even the risk of loss, they do not have free and clear ownership until payment is complete. This has a few consequences:

6.2.1 Limited rights to use the goods as collateral

The buyer cannot grant another lender a security interest in the goods free of the seller’s interest (except perhaps by paying off the seller – akin to refinancing the PMSI).

Any financier will discover the seller’s filed financing statement (if one has been filed) and will either require subordination or payoff.

In practical terms, goods under an ROT clause are encumbered assets on the buyer’s balance sheet, similar to assets purchased on secured credit.

6.2.2 Risk of repossession

The buyer must be aware that defaulting on the payment obligation gives the seller the right to repossess.

This is similar to buying on credit generally, but an ROT clause can sometimes catch unwary buyers by surprise if they assumed “title” being retained was a mere formality.

Businesses are generally familiar with secured financing, so an ROT clause is not unusual – it just means the buyer needs to manage that obligation carefully to avoid losing essential inventory or equipment.

6.2.3 Insurance and risk considerations

Typically, even though the seller retains title for security, the risk of loss after shipment often passes to the buyer (depending on contract terms and UCC default rules).

The buyer should insure the goods because if they are damaged or destroyed, the buyer usually still owes the price. The ROT clause might specify insurance requirements and loss responsibilities.

Additionally, because the buyer has an insurable interest (UCC 2-501(1) grants the buyer a special property interest upon identification of goods to the contract) despite the seller’s retained title, both parties may have insurable interests. Clear contract terms can avoid confusion here.

6.2.4 Operational freedom

If the goods are inventory for resale, the buyer will generally have the right (or at least the practical ability) to resell them notwithstanding the ROT clause.

U.S. buyers in ordinary course take free of the security interest, which facilitates commerce. But the buyer must then turn over proceeds to the seller or otherwise pay the debt, or they risk breach of the agreement and conversion of proceeds.

In some jurisdictions outside the U.S., using or selling ROT-covered goods without the seller’s permission could even be a criminal offence (as it may be viewed as selling someone else’s property).

Under U.S. law, it’s governed by contract and Article 9 – if the buyer sells the goods and fails to pay the seller, the seller’s interest attaches to the proceeds and the seller can also sue for breach of contract or seek recovery of proceeds. The buyer thus has some flexibility but also a clear obligation to account for the collateral’s value.

In essence, for debtors, an ROT clause is functionally equivalent to buying on a chattel mortgage or secured credit. It doesn’t deprive them of the ability to use the goods in business, but it does mean they have a secured debt to pay off.

Debtors should treat the seller as a secured creditor in their records and financial planning. If they need to refinance or restructure, they must deal with the ROT creditor like any other lienholder.

7. U.S. vs International Approaches to Retention of Title

The U.S. approach under Article 9, which requires public filing and treats ROT as a security interest, differs from the approach in some other jurisdictions.

Internationally, there is a split between systems that continue to respect retention of title as a distinct property right and those that have shifted to a unified secured transactions regime.

7.1 ROT Clauses in theUnited Kingdom and Traditional Common Law

In the UK, ROT clauses are valid under the Sale of Goods Act 1979 s19, which allows the seller to reserve the right of disposal of goods until conditions are met​.

British courts in Romalpa and subsequent cases enforced simple retention of title in bankruptcies, allowing sellers to reclaim identifiable goods.

However, UK case law has also policed the boundaries of ROT clauses: if a clause goes too far (for example, an “all monies” clause or a clause claiming proceeds or manufactured products), courts may re-characterise it as a charge that, if unregistered, is void against a company’s administrator or liquidator.

For instance, Re Bond Worth [1980] Ch 228 and Re Peachdart [1984] Ch 131, held that certain ROT arrangements were in substance floating charges requiring registration​.

Nevertheless, the UK has not (yet) adopted an Article 9-style general filing system for outright ROT clauses, so a simple ROT (title to specific delivered goods until paid) remains a potent tool for sellers, giving them priority without registration in many cases.

This can be seen as a formal ownership-based approach: the seller’s property right is recognised, subject to some carve-outs (like buyer in ordinary course rules, and the need for incorporation of the clause into the contract).

7.2 ROT Clauses in the European Union

The EU’s Late Payment Directive (2011/7/EU) explicitly recognised ROT clauses by requiring Member States to ensure that sellers can retain title until payment if a clause is agreed​.

The EU Insolvency Regulation (2015/848) also respects sellers’ ROT rights across borders.​

In civil law countries like Germany, ROT clauses (Eigentumsvorbehalt) are very common and generally enforceable without registration – the seller retains ownership by default until payment, and in insolvency the ROT goods are excluded from the estate, or subject to the seller’s right to separate them.

Extended ROT clauses (covering proceeds or processed goods) are also recognised to an extent under German law (proceeds become the property of the seller, etc.), though subject to some limitations.

France and other civil law jurisdictions allow ROT if agreed in writing (in France, it must be accepted by the buyer at the latest upon delivery, per the Code de Commerce), and they often give the seller a privilege to reclaim the goods in insolvency.

Thus, in many non-U.S. jurisdictions, a retention of title clause can operate as a kind of “secured transaction” without registration, stemming from the idea that the seller never parted with ownership​.

7.3 Personal Property Security Acts (PPSA) – Canada, Australia, New Zealand

Following the North American model, Canada’s common-law provinces have Personal Property Security Acts that mirror Article 9’s functional approach​.

A ROT clause in Ontario or British Columbia, for example, is treated as a security interest (“reservation of ownership…constitutes a security interest” under PPSA).

Sellers must register their security interest to be protected. Australia and New Zealand have similarly adopted PPSA regimes.

The Australian PPSA 2009 explicitly includes retention of title arrangements as “PPSA retention of title security interests,” requiring registration on the PPSR (Personal Property Securities Register).

​In these countries, the reforms were in part motivated by the desire to end the unpredictability of Romalpa litigation and bring all security devices under one filing system.

ROT clauses are still used, but now as part of a larger secured lending framework – much like in the U.S., an unregistered ROT clause will generally be ineffective against third parties (including an insolvency practitioner).

7.4 ROT Clauses in Quebec

An outlier is Quebec (Canada’s civil law province), which does not follow the PPSA model for ROT. Under the Civil Code of Quebec 1991, a simple retention of title is treated as a suspensive condition of sale rather than a security device, and there is “no presumption of hypothec” for a ROT clause​.

Thus, in Quebec a seller can reserve ownership and reclaim goods from an insolvent buyer without needing to register a hypothec, as long as the clause is properly agreed.

However, Quebec’s rules are unique in North America and highlight the divergence between strict property-law approaches and the functional Article 9 approach.

Overall, the U.S. ROT approach is increasingly influential worldwide, as seen by the spread of PPSA laws and the guidance of international bodies. The UNCITRAL Model Law on Secured Transactions (2016), for example, recommends that all security interests in personal property – including retention of title arrangements – be subject to a single registration system​.

The policy rationale is to promote transparency and certainty: any creditor or prospective creditor can search a registry to discover security interests, rather than being surprised by hidden title claims.

Critics of retention of title have long argued that it allows a secret lien that disadvantages general creditors and even other secured creditors who might not know of the ROT supplier’s claim (especially in jurisdictions without filing requirements).

By requiring ROT sellers to register like any secured party, Article 9-type systems aim to balance the interests of sellers with those of other creditors and purchasers​.

8. Conclusion

Retention of title clauses, or Romalpa clauses, serve as an important financing tool for sellers seeking to secure payment in commercial sales.

In U.S. law, their role has been fully absorbed into the secured transactions regime of the UCC. Rather than treating ROT as a distinct concept of title, the U.S. treats it as a form of security interest that must follow the Article 9 rules for perfection and priority​.

This functional approach ensures that all security devices – whether called ownership retention, chattel mortgage, conditional sale, or otherwise – are subject to a consistent set of requirements and are visible to third parties through public filings.

Courts have consistently enforced this approach, holding that an unperfected retention of title will not prevail against bankruptcy trustees or other creditors​, and that the parties cannot evade the UCC by clever drafting about “title.”

At the same time, U.S. law does give diligent sellers a powerful advantage through purchase-money security interest status, enabling ROT-based interests to take priority if properly documented and perfected​.

For creditors, the lesson is clear: in the U.S., a Romalpa clause is only as good as the filing that accompanies it. Creditors who extend goods on credit should perfect their interest and take advantage of PMSI provisions for maximum protection.

For debtors and other creditors, the U.S. system provides greater predictability – a quick lien search will reveal any ROT claims since they appear as filed security interests, thereby avoiding the trap of “hidden owner” situations.