RIGHTS OF SECURED PARTY.

(a) In this section, "good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(b) Subject to Subsection (c), the effect of perfection and nonperfection of a security interest and the priority of a perfected or unperfected security interest with respect to the rights of a purchaser or creditor, including a lien creditor, is governed by the Business & Commerce Code.

(c) If, while a security interest in a vessel or outboard motor is perfected by any method under this chapter, the department issues a certificate of title that does not indicate that the vessel or outboard motor is subject to the security interest or contain a statement that it may be subject to security interests not indicated on the certificate of title:

(1) a buyer of the vessel or outboard motor, other than a person in the business of selling or leasing vessels or outboard motors of that kind, takes free of the security interest if the buyer, acting in good faith and without knowledge of the security interest, gives value and receives possession of the vessel or outboard motor; and

(2) the security interest is subordinate to a conflicting security interest in the vessel or outboard motor that is perfected under Section 31.0569, after creation of the certificate and without the conflicting secured party's knowledge of the security interest.