ENTITLED, An Act to revise Article 9 of the Uniform Commercial Code, to make an appropriation,
and to declare an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 57A-9-102 be amended to read as follows:
57A-9-102. (a) In this chapter:
(1) "Accession" means goods that are physically united with other goods in such a manner
that the identity of the original goods is not lost.
(2) "Account," except as used in "account for," means a right to payment of a monetary
obligation, whether or not earned by performance, (i) for property that has been or is to
be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or
to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary
obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for
the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of
a credit or charge card or information contained on or for use with the card, or (viii) as
winnings in a lottery or other game of chance operated or sponsored by a state,
governmental unit of a state, or person licensed or authorized to operate the game by a
state or governmental unit of a state. The term includes health-care-insurance receivables.
The term does not include (i) rights to payment evidenced by chattel paper or an
instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property,
(v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds
advanced or sold, other than rights arising out of the use of a credit or charge card or
information contained on or for use with the card.
(3) "Account debtor" means a person obligated on an account, chattel paper, or general
intangible. The term does not include persons obligated to pay a negotiable instrument,
even if the instrument constitutes part of chattel paper.
(4) "Accounting," except as used in "accounting for," means a record:
(A) Authenticated by a secured party;
(B) Indicating the aggregate unpaid secured obligations as of a date not more than 35
days earlier or 35 days later than the date of the record; and
(C) Identifying the components of the obligations in reasonable detail.
(5) "Agricultural lien" means an interest, other than a security interest, in farm products:
(A) Which secures payment or performance of an obligation for:
(i) Goods or services furnished in connection with a debtor's farming operation;
or
(ii) Rent on real property leased by a debtor in connection with its farming
operation;
(B) Which is created by statute in favor of a person that:
(i) In the ordinary course of its business furnished goods or services to a debtor
in connection with a debtor's farming operation; or
(ii) Leased real property to a debtor in connection with the debtor's farming
operation; and
(C) Whose effectiveness does not depend on the person's possession of the personal
property.
(6) "As-extracted collateral" means:
(A) Oil, gas, or other minerals that are subject to a security interest that:
(i) Is created by a debtor having an interest in the minerals before extraction;
and
(ii) Attaches to the minerals as extracted; or
(B) Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other
minerals in which the debtor had an interest before extraction.
(7) "Authenticate" means:
(A) To sign; or
(B) With present intent to adopt or accept a record, to attach to or logically associate
with the record an electronic sound, symbol, or process.
(8) "Bank" means an organization that is engaged in the business of banking. The term
includes savings banks, savings and loan associations, credit unions, and trust companies.
(9) "Cash proceeds" means proceeds that are money, checks, deposit accounts, or the like.
(10) "Certificate of title" means a certificate of title with respect to which a statute provides
for the security interest in question to be indicated on the certificate as a condition or
result of the security interest's obtaining priority over the rights of a lien creditor with
respect to the collateral. The term includes another record maintained as an alternative to
a certificate of title by the governmental unit that issues certificates of title if a statute
permits the security interest in question to be indicated on the record as a condition or
result of the security interest's obtaining priority over the rights of a lien creditor with
respect to the collateral.
(11) "Chattel paper" means a record or records that evidence both a monetary obligation and
a security interest in specific goods, a security interest in specific goods and software used
in the goods, a security interest in specific goods and license of software used in the
goods, a lease of specific goods, or a lease of specific goods and license of software used
in the goods. In this paragraph, "monetary obligation" means a monetary obligation
secured by the goods or owed under a lease of the goods and includes a monetary
obligation with respect to software used in the goods. The term does not include (i)
charters or other contracts involving the use or hire of a vessel or (ii) records that evidence
a right to payment arising out of the use of a credit or charge card or information
contained on or for use with the card. If a transaction is evidenced by records that include
an instrument or series of instruments, the group of records taken together constitutes
chattel paper.
(12) "Collateral" means the property subject to a security interest or agricultural lien. The term
includes:
(A) Proceeds to which a security interest attaches;
(B) Accounts, chattel paper, payment intangibles, and promissory notes that have been
sold; and
(C) Goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort with respect to which:
(A) The claimant is an organization; or
(B) The claimant is an individual and the claim:
(i) Arose in the course of the claimant's business or profession; and
(ii) Does not include damages arising out of personal injury to or the death of
an individual.
(14) "Commodity account" means an account maintained by a commodity intermediary in
which a commodity contract is carried for a commodity customer.
(15) "Commodity contract" means a commodity futures contract, an option on a commodity
futures contract, a commodity option, or another contract if the contract or option is:
(A) Traded on or subject to the rules of a board of trade that has been designated as a
contract market for such a contract pursuant to federal commodities laws; or
(B) Traded on a foreign commodity board of trade, exchange, or market, and is carried
on the books of a commodity intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a commodity intermediary carries a
commodity contract on its books.
(17) "Commodity intermediary" means a person that:
(A) Is registered as a futures commission merchant under federal commodities law; or
(B) In the ordinary course of its business provides clearance or settlement services for
a board of trade that has been designated as a contract market pursuant to federal
commodities law.
(18) "Communicate" means:
(A) To send a written or other tangible record;
(B) To transmit a record by any means agreed upon by the persons sending and
receiving the record; or
(C) In the case of transmission of a record to or by a filing office, to transmit a record
by any means prescribed by filing-office rule.
(19) "Consignee" means a merchant to which goods are delivered in a consignment.
(20) "Consignment" means a transaction, regardless of its form, in which a person delivers
goods to a merchant for the purpose of sale and:
(A) The merchant:
(i) Deals in goods of that kind under a name other than the name of the person
making delivery;
(ii) Is not an auctioneer; and
(iii) Is not generally known by its creditors to be substantially engaged in selling
the goods of others;
(B) With respect to each delivery, the aggregate value of the goods is $1,000 or more
at the time of delivery;
(C) The goods are not consumer goods immediately before delivery; and
(D) The transaction does not create a security interest that secures an obligation.
(21) "Consignor" means a person that delivers goods to a consignee in a consignment.
(22) "Consumer debtor" means a debtor in a consumer transaction.
(23) "Consumer goods" means goods that are used or bought for use primarily for personal,
family, or household purposes.
(24) "Consumer-goods transaction" means a consumer transaction in which:
(A) An individual incurs an obligation primarily for personal, family, or household
purposes; and
(B) A security interest in consumer goods secures the obligation.
(25) "Consumer obligor" means an obligor who is an individual and who incurred the
obligation as part of a transaction entered into primarily for personal, family, or household
purposes.
(26) "Consumer transaction" means a transaction in which (i) an individual incurs an
obligation primarily for personal, family, or household purposes, (ii) a security interest
secures the obligation, and (iii) the collateral is held or acquired primarily for personal,
family, or household purposes. The term includes consumer-goods transactions.
(27) "Continuation statement" means an amendment of a financing statement which:
(A) Identifies, by its file number, the initial financing statement to which it relates; and
(B) Indicates that it is a continuation statement for, or that it is filed to continue the
effectiveness of, the identified financing statement.
(28) "Debtor" means:
(A) A person having an interest, other than a security interest or other lien, in the
collateral, whether or not the person is an obligor;
(B) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(C) A consignee.
(29) "Deposit account" means a demand, time, savings, passbook, or similar account
maintained with a bank. The term does not include investment property or accounts
evidenced by an instrument.
(30) "Document" means a document of title or a receipt of the type described in § 57A-7-201(b).
(31) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting
of information stored in an electronic medium.
(32) "Encumbrance" means a right, other than an ownership interest, in real property. The term
includes mortgages and other liens on real property.
(33) "Equipment" means goods other than inventory, farm products, or consumer goods.
(34) "Farm products" means goods, other than standing timber, with respect to which the
debtor is engaged in a farming operation and which are:
(A) Crops grown, growing, or to be grown, including:
(i) Crops produced on trees, vines, and bushes; and
(ii) Aquatic goods produced in aquacultural operations;
(B) Livestock, born or unborn, including aquatic goods produced in aquacultural
operations;
(C) Supplies used or produced in a farming operation; or
(D) Products of crops or livestock in their unmanufactured states.
(35) "Farming operation" means raising, cultivating, propagating, fattening, grazing, or any
other farming, livestock, or aquacultural operation.
(36) "File number" means the number assigned to an initial financing statement pursuant to
§ 57A-9-519(a).
(37) "Filing office" means an office designated in § 57A-9-501 as the place to file a financing
statement.
(38) "Filing-office rule" means a rule adopted pursuant to § 57A-9-526.
(39) "Financing statement" means a record or records composed of an initial financing
statement and any filed record relating to the initial financing statement.
(40) "Fixture filing" means the filing of a financing statement covering goods that are or are
to become fixtures and satisfying § 57A-9-502(a) and (b). The term includes the filing of
a financing statement covering goods of a transmitting utility which are or are to become
fixtures.
(41) "Fixtures" means goods that have become so related to particular real property that an
interest in them arises under real property law.
(42) "General intangible" means any personal property, including things in action, other than
accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods,
instruments, investment property, letter-of-credit rights, letters of credit, money, and oil,
gas, or other minerals before extraction. The term includes payment intangibles and
software.
(43) "Good faith" means honesty in fact and the observance of reasonable commercial
standards of fair dealing.
(44) "Goods" means all things that are movable when a security interest attaches. The term
includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance
or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be
grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured
homes. The term also includes a computer program embedded in goods and any
supporting information provided in connection with a transaction relating to the program
if (i) the program is associated with the goods in such a manner that it customarily is
considered part of the goods, or (ii) by becoming the owner of the goods, a person
acquires a right to use the program in connection with the goods. The term does not
include a computer program embedded in goods that consist solely of the medium in
which the program is embedded. The term also does not include accounts, chattel paper,
commercial tort claims, deposit accounts, documents, general intangibles, instruments,
investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other
minerals before extraction.
(45) "Governmental unit" means a subdivision, agency, department, county, parish,
municipality, or other unit of the government of the United States, a state, or a foreign
country. The term includes an organization having a separate corporate existence if the
organization is eligible to issue debt on which interest is exempt from income taxation
under the laws of the United States.
(46) "Health-care-insurance receivable" means an interest in or claim under a policy of
insurance which is a right to payment of a monetary obligation for health-care goods or
services provided.
(47) "Instrument" means a negotiable instrument or any other writing that evidences a right to
the payment of a monetary obligation, is not itself a security agreement or lease, and is of
a type that in ordinary course of business is transferred by delivery with any necessary
indorsement or assignment. The term does not include (i) investment property, (ii) letters
of credit, or (iii) writings that evidence a right to payment arising out of the use of a credit
or charge card or information contained on or for use with the card.
(48) "Inventory" means goods, other than farm products, which:
(A) Are leased by a person as lessor;
(B) Are held by a person for sale or lease or to be furnished under a contract of service;
(C) Are furnished by a person under a contract of service; or
(D) Consist of raw materials, work in process, or materials used or consumed in a
business.
(49) "Investment property" means a security, whether certificated or uncertificated, security
entitlement, securities account, commodity contract, or commodity account.
(50) "Jurisdiction of organization" with respect to a registered organization, means the
jurisdiction under whose law the organization is formed or organized.
(51) "Letter-of-credit right" means a right to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is at the time entitled to demand payment
or performance. The term does not include the right of a beneficiary to demand payment
or performance under a letter of credit.
(52) "Lien creditor" means:
(A) A creditor that has acquired a lien on the property involved by attachment, levy, or
the like;
(B) An assignee for benefit of creditors from the time of assignment;
(C) A trustee in bankruptcy from the date of the filing of the petition; or
(D) A receiver in equity from the time of appointment.
(53) "Manufactured home" means a structure, transportable in one or more sections, which,
in the traveling mode, is eight body feet or more in width or 40 body feet or more in
length, or, when erected on site, is 320 or more square feet, and which is built on a
permanent chassis and designed to be used as a dwelling with or without a permanent
foundation when connected to the required utilities, and includes the plumbing, heating,
air-conditioning, and electrical systems contained therein. The term includes any structure
that meets all of the requirements of this paragraph except the size requirements and with
respect to which the manufacturer voluntarily files a certification required by the United
States Secretary of Housing and Urban Development and complies with the standards
established under Title 42 of the United States Code.
(54) "Manufactured-home transaction" means a secured transaction:
(A) That creates a purchase-money security interest in a manufactured home, other than
a manufactured home held as inventory; or
(B) In which a manufactured home, other than a manufactured home held as inventory,
is the primary collateral.
(55) "Mortgage" means a consensual interest in real property, including fixtures, which secures
payment or performance of an obligation.
(56) "New debtor" means a person that becomes bound as debtor under § 57A-9-203(d) by a
security agreement previously entered into by another person.
(57) "New value" means (i) money, (ii) money's worth in property, services, or new credit, or
(iii) release by a transferee of an interest in property previously transferred to the
transferee. The term does not include an obligation substituted for another obligation.
(58) "Noncash proceeds" means proceeds other than cash proceeds.
(59) "Obligor" means a person that, with respect to an obligation secured by a security interest
in or an agricultural lien on the collateral, (i) owes payment or other performance of the
obligation, (ii) has provided property other than the collateral to secure payment or other
performance of the obligation, or (iii) is otherwise accountable in whole or in part for
payment or other performance of the obligation. The term does not include issuers or
nominated persons under a letter of credit.
(60) "Original debtor," except as used in § 57A-9-310(c), means a person that, as debtor,
entered into a security agreement to which a new debtor has become bound under § 57A-9-203(d).
(61) "Payment intangible" means a general intangible under which the account debtor's
principal obligation is a monetary obligation.
(62) "Person related to," with respect to an individual, means:
(A) The spouse of the individual;
(B) A brother, brother-in-law, sister, or sister-in-law of the individual;
(C) An ancestor or lineal descendant of the individual or the individual's spouse; or
(D) Any other relative, by blood or marriage, of the individual or the individual's
spouse who shares the same home with the individual.
(63) "Person related to," with respect to an organization, means:
(A) A person directly or indirectly controlling, controlled by, or under common control
with the organization;
(B) An officer or director of, or a person performing similar functions with respect to,
the organization;
(C) An officer or director of, or a person performing similar functions with respect to,
a person described in subparagraph (A);
(D) The spouse of an individual described in subparagraph (A), (B), or (C); or
(E) An individual who is related by blood or marriage to an individual described in
subparagraph (A), (B), (C), or (D) and shares the same home with the individual.
(64) "Proceeds," except as used in § 57A-9-609(b), means the following property:
(A) Whatever is acquired upon the sale, lease, license, exchange, or other disposition
of collateral;
(B) Whatever is collected on, or distributed on account of, collateral;
(C) Rights arising out of collateral;
(D) To the extent of the value of collateral, claims arising out of the loss,
nonconformity, or interference with the use of, defects or infringement of rights in,
or damage to, the collateral; or
(E) To the extent of the value of collateral and to the extent payable to the debtor or the
secured party, insurance payable by reason of the loss or nonconformity of, defects
or infringement of rights in, or damage to, the collateral.
(65) "Promissory note" means an instrument that evidences a promise to pay a monetary
obligation, does not evidence an order to pay, and does not contain an acknowledgment
by a bank that the bank has received for deposit a sum of money or funds.
(66) "Proposal" means a record authenticated by a secured party which includes the terms on
which the secured party is willing to accept collateral in full or partial satisfaction of the
obligation it secures pursuant to §§ 57A-9-620, 57A-9-621, and 57A-9-622.
(67) "Public-finance transaction" means a secured transaction in connection with which:
(A) Debt or other securities are issued; and
(B) The debtor, obligor, secured party, account debtor or other person obligated on
collateral, assignor or assignee of a secured obligation, or assignor or assignee of
a security interest is a state or a governmental unit of a state.
(68) "Public organic record" means a record that is available to the public for inspection and
is:
(A) A record consisting of the record initially filed with or issued by a state or the
United States to form or organize an organization and any record filed with or
issued by the state or the United States which amends or restates the original
record;
(B) An organic record of a business trust consisting of the record initially filed with a
state and any record filed with the state which amends or restates the initial record,
if a statute of the state governing business trusts requires that the record be filed
with the state; or
(C) A record consisting of legislation enacted by the Legislature of a state or the
Congress of the United States which forms or organizes an organization, any record
amending the legislation, and any record filed with or issued by the state or the
United States which amends or restates the name of the organization.
(69) "Pursuant to commitment," with respect to an advance made or other value given by a
secured party, means pursuant to the secured party's obligation, whether or not a
subsequent event of default or other event not within the secured party's control has
relieved or may relieve the secured party from its obligation.
(70) "Record," except as used in "for record," "of record," "record or legal title," and "record
owner," means information that is inscribed on a tangible medium or which is stored in
an electronic or other medium and is retrievable in perceivable form.
(71) "Registered organization" means an organization organized solely under the law of a
single state or the United States by the filing of a public organic record with, the issuance
of a public organic record by, or the enactment of legislation by the state or the United
States. The term includes a business trust that is formed or organized under the law of a
single state if a statute of the state governing business trusts requires that the business
trust's organic record be filed with the state.
(72) "Secondary obligor" means an obligor to the extent that:
(A) The obligor's obligation is secondary; or
(B) The obligor has a right of recourse with respect to an obligation secured by
collateral against the debtor, another obligor, or property of either.
(73) "Secured party" means:
(A) A person in whose favor a security interest is created or provided for under a
security agreement, whether or not any obligation to be secured is outstanding;
(B) A person that holds an agricultural lien;
(C) A consignor;
(D) A person to which accounts, chattel paper, payment intangibles, or promissory
notes have been sold;
(E) A trustee, indenture trustee, agent, collateral agent, or other representative in whose
favor a security interest or agricultural lien is created or provided for; or
(F) A person that holds a security interest arising under §§ 57A-2-401, 57A-2-505,
57A-2-711(3), 57A-2A-508(5), 57A-4-210, or 57A-5-118.
(74) "Security agreement" means an agreement that creates or provides for a security interest.
(75) "Send," in connection with a record or notification, means:
(A) To deposit in the mail, deliver for transmission, or transmit by any other usual
means of communication, with postage or cost of transmission provided for,
addressed to any address reasonable under the circumstances; or
(B) To cause the record or notification to be received within the time that it would have
been received if properly sent under subparagraph (A).
(76) "Software" means a computer program and any supporting information provided in
connection with a transaction relating to the program. The term does not include a
computer program that is included in the definition of goods.
(77) "State" means a state of the United States, the District of Columbia, Puerto Rico, the
United States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States.
(78) "Supporting obligation" means a letter-of-credit right or secondary obligation that
supports the payment or performance of an account, chattel paper, a document, a general
intangible, an instrument, or investment property.
(79) "Tangible chattel paper" means chattel paper evidenced by a record or records consisting
of information that is inscribed on a tangible medium.
(80) "Termination statement" means an amendment of a financing statement which:
(A) Identifies, by its file number, the initial financing statement to which it relates; and
(B) Indicates either that it is a termination statement or that the identified financing
statement is no longer effective.
(81) "Transmitting utility" means a person primarily engaged in the business of:
(A) Operating a railroad, subway, street railway, or trolley bus;
(B) Transmitting communications electrically, electromagnetically, or by light;
(C) Transmitting goods by pipeline or sewer; or
(D) Transmitting or producing and transmitting electricity, steam, gas, or water.
(b) The following definitions in other sections apply to this chapter:
"Applicant." § 57A-5-102.
"Broker." § 57A-8-102.
"Certificated security." § 57A-8-102.
"Check." § 57A-3-104.
"Clearing corporation." § 57A-8-102.
"Contract for sale." § 57A-2-106.
"Control" (with respect to a document of title) § 57A-7-106.
"Customer." § 57A-4-104.
"Entitlement holder." § 57A-8-102.
"Financial asset." § 57A-8-102.
"Holder in due course." § 57A-3-302.
"Issuer" (with respect to a letter of credit or letter-of-credit right). § 57A-5-102.
"Issuer" (with respect to a security). § 57A-8-201.
"Lease." § 57A-2A-103.
"Lease agreement." § 57A-2A-103.
"Lease contract." § 57A-2A-103.
"Leasehold interest." § 57A-2A-103.
"Lessee." § 57A-2A-103.
"Lessee in ordinary course of business." § 57A-2A-103.
"Lessor." § 57A-2A-103.
"Lessor's residual interest." § 57A-2A-103.
"Letter of credit." § 57A-5-102.
"Merchant." § 57A-2-104.
"Negotiable instrument." § 57A-3-104.
"Nominated person." § 57A-5-102.
"Note." § 57A-3-104.
"Proceeds of a letter of credit." § 57A-5-114.
"Prove." § 57A-3-103.
"Sale." § 57A-2-106.
"Securities account." § 57A-8-501.
"Securities intermediary." § 57A-8-102.
"Security." § 57A-8-102.
"Security certificate." § 57A-8-102.
"Security entitlement." § 57A-8-102.
"Uncertificated security." § 57A-8-102.
(c) SDCL chapter 57A-1 contains general definitions and principles of construction and
interpretation applicable throughout this chapter.
Section 2. That § 57A-9-105 be amended to read as follows:
57A-9-105. (a) A secured party has control of electronic chattel paper if a system employed for
evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the
person to which the chattel paper was assigned.
(b) A system satisfies subsection (a) and a secured party has control of electronic chattel paper,
if the record or records comprising the chattel paper are created, stored, and assigned in such a
manner that:
(1) A single authoritative copy of the record or records exists which is unique, identifiable
and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
(2) The authoritative copy identifies the secured party as the assignee of the record or records;
(3) The authoritative copy is communicated to and maintained by the secured party or its
designated custodian;
(4) Copies or amendments that add or change an identified assignee of the authoritative copy
can be made only with the consent of the secured party;
(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a
copy that is not the authoritative copy; and
(6) Any amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
Section 3. That § 57A-9-307 be amended to read as follows:
57A-9-307. (a) In this section, "place of business" means a place where a debtor conducts its
affairs.
(b) Except as otherwise provided in this section, the following rules determine a debtor's
location:
(1) A debtor who is an individual is located at the individual's principal residence.
(2) A debtor that is an organization and has only one place of business is located at its place
of business.
(3) A debtor that is an organization and has more than one place of business is located at its
chief executive office.
(c) Subsection (b) applies only if a debtor's residence, place of business, or chief executive office,
as applicable, is located in a jurisdiction whose law generally requires information concerning the
existence of a nonpossessory security interest to be made generally available in a filing, recording,
or registration system as a condition or result of the security interest's obtaining priority over the
rights of a lien creditor with respect to the collateral. If subsection (b) does not apply, the debtor is
located in the District of Columbia.
(d) A person that ceases to exist, have a residence, or have a place of business continues to be
located in the jurisdiction specified by subsections (b) and (c).
(e) A registered organization that is organized under the law of a state is located in that state.
(f) Except as otherwise provided in subsection (i), a registered organization that is organized
under the law of the United States and a branch or agency of a bank that is not organized under the
law of the United States or a State are located:
(1) In the state that the law of the United States designates, if the law designates a state of
location;
(2) In the state that the registered organization, branch, or agency designates, if the law of the
United States authorizes the registered organization, branch, or agency to designate its
state of location, including by designating its main office, home office, or other
comparable office; or
(3) In the District of Columbia, if neither paragraph (1) nor paragraph (2) applies.
(g) A registered organization continues to be located in the jurisdiction specified by subsection
(e) or (f) notwithstanding:
(1) The suspension, revocation, forfeiture, or lapse of the registered organization's status as
such in its jurisdiction of organization; or
(2) The dissolution, winding up, or cancellation of the existence of the registered
organization.
(h) The United States is located in the District of Columbia.
(i) A branch or agency of a bank that is not organized under the law of the United States or a state
is located in the state in which the branch or agency is licensed, if all branches and agencies of the
bank are licensed in only one state.
(j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the
designated office of the agent upon which service of process may be made on behalf of the carrier.
(k) This section applies only for purposes of this part.
Section 4. That § 57A-9-311 be amended to read as follows:
57A-9-311. (a) Except as otherwise provided in subsection (d), the filing of a financing statement
is not necessary or effective to perfect a security interest in property subject to:
(1) A statute, regulation, or treaty of the United States whose requirements for a security
interest's obtaining priority over the rights of a lien creditor with respect to the property
preempt § 57A-9-310(a);
(2) A certificate-of-title statute of this state under the law of which indication of a security
interest on the certificate of title is required as a condition of perfection; or
(3) A statute of another jurisdiction which provides for a security interest to be indicated on
a certificate of title as a condition or result of the security interest's obtaining priority over
the rights of a lien creditor with respect to the property.
(b) Compliance with the requirements of a statute, regulation, or treaty described in subsection
(a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing
statement under this article. Except as otherwise provided in subsection (d) and §§ 57A-9-313 and
57A-9-316(d) and (e) for goods covered by a certificate of title, a security interest in property subject
to a statute, regulation, or treaty described in subsection (a) may be perfected only by compliance
with those requirements, and a security interest so perfected remains perfected notwithstanding a
change in the use or transfer of possession of the collateral.
(c) Except as otherwise provided in subsection (d) and § 57A-9-316(d) and (e), duration and
renewal of perfection of a security interest perfected by compliance with the requirements prescribed
by a statute, regulation, or treaty described in subsection (a) are governed by the statute, regulation,
or treaty. In other respects, the security interest is subject to this article.
(d) During any period in which collateral subject to a statute specified in subsection (a)(2) is
inventory held for sale or lease by a person or leased by that person as lessor and that person is in
the business of selling goods of that kind, this section does not apply to a security interest in that
collateral created by that person.
Section 5. That § 57A-9-316 be amended to read as follows:
57A-9-316. (a) A security interest perfected pursuant to the law of the jurisdiction designated in
§ 57A-9-301(1) or 57A-9-305(c) remains perfected until the earliest of:
(1) The time perfection would have ceased under the law of that jurisdiction;
(2) The expiration of four months after a change of the debtor's location to another
jurisdiction; or
(3) The expiration of one year after a transfer of collateral to a person that thereby becomes
a debtor and is located in another jurisdiction.
(b) If a security interest described in subsection (a) becomes perfected under the law of the other
jurisdiction before the earliest time or event described in that subsection, it remains perfected
thereafter. If the security interest does not become perfected under the law of the other jurisdiction
before the earliest time or event, it becomes unperfected and is deemed never to have been perfected
as against a purchaser of the collateral for value.
(c) A possessory security interest in collateral, other than goods covered by a certificate of title
and as-extracted collateral consisting of goods, remains continuously perfected if:
(1) The collateral is located in one jurisdiction and subject to a security interest perfected
under the law of that jurisdiction;
(2) Thereafter the collateral is brought into another jurisdiction; and
(3) Upon entry into the other jurisdiction, the security interest is perfected under the law of
the other jurisdiction.
(d) Except as otherwise provided in subsection (e), a security interest in goods covered by a
certificate of title which is perfected by any method under the law of another jurisdiction when the
goods become covered by a certificate of title from this State remains perfected until the security
interest would have become unperfected under the law of the other jurisdiction had the goods not
become so covered.
(e) A security interest described in subsection (d) becomes unperfected as against a purchaser
of the goods for value and is deemed never to have been perfected as against a purchaser of the
goods for value if the applicable requirements for perfection under § 57A-9-311(b) or 57A-9-313
are not satisfied before the earlier of:
(1) The time the security interest would have become unperfected under the law of the other
jurisdiction had the goods not become covered by a certificate of title from this state; or
(2) The expiration of four months after the goods had become so covered.
(f) A security interest in deposit accounts, letter-of-credit rights, or investment property which
is perfected under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated person's
jurisdiction, the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction,
as applicable, remains perfected until the earlier of:
(1) The time the security interest would have become unperfected under the law of that
jurisdiction; or
(2) The expiration of four months after a change of the applicable jurisdiction to another
jurisdiction.
(g) If a security interest described in subsection (f) becomes perfected under the law of the other
jurisdiction before the earlier of the time or the end of the period described in that subsection, it
remains perfected thereafter. If the security interest does not become perfected under the law of the
other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and
is deemed never to have been perfected as against a purchaser of the collateral for value.
(h) The following rules apply to collateral to which a security interest attaches within four
months after the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change pursuant to the law of the jurisdiction
designated in § 57A-9-301(1) or 57A-9-305(c) is effective to perfect a security interest
in the collateral if the financing statement would have been effective to perfect a security
interest in the collateral had the debtor not changed it location;
(2) If a security interest perfected by a financing statement that is effective under paragraph
(1) becomes perfected under the law of the other jurisdiction before the earlier of the time
the financing statement would have become ineffective under the law of the jurisdiction
designated in § 57A-9-301(1) or 57A-9-305(c) or the expiration of the four-month period,
it remains perfected thereafter. If the security interest does not become perfected under
the law of the other jurisdiction before the earlier time or event, it becomes unperfected
and is deemed never to have been perfected as against a purchaser of the collateral for
value.
(i) If a financing statement naming an original debtor is filed pursuant to the law of the
jurisdiction designated in § 57A-9-301(1) or 57A-9-305(c) and the new debtor is located in another
jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect a security interest in collateral in which the
new debtor has or acquires rights before or within four months after the new debtor
becomes bound under § 57A-9-203(d), if the financing statement would have been
effective to perfect a security interest in the collateral if the collateral been acquired by
the original debtor.
(2) A security interest perfected by the financing statement and which becomes perfected
under the law of the other jurisdiction before the earlier of the expiration of the four-month period or the time the financing statement would have become ineffective under
the law of the jurisdiction designated in § 57A-9-301(1) or 57A-9-305(c) remains
perfected thereafter. A security interest that is perfected by the financing statement but
which does not become perfected under the law of the other jurisdiction before the earlier
time or event becomes unperfected and is deemed never to have been perfected as against
a purchaser of the collateral for value.
Section 6. That § 57A-9-317 be amended to read as follows:
57A-9-317. (a) A security interest or agricultural lien is subordinate to the rights of:
(1) A person entitled to priority under § 57A-9-322; and
(2) Except as otherwise provided in subsection (e), a person that becomes a lien creditor
before the earlier of the time:
(A) The security interest or agricultural lien is perfected; or
(B) One of the conditions specified in § 57A-9-203(b)(3) is met and a financing
statement covering the collateral is filed.
(b) Except as otherwise provided in subsection (e), a buyer, other than a secured party, of
tangible chattel paper, tangible documents, goods, instruments, or a certified security takes free of
a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral
without knowledge of the security interest or agricultural lien and before it is perfected.
(c) Except as otherwise provided in subsection (e), a lessee of goods takes free of a security
interest or agricultural lien if the lessee gives value and receives delivery of the collateral without
knowledge of the security interest or agricultural lien and before it is perfected.
(d) A licensee of a general intangible or a buyer, other than a secured party, of collateral other
than tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes
free of a security interest if the licensee or buyer gives value without knowledge of the security
interest and before it is perfected.
(e) Except as otherwise provided in § 57A-9-320 and 57A-9-321, if a person files a financing
statement with respect to a purchase-money security interest before or within 20 days after the debtor
receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee,
or lien creditor which arise between the time the security interest attaches and the time of filing.
Section 7. That § 57A-9-326 be amended to read as follows:
57A-9-326. (a) Subject to subsection (b), a security interest that is created by a new debtor in
collateral in which the new debtor has or acquires rights and is perfected by a filed financing
statement that would be ineffective to perfect the security interest but for the application of § 57A-9-508 or §§ 57A-9-508 and 57A-9-316(i)(1) is subordinate to a security interest in the same collateral
which is perfected other than by a filed financing statement that is effective solely under § 57A-9-508.
(b) The other provisions of this part determine the priority among conflicting security interests
in the same collateral perfected by filed financing statements described in subsection (a). However,
if the security agreements to which a new debtor became bound as debtor were not entered into by
the same original debtor, the conflicting security interests rank according to priority in time of the
new debtor's having become bound.
Section 8. That § 57A-9-406 be amended to read as follows:
57A-9-406. (a) Subject to subsections (b) through (i), an account debtor on an account, chattel
paper, or a payment intangible may discharge its obligation by paying the assignor until, but not
after, the account debtor receives a notification, authenticated by the assignor or the assignee, that
the amount due or to become due has been assigned and that payment is to be made to the assignee.
After receipt of the notification, the account debtor may discharge its obligation by paying the
assignee and may not discharge the obligation by paying the assignor.
(b) Subject to subsection (h), notification is ineffective under subsection (a):
(1) If it does not reasonably identify the rights assigned;
(2) To the extent that an agreement between an account debtor and a seller of a payment
intangible limits the account debtor's duty to pay a person other than the seller and the
limitation is effective under law other than this article; or
(3) At the option of an account debtor, if the notification notifies the account debtor to make
less than the full amount of any installment or other periodic payment to the assignee,
even if:
(A) Only a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;
(B) A portion has been assigned to another assignee; or
(C) The account debtor knows that the assignment to that assignee is limited.
(c) Subject to subsection (h), if requested by the account debtor, an assignee shall seasonably
furnish reasonable proof that the assignment has been made. Unless the assignee complies, the
account debtor may discharge its obligation by paying the assignor, even if the account debtor has
received a notification under subsection (a).
(d) Except as otherwise provided in subsection (e) and §§ 57A-2A-303 and 57A-9-407, and
subject to subsection (h), a term in an agreement between an account debtor and an assignor or in
a promissory note is ineffective to the extent that it:
(1) Prohibits, restricts, or requires the consent of the account debtor or person obligated on
the promissory note to the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in, the account, chattel paper, payment
intangible, or promissory note; or
(2) Provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under the
account, chattel paper, payment intangible, or promissory note.
(e) Subsection (d) does not apply to the sale of a payment intangible or promissory note other
than a sale pursuant to a disposition under § 57A-9-610 or an acceptance of collateral under § 57A-9-
620.
(f) Except as otherwise provided in §§ 57A-2A-303 and 57A-9-407 and subject to subsections
(h) and (i), a rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a
government, governmental body or official, or account debtor to the assignment or transfer of, or
creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule
of law, statute, or regulation:
(1) Prohibits, restricts, or requires the consent of the government, governmental body or
official, or account debtor to the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in the account or chattel paper; or
(2) Provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under the
account or chattel paper.
(g) Subject to subsection (h), an account debtor may not waive or vary its option under
subsection (b)(3).
(h) This section is subject to law other than this article which establishes a different rule for an
account debtor who is an individual and who incurred the obligation primarily for personal, family,
or household purposes.
(i) This section does not apply to an assignment of a health-care-insurance receivable.
(j) This section prevails over any inconsistent statute.
Section 9. That § 57A-9-408 be amended to read as follows:
57A-9-408. (a) Except as otherwise provided in subsection (b), a term in a promissory note or
in an agreement between an account debtor and a debtor which relates to a health-care-insurance
receivable or a general intangible, including a contract, permit, license, or franchise, and which term
prohibits, restricts, or requires the consent of the person obligated on the promissory note or the
account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security
interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective
to the extent that the term:
(1) Would impair the creation, attachment, or perfection of a security interest; or
(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.
(b) Subsection (a) applies to a security interest in a payment intangible or promissory note only
if the security interest arises out of a sale of the payment intangible or promissory note, other than
a sale pursuant to a disposition under § 57A-9-610 or an acceptance of collateral under § 57A-9-620.
(c) A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a
government, governmental body or official, person obligated on a promissory note, or account debtor
to the assignment or transfer of, or creation of a security interest in, a promissory note,
health-care-insurance receivable, or general intangible, including a contract, permit, license, or
franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law,
statute, or regulation:
(1) Would impair the creation, attachment, or perfection of a security interest; or
(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.
(d) To the extent that a term in a promissory note or in an agreement between an account debtor
and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law,
statute, or regulation described in subsection (c) would be effective under law other than this article
but is ineffective under subsection (a) or (c), the creation, attachment, or perfection of a security
interest in the promissory note, health-care-insurance receivable, or general intangible:
(1) Is not enforceable against the person obligated on the promissory note or the account
debtor;
(2) Does not impose a duty or obligation on the person obligated on the promissory note or
the account debtor;
(3) Does not require the person obligated on the promissory note or the account debtor to
recognize the security interest, pay or render performance to the secured party, or accept
payment or performance from the secured party;
(4) Does not entitle the secured party to use or assign the debtor's rights under the promissory
note, health-care-insurance receivable, or general intangible, including any related
information or materials furnished to the debtor in the transaction giving rise to the
promissory note, health-care-insurance receivable, or general intangible;
(5) Does not entitle the secured party to use, assign, possess, or have access to any trade
secrets or confidential information of the person obligated on the promissory note or the
account debtor; and
(6) Does not entitle the secured party to enforce the security interest in the promissory note,
health-care-insurance receivable, or general intangible.
(e) This section prevails over any inconsistent statute.
Section 10. That § 57A-9-502 be amended to read as follows:
57A-9-502. (a) Subject to subsection (b), a financing statement is sufficient only if it:
(1) Provides the name of the debtor and either the social security number or the internal
revenue service taxpayer identification number of the debtor;
(2) Provides the name of the secured party or a representative of the secured party; and
(3) Indicates the collateral covered by the financing statement.
(b) Except as otherwise provided in § 57A-9-501(b), to be sufficient, a financing statement that
covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers
goods that are or are to become fixtures, must satisfy subsection (a) and also:
(1) Indicate that it covers this type of collateral;
(2) Indicate that it is to be filed for record in the real property records;
(3) Provide a description of the real property to which the collateral is related sufficient to
give constructive notice of a mortgage under the law of this State if the description were
contained in a record of the mortgage of the real property. A financing statement covering
timber to be cut or covering minerals or the like (including oil and gas) or accounts
subject to § 57A-9-301, or a financing statement filed as a fixture filing where the debtor
is not a transmitting utility, must show that it covers this type of collateral, must recite that
it is to be filed for record in the real estate records, and the financing statement must
contain a description of the real estate sufficient if it were contained in a mortgage of the
real estate to give constructive notice of the mortgage under the law of this state. If the
debtor does not have an interest of record in the real estate, the financing statement must
show the name of a record owner. No description of the real estate or the name of the
record owner thereof is required for a fixture filing where the debtor is a transmitting
utility; and
(4) If the debtor does not have an interest of record in the real property, provide the name of
a record owner.
(c) A record of a mortgage is effective, from the date of recording, as a financing statement filed
as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only
if:
(1) The record indicates the goods or accounts that it covers;
(2) The goods are or are to become fixtures related to the real property described in the record
or the collateral is related to the real property described in the record and is as-extracted
collateral or timber to be cut;
(3) The record satisfies the requirements for a financing statement in this section, but:
(A) The record need not indicate that it is to be filed in the real property records; and
(B) The record sufficiently provides the name of a debtor who is an individual if it
provides the individual name of the debtor or the surname and first personal name
of the debtor, even if the debtor is an individual to whom § 57A-9-503(a)(4)
applies; and
(4) The record is recorded.
(d) A financing statement may be filed before a security agreement is made or a security interest
otherwise attaches.
Section 11. That § 57A-9-503 be amended to read as follows:
57A-9-503. (a) A financing statement sufficiently provides the name of the debtor:
(1) Except as otherwise provided in paragraph (3), if the debtor is a registered organization
or the collateral is held in a trust that is a registered organization, only if the financing
statement provides the name that is stated to be the registered organization's name on the
public organic record most recently filed with or issued or enacted by the registered
organization's jurisdiction of organization which purports to state, amend, or restate the
registered organization's name;
(2) Subject to subsection (f), if the collateral is being administered by the personal
representative of a decedent, only if the financing statement provides, as the name of the
debtor, the name of the decedent and, in a separate part of the financing statement,
indicates that the collateral is being administered by a personal representative;
(3) If the collateral is held in a trust that is not a registered organization, only if the financing
statement:
(A) Provides, as the name of the debtor:
(i) If the organic record of the trust specifies a name for the trust, the name so
specified; or
(ii) If the organic record of the trust does not specify a name for the trust, the
name of the settlor or testator; and
(B) In a separate part of the financing statement:
(i) If the name is provided in accordance with subparagraph (A)(i), indicates
that the collateral is held in a trust; or
(ii) If the name is provided in accordance with subparagraph (A)(ii), provides
additional information sufficient to distinguish the trust from other trusts
having one or more of the same settlors or the same testator and indicates
that the collateral is held in a trust, unless the additional information so
indicates;
(4) Subject to subsection (g), if the debtor is an individual to whom this state has issued a
driver license that has not expired, only if it provides the name of the individual which is
indicated on the driver license;
(5) If the debtor is an individual to whom paragraph (4) does not apply, only if it provides the
individual name of the debtor or the surname and first personal name of the debtor; and
(6) In other cases:
(A) If the debtor has a name, only if provides the organizational name of the debtor;
and
(B) If the debtor does not have a name, only if it provides the names of the partners,
members, associates, or other persons comprising the debtor in a manner that each
name provided would be sufficient if the person named were the debtor.
(b) A financing statement that provides the name of the debtor in accordance with subsection (a)
is not rendered ineffective by the absence of:
(1) A trade name or other name of the debtor; or
(2) Unless required under subsection (a)(6)(B), names of partners, members, associates, or
other persons comprising the debtor.
(c) A financing statement that provides only the debtor's trade name does not sufficiently provide
the name of the debtor.
(d) Failure to indicate the representative capacity of a secured party or representative of a secured
party does not affect the sufficiency of a financing statement.
(e) A financing statement may provide the name of more than one debtor and the name of more
than one secured party.
(f) The name of the decedent indicated on the order appointing the personal representative of the
decedent issued by the court having jurisdiction over the collateral is sufficient as the "name of the
decedent" under subsection (a)(2).
(g) If this state has issued to an individual more than one driver license of a kind described in
subsection (a)(4), the one that was issued most recently is the one to which subsection (a)(4) refers.
(h) In this section, the "name of the settlor or testator" means:
(1) If the settlor is a registered organization, the name of the registered organization indicated
on the public organic record filed with or enacted by the registered organization; or
(2) In other cases, the name of the settlor or testator indicated in the trust's organic record.
Section 12. That § 57A-9-507 be amended to read as follows:
57A-9-507. (a) A filed financing statement remains effective with respect to collateral that is
sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or
agricultural lien continues, even if the secured party knows of or consents to the disposition.
(b) Except as otherwise provided in subsection (c) and § 57A-9-508, a financing statement is not
rendered ineffective if, after the financing statement is filed, the information provided in the
financing statement becomes seriously misleading under § 57A-9-506.
(c) If the name that a filed financing statement provides for a debtor becomes insufficient as the
name of the debtor under § 57A-9-503(a) so that the financing statement becomes seriously
misleading under § 57A-9-506:
(1) The financing statement is effective to perfect a security interest in collateral acquired by
the debtor before, or within four months after, the filed financing statement becomes
seriously misleading; and
(2) The financing statement is not effective to perfect a security interest in collateral acquired
by the debtor more than four months after the filed financing statement becomes seriously
misleading, unless an amendment to the financing statement which renders the financing
statement not seriously misleading is filed within four months after that event.
Section 13. That § 57A-9-515 be amended to read as follows:
57A-9-515. (a) Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing
statement is effective for a period of five years after the date of filing. Financing statements filed
before July 1, 1997, are effective for a period of five years from the date of filing and thereafter for
a period of sixty days.
The expiration date established by a financing statement filed prior to July 1, 1997, whether or
not continued by a continuation statement shall remain in full force and effect and is not diminished
by any subsequent amendments to this chapter.
(b) Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement
filed in connection with a manufactured-home transaction is effective for a period of thirty years
after the date of filing if it indicates that it is filed in connection with a manufactured-home
transaction.
(c) The effectiveness of a filed financing statement lapses on the expiration of the period of its
effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d).
Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien
that was perfected by the financing statement becomes unperfected, unless the security interest is
perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it
is deemed never to have been perfected as against a purchaser of the collateral for value.
(d) A continuation statement may be filed only within six months before the expiration of the
five-year period specified in subsection (a) or the thirty-year period specified in subsection (b),
whichever is applicable.
However, for financing statements filed before July 1, 1997, a continuation statement may be
filed within six months before and sixty days after the expiration of the five-year period.
(e) Except as otherwise provided in § 57A-9-510, upon timely filing of a continuation statement,
the effectiveness of the initial financing statement continues for a period of five years and, for initial
financing statements filed before July 1, 1997, the effectiveness of the initial financing statement
continues for a period of five years and sixty days, commencing on the day on which the financing
statement would have become ineffective in the absence of the filing. Upon the expiration of the
five-year period, the financing statement lapses in the same manner as provided in subsection (c),
unless, before the lapse, another continuation statement is filed pursuant to subsection (d).
Succeeding continuation statements may be filed in the same manner to continue the effectiveness
of the initial financing statement.
(f) If a debtor is a transmitting utility and a filed initial financing statement so indicates, the
financing statement is effective until a termination statement is filed.
(g) A record of a mortgage that is effective as a financing statement filed as a fixture filing under
§ 57A-9-502(c) remains effective as a financing statement filed as a fixture filing until the mortgage
is released or satisfied of record or its effectiveness otherwise terminates as to the real property.
Section 14. That § 57A-9-516 be amended to read as follows:
57A-9-516. (a) Except as otherwise provided in subsection (b), communication of a record to a
filing office and tender of the filing fee or acceptance of the record by the filing office constitutes
filing.
(b) Filing does not occur with respect to a record that a filing office refuses to accept because:
(1) The record is not communicated by a method or medium of communication authorized
by the filing office;
(2) An amount equal to or greater than the applicable filing fee is not tendered;
(3) The filing office is unable to index the record because:
(A) In the case of an initial financing statement, the record does not provide a name for
the debtor;
(B) In the case of an amendment or information statement, the record:
(i) Does not identify the initial financing statement as required by § 57A-9-512
or 57A-9-518, as applicable; or
(ii) Identifies an initial financing statement whose effectiveness has lapsed
under § 57A-9-515;
(C) In the case of an initial financing statement that provides the name of a debtor
identified as an individual or an amendment that provides a name of a debtor
identified as an individual which was not previously provided in the financing
statement to which the record relates, the record does not identify the debtor's
surname; or
(D) In the case of a record filed or recorded in the filing office described in § 57A-9-501(a)(1), the record does not provide a sufficient description of the real property
to which it relates;
(4) In the case of an initial financing statement or an amendment that adds a secured party of
record, the record does not provide a name and mailing address for the secured party of
record;
(5) In the case of an initial financing statement or an amendment that provides a name of a
debtor which was not previously provided in the financing statement to which the
amendment relates, the record does not:
(A) Provide a mailing address for the debtor; or
(B) Indicate whether the name provided as the name of the debtor is the name of an
individual or an organization;
(6) In the case of an assignment reflected in an initial financing statement under § 57A-9-514(a) or an amendment filed under § 57A-9-514(b), the record does not provide a name
and mailing address for the assignee; or
(7) In the case of a continuation statement, the record is not filed within the six-month period
prescribed by § 57A-9-515(d).
(c) For purposes of subsection (b):
(1) A record does not provide information if the filing office is unable to read or decipher the
information; and
(2) A record that does not indicate that it is an amendment or identify an initial financing
statement to which it relates, as required by § 57A-9-512, 57A-9-514, or 57A-9-518, is
an initial financing statement.
(d) A record that is communicated to the filing office with tender of the filing fee, but which the
filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as
a filed record except as against a purchaser of the collateral which gives value in reasonable reliance
upon the absence of the record from the files.
Section 15. That § 57A-9-518 be amended to read as follows:
57A-9-518. (a) A person may file in the filing office an information statement with respect to a
record indexed there under the person's name if the person believes that the record is inaccurate or
was wrongfully filed.
(b) An information statement under subsection (a) must:
(1) Identify the record to which it relates by:
(A) The file number assigned to the initial financing statement to which the record
relates; and
(B) If the information statement relates to a record filed or recorded in a filing office
described in § 57A-9-501(a)(1), the date and time that the initial financing
statement was filed or recorded and the information specified in § 57A-9-502(b);
(2) Indicate that it is an information statement; and
(3) Provide the basis for the person's belief that the record is inaccurate and indicate the
manner in which the person believes the record should be amended to cure any inaccuracy
or provide the basis for the person's belief that the record was wrongfully filed.
(c) A person may file in the filing office an information statement with respect to a record filed
there if the person is a secured party of record with respect to the financing statement to which the
record relates and believes that the person that filed the record was not entitled to do so under § 57A-9-509(d).
(d) An information statement under subsection (c) must:
(1) Identify the record to which it relates by:
(a) The file number assigned to the initial financing statement to which the record
relates; and
(b) If the statement relates to a record filed or recorded in a filing office described in
§ 57A-9-501(a)(1), the date and time that the initial financing statement was filed
or recorded and the information specified in § 57A-9-502(b);
(2) Indicate that it is an information statement; and
(3) Provide the basis for the person's belief that the person that filed the record was not
entitled to do so under § 57A-9-509(d).
(e) The filing of an information statement does not affect the effectiveness of an initial financing
statement or other filed record.
Section 16. That § 57A-9-521 be amended to read as follows:
57A-9-521. (a) A filing office that accepts written records may not refuse to accept a written
initial financing statement in the following form and format except for a reason set forth in § 57A-9-516(b).
(b) A filing office that accepts written records may not refuse to accept a written record in the
following form and format except for a reason set forth in § 57A-9-516(b).
Section 17. That § 57A-9-607 be amended to read as follows:
57A-9-607. (a) If so agreed, and in any event after default, a secured party:
(1) May notify an account debtor or other person obligated on collateral to make payment or
otherwise render performance to or for the benefit of the secured party;
(2) May take any proceeds to which the secured party is entitled under § 57A-9-315;
(3) May enforce the obligations of an account debtor or other person obligated on collateral
and exercise the rights of the debtor with respect to the obligation of the account debtor
or other person obligated on collateral to make payment or otherwise render performance
to the debtor, and with respect to any property that secures the obligations of the account
debtor or other person obligated on the collateral;
(4) If it holds a security interest in a deposit account perfected by control under § 57A-9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the
deposit account; and
(5) If it holds a security interest in a deposit account perfected by control under § 57A-9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for
the benefit of the secured party.
(b) If necessary to enable a secured party to exercise under subsection (a)(3) the right of a debtor
to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of
the mortgage is recorded:
(1) A copy of the security agreement that creates or provides for a security interest in the
obligation secured by the mortgage; and
(2) The secured party's sworn affidavit in recordable form stating that:
(A) A default has occurred with respect to the obligation secured by the mortgage; and
(B) The secured party is entitled to enforce the mortgage nonjudicially.
(c) A secured party shall proceed in a commercially reasonable manner if the secured party:
(1) Undertakes to collect from or enforce an obligation of an account debtor or other person
obligated on collateral; and
(2) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse
against the debtor or a secondary obligor.
(d) A secured party may deduct from the collections made pursuant to subsection (c) reasonable
expenses of collection and enforcement, including reasonable attorney's fees and legal expenses
incurred by the secured party.
(e) This section does not determine whether an account debtor, bank, or other person obligated
on collateral owes a duty to a secured party.
Section 18. There is hereby appropriated from the general fund the sum of one hundred sixty
thousand dollars ($160,000), or so much thereof as may be necessary, to the secretary of state for the
purpose of complying with the provisions of this Act.
Section 19. The secretary of state shall approve vouchers and the state auditor shall draw
warrants to pay expenditures authorized in this Act.
Section 20. Whereas, section 18 of this Act is necessary for the support of the state government
and its existing public institutions, an emergency is hereby declared to exist, and section 18 of this
Act shall be in full force and effect from and after its passage and approval.
Section 9-801. This Act takes effect on July 1, 2013.
Section 9-802. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
(a) Except as otherwise provided in this part, this Act applies to a transaction or lien within its
scope, even if the transaction or lien was entered into or created before July 1, 2013.
(b) This Act does not affect an action, case, or proceeding commenced before July 1, 2013.
Section 9-803. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
(a) A security interest that is a perfected security interest immediately before this Act takes effect
is a perfected security interest under chapter 57A-9 as amended by this Act if, when this Act takes
effect, the applicable requirements for attachment and perfection under chapter 57A-9 as amended
by this Act are satisfied without further action.
(b) Except as otherwise provided in section 9-805 of this Act, if, immediately before this Act
takes effect, a security interest is a perfected security interest, but the applicable requirements for
perfection under chapter 57A-9 as amended by this Act are not satisfied when this Act takes effect,
the security interest remains perfected thereafter only if the applicable requirements for perfection
under chapter 57A-9 as amended by this Act are satisfied within one year after this Act takes effect.
Section 9-804. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
A security interest that is an unperfected security interest immediately before this Act takes effect
becomes a perfected security interest:
(1) Without further action, when this Act takes effect if the applicable requirements for
perfection under chapter-57A-9 as amended by this Act are satisfied before or at that time;
or
(2) When the applicable requirements for perfection are satisfied if the requirements are
satisfied after that time.
Section 9-805. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
(a) The filing of a financing statement before this Act takes effect is effective to perfect a security
interest to the extent the filing would satisfy the applicable requirements for perfection under chapter
57A-9 as amended by this Act.
(b) This Act does not render ineffective an effective financing statement that, before this Act
takes effect, is filed and satisfies the applicable requirements for perfection under the law of the
jurisdiction governing perfection as provided in chapter 57A-9 as it existed before the effective date
of this Act. However, except as otherwise provided in subsections (c) and (d) and section 9-806 of
this Act, the financing statement ceases to be effective:
(1) If the financing statement is filed in this state, at the time the financing statement would
have ceased to be effective had this Act not taken effect; or
(2) If the financing statement is filed in another jurisdiction, at the earlier of:
(A) The time the financing statement would have ceased to be effective under the law
of that jurisdiction; or
(B) June 30, 2018.
(c) The filing of a continuation statement after this Act takes effect does not continue the
effectiveness of a financing statement filed before this Act takes effect. However, upon the timely
filing of a continuation statement after this Act takes effect and in accordance with the law of the
jurisdiction governing perfection as provided in chapter 57A-9 as amended by this Act, the
effectiveness of a financing statement filed in the same office in that jurisdiction before this Act
takes effect continues for the period provided by the law of that jurisdiction.
(d) Subsection (b)(2)(B) applies to a financing statement that, before this Act takes effect, is filed
against a transmitting utility and satisfies the applicable requirements for perfection under the law
of the jurisdiction governing perfection as provided in chapter 57A-9 as it existed prior to this Act,
only to the extent that chapter 57A-9 as amended by this Act provides that the law of a jurisdiction
other than the jurisdiction in which the financing statement is filed governs perfection of a security
interest in collateral covered by the financing statement.
(e) A financing statement that includes a financing statement filed before this Act takes effect
and a continuation statement filed after this Act takes effect is effective only to the extent that it
satisfies the requirements of §§ 57A-9-501 to 57A-9-530, inclusive, as amended by this Act for an
initial financing statement. A financing statement that indicates that the debtor is a decedent's estate
indicates that the collateral is being administered by a personal representative within the meaning
of § 57A-9-503(a)(2) as amended by this Act. A financing statement that indicates that the debtor
is a trust or is a trustee acting with respect to property held in trust indicates that the collateral is held
in a trust within the meaning of § 57A-9-503(a)(3) as amended by this Act.
Section 9-806. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
(a) The filing of an initial financing statement in the office specified in § 57A-9-501 continues
the effectiveness of a financing statement filed before this Act takes effect if:
(1) The filing of an initial financing statement in that office would be effective to perfect a
security interest under chapter 57A-9 as amended by this Act;
(2) The pre-effective-date financing statement was filed in an office in another state; and
(3) The initial financing statement satisfies subsection (c).
(b) The filing of an initial financing statement under subsection (a) continues the effectiveness
of the pre-effective-date financing statement:
(1) If the initial financing statement is filed before this Act takes effect, for the period
provided in unamended § 57A-9-515 as found prior to July 1, 2015, with respect to an
initial financing statement; and
(2) If the initial financing statement is filed after this Act takes effect, for the period provided
in§ 57A-9-515 as amended by this Act with respect to an initial financing statement.
(c) To be effective for purposes of subsection (a), an initial financing statement must:
(1) Satisfy the requirements of §§ 57A-9-501 to 57A-9-530, inclusive, as amended by this
Act for an initial financing statement;
(2) Identify the pre-effective-date financing statement by indicating the office in which the
financing statement was filed and providing the dates of filing and file numbers, if any,
of the financing statement and of the most recent continuation statement filed with respect
to the financing statement; and
(3) Indicate that the pre-effective-date financing statement remains effective.
Section 9-807. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
(a) In this section, "pre-effective-date financing statement" means a financing statement filed
before this Act takes effect.
(b) After this Act takes effect, a person may add or delete collateral covered by, continue or
terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date
financing statement only in accordance with the law of the jurisdiction governing perfection as
provided in chapter 57A-9 as amended by this Act. However, the effectiveness of a pre-effective-date
financing statement also may be terminated in accordance with the law of the jurisdiction in which
the financing statement is filed.
(c) Except as otherwise provided in subsection (d), if the law of this state governs perfection of
a security interest, the information in a pre-effective-date financing statement may be amended after
this Act takes effect only if:
(1) The pre-effective-date financing statement and an amendment are filed in the office
specified in § 57A-9-501;
(2) An amendment is filed in the office specified in § 57A-9-501 concurrently with, or after
the filing in that office of, an initial financing statement that satisfies section 9-806(c) of
this Act; or
(3) An initial financing statement that provides the information as amended and satisfies
section 9-806(c) of this Act is filed in the office specified in § 57A-9-501.
(d) If the law of this state governs perfection of a security interest, the effectiveness of a
pre-effective-date financing statement may be continued only under section 9-805(c) and ( e) of this
Act or section 9-806 of this Act.
(e) Whether or not the law of this state governs perfection of a security interest, the effectiveness
of a pre-effective-date financing statement filed in this state may be terminated after this Act takes
effect by filing a termination statement in the office in which the pre-effective-date financing
statement is filed, unless an initial financing statement that satisfies section 9-806(c) of this Act has
been filed in the office specified by the law of the jurisdiction governing perfection as provided in
chapter 57A-9 as amended by this Act as the office in which to file a financing statement.
Section 9-808. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
A person may file an initial financing statement or a continuation statement under this part if:
(1) The secured party of record authorizes the filing; and
(2) The filing is necessary under this part:
(A) To continue the effectiveness of a financing statement filed before this Act takes
effect; or
(B) To perfect or continue the perfection of a security interest.
Section 9-809. That chapter 57A-9 be amended by adding thereto a NEW SECTION to read as
follows:
This Act determines the priority of conflicting claims to collateral. However, if the relative
priorities of the claims were established before this Act takes effect, chapter 57A-9-as it existed
before July 1, 2013 determines priority.
An Act to revise Article 9 of the Uniform Commercial Code, to make an appropriation, and to
declare an emergency.
=========================
I certify that the attached Act
originated in the
HOUSE as Bill No. 1059
____________________________
Chief Clerk
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____________________________
Speaker of the House
____________________________
Chief Clerk
____________________________
President of the Senate
____________________________
Secretary of the Senate
House Bill No. 1059
File No. ____
Chapter No. ______
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Received at this Executive Office
this _____ day of _____________ ,
20____ at ____________ M.
By _________________________
for the Governor
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The attached Act is hereby
approved this ________ day of
______________ , A.D., 20___
____________________________
Governor
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STATE OF SOUTH DAKOTA,
ss.
Office of the Secretary of State
Filed ____________ , 20___
at _________ o'clock __ M.
____________________________
Secretary of State
By _________________________
Asst. Secretary of State
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