H.F. _____ DIVISION I 1 GRAIN WAREHOUSE LIEN 2 Section 1. NEW SECTION . 571A.1 Definitions. 3 As used in this chapter, unless the context otherwise 4 requires: 5 1. “Grain” means the same as defined in section 203.1. 6 2. “Grain depositor” means a person having a legal interest 7 in grain who delivers that grain to a licensed grain warehouse. 8 3. “Grain warehouse lien” or “lien” means the lien created 9 pursuant to section 571A.4. 10 4. “Licensed grain warehouse” means any of the following: 11 a. A licensed warehouse as defined in section 203C.1. 12 b. A warehouse operator licensed by the United States 13 department of agriculture as provided by 7 U.S.C. §241 et seq. 14 Sec. 2. NEW SECTION . 571A.2 Applicable law. 15 1. Unless expressly superseded by a provision of this 16 chapter, chapter 554, article 9, shall govern parties and 17 transactions described in this chapter. For purposes of 18 chapter 554, article 9, all of the following apply: 19 a. A grain warehouse lien is an agricultural lien. 20 b. Grain subject to a grain warehouse lien is a farm 21 product. The grain is a fungible good. 22 c. A licensed grain warehouse is a secured party. 23 d. A licensed grain warehouse shall act in the ordinary 24 course of business and in a commercially reasonable manner. 25 e. (1) A grain depositor who incurs an obligation for 26 obtaining a service furnished by a licensed grain warehouse 27 pursuant to section 571A.3 is a debtor. Notwithstanding 28 section 554.9102, a grain depositor is deemed a debtor even if 29 the grain depositor’s legal interest is a security interest, 30 agricultural lien, or other lien in grain. 31 (2) For purposes of section 554.9606, a default occurs when 32 a grain depositor fails to satisfy the incurred obligation as 33 described in section 571A.3. 34 2. This chapter does not create a possessory lien as 35 -1- LSB 5179YC (3) 88 da/ns 1/ 8

H.F. _____ provided in section 554.9333 and does not affect a lien held by 1 a licensed grain warehouse under section 554.7209. 2 Sec. 3. NEW SECTION . 571A.3 Obligation incurred. 3 1. A grain depositor incurs an obligation when delivering 4 grain to a licensed grain warehouse and the licensed grain 5 warehouse furnishes a service with respect to storing, drying, 6 conditioning, processing, or transporting grain for the benefit 7 of the grain depositor. The service may include any act 8 performed by the licensed grain warehouse that preserves the 9 grain or its value as provided in section 554.9207. 10 2. The obligation may be incurred by written agreement or 11 as required by law. Notwithstanding section 554.2201, the 12 obligation may be incurred by oral agreement. Evidence of the 13 obligation may include but is not limited to the licensed grain 14 warehouse’s issuance of a warehouse receipt, scale ticket, or 15 any other confirmatory memoranda or expression recognized under 16 chapter 554, article 2. 17 Sec. 4. NEW SECTION . 571A.4 Lien created. 18 1. A grain warehouse lien is created. The lien secures the 19 satisfaction of an obligation incurred by a grain depositor as 20 provided in section 571A.3. 21 2. The lien is effective and attaches to the grain when the 22 licensed grain warehouse takes possession of the grain. 23 3. The lien attaches to both the grain and any identifiable 24 cash proceeds, as described in section 554.9315, subsection 2, 25 from the sale of the grain. 26 4. The amount of the lien is the entire amount of the 27 outstanding obligation owed by the grain depositor to the 28 licensed grain warehouse pursuant to section 571A.3. 29 Sec. 5. NEW SECTION . 571A.5 Automatic perfection —— 30 priority. 31 1. a. A grain warehouse lien is automatically perfected at 32 the time the lien becomes effective pursuant to section 571A.4. 33 b. The lien is no longer perfected under this section when 34 the licensed grain warehouse relinquishes possession of the 35 -2- LSB 5179YC (3) 88 da/ns 2/ 8

H.F. _____ grain. 1 2. The perfected lien has priority over a conflicting 2 security interest, agricultural lien, or other lien in the same 3 grain, including a security interest or lien that was perfected 4 prior to the effective date of the grain warehouse lien. 5 Sec. 6. NEW SECTION . 571A.6 Perfection by filing —— 6 priority. 7 1. A grain warehouse lien that is effective may also be 8 perfected by filing a financing statement in the office of the 9 secretary of state as provided in section 554.9308. 10 2. a. The financing statement must substantially meet the 11 requirements of section 554.9502, subsection 1, and include 12 all applicable information described in section 554.9516. In 13 addition, the collateral description in the financing statement 14 must at least include the type and number of bushels of grain 15 subject to the lien and each crop year in which the licensed 16 grain warehouse furnished a service in respect to the grain 17 subject to the lien. 18 b. Filing a financing statement as provided in paragraph 19 “a” satisfies all requirements for the perfection of an 20 agricultural lien as provided in chapter 554, article 9. 21 3. a. A financing statement may be filed during the period 22 that the grain warehouse lien is automatically perfected under 23 section 571A.5. The lien perfected by filing under this 24 paragraph has priority over a conflicting security interest, 25 agricultural lien, or other lien, including a security interest 26 or lien that was perfected prior to the effective date of the 27 grain warehouse lien. 28 b. A financing statement may be filed after the period 29 that the grain warehouse lien is automatically perfected under 30 section 571A.5. The lien perfected by filing under this 31 paragraph has priority over a conflicting security interest, 32 agricultural lien, or other lien in the grain as provided in 33 section 554.9322 in the same manner as if the grain warehouse 34 lien had never been automatically perfected. 35 -3- LSB 5179YC (3) 88 da/ns 3/ 8

H.F. _____ c. If the licensed grain warehouse relinquishes possession 1 of the grain and no financing statement is filed, the lien 2 is unperfected until a financing statement is filed. An 3 unperfected lien has priority over a conflicting security 4 interest, agricultural lien, or other lien in the grain as 5 provided in section 554.9322 in the same manner as if the grain 6 warehouse lien had never been automatically perfected. 7 Sec. 7. NEW SECTION . 571A.7 Enforcement. 8 1. After a grain depositor’s default, the licensed grain 9 warehouse may enforce a grain warehouse lien in the same manner 10 provided for agricultural liens pursuant to chapter 554, 11 article 9, part 6. 12 2. After the grain depositor’s default, and during the 13 period that the grain is automatically perfected under section 14 571A.5, the licensed grain warehouse may dispose of the grain 15 as if the licensed grain warehouse were taking possession and 16 disposing of the grain pursuant to chapter 554, article 9, part 17 6. 18 DIVISION II 19 CONFORMING PROVISIONS 20 Sec. 8. Section 554.7209, Code 2020, is amended by adding 21 the following new subsection: 22 NEW SUBSECTION . 6. A warehouse that is a lienholder under 23 this section may enforce a grain warehouse lien as provided in 24 chapter 571A to the extent allowed in that chapter and in lieu 25 of the lien created pursuant to this section. 26 Sec. 9. Section 570.1, subsection 2, unnumbered paragraph 27 1, Code 2020, is amended to read as follows: 28 In order to perfect a lien in farm products as defined 29 in section 554.9102 , which is created under this section , a 30 landlord must file a financing statement as required by section 31 554.9308, subsection 2 . Except as provided in chapters 571 , 32 571A, 572 , 579A , 579B , and 581 , a perfected lien in the farm 33 products has priority over a conflicting security interest or 34 lien, including a security interest or lien that was perfected 35 -4- LSB 5179YC (3) 88 da/ns 4/ 8

H.F. _____ prior to the creation of the lien under this section , if the 1 lien created in this section is perfected on either of the 2 following dates: 3 Sec. 10. Section 570A.5, subsection 2, Code 2020, is amended 4 to read as follows: 5 2. Except as provided in section 570A.2, subsection 3 , the 6 lien shall have equal priority to a lien or security interest 7 which is perfected prior to the time that the agricultural 8 supply dealer lien is perfected. However, a all of the 9 following exceptions apply: 10 a. A landlord’s lien that is perfected pursuant to section 11 570.1 shall have priority over a conflicting agricultural 12 supply dealer lien as provided in section 570.1 , and a that 13 section. 14 b. A harvester’s lien that is perfected pursuant to section 15 571.3 shall have priority over a conflicting agricultural 16 supply dealer lien as provided in section 571.3A . 17 c. (1) A grain warehouse lien that is perfected pursuant 18 to section 571A.5 shall have priority over a conflicting 19 agricultural supply dealer lien. 20 (2) A grain warehouse lien that is perfected pursuant 21 to section 571A.6 shall have priority over a conflicting 22 agricultural supply dealer lien only as provided in that 23 section. 24 Sec. 11. Section 571.3A, subsection 2, Code 2020, is amended 25 to read as follows: 26 2. a. A harvester’s lien that is perfected under section 27 571.3 shall have priority over a conflicting security interest 28 in harvested crops regardless of when such security interest 29 is perfected. 30 b. A perfected harvester’s lien shall have priority over 31 a conflicting landlord’s lien as provided in chapter 570 , 32 regardless of when such landlord’s lien is perfected. 33 c. (1) A grain warehouse lien that is perfected pursuant to 34 section 571A.5 shall have priority over a conflicting perfected 35 -5- LSB 5179YC (3) 88 da/ns 5/ 8

H.F. _____ harvester’s lien. 1 (2) A grain warehouse lien that is perfected pursuant to 2 section 571A.6 shall have priority over a conflicting perfected 3 harvester’s lien only as provided in that section. 4 Sec. 12. Section 579B.4, subsection 4, paragraph a, 5 subparagraph (2), Code 2020, is amended to read as follows: 6 (2) Notwithstanding subparagraph (1), a commodity 7 production contract lien shall not be superior to a any of the 8 following: 9 (a) A court-ordered lien provided in section 717.4 or a . 10 (b) A veterinarian’s lien created under chapter 581 , if such 11 lien is perfected as an agricultural lien. 12 (c) (1) A grain warehouse lien that is perfected pursuant 13 to section 571A.5. 14 (2) A grain warehouse lien that is perfected pursuant to 15 section 571A.6, but only as provided in that section. 16 DIVISION III 17 APPLICABILITY 18 Sec. 13. APPLICABILITY. This Act applies to grain first 19 delivered by a grain depositor on or after the effective date 20 of this Act. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 GENERAL. This bill creates new Code chapter 571A which 25 provides for a special lien referred to as a “grain warehouse 26 lien”. The lien is imposed pursuant to a financial obligation 27 incurred by a debtor for certain services performed by a 28 creditor who is delivered possession of grain. For purposes 29 of the uniform commercial code (UCC), article 9, the lien is 30 considered an agricultural lien. The lien also attaches to 31 any identifiable cash proceeds resulting from the sale of the 32 grain. The grain is considered a fungible good meaning that 33 it may be comingled with other equivalent grain stored in bulk 34 and the creditor is not required to provide for its special 35 -6- LSB 5179YC (3) 88 da/ns 6/ 8

H.F. _____ identification or segregation. 1 PARTIES. Under the bill, the debtor is a grain depositor 2 (e.g., farmer) who has a legal interest in the grain and 3 relinquishes possession of the grain to a grain warehouse. The 4 creditor is a grain warehouse licensed by either the department 5 of agriculture and land stewardship under Code chapter 203C or 6 by the United States department of agriculture under the United 7 States Warehouse Act, codified in 7 U.S.C. ch. 10. 8 OBLIGATION SUBJECT TO THE LIEN. The financial obligation 9 incurred by the grain depositor is limited to those services 10 related to storing, drying, conditioning, processing, or 11 transporting the grain performed by the licensed grain 12 warehouse. The services may also include any act performed by 13 the licensed grain warehouse that preserves the grain or its 14 value (see Code section 554.9207). 15 PERFECTING THE LIEN —— PRIORITY. The warehouse lien is 16 perfected in two ways. First, the lien is automatically 17 perfected at the time the licensed grain warehouse takes 18 possession of the grain. During the period of possession, 19 the lien enjoys a super-priority status over any competing 20 creditor’s interest. Thus, a licensed warehouse could enforce 21 the lien before all other competing security interests and 22 statutory liens, including agricultural liens, and common law 23 liens regardless of when the competing security interest or 24 lien was perfected. The automatic perfection terminates when 25 the licensed grain dealer relinquishes possession of the grain. 26 However, the licensed warehouse may retain its super-priority 27 status by filing a financing statement (UCC-1) with the 28 secretary of state during the period that the possessory lien 29 is perfected. If the financing statement is filed after 30 the period that the grain warehouse lien is automatically 31 perfected, or the lien is never perfected after that period, 32 the lien has priority over a conflicting security interest, 33 agricultural lien, or other lien in the grain in the same 34 manner as provided for other agricultural liens as if the lien 35 -7- LSB 5179YC (3) 88 da/ns 7/ 8

H.F. _____ had never been automatically perfected. 1 BACKGROUND. Under Iowa’s version of the UCC, article 9, 2 a security interest is created by a contract referred to as 3 a security agreement executed by a creditor and debtor that 4 creates a financial obligation (Code section 554.9201). The 5 security interest attaches to the debtor’s collateral (Code 6 section 554.9203) and based on that agreement the creditor 7 may perfect the security interest by filing a financing 8 statement with the secretary of state (Code section 554.9310). 9 Possession is also a means to perfect a security interest, 10 including general warehouse lien allowed under the UCC, 11 article 7 (Code section 554.7209). In addition, various Code 12 chapters existing outside the UCC create agricultural liens in 13 commodities produced by a farming operation. An agricultural 14 lien is a statutory lien that may secure the payment of a 15 financial obligation associated with commodity production, and 16 is not necessarily possessory, meaning that it may continue to 17 cover the commodity after harvest and delivery (Code section 18 554.9102(1)(e)). However, an agricultural lien must be 19 perfected by filing a financing statement with the secretary 20 of state (Code section 554.9310). Once a lien is created, it 21 receives a degree of priority over the covered collateral among 22 competing creditors seeking to enforce a debt. Generally, 23 under the UCC, article 9, the status of a creditor’s priority 24 is based on the date of the security interest’s perfection. 25 However, certain statutes outside the UCC, article 9, provide 26 a special status to lienholders, including those holding 27 agricultural liens. 28 APPLICABILITY. The bill applies to grain first delivered by 29 a grain depositor on or after the effective date of this Act. 30 -8- LSB 5179YC (3) 88 da/ns 8/ 8