Text: HF02395 Text: HF02397 Text: HF02300 - HF02399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 554.9307, subsection 1, Code 1999, is 1 2 amended to read as follows: 1 3 1.Except as provided in subsection 4, aA buyer in the 1 4 ordinary course of business as defined in section 554.1201, 1 5 subsection 9, takes free of a security interest created by 1 6 that person's seller even though the security interest is 1 7 perfected and even though the buyer knows of its existence. 1 8 However, this section does not apply to buyers of farm 1 9 products as provided in section 554.9307A. For purposes of 1 10 this section, a buyer or buyer in the ordinary course of 1 11 business includes any commission merchant, selling agent, or 1 12 other person engaged in the business of receiving livestock as 1 13 defined in section 189A.2 on commission for or on behalf of 1 14 another. 1 15 Sec. 2. Section 554.9307, subsections 4 through 6, Code 1 16 1999, are amended by striking the subsections. 1 17 Sec. 3. NEW SECTION. 554.9307A FARM PRODUCTS. 1 18 1. As used in this section, unless the context otherwise 1 19 requires: 1 20 a. "Buyer" means a person who, in the ordinary course of 1 21 business, buys farm products from a person engaged in farming 1 22 operations who is in the business of selling farm products. A 1 23 buyer includes a commission merchant and selling agent as 1 24 defined in this section. 1 25 b. "Central filing system" means a system for filing 1 26 effective financing statements, and statements amending, 1 27 continuing, or terminating effective financing statements as 1 28 provided in subsection 2. 1 29 c. "Commission merchant" means a person engaged in the 1 30 business of receiving any farm product for sale, on 1 31 commission, or for or on behalf of another person. 1 32 d. "Crop year" means the calendar year in which a crop is 1 33 or will be harvested, animals are born or acquired, or poultry 1 34 or eggs are or will be sold. 1 35 e. "Debtor" means a person who owns a farm product and 2 1 subjects it to a security interest, whether or not that person 2 2 owes a debt to the secured party. 2 3 f. "Effective financing statement" means a financing 2 4 statement required to be filed as part of the central filing 2 5 system as provided in subsection 2. 2 6 g. "Farm product" means an agricultural commodity such as 2 7 wheat, corn, soybeans, or a species of livestock such as 2 8 cattle, hogs, sheep, horses, or poultry used or produced in 2 9 farming operations. "Farm product" also means a product of 2 10 such crop or livestock in its unmanufactured state that is in 2 11 the possession of a person engaged in farming operations. The 2 12 secretary, by rule, shall create a list of farm products which 2 13 may include the list of farm products set forth in 9 C.F.R. } 2 14 205.206. 2 15 h. "Internet" means the federated system composed of 2 16 allied computer networks and organizational computer 2 17 facilities, including educational, scientific, and commercial 2 18 institutions, that is international in scope and that 2 19 facilitates data communication, as developed from the network 2 20 established by the United States advanced research projects 2 21 agency. 2 22 i. "Knows" means having actual knowledge. "Knowledge" 2 23 means actual knowledge. 2 24 j. "Secretary" means the secretary of state. 2 25 k. "Security interest" means an interest in a farm product 2 26 that secures payment or performance of an obligation. 2 27 l. "Selling agent" means a person, other than a commission 2 28 merchant, who is engaged in the business of negotiating the 2 29 sale and purchase of a farm product on behalf of a person 2 30 engaged in farming operations. 2 31 2. The secretary of state shall establish and administer a 2 32 central filing system for filing effective financing 2 33 statements or statements amending, continuing, or terminating 2 34 effective financing statements on a statewide basis. The 2 35 central filing system shall provide for the electronic filing 3 1 and examining of effective financing statements, or statements 3 2 amending, continuing, or terminating effective financing 3 3 statements. The central filing system shall be designed to 3 4 allow persons to file and examine these documents using the 3 5 internet. Until July 1, 2004, the central filing system may 3 6 provide for the filing and examining of these documents in a 3 7 paper format, including the compilation of master lists as 3 8 provided in this section. The central financing system must 3 9 comply with the requirements set forth in 7 U.S.C. } 1631 and 3 10 which has been certified by the United States secretary of 3 11 agriculture prior to implementation. 3 12 a. The secretary of state shall provide for filing 3 13 effective financing statements, and statements amending, 3 14 continuing, or terminating effective financing statements, as 3 15 provided in this paragraph. The secretary shall prescribe all 3 16 forms to be used for filing. Presentation for filing of a 3 17 statement and the acceptance of the statement by the secretary 3 18 constitutes filing under this subsection. 3 19 (1) An effective financing statement shall be valid if it 3 20 substantially complies with the requirements of this paragraph 3 21 "a" even though it contains minor errors that are not 3 22 seriously misleading. An effective financing statement shall 3 23 comply with all of the following: 3 24 (a) The statement must be an original or reproduced copy 3 25 which is signed by the secured party and debtor. The 3 26 statement must be filed with the secretary by the secured 3 27 party. The secretary shall record the date and hour of the 3 28 filing of the effective financing statement. The statement 3 29 must contain information that the secretary requires to comply 3 30 with 7 U.S.C. } 1631 or to administer this section. 3 31 (b) The statement must contain all of the following: 3 32 (i) The name and address of the secured party. 3 33 (ii) The name and address of the debtor. 3 34 (iii) The social security number of the debtor or, in the 3 35 case of a debtor doing business other than as an individual, 4 1 the internal revenue service taxpayer identification number of 4 2 the debtor. 4 3 (iv) A description of the farm products subject to the 4 4 security interest, the county in Iowa where the farm products 4 5 are produced or will be produced, the crop year unless every 4 6 crop of the farm product in question for the duration of the 4 7 effective financing statement is to be subject to the 4 8 particular security interest, further details of the farm 4 9 product subject to the security interest if needed to 4 10 distinguish it from other quantities of the farm product owned 4 11 by the same person or persons but not subject to the 4 12 particular security interest, and other information that the 4 13 secretary requires to administer this section. The effective 4 14 financing statement may cover more than one farm product 4 15 located in more than one county. 4 16 (v) Whether the secured party demands that a buyer issue a 4 17 check for payment jointly to the debtor and the secured party 4 18 for the purchase of the farm products. 4 19 (2) The following shall apply to an effective financing 4 20 statement: 4 21 (a) The statement shall remain effective for a period of 4 22 five years from the date of filing, subject to extensions for 4 23 additional periods of five years each by filing or refiling a 4 24 continuation statement within six months before the expiration 4 25 of the five-year period. A continuation statement shall be 4 26 signed by the secured party and the debtor, identify the 4 27 original effective financing statement by file number, and 4 28 state that the original financing statement is still 4 29 effective. Upon timely filing of a continuation statement, 4 30 the effectiveness of the original financing statement shall be 4 31 continued for five years after the last date to which the 4 32 filing was effective, whereupon it shall lapse unless another 4 33 continuation statement is filed prior to the lapse. 4 34 Succeeding continuation statements may be filed in the same 4 35 manner to continue the effectiveness of the original effective 5 1 financing statement. 5 2 (b) The statement shall be amended in writing to reflect a 5 3 material change, within three months of the change. The 5 4 amendment shall be signed and filed as required for an 5 5 original effective financing statement. 5 6 (c) The statement lapses upon the expiration of the 5 7 effective period of the effective financing statement or 5 8 terminates upon the filing of a statement signed by the 5 9 secured party that the effective financing statement is 5 10 terminated. If the effective financing statement has not 5 11 lapsed or terminated and there is no outstanding secured 5 12 obligation and no commitment to make advances, incur 5 13 obligations, or otherwise give value, the debtor may notify 5 14 the secured party in writing to terminate the effective 5 15 financing statement. Until the debtor instructs the secured 5 16 party in writing to terminate the effective financing 5 17 statement, the secured party has no obligation to terminate 5 18 the effective financing statement. Within thirty days after 5 19 receipt by the secured party of the statement from the debtor 5 20 to terminate the effective financing statement, the secured 5 21 party shall file with the secretary a termination statement 5 22 with respect to the effective financing statement. 5 23 b. Until July 1, 2004, the secretary shall compile the 5 24 effective financing statements into a master list subject to 5 25 all of the following: 5 26 (1) The master list shall be organized according to farm 5 27 products. The master list shall contain information required 5 28 to be contained in effective financing statements filed with 5 29 the secretary. The secretary shall arrange the master list 5 30 for each farm product as follows: 5 31 (a) In alphabetical order according to the last name of 5 32 the individual debtors or, in the case of debtors doing 5 33 business other than as individuals, the first word in the name 5 34 of such debtors. 5 35 (b) In numerical order according to the social security 6 1 numbers of the individual debtors or, in the case of debtors 6 2 doing business other than as individuals, the internal revenue 6 3 service taxpayer identification numbers of the debtors. 6 4 (c) Geographically by county. 6 5 (d) By crop year. 6 6 (2) The master list shall include information regarding 6 7 buyers who register with the secretary on forms prescribed by 6 8 the secretary as provided in subparagraph (3). 6 9 (3) The secretary shall maintain a list of all buyers of 6 10 farm products who register with the secretary. A buyer 6 11 registering with the secretary shall complete forms requiring 6 12 all of the following information, as prescribed by the 6 13 secretary: 6 14 (a) The name and address of the buyer. 6 15 (b) The interest of the buyer in receiving the lists 6 16 described in this paragraph "b". 6 17 (c) The farm products in which the buyer has an interest. 6 18 (d) Whether the secured party demands that a buyer issue a 6 19 check for payment jointly to the debtor and the secured party 6 20 for the purchase of the farm products. 6 21 (4) The secretary shall distribute to each registered 6 22 buyer a copy in written, printed, or electronic form of those 6 23 portions of the master list relating to farm products in which 6 24 the buyer has registered an interest. The secretary may 6 25 provide for the distribution of the master list or portions of 6 26 the list on any other medium requested by a registered buyer. 6 27 If a registered buyer so requests, the information provided to 6 28 the buyer may be limited to a county or group of counties 6 29 where the farm product is produced or to a crop year or crop 6 30 years or to a combination of those identifiers. Distribution 6 31 is subject to all of the following: 6 32 (a) The distribution shall be by postal or electronic 6 33 mail. 6 34 (b) The secretary shall, by rule, establish the dates upon 6 35 which the quarterly distributions will be made, the dates 7 1 after which a filing of an effective financing statement will 7 2 not be reflected on the next quarterly distribution of lists, 7 3 and the dates by which a buyer must complete a registration to 7 4 receive the next quarterly list. 7 5 (c) The secretary shall remove information pertaining to 7 6 lapsed and terminated effective financing statements from the 7 7 master list prior to preparation of the lists required to be 7 8 distributed. 7 9 (d) Upon written notice to the secretary by a registered 7 10 buyer, the secretary shall terminate distribution of the list 7 11 to the registered buyer. 7 12 Oral and written inquiries by a buyer not registered 7 13 pursuant to subparagraph (3) may be made to the secretary 7 14 during hours determined by the secretary. The secretary shall 7 15 maintain a toll-free telephone line for purposes of responding 7 16 to oral inquiries. An oral response to inquiries shall be 7 17 available to an inquiring nonregistered buyer not later than 7 18 on the regular business day following the day on which the 7 19 inquiry was received, at or before the time of day when it was 7 20 received. Written confirmation of the information provided 7 21 orally in response to the inquiry shall be delivered by first 7 22 class mail or electronic mail to the buyer, at an address 7 23 provided by the buyer, by the secretary not later than the 7 24 second regular business day following the day on which the 7 25 inquiry was received. 7 26 In order to verify the existence or nonexistence of a 7 27 security interest, a buyer may request a seller to disclose 7 28 the seller's social security number or, in the case of a 7 29 seller doing business other than as an individual, the 7 30 internal revenue service taxpayer identification number of the 7 31 seller. 7 32 3. Except as provided in this subsection, a buyer who buys 7 33 farm products from a seller engaged in farming operations 7 34 shall take free of a security interest created by the seller, 7 35 even though the security interest is perfected and the buyer 8 1 knows of the existence of the interest. 8 2 a. Until the secretary establishes an electronic central 8 3 filing system as provided in subsection 2, the following shall 8 4 apply: 8 5 (1) If the buyer fails to register with the secretary 8 6 prior to the purchase of farm products, the buyer takes 8 7 subject to a security interest in the farm products only if 8 8 the secured party has filed an effective financing statement 8 9 that covers the farm products being sold, the secured party 8 10 demands that a buyer issue a check for payment jointly to the 8 11 debtor and the secured party for the purchase of the farm 8 12 products as memorialized in the effective financing statement, 8 13 and the buyer could have discovered the existence of the 8 14 effective financing statement prior to the purchase by making 8 15 an inquiry as provided in subsection 2. The buyer shall take 8 16 free of the security interest, if the buyer could not have 8 17 discovered the existence of a filed effective financing 8 18 statement because it is not available for public disclosure. 8 19 (2) If the buyer registers with the secretary prior to the 8 20 purchase of the farm products, the buyer takes subject to a 8 21 security interest in the farm products only if the secured 8 22 party has filed an effective financing statement that covers 8 23 the farm products being sold, and the buyer receives from the 8 24 secretary a master list or a portion of the master list that 8 25 identifies both the seller and the farm products being sold by 8 26 the seller as being subject to an effective financing 8 27 statement, and the buyer does not secure a waiver or release 8 28 of the security interest as specified in the effective 8 29 financing statement. 8 30 b. When the secretary establishes an electronic central 8 31 filing system as provided in subsection 2, the buyer of farm 8 32 products takes subject to a security interest in the farm 8 33 product if the secured party has filed an effective financing 8 34 statement that covers the farm products being sold, the 8 35 secured party demands that a buyer issue a check for payment 9 1 jointly to the debtor and the secured party for the purchase 9 2 of the farm products as memorialized in the effective 9 3 financing statement, and the buyer could have discovered the 9 4 existence of the effective financing statement prior to the 9 5 purchase by accessing the data base containing effective 9 6 financing statements filed electronically with the secretary. 9 7 The buyer shall take free of the security interest, if the 9 8 buyer could not have discovered the existence of a filed 9 9 effective financing statement because it is not available for 9 10 public disclosure. 9 11 c. The secretary shall establish fees for filing effective 9 12 financing statements. The fees shall not be more than 9 13 provided for filing financing statements as provided in 9 14 section 554.9403. The secretary shall not charge a buyer a 9 15 fee for registering to receive a master list or for responding 9 16 to buyer inquiries, including by examining or printing 9 17 effective financing statements, and statements amending, 9 18 continuing, or terminating effective financing statements 9 19 which are accessed in an electronic format. 9 20 Sec. 4. DIRECTIONS TO THE SECRETARY OF STATE. The 9 21 secretary of state shall adopt rules necessary to implement 9 22 this division of this Act. If necessary to obtain federal 9 23 certification of the central filing system, additional or 9 24 alternative requirements made in conformity with 7 U.S.C. } 9 25 1631 may be imposed by the secretary of state by rule. The 9 26 secretary of state may computerize the central filing system. 9 27 Sec. 5. EFFECTIVE DATE. This Act takes effect January 1, 9 28 2001. 9 29 EXPLANATION 9 30 Under Code section 554.9307 of Iowa's uniform commercial 9 31 code, a buyer in the ordinary course of business takes free of 9 32 a security interest created by the seller, unless the buyer 9 33 purchases farm products. This is sometimes referred to as 9 34 "the farm products rule". In 1985, Congress enacted 9 35 legislation providing two approaches for notifying buyers of 10 1 farm products; a system of certified central filing and the 10 2 already-existing system for actual notification. 10 3 In 1987, the general assembly enacted legislation requiring 10 4 actual notification to buyers. Under current law, a buyer in 10 5 the ordinary course of business buying farm products from a 10 6 debtor engaged in farming operations takes subject to a 10 7 security interest created by the debtor only if within one 10 8 year before the sale of the farm products the buyer receives 10 9 prior written notice of the security interest. 10 10 The bill creates a centralized filing system for this 10 11 state. The system is administered by the secretary of state 10 12 who must provide for filing effective financing statements on 10 13 a statewide basis. The secretary of state must produce a 10 14 master list of information required to be contained in the 10 15 effective financing statements. The bill provides 10 16 requirements for the contents and duration of an effective 10 17 financing statement. The bill provides for the distribution 10 18 of information by the secretary regarding effective financing 10 19 statements to interested persons by sending the information to 10 20 buyers registered with the secretary and by answering specific 10 21 oral and written inquiries. The bill provides that the 10 22 secretary of state must establish an electronic system for 10 23 filing and accessing effective financing statements. 10 24 The bill authorizes the secretary of state to establish 10 25 fees for filing effective financing statements. The bill 10 26 restricts the secretary of state from imposing other fees. 10 27 The bill takes effect on January 1, 2001. 10 28 LSB 6777HV 78 10 29 da/as/5
Text: HF02395 Text: HF02397 Text: HF02300 - HF02399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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