Senate Study Bill 1252 SENATE FILE BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CO=CHAIRPERSONS KREIMAN AND MILLER) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to liens associated with agricultural production, 2 by providing for the termination of those liens. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 3041SC 81 5 da/sh/8 PAG LIN 1 1 Section 1. Section 579A.2, subsection 3, paragraph b, Code 1 2 2005, is amended to read as follows: 1 3 b. The lien terminates one year after the cattle have left 1 4 the custom cattle feedlot.
Section 554.9515 shall not apply 1 5 to a financing statement perfecting the lien.The lien may be 1 6 terminated by the custom cattle feedlot operator who files a 1 7 termination statement as provided in chapter 554, article 9. 1 8 Sec. 2. Section 579B.4, subsection 1, paragraph b, Code 1 9 2005, is amended to read as follows: 1 10 b. For a lien arising out of producing a crop, the lien 1 11 becomes effective the day that the crop is first planted. In 1 12 order to perfect the lien, the contract producer must file a 1 13 financing statement in the office of the secretary of state as 1 14 provided in section 554.9308. The contract producer must file 1 15 a financing statement for the crop within forty=five days 1 16 after the crop is first planted. The lien terminates one year 1 17 after the crop is no longer under the authority of the 1 18 contract producer. For purposes of this section, a crop is no 1 19 longer under the authority of the contract producer when the 1 20 crop or a warehouse receipt issued by a warehouse operator 1 21 licensed under chapter 203C for grain from the crop is no 1 22 longer under the custody or control of the contract producer. 1 23 Section 554.9515 shall not apply to a financing statement 1 24 perfecting the lien.The lien may be terminated by the 1 25 contract producer who files a termination statement as 1 26 provided in chapter 554, article 9. 1 27 EXPLANATION 1 28 In 2001, the general assembly enacted H.F. 549 (2001 Iowa 1 29 Acts, ch. 25) which amended provisions in Code chapters 579A 1 30 and 579B, two of the agricultural lien statutes, in part to 1 31 better conform with provisions in revised Article 9 of the 1 32 uniform commercial code (Code chapter 554), which was enacted 1 33 during the previous session. With limited exceptions, new 1 34 Article 9 governs the creation, priority, and enforcement of 1 35 creditor's consensual liens, which are defined as security 2 1 interests in personal property and fixtures. 2 2 Code chapters 579A and 579B are similar and provide special 2 3 creditor rights to a person who keeps livestock or grows a 2 4 crop on the person's land on behalf of someone else who owns 2 5 the livestock or crop. Code chapter 579A provides for cattle 2 6 feeding operations and Code chapter 579B provides for 2 7 production operations for both livestock (including beef and 2 8 dairy cattle) and crops under contract. The two chapters 2 9 afford protection to a person who owns land or facilities and 2 10 keeps livestock or grows a crop at that location. Under Code 2 11 chapter 579A, that person is known as a custom cattle feedlot 2 12 operator, and under Code chapter 579B, the person is known as 2 13 a contract producer. The custom cattle feedlot operator or 2 14 contract producer is provided a right to file a lien on the 2 15 commodities produced under contract (livestock, milk, or a 2 16 crop) which may include cash from the sale of the commodity. 2 17 The lien enjoys super priority status as long as it is 2 18 perfected by filing a U.C.C. financing statement with the 2 19 secretary of state. A lien under Code chapter 579A terminates 2 20 one year after the cattle have left the custom cattle feedlot. 2 21 A lien under Code chapter 579B terminates one year after the 2 22 livestock or crop is no longer under the authority of the 2 23 contract producer. 2 24 Both Code chapters provide that in order to perfect the 2 25 lien, the contract producer must file a financing statement in 2 26 the office of the secretary of state in the same manner as 2 27 other secured parties under Code section 554.9308, which 2 28 provides that a filed financing statement is effective for a 2 29 period of five years after the date of filing. Both Code 2 30 chapters also provide that Code section 554.9515 does not 2 31 apply. That section provides that a financing statement is 2 32 effective for a period of five years after the date of filing 2 33 before it lapses, unless a continuation statement is filed for 2 34 another five=year period. The chapters contemplate that the 2 35 lien would terminate prior to the five=year period. The 3 1 effect of the bill is to allow the perfecting financing 3 2 statement to expire in the same manner as other financing 3 3 statements, even though the lien may have terminated prior to 3 4 that date. 3 5 LSB 3041SC 81 3 6 da:nh/sh/8