House Study Bill 619 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ANDERSON) A BILL FOR An Act amending provisions in the uniform commercial code 1 relating to secured transactions, and including effective 2 date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5461YC (5) 84 da/rj
H.F. _____ Section 1. Section 554.9102, subsection 1, paragraph g, 1 subparagraph (2), Code 2011, is amended to read as follows: 2 (2) to execute or otherwise adopt a symbol, or encrypt 3 or similarly process a record in whole or in part, with the 4 present intent of the authenticating person to identify the 5 person and adopt or accept a record to adopt or accept a 6 record, to attach to or logically associate with the record an 7 electronic sound, symbol, or process . 8 Sec. 2. Section 554.9102, subsection 1, paragraphs j, ax, 9 and br, Code 2011, are amended to read as follows: 10 j. “Certificate of title” means a certificate of title 11 with respect to which a statute provides for the security 12 interest in question to be indicated on the certificate as 13 a condition or result of the security interest’s obtaining 14 priority over the rights of a lien creditor with respect to the 15 collateral. The term includes another record maintained as 16 an alternative to a certificate of title by the governmental 17 unit that issues certificates of title if a statute permits the 18 security interest in question to be indicated on the record 19 as a condition or result of the security interest’s obtaining 20 priority over the rights of a lien creditor with respect to the 21 collateral. 22 ax. “Jurisdiction of organization” , with respect to a 23 registered organization, means the jurisdiction under whose law 24 the organization is formed or organized. 25 br. “Registered organization” means an organization formed 26 or organized solely under the law of a single state or the 27 United States and as to which the state or the United States 28 must maintain a public record showing the organization to have 29 been organized by the filing of a public organic record with, 30 the issuance of a public organic record by, or the enactment 31 of legislation by the state or the United States. The term 32 includes a business trust that is formed under the law of a 33 single state if a statute of the state governing business 34 trusts requires that the business trust’s organic record be 35 -1- LSB 5461YC (5) 84 da/rj 1/ 27
H.F. _____ filed with the state . 1 Sec. 3. Section 554.9102, subsection 1, Code 2011, is 2 amended by adding the following new paragraph: 3 NEW PARAGRAPH . 0bp. “Public organic record” means a record 4 that is available to the public for inspection and is: 5 (1) a record consisting of the record initially filed with 6 or issued by a state or the United States to form or organize 7 an organization and any record filed with or issued by the 8 state or the United States which amends or restates the initial 9 record; 10 (2) an organic record of a business trust consisting of 11 the record initially filed with a state and any record filed 12 with the state which amends or restates the initial record, if 13 a statute of the state governing business trusts requires that 14 the record be filed with the state; or 15 (3) a record consisting of legislation enacted by the 16 legislature of a state or the Congress of the United States 17 which forms or organizes an organization, any record amending 18 the legislation, and any record filed with or issued by the 19 state or the United States which amends or restates the name of 20 the organization. 21 Sec. 4. Section 554.9105, Code 2011, is amended to read as 22 follows: 23 554.9105 Control of electronic chattel paper. 24 1. General rule: control of electronic chattel paper. A 25 secured party has control of electronic chattel paper if a 26 system employed for evidencing the transfer of interests in the 27 chattel paper reliably establishes the secured party as the 28 person to which the chattel paper was assigned. 29 2. Specific facts giving control. A system satisfies 30 subsection 1 if the record or records comprising the chattel 31 paper are created, stored, and assigned in such a manner that: 32 1. a. a single authoritative copy of the record or records 33 exists which is unique, identifiable and, except as otherwise 34 provided in subsections 4, 5, and 6 paragraphs “d” , “e” , and 35 -2- LSB 5461YC (5) 84 da/rj 2/ 27
H.F. _____ “f” , unalterable; 1 2. b. the authoritative copy identifies the secured party 2 as the assignee of the record or records; 3 3. c. the authoritative copy is communicated to and 4 maintained by the secured party or its designated custodian; 5 4. d. copies or revisions amendments that add or change an 6 identified assignee of the authoritative copy can be made only 7 with the participation consent of the secured party; 8 5. e. each copy of the authoritative copy and any copy 9 of a copy is readily identifiable as a copy that is not the 10 authoritative copy; and 11 6. f. any revision amendment of the authoritative copy is 12 readily identifiable as an authorized or unauthorized revision. 13 Sec. 5. Section 554.9307, subsection 6, paragraph b, Code 14 2011, is amended to read as follows: 15 b. in the state that the registered organization, branch, or 16 agency designates, if the law of the United States authorizes 17 the registered organization, branch, or agency to designate its 18 state of location , including by designating its main office, 19 home office, or other comparable office ; or 20 Sec. 6. Section 554.9311, subsection 1, paragraphs b and c, 21 Code 2011, are amended to read as follows: 22 b. any certificate-of-title statute, including as provided 23 in chapter 321 , covering automobiles, trailers, mobile homes, 24 boats, farm tractors, or the like, which provides for a 25 security interest to be indicated on the a certificate of title 26 as a condition or result of perfection; or 27 c. a certificate-of-title statute of another jurisdiction 28 which provides for a security interest to be indicated on 29 the a certificate of title as a condition or result of the 30 security interest’s obtaining priority over the rights of a 31 lien creditor with respect to the property. 32 Sec. 7. Section 554.9316, Code 2011, is amended by adding 33 the following new subsections: 34 NEW SUBSECTION . 8. Effect on filed financing statement 35 -3- LSB 5461YC (5) 84 da/rj 3/ 27
H.F. _____ of change in governing law. The following rules apply to 1 collateral to which a security interest attaches within 2 four months after the debtor changes its location to another 3 jurisdiction: 4 a. A financing statement filed before the change pursuant 5 to the law of the jurisdiction designated in section 554.9301, 6 subsection 1, or section 554.9305, subsection 3, is effective 7 to perfect a security interest in the collateral if the 8 financing statement would have been effective to perfect a 9 security interest in the collateral had the debtor not changed 10 its location. 11 b. If a security interest perfected by a financing statement 12 that is effective under paragraph “a” becomes perfected under 13 the law of the other jurisdiction before the earlier of the 14 time the financing statement would have become ineffective 15 under the law of the jurisdiction designated in section 16 554.9301, subsection 1, or section 554.9305, subsection 3, or 17 the expiration of the four-month period, it remains perfected 18 thereafter. If the security interest does not become perfected 19 under the law of the other jurisdiction before the earlier time 20 or event, it becomes unperfected and is deemed never to have 21 been perfected as against a purchaser of the collateral for 22 value. 23 NEW SUBSECTION . 9. Effect of change in governing law 24 on financing statement filed against original debtor. If a 25 financing statement naming an original debtor is filed pursuant 26 to the law of the jurisdiction designated in section 554.9301, 27 subsection 1, or section 554.9305, subsection 3, and the new 28 debtor is located in another jurisdiction, the following rules 29 apply: 30 a. The financing statement is effective to perfect a 31 security interest in collateral acquired by the new debtor 32 before, and within four months after, the new debtor becomes 33 bound under section 554.9203, subsection 4, if the financing 34 statement would have been effective to perfect a security 35 -4- LSB 5461YC (5) 84 da/rj 4/ 27
H.F. _____ interest in the collateral had the collateral been acquired by 1 the original debtor. 2 b. A security interest perfected by the financing statement 3 and which becomes perfected under the law of the other 4 jurisdiction before the earlier of the time the financing 5 statement would have become ineffective under the law of 6 the jurisdiction designated in section 554.9301, subsection 7 1, or section 554.9305, subsection 3, or the expiration 8 of the four-month period remains perfected thereafter. A 9 security interest that is perfected by the financing statement 10 but which does not become perfected under the law of the 11 other jurisdiction before the earlier time or event becomes 12 unperfected and is deemed never to have been perfected as 13 against a purchaser of the collateral for value. 14 Sec. 8. Section 554.9317, subsections 2 and 4, Code 2011, 15 are amended to read as follows: 16 2. Buyers that receive delivery. Except as otherwise 17 provided in subsection 5 , a buyer, other than a secured 18 party, of tangible chattel paper, tangible documents, goods, 19 instruments, or a security certificate certificated security 20 takes free of a security interest or agricultural lien if the 21 buyer gives value and receives delivery of the collateral 22 without knowledge of the security interest or agricultural lien 23 and before it is perfected. 24 4. Licensees and buyers of certain collateral. A licensee of 25 a general intangible or a buyer, other than a secured party, 26 of accounts, electronic chattel paper, electronic documents, 27 general intangibles, or investment property collateral other 28 than tangible chattel paper, tangible documents, goods, 29 instruments, or a certificated security takes free of a 30 security interest if the licensee or buyer gives value without 31 knowledge of the security interest and before it is perfected. 32 Sec. 9. Section 554.9326, Code 2011, is amended to read as 33 follows: 34 554.9326 Priority of security interests created by new 35 -5- LSB 5461YC (5) 84 da/rj 5/ 27
H.F. _____ debtor. 1 1. Subordination of security interest created by new 2 debtor. Subject to subsection 2 , a security interest that 3 is created by a new debtor which is in collateral in which 4 the new debtor has or acquires rights and is perfected solely 5 by a filed financing statement that is effective solely 6 under section 554.9508 in collateral in which a new debtor 7 has or acquires rights would be ineffective to perfect the 8 security interest but for the application of section 554.9316, 9 subsection 9, paragraph “a” , or section 554.9508 is subordinate 10 to a security interest in the same collateral which is 11 perfected other than by such a filed financing statement that 12 is effective solely under section 554.9508 . 13 2. Priority under other provisions —— multiple original 14 debtors. The other provisions of this part determine the 15 priority among conflicting security interests in the same 16 collateral perfected by filed financing statements that are 17 effective solely under section 554.9508 described in subsection 18 1 . However, if the security agreements to which a new debtor 19 became bound as debtor were not entered into by the same 20 original debtor, the conflicting security interests rank 21 according to priority in time of the new debtor’s having become 22 bound. 23 Sec. 10. Section 554.9406, subsection 5, Code 2011, is 24 amended to read as follows: 25 5. Inapplicability of subsection 4 to certain sales. 26 Subsection 4 does not apply to the sale of a payment intangible 27 or promissory note , other than a sale pursuant to a disposition 28 under section 554.9610 or an acceptance of collateral under 29 section 554.9620 . 30 Sec. 11. Section 554.9408, subsection 2, Code 2011, is 31 amended to read as follows: 32 2. Applicability of subsection 1 to sales of certain rights 33 to payment. Subsection 1 applies to a security interest in 34 a payment intangible or promissory note only if the security 35 -6- LSB 5461YC (5) 84 da/rj 6/ 27
H.F. _____ interest arises out of a sale of the payment intangible or 1 promissory note , other than a sale pursuant to a disposition 2 under section 554.9610 or an acceptance of collateral under 3 section 554.9620 . 4 Sec. 12. Section 554.9502, subsection 3, paragraph c, Code 5 2011, is amended to read as follows: 6 c. the record satisfies the requirements for a financing 7 statement in this section , other than an indication but: 8 (1) the record need not indicate that it is to be filed in 9 the real property records; and 10 (2) the record sufficiently provides the name of a debtor 11 who is an individual if it provides the individual name of the 12 debtor or the surname and first personal name of the debtor, 13 even if the debtor is an individual to whom section 554.9503, 14 subsection 1, paragraph “d” applies; and 15 Sec. 13. Section 554.9503, subsection 1, paragraphs a 16 through d, Code 2011, are amended to read as follows: 17 a. except as otherwise provided in paragraph “c” , if the 18 debtor is a registered organization or if the collateral is 19 held in a trust that is a registered organization , only if the 20 financing statement provides the name of the debtor indicated 21 that is stated to be the registered organization’s name on 22 the public organic record of most recently filed with or 23 issued or enacted by the debtor’s registered organization’s 24 jurisdiction of organization which shows the debtor to have 25 been organized purports to state, amend, or restate the 26 registered organization’s name ; 27 b. subject to subsection 6, if the debtor is a decedent’s 28 estate collateral is being administered by the personal 29 representative of a decedent , only if the financing statement 30 provides , as the name of the debtor, the name of the decedent 31 and , in a separate part of the financing statement, indicates 32 that the debtor is an estate collateral is being administered 33 by a personal representative ; 34 c. if the debtor is a trust or a trustee acting with respect 35 -7- LSB 5461YC (5) 84 da/rj 7/ 27
H.F. _____ to property held in trust, only if the financing statement 1 collateral is held in a trust that is not a registered 2 organization, only if the financing statement : 3 (1) provides as the name specified for the trust in its 4 organic documents or, if no name is specified, provides the 5 name of the settlor and additional information sufficient to 6 distinguish the debtor from other trusts having one or more of 7 the same settlors; and of the debtor: 8 (a) if the organic record of the trust specifies a name for 9 the trust, the name specified; or 10 (b) if the organic record of the trust does not specify a 11 name for the trust, the name of the settlor or testator; and 12 (2) indicates, in the debtor’s name or otherwise, that 13 the debtor is a trust or is a trustee acting with respect to 14 property held in trust; and in a separate part of the financing 15 statement: 16 (a) if the name is provided in accordance with subparagraph 17 (1), subparagraph division (a), indicates that the collateral 18 is held in a trust; or 19 (b) if the name is provided in accordance with subparagraph 20 (1), subparagraph division (b), provides additional information 21 sufficient to distinguish the trust from other trusts having 22 one or more of the same settlors or the same testator and 23 indicates that the collateral is held in a trust, unless the 24 additional information so indicates; 25 d. subject to subsection 7, if the debtor is an individual 26 to whom this state has issued a driver’s license under chapter 27 321 that has not expired, only if the financing statement 28 provides the name of the individual which is indicated on the 29 driver’s license; 30 e. if the debtor is an individual to whom paragraph “d” 31 does not apply, only if the financing statement provides the 32 individual name of the debtor or the surname and first personal 33 name of the debtor; and 34 f. in other cases: 35 -8- LSB 5461YC (5) 84 da/rj 8/ 27
H.F. _____ (1) if the debtor has a name, only if it the financing 1 statement provides the individual or organizational name of the 2 debtor; and 3 (2) if the debtor does not have a name, only if it provides 4 the names of the partners, members, associates, or other 5 persons comprising the debtor , in a manner that each name 6 provided would be sufficient if the person named were the 7 debtor . 8 Sec. 14. Section 554.9503, subsection 2, paragraph b, Code 9 2011, is amended to read as follows: 10 b. unless required under subsection 1 , paragraph “d” “f” , 11 subparagraph (2), names of partners, members, associates, or 12 other persons comprising the debtor. 13 Sec. 15. Section 554.9503, Code 2011, is amended by adding 14 the following new subsections: 15 NEW SUBSECTION . 6. Name of decedent. The name of the 16 decedent indicated on the order appointing the personal 17 representative of the decedent issued by the court having 18 jurisdiction over the collateral is sufficient as the “name of 19 the decedent” under subsection 1, paragraph “b” . 20 NEW SUBSECTION . 7. Multiple driver’s licenses. If this 21 state has issued to an individual more than one driver’s 22 license under chapter 321 of a kind described in subsection 1, 23 paragraph “d” , the one that was issued most recently is the one 24 to which subsection 1, paragraph “d” refers. 25 NEW SUBSECTION . 8. Definition. In this section, the “name 26 of the settlor or testator” means: 27 a. if the settlor is a registered organization, the name 28 that is stated to be the settlor’s name on the public organic 29 record most recently filed with or issued or enacted by the 30 settlor’s jurisdiction of organization which purports to state, 31 amend, or restate the settlor’s name; or 32 b. in other cases, the name of the settlor or testator 33 indicated in the trust’s organic record. 34 Sec. 16. Section 554.9507, subsection 3, Code 2011, is 35 -9- LSB 5461YC (5) 84 da/rj 9/ 27
H.F. _____ amended to read as follows: 1 3. Change in debtor’s name. If a debtor so changes its the 2 name that a filed financing statement provides for a debtor 3 becomes insufficient as the name of the debtor under section 4 554.9503, subsection 1, so that the financing statement becomes 5 seriously misleading under section 554.9506 : 6 a. the financing statement is effective to perfect a 7 security interest in collateral acquired by the debtor before, 8 or within four months after, the change filed financing 9 statement becomes seriously misleading ; and 10 b. the financing statement is not effective to perfect a 11 security interest in collateral acquired by the debtor more 12 than four months after the change filed financing statement 13 becomes seriously misleading , unless an amendment to the 14 financing statement which renders the financing statement not 15 seriously misleading is filed within four months after the 16 change the financing statement became seriously misleading . 17 Sec. 17. Section 554.9515, subsection 6, Code 2011, is 18 amended to read as follows: 19 6. Transmitting utility financing statement. If a debtor is 20 a transmitting utility and a filed initial financing statement 21 so indicates, the financing statement is effective until a 22 termination statement is filed. 23 Sec. 18. Section 554.9516, subsection 2, paragraph c, 24 subparagraph (2), unnumbered paragraph 1, Code 2011, is amended 25 to read as follows: 26 in the case of an amendment or correction information 27 statement, the record: 28 Sec. 19. Section 554.9516, subsection 2, paragraph c, 29 subparagraph (3), Code 2011, is amended to read as follows: 30 (3) in the case of an initial financing statement that 31 provides the name of a debtor identified as an individual or 32 an amendment that provides a name of a debtor identified as an 33 individual which was not previously provided in the financing 34 statement to which the record relates, the record does not 35 -10- LSB 5461YC (5) 84 da/rj 10/ 27
H.F. _____ identify the debtor’s last name surname ; or 1 Sec. 20. Section 554.9516, subsection 2, paragraph e, Code 2 2011, is amended to read as follows: 3 e. in the case of an initial financing statement or an 4 amendment that provides a name of a debtor which was not 5 previously provided in the financing statement to which the 6 amendment relates, the record does not: 7 (1) provide a mailing address for the debtor; or 8 (2) indicate whether the name provided as the name of the 9 debtor is the name of an individual or an organization; or 10 (3) if the financing statement indicates that the debtor is 11 an organization, provide: 12 (a) a type of organization for the debtor; 13 (b) a jurisdiction of organization for the debtor; or 14 (c) an organizational identification number for the debtor 15 or indicate that the debtor has none; 16 Sec. 21. Section 554.9518, Code 2011, is amended to read as 17 follows: 18 554.9518 Claim concerning inaccurate or wrongfully filed 19 record. 20 1. Correction statement Statement with respect to record 21 indexed under person’s name . A person may file in the filing 22 office a correction an information statement with respect to 23 a record indexed there under the person’s name if the person 24 believes that the record is inaccurate or was wrongfully filed. 25 2. Sufficiency Contents of correction statement under 26 subsection 1 . A correction An information statement under 27 subsection 1 must: 28 a. identify the record to which it relates by: 29 (1) by the file number assigned to the initial financing 30 statement to which the record relates; and 31 (2) if the correction statement relates to a record filed 32 or recorded in a filing office described in section 554.9501, 33 subsection 1 , paragraph “a” , the date and time that the initial 34 financing statement was filed or recorded and the information 35 -11- LSB 5461YC (5) 84 da/rj 11/ 27
H.F. _____ specified in section 554.9502, subsection 2 ; 1 b. indicate that it is a correction an information 2 statement; and 3 c. provide the basis for the person’s belief that the record 4 is inaccurate and indicate the manner in which the person 5 believes the record should be amended to cure any inaccuracy or 6 provide the basis for the person’s belief that the record was 7 wrongfully filed. 8 3. Statement by secured party of record. A person may file 9 in the filing office an information statement with respect to a 10 record filed there if the person is a secured party of record 11 with respect to the financing statement to which the record 12 relates and believes that the person that filed the record was 13 not entitled to do so under section 554.9509, subsection 4. 14 4. Contents of statement under subsection 3. An information 15 statement under subsection 3 must: 16 a. identify the record to which it relates by the file 17 number assigned to the initial financing statement to which the 18 record relates; 19 b. indicate that it is an information statement; and 20 c. provide the basis for the person’s belief that the person 21 that filed the record was not entitled to do so under section 22 554.9509, subsection 4. 23 3. 5. Record not affected by correction information 24 statement. The filing of a correction an information statement 25 does not affect the effectiveness of an initial financing 26 statement or other filed record. 27 Sec. 22. Section 554.9607, subsection 2, paragraph b, 28 subparagraph (1), Code 2011, is amended to read as follows: 29 (1) a default has occurred with respect to the obligation 30 secured by the mortgage ; and 31 Sec. 23. Section 554.9625, subsection 3, Code 2011, is 32 amended to read as follows: 33 3. Persons entitled to recover damages —— statutory 34 damages in consumer-goods transaction if collateral is consumer 35 -12- LSB 5461YC (5) 84 da/rj 12/ 27
H.F. _____ goods . Except as otherwise provided in section 554.9628 : 1 a. a person that, at the time of the failure, was a debtor, 2 was an obligor, or held a security interest in or other lien 3 on the collateral may recover damages under subsection 2 for 4 its loss; and 5 b. if the collateral is consumer goods, a person that was 6 a debtor or a secondary obligor at the time a secured party 7 failed to comply with this part may recover for that failure 8 in any event an amount not less than the credit service charge 9 plus ten percent of the principal amount of the obligation or 10 the time-price differential plus ten percent of the cash price. 11 Sec. 24. NEW SECTION . 554.9801 Effective date. The 12 amendments to this Article, as enacted in this Act, take effect 13 on July 1, 2013. 14 Sec. 25. NEW SECTION . 554.9802 Savings clause. 15 1. Pre-effective-date transactions or liens. Except 16 as otherwise provided in this part, this Act applies to a 17 transaction or lien within its scope, even if the transaction 18 or lien was entered into or created before July 1, 2013. 19 2. Pre-effective date proceedings. This Act does not affect 20 an action, case, or proceeding commenced before July 1, 2013. 21 Sec. 26. NEW SECTION . 554.9803 Security interest perfected 22 before effective date. 23 1. Continuing perfection: perfection requirements 24 satisfied. A security interest that is a perfected security 25 interest immediately before July 1, 2013, is a perfected 26 security interest under this Article, as amended by this Act, 27 if on July 1, 2013, the applicable requirements for attachment 28 and perfection under this Article, as amended by this Act, are 29 satisfied without further action. 30 2. Continuing perfection: perfection requirements not 31 satisfied. Except as otherwise provided in section 554.9805, 32 if immediately before July 1, 2013, a security interest is a 33 perfected security interest, but the applicable requirements 34 for perfection under this Article, as amended by this Act, are 35 -13- LSB 5461YC (5) 84 da/rj 13/ 27
H.F. _____ not satisfied on July 1, 2013, the security interest remains 1 perfected thereafter only if the applicable requirements for 2 perfection under this Article, as amended by this Act, are 3 satisfied within one year after July 1, 2013. 4 Sec. 27. NEW SECTION . 554.9804 Security interest 5 unperfected before effective date. 6 A security interest that is an unperfected security interest 7 immediately before July 1, 2013, becomes a perfected security 8 interest: 9 1. without further action, on July 1, 2013, if the 10 applicable requirements for perfection under this Article, as 11 amended by this Act, are satisfied before or on July 1, 2013; 12 or 13 2. when the applicable requirements for perfection are 14 satisfied if the requirements are satisfied after July 1, 2013. 15 Sec. 28. NEW SECTION . 554.9805 Effectiveness of action 16 taken before effective date. 17 1. Pre-effective-date filing effective. The filing of 18 a financing statement before July 1, 2013, is effective to 19 perfect a security interest to the extent the filing would 20 satisfy the applicable requirements for perfection under this 21 Article, as amended by this Act. 22 2. When pre-effective-date filing becomes ineffective. This 23 Act does not render ineffective an effective financing 24 statement that, before July 1, 2013, is filed and satisfies 25 the applicable requirements for perfection under the law of 26 the jurisdiction governing perfection as provided in this 27 Article, as it existed before July 1, 2013. However, except as 28 otherwise provided in subsections 3 and 4 and section 554.9806, 29 the financing statement ceases to be effective: 30 a. if the financing statement is filed in this state, at the 31 time the financing statement would have ceased to be effective 32 had this Act not taken effect; or 33 b. if the financing statement is filed in another 34 jurisdiction, at the earlier of: 35 -14- LSB 5461YC (5) 84 da/rj 14/ 27
H.F. _____ (1) the time the financing statement would have ceased to be 1 effective under the law of that jurisdiction; or 2 (2) June 30, 2018. 3 3. Continuation statement. The filing of a continuation 4 statement on or after July 1, 2013, does not continue the 5 effectiveness of a financing statement filed before July 1, 6 2013. However, upon the timely filing of a continuation 7 statement on or after July 1, 2013, and in accordance with 8 the law of the jurisdiction governing perfection as provided 9 in this Article, as amended by this Act, the effectiveness 10 of a financing statement filed in the same office in that 11 jurisdiction before July 1, 2013, continues for the period 12 provided by the law of that jurisdiction. 13 4. Application of subsection 2, paragraph “b”, subparagraph 14 (2) to transmitting utility financing statement. Subsection 15 2, paragraph “b” , subparagraph (2) applies to a financing 16 statement that, before July 1, 2013, is filed against a 17 transmitting utility and satisfies the applicable requirements 18 for perfection under the law of the jurisdiction governing 19 perfection as provided in this Article, as it existed before 20 July 1, 2013, only to the extent that this Article, as amended 21 by this Act, provides that the law of a jurisdiction other than 22 the jurisdiction in which the financing statement is filed 23 governs perfection of a security interest in collateral covered 24 by the financing statement. 25 5. Application of Part 5. A financing statement that 26 includes a financing statement filed before July 1, 2013, 27 and a continuation statement filed on or after July 1, 28 2013, is effective only to the extent that the financing 29 statement satisfies the requirements of Part 5, as amended by 30 this Act, for an initial financing statement. A financing 31 statement that indicates that the debtor is a decedent’s 32 estate indicates that the collateral is being administered 33 by a personal representative within the meaning of section 34 554.9503, subsection 1, paragraph “b” , as amended by this Act. 35 -15- LSB 5461YC (5) 84 da/rj 15/ 27
H.F. _____ A financing statement that indicates that the debtor is a trust 1 or is a trustee acting with respect to property held in trust 2 indicates that the collateral is held in a trust within the 3 meaning of section 554.9503, subsection 1, paragraph “c” , as 4 amended by this Act. 5 Sec. 29. NEW SECTION . 554.9806 When initial financing 6 statement suffices to continue effectiveness of financing 7 statement. 8 1. Initial financing statement in lieu of continuation 9 statement. The filing of an initial financing statement 10 in the office specified in section 554.9501 continues the 11 effectiveness of a financing statement filed before July 1, 12 2013, if: 13 a. the filing of an initial financing statement in that 14 office would be effective to perfect a security interest under 15 this Article, as amended by this Act; 16 b. the pre-effective-date financing statement was filed in 17 an office in another state; and 18 c. the initial financing statement satisfies subsection 3. 19 2. Period of continued effectiveness. The filing of an 20 initial financing statement under subsection 1 continues the 21 effectiveness of the pre-effective-date financing statement: 22 a. if the initial financing statement is filed before 23 July 1, 2013, for the period provided in section 554.9515, as 24 it existed before July 1, 2013, with respect to an initial 25 financing statement; and 26 b. if the initial financing statement is filed on or after 27 July 1, 2013, for the period provided in section 554.9515, 28 as amended by this Act, with respect to an initial financing 29 statement. 30 3. Requirements for initial financing statement under 31 subsection 1. To be effective for purposes of subsection 1, an 32 initial financing statement must: 33 a. satisfy the requirements of Part 5, as amended by this 34 Act, for an initial financing statement; 35 -16- LSB 5461YC (5) 84 da/rj 16/ 27
H.F. _____ b. identify the pre-effective-date financing statement by 1 indicating the office in which the financing statement was 2 filed and providing the dates of filing and file numbers, 3 if any, of the financing statement and of the most recent 4 continuation statement filed with respect to the financing 5 statement; and 6 c. indicate that the pre-effective-date financing statement 7 remains effective. 8 Sec. 30. NEW SECTION . 554.9807 Amendment of 9 pre-effective-date financing statement. 10 1. “Pre-effective-date financing statement”. In this 11 section, “pre-effective-date financing statement” means a 12 financing statement filed before July 1, 2013. 13 2. Applicable law. On or after July 1, 2013, a person may 14 add or delete collateral covered by, continue or terminate the 15 effectiveness of, or otherwise amend the information provided 16 in, a pre-effective-date financing statement only in accordance 17 with the law of the jurisdiction governing perfection as 18 provided in this Article, as amended by this Act. However, 19 the effectiveness of a pre-effective-date financing statement 20 also may be terminated in accordance with the law of the 21 jurisdiction in which the financing statement is filed. 22 3. Method of amending: general rule. Except as otherwise 23 provided in subsection 4, if the law of this state governs 24 perfection of a security interest, the information in a 25 pre-effective-date financing statement may be amended on or 26 after July 1, 2013, only if: 27 a. the pre-effective-date financing statement and an 28 amendment are filed in the office specified in section 29 554.9501; 30 b. an amendment is filed in the office specified in section 31 554.9501 concurrently with, or after the filing in that office 32 of, an initial financing statement that satisfies section 33 554.9806, subsection 3; or 34 c. an initial financing statement that provides the 35 -17- LSB 5461YC (5) 84 da/rj 17/ 27
H.F. _____ information as amended and satisfies section 554.9806, 1 subsection 3, is filed in the office specified in section 2 554.9501. 3 4. Method of amending: continuation. If the law of 4 this state governs perfection of a security interest, the 5 effectiveness of a pre-effective-date financing statement may 6 be continued only under section 554.9805, subsections 3 and 5, 7 or section 554.9806. 8 5. Method of amending: additional termination rule. Whether 9 or not the law of this state governs perfection of a security 10 interest, the effectiveness of a pre-effective-date financing 11 statement filed in this state may be terminated on or after 12 July 1, 2013, by filing a termination statement in the office 13 in which the pre-effective-date financing statement is filed, 14 unless an initial financing statement that satisfies section 15 554.9806, subsection 3, has been filed in the office specified 16 by the law of the jurisdiction governing perfection as provided 17 in this Article, as amended by this Act, as the office in which 18 to file a financing statement. 19 Sec. 31. NEW SECTION . 554.9808 Person entitled to file 20 initial financing statement or continuation statement. 21 A person may file an initial financing statement or a 22 continuation statement under this part if: 23 1. the secured party of record authorizes the filing; and 24 2. the filing is necessary under this part: 25 a. to continue the effectiveness of a financing statement 26 filed before July 1, 2013; or 27 b. to perfect or continue the perfection of a security 28 interest. 29 Sec. 32. NEW SECTION . 554.9809 Priority. 30 This Act determines the priority of conflicting claims to 31 collateral. However, if the relative priorities of the claims 32 were established before July 1, 2013, this Article, as it 33 existed before July 1, 2013, determines priority. 34 Sec. 33. CODE EDITOR DIRECTIVE. Section 554.9316, Code 35 -18- LSB 5461YC (5) 84 da/rj 18/ 27
H.F. _____ 2011, is amended by striking from the headnote the words 1 “Continued perfection of security interest following change in 2 governing law.” and inserting in lieu thereof the words “Effect 3 of change in governing law.” 4 Sec. 34. REPEAL. Sections 554.9701 through 554.9710, Code 5 2011, are repealed effective July 1, 2017. 6 Sec. 35. REPEAL. Sections 554.9801 through 554.9809 are 7 repealed effective July 1, 2017. 8 Sec. 36. GENERAL SAVINGS PROVISION. The repeals of sections 9 554.9701 through 554.9710, and sections 554.9801 through 10 554.9809 in this Act are subject to the application of section 11 4.13, relating to general savings provisions. 12 Sec. 37. EFFECTIVE DATE. This Act takes effect July 1, 13 2013. 14 EXPLANATION 15 BACKGROUND. This bill makes changes in Article 9 of 16 the Uniform Commercial Code (UCC). Generally, Article 9 17 regulates transactions involving the collateralization of 18 debt in personal property and provides rights to competing 19 creditors. It allows a creditor to take a lien (a security 20 interest) in the collateral with the possibility of enforcing 21 the lien if the debtor defaults upon a contractual obligation. 22 The Article includes detailed requirements relating to the 23 creation and perfection of the creditor’s security interest in 24 the collateral, and the right to acquire priority over other 25 creditors (e.g., by filing a financing statement with the 26 secretary of state, possessing or controlling the property, or 27 acquiring some form of automatic attachment), and for taking 28 legal action to satisfy the debt by acquiring the collateral or 29 rights to property associated with the contract. 30 BACKGROUND —— MODEL ACT. Iowa’s version of the UCC is 31 codified in Code chapter 554 based on a model Act drafted and 32 recommended, in association with the American law institute, by 33 the national conference of commissioners on uniform state laws 34 (NCCUSL), also known as the uniform law commission (ULC), which 35 -19- LSB 5461YC (5) 84 da/rj 19/ 27
H.F. _____ includes Iowa members appointed by the governor (Code chapter 1 5). In 2000, the general assembly substantially amended 2 Article 9 in conformance with the NCCUSL’s 1998 recommended 3 revisions (2000 Iowa Acts, ch. 1149). This bill provides for 4 further revisions to the revised Article 9 again as recommended 5 by the NCCUSL. 6 GENERAL PROVISIONS —— DEFINITIONS (CODE SECTION 554.9102). 7 The bill changes definitional provisions, including terms 8 related to records produced or stored in an electronic format 9 including the authentication of records and certificates of 10 title. 11 DEFINITIONS —— AUTHENTICATION. The bill amends the 12 definition of “authenticate” to include attaching or logically 13 associating an electronic sound, symbol, or process with a 14 record. 15 DEFINITIONS —— CERTIFICATE OF TITLE. The law defines 16 “record” as information inscribed on a tangible medium or 17 stored in an electronic or other medium that can be retrieved 18 in a perceivable form. The bill amends the definition of 19 “certificate of title” to include a record maintained as an 20 alternative to a certificate of title by the issuing government 21 unit. 22 DEFINITIONS —— PUBLIC ORGANIC RECORD. The bill creates a 23 new definition for a “public organic record” to mean one of 24 three items: (1) a record available for public inspection that 25 is initially filed with or issued by a state or the federal 26 government to form an organization; (2) an organic record of 27 a business trust initially filed with a state or which amends 28 that record; or (3) a record consisting of federal or state 29 legislation that forms an organization. 30 DEFINITIONS —— REGISTERED ORGANIZATION. Under current law, 31 a “registered organization” is formed solely under state or 32 federal law for which the state or federal government must 33 maintain a public record. The bill provides that a registered 34 organization is formed in one of three ways: (1) by filing 35 -20- LSB 5461YC (5) 84 da/rj 20/ 27
H.F. _____ a public organic record under state or federal law, (2) the 1 issuance of a public organic record by a state or the federal 2 government, or (3) pursuant to state or federal legislation. 3 The bill specifies that this expressly includes a business 4 trust (e.g., a so-called Massachusetts business trust) formed 5 under a state law that requires public organic records to be 6 filed with the state (e.g., secretary of state). 7 ELECTRONIC CHATTEL PAPER (CODE SECTION 554.9105). A 8 chattel paper transaction involves a written agreement in 9 which a seller or lessor transfers possession and control of 10 property to another while retaining a security interest or 11 lease interest in the property. The writing evidencing the 12 debt constitutes chattel paper. Under current law, a security 13 interest is perfected by control of the paper, and the UCC 14 sets forth a six-factor test to determine if a secured party 15 has control of electronic chattel paper. The bill retains the 16 six-factor test but allows a secured party to establish control 17 by using a system that reliably establishes the secured party 18 as the person to whom the chattel paper was assigned. 19 PERFECTION AND PRIORITY —— LOCATION OF A DEBTOR (CODE 20 SECTION 554.9307). This provision applies to either a 21 registered organization formed under the laws of the United 22 States or a branch or agency of a bank that is not organized 23 under the law of the United States or a state. A registered 24 organization can designate its state of location in a manner 25 described in federal law. The bill provides that when 26 referenced in federal law, a registered organization’s “main 27 office” or “home office” means the organization’s location (for 28 purposes of filing a financing statement). 29 PERFECTION AND PRIORITY —— PERFECTION OF SECURITY INTEREST 30 IN PROPERTY (CODE SECTION 554.9311). The bill makes changes to 31 conform with the bill’s revised definition of “certificate of 32 title” (See Code section 554.9101 as amended in the bill). 33 PERFECTION AND PRIORITY —— EFFECT OF CHANGE IN GOVERNING 34 LAW (CODE SECTION 554.9316). The bill provides protection 35 -21- LSB 5461YC (5) 84 da/rj 21/ 27
H.F. _____ for a secured party whose security interest in after-acquired 1 property would become unperfected if the debtor relocated to 2 another jurisdiction (e.g., state). Under current law, by 3 comparison, a security interest that attached to collateral 4 prior to a debtor’s move to another jurisdiction remains 5 perfected for four months after the move. The four-month 6 grace period is limited to collateral in which the security 7 party’s interest was perfected at the time that the debtor’s 8 location changed. The bill adds the same grace period for 9 the after-acquired property. It provides that the security 10 interest attaches within the four-month period if the secured 11 party does whatever would have been necessary to perfect the 12 security interest in the original jurisdiction. The collateral 13 remains perfected for the four-month period. The secured party 14 may continue perfection beyond the four-month period by filing 15 a financing statement or otherwise perfecting under the law 16 of the new jurisdiction. Similarly, the rule applies to a 17 security interest in after-acquired property if a new debtor 18 becomes bound by the original debtor’s security agreement and 19 the new debtor is located in a different jurisdiction from the 20 jurisdiction in which the original debtor was located. 21 PERFECTION AND PRIORITY —— INTERESTS THAT TAKE PRIORITY OVER 22 OR TAKE FREE OF SECURITY INTERESTS (CODE SECTION 554.9317). 23 Currently, a licensee of general intangible property or a buyer 24 (other than a secured party) takes free of a security interest 25 if the licensee or buyer gives value without knowledge of a 26 security interest before the security interest is perfected. 27 The bill strikes the list of types of property subject to this 28 exclusion (accounts, electronic chattel paper, electronic 29 documents, general intangibles, or investment property other 30 than a certificated security) and provides that the licensee 31 or buyer takes free of an unperfected security in collateral 32 other than tangible chattel paper, tangible documents, goods, 33 instruments, or a certificated security. 34 PERFECTION AND PRIORITY —— PRIORITY OF SECURITY INTERESTS 35 -22- LSB 5461YC (5) 84 da/rj 22/ 27
H.F. _____ CREATED BY A NEW DEBTOR (CODE SECTION 554.9326). The current 1 law provides for contests involving priority that may arise 2 when a new debtor becomes bound by a security agreement of an 3 original debtor and each debtor has a secured creditor. The 4 bill makes changes to correspond to a change made in the bill 5 to Code section 554.9316. It provides for the subordinate 6 position of a secured party who has a security interest in the 7 original debtor’s collateral and who has filed a financing 8 statement against the new debtor in a different jurisdiction, 9 but the financing statement would not otherwise be sufficient 10 to obtain priority. 11 RIGHTS OF THIRD PARTIES —— PAYMENT INTANGIBLES AND 12 PROMISSORY NOTES (CODE SECTIONS 554.9406 AND 554.9408). Two 13 similar provisions are affected. Both relate to a term 14 restricting an assignment in an agreement between an account 15 debtor and an assignor or in a promissory note. 16 RIGHTS OF THIRD PARTIES —— GENERAL PROVISION (CODE 17 SECTION 554.9406). The first section applies generally to 18 accounts, chattel paper, payment intangibles, and promissory 19 notes, by making such a term ineffective (Code section 20 554.9406). However, an exception applies to the sale of a 21 payment intangible or promissory note. Under the bill, this 22 exception does not apply when the sale is under a disposition 23 of collateral after default (Code section 554.9610) or on 24 acceptance of collateral in full or partial satisfaction of 25 obligation (Code section 554.9620). 26 RIGHTS OF THIRD PARTIES —— SPECIFIC PROVISION (CODE SECTION 27 554.9408). The second section applies to restrict but not 28 prohibit the assignment of a general intangible, health care 29 insurance receivable, or promissory note. Under current law, 30 a qualifying restriction applies to a security interest in a 31 payment intangible or promissory note only if the security 32 interest arises out of a sale of the payment intangible or 33 promissory note. The bill amends this qualification, again 34 to provide that it does not apply to a security interest that 35 -23- LSB 5461YC (5) 84 da/rj 23/ 27
H.F. _____ arises out of a sale under a disposition of collateral after 1 default or on acceptance of collateral in full or partial 2 satisfaction of obligation. 3 FILING —— NAME OF DEBTOR AND SECURED PARTY (CODE SECTIONS 4 554.9502, 554.9503, AND 554.9507). The current law provides 5 when a financing statement sufficiently provides the correct 6 name of a debtor. The bill provides that for a registered 7 organization, the name of the debtor is sufficient if it 8 matches the name on the public organic record most recently 9 filed in the jurisdiction of organization. In addition, 10 the bill adopts the so-called model Act’s “Alternative A”, 11 sometimes known as the “only-if” rule which requires the 12 financing statement to include the name of the debtor as it 13 appears on the debtor’s unexpired driver’s license. In lieu of 14 the driver’s license information, a variation of the current 15 rule applies. Specifically, the financing statement must use 16 the debtor’s legal name or debtor’s surname and first personal 17 name. 18 FILING —— DURATION AND EFFECTIVENESS OF A FINANCING 19 STATEMENT FOR TRANSMITTING UTILITIES (CODE SECTION 554.9515). 20 Under current law, a financing statement listing a transmitting 21 utility as a debtor does not lapse but continues until the 22 secured party files a termination statement. The bill requires 23 that the designation of a debtor as a transmitting utility must 24 be made on the initial financing statement. 25 FILING —— WHAT CONSTITUTES FILING —— EFFECTIVENESS OF FILING 26 (CODE SECTION 554.9516). The bill eliminates a requirement 27 that certain information about a debtor that is an organization 28 must be stated on a financing statement. The secretary 29 of state is not required to reject a financing statement 30 because it fails to list type of organization, jurisdiction of 31 organization, and organizational identification number. 32 FILING —— CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED 33 RECORD (CODE SECTION 554.9518). Currently, a person may file 34 a statement correcting an incorrect statement on record (a 35 -24- LSB 5461YC (5) 84 da/rj 24/ 27
H.F. _____ so-called UCC-5 Correction Statement) without legal effect. 1 The bill renames this document as an “information statement” 2 and provides that a secured party may also file such statement. 3 It adopts the model Act’s 1998 Alternative A version, by 4 eliminating a provision in current law that requires the 5 statement to include the date and time that the initial 6 financing statement was filed or recorded. 7 FILING —— COLLECTION AND ENFORCEMENT OF A MORTGAGE INTEREST 8 OUTSIDE FORECLOSURE (CODE SECTION 554.9607). Under current 9 law, a secured party may enforce a mortgage (e.g., securing 10 a promissory note) pursuant to a nonjudicial proceeding 11 (foreclosure sale) in part by recording the security agreement 12 and affidavit in the place where the mortgage is recorded. The 13 affidavit must include a provision verifying that a default 14 has occurred. The bill provides that the affidavit must 15 verify that the default involved an obligation secured by the 16 mortgage. 17 TRANSITION PROVISIONS —— GENERAL. The bill provides for the 18 scope and application of its provisions, including by referring 19 to its effective date (Code section 554.9801) and including a 20 general savings clause (Code section 554.9802). Generally, 21 the transition provisions detail the requirements of secured 22 parties that acquired or perfected a security interest prior 23 to the bill’s effective date (pre-effective-date) including by 24 filing a pre-effective-date financing statement in this state 25 or another jurisdiction (state) and specifying the necessary 26 requirements to comply with the bill’s provisions on and after 27 its effective date. 28 TRANSITION PROVISIONS —— SECURITY INTERESTS. The bill 29 provides that a pre-effective-date security interest remains 30 effective on and after the bill’s effective date, unless it 31 fails to satisfy the bill’s requirements with a one-year grace 32 period provided (Code section 554.9803). A pre-effective-date 33 unperfected security interest will become perfected upon 34 the effective date if it satisfies the bill’s perfection 35 -25- LSB 5461YC (5) 84 da/rj 25/ 27
H.F. _____ requirements. Otherwise, it will remain unperfected until the 1 bill’s perfection requirements are satisfied (Code section 2 554.9804). 3 TRANSITION PROVISION —— EFFECTIVENESS OF FINANCING 4 AND CONTINUATION STATEMENTS. The bill provides that a 5 pre-effective-date financing statement continues in effect 6 as long as it satisfies the bill’s requirements and other 7 provisions applicable to such financing statements. It 8 also provides that a financing statement filed in another 9 jurisdiction may remain effective for as long as it would 10 remain effective in the other jurisdiction or June 30, 2018 11 whichever is earlier (Code section 554.9805). The bill 12 provides that the filing of an initial financing statement may 13 continue the effectiveness of a pre-effective-date financing 14 statement rather than a continuation statement that would 15 otherwise be filed (Code section 554.9806). Generally, a 16 financing statement is effective for five years or until it 17 lapses (Code section 554.9515). The bill provides for the 18 amendment or termination of a pre-effective-date financing 19 statement (Code section 554.9807). A person may file an 20 initial financing statement or a continuation statement to 21 the extent authorized by the secured party and the filing is 22 necessary to comply with the bill’s transition provisions 23 (Code section 554.9808). The bill expressly states that its 24 provisions govern relative priorities of conflicting claims, 25 except to the extent that the priorities were established 26 before the bill’s effective date. 27 HEADNOTE CHANGE. The bill expressly amends a section’s 28 headnote to comply with codification requirements provided in 29 Code section 3.3. 30 REPEAL OF TRANSITION PROVISION. The bill repeals existing 31 transition provisions enacted in 2000 Iowa Acts, chapter 1149, 32 and transition provisions included in the bill. The repeals 33 take effect July 1, 2017, when such provisions will be out of 34 date. The bill includes a general savings clause. 35 -26- LSB 5461YC (5) 84 da/rj 26/ 27
H.F. _____ EFFECTIVE DATE. The bill takes effect July 1, 2013, in the 1 same manner as other states which have adopted the model act. 2 -27- LSB 5461YC (5) 84 da/rj 27/ 27