House
Study
Bill
688
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
AGRICULTURE
BILL
BY
CHAIRPERSON
SEXTON)
A
BILL
FOR
An
Act
establishing
a
central
filing
system
relating
to
1
security
interests
in
farm
products,
providing
fees,
and
2
including
contingent
implementation
and
effective
date
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
TLSB
5829YC
(4)
90
da/ns
H.F.
_____
Section
1.
Section
554.9102,
subsection
4,
Code
2024,
is
1
amended
to
read
as
follows:
2
4.
Federal
Food
Security
Act.
3
a.
For
purposes
of
the
Federal
Food
Security
Act,
7
U.S.C.
4
§1631,
written
notice
shall
be
considered
to
be
received
by
the
5
person
to
whom
it
was
delivered
if
the
notice
is
delivered
in
6
hand
to
the
person,
or
mailed
by
certified
or
registered
mail
7
with
the
proper
postage
and
properly
addressed
to
the
person
to
8
whom
it
was
sent.
The
refusal
of
a
person
to
whom
a
notice
is
9
so
mailed
to
accept
delivery
of
the
notice
shall
be
considered
10
receipt.
11
b.
This
subsection
is
repealed
on
the
date
that
this
Act
is
12
implemented
as
provided
in
this
Act.
13
Sec.
2.
NEW
SECTION
.
554C.1
Definitions.
14
As
used
in
this
chapter,
unless
the
context
otherwise
15
requires:
16
1.
“Buyer
in
the
ordinary
course
of
business”
means
a
person
17
who,
in
the
ordinary
course
of
business,
buys
farm
products
18
from
a
person
engaged
in
farming
operations
who
is
in
the
19
business
of
selling
farm
products.
20
2.
“Central
filing
system”
means
a
system
for
filing
21
effective
financing
statements,
and
statements
amending,
22
continuing,
or
terminating
effective
financing
statements
as
23
provided
in
section
554C.4.
24
3.
“Commission
merchant”
means
a
person
engaged
in
the
25
business
of
receiving
any
farm
product
for
sale,
on
commission,
26
or
for
or
on
behalf
of
another
person.
27
4.
“Effective
financing
statement”
means
a
financing
28
statement
required
to
be
filed
as
part
of
the
central
filing
29
system
as
provided
in
section
554C.6.
30
5.
“Secretary”
means
the
secretary
of
state.
31
6.
“Selling
agent”
means
a
person,
other
than
a
commission
32
merchant,
who
is
engaged
in
the
business
of
negotiating
the
33
sale
and
purchase
of
a
farm
product
on
behalf
of
a
person
34
engaged
in
farming
operations.
35
-1-
LSB
5829YC
(4)
90
da/ns
1/
12
H.F.
_____
Sec.
3.
NEW
SECTION
.
554C.2
Special
definitions.
1
To
every
extent
consistent
with
the
application
of
federal
2
law,
unless
the
context
otherwise
requires:
3
1.
“Agricultural
lien”
means
the
same
as
defined
in
section
4
554.9102.
5
2.
“Buyer”
means
a
buyer
in
the
ordinary
course
of
business,
6
a
commission
merchant,
or
a
selling
agent.
7
3.
“Crop
year”
means
the
calendar
year
in
which
a
crop
is
or
8
will
be
harvested,
animals
are
born
or
acquired,
or
poultry
or
9
eggs
are
or
will
be
sold.
10
4.
“Debtor”
means
a
person
who
has
an
interest
other
than
a
11
security
interest
in
a
farm
product,
or
any
other
person
who
12
owns
a
farm
product
and
subjects
the
farm
product
to
a
security
13
interest
whether
or
not
that
person
owes
a
debt
to
the
secured
14
party.
15
5.
“Farm
products”
means
the
same
as
defined
in
section
16
554.9102.
17
6.
“Farming
operation”
means
the
same
as
defined
in
section
18
554.9102.
19
7.
a.
“Secured
party”
means
a
secured
party
in
whose
favor
20
a
security
interest
in
farm
products
is
created.
21
b.
“Secured
party”
includes
the
holder
of
a
lien,
including
22
an
agricultural
lien,
on
farm
products.
23
8.
a.
“Security
interest”
means
an
interest
in
farm
24
products
that
secures
payment
or
performance
of
an
obligation.
25
b.
“Security
interest”
includes
a
lien
created
by
statute,
26
including
an
agricultural
lien.
27
9.
“Signature”
means
a
symbol
used
to
sign,
execute,
or
28
otherwise
to
encrypt
or
similarly
process
a
record,
in
whole
or
29
in
part,
with
the
present
intent
of
authenticating
the
record
30
for
purposes
of
identifying
the
person
adopting
or
accepting
31
the
record.
32
10.
“Unique
identifier”
means
a
number,
combination
33
of
numbers
and
letters,
or
other
identifier
selected
by
34
the
secretary
of
state
using
a
selection
system
or
method
35
-2-
LSB
5829YC
(4)
90
da/ns
2/
12
H.F.
_____
approved
by
the
secretary
of
the
United
States
department
of
1
agriculture.
2
Sec.
4.
NEW
SECTION
.
554C.3
Chapter
consistent
with
uniform
3
commercial
code.
4
This
chapter
shall
be
interpreted
in
conjunction
with
5
chapter
554,
and
terms
and
phrases
used
in
this
chapter
shall,
6
to
every
extent
practicable,
be
interpreted
consistently
with
7
chapter
554,
article
9.
8
Sec.
5.
NEW
SECTION
.
554C.4
Central
filing
system
——
9
establishment
and
certification.
10
1.
The
secretary
of
state
shall
establish
and
administer
a
11
central
filing
system
for
the
electronic
filing
and
examining
12
of
effective
financing
statements
and
statements
amending,
13
continuing,
or
terminating
effective
financing
statements
on
14
a
statewide
basis.
15
2.
The
central
filing
system
shall
be
designed
to
allow
16
persons
to
file
and
examine
effective
financing
statements
17
and
statements
amending,
continuing,
or
terminating
effective
18
financing
statements
using
the
internet.
The
secretary
may
19
provide
for
the
filing
and
examining
of
statements
amending,
20
continuing,
or
terminating
effective
financing
statements
in
a
21
paper
format.
22
3.
The
central
financing
system
must
comply
with
the
23
requirements
set
forth
in
7
U.S.C.
§1631,
as
certified
by
24
the
United
States
secretary
of
agriculture
prior
to
the
25
implementation
date
of
this
Act.
26
Sec.
6.
NEW
SECTION
.
554C.5
Effective
financing
statements
27
——
filing
requirements.
28
1.
The
secretary
of
state
shall
provide
for
filing
effective
29
financing
statements,
and
statements
amending,
continuing,
or
30
terminating
effective
financing
statements,
as
provided
in
31
this
section.
The
secretary
shall
prescribe
all
forms
to
be
32
used
for
filing.
The
presentation
for
filing
of
an
effective
33
financing
statement
and
statement
amending,
continuing,
or
34
terminating
an
effective
financing
statement
and
the
acceptance
35
-3-
LSB
5829YC
(4)
90
da/ns
3/
12
H.F.
_____
of
any
such
statement
by
the
secretary
constitutes
filing
under
1
this
section.
2
2.
An
effective
financing
statement
is
valid
if
the
3
statement
substantially
complies
with
the
requirements
of
this
4
section
even
though
it
contains
minor
errors
that
are
not
5
seriously
misleading.
6
3.
An
effective
financing
statement
must
contain
7
information
that
the
secretary
requires
to
comply
with
7
U.S.C.
8
§1631
or
to
administer
this
section.
The
statement
must
be
9
an
original
or
reproduced
copy
which
is
signed
by
the
secured
10
party
and
the
debtor.
If
filed
electronically,
the
debtor
is
11
not
required
to
sign
the
statement.
The
statement
must
be
12
filed
with
the
secretary
by
the
secured
party.
The
secretary
13
shall
record
the
date
and
hour
of
the
filing
of
the
statement.
14
4.
An
effective
financing
statement
must
contain
all
of
the
15
following:
16
a.
The
name
and
address
of
the
secured
party.
17
b.
The
name
and
address
of
the
debtor.
18
c.
The
unique
identifier
of
the
debtor.
19
d.
A
description
of
the
farm
products
subject
to
the
20
security
interest,
the
county
in
Iowa
where
the
farm
products
21
are
produced
or
will
be
produced,
the
crop
year
unless
every
22
crop
of
the
farm
product
in
question
for
the
duration
of
23
the
effective
financing
statement
is
to
be
subject
to
the
24
particular
security
interest,
and
further
details
of
the
25
farm
products
subject
to
the
security
interest
if
needed
to
26
distinguish
it
from
other
quantities
of
farm
products
owned
by
27
the
same
person
or
persons
but
not
subject
to
the
particular
28
security
interest.
29
e.
Any
other
information
that
the
secretary
requires
to
30
comply
with
7
U.S.C.
§1631
or
to
administer
this
section.
31
5.
The
effective
financing
statement
may
cover
more
than
one
32
farm
product
located
in
more
than
one
county.
33
6.
A
continuation
statement
shall
be
signed
by
the
secured
34
party,
identify
the
original
effective
financing
statement
by
35
-4-
LSB
5829YC
(4)
90
da/ns
4/
12
H.F.
_____
file
number,
and
state
that
the
original
financing
statement
1
is
still
effective.
2
Sec.
7.
NEW
SECTION
.
554C.6
Effective
financing
statements
3
——
effectiveness.
4
1.
The
effective
financing
statement
shall
remain
effective
5
for
a
period
of
five
years
from
the
date
of
filing,
subject
to
6
extensions
for
additional
periods
of
five
years
each
by
filing
7
or
refiling
a
continuation
statement
within
six
months
before
8
the
expiration
of
the
five-year
period.
9
2.
Upon
timely
filing
of
a
continuation
statement,
the
10
effectiveness
of
the
original
financing
statement
shall
be
11
continued
for
five
years
after
the
last
date
to
which
the
prior
12
filing
was
effective,
whereupon
it
shall
lapse
unless
another
13
continuation
statement
is
filed
prior
to
the
lapse.
Succeeding
14
continuation
statements
may
be
filed
in
the
same
manner
to
15
continue
the
effectiveness
of
the
original
effective
financing
16
statement.
17
3.
The
effective
financing
statement
shall
be
amended
in
18
writing
to
reflect
a
material
change
within
three
months
of
the
19
material
change.
The
amendment
shall
be
signed
and
filed
as
20
required
for
an
original
effective
financing
statement.
If
the
21
statement
is
filed
electronically,
the
signature
of
the
debtor
22
shall
not
be
required.
23
4.
a.
The
effective
financing
statement
lapses
upon
the
24
expiration
of
the
effective
period
of
the
effective
financing
25
statement
or
is
terminated
upon
the
filing
of
a
statement
26
signed
by
the
secured
party
that
the
effective
financing
27
statement
is
terminated.
28
b.
If
the
effective
financing
statement
has
not
lapsed
or
is
29
not
terminated
and
there
are
no
outstanding
secured
obligations
30
and
no
commitments
to
make
advances,
incur
obligations,
or
31
otherwise
give
value,
the
debtor
may
notify
the
secured
party
32
in
writing
to
terminate
the
effective
financing
statement.
33
c.
Until
the
debtor
instructs
the
secured
party
in
writing
34
to
terminate
the
effective
financing
statement,
the
secured
35
-5-
LSB
5829YC
(4)
90
da/ns
5/
12
H.F.
_____
party
has
no
obligation
to
terminate
the
statement.
1
d.
Within
thirty
days
after
receipt
by
the
secured
party
2
of
the
statement
from
the
debtor
to
terminate
the
effective
3
financing
statement,
the
secured
party
shall
file
with
the
4
secretary
a
termination
statement
with
respect
to
the
effective
5
financing
statement.
6
Sec.
8.
NEW
SECTION
.
554C.7
Master
list
——
organization
7
and
contents.
8
1.
The
secretary
of
state
shall
compile
the
filed
effective
9
financing
statements
into
a
master
list.
10
2.
The
master
list
shall
be
organized
according
to
farm
11
products.
The
master
list
shall
contain
information
required
12
to
be
contained
in
effective
financing
statements
filed
with
13
the
secretary.
The
secretary
shall
arrange
the
master
list
for
14
each
farm
product
as
follows:
15
a.
In
alphabetical
order
according
to
the
last
name
of
the
16
individual
debtors
or,
in
the
case
of
debtors
doing
business
17
other
than
as
individuals,
the
first
word
in
the
name
of
such
18
debtors.
19
b.
In
numerical
order
according
to
the
unique
identifiers
20
of
the
debtors.
21
c.
Geographically
by
county.
22
d.
By
crop
year.
23
3.
The
master
list
shall
include
information
regarding
24
buyers
who
register
with
the
secretary
on
forms
prescribed
by
25
the
secretary
as
provided
in
this
section.
The
secretary
may
26
require
that
a
buyer
be
classified
as
a
buyer
in
the
ordinary
27
course
of
business,
commission
merchant,
or
selling
agent.
28
4.
The
secretary
shall
maintain
a
list
of
all
buyers
of
farm
29
products
who
register
with
the
secretary.
A
buyer
registering
30
with
the
secretary
shall
complete
forms
requiring
all
of
the
31
following
information,
as
prescribed
by
the
secretary:
32
a.
The
name
and
address
of
the
buyer.
33
b.
The
interest
of
the
buyer
in
receiving
the
list.
34
c.
The
farm
products
in
which
the
buyer
has
an
interest.
35
-6-
LSB
5829YC
(4)
90
da/ns
6/
12
H.F.
_____
d.
Any
other
information
that
the
secretary
determines
is
1
necessary
to
comply
with
7
U.S.C.
§1631
or
to
administer
this
2
section.
3
Sec.
9.
NEW
SECTION
.
554C.8
Master
list
——
distribution
and
4
inquiries.
5
1.
The
secretary
of
state
shall
distribute
to
each
6
registered
buyer
a
copy
in
written,
printed,
or
electronic
form
7
of
those
portions
of
the
master
list
relating
to
farm
products
8
in
which
the
buyer
has
registered
an
interest.
The
secretary
9
may
provide
for
the
distribution
of
the
master
list
or
portions
10
of
the
list
on
any
other
medium
requested
by
a
registered
11
buyer.
If
a
registered
buyer
so
requests,
the
information
12
provided
to
the
buyer
may
be
limited
to
a
county
or
group
of
13
counties
where
the
farm
products
are
produced
or
to
a
crop
year
14
or
crop
years
or
to
a
combination
of
those
identifiers.
15
2.
Distribution
is
subject
to
all
of
the
following:
16
a.
The
distribution
shall
be
by
first
class
or
electronic
17
mail.
18
b.
The
secretary
shall
adopt
rules
pursuant
to
chapter
17A
19
establishing
the
dates
upon
which
the
quarterly
distributions
20
will
be
made,
the
dates
after
which
a
filing
of
an
effective
21
financing
statement
will
not
be
reflected
on
the
next
quarterly
22
distribution
of
lists,
and
the
dates
by
which
a
buyer
must
23
complete
a
registration
to
receive
the
next
quarterly
list.
24
3.
The
secretary
shall
remove
information
pertaining
to
25
lapsed
and
terminated
effective
financing
statements
from
the
26
master
list
prior
to
preparation
of
the
lists
required
to
be
27
distributed.
28
4.
Upon
written
notice
to
the
secretary
by
a
registered
29
buyer
requesting
termination
of
the
distribution
of
the
30
list
to
the
registered
buyer,
the
secretary
shall
terminate
31
distribution
of
the
list
to
the
registered
buyer.
32
5.
Oral
and
written
inquiries
by
a
buyer
not
registered
33
pursuant
to
section
554C.7
may
be
made
to
the
secretary
during
34
hours
determined
by
the
secretary.
35
-7-
LSB
5829YC
(4)
90
da/ns
7/
12
H.F.
_____
a.
The
secretary
may
provide
for
a
computerized
system
1
for
inquiry
and
confirmation
which
may
be
used
in
lieu
of
the
2
inquiry
and
confirmation
system
otherwise
provided
for
in
this
3
section.
4
b.
Written
confirmation
of
the
information
provided
orally
5
in
response
to
the
inquiry
shall
be
delivered
by
first
class
6
mail
or
electronic
mail
to
the
buyer,
at
an
address
provided
7
by
the
buyer,
by
the
secretary
not
later
than
the
second
8
regular
business
day
following
the
day
on
which
the
inquiry
was
9
received.
10
6.
In
order
to
verify
the
existence
or
nonexistence
of
a
11
security
interest,
a
buyer
may
request
a
seller
to
disclose
the
12
seller’s
unique
identifier.
13
Sec.
10.
NEW
SECTION
.
554C.9
Perfection
——
creation
of
14
superior
interests.
15
1.
If
a
buyer
fails
to
register
with
the
secretary
of
16
state
prior
to
the
purchase
of
farm
products,
the
buyer
takes
17
subject
to
a
security
interest
in
the
farm
products
only
if
the
18
secured
party
has
filed
an
effective
financing
statement
that
19
covers
the
farm
products
being
sold,
and
the
buyer
could
have
20
discovered
the
existence
of
the
effective
financing
statement
21
prior
to
the
purchase
by
accessing
the
database
containing
22
effective
financing
statements
filed
electronically
with
the
23
secretary.
24
2.
If
the
buyer
registers
with
the
secretary
prior
to
the
25
purchase
of
the
farm
products,
the
buyer
takes
subject
to
a
26
security
interest
in
the
farm
products
only
if
the
secured
27
party
has
filed
an
effective
financing
statement
that
covers
28
the
farm
products
being
sold,
and
the
buyer
does
not
secure
29
a
waiver
or
release
of
the
security
interest
as
specified
in
30
the
effective
financing
statement
from
the
secured
party.
31
If
a
buyer
in
the
ordinary
course
of
business
buying
farm
32
products
covered
by
the
central
filing
system
as
provided
in
33
section
554C.4
tenders
to
the
seller
the
total
purchase
price
34
by
means
of
a
check
or
any
other
form
of
payment
payable
to
35
-8-
LSB
5829YC
(4)
90
da/ns
8/
12
H.F.
_____
such
seller
and
each
security
interest
holder
of
the
seller
1
identified
in
the
central
filing
system
for
such
products
and
2
if
such
security
interest
holder
authorizes
the
negotiation
3
of
such
check
or
other
form
of
payment,
such
authorization
or
4
endorsement
and
payment
thereof
shall
constitute
a
waiver
or
5
release
of
the
security
interest
specified
to
the
extent
of
6
the
amount
of
the
instrument.
Such
waiver
or
release
of
the
7
security
interest
shall
not
serve
to
establish
or
alter
in
any
8
way
security
interest
priorities
under
Iowa
law.
9
Sec.
11.
NEW
SECTION
.
554C.10
Fees.
10
1.
The
secretary
of
state
shall
establish
fees
for
initially
11
filing
an
effective
financing
statement,
or
a
statement
12
amending,
continuing,
or
terminating
an
effective
financing
13
statement.
The
fees
shall
not
be
more
than
provided
for
filing
14
financing
statements
as
provided
in
section
554.9525.
15
2.
Notwithstanding
section
22.3,
the
secretary
may
charge
16
a
buyer
a
fee
for
registering
to
receive
a
master
list
or
17
for
receiving
responses
to
inquiries
which
are
accessed
in
a
18
printed
format.
The
secretary
shall
not
charge
a
buyer
a
fee
19
for
registering
to
receive
a
master
list
or
for
responding
to
20
buyer
inquiries,
including
by
examining
or
printing
effective
21
financing
statements,
and
statements
amending,
continuing,
or
22
terminating
effective
financing
statements
which
are
accessed
23
in
an
electronic
format.
24
3.
All
moneys
received
by
the
secretary
under
this
section
25
shall
be
handled
in
the
same
manner
as
repayment
receipts,
as
26
defined
in
section
8.2,
and
shall
be
used
by
the
secretary
27
exclusively
for
the
administration
of
this
chapter.
28
Sec.
12.
NEW
SECTION
.
554C.11
Rules.
29
The
secretary
of
state
shall
adopt
rules
pursuant
to
chapter
30
17A
necessary
or
desirable
to
administer
this
chapter.
31
Sec.
13.
DIRECTIONS
TO
SECRETARY
OF
STATE.
32
1.
The
secretary
of
state
shall
adopt
rules
necessary
33
to
implement
this
Act,
including
by
requesting
certification
34
of
a
central
filing
system
as
provided
in
this
Act
pursuant
35
-9-
LSB
5829YC
(4)
90
da/ns
9/
12
H.F.
_____
to
7
U.S.C.
§1631.
If
it
is
necessary
to
obtain
federal
1
certification,
the
secretary
of
state
may
adopt
rules
providing
2
additional
requirements
made
in
conformity
with
7
U.S.C.
§1631.
3
2.
If
the
secretary
of
the
United
States
department
of
4
agriculture
rejects
federal
certification,
the
secretary
of
5
state
shall
propose
legislation
prior
to
the
next
session
of
6
the
general
assembly
necessary
to
comply
with
the
certification
7
requirements
of
7
U.S.C.
§1631.
8
Sec.
14.
CONTINGENT
IMPLEMENTATION.
The
implementation
of
9
this
Act
is
contingent
upon
federal
certification
of
a
central
10
filing
system
as
provided
in
this
Act
pursuant
to
7
U.S.C.
11
§1631.
The
provisions
of
this
Act
shall
be
implemented
on
12
the
first
business
day
three
months
after
the
date
of
such
13
certification.
The
secretary
of
state
shall
provide
notice
of
14
the
implementation
date
in
the
Iowa
administrative
bulletin
15
in
three
consecutive
issues
prior
to
the
implementation
date.
16
Until
the
implementation
date,
persons
shall
take
subject
17
to
or
free
of
a
security
interest,
including
a
lien,
in
the
18
same
manner
and
according
to
the
same
procedures
applicable
19
immediately
prior
to
the
implementation
date.
20
Sec.
15.
EFFECTIVE
DATES.
21
1.
Except
as
provided
in
subsection
2,
this
Act
takes
effect
22
July
1,
2024.
23
2.
The
sections
of
this
Act
providing
for
the
adoption
24
of
rules
by
the
secretary
of
state
in
preparation
to
request
25
certification
of
a
central
filing
system
as
provided
in
this
26
Act
pursuant
to
7
U.S.C.
§1631
take
effect
upon
enactment.
27
EXPLANATION
28
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
29
the
explanation’s
substance
by
the
members
of
the
general
assembly.
30
CENTRALIZED
FILING
SYSTEM
——
GENERAL.
This
bill
creates
31
a
centralized,
statewide
filing
system
(system)
for
security
32
interests
in
farm
products
to
notify
buyers
of
farm
products
33
subject
to
an
attached
security
interest.
The
system
is
to
34
facilitate
notice
under
Article
9
of
the
Uniform
Commercial
35
-10-
LSB
5829YC
(4)
90
da/ns
10/
12
H.F.
_____
Code
(UCC)
(Code
chapter
554).
Farm
products
include
goods
1
other
than
standing
timber
produced
as
part
of
a
farming
2
operation
and
includes
crops,
aquatic
goods,
livestock,
3
supplies
used
or
produced
on
the
farming
operation,
or
products
4
of
crops
or
livestock
in
an
unmanufactured
form
(Code
section
5
554.9102).
The
system
must
be
certified
by
the
United
States
6
department
of
agriculture.
7
The
bill
allows
a
person
who
has
a
secured
interest
attached
8
to
farm
products
to
complete
and
file
a
document
referred
to
9
as
an
effective
financing
statement
or
a
statement
amending,
10
continuing,
or
terminating
the
effective
financing
statement,
11
with
the
secretary
of
state.
The
secretary
must
compile
12
information
contained
in
the
effective
financing
statements
13
into
a
master
list
organized
according
to
farm
products
which
14
the
secretary
must
regularly
distribute
to
persons
designated
15
as
buyers
of
farm
products
registered
with
the
secretary.
This
16
includes
buyers
in
the
ordinary
course
of
business,
commission
17
merchants,
and
selling
agents.
The
secretary
may
also
respond
18
to
verbal
or
written
inquiries
by
buyers
including
unregistered
19
buyers
and
deliver
a
written
confirmation
to
inquiring
buyers
20
regarding
whether
a
farm
product
is
subject
to
a
security
21
interest.
22
CENTRALIZED
FILING
SYSTEM
——
REGISTRATION.
If
a
buyer
23
registers
with
the
secretary
prior
to
the
purchase
of
farm
24
products,
the
registered
buyer
takes
subject
to
the
security
25
interest
only
if
the
secured
party
has
filed
an
effective
26
financing
statement
that
covers
the
farm
products
being
27
sold,
unless
the
registered
buyer
secures
a
release
of
the
28
security
interest.
If
a
buyer
fails
to
register
with
the
29
secretary,
the
buyer
takes
subject
to
the
security
interest
30
only
if
the
secured
party
has
filed
an
effective
financing
31
statement
that
covers
the
farm
products,
and
the
buyer
could
32
have
discovered
the
existence
of
the
effective
financing
33
statement
by
conducting
an
inquiry
and
receiving
a
response
and
34
confirmation.
35
-11-
LSB
5829YC
(4)
90
da/ns
11/
12
H.F.
_____
CENTRALIZED
FILING
SYSTEM
——
FEES.
The
bill
authorizes
1
the
secretary
to
establish
fees
for
secured
parties
filing
2
effective
financing
statements
and
buyers
registering
with
3
the
secretary.
The
secretary
must
adopt
rules
as
necessary
4
to
implement,
administer,
and
enforce
the
provisions
of
the
5
system.
The
system
is
implemented
on
the
first
business
day
6
occurring
three
months
after
certification
by
the
United
States
7
department
of
agriculture.
The
secretary
must
publish
notice
8
of
the
certification
in
the
Iowa
administrative
bulletin.
9
EFFECTIVE
DATES.
The
bill
takes
effect
July
1,
2024,
except
10
for
the
provisions
relating
to
rulemaking
and
certification
11
which
take
effect
upon
enactment.
12
BACKGROUND.
Article
9
of
the
UCC
provides
an
exception
for
13
buyers
in
the
ordinary
course
of
business
who
generally
take
14
free
of
a
security
interest
created
by
the
seller
even
in
cases
15
in
which
the
security
interest
has
been
perfected
and
the
buyer
16
is
aware
of
its
existence
(Code
section
554.9320).
However,
17
notwithstanding
this
exception,
a
buyer
who
purchases
a
farm
18
product
from
a
person
engaged
in
farming
operations
may
not
19
take
free
of
a
security
interest.
The
federal
Food
Security
20
Act
of
1985,
in
relevant
part
(7
U.S.C.
§1631),
preempts
the
21
state’s
Article
9
requirements
by
providing
that
a
buyer
in
22
the
ordinary
course
of
business,
a
commission
merchant,
or
23
a
selling
agent
(buyer)
may
buy
farm
products
without
being
24
subject
to
a
security
interest
created
by
the
seller
but
only
25
if
the
buyer
does
not
have
actual
or
constructive
notice
of
26
that
security
interest.
The
federal
law
allows
states
to
27
elect
between
two
notification
options:
(1)
Iowa’s
current
28
law
requiring
the
secured
party
to
deliver
direct
notice
to
29
potential
buyers
of
a
secured
party’s
interest
in
the
farm
30
products
within
one
year
prior
to
sale,
or
(2)
the
system
31
described
in
the
bill.
In
either
case,
the
federal
law
does
32
not
supersede
Article
9
requirements
that
establish
priorities
33
among
creditors.
34
-12-
LSB
5829YC
(4)
90
da/ns
12/
12