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Senate Study Bill 3167 - IntroducedA Bill ForAn Act 1establishing a central filing system relating to
2security interests in farm products, providing fees, and
3including contingent implementation and effective date
4provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 554.9102, subsection 4, Code 2024, is
2amended to read as follows:
34. Federal Food Security Act.
4a. For purposes of the Federal Food Security Act, 7 U.S.C.
5§1631, written notice shall be considered to be received by the
6person to whom it was delivered if the notice is delivered in
7hand to the person, or mailed by certified or registered mail
8with the proper postage and properly addressed to the person to
9whom it was sent. The refusal of a person to whom a notice is
10so mailed to accept delivery of the notice shall be considered
11receipt.
12b. This subsection is repealed on the date that this Act is
13implemented as provided in this Act.
14 Sec. 2. NEW SECTION. 554C.1 Definitions.
15As used in this chapter, unless the context otherwise
16requires:
171. “Buyer in the ordinary course of business” means a person
18who, in the ordinary course of business, buys farm products
19from a person engaged in farming operations who is in the
20business of selling farm products.
212. “Central filing system” means a system for filing
22effective financing statements, and statements amending,
23continuing, or terminating effective financing statements as
24provided in section 554C.4.
253. “Commission merchant” means a person engaged in the
26business of receiving any farm product for sale, on commission,
27or for or on behalf of another person.
284. “Effective financing statement” means a financing
29statement required to be filed as part of the central filing
30system as provided in section 554C.6.
315. “Secretary” means the secretary of state.
326. “Selling agent” means a person, other than a commission
33merchant, who is engaged in the business of negotiating the
34sale and purchase of a farm product on behalf of a person
35engaged in farming operations.
-1-1 Sec. 3. NEW SECTION. 554C.2 Special definitions.
2To every extent consistent with the application of federal
3law, unless the context otherwise requires:
41. “Agricultural lien” means the same as defined in section
5554.9102.
62. “Buyer” means a buyer in the ordinary course of business,
7a commission merchant, or a selling agent.
83. “Crop year” means the calendar year in which a crop is or
9will be harvested, animals are born or acquired, or poultry or
10eggs are or will be sold.
114. “Debtor” means a person who has an interest other than a
12security interest in a farm product, or any other person who
13owns a farm product and subjects the farm product to a security
14interest whether or not that person owes a debt to the secured
15party.
165. “Farm products” means the same as defined in section
17554.9102.
186. “Farming operation” means the same as defined in section
19554.9102.
207. a. “Secured party” means a secured party in whose favor
21a security interest in farm products is created.
22b. “Secured party” includes the holder of a lien, including
23an agricultural lien, on farm products.
248. a. “Security interest” means an interest in farm
25products that secures payment or performance of an obligation.
26b. “Security interest” includes a lien created by statute,
27including an agricultural lien.
289. “Signature” means a symbol used to sign, execute, or
29otherwise to encrypt or similarly process a record, in whole or
30in part, with the present intent of authenticating the record
31for purposes of identifying the person adopting or accepting
32the record.
3310. “Unique identifier” means a number, combination
34of numbers and letters, or other identifier selected by
35the secretary of state using a selection system or method
-2-1approved by the secretary of the United States department of
2agriculture.
3 Sec. 4. NEW SECTION. 554C.3 Chapter consistent with uniform
4commercial code.
5This chapter shall be interpreted in conjunction with
6chapter 554, and terms and phrases used in this chapter shall,
7to every extent practicable, be interpreted consistently with
8chapter 554, article 9.
9 Sec. 5. NEW SECTION. 554C.4 Central filing system —
10establishment and certification.
111. The secretary of state shall establish and administer a
12central filing system for the electronic filing and examining
13of effective financing statements and statements amending,
14continuing, or terminating effective financing statements on
15a statewide basis.
162. The central filing system shall be designed to allow
17persons to file and examine effective financing statements
18and statements amending, continuing, or terminating effective
19financing statements using the internet. The secretary may
20provide for the filing and examining of statements amending,
21continuing, or terminating effective financing statements in a
22paper format.
233. The central financing system must comply with the
24requirements set forth in 7 U.S.C. §1631, as certified by
25the United States secretary of agriculture prior to the
26implementation date of this Act.
27 Sec. 6. NEW SECTION. 554C.5 Effective financing statements
28— filing requirements.
291. The secretary of state shall provide for filing effective
30financing statements, and statements amending, continuing, or
31terminating effective financing statements, as provided in
32this section. The secretary shall prescribe all forms to be
33used for filing. The presentation for filing of an effective
34financing statement and statement amending, continuing, or
35terminating an effective financing statement and the acceptance
-3-1of any such statement by the secretary constitutes filing under
2this section.
32. An effective financing statement is valid if the
4statement substantially complies with the requirements of this
5section even though it contains minor errors that are not
6seriously misleading.
73. An effective financing statement must contain
8information that the secretary requires to comply with 7 U.S.C.
9§1631 or to administer this section. The statement must be
10an original or reproduced copy which is signed by the secured
11party and the debtor. If filed electronically, the debtor is
12not required to sign the statement. The statement must be
13filed with the secretary by the secured party. The secretary
14shall record the date and hour of the filing of the statement.
154. An effective financing statement must contain all of the
16following:
17a. The name and address of the secured party.
18b. The name and address of the debtor.
19c. The unique identifier of the debtor.
20d. A description of the farm products subject to the
21security interest, the county in Iowa where the farm products
22are produced or will be produced, the crop year unless every
23crop of the farm product in question for the duration of
24the effective financing statement is to be subject to the
25particular security interest, and further details of the
26farm products subject to the security interest if needed to
27distinguish it from other quantities of farm products owned by
28the same person or persons but not subject to the particular
29security interest.
30e. Any other information that the secretary requires to
31comply with 7 U.S.C. §1631 or to administer this section.
325. The effective financing statement may cover more than one
33farm product located in more than one county.
346. A continuation statement shall be signed by the secured
35party, identify the original effective financing statement by
-4-1file number, and state that the original financing statement
2is still effective.
3 Sec. 7. NEW SECTION. 554C.6 Effective financing statements
4— effectiveness.
51. The effective financing statement shall remain effective
6for a period of five years from the date of filing, subject to
7extensions for additional periods of five years each by filing
8or refiling a continuation statement within six months before
9the expiration of the five-year period.
102. Upon timely filing of a continuation statement, the
11effectiveness of the original financing statement shall be
12continued for five years after the last date to which the prior
13filing was effective, whereupon it shall lapse unless another
14continuation statement is filed prior to the lapse. Succeeding
15continuation statements may be filed in the same manner to
16continue the effectiveness of the original effective financing
17statement.
183. The effective financing statement shall be amended in
19writing to reflect a material change within three months of the
20material change. The amendment shall be signed and filed as
21required for an original effective financing statement. If the
22statement is filed electronically, the signature of the debtor
23shall not be required.
244. a. The effective financing statement lapses upon the
25expiration of the effective period of the effective financing
26statement or is terminated upon the filing of a statement
27signed by the secured party that the effective financing
28statement is terminated.
29b. If the effective financing statement has not lapsed or is
30not terminated and there are no outstanding secured obligations
31and no commitments to make advances, incur obligations, or
32otherwise give value, the debtor may notify the secured party
33in writing to terminate the effective financing statement.
34c. Until the debtor instructs the secured party in writing
35to terminate the effective financing statement, the secured
-5-1party has no obligation to terminate the statement.
2d. Within thirty days after receipt by the secured party
3of the statement from the debtor to terminate the effective
4financing statement, the secured party shall file with the
5secretary a termination statement with respect to the effective
6financing statement.
7 Sec. 8. NEW SECTION. 554C.7 Master list — organization
8and contents.
91. The secretary of state shall compile the filed effective
10financing statements into a master list.
112. The master list shall be organized according to farm
12products. The master list shall contain information required
13to be contained in effective financing statements filed with
14the secretary. The secretary shall arrange the master list for
15each farm product as follows:
16a. In alphabetical order according to the last name of the
17individual debtors or, in the case of debtors doing business
18other than as individuals, the first word in the name of such
19debtors.
20b. In numerical order according to the unique identifiers
21of the debtors.
22c. Geographically by county.
23d. By crop year.
243. The master list shall include information regarding
25buyers who register with the secretary on forms prescribed by
26the secretary as provided in this section. The secretary may
27require that a buyer be classified as a buyer in the ordinary
28course of business, commission merchant, or selling agent.
294. The secretary shall maintain a list of all buyers of farm
30products who register with the secretary. A buyer registering
31with the secretary shall complete forms requiring all of the
32following information, as prescribed by the secretary:
33a. The name and address of the buyer.
34b. The interest of the buyer in receiving the list.
35c. The farm products in which the buyer has an interest.
-6- 1d. Any other information that the secretary determines is
2necessary to comply with 7 U.S.C.§1631 or to administer this
3section.
4 Sec. 9. NEW SECTION. 554C.8 Master list — distribution and
5inquiries.
61. The secretary of state shall distribute to each
7registered buyer a copy in written, printed, or electronic form
8of those portions of the master list relating to farm products
9in which the buyer has registered an interest. The secretary
10may provide for the distribution of the master list or portions
11of the list on any other medium requested by a registered
12buyer. If a registered buyer so requests, the information
13provided to the buyer may be limited to a county or group of
14counties where the farm products are produced or to a crop year
15or crop years or to a combination of those identifiers.
162. Distribution is subject to all of the following:
17a. The distribution shall be by first class or electronic
18mail.
19b. The secretary shall adopt rules pursuant to chapter 17A
20establishing the dates upon which the quarterly distributions
21will be made, the dates after which a filing of an effective
22financing statement will not be reflected on the next quarterly
23distribution of lists, and the dates by which a buyer must
24complete a registration to receive the next quarterly list.
253. The secretary shall remove information pertaining to
26lapsed and terminated effective financing statements from the
27master list prior to preparation of the lists required to be
28distributed.
294. Upon written notice to the secretary by a registered
30buyer requesting termination of the distribution of the
31list to the registered buyer, the secretary shall terminate
32distribution of the list to the registered buyer.
335. Oral and written inquiries by a buyer not registered
34pursuant to section 554C.7 may be made to the secretary during
35hours determined by the secretary.
-7- 1a. The secretary may provide for a computerized system
2for inquiry and confirmation which may be used in lieu of the
3inquiry and confirmation system otherwise provided for in this
4section.
5b. Written confirmation of the information provided orally
6in response to the inquiry shall be delivered by first class
7mail or electronic mail to the buyer, at an address provided
8by the buyer, by the secretary not later than the second
9regular business day following the day on which the inquiry was
10received.
116. In order to verify the existence or nonexistence of a
12security interest, a buyer may request a seller to disclose the
13seller’s unique identifier.
14 Sec. 10. NEW SECTION. 554C.9 Perfection — creation of
15superior interests.
161. If a buyer fails to register with the secretary of
17state prior to the purchase of farm products, the buyer takes
18subject to a security interest in the farm products only if the
19secured party has filed an effective financing statement that
20covers the farm products being sold, and the buyer could have
21discovered the existence of the effective financing statement
22prior to the purchase by accessing the database containing
23effective financing statements filed electronically with the
24secretary.
252. If the buyer registers with the secretary prior to the
26purchase of the farm products, the buyer takes subject to a
27security interest in the farm products only if the secured
28party has filed an effective financing statement that covers
29the farm products being sold, and the buyer does not secure
30a waiver or release of the security interest as specified in
31the effective financing statement from the secured party.
32If a buyer in the ordinary course of business buying farm
33products covered by the central filing system as provided in
34section 554C.4 tenders to the seller the total purchase price
35by means of a check or any other form of payment payable to
-8-1such seller and each security interest holder of the seller
2identified in the central filing system for such products and
3if such security interest holder authorizes the negotiation
4of such check or other form of payment, such authorization or
5endorsement and payment thereof shall constitute a waiver or
6release of the security interest specified to the extent of
7the amount of the instrument. Such waiver or release of the
8security interest shall not serve to establish or alter in any
9way security interest priorities under Iowa law.
10 Sec. 11. NEW SECTION. 554C.10 Fees.
111. The secretary of state shall establish fees for initially
12filing an effective financing statement, or a statement
13amending, continuing, or terminating an effective financing
14statement. The fees shall not be more than provided for filing
15financing statements as provided in section 554.9525.
162. Notwithstanding section 22.3, the secretary may charge
17a buyer a fee for registering to receive a master list or
18for receiving responses to inquiries which are accessed in a
19printed format. The secretary shall not charge a buyer a fee
20for registering to receive a master list or for responding to
21buyer inquiries, including by examining or printing effective
22financing statements, and statements amending, continuing, or
23terminating effective financing statements which are accessed
24in an electronic format.
253. All moneys received by the secretary under this section
26shall be handled in the same manner as repayment receipts, as
27defined in section 8.2, and shall be used by the secretary
28exclusively for the administration of this chapter.
29 Sec. 12. NEW SECTION. 554C.11 Rules.
30The secretary of state shall adopt rules pursuant to chapter
3117A necessary or desirable to administer this chapter.
32 Sec. 13. DIRECTIONS TO SECRETARY OF STATE.
331. The secretary of state shall adopt rules necessary
34to implement this Act, including by requesting certification
35of a central filing system as provided in this Act pursuant
-9-1to 7 U.S.C.§1631. If it is necessary to obtain federal
2certification, the secretary of state may adopt rules providing
3additional requirements made in conformity with 7 U.S.C.§1631.
42. If the secretary of the United States department of
5agriculture rejects federal certification, the secretary of
6state shall propose legislation prior to the next session of
7the general assembly necessary to comply with the certification
8requirements of 7 U.S.C.§1631.
9 Sec. 14. CONTINGENT IMPLEMENTATION. The implementation of
10this Act is contingent upon federal certification of a central
11filing system as provided in this Act pursuant to 7 U.S.C.
12§1631. The provisions of this Act shall be implemented on
13the first business day three months after the date of such
14certification. The secretary of state shall provide notice of
15the implementation date in the Iowa administrative bulletin
16in three consecutive issues prior to the implementation date.
17Until the implementation date, persons shall take subject
18to or free of a security interest, including a lien, in the
19same manner and according to the same procedures applicable
20immediately prior to the implementation date.
21 Sec. 15. EFFECTIVE DATES.
221. Except as provided in subsection 2, this Act takes effect
23July 1, 2024.
242. The sections of this Act providing for the adoption
25of rules by the secretary of state in preparation to request
26certification of a central filing system as provided in this
27Act pursuant to 7 U.S.C.§1631 take effect upon enactment.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31CENTRALIZED FILING SYSTEM — GENERAL. This bill creates
32a centralized, statewide filing system (system) for security
33interests in farm products to notify buyers of farm products
34subject to an attached security interest. The system is to
35facilitate notice under Article 9 of the Uniform Commercial
-10-1Code (UCC) (Code chapter 554). Farm products include goods
2other than standing timber produced as part of a farming
3operation and includes crops, aquatic goods, livestock,
4supplies used or produced on the farming operation, or products
5of crops or livestock in an unmanufactured form (Code section
6554.9102). The system must be certified by the United States
7department of agriculture.
8The bill allows a person who has a secured interest attached
9to farm products to complete and file a document referred to
10as an effective financing statement or a statement amending,
11continuing, or terminating the effective financing statement,
12with the secretary of state. The secretary must compile
13information contained in the effective financing statements
14into a master list organized according to farm products which
15the secretary must regularly distribute to persons designated
16as buyers of farm products registered with the secretary. This
17includes buyers in the ordinary course of business, commission
18merchants, and selling agents. The secretary may also respond
19to verbal or written inquiries by buyers including unregistered
20buyers and deliver a written confirmation to inquiring buyers
21regarding whether a farm product is subject to a security
22interest.
23CENTRALIZED FILING SYSTEM — REGISTRATION. If a buyer
24registers with the secretary prior to the purchase of farm
25products, the registered buyer takes subject to the security
26interest only if the secured party has filed an effective
27financing statement that covers the farm products being
28sold, unless the registered buyer secures a release of the
29security interest. If a buyer fails to register with the
30secretary, the buyer takes subject to the security interest
31only if the secured party has filed an effective financing
32statement that covers the farm products, and the buyer could
33have discovered the existence of the effective financing
34statement by conducting an inquiry and receiving a response and
35confirmation.
-11- 1CENTRALIZED FILING SYSTEM — FEES. The bill authorizes
2the secretary to establish fees for secured parties filing
3effective financing statements and buyers registering with
4the secretary. The secretary must adopt rules as necessary
5to implement, administer, and enforce the provisions of the
6system. The system is implemented on the first business day
7occurring three months after certification by the United States
8department of agriculture. The secretary must publish notice
9of the certification in the Iowa administrative bulletin.
10EFFECTIVE DATES. The bill takes effect July 1, 2024, except
11for the provisions relating to rulemaking and certification
12which take effect upon enactment.
13BACKGROUND. Article 9 of the UCC provides an exception for
14buyers in the ordinary course of business who generally take
15free of a security interest created by the seller even in cases
16in which the security interest has been perfected and the buyer
17is aware of its existence (Code section 554.9320). However,
18notwithstanding this exception, a buyer who purchases a farm
19product from a person engaged in farming operations may not
20take free of a security interest. The federal Food Security
21Act of 1985, in relevant part (7 U.S.C.§1631), preempts the
22state’s Article 9 requirements by providing that a buyer in
23the ordinary course of business, a commission merchant, or
24a selling agent (buyer) may buy farm products without being
25subject to a security interest created by the seller but only
26if the buyer does not have actual or constructive notice of
27that security interest. The federal law allows states to
28elect between two notification options: (1) Iowa’s current
29law requiring the secured party to deliver direct notice to
30potential buyers of a secured party’s interest in the farm
31products within one year prior to sale, or (2) the system
32described in the bill. In either case, the federal law does
33not supersede Article 9 requirements that establish priorities
34among creditors.
-12-da/ns
2security interests in farm products, providing fees, and
3including contingent implementation and effective date
4provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 554.9102, subsection 4, Code 2024, is
2amended to read as follows:
34. Federal Food Security Act.
4a. For purposes of the Federal Food Security Act, 7 U.S.C.
5§1631, written notice shall be considered to be received by the
6person to whom it was delivered if the notice is delivered in
7hand to the person, or mailed by certified or registered mail
8with the proper postage and properly addressed to the person to
9whom it was sent. The refusal of a person to whom a notice is
10so mailed to accept delivery of the notice shall be considered
11receipt.
12b. This subsection is repealed on the date that this Act is
13implemented as provided in this Act.
14 Sec. 2. NEW SECTION. 554C.1 Definitions.
15As used in this chapter, unless the context otherwise
16requires:
171. “Buyer in the ordinary course of business” means a person
18who, in the ordinary course of business, buys farm products
19from a person engaged in farming operations who is in the
20business of selling farm products.
212. “Central filing system” means a system for filing
22effective financing statements, and statements amending,
23continuing, or terminating effective financing statements as
24provided in section 554C.4.
253. “Commission merchant” means a person engaged in the
26business of receiving any farm product for sale, on commission,
27or for or on behalf of another person.
284. “Effective financing statement” means a financing
29statement required to be filed as part of the central filing
30system as provided in section 554C.6.
315. “Secretary” means the secretary of state.
326. “Selling agent” means a person, other than a commission
33merchant, who is engaged in the business of negotiating the
34sale and purchase of a farm product on behalf of a person
35engaged in farming operations.
-1-1 Sec. 3. NEW SECTION. 554C.2 Special definitions.
2To every extent consistent with the application of federal
3law, unless the context otherwise requires:
41. “Agricultural lien” means the same as defined in section
5554.9102.
62. “Buyer” means a buyer in the ordinary course of business,
7a commission merchant, or a selling agent.
83. “Crop year” means the calendar year in which a crop is or
9will be harvested, animals are born or acquired, or poultry or
10eggs are or will be sold.
114. “Debtor” means a person who has an interest other than a
12security interest in a farm product, or any other person who
13owns a farm product and subjects the farm product to a security
14interest whether or not that person owes a debt to the secured
15party.
165. “Farm products” means the same as defined in section
17554.9102.
186. “Farming operation” means the same as defined in section
19554.9102.
207. a. “Secured party” means a secured party in whose favor
21a security interest in farm products is created.
22b. “Secured party” includes the holder of a lien, including
23an agricultural lien, on farm products.
248. a. “Security interest” means an interest in farm
25products that secures payment or performance of an obligation.
26b. “Security interest” includes a lien created by statute,
27including an agricultural lien.
289. “Signature” means a symbol used to sign, execute, or
29otherwise to encrypt or similarly process a record, in whole or
30in part, with the present intent of authenticating the record
31for purposes of identifying the person adopting or accepting
32the record.
3310. “Unique identifier” means a number, combination
34of numbers and letters, or other identifier selected by
35the secretary of state using a selection system or method
-2-1approved by the secretary of the United States department of
2agriculture.
3 Sec. 4. NEW SECTION. 554C.3 Chapter consistent with uniform
4commercial code.
5This chapter shall be interpreted in conjunction with
6chapter 554, and terms and phrases used in this chapter shall,
7to every extent practicable, be interpreted consistently with
8chapter 554, article 9.
9 Sec. 5. NEW SECTION. 554C.4 Central filing system —
10establishment and certification.
111. The secretary of state shall establish and administer a
12central filing system for the electronic filing and examining
13of effective financing statements and statements amending,
14continuing, or terminating effective financing statements on
15a statewide basis.
162. The central filing system shall be designed to allow
17persons to file and examine effective financing statements
18and statements amending, continuing, or terminating effective
19financing statements using the internet. The secretary may
20provide for the filing and examining of statements amending,
21continuing, or terminating effective financing statements in a
22paper format.
233. The central financing system must comply with the
24requirements set forth in 7 U.S.C. §1631, as certified by
25the United States secretary of agriculture prior to the
26implementation date of this Act.
27 Sec. 6. NEW SECTION. 554C.5 Effective financing statements
28— filing requirements.
291. The secretary of state shall provide for filing effective
30financing statements, and statements amending, continuing, or
31terminating effective financing statements, as provided in
32this section. The secretary shall prescribe all forms to be
33used for filing. The presentation for filing of an effective
34financing statement and statement amending, continuing, or
35terminating an effective financing statement and the acceptance
-3-1of any such statement by the secretary constitutes filing under
2this section.
32. An effective financing statement is valid if the
4statement substantially complies with the requirements of this
5section even though it contains minor errors that are not
6seriously misleading.
73. An effective financing statement must contain
8information that the secretary requires to comply with 7 U.S.C.
9§1631 or to administer this section. The statement must be
10an original or reproduced copy which is signed by the secured
11party and the debtor. If filed electronically, the debtor is
12not required to sign the statement. The statement must be
13filed with the secretary by the secured party. The secretary
14shall record the date and hour of the filing of the statement.
154. An effective financing statement must contain all of the
16following:
17a. The name and address of the secured party.
18b. The name and address of the debtor.
19c. The unique identifier of the debtor.
20d. A description of the farm products subject to the
21security interest, the county in Iowa where the farm products
22are produced or will be produced, the crop year unless every
23crop of the farm product in question for the duration of
24the effective financing statement is to be subject to the
25particular security interest, and further details of the
26farm products subject to the security interest if needed to
27distinguish it from other quantities of farm products owned by
28the same person or persons but not subject to the particular
29security interest.
30e. Any other information that the secretary requires to
31comply with 7 U.S.C. §1631 or to administer this section.
325. The effective financing statement may cover more than one
33farm product located in more than one county.
346. A continuation statement shall be signed by the secured
35party, identify the original effective financing statement by
-4-1file number, and state that the original financing statement
2is still effective.
3 Sec. 7. NEW SECTION. 554C.6 Effective financing statements
4— effectiveness.
51. The effective financing statement shall remain effective
6for a period of five years from the date of filing, subject to
7extensions for additional periods of five years each by filing
8or refiling a continuation statement within six months before
9the expiration of the five-year period.
102. Upon timely filing of a continuation statement, the
11effectiveness of the original financing statement shall be
12continued for five years after the last date to which the prior
13filing was effective, whereupon it shall lapse unless another
14continuation statement is filed prior to the lapse. Succeeding
15continuation statements may be filed in the same manner to
16continue the effectiveness of the original effective financing
17statement.
183. The effective financing statement shall be amended in
19writing to reflect a material change within three months of the
20material change. The amendment shall be signed and filed as
21required for an original effective financing statement. If the
22statement is filed electronically, the signature of the debtor
23shall not be required.
244. a. The effective financing statement lapses upon the
25expiration of the effective period of the effective financing
26statement or is terminated upon the filing of a statement
27signed by the secured party that the effective financing
28statement is terminated.
29b. If the effective financing statement has not lapsed or is
30not terminated and there are no outstanding secured obligations
31and no commitments to make advances, incur obligations, or
32otherwise give value, the debtor may notify the secured party
33in writing to terminate the effective financing statement.
34c. Until the debtor instructs the secured party in writing
35to terminate the effective financing statement, the secured
-5-1party has no obligation to terminate the statement.
2d. Within thirty days after receipt by the secured party
3of the statement from the debtor to terminate the effective
4financing statement, the secured party shall file with the
5secretary a termination statement with respect to the effective
6financing statement.
7 Sec. 8. NEW SECTION. 554C.7 Master list — organization
8and contents.
91. The secretary of state shall compile the filed effective
10financing statements into a master list.
112. The master list shall be organized according to farm
12products. The master list shall contain information required
13to be contained in effective financing statements filed with
14the secretary. The secretary shall arrange the master list for
15each farm product as follows:
16a. In alphabetical order according to the last name of the
17individual debtors or, in the case of debtors doing business
18other than as individuals, the first word in the name of such
19debtors.
20b. In numerical order according to the unique identifiers
21of the debtors.
22c. Geographically by county.
23d. By crop year.
243. The master list shall include information regarding
25buyers who register with the secretary on forms prescribed by
26the secretary as provided in this section. The secretary may
27require that a buyer be classified as a buyer in the ordinary
28course of business, commission merchant, or selling agent.
294. The secretary shall maintain a list of all buyers of farm
30products who register with the secretary. A buyer registering
31with the secretary shall complete forms requiring all of the
32following information, as prescribed by the secretary:
33a. The name and address of the buyer.
34b. The interest of the buyer in receiving the list.
35c. The farm products in which the buyer has an interest.
-6- 1d. Any other information that the secretary determines is
2necessary to comply with 7 U.S.C.§1631 or to administer this
3section.
4 Sec. 9. NEW SECTION. 554C.8 Master list — distribution and
5inquiries.
61. The secretary of state shall distribute to each
7registered buyer a copy in written, printed, or electronic form
8of those portions of the master list relating to farm products
9in which the buyer has registered an interest. The secretary
10may provide for the distribution of the master list or portions
11of the list on any other medium requested by a registered
12buyer. If a registered buyer so requests, the information
13provided to the buyer may be limited to a county or group of
14counties where the farm products are produced or to a crop year
15or crop years or to a combination of those identifiers.
162. Distribution is subject to all of the following:
17a. The distribution shall be by first class or electronic
18mail.
19b. The secretary shall adopt rules pursuant to chapter 17A
20establishing the dates upon which the quarterly distributions
21will be made, the dates after which a filing of an effective
22financing statement will not be reflected on the next quarterly
23distribution of lists, and the dates by which a buyer must
24complete a registration to receive the next quarterly list.
253. The secretary shall remove information pertaining to
26lapsed and terminated effective financing statements from the
27master list prior to preparation of the lists required to be
28distributed.
294. Upon written notice to the secretary by a registered
30buyer requesting termination of the distribution of the
31list to the registered buyer, the secretary shall terminate
32distribution of the list to the registered buyer.
335. Oral and written inquiries by a buyer not registered
34pursuant to section 554C.7 may be made to the secretary during
35hours determined by the secretary.
-7- 1a. The secretary may provide for a computerized system
2for inquiry and confirmation which may be used in lieu of the
3inquiry and confirmation system otherwise provided for in this
4section.
5b. Written confirmation of the information provided orally
6in response to the inquiry shall be delivered by first class
7mail or electronic mail to the buyer, at an address provided
8by the buyer, by the secretary not later than the second
9regular business day following the day on which the inquiry was
10received.
116. In order to verify the existence or nonexistence of a
12security interest, a buyer may request a seller to disclose the
13seller’s unique identifier.
14 Sec. 10. NEW SECTION. 554C.9 Perfection — creation of
15superior interests.
161. If a buyer fails to register with the secretary of
17state prior to the purchase of farm products, the buyer takes
18subject to a security interest in the farm products only if the
19secured party has filed an effective financing statement that
20covers the farm products being sold, and the buyer could have
21discovered the existence of the effective financing statement
22prior to the purchase by accessing the database containing
23effective financing statements filed electronically with the
24secretary.
252. If the buyer registers with the secretary prior to the
26purchase of the farm products, the buyer takes subject to a
27security interest in the farm products only if the secured
28party has filed an effective financing statement that covers
29the farm products being sold, and the buyer does not secure
30a waiver or release of the security interest as specified in
31the effective financing statement from the secured party.
32If a buyer in the ordinary course of business buying farm
33products covered by the central filing system as provided in
34section 554C.4 tenders to the seller the total purchase price
35by means of a check or any other form of payment payable to
-8-1such seller and each security interest holder of the seller
2identified in the central filing system for such products and
3if such security interest holder authorizes the negotiation
4of such check or other form of payment, such authorization or
5endorsement and payment thereof shall constitute a waiver or
6release of the security interest specified to the extent of
7the amount of the instrument. Such waiver or release of the
8security interest shall not serve to establish or alter in any
9way security interest priorities under Iowa law.
10 Sec. 11. NEW SECTION. 554C.10 Fees.
111. The secretary of state shall establish fees for initially
12filing an effective financing statement, or a statement
13amending, continuing, or terminating an effective financing
14statement. The fees shall not be more than provided for filing
15financing statements as provided in section 554.9525.
162. Notwithstanding section 22.3, the secretary may charge
17a buyer a fee for registering to receive a master list or
18for receiving responses to inquiries which are accessed in a
19printed format. The secretary shall not charge a buyer a fee
20for registering to receive a master list or for responding to
21buyer inquiries, including by examining or printing effective
22financing statements, and statements amending, continuing, or
23terminating effective financing statements which are accessed
24in an electronic format.
253. All moneys received by the secretary under this section
26shall be handled in the same manner as repayment receipts, as
27defined in section 8.2, and shall be used by the secretary
28exclusively for the administration of this chapter.
29 Sec. 12. NEW SECTION. 554C.11 Rules.
30The secretary of state shall adopt rules pursuant to chapter
3117A necessary or desirable to administer this chapter.
32 Sec. 13. DIRECTIONS TO SECRETARY OF STATE.
331. The secretary of state shall adopt rules necessary
34to implement this Act, including by requesting certification
35of a central filing system as provided in this Act pursuant
-9-1to 7 U.S.C.§1631. If it is necessary to obtain federal
2certification, the secretary of state may adopt rules providing
3additional requirements made in conformity with 7 U.S.C.§1631.
42. If the secretary of the United States department of
5agriculture rejects federal certification, the secretary of
6state shall propose legislation prior to the next session of
7the general assembly necessary to comply with the certification
8requirements of 7 U.S.C.§1631.
9 Sec. 14. CONTINGENT IMPLEMENTATION. The implementation of
10this Act is contingent upon federal certification of a central
11filing system as provided in this Act pursuant to 7 U.S.C.
12§1631. The provisions of this Act shall be implemented on
13the first business day three months after the date of such
14certification. The secretary of state shall provide notice of
15the implementation date in the Iowa administrative bulletin
16in three consecutive issues prior to the implementation date.
17Until the implementation date, persons shall take subject
18to or free of a security interest, including a lien, in the
19same manner and according to the same procedures applicable
20immediately prior to the implementation date.
21 Sec. 15. EFFECTIVE DATES.
221. Except as provided in subsection 2, this Act takes effect
23July 1, 2024.
242. The sections of this Act providing for the adoption
25of rules by the secretary of state in preparation to request
26certification of a central filing system as provided in this
27Act pursuant to 7 U.S.C.§1631 take effect upon enactment.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31CENTRALIZED FILING SYSTEM — GENERAL. This bill creates
32a centralized, statewide filing system (system) for security
33interests in farm products to notify buyers of farm products
34subject to an attached security interest. The system is to
35facilitate notice under Article 9 of the Uniform Commercial
-10-1Code (UCC) (Code chapter 554). Farm products include goods
2other than standing timber produced as part of a farming
3operation and includes crops, aquatic goods, livestock,
4supplies used or produced on the farming operation, or products
5of crops or livestock in an unmanufactured form (Code section
6554.9102). The system must be certified by the United States
7department of agriculture.
8The bill allows a person who has a secured interest attached
9to farm products to complete and file a document referred to
10as an effective financing statement or a statement amending,
11continuing, or terminating the effective financing statement,
12with the secretary of state. The secretary must compile
13information contained in the effective financing statements
14into a master list organized according to farm products which
15the secretary must regularly distribute to persons designated
16as buyers of farm products registered with the secretary. This
17includes buyers in the ordinary course of business, commission
18merchants, and selling agents. The secretary may also respond
19to verbal or written inquiries by buyers including unregistered
20buyers and deliver a written confirmation to inquiring buyers
21regarding whether a farm product is subject to a security
22interest.
23CENTRALIZED FILING SYSTEM — REGISTRATION. If a buyer
24registers with the secretary prior to the purchase of farm
25products, the registered buyer takes subject to the security
26interest only if the secured party has filed an effective
27financing statement that covers the farm products being
28sold, unless the registered buyer secures a release of the
29security interest. If a buyer fails to register with the
30secretary, the buyer takes subject to the security interest
31only if the secured party has filed an effective financing
32statement that covers the farm products, and the buyer could
33have discovered the existence of the effective financing
34statement by conducting an inquiry and receiving a response and
35confirmation.
-11- 1CENTRALIZED FILING SYSTEM — FEES. The bill authorizes
2the secretary to establish fees for secured parties filing
3effective financing statements and buyers registering with
4the secretary. The secretary must adopt rules as necessary
5to implement, administer, and enforce the provisions of the
6system. The system is implemented on the first business day
7occurring three months after certification by the United States
8department of agriculture. The secretary must publish notice
9of the certification in the Iowa administrative bulletin.
10EFFECTIVE DATES. The bill takes effect July 1, 2024, except
11for the provisions relating to rulemaking and certification
12which take effect upon enactment.
13BACKGROUND. Article 9 of the UCC provides an exception for
14buyers in the ordinary course of business who generally take
15free of a security interest created by the seller even in cases
16in which the security interest has been perfected and the buyer
17is aware of its existence (Code section 554.9320). However,
18notwithstanding this exception, a buyer who purchases a farm
19product from a person engaged in farming operations may not
20take free of a security interest. The federal Food Security
21Act of 1985, in relevant part (7 U.S.C.§1631), preempts the
22state’s Article 9 requirements by providing that a buyer in
23the ordinary course of business, a commission merchant, or
24a selling agent (buyer) may buy farm products without being
25subject to a security interest created by the seller but only
26if the buyer does not have actual or constructive notice of
27that security interest. The federal law allows states to
28elect between two notification options: (1) Iowa’s current
29law requiring the secured party to deliver direct notice to
30potential buyers of a secured party’s interest in the farm
31products within one year prior to sale, or (2) the system
32described in the bill. In either case, the federal law does
33not supersede Article 9 requirements that establish priorities
34among creditors.
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