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§ 9—101. Short title
This article may be cited as Uniform Commercial Code—Secured Transactions. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—102. Definitions and index of definitions
(a) In this article:
(1) “Accession” means goods that are physically united with other goods in such a manner
that the identity of the original goods is not lost.
(2) “Account,” except as used in “account for,” “account statement,” “account to,” “commodity
account” in subdivision (14) of this subsection, “customer’s account,” “deposit account”
in subdivision (29) of this subsection, “on account of,” and “statement of account,”
means a right to payment of a monetary obligation, whether or not earned by performance,
(i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise
disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance
issued or to be issued, (iv) for a secondary obligation incurred or to be incurred,
(v) for energy provided or to be provided, (vi) for the use or hire of a vessel under
a charter or other contract, (vii) arising out of the use of a credit or charge card
or information contained on or for use with the card, or (viii) as winnings in a lottery
or other game of chance operated or sponsored by a state, governmental unit of a state,
or person licensed or authorized to operate the game by a state or governmental unit
of a state. The term includes controllable accounts and health-care-insurance receivables.
The term does not include (i) chattel paper, (ii) commercial tort claims, (iii) deposit
accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit,
(vi) rights to payment for money or funds advanced or sold, other than rights arising
out of the use of a credit or charge card or information contained on or for use with
the card, or (vii) rights to payment evidenced by an instrument.
(3) “Account debtor” means a person obligated on an account, chattel paper, or general
intangible. The term does not include persons obligated to pay a negotiable instrument,
even if the negotiable instrument evidences chattel paper.
(4) “Accounting,” except as used in “accounting for,” means a record:
(A) signed by a secured party;
(B) indicating the aggregate unpaid secured obligations as of a date not more than 35
days earlier or 35 days later than the date of the record; and
(C) identifying the components of the obligations in reasonable detail.
(5) “Agricultural lien” means an interest, other than a security interest, in farm products:
(A) which secures payment or performance of an obligation for:
(i) goods or services furnished in connection with a debtor’s farming operation; or
(ii) rent on real property leased by a debtor in connection with its farming operation;
(B) which is created by statute in favor of a person that:
(i) in the ordinary course of its business furnished goods or services to a debtor in
connection with a debtor’s farming operation; or
(ii) leased real property to a debtor in connection with the debtor’s farming operation;
and
(C) whose effectiveness does not depend on the person’s possession of the personal property.
(6) “As-extracted collateral” means:
(A) oil, gas, or other minerals that are subject to a security interest that:
(i) is created by a debtor having an interest in the minerals before extraction; and
(ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the wellhead or minehead of oil, gas, or other
minerals in which the debtor had an interest before extraction.
(7) [Reserved.]
(7A) “Assignee,” except as used in “assignee for benefit of creditors,” means a person
(i) in whose favor a security interest that secures an obligation is created or provided
for under a security agreement, whether or not the obligation is outstanding or (ii)
to which an account, chattel paper, payment intangible, or promissory note has been
sold. The term includes a person to which a security interest has been transferred
by a secured party.
(7B) “Assignor” means a person that (i) under a security agreement creates or provides
for a security interest that secures an obligation or (ii) sells an account, chattel
paper, payment intangible, or promissory note. The term includes a secured party that
has transferred a security interest to another person.
(8) “Bank” means an organization that is engaged in the business of banking. The term
includes savings banks, savings and loan associations, credit unions, and trust companies.
(9) “Cash proceeds” means proceeds that are money, checks, deposit accounts, or the like.
(10) “Certificate of title” means a certificate of title with respect to which a statute
provides for the security interest in question to be indicated on the certificate
as a condition or result of the security interest’s obtaining priority over the rights
of a lien creditor with respect to the collateral. The term includes another record
maintained as an alternative to a certificate of title by the governmental unit that
issues certificates of title if a statute permits the security interest in question
to be indicated on the record as a condition or result of the security interest’s
obtaining priority over the rights of a lien creditor with respect to the collateral.
(11) “Chattel paper” means:
(A) a right to payment of a monetary obligation secured by specific goods, if the right
to payment and security agreement are evidenced by a record; or
(B) a right to payment of a monetary obligation owed by a lessee under a lease agreement
with respect to specific goods and a monetary obligation owed by the lessee in connection
with the transaction giving rise to the lease, if:
(i) the right to payment and lease agreement are evidenced by a record; and
(ii) the predominant purpose of the transaction giving rise to the lease was to give the
lessee the right to possession and use of the goods.
The term does not include a right to payment arising out of a charter or other contract
involving the use or hire of a vessel or a right to payment arising out of the use
of a credit or charge card or information contained on or for use with the card.
(12) “Collateral” means the property subject to a security interest or agricultural lien.
The term includes:
(A) proceeds to which a security interest attaches;
(B) accounts, chattel paper, payment intangibles, and promissory notes that have been
sold; and
(C) goods that are the subject of a consignment.
(13) “Commercial tort claim” means a claim arising in tort with respect to which:
(A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant’s business or profession; and
(ii) does not include damages arising out of personal injury to or the death of an individual.
(14) “Commodity account” means an account maintained by a commodity intermediary in which
a commodity contract is carried for a commodity customer.
(15) “Commodity contract” means a commodity futures contract, an option on a commodity
futures contract, a commodity option, or another contract if the contract or option
is:
(A) traded on or subject to the rules of a board of trade that has been designated as
a contract market for such a contract pursuant to federal commodities laws; or
(B) traded on a foreign commodity board of trade, exchange, or market, and is carried
on the books of a commodity intermediary for a commodity customer.
(16) “Commodity customer” means a person for which a commodity intermediary carries a commodity
contract on its books.
(17) “Commodity intermediary” means a person that:
(A) is registered as a futures commission merchant under federal commodities law; or
(B) in the ordinary course of its business provides clearance or settlement services for
a board of trade that has been designated as a contract market pursuant to federal
commodities law.
(18) “Communicate” means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon by the persons sending and receiving
the record; or
(C) in the case of transmission of a record to or by a filing office, to transmit a record
by any means prescribed by filing-office rule.
(19) “Consignee” means a merchant to which goods are delivered in a consignment.
(20) “Consignment” means a transaction, regardless of its form, in which a person delivers
goods to a merchant for the purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name other than the name of the person making
delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors to be substantially engaged in selling the
goods of others;
(B) with respect to each delivery, the aggregate value of the goods is $1,000.00 or more
at the time of delivery;
(C) the goods are not consumer goods immediately before delivery; and
(D) the transaction does not create a security interest that secures an obligation.
(21) “Consignor” means a person that delivers goods to a consignee in a consignment.
(22) “Consumer debtor” means a debtor in a consumer transaction.
(23) “Consumer goods” means goods that are used or bought for use primarily for personal,
family, or household purposes.
(24) “Consumer-goods transaction” means a consumer transaction in which:
(A) an individual incurs an obligation primarily for personal, family, or household purposes;
and
(B) a security interest in consumer goods secures the obligation.
(25) “Consumer obligor” means an obligor who is an individual and who incurred the obligation
as part of a transaction entered into primarily for personal, family, or household
purposes.
(26) “Consumer transaction” means a transaction in which (i) an individual incurs an obligation
primarily for personal, family, or household purposes, (ii) a security interest secures
the obligation, and (iii) the collateral is held or acquired primarily for personal,
family, or household purposes. The term includes consumer-goods transactions.
(27) “Continuation statement” means an amendment of a financing statement which:
(A) identifies, by its file number, the initial financing statement to which it relates;
and
(B) indicates that it is a continuation statement for, or that it is filed to continue
the effectiveness of, the identified financing statement.
(27A) “Controllable account” means an account evidenced by a controllable electronic record
that provides that the account debtor undertakes to pay the person that has control
under section 12—105 of this title of the controllable electronic record.
(27B) “Controllable payment intangible” means a payment intangible evidenced by a controllable
electronic record that provides that the account debtor undertakes to pay the person
that has control under section 12—105 of this title of the controllable electronic record.
(28) “Debtor” means:
(A) a person having an interest, other than a security interest or other lien, in the
collateral, whether or not the person is an obligor;
(B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(C) a consignee.
(29) “Deposit account” means a demand, time, savings, passbook, or similar account maintained
with a bank. The term does not include investment property or accounts evidenced by
an instrument.
(30) “Document” means a document of title or a receipt of the type described in subsection 7—201(b) of this title.
(31) [Reserved.]
(31A) “Electronic money” means money in an electronic form.
(32) “Encumbrance” means a right, other than an ownership interest, in real property. The
term includes mortgages and other liens on real property.
(33) “Equipment” means goods other than inventory, farm products, or consumer goods.
(34) “Farm products” means goods, other than standing timber, with respect to which the
debtor is engaged in a farming operation and which are:
(A) crops grown, growing, or to be grown, including:
(i) crops produced on trees, vines, and bushes; and
(ii) aquatic goods produced in aquacultural operations;
(B) livestock, born or unborn, including aquatic goods produced in aquacultural operations;
(C) supplies used or produced in a farming operation; or
(D) products of crops or livestock in their unmanufactured states.
(35) “Farming operation” means raising, cultivating, propagating, fattening, grazing, or
any other farming, livestock, or aquacultural operation.
(36) “File number” means the number assigned to an initial financing statement pursuant
to subsection 9—519(a) of this title.
(37) “Filing office” means an office designated in section 9—501 of this title as the place to file a financing statement.
(38) “Filing-office rule” means a rule adopted pursuant to section 9—526 of this title.
(39) “Financing statement” means a record or records composed of an initial financing statement
and any filed record relating to the initial financing statement.
(40) “Fixture filing” means the filing of a financing statement covering goods that are
or are to become fixtures and satisfying subsections 9—502(a) and (b) of this title.
The term includes the filing of a financing statement covering goods of a transmitting
utility which are or are to become fixtures.
(41) “Fixtures” means goods that have become so related to particular real property that
an interest in them arises under real property law.
(42) “General intangible” means any personal property, including things in action, other
than accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods, instruments, investment property, letter-of-credit rights, letters of credit,
money, and oil, gas, or other minerals before extraction. The term includes controllable
electronic records, payment intangibles, and software.
(43) [Reserved.]
(44) “Goods” means all things that are movable when a security interest attaches. The term
includes (i) fixtures, (ii) standing timber that is to be cut and removed under a
conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown,
growing, or to be grown, even if the crops are produced on trees, vines, or bushes,
and (v) manufactured homes. The term also includes a computer program embedded in
goods and any supporting information provided in connection with a transaction relating
to the program if (i) the program is associated with the goods in such a manner that
it customarily is considered part of the goods, or (ii) by becoming the owner of the
goods, a person acquires a right to use the program in connection with the goods.
The term does not include a computer program embedded in goods that consist solely
of the medium with which the program is embedded. The term also does not include accounts,
chattel paper, commercial tort claims, deposit accounts, documents, general intangibles,
instruments, investment property, letter-of-credit rights, letters of credit, money,
or oil, gas, or other minerals before extraction.
(45) “Governmental unit” means a subdivision, agency, department, county, parish, municipality,
or other unit of the government of the United States, a state, or a foreign country.
The term includes an organization having a separate corporate existence if the organization
is eligible to issue debt on which interest is exempt from income taxation under the
laws of the United States.
(46) “Health-care-insurance receivable” means an interest in or claim under a policy of
insurance which is a right to payment of a monetary obligation for health-care goods
or services provided.
(47) “Instrument” means a negotiable instrument or any other writing that evidences a right
to the payment of a monetary obligation, is not itself a security agreement or lease,
and is of a type that in ordinary course of business is transferred by delivery with
any necessary indorsement or assignment. The term does not include (i) investment
property, (ii) letters of credit, (iii) writings that evidence a right to payment
arising out of the use of a credit or charge card or information contained on or for
use with the card, or (iv) writings that evidence chattel paper.
(48) “Inventory” means goods, other than farm products, which:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to be furnished under a contract of service;
(C) are furnished by a person under a contract of service; or
(D) consist of raw materials, work in process, or materials used or consumed in a business.
(49) “Investment property” means a security, whether certificated or uncertificated, security
entitlement, securities account, commodity contract, or commodity account.
(50) “Jurisdiction of organization,” with respect to a registered organization, means the
jurisdiction under whose law the organization is organized.
(51) “Letter-of-credit right” means a right to payment and performance under a letter of
credit, whether or not the beneficiary has demanded or is at the time entitled to
demand payment or performance. The term does not include the right of a beneficiary
to demand payment or performance under a letter of credit.
(52) “Lien creditor” means:
(A) a creditor that has acquired a lien on the property involved by attachment, levy,
or the like;
(B) an assignee for benefit of creditors from the time of assignment;
(C) a trustee in bankruptcy from the date of the filing of the petition; or
(D) a receiver in equity from the time of appointment.
(53) “Manufactured home” means a structure, transportable in one or more sections, which,
in the traveling mode, is eight body feet or more in width or 40 body feet or more
in length, or, when erected on site, is 320 or more square feet, and which is built
on a permanent chassis and designed to be used as a dwelling with or without a permanent
foundation when connected to the required utilities, and includes the plumbing, heating,
air-conditioning, and electrical systems contained therein. The term includes any
structure that meets all of the requirements of this subdivision except the size requirements
and with respect to which the manufacturer voluntarily files a certification required
by the United States Secretary of Housing and Urban Development and complies with
the standards established under Title 42 of the United States Code.
(54) “Manufactured-home transaction” means a secured transaction:
(A) that creates a purchase-money security interest in a manufactured home, other than
a manufactured home held as inventory; or
(B) in which a manufactured home, other than a manufactured home held as inventory, is
the primary collateral.
(54A) “Money” has the meaning in subdivision 1—201(b)(24) of this title, but does not include (i) a deposit account or (ii) money in an electronic form that
cannot be subjected to control under section 9—105A of this title.
(55) “Mortgage” means a consensual interest in real property, including fixtures, which
secures payment or performance of an obligation.
(56) “New debtor” means a person that becomes bound as debtor under subsection 9—203(d) of this title by a security agreement previously entered into by another person.
(57) “New value” means (i) money, (ii) money’s worth in property, services, or new credit,
or (iii) release by a transferee of an interest in property previously transferred
to the transferee. The term does not include an obligation substituted for another
obligation.
(58) “Noncash proceeds” means proceeds other than cash proceeds.
(59) “Obligor” means a person that, with respect to an obligation secured by a security
interest in or an agricultural lien on the collateral, (i) owes payment or other performance
of the obligation, (ii) has provided property other than the collateral to secure
payment or other performance of the obligation, or (iii) is otherwise accountable
in whole or in part for payment or other performance of the obligation. The term does
not include issuers or nominated persons under a letter of credit.
(60) “Original debtor,” except as used in subsection 9—310(c) of this title, means a person that, as debtor, entered into a security agreement to which a new
debtor has become bound under subsection 9—203(d) of this title.
(61) “Payment intangible” means a general intangible under which the account debtor’s principal
obligation is a monetary obligation. The term includes a controllable payment intangible.
(62) “Person related to,” with respect to an individual, means:
(A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or sister-in-law of the individual;
(C) an ancestor or lineal descendant of the individual or the individual’s spouse; or
(D) any other relative, by blood or marriage, of the individual or the individual’s spouse
who shares the same home with the individual.
(63) “Person related to,” with respect to an organization, means:
(A) a person directly or indirectly controlling, controlled by, or under common control
with the organization;
(B) an officer or director of, or a person performing similar functions with respect to,
the organization;
(C) an officer or director of, or a person performing similar functions with respect to,
a person described in subdivision (A) of this subdivision (63);
(D) the spouse of an individual described in subdivision (A), (B), or (C) of this subdivision
(63); or
(E) an individual who is related by blood or marriage to an individual described in subdivision
(A), (B), (C), or (D) of this subdivision (63) and shares the same home with the individual.
(64) “Proceeds,” except as used in subsection 9—609(b) of this title, means the following property:
(A) whatever is acquired upon the sale, lease, license, exchange, or other disposition
of collateral;
(B) whatever is collected on, or distributed on account of, collateral;
(C) rights arising out of collateral;
(D) to the extent of the value of collateral, claims arising out of the loss, nonconformity,
or interference with the use of, defects or infringement of rights in, or damage to,
the collateral; or
(E) to the extent of the value of collateral and to the extent payable to the debtor or
the secured party, insurance payable by reason of the loss or nonconformity of, defects
or infringement of rights in, or damage to, the collateral.
(65) “Production-money crops” means crops that secure a production money obligation incurred
with respect to those crops.
(66) “Production-money obligation” means an obligation of an obligor incurred for new value
given to enable the debtor to produce crops if the value is in fact used for the production
of the crops.
(67) “Production of crops” includes tilling and otherwise preparing land for growing, planting,
cultivating, fertilizing, irrigating, harvesting and gathering crops, and protecting
them from damage or disease.
(68) “Promissory note” means an instrument that evidences a promise to pay a monetary obligation,
does not evidence an order to pay, and does not contain an acknowledgment by a bank
that the bank has received for deposit a sum of money or funds.
(69) “Proposal” means a record signed by a secured party which includes the terms on which
the secured party is willing to accept collateral in full or partial satisfaction
of the obligation it secures pursuant to sections 9—620, 9—621, and 9—622 of this title.
(70) “Public-finance transaction” means a secured transaction in connection with which:
(A) debt securities are issued;
(B) all or a portion of the securities issued have an initial stated maturity of at least
20 years; and
(C) the debtor, obligor, secured party, account debtor or other person obligated on collateral,
assignor or assignee of a secured obligation, or assignor or assignee of a security
interest is a state or a governmental unit of a state.
(71) “Public organic record” means a record that is available to the public for inspection
and is:
(A) a record consisting of the record initially filed with or issued by a state or the
United States to form or organize an organization and any record filed with or issued
by the state or the United States which amends or restates the initial record;
(B) an organic record of a business trust consisting of the record initially filed with
a state and any record filed with the state which amends or restates the initial record,
if a statute of the state governing business trusts requires that the record be filed
with the state; or
(C) a record consisting of legislation enacted by the legislature of a state or the Congress
of the United States which forms or organizes an organization, any record amending
the legislation, and any record filed with or issued by the state or the United States
which amends or restates the name of the organization.
(72) “Pursuant to commitment,” with respect to an advance made or other value given by
a secured party, means pursuant to the secured party’s obligation, whether or not
a subsequent event of default or other event not within the secured party’s control
has relieved or may relieve the secured party from its obligation.
(73) “Record,” except as used in “for record,” “of record,” “record or legal title,” and
“record owner,” means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable form.
(74) “Registered organization” means an organization formed or organized solely under the
law of a single state or the United States by the filing of a public organic record
with, the issuance of a public organic record by, or the enactment of legislation
by, the state or the United States. The term includes a business trust that is formed
or organized under the law of a single state if a statute of the state governing business
trusts requires that the business trust’s organic record be filed with the state.
(75) “Secondary obligor” means an obligor to the extent that:
(A) the obligor’s obligation is secondary; or
(B) the obligor has a right of recourse with respect to an obligation secured by collateral
against the debtor, another obligor, or property of either.
(76) “Secured party” means:
(A) a person in whose favor a security interest is created or provided for under a security
agreement, whether or not any obligation to be secured is outstanding;
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper, payment intangibles, or promissory notes
have been sold;
(E) a trustee, indenture trustee, agent, collateral agent, or other representative in
whose favor a security interest or agricultural lien is created or provided for; or
(F) a person that holds a security interest arising under section 2—401, 2—505, 4—210, or 5—118 of this title or subsection 2—711(3) or 2A—508(5) of this title.
(77) “Security agreement” means an agreement that creates or provides for a security interest.
(78) [Reserved.]
(79) “Software” means a computer program and any supporting information provided in connection
with a transaction relating to the program. The term does not include a computer program
that is included in the definition of goods.
(80) “State” means a state of the United States, the District of Columbia, Puerto Rico,
the United States Virgin Islands, or any territory or insular possession subject to
the jurisdiction of the United States.
(81) “Supporting obligation” means a letter-of-credit right or secondary obligation that
supports the payment or performance of an account, chattel paper, a document, a general
intangible, an instrument, or investment property.
(82) [Reserved.]
(82A) “Tangible money” means money in a tangible form.
(83) “Termination statement” means an amendment of a financing statement which:
(A) identifies, by its file number, the initial financing statement to which it relates;
and
(B) indicates either that it is a termination statement or that the identified financing
statement is no longer effective.
(84) “Transmitting utility” means a person primarily engaged in the business of:
(A) operating a railroad, subway, street railway, or trolley bus;
(B) transmitting communications electrically, electromagnetically, or by light;
(C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting electricity, steam, gas, or water.
(b) “Control” as provided in section 7—106 of this title and the following definitions in other articles apply to this article:
“Applicant” Section 5—102.
“Beneficiary” Section 5—102.
“Broker” Section 8—102.
“Certificated security” Section 8—102.
“Check” Section 3—104.
“Clearing corporation” Section 8—102.
“Contract for sale” Section 2—106.
“Controllable electronic record” Section 12—102.
“Customer” Section 4—104.
“Entitlement holder” Section 8—102.
“Financial asset” Section 8—102.
“Holder in due course” Section 3—302.
“Issuer” (with respect to a letter of credit or letter-of-credit right) Section 5—102.
“Issuer” (with respect to documents of title) Section 7—102.
“Issuer” (with respect to a security) Section 8—201.
“Lease” Section 2A—103.
“Lease agreement” Section 2A—103.
“Lease contract” Section 2A—103.
“Leasehold interest” Section 2A—103.
“Lessee” Section 2A—103.
“Lessee in ordinary course of business” Section 2A—103.
“Lessor” Section 2A—103.
“Lessor’s residual interest” Section 2A—103.
“Letter of credit” Section 5—102.
“Merchant” Section 2—104.
“Negotiable instrument” Section 3—104.
“Nominated person” Section 5—102.
“Note” Section 3—104.
“Proceeds of a letter of credit” Section 5—114.
“Protected purchaser” Section 8—303.
“Prove” Section 3—103.
“Qualifying purchaser” Section 12—102.
“Sale” Section 2—106.
“Securities account” Section 8—501.
“Securities intermediary” Section 8—102.
“Security” Section 8—102.
“Security certificate” Section 8—102.
“Security entitlement” Section 8—102.
“Uncertificated security” Section 8—102.
(c) Article 1 contains general definitions and principles of construction and interpretation
applicable throughout this article. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 1; 2007, No. 99 (Adj. Sess.), § 18; 2009, No. 3, § 12a, eff. Sept. 1, 2009; 2013, No. 157 (Adj. Sess.), § 1; 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—103. Purchase-money security interest; application of payments; burden of establishing
(a) In this section:
(1) “Purchase-money collateral” means goods or software that secures a purchase-money
obligation incurred with respect to that collateral.
(2) “Purchase-money obligation” means an obligation of an obligor incurred as all or part
of the price of the collateral or for value given to enable the debtor to acquire
rights in or the use of the collateral if the value is in fact so used.
(b) A security interest in goods is a purchase-money security interest:
(1) to the extent that the goods are purchase-money collateral with respect to that security
interest;
(2) if the security interest is in inventory that is or was purchase-money collateral,
also to the extent that the security interest secures a purchase-money obligation
incurred with respect to other inventory in which the secured party holds or held
a purchase-money security interest; and
(3) also to the extent that the security interest secures a purchase-money obligation
incurred with respect to software in which the secured party holds or held a purchase-money
security interest.
(c) A security interest in software is a purchase-money security interest to the extent
that the security interest also secures a purchase-money obligation incurred with
respect to goods in which the secured party holds or held a purchase-money security
interest if:
(1) the debtor acquired its interest in the software in an integrated transaction in which
it acquired an interest in the goods; and
(2) the debtor acquired its interest in the software for the principal purpose of using
the software in the goods.
(d) The security interest of a consignor in goods that are the subject of a consignment
is a purchase-money security interest in inventory.
(e) In a transaction other than a consumer-goods transaction, if the extent to which a
security interest is a purchase-money security interest depends on the application
of a payment to a particular obligation, the payment must be applied:
(1) in accordance with any reasonable method of application to which the parties agree;
(2) in the absence of the parties’ agreement to a reasonable method, in accordance with
any intention of the obligor manifested at or before the time of payment; or
(3) in the absence of an agreement to a reasonable method and a timely manifestation of
the obligor’s intention, in the following order:
(A) to obligations that are not secured; and
(B) if more than one obligation is secured, to obligations secured by purchase-money security
interests in the order in which those obligations were incurred.
(f) In a transaction other than a consumer-goods transaction, a purchase-money security
interest does not lose its status as such, even if:
(1) the purchase-money collateral also secures an obligation that is not a purchase-money
obligation;
(2) collateral that is not purchase-money collateral also secures the purchase-money obligation;
or
(3) the purchase-money obligation has been renewed, refinanced, consolidated, or restructured.
(g) In a transaction other than a consumer-goods transaction, a secured party claiming
a purchase-money security interest has the burden of establishing the extent to which
the security interest is a purchase-money security interest.
(h) The limitation of the rules in subsections (e), (f), and (g) of this section to transactions
other than consumer-goods transactions is intended to leave to the court the determination
of the proper rules in consumer-goods transactions. The court may not infer from that
limitation the nature of the proper rule in consumer-goods transactions and may continue
to apply established approaches. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—103A. “Production-money crops”; “production-money obligation”; “production-money security
interest”; burden of establishing
(a) A security interest in crops is a production-money security interest to the extent
that the crops are production-money crops.
(b) If the extent to which a security interest is a production-money security interest
depends on the application of a payment to a particular obligation, the payment must
be applied:
(1) in accordance with any reasonable method of application to which the parties agree;
(2) in the absence of the parties’ agreement to a reasonable method, in accordance with
any intention of the obligor manifested at or before the time of payment; or
(3) in the absence of an agreement to a reasonable method and a timely manifestation of
the obligor’s intention, in the following order:
(A) to obligations that are not secured; and
(B) if more than one obligation is secured, to obligations secured by production-money
security interests in the order in which those obligations were incurred.
(c) A production-money security interest does not lose its status as such, even if:
(1) the production-money crops also secure an obligation that is not a production-money
obligation;
(2) collateral that is not production-money crops also secures the production-money obligation;
or
(3) the production-money obligation has been renewed, refinanced, or restructured.
(d) A secured party claiming a production-money security interest has the burden of establishing
the extent to which the security interest is a production-money security interest. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—104. Control of deposit account
(a) A secured party has control of a deposit account if:
(1) the secured party is the bank with which the deposit account is maintained;
(2) the debtor, secured party, and bank have agreed in a signed record that the bank will
comply with instructions originated by the secured party directing disposition of
the funds in the account without further consent by the debtor;
(3) the secured party becomes the bank’s customer with respect to the deposit account;
or
(4) another person, other than the debtor:
(A) has control of the deposit account and acknowledges that it has control on behalf
of the secured party; or
(B) obtains control of the deposit account after having acknowledged that it will obtain
control of the deposit account on behalf of the secured party.
(b) A secured party that has satisfied subsection (a) of this section has control, even
if the debtor retains the right to direct the disposition of funds from the deposit
account. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—105. Control of electronic copy of record evidencing chattel paper
(a) A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if a system employed for evidencing the assignment of interests in the
chattel paper reliably establishes the purchaser as the person to which the authoritative
electronic copy was assigned.
(b) A system satisfies subsection (a) of this section if the record or records evidencing
the chattel paper are created, stored, and assigned in a manner that:
(1) a single authoritative copy of the record or records exists which is unique, identifiable,
and, except as otherwise provided in subdivisions (4), (5), and (6) of this subsection,
unalterable;
(2) the authoritative copy identifies the purchaser as the assignee of the record or records;
(3) the authoritative copy is communicated to and maintained by the purchaser or its designated
custodian;
(4) copies or amendments that add or change an identified assignee of the authoritative
copy can be made only with the consent of the purchaser;
(5) each copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and
(6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.
(c) A system satisfies subsection (a) of this section, and a purchaser has control of
an authoritative electronic copy of a record evidencing chattel paper, if the electronic
copy, a record attached to or logically associated with the electronic copy, or a
system in which the electronic copy is recorded:
(1) enables the purchaser readily to identify each electronic copy as either an authoritative
copy or a nonauthoritative copy;
(2) enables the purchaser readily to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as the assignee of the authoritative
electronic copy; and
(3) gives the purchaser exclusive power, subject to subsection (d) of this section, to:
(A) prevent others from adding or changing an identified assignee of the authoritative
electronic copy; and
(B) transfer control of the authoritative electronic copy.
(d) Subject to subsection (e) of this section, a power is exclusive under subdivisions
(c)(3)(A) and (B) of this section even if:
(1) the authoritative electronic copy, a record attached to or logically associated with
the authoritative electronic copy, or a system in which the authoritative electronic
copy is recorded limits the use of the authoritative electronic copy or has a protocol
programmed to cause a change, including a transfer or loss of control; or
(2) the power is shared with another person.
(e) A power of a purchaser is not shared with another person under subdivision (d)(2)
of this section and the purchaser’s power is not exclusive if:
(1) the purchaser can exercise the power only if the power also is exercised by the other
person; and
(2) the other person:
(A) can exercise the power without exercise of the power by the purchaser; or
(B) is the transferor to the purchaser of an interest in the chattel paper.
(f) If a purchaser has the powers specified in subdivisions (c)(3)(A) and (B) of this
section, the powers are presumed to be exclusive.
(g) A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if another person, other than the transferor to the purchaser of an
interest in the chattel paper:
(1) has control of the authoritative electronic copy and acknowledges that it has control
on behalf of the purchaser; or
(2) obtains control of the authoritative electronic copy after having acknowledged that
it will obtain control of the electronic copy on behalf of the purchaser. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—105A. Control of electronic money
(a) A person has control of electronic money if:
(1) the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded gives the person:
(A) power to avail itself of substantially all the benefit from the electronic money;
and
(B) exclusive power, subject to subsection (b) of this section, to:
(i) prevent others from availing themselves of substantially all the benefit from the
electronic money; and
(ii) transfer control of the electronic money to another person or cause another person
to obtain control of other electronic money as a result of the transfer of the electronic
money; and
(2) the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded enables the person readily
to identify itself in any way, including by name, identifying number, cryptographic
key, office, or account number, as having the powers under subdivision (1) of this
subsection.
(b) Subject to subsection (c) of this section, a power is exclusive under subdivisions
(a)(1)(B)(i) and (ii) of this section even if:
(1) the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded limits the use of the
electronic money or has a protocol programmed to cause a change, including a transfer
or loss of control; or
(2) the power is shared with another person.
(c) A power of a person is not shared with another person under subdivision (b)(2) of
this section and the person’s power is not exclusive if:
(1) the person can exercise the power only if the power also is exercised by the other
person; and
(2) the other person:
(A) can exercise the power without exercise of the power by the person; or
(B) is the transferor to the person of an interest in the electronic money.
(d) If a person has the powers specified in subdivisions (a)(1)(B)(i) and (ii) of this
section, the powers are presumed to be exclusive.
(e) A person has control of electronic money if another person, other than the transferor
to the person of an interest in the electronic money:
(1) has control of the electronic money and acknowledges that it has control on behalf
of the person; or
(2) obtains control of the electronic money after having acknowledged that it will obtain
control of the electronic money on behalf of the person. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—106. Control of investment property
(a) A person has control of a certificated security, uncertificated security, or security
entitlement as provided in section 8—106 of this title.
(b) A secured party has control of a commodity contract if:
(1) the secured party is the commodity intermediary with which the commodity contract
is carried; or
(2) the commodity customer, secured party, and commodity intermediary have agreed that
the commodity intermediary will apply any value distributed on account of the commodity
contract as directed by the secured party without further consent by the commodity
customer.
(c) A secured party having control of all security entitlements or commodity contracts
carried in a securities account or commodity account has control over the securities
account or commodity account. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—107. Control of letter-of-credit right
A secured party has control of a letter-of-credit right to the extent of any right
to payment or performance by the issuer or any nominated person if the issuer or nominated
person has consented to an assignment of proceeds of the letter of credit under subsection 5—114(c) of this title or otherwise applicable law or practice. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—107A. Control of controllable electronic record, controllable account, or controllable payment
intangible
(a) A secured party has control of a controllable electronic record as provided in section 12—105 of this title.
(b) A secured party has control of a controllable account or controllable payment intangible
if the secured party has control of the controllable electronic record that evidences
the controllable account or controllable payment intangible. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—107B. No requirement to acknowledge or confirm; no duties
(a) A person that has control under section 9—104, 9—105, or 9—105A of this title is not required to acknowledge that it has control on behalf of another person.
(b) If a person acknowledges that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this article otherwise provides,
the person does not owe any duty to the other person and is not required to confirm
the acknowledgment to any other person. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—108. Sufficiency of description in a security agreement
(a) Except as otherwise provided in subsections (c), (d), and (e) of this section, a description
of personal or real property is sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) Except as otherwise provided in subsection (d) of this section, a description of collateral
reasonably identifies the collateral if it identifies the collateral by:
(1) specific listing;
(2) category;
(3) except as otherwise provided in subsection (e) of this section, a type of collateral
defined in this title;
(4) quantity;
(5) computational or allocational formula or procedure; or
(6) except as otherwise provided in subsection (c) of this section, any other method,
if the identity of the collateral is objectively determinable.
(c) A description of collateral as “all the debtor’s assets” or “all the debtor’s personal
property” or using words of similar import does not reasonably identify the collateral.
(d) Except as otherwise provided in subsection (e) of this section, a description of a
security entitlement, securities account, or commodity account is sufficient if it
describes:
(1) the collateral by those terms or as investment property; or
(2) the underlying financial asset or commodity contract.
(e) A description only by type of collateral defined in this title is an insufficient
description of:
(1) a commercial tort claim; or
(2) in a consumer transaction, consumer goods, a security entitlement, a securities account,
or a commodity account. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—109. Scope
(a) Except as otherwise provided in subsections (c) and (d) of this section, this article
applies to:
(1) a transaction, regardless of its form, that creates a security interest in personal
property or fixtures by contract;
(2) an agricultural lien;
(3) a sale of accounts, chattel paper, payment intangibles, or promissory notes;
(4) a consignment;
(5) a security interest arising under section 2—401, 2—505 of this title or subsection 2—711(3), or 2A—508(5) of this title, as provided in section 9—110 of this title; and
(6) a security interest arising under section 4—210 or 5—118 of this title.
(b) The application of this article to a security interest in a secured obligation is
not affected by the fact that the obligation is itself secured by a transaction or
interest to which this article does not apply.
(c) This article does not apply to the extent that:
(1) a statute, regulation, or treaty of the United States preempts this article;
(2) a statute of another state, a foreign country, or a governmental unit of another state
or a foreign country, other than a statute generally applicable to security interests,
expressly governs creation, perfection, priority, or enforcement of a security interest
created by the state, country, or governmental unit; or
(3) the rights of a transferee beneficiary or nominated person under a letter of credit
are independent and superior under section 5—114 of this title.
(d) This article does not apply to:
(1) a landlord’s lien, other than an agricultural lien;
(2) a lien, other than an agricultural lien, given by statute or other rule of law for
services or materials, but section 9—333 of this title applies with respect to priority of the lien;
(3) an assignment of a claim for wages, salary, or other compensation of an employee;
(4) a sale of accounts, chattel paper, payment intangibles, or promissory notes as part
of a sale of the business out of which they arose;
(5) an assignment of accounts, chattel paper, payment intangibles, or promissory notes
which is for the purpose of collection only;
(6) an assignment of a right to payment under a contract to an assignee that is also obligated
to perform under the contract;
(7) an assignment of a single account, payment intangible, or promissory note to an assignee
in full or partial satisfaction of a preexisting indebtedness;
(8) a transfer of an interest in or an assignment of a claim under a policy of insurance,
other than an assignment by or to a health care provider of a health care-insurance
receivable and any subsequent assignment of the right to payment, but sections 9—315 and 9—322 of this title apply with respect to proceeds and priorities in proceeds;
(9) an assignment of a right represented by a judgment, other than a judgment taken on
a right to payment that was collateral;
(10) a right of recoupment or set-off, but:
(A) section 9—340 of this title applies with respect to the effectiveness of rights of recoupment or set-off against
deposit accounts; and
(B) section 9—404 of this title applies with respect to defenses or claims of an account debtor;
(11) the creation or transfer of an interest in or lien on real property, including a lease
or rents thereunder, except to the extent that provision is made for:
(A) liens on real property in sections 9—203 of this title and 9—308 of this title;
(B) fixtures in section 9—334 of this title;
(C) fixture filings in sections 9—501, 9—502, 9—512, 9—516, and 9—519 of this title; and
(D) security agreements covering personal and real property in section 9—604 of this title;
(12) an assignment of a claim arising in tort, other than a commercial tort claim, but
sections 9—315 and 9—322 of this title apply with respect to proceeds and priorities in proceeds;
(13) an assignment of a deposit account in a consumer transaction, but sections 9—315 and 9—322 of this title apply with respect to proceeds and priorities in proceeds;
(14) a transfer by this State or a subdivision, agency, department, county, municipality,
or other unit of the government of this State;
(15) a claim or right to receive compensation for injuries or sickness as described in
26 U.S.C. § 104(a)(1) or (2); or
(16) a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p(d)(4). (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, §§ 1a, 1b.)
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§ 9—110. Security interests arising under Article 2 or 2a
A security interest arising under section 2—401, or 2—505, or subsection 2—711(3) or 2A—508(5) of this title is subject to this article. However, until the debtor obtains possession of the goods:
(1) the security interest is enforceable, even if subdivision 9—203(b)(3) of this title has not been satisfied;
(2) filing is not required to perfect the security interest;
(3) the rights of the secured party after default by the debtor are governed by Article
2 or 2A; and
(4) the security interest has priority over a conflicting security interest created by
the debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—201. General effectiveness of security agreement
(a) Except as otherwise provided in this title, a security agreement is effective according
to its terms between the parties, against purchasers of the collateral, and against
creditors.
(b) A transaction subject to this article is subject to any applicable rule of law which
establishes a different rule for consumers and (i) any other Vermont statute or regulation
that regulates loans, credit sales, or other extensions of credit; and (ii) 9 V.S.A. chapter 63.
(c) In case of conflict between this article and a rule of law, statute, or regulation
described in subsection (b) of this section, the rule of law, statute, or regulation
controls. Failure to comply with a statute or regulation described in subsection (b)
of this section has only the effect the statute or regulation specifies.
(d) This article does not:
(1) validate any rate, charge, agreement, or practice that violates a rule of law, statute,
or regulation described in subsection (b) of this section; or
(2) extend the application of the rule of law, statute, or regulation to a transaction
not otherwise subject to it. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—202. Title to collateral immaterial
Except as otherwise provided with respect to consignments or sales of accounts, chattel
paper, payment intangibles, or promissory notes, the provisions of this article with
regard to rights and obligations apply whether title to collateral is in the secured
party or the debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—203. Attachment and enforceability of security interest; proceeds; supporting obligations;
formal requisites
(a) A security interest attaches to collateral when it becomes enforceable against the
debtor with respect to the collateral, unless an agreement expressly postpones the
time of attachment.
(b) Except as otherwise provided in subsections (c) through (i) of this section, a security
interest is enforceable against the debtor and third parties with respect to the collateral
only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the power to transfer rights in the collateral
to a secured party; and
(3) one of the following conditions is met:
(A) the debtor has signed a security agreement that provides a description of the collateral
and, if the security interest covers timber to be cut, a description of the land concerned;
(B) the collateral is not a certificated security and is in the possession of the secured
party under section 9—313 of this title pursuant to the debtor’s security agreement;
(C) the collateral is a certificated security in registered form and the security certificate
has been delivered to the secured party under section 8—301 of this title pursuant to the debtor’s security agreement;
(D) the collateral is controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, electronic documents, electronic money, investment
property, or letter-of-credit rights, and the secured party has control under section
7—106, 9—104, 9—105A, 9—106, 9—107, or 9—107A of this title pursuant to the debtor’s
security agreement; or
(E) the collateral is chattel paper and the secured party has possession and control under
section 9—314A of this title pursuant to the debtor’s security agreement.
(c) Subsection (b) of this section is subject to section 4—210 of this title on the security interest of a collecting bank, section 5—118 of this title on the security interest of a letter-of-credit issuer or nominated person, section 9—110 of this title on a security interest arising under Article 2 or 2A of this title, and section 9—206 of this title on security interests in investment property.
(d) A person becomes bound as debtor by a security agreement entered into by another person
if, by operation of law other than this article or by contract:
(1) the security agreement becomes effective to create a security interest in the person’s
property; or
(2) the person becomes generally obligated for the obligations of the other person, including
the obligation secured under the security agreement, and acquires or succeeds to all
or substantially all of the assets of the other person.
(e) If a new debtor becomes bound as debtor by a security agreement entered into by another
person:
(1) the agreement satisfies subdivision (b)(3) of this section with respect to existing
or after-acquired property of the new debtor to the extent the property is described
in the agreement; and
(2) another agreement is not necessary to make a security interest in the property enforceable.
(f) The attachment of a security interest in collateral gives the secured party the rights
to proceeds provided by section 9—315 of this title and is also attachment of a security interest in a supporting obligation for the
collateral.
(g) The attachment of a security interest in a right to payment or performance secured
by a security interest or other lien on personal or real property is also attachment
of a security interest in the security interest, mortgage, or other lien.
(h) The attachment of a security interest in a securities account is also attachment of
a security interest in the security entitlements carried in the securities account.
(i) The attachment of a security interest in a commodity account is also attachment of
a security interest in the commodity contracts carried in the commodity account. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—204. After-acquired property; future advances
(a) Except as otherwise provided in subsection (b) of this section, a security agreement
may create or provide for a security interest in after-acquired collateral.
(b) Subject to subsection (b.1) of this section, a security interest does not attach under
a term constituting an after-acquired property clause to:
(1) consumer goods, other than an accession when given as additional security, unless
the debtor acquires rights in them within 10 days after the secured party gives value;
or
(2) a commercial tort claim.
(b.1) Subsection (b) of this section does not prevent a security interest from attaching:
(1) to consumer goods as proceeds under subsection 9—315(a) of this title or commingled goods under subsection 9—336(c) of this title;
(2) to a commercial tort claim as proceeds under subsection 9—315(a) of this title; or
(3) under an after-acquired property clause to property that is proceeds of consumer goods
or a commercial tort claim.
(c) A security agreement may provide that collateral secures, or that accounts, chattel
paper, payment intangibles, or promissory notes are sold in connection with, future
advances or other value, whether or not the advances or value are given pursuant to
commitment. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—205. Use or disposition of collateral permissible
(a) A security interest is not invalid or fraudulent against creditors solely because:
(1) the debtor has the right or ability to:
(A) use, commingle, or dispose of all or part of the collateral, including returned or
repossessed goods;
(B) collect, compromise, enforce, or otherwise deal with collateral;
(C) accept the return of collateral or make repossessions; or
(D) use, commingle, or dispose of proceeds; or
(2) the secured party fails to require the debtor to account for proceeds or replace collateral.
(b) This section does not relax the requirements of possession if attachment, perfection,
or enforcement of a security interest depends upon possession of the collateral by
the secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—206. Security interest arising in purchase or delivery of financial asset
(a) A security interest in favor of a securities intermediary attaches to a person’s security
entitlement if:
(1) the person buys a financial asset through the securities intermediary in a transaction
in which the person is obligated to pay the purchase price to the securities intermediary
at the time of the purchase; and
(2) the securities intermediary credits the financial asset to the buyer’s securities
account before the buyer pays the securities intermediary.
(b) The security interest described in subsection (a) of this section secures the person’s
obligation to pay for the financial asset.
(c) A security interest in favor of a person that delivers a certificated security or
other financial asset represented by a writing attaches to the security or other financial
asset if:
(1) the security or other financial asset:
(A) in the ordinary course of business is transferred by delivery with any necessary indorsement
or assignment; and
(B) is delivered under an agreement between persons in the business of dealing with such
securities or financial assets; and
(2) the agreement calls for delivery against payment.
(d) The security interest described in subsection (c) of this section secures the obligation
to make payment for the delivery. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—207. Rights and duties of secured party having possession or control of collateral
(a) Except as otherwise provided in subsection (d) of this section, a secured party shall
use reasonable care in the custody and preservation of collateral in the secured party’s
possession. In the case of chattel paper or an instrument, reasonable care includes
taking necessary steps to preserve rights against prior parties unless otherwise agreed.
(b) Except as otherwise provided in subsection (d) of this section, if a secured party
has possession of collateral:
(1) reasonable expenses, including the cost of insurance and payment of taxes or other
charges, incurred in the custody, preservation, use, or operation of the collateral
are chargeable to the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the extent of a deficiency
in any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but fungible collateral
may be commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent jurisdiction; or
(C) except in the case of consumer goods, in the manner and to the extent agreed by the
debtor.
(c) Except as otherwise provided in subsection (d) of this section, a secured party having
possession of collateral or control of collateral under section 7—106, 9—104, 9—105,
9—105A, 9—106, 9—107, or 9—107A of this title:
(1) may hold as additional security any proceeds, except money or funds, received from
the collateral;
(2) shall apply money or funds received from the collateral to reduce the secured obligation,
unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) If the secured party is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor:
(1) subsection (a) of this section does not apply unless the secured party is entitled
under an agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or a secondary obligor based
on the nonpayment or other default of an account debtor or other obligor on the collateral;
and
(2) subsections (b) and (c) of this section do not apply. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—208. Additional duties of secured party having control of collateral
(a) This section applies to cases in which there is no outstanding secured obligation
and the secured party is not committed to make advances, incur obligations, or otherwise
give value.
(b) Within 10 days after receiving a signed demand by the debtor:
(1) a secured party having control of a deposit account under subdivision 9—104(a)(2) of this title shall send to the bank with which the deposit account is maintained a signed record
that releases the bank from any further obligation to comply with instructions originated
by the secured party;
(2) a secured party having control of a deposit account under subdivision 9—104(a)(3) of this title shall:
(A) pay the debtor the balance on deposit in the deposit account; or
(B) transfer the balance on deposit into a deposit account in the debtor’s name;
(3) a secured party, other than a buyer, having control under section 9—105 of this title of an authoritative electronic copy of a record evidencing chattel paper shall transfer
control of the electronic copy to the debtor or a person designated by the debtor;
(4) a secured party having control of investment property under subdivision 8—106(d)(2)
or subsection 9—106(b) of this title shall send to the securities intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained a signed record that releases
the securities intermediary or commodity intermediary from any further obligation
to comply with entitlement orders or directions originated by the secured party;
(5) a secured party having control of a letter-of-credit right under section 9—107 of this title shall send to each person having an unfulfilled obligation to pay or deliver proceeds
of the letter of credit to the secured party a signed release from any further obligation
to pay or deliver proceeds of the letter of credit to the secured party;
(6) a secured party having control under section 7—106 of this title of an authoritative electronic copy of an electronic document shall transfer control
of the electronic copy to the debtor or a person designated by the debtor;
(7) a secured party having control under section 9—105A of this title of electronic money shall transfer control of the electronic money to the debtor
or a person designated by the debtor; and
(8) a secured party having control under section 12—105 of this title of a controllable electronic record, other than a buyer of a controllable account
or controllable payment intangible evidenced by the controllable electronic record,
shall transfer control of the controllable electronic record to the debtor or a person
designated by the debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—209. Duties of secured party if account debtor has been notified of assignment
(a) Except as otherwise provided in subsection (c) of this section, this section applies
if:
(1) there is no outstanding secured obligation; and
(2) the secured party is not committed to make advances, incur obligations, or otherwise
give value.
(b) Within 10 days after receiving a signed demand by the debtor, a secured party shall
send to an account debtor that has received notification under subsection 9—406(a) or 12—106(b) of this title of an assignment to the secured party as assignee a signed record that releases the
account debtor from any further obligation to the secured party.
(c) This section does not apply to an assignment constituting the sale of an account,
chattel paper, or payment intangible. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—210. Request for accounting; request regarding list of collateral or statement of account
(a) In this section:
(1) “Request” means a record of a type described in subdivision (2), (3), or (4) of this
subsection.
(2) “Request for an accounting” means a record signed by a debtor requesting that the
recipient provide an accounting of the unpaid obligations secured by collateral and
reasonably identifying the transaction or relationship that is the subject of the
request.
(3) “Request regarding a list of collateral” means a record signed by a debtor requesting
that the recipient approve or correct a list of what the debtor believes to be the
collateral securing an obligation and reasonably identifying the transaction or relationship
that is the subject of the request.
(4) “Request regarding a statement of account” means a record signed by a debtor requesting
that the recipient approve or correct a statement indicating what the debtor believes
to be the aggregate amount of unpaid obligations secured by collateral as of a specified
date and reasonably identifying the transaction or relationship that is the subject
of the request.
(b) Subject to subsections (c), (d), (e), and (f) of this section, a secured party, other
than a buyer of accounts, chattel paper, payment intangibles, or promissory notes
or a consignor, shall comply with a request within 14 days after receipt:
(1) in the case of a request for an accounting, by signing and sending to the debtor an
accounting; and
(2) in the case of a request regarding a list of collateral or a request regarding a statement
of account, by signing and sending to the debtor an approval or correction.
(c) A secured party that claims a security interest in all of a particular type of collateral
owned by the debtor may comply with a request regarding a list of collateral by sending
to the debtor a signed record including a statement to that effect within 14 days
after receipt.
(d) A person that receives a request regarding a list of collateral, claims no interest
in the collateral when it receives the request, and claimed an interest in the collateral
at an earlier time shall comply with the request within 14 days after receipt by sending
to the debtor a signed record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and mailing address of any assignee
of or successor to the recipient’s interest in the collateral.
(e) A person that receives a request for an accounting or a request regarding a statement
of account, claims no interest in the obligations when it receives the request, and
claimed an interest in the obligations at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor a signed record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and mailing address of any assignee
of or successor to the recipient’s interest in the obligations.
(f) A debtor is entitled without charge to one response to a request under this section
during any six-month period. The secured party may require payment of a charge not
exceeding $25.00 for each additional response. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—301. Law governing perfection and priority of security interests
Except as otherwise provided in sections 9—303 through 9—306B of this title, the following
rules determine the law governing perfection, the effect of perfection or nonperfection,
and the priority of a security interest in collateral:
(1) Except as otherwise provided in this section, while a debtor is located in a jurisdiction,
the local law of that jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in collateral.
(2) While collateral is located in a jurisdiction, the local law of that jurisdiction
governs perfection, the effect of perfection or nonperfection, and the priority of
a possessory security interest in that collateral.
(3) Except as otherwise provided in subdivision (4) of this section, while negotiable
tangible documents, goods, instruments, or tangible money is located in a jurisdiction,
the local law of that jurisdiction governs:
(A) perfection of a security interest in the goods by filing a fixture filing;
(B) perfection of a security interest in timber to be cut; and
(C) the effect of perfection or nonperfection and the priority of a nonpossessory security
interest in the collateral.
(4) The local law of the jurisdiction in which the wellhead or minehead is located governs
perfection, the effect of perfection or nonperfection, and the priority of a security
interest in as-extracted collateral. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—302. Law governing perfection and priority of agricultural liens
While farm products are located in a jurisdiction, the local law of that jurisdiction
governs perfection, the effect of perfection or nonperfection, and the priority of
an agricultural lien on the farm products. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—303. Law governing perfection and priority of security interests in goods covered by a
certificate of title
(a) This section applies to goods covered by a certificate of title, even if there is
no other relationship between the jurisdiction under whose certificate of title the
goods are covered and the goods or the debtor.
(b) Goods become covered by a certificate of title when a valid application for the certificate
of title and the applicable fee are delivered to the appropriate authority. Goods
cease to be covered by a certificate of title at the earlier of the time the certificate
of title ceases to be effective under the law of the issuing jurisdiction or the time
the goods become covered subsequently by a certificate of title issued by another
jurisdiction.
(c) The local law of the jurisdiction under whose certificate of title the goods are covered
governs perfection, the effect of perfection or nonperfection, and the priority of
a security interest in goods covered by a certificate of title from the time the goods
become covered by the certificate of title until the goods cease to be covered by
the certificate of title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—304. Law governing perfection and priority of security interests in deposit accounts
(a) The local law of a bank’s jurisdiction governs perfection, the effect of perfection
or nonperfection, and the priority of a security interest in a deposit account maintained
with that bank even if the transaction does not bear any relation to the bank’s jurisdiction.
(b) The following rules determine a bank’s jurisdiction for purposes of this part:
(1) If an agreement between the bank and the debtor governing the deposit account expressly
provides that a particular jurisdiction is the bank’s jurisdiction for purposes of
this part, this article, or this title, that jurisdiction is the bank’s jurisdiction.
(2) If subdivision (1) of this subsection does not apply and an agreement between the
bank and its customer governing the deposit account expressly provides that the agreement
is governed by the law of a particular jurisdiction, that jurisdiction is the bank’s
jurisdiction.
(3) If neither subdivision (1) nor subdivision (2) of this subsection applies and an agreement
between the bank and its customer governing the deposit account expressly provides
that the deposit account is maintained at an office in a particular jurisdiction,
that jurisdiction is the bank’s jurisdiction.
(4) If none of the preceding subdivisions applies, the bank’s jurisdiction is the jurisdiction
in which the office identified in an account statement as the office serving the customer’s
account is located.
(5) If none of the preceding subdivisions applies, the bank’s jurisdiction is the jurisdiction
in which the chief executive office of the bank is located. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—305. Law governing perfection and priority of security interests in investment property
(a) Except as otherwise provided in subsection (c) of this section, the following rules
apply:
(1) While a security certificate is located in a jurisdiction, the local law of that jurisdiction
governs perfection, the effect of perfection or nonperfection, and the priority of
a security interest in the certificated security represented thereby.
(2) The local law of the issuer’s jurisdiction as specified in subsection 8—110(d) of this title governs perfection, the effect of perfection or nonperfection, and the priority of
a security interest in an uncertificated security.
(3) The local law of the securities intermediary’s jurisdiction as specified in subsection 8—110(e) of this title governs perfection, the effect of perfection or nonperfection, and the priority of
a security interest in a security entitlement or securities account.
(4) The local law of the commodity intermediary’s jurisdiction governs perfection, the
effect of perfection or nonperfection, and the priority of a security interest in
a commodity contract or commodity account.
(5) Subdivisions (2), (3), and (4) of this subsection apply even if the transaction does
not bear any relation to the jurisdiction.
(b) The following rules determine a commodity intermediary’s jurisdiction for purposes
of this part:
(1) If an agreement between the commodity intermediary and commodity customer governing
the commodity account expressly provides that a particular jurisdiction is the commodity
intermediary’s jurisdiction for purposes of this part, this article, or this title,
that jurisdiction is the commodity intermediary’s jurisdiction.
(2) If subdivision (1) of this subsection does not apply and an agreement between the
commodity intermediary and commodity customer governing the commodity account expressly
provides that the agreement is governed by the law of a particular jurisdiction, that
jurisdiction is the commodity intermediary’s jurisdiction.
(3) If neither subdivision (1) nor subdivision (2) of this subsection applies and an agreement
between the commodity intermediary and commodity customer governing the commodity
account expressly provides that the commodity account is maintained at an office in
a particular jurisdiction, that jurisdiction is the commodity intermediary’s jurisdiction.
(4) If none of the preceding subdivisions of this subsection applies, the commodity intermediary’s
jurisdiction is the jurisdiction in which the office identified in an account statement
as the office serving the commodity customer’s account is located.
(5) If none of the preceding subdivisions of this subsection applies, the commodity intermediary’s
jurisdiction is the jurisdiction in which the chief executive office of the commodity
intermediary is located.
(c) The local law of the jurisdiction in which the debtor is located governs:
(1) perfection of a security interest in investment property by filing;
(2) automatic perfection of a security interest in investment property created by a broker
or securities intermediary; and
(3) automatic perfection of a security interest in a commodity contract or commodity account
created by a commodity intermediary. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—306. Law governing perfection and priority of security interests in letter-of-credit rights
(a) Subject to subsection (c) of this section, the local law of the issuer’s jurisdiction
or a nominated person’s jurisdiction governs perfection, the effect of perfection
or nonperfection, and the priority of a security interest in a letter-of-credit right
if the issuer’s jurisdiction or nominated person’s jurisdiction is a state.
(b) For purposes of this part, an issuer’s jurisdiction or nominated person’s jurisdiction
is the jurisdiction whose law governs the liability of the issuer or nominated person
with respect to the letter-of-credit right as provided in section 5—116 of this title.
(c) This section does not apply to a security interest that is perfected only under subsection 9—308(d) of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—306A. Law governing perfection and priority of security interests in chattel paper
(a) Except as provided in subsection (d) of this section, if chattel paper is evidenced
only by an authoritative electronic copy of the chattel paper or is evidenced by an
authoritative electronic copy and an authoritative tangible copy, the local law of
the chattel paper’s jurisdiction governs perfection, the effect of perfection or nonperfection,
and the priority of a security interest in the chattel paper, even if the transaction
does not bear any relation to the chattel paper’s jurisdiction.
(b) The following rules determine the chattel paper’s jurisdiction under this section:
(1) If the authoritative electronic copy of the record evidencing chattel paper, or a
record attached to or logically associated with the electronic copy and readily available
for review, expressly provides that a particular jurisdiction is the chattel paper’s
jurisdiction for purposes of this section, this article, or the Uniform Commercial
Code, that jurisdiction is the chattel paper’s jurisdiction.
(2) If subdivision (1) of this subsection does not apply and the rules of the system in
which the authoritative electronic copy is recorded are readily available for review
and expressly provide that a particular jurisdiction is the chattel paper’s jurisdiction
for purposes of this part, this article, or the Uniform Commercial Code, that jurisdiction
is the chattel paper’s jurisdiction.
(3) If subdivisions (1) and (2) of this subsection do not apply and the authoritative
electronic copy, or a record attached to or logically associated with the electronic
copy and readily available for review, expressly provides that the chattel paper is
governed by the law of a particular jurisdiction, that jurisdiction is the chattel
paper’s jurisdiction.
(4) If subdivisions (1), (2), and (3) of this subsection do not apply and the rules of
the system in which the authoritative electronic copy is recorded are readily available
for review and expressly provide that the chattel paper or the system is governed
by the law of a particular jurisdiction, that jurisdiction is the chattel paper’s
jurisdiction.
(5) If subdivisions (1) through (4) of this subsection do not apply, the chattel paper’s
jurisdiction is the jurisdiction in which the debtor is located.
(c) If an authoritative tangible copy of a record evidences chattel paper and the chattel
paper is not evidenced by an authoritative electronic copy, while the authoritative
tangible copy of the record evidencing chattel paper is located in a jurisdiction,
the local law of that jurisdiction governs:
(1) perfection of a security interest in the chattel paper by possession under section 9—314A of this title; and
(2) the effect of perfection or nonperfection and the priority of a security interest
in the chattel paper.
(d) The local law of the jurisdiction in which the debtor is located governs perfection
of a security interest in chattel paper by filing. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—306B. Law governing perfection and priority of security interests in controllable accounts,
controllable electronic records, and controllable payment intangibles
(a) Except as provided in subsection (b) of this section, the local law of the controllable
electronic record’s jurisdiction specified in subsections 12—107(c) and (d) of this
title governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in a controllable electronic record and a security interest
in a controllable account or controllable payment intangible evidenced by the controllable
electronic record.
(b) The local law of the jurisdiction in which the debtor is located governs:
(1) perfection of a security interest in a controllable account, controllable electronic
record, or controllable payment intangible by filing; and
(2) automatic perfection of a security interest in a controllable payment intangible created
by a sale of the controllable payment intangible. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—307. Location of debtor
(a) In this section, “place of business” means a place where a debtor conducts its affairs.
(b) Except as otherwise provided in this section, the following rules determine a debtor’s
location:
(1) A debtor who is an individual is located at the individual’s principal residence.
(2) A debtor that is an organization and has only one place of business is located at
its place of business.
(3) A debtor that is an organization and has more than one place of business is located
at its chief executive office.
(c) Subsection (b) of this section applies only if a debtor’s residence, place of business,
or chief executive office, as applicable, is located in a jurisdiction whose law generally
requires information concerning the existence of a nonpossessory security interest
to be made generally available in a filing, recording, or registration system as a
condition or result of the security interest’s obtaining priority over the rights
of a lien creditor with respect to the collateral. If subsection (b) of this section
does not apply, the debtor is located in the District of Columbia.
(d) A person that ceases to exist, have a residence, or have a place of business continues
to be located in the jurisdiction specified by subsections (b) and (c) of this section.
(e) A registered organization that is organized under the law of a state is located in
that state.
(f) Except as otherwise provided in subsection (i) of this section, a registered organization
that is organized under the law of the United States and a branch or agency of a bank
that is not organized under the law of the United States or a state are located:
(1) in the state that the law of the United States designates, if the law designates a
state of location;
(2) in the state that the registered organization, branch, or agency designates, if the
law of the United States authorizes the registered organization, branch, or agency
to designate its state of location, including by designating its main office, home
office, or other comparable office; or
(3) in the District of Columbia, if neither subdivision (1) nor subdivision (2) applies.
(g) A registered organization continues to be located in the jurisdiction specified by
subsection (e) or (f) of this section notwithstanding:
(1) the suspension, revocation, forfeiture, or lapse of the registered organization’s
status as such in its jurisdiction of organization; or
(2) the dissolution, winding up, or cancellation of the existence of the registered organization.
(h) The United States is located in the District of Columbia.
(i) A branch or agency of a bank that is not organized under the law of the United States
or a state is located in the state in which the branch or agency is licensed, if all
branches and agencies of the bank are licensed in only one state.
(j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located
at the designated office of the agent upon which service of process may be made on
behalf of the carrier.
(k) This section applies only for purposes of this part. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—308. When security interest or agricultural lien is perfected; continuity of perfection
(a) Except as otherwise provided in this section and section 9—309 of this title, a security interest is perfected if it has attached and all of the applicable requirements
for perfection in sections 9—310 through 9—316 of this title have been satisfied. A security interest is perfected when it attaches if the applicable
requirements are satisfied before the security interest attaches.
(b) An agricultural lien is perfected if it has become effective and all of the applicable
requirements for perfection in section 9—310 of this title have been satisfied. An agricultural lien is perfected when it becomes effective
if the applicable requirements are satisfied before the agricultural lien becomes
effective.
(c) A security interest or agricultural lien is perfected continuously if it is originally
perfected by one method under this article and is later perfected by another method
under this article, without an intermediate period when it was unperfected.
(d) Perfection of a security interest in collateral also perfects a security interest
in a supporting obligation for the collateral.
(e) Perfection of a security interest in a right to payment or performance also perfects
a security interest in a security interest, mortgage, or other lien on personal or
real property securing the right.
(f) Perfection of a security interest in a securities account also perfects a security
interest in the security entitlements carried in the securities account.
(g) Perfection of a security interest in a commodity account also perfects a security
interest in the commodity contracts carried in the commodity account. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—309. Security interest perfected upon attachment
The following security interests are perfected when they attach:
(1) a purchase-money security interest in consumer goods, except as otherwise provided
in subsection 9—311(b) of this title with respect to consumer goods that are subject to a statute or treaty described
in subsection 9—311(a) of this title;
(2) an assignment of accounts or payment intangibles which does not by itself or in conjunction
with other assignments to the same assignee transfer a significant part of the assignor’s
outstanding accounts or payment intangibles;
(3) a sale of a payment intangible;
(4) a sale of a promissory note;
(5) a security interest created by the assignment of a health care-insurance receivable
to the provider of the health care goods or services;
(6) a security interest arising under section 2—401, or 2—505 of this title, or subsection 2—711(3), or 2A—508(5) of this title, until the debtor obtains possession of the collateral;
(7) a security interest of a collecting bank arising under section 4—210 of this title;
(8) a security interest of an issuer or nominated person arising under section 5—118 of this title;
(9) a security interest arising in the delivery of a financial asset under subsection 9—206(c) of this title;
(10) a security interest in investment property created by a broker or securities intermediary;
(11) a security interest in a commodity contract or a commodity account created by a commodity
intermediary;
(12) an assignment for the benefit of all creditors of the transferor and subsequent transfers
by the assignee thereunder; and
(13) a security interest created by an assignment of a beneficial interest in a decedent’s
estate. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—310. When filing required to perfect security interest or agricultural lien; security interests
and agricultural liens to which filing provisions do not apply
(a) Except as otherwise provided in subsection (b) of this section and subsection 9—312(b) of this title, a financing statement must be filed to perfect all security interests and agricultural
liens.
(b) The filing of a financing statement is not necessary to perfect a security interest:
(1) that is perfected under subsection 9—308(d), (e), (f), or (g) of this title;
(2) that is perfected under section 9—309 of this title when it attaches;
(3) in property subject to a statute, regulation, or treaty described in subsection 9—311(a) of this title;
(4) in goods in possession of a bailee which is perfected under subdivision 9—312(d)(1)
or (2) of this title;
(5) in certificated securities, documents, goods, or instruments which is perfected without
filing, control, or possession under subsection 9—312(e), (f), or (g) of this title;
(6) in collateral in the secured party’s possession under section 9—313 of this title;
(7) in a certificated security which is perfected by delivery of the security certificate
to the secured party under section 9—313 of this title;
(8) in controllable accounts, controllable electronic records, controllable payment intangibles,
deposit accounts, electronic documents, investment property, or letter-of-credit rights
which is perfected by control under section 9—314 of this title;
(8.1) in chattel paper which is perfected by possession and control under section 9—314A of this title;
(9) in proceeds which is perfected under section 9—315 of this title; or
(10) that is perfected under section 9—316 of this title.
(c) If a secured party assigns a perfected security interest or agricultural lien, a filing
under this article is not required to continue the perfected status of the security
interest against creditors of and transferees from the original debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—311. Perfection of security interests in property subject to certain statutes, regulations,
and treaties
(a) Except as otherwise provided in subsection (d) of this section, the filing of a financing
statement is not necessary or effective to perfect a security interest in property
subject to:
(1) a statute, regulation, or treaty of the United States whose requirements for a security
interest’s obtaining priority over the rights of a lien creditor with respect to the
property preempt subsection 9—310(a) of this title;
(2) the following statutes of this State: 23 V.S.A. chapters 21 and 36; or
(3) a statute of another jurisdiction which provides for a security interest to be indicated
on a certificate as a condition or result of the security interest’s obtaining priority
over the rights of a lien creditor with respect to the property.
(b) Compliance with the requirements of a statute, regulation, or treaty described in
subsection (a) of this section for obtaining priority over the rights of a lien creditor
is equivalent to the filing of a financing statement under this article. Except as
otherwise provided in subsection (d) of this section and section 9—313 and subsections
9—316(d) and (e) of this title for goods covered by a certificate of title, a security
interest in property subject to a statute, regulation, or treaty described in subsection
(a) of this section may be perfected only by compliance with those requirements, and
a security interest so perfected remains perfected notwithstanding a change in the
use or transfer of possession of the collateral.
(c) Except as otherwise provided in subsection (d) of this section and subsections 9—316(d)
and (e) of this title, duration and renewal of perfection of a security interest perfected
by compliance with the requirements prescribed by a statute, regulation, or treaty
described in subsection (a) of this section are governed by the statute, regulation,
or treaty. In other respects, the security interest is subject to this article.
(d) During any period in which collateral subject to a statute specified in subdivision
(a)(2) of this section is inventory held for sale or lease by a person or leased by
that person as lessor and that person is in the business of selling goods of that
kind, this section does not apply to a security interest in that collateral created
by that person. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 2; 2005, No. 116 (Adj. Sess.), § 1, eff. April 26, 2006; 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—312. Perfection of security interests in chattel paper, controllable accounts, controllable
electronic records, controllable payment intangibles, deposit accounts, negotiable
documents, goods covered by documents, instruments, investment property, letter-of-credit
rights, and money; perfection by permissive filing; temporary perfection without filing
or transfer of possession
(a) A security interest in chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, instruments, investment property, or negotiable
documents may be perfected by filing.
(b) Except as otherwise provided in subsections 9—315(c) and (d) of this title for proceeds:
(1) a security interest in a deposit account may be perfected only by control under section 9—314 of this title;
(2) except as otherwise provided in subsection 9—308(d) of this title, a security interest in a letter-of-credit right may be perfected only by control
under section 9—314 of this title;
(3) a security interest in tangible money may be perfected only by the secured party’s
taking possession under section 9—313 of this title; and
(4) a security interest in electronic money may be perfected only by control under section 9—314 of this title.
(c) While goods are in the possession of a bailee that has issued a negotiable document
covering the goods:
(1) a security interest in the goods may be perfected by perfecting a security interest
in the document; and
(2) a security interest perfected in the document has priority over any security interest
that becomes perfected in the goods by another method during that time.
(d) While goods are in the possession of a bailee that has issued a nonnegotiable document
covering the goods, a security interest in the goods may be perfected by:
(1) issuance of a document in the name of the secured party;
(2) the bailee’s receipt of notification of the secured party’s interest; or
(3) filing as to the goods.
(e) A security interest in certificated securities, negotiable documents, or instruments
is perfected without filing or the taking of possession or control for a period of
20 days from the time it attaches to the extent that it arises for new value given
under a signed security agreement.
(f) A perfected security interest in a negotiable document or goods in possession of a
bailee, other than one that has issued a negotiable document for the goods, remains
perfected for 20 days without filing if the secured party makes available to the debtor
the goods or documents representing the goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping, transshipping, manufacturing, processing, or
otherwise dealing with them in a manner preliminary to their sale or exchange.
(g) Temporary perfection: delivery of security certificate or instrument to debtor. A
perfected security interest in a certificated security or instrument remains perfected
for 20 days without filing if the secured party delivers the security certificate
or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal, or registration of transfer.
(h) Expiration of temporary perfection. After the 20-day period specified in subsection
(e), (f), or (g) of this section expires, perfection depends upon compliance with
this article. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—313. When possession by or delivery to secured party perfects security interest without
filing
(a) Except as otherwise provided in subsection (b) of this section, a secured party may
perfect a security interest in goods, instruments, negotiable tangible documents,
or tangible money by taking possession of the collateral. A secured party may perfect
a security interest in certificated securities by taking delivery of the certificated
securities under section 8—301 of this title.
(b) With respect to goods covered by a certificate of title issued by this State, a secured
party may perfect a security interest in the goods by taking possession of the goods
only in the circumstances described in subsection 9—316(d) of this title.
(c) With respect to collateral other than certificated securities and goods covered by
a document, a secured party takes possession of collateral in the possession of a
person other than the debtor, the secured party, or a lessee of the collateral from
the debtor in the ordinary course of the debtor’s business, when:
(1) the person in possession signs a record acknowledging that it holds possession of
the collateral for the secured party’s benefit; or
(2) the person takes possession of the collateral after having signed a record acknowledging
that it will hold possession of the collateral for the secured party’s benefit.
(d) If perfection of a security interest depends upon possession of the collateral by
a secured party, perfection occurs not earlier than the time the secured party takes
possession and continues only while the secured party retains possession.
(e) A security interest in a certificated security in registered form is perfected by
delivery when delivery of the certificated security occurs under section 8—301 of this title and remains perfected by delivery until the debtor obtains possession of the security
certificate.
(f) A person in possession of collateral is not required to acknowledge that it holds
possession for a secured party’s benefit.
(g) If a person acknowledges that it holds possession for the secured party’s benefit:
(1) the acknowledgment is effective under subsection (c) of this section or subsection 8—301(a) of this title, even if the acknowledgment violates the rights of a debtor; and
(2) unless the person otherwise agrees or law other than this article otherwise provides,
the person does not owe any duty to the secured party and is not required to confirm
the acknowledgment to another person.
(h) A secured party having possession of collateral does not relinquish possession by
delivering the collateral to a person other than the debtor or a lessee of the collateral
from the debtor in the ordinary course of the debtor’s business if the person was
instructed before the delivery or is instructed contemporaneously with the delivery:
(1) to hold possession of the collateral for the secured party’s benefit; or
(2) to redeliver the collateral to the secured party.
(i) A secured party does not relinquish possession, even if a delivery under subsection
(h) of this section violates the rights of a debtor. A person to which collateral
is delivered under subsection (h) of this section does not owe any duty to the secured
party and is not required to confirm the delivery to another person unless the person
otherwise agrees or law other than this article otherwise provides. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—314. Perfection by control
(a) A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, electronic documents, electronic money, investment
property, or letter-of-credit rights may be perfected by control of the collateral
under section 7—106, 9—104, 9—105A, 9—106, 9—107, or 9—107A of this title.
(b) A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, electronic documents, electronic money, or
letter-of-credit rights is perfected by control under section 7—106, 9—104, 9—105A,
9—107, or 9—107A of this title not earlier than the time the secured party obtains
control and remains perfected by control only while the secured party retains control.
(c) A security interest in investment property is perfected by control under section 9—106 of this title not earlier than the time the secured party obtains control and remains perfected
by control until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security, the debtor has or acquires possession
of the security certificate;
(B) if the collateral is an uncertificated security, the issuer has registered or registers
the debtor as the registered owner; or
(C) if the collateral is a security entitlement, the debtor is or becomes the entitlement
holder. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—314A. Perfection by possession and control of chattel paper
(a) A secured party may perfect a security interest in chattel paper by taking possession
of each authoritative tangible copy of the record evidencing the chattel paper and
obtaining control of each authoritative electronic copy of the electronic record evidencing
the chattel paper.
(b) A security interest is perfected under subsection (a) of this section not earlier
than the time the secured party takes possession and obtains control and remains perfected
under subsection (a) of this section only while the secured party retains possession
and control.
(c) Subsections 9—313(c) and (f)–(i) of this title apply to perfection by possession of
an authoritative tangible copy of a record evidencing chattel paper. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—315. Secured party’s rights on disposition of collateral and in proceeds
(a) Except as otherwise provided in this article and in subsection 2—403(2) of this title:
(1) a security interest or agricultural lien continues in collateral notwithstanding sale,
lease, license, exchange, or other disposition thereof unless the secured party authorized
the disposition free of the security interest or agricultural lien; and
(2) a security interest attaches to any identifiable proceeds of collateral.
(b) Proceeds that are commingled with other property are identifiable proceeds:
(1) if the proceeds are goods, to the extent provided by section 9—336 of this title; and
(2) if the proceeds are not goods, to the extent that the secured party identifies the
proceeds by a method of tracing, including application of equitable principles, that
is permitted under law other than this article with respect to commingled property
of the type involved.
(c) A security interest in proceeds is a perfected security interest if the security interest
in the original collateral was perfected.
(d) A perfected security interest in proceeds becomes unperfected on the 21st day after
the security interest attaches to the proceeds unless:
(1) the following conditions are satisfied:
(A) a filed financing statement covers the original collateral;
(B) the proceeds are collateral in which a security interest may be perfected by filing
in the office in which the financing statement has been filed; and
(C) the proceeds are not acquired with cash proceeds;
(2) the proceeds are identifiable cash proceeds; or
(3) the security interest in the proceeds is perfected other than under subsection (c)
of this section when the security interest attaches to the proceeds or within 20 days
thereafter.
(e) If a filed financing statement covers the original collateral, a security interest
in proceeds which remains perfected under subdivision (d)(1) of this section becomes
unperfected at the later of:
(1) when the effectiveness of the filed financing statement lapses under section 9—515 of this title or is terminated under section 9—513 of this title; or
(2) the 21st day after the security interest attaches to the proceeds. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—316. Effect of change in governing law
(a) A security interest perfected pursuant to the law of the jurisdiction designated in
subdivision 9-301(1) or in subsection 9-305(c), 9—306A(d), or 9—306B(b) of this title
remains perfected until the earliest of:
(1) the time perfection would have ceased under the law of that jurisdiction;
(2) the expiration of four months after a change of the debtor’s location to another jurisdiction;
(3) the expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction; or
(4) the expiration of one year after a new debtor located in another jurisdiction becomes
bound under subsection 9—203(d) of this title.
(b) If a security interest described in subsection (a) of this section becomes perfected
under the law of the other jurisdiction before the earliest time or event described
in that subsection, it remains perfected thereafter. If the security interest does
not become perfected under the law of the other jurisdiction before the earliest time
or event, it becomes unperfected and is deemed never to have been perfected as against
a purchaser of the collateral for value.
(c) A possessory security interest in collateral, other than goods covered by a certificate
of title and as-extracted collateral consisting of goods, remains continuously perfected
if:
(1) the collateral is located in one jurisdiction and subject to a security interest perfected
under the law of that jurisdiction;
(2) thereafter the collateral is brought into another jurisdiction; and
(3) upon entry into the other jurisdiction, the security interest is perfected under the
law of the other jurisdiction.
(d) Except as otherwise provided in subsection (e) of this section, a security interest
in goods covered by a certificate of title which is perfected by any method under
the law of another jurisdiction when the goods become covered by a certificate of
title from this state remains perfected until the security interest would have become
unperfected under the law of the other jurisdiction had the goods not become so covered.
(e) A security interest described in subsection (d) of this section becomes unperfected
as against a purchaser of the goods for value and is deemed never to have been perfected
as against a purchaser of the goods for value if the applicable requirements for perfection
under subsection 9—311(b) or section 9—313 of this title are not satisfied before the earlier of:
(1) the time the security interest would have become unperfected under the law of the
other jurisdiction had the goods not become covered by a certificate of title from
this State; or
(2) the expiration of four months after the goods had become so covered.
(f) A security interest in chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts, letter-of-credit rights,
or investment property which is perfected under the law of the chattel paper’s jurisdiction,
the controllable electronic record’s jurisdiction, the bank’s jurisdiction, the issuer’s
jurisdiction, a nominated person’s jurisdiction, the securities intermediary’s jurisdiction,
or the commodity intermediary’s jurisdiction, as applicable, remains perfected until
the earlier of:
(1) the time the security interest would have become unperfected under the law of that
jurisdiction; or
(2) the expiration of four months after a change of the applicable jurisdiction to another
jurisdiction.
(g) If a security interest described in subsection (f) of this section becomes perfected
under the law of the other jurisdiction before the earlier of the time or the end
of the period described in that subsection, it remains perfected thereafter. If the
security interest does not become perfected under the law of the other jurisdiction
before the earlier of that time or the end of that period, it becomes unperfected
and is deemed never to have been perfected as against a purchaser of the collateral
for value.
(h) The following rules apply to collateral to which a security interest attaches within
four months after the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change pursuant to the law of the jurisdiction
designated in subsection 9—301(1) or 9—305(c) of this title is effective to perfect a security interest in the collateral if the financing statement
would have been effective to perfect a security interest in the collateral had the
debtor not changed its location.
(2) If a security interest perfected by a financing statement that is effective under
subdivision (1) of this subsection becomes perfected under the law of the other jurisdiction
before the earlier of the time the financing statement would have become ineffective
under the law of the jurisdiction designated in subsection 9—301(1) or 9—305(c) of this title or the expiration of the four-month period, it remains perfected thereafter. If the
security interest does not become perfected under the law of the other jurisdiction
before the earlier time or event, it becomes unperfected and is deemed never to have
been perfected as against a purchaser of the collateral for value.
(i) If a financing statement naming an original debtor is filed pursuant to the law of
the jurisdiction designated in subsection 9—301(1) or 9—305(c) of this title and the new debtor is located in another jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect a security interest in collateral
acquired by the new debtor before, and within four months after, the new debtor becomes
bound under subsection 9—203(d) of this title if the financing statement would have been effective to perfect a security interest
in the collateral had the collateral been acquired by the original debtor.
(2) A security interest perfected by the financing statement, which becomes perfected
under the law of the other jurisdiction before the earlier of the time the financing
statement would have become ineffective under the law of the jurisdiction designated
in subsection 9—301(1) or 9—305(c) of this title or the expiration of the four-month period, remains perfected thereafter. A security
interest perfected by the financing statement, which does not become perfected under
the law of the other jurisdiction before the earlier time or event, becomes unperfected
and is deemed never to have been perfected as against a purchaser of the collateral
for value. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—317. Interests that take priority over or take free of security interest or agricultural
lien
(a) A security interest or agricultural lien is subordinate to the rights of:
(1) a person entitled to priority under section 9—322 of this title; and
(2) except as otherwise provided in subsection (e) of this section, a person that becomes
a lien creditor before the earlier of the time:
(A) the security interest or agricultural lien is perfected; or
(B) one of the conditions specified in subdivision 9—203(b)(3) of this title is met and a financing statement covering the collateral is filed.
(b) Except as otherwise provided in subsection (e) of this section, a buyer, other than
a secured party, of goods, instruments, tangible documents, or a certificated security
takes free of a security interest or agricultural lien if the buyer gives value and
receives delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
(c) Except as otherwise provided in subsection (e) of this section, a lessee of goods
takes free of a security interest or agricultural lien if the lessee gives value and
receives delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
(d) Subject to subsections (f)–(i) of this section, a licensee of a general intangible
or a buyer, other than a secured party, of collateral other than electronic money,
goods, instruments, tangible documents, or a certified security takes free of a security
interest if the licensee or buyer gives value without knowledge of the security interest
and before it is perfected.
(e) Except as otherwise provided in sections 9—320 and 9—321 of this title, if a person files a financing statement with respect to a purchase-money security
interest before or within 20 days after the debtor receives delivery of the collateral,
the security interest takes priority over the rights of a buyer, lessee, or lien creditor
which arise between the time the security interest attaches and the time of filing.
(f) A buyer, other than a secured party, of chattel paper takes free of a security interest
if, without knowledge of the security interest and before it is perfected, the buyer
gives value and:
(1) receives delivery of each authoritative tangible copy of the record evidencing the
chattel paper; and
(2) if each authoritative electronic copy of the record evidencing the chattel paper can
be subjected to control under section 9—105 of this title, obtains control of each authoritative electronic copy.
(g) A buyer of an electronic document takes free of a security interest if, without knowledge
of the security interest and before it is perfected, the buyer gives value and, if
each authoritative electronic copy of the document can be subjected to control under
section 7—106 of this title, obtains control of each authoritative electronic copy.
(h) A buyer of a controllable electronic record takes free of a security interest if,
without knowledge of the security interest and before it is perfected, the buyer gives
value and obtains control of the controllable electronic record.
(i) A buyer, other than a secured party, of a controllable account or a controllable payment
intangible takes free of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and obtains control of
the controllable account or controllable payment intangible. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 3; 2013, No. 157 (Adj. Sess.), § 1; 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—318. No interest retained in right to payment that is sold; rights and title of seller
of account or chattel paper with respect to creditors and purchasers
(a) A debtor that has sold an account, chattel paper, payment intangible, or promissory
note does not retain a legal or equitable interest in the collateral sold.
(b) For purposes of determining the rights of creditors of, and purchasers for value of
an account or chattel paper from, a debtor that has sold an account or chattel paper,
while the buyer’s security interest is unperfected, the debtor is deemed to have rights
and title to the account or chattel paper identical to those the debtor sold. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—319. Rights and title of consignee with respect to creditors and purchasers
(a) Except as otherwise provided in subsection (b) of this section, for purposes of determining
the rights of creditors of, and purchasers for value of goods from, a consignee, while
the goods are in the possession of the consignee, the consignee has rights and title
to the goods identical to those the consignor had or had power to transfer.
(b) For purposes of determining the rights of a creditor of a consignee, law other than
this article determines the rights and title of a consignee while goods are in the
consignee’s possession if, under this part, a perfected security interest held by
the consignor would have priority over the rights of the creditor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—320. Buyer of goods
(a) Except as otherwise provided in subsection (e) of this section, a buyer in ordinary
course of business, other than a person buying farm products from a person engaged
in farming operations, takes free of a security interest created by the buyer’s seller,
even if the security interest is perfected and the buyer knows of its existence.
(b) Except as otherwise provided in subsection (e) of this section, a buyer of goods from
a person who used or bought the goods for use primarily for personal, family, or household
purposes takes free of a security interest, even if perfected, if the buyer buys:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer’s personal, family, or household purposes; and
(4) before the filing of a financing statement covering the goods.
(c) To the extent that it affects the priority of a security interest over a buyer of
goods under subsection (b) of this section, the period of effectiveness of a filing
made in the jurisdiction in which the seller is located is governed by subsections
9—316(a) and (b) of this title.
(d) A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead
or minehead or after extraction takes free of an interest arising out of an encumbrance.
(e) Subsections (a) and (b) of this section do not affect a security interest in goods
in the possession of the secured party under section 9—313 of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—321. Licensee of general intangible and lessee of goods in ordinary course of business
(a) In this section, “licensee in ordinary course of business” means a person that becomes
a licensee of a general intangible in good faith, without knowledge that the license
violates the rights of another person in the general intangible, and in the ordinary
course from a person in the business of licensing general intangibles of that kind.
A person becomes a licensee in the ordinary course if the license to the person comports
with the usual or customary practices in the kind of business in which the licensor
is engaged or with the licensor’s own usual or customary practices.
(b) A licensee in ordinary course of business takes its rights under the license free
of a security interest in the general intangible created by the licensor, even if
the security interest is perfected and the licensee knows of its existence.
(c) A lessee in ordinary course of business takes its leasehold interest free of a security
interest in the goods created by the lessor, even if the security interest is perfected
and the lessee knows of its existence. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—322. Priorities among conflicting security interests in and agricultural liens on same
collateral
(a) Except as otherwise provided in this section, priority among conflicting security
interests and agricultural liens in the same collateral is determined according to
the following rules:
(1) Conflicting perfected security interests and agricultural liens rank according to
priority in time of filing or perfection. Priority dates from the earlier of the time
a filing covering the collateral is first made or the security interest or agricultural
lien is first perfected, if there is no period thereafter when there is neither filing
nor perfection.
(2) A perfected security interest or agricultural lien has priority over a conflicting
unperfected security interest or agricultural lien.
(3) The first security interest or agricultural lien to attach or become effective has
priority if conflicting security interests and agricultural liens are unperfected.
(b) For the purposes of subdivision (a)(1) of this section:
(1) the time of filing or perfection as to a security interest in collateral is also the
time of filing or perfection as to a security interest in proceeds; and
(2) the time of filing or perfection as to a security interest in collateral supported
by a supporting obligation is also the time of filing or perfection as to a security
interest in the supporting obligation.
(c) Except as otherwise provided in subsection (f) of this section, a security interest
in collateral which qualifies for priority over a conflicting security interest under
section 9—327 through 9—331 of this title also has priority over a conflicting security interest in:
(1) any supporting obligation for the collateral; and
(2) proceeds of the collateral if:
(A) the security interest in proceeds is perfected;
(B) the proceeds are cash proceeds or of the same type as the collateral; and
(C) in the case of proceeds that are proceeds of proceeds, all intervening proceeds are
cash proceeds, proceeds of the same type as the collateral, or an account relating
to the collateral.
(d) Subject to subsection (e) of this section and except as otherwise provided in subsection
(f) of this section, if a security interest in chattel paper, deposit accounts, negotiable
documents, instruments, investment property, or letter-of-credit rights is perfected
by a method other than filing, conflicting perfected security interests in proceeds
of the collateral rank according to priority in time of filing.
(e) Subsection (d) of this section applies only if the proceeds of the collateral are
not cash proceeds, chattel paper, negotiable documents, instruments, investment property,
or letter-of-credit rights.
(f) Subsections (a) through (e) of this section are subject to:
(1) subsection (g) of this section and the other provisions of this part;
(2) section 4—210 of this title with respect to a security interest of a collecting bank;
(3) section 5—118 of this title with respect to a security interest of an issuer or nominated person; and
(4) section 9—110 of this title with respect to a security interest arising under Article 2 or 2A.
(g) A perfected agricultural lien on collateral has priority over a conflicting security
interest in or agricultural lien on the same collateral if the statute creating the
agricultural lien so provides. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—323. Future advances
(a) Except as otherwise provided in subsection (c) of this section, for purposes of determining
the priority of a perfected security interest under subdivision 9—322(a)(1) of this title, perfection of the security interest dates from the time an advance is made to the
extent that the security interest secures an advance that:
(1) is made while the security interest is perfected only:
(A) under section 9—309 of this title when it attaches; or
(B) temporarily under subsection 9—312(e), (f), or (g) of this title; and
(2) is not made pursuant to a commitment entered into before or while the security interest
is perfected by a method other than under section 9—309 or subsection 9—312(e), (f),
or (g) of this title.
(b) Except as otherwise provided in subsection (c) of this section, a security interest
is subordinate to the rights of a person that becomes a lien creditor to the extent
that the security interest secures an advance made more than 45 days after the person
becomes a lien creditor, unless the advance is made:
(1) without knowledge of the lien; or
(2) pursuant to a commitment entered into without knowledge of the lien.
(c) Subsections (a) and (b) of this section do not apply to a security interest held by
a secured party that is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor.
(d) Except as otherwise provided in subsection (e) of this section, a buyer of goods takes
free of a security interest to the extent that it secures advances made after the
earlier of:
(1) the time the secured party acquires knowledge of the buyer’s purchase; or
(2) 45 days after the purchase.
(e) Subsection (d) of this section does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the buyer’s purchase and before the expiration
of the 45 day period.
(f) Except as otherwise provided in subsection (g) of this section, a lessee of goods
takes the leasehold interest free of a security interest to the extent that it secures
advances made after the earlier of:
(1) the time the secured party acquires knowledge of the lease; or
(2) 45 days after the lease contract becomes enforceable.
(g) Subsection (f) of this section does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the lease and before the expiration of
the 45-day period. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—324. Priority of purchase-money security interests
(a) Except as otherwise provided in subsection (g) of this section, a perfected purchase
money security interest in goods other than inventory or livestock has priority over
a conflicting security interest in the same goods, and, except as otherwise provided
in section 9—327 of this title, a perfected security interest in its identifiable proceeds also has priority, if
the purchase-money security interest is perfected when the debtor receives possession
of the collateral or within 20 days thereafter.
(b) Subject to subsection (c) of this section and except as otherwise provided in subsection
(g) of this section, a perfected purchase-money security interest in inventory has
priority over a conflicting security interest in the same inventory, has priority
over a conflicting security interest in chattel paper or an instrument constituting
proceeds of the inventory and in proceeds of the chattel paper, if so provided in
section 9—330 of this title, and, except as otherwise provided in section 9—327 of this title, also has priority in identifiable cash proceeds of the inventory to the extent the
identifiable cash proceeds are received on or before the delivery of the inventory
to a buyer, if:
(1) the purchase-money security interest is perfected when the debtor receives possession
of the inventory;
(2) the purchase-money secured party sends a signed notification to the holder of the
conflicting security interest;
(3) the holder of the conflicting security interest receives the notification within five
years before the debtor receives possession of the inventory; and
(4) the notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in inventory of the debtor and describes
the inventory.
(c) Subdivisions (b)(2) through (4) of this section apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of inventory:
(1) if the purchase-money security interest is perfected by filing, before the date of
the filing; or
(2) if the purchase-money security interest is temporarily perfected without filing or
possession under subsection 9—312(f) of this title, before the beginning of the 20-day period thereunder.
(d) Subject to subsection (e) of this section and except as otherwise provided in subsection
(g) of this section, a perfected purchase-money security interest in livestock that
are farm products has priority over a conflicting security interest in the same livestock,
and, except as otherwise provided in section 9—327 of this title, a perfected security interest in their identifiable proceeds and identifiable products
in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected when the debtor receives possession
of the livestock;
(2) the purchase-money secured party sends a signed notification to the holder of the
conflicting security interest;
(3) the holder of the conflicting security interest receives the notification within six
months before the debtor receives possession of the livestock; and
(4) the notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in livestock of the debtor and describes
the livestock.
(e) Subdivisions (d)(2) through (4) of this section apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of livestock:
(1) if the purchase-money security interest is perfected by filing, before the date of
the filing; or
(2) if the purchase-money security interest is temporarily perfected without filing or
possession under subsection 9—312(f) of this title, before the beginning of the 20-day period thereunder.
(f) Except as otherwise provided in subsection (g) of this section, a perfected purchase-money
security interest in software has priority over a conflicting security interest in
the same collateral, and, except as otherwise provided in section 9—327 of this title, a perfected security interest in its identifiable proceeds also has priority, to
the extent that the purchase-money security interest in the goods in which the software
was acquired for use has priority in the goods and proceeds of the goods under this
section.
(g) If more than one security interest qualifies for priority in the same collateral under
subsection (a), (b), (d), or (f) of this section:
(1) a security interest securing an obligation incurred as all or part of the price of
the collateral has priority over a security interest securing an obligation incurred
for value given to enable the debtor to acquire rights in or the use of collateral;
and
(2) in all other cases, subsection 9—322(a) of this title applies to the qualifying security interests. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—324A. Priority of production-money security interests and agricultural liens
(a) Except as otherwise provided in subsections (c), (d), and (e) of this section, if
the requirements of subsection (b) of this section are satisfied, a perfected production-money
security interest in production-money crops has priority over a conflicting security
interest in the same crops and, except as otherwise provided in section 9—327 of this title, also has priority in their identifiable proceeds.
(b) A production-money security interest has priority under subsection (a) of this section
if:
(1) the production-money security interest is perfected by filing when the production-money
secured party first gives new value to enable the debtor to produce the crops;
(2) the production-money secured party sends an authenticated notification to the holder
of the conflicting security interest not less than 10 or more than 30 days before
the production-money secured party first gives new value to enable the debtor to produce
the crops if the holder had filed a financing statement covering the crops before
the date of the filing made by the production-money secured party; and
(3) the notification states that the production-money secured party has or expects to
acquire a production-money security interest in the debtor’s crops and provides a
description of the crops.
(c) Except as otherwise provided in subsection (d) or (e) of this section, if more than
one security interest qualifies for priority in the same collateral under subsection
(a) of this section, the security interests rank according to priority in time of
filing under subsection 9—322(a) of this title.
(d) To the extent that a person holding a perfected security interest in production-money
crops that are the subject of a production-money security interest gives new value
to enable the debtor to produce the production-money crops and the value is in fact
used for the production of the production-money crops, the security interests rank
according to priority in time of filing under subsection 9—322(a) of this title.
(e) To the extent that a person holds both an agricultural lien and a production-money
security interest in the same collateral securing the same obligations, the rules
of priority applicable to agricultural liens govern priority. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—325. Priority of security interests in transferred collateral
(a) Except as otherwise provided in subsection (b) of this section, a security interest
created by a debtor is subordinate to a security interest in the same collateral created
by another person if:
(1) the debtor acquired the collateral subject to the security interest created by the
other person;
(2) the security interest created by the other person was perfected when the debtor acquired
the collateral; and
(3) there is no period thereafter when the security interest is unperfected.
(b) Subsection (a) of this section subordinates a security interest only if the security
interest:
(1) otherwise would have priority solely under subsection 9—322(a) or section 9—324 of this title; or
(2) arose solely under subsection 2—711(3) or 2A—508(5) of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—326. Priority of security interests created by new debtor
(a) Subject to subsection (b) of this section, a security interest that is created by
a new debtor in collateral in which the new debtor has or acquires rights and is perfected
solely by a filed financing statement that would be ineffective to perfect the security
interest but for the application of subdivision 9—316(i)(1) or section 9—508 of this title is subordinate to a security interest in the same collateral which is perfected by
another method.
(b) If more than one security interest in the same collateral is subordinate under subsection
(a) of this section, the other provisions of this part determine the priority among
the subordinated security interests. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—326A. Priority of security interest in controllable account, controllable electronic record,
and controllable payment intangible
A security interest in a controllable account, controllable electronic record, or
controllable payment intangible held by a secured party having control of the account,
electronic record, or payment intangible has priority over a conflicting security
interest held by a secured party that does not have control. (Added 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—327. Priority of security interests in deposit account
The following rules govern priority among conflicting security interests in the same
deposit account:
(1) A security interest held by a secured party having control of the deposit account
under section 9—104 of this title has priority over a conflicting security interest held by a secured party that does
not have control.
(2) Except as otherwise provided in subdivisions (3) and (4) of this section, security
interests perfected by control under section 9—314 of this title rank according to priority in time of obtaining control.
(3) Except as otherwise provided in subdivision (4) of this section, a security interest
held by the bank with which the deposit account is maintained has priority over a
conflicting security interest held by another secured party.
(4) A security interest perfected by control under subdivision 9—104(a)(3) of this title has priority over a security interest held by the bank with which the deposit account
is maintained. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—328. Priority of security interests in investment property
The following rules govern priority among conflicting security interests in the same
investment property:
(1) A security interest held by a secured party having control of investment property
under section 9—106 of this title has priority over a security interest held by a secured party that does not have
control of the investment property.
(2) Except as otherwise provided in subdivisions (3) and (4) of this section, conflicting
security interests held by secured parties each of which has control under section 9—106 of this title rank according to priority in time of:
(A) if the collateral is a security, obtaining control;
(B) if the collateral is a security entitlement carried in a securities account and:
(i) if the secured party obtained control under subdivision 8—106(d)(1) of this title, the secured party’s becoming the person for which the securities account is maintained;
(ii) if the secured party obtained control under subdivision 8—106(d)(2) of this title, the securities intermediary’s agreement to comply with the secured party’s entitlement
orders with respect to security entitlements carried or to be carried in the securities
account; or
(iii) if the secured party obtained control through another person under subdivision 8—106(d)(3) of this title, the time on which priority would be based under this paragraph if the other person
were the secured party; or
(C) if the collateral is a commodity contract carried with a commodity intermediary, the
satisfaction of the requirement for control specified in subdivision 9—106(b)(2) of this title with respect to commodity contracts carried or to be carried with the commodity intermediary.
(3) A security interest held by a securities intermediary in a security entitlement or
a securities account maintained with the securities intermediary has priority over
a conflicting security interest held by another secured party.
(4) A security interest held by a commodity intermediary in a commodity contract or a
commodity account maintained with the commodity intermediary has priority over a conflicting
security interest held by another secured party.
(5) A security interest in a certificated security in registered form which is perfected
by taking delivery under subsection 9—313(a) of this title and not by control under section 9—314 of this title has priority over a conflicting security interest perfected by a method other than
control.
(6) Conflicting security interests created by a broker, securities intermediary, or commodity
intermediary which are perfected without control under section 9—106 of this title rank equally.
(7) In all other cases, priority among conflicting security interests in investment property
is governed by sections 9—322 and 9—323 of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—329. Priority of security interests in letter-of-credit right
The following rules govern priority among conflicting security interests in the same
letter-of-credit right:
(1) A security interest held by a secured party having control of the letter-of-credit
right under section 9—107 of this title has priority to the extent of its control over a conflicting security interest held
by a secured party that does not have control.
(2) Security interests perfected by control under section 9—314 of this title rank according to priority in time of obtaining control. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—330. Priority of purchaser of chattel paper or instrument
(a) A purchaser of chattel paper has priority over a security interest in the chattel
paper which is claimed merely as proceeds of inventory subject to a security interest
if:
(1) in good faith and in the ordinary course of the purchaser’s business, the purchaser
gives new value, takes possession of each authoritative tangible copy of the record
evidencing the chattel paper, and obtains control under section 9—105 of this title of each authoritative electronic copy of the record evidencing the chattel paper;
and
(2) the authoritative copies of the record evidencing the chattel paper do not indicate
that the chattel paper has been assigned to an identified assignee other than the
purchaser.
(b) A purchaser of chattel paper has priority over a security interest in the chattel
paper which is claimed other than merely as proceeds of inventory subject to a security
interest if the purchaser gives new value, takes possession of each authoritative
tangible copy of the record evidencing the chattel paper, and obtains control under
section 9—105 of this title of each authoritative electronic copy of the record evidencing the chattel paper
in good faith, in the ordinary course of the purchaser’s business, and without knowledge
that the purchase violates the rights of the secured party.
(c) Except as otherwise provided in section 9—327 of this title, a purchaser having priority in chattel paper under subsection (a) or (b) of this
section also has priority in proceeds of the chattel paper to the extent that:
(1) section 9—322 of this title provides for priority in the proceeds; or
(2) the proceeds consist of the specific goods covered by the chattel paper or cash proceeds
of the specific goods, even if the purchaser’s security interest in the proceeds is
unperfected.
(d) Except as otherwise provided in subsection 9—331(a) of this title, a purchaser of an instrument has priority over a security interest in the instrument
perfected by a method other than possession if the purchaser gives value and takes
possession of the instrument in good faith and without knowledge that the purchase
violates the rights of the secured party.
(e) For purposes of subsections (a) and (b) of this section, the holder of a purchase-money
security interest in inventory gives new value for chattel paper constituting proceeds
of the inventory.
(f) For purposes of subsections (b) and (d) of this section, if the authoritative copies
of the record evidencing chattel paper or an instrument indicate that the chattel
paper or instrument has been assigned to an identified secured party other than the
purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase
violates the rights of the secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—331. Priority of rights of purchasers of controllable accounts, controllable electronic
records, controllable payment intangibles, documents, instruments, and securities
under other Articles; priority of interests in financial assets and security entitlements
and protection against assertion of claim under Articles 8 and 12
(a) This article does not limit the rights of a holder in due course of a negotiable instrument,
a holder to which a negotiable document of title has been duly negotiated, a protected
purchaser of a security, or a qualifying purchaser of a controllable account, controllable
electronic record, or controllable payment intangible. These holders or purchasers
take priority over an earlier security interest, even if perfected, to the extent
provided in Articles 3, 7, 8, and 12 of this title.
(b) This article does not limit the rights of or impose liability on a person to the extent
that the person is protected against the assertion of an adverse claim under Article
8 or 12 of this title.
(c) Filing under this article does not constitute notice of a claim or defense to the
holders, or purchasers, or persons described in subsections (a) and (b) of this section. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—332. Transfer of money; transfer of funds from deposit account
(a) A transferee of tangible money takes the money free of a security interest if the
transferee receives possession of the money without acting in collusion with the debtor
in violating the rights of the secured party.
(b) A transferee of funds from a deposit account takes the funds free of a security interest
in the deposit account if the transferee receives the funds without acting in collusion
with the debtor in violating the rights of the secured party.
(c) A transferee of electronic money takes the money free of a security interest if the
transferee obtains control of the money without acting in collusion with the debtor
in violating the rights of the secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—333. Priority of certain liens arising by operation of law
(a) In this section, “possessory lien” means an interest, other than a security interest
or an agricultural lien:
(1) which secures payment or performance of an obligation for services or materials furnished
with respect to goods by a person in the ordinary course of the person’s business;
(2) which is created by statute or rule of law in favor of the person; and
(3) whose effectiveness depends on the person’s possession of the goods.
(b) A possessory lien on goods has priority over a security interest in the goods unless
the lien is created by a statute that expressly provides otherwise. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—334. Priority of security interests in fixtures and crops
(a) A security interest under this article may be created in goods that are fixtures or
may continue in goods that become fixtures. A security interest does not exist under
this article in ordinary building materials incorporated into an improvement on land.
(b) This article does not prevent creation of an encumbrance upon fixtures under real
property law.
(c) In cases not governed by subsections (d) through (h) of this section, a security interest
in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of
the related real property other than the debtor.
(d) Except as otherwise provided in subsection (h) of this section, a perfected security
interest in fixtures has priority over a conflicting interest of an encumbrancer or
owner of the real property if the debtor has an interest of record in or is in possession
of the real property and:
(1) the security interest is a purchase-money security interest;
(2) the interest of the encumbrancer or owner arises before the goods become fixtures;
and
(3) the security interest is perfected by a fixture filing before the goods become fixtures
or within 20 days thereafter.
(e) A perfected security interest in fixtures has priority over a conflicting interest
of an encumbrancer or owner of the real property if:
(1) the debtor has an interest of record in the real property or is in possession of the
real property and the security interest:
(A) is perfected by a fixture filing before the interest of the encumbrancer or owner
is of record; and
(B) has priority over any conflicting interest of a predecessor in title of the encumbrancer
or owner;
(2) before the goods become fixtures, the security interest is perfected by any method
permitted by this article and the fixtures are readily removable:
(A) factory or office machines;
(B) equipment that is not primarily used or leased for use in the operation of the real
property; or
(C) replacements of domestic appliances that are consumer goods;
(3) the conflicting interest is a lien on the real property obtained by legal or equitable
proceedings after the security interest was perfected by any method permitted by this
article; or
(4) the security interest is:
(A) created in a manufactured home in a manufactured-home transaction; and
(B) perfected pursuant to a statute described in subdivision 9—311(a)(2) of this title.
(f) A security interest in fixtures, whether or not perfected, has priority over a conflicting
interest of an encumbrancer or owner of the real property if:
(1) the encumbrancer or owner has, in a signed record, consented to the security interest
or disclaimed an interest in the goods as fixtures; or
(2) the debtor has a right to remove the goods as against the encumbrancer or owner.
(g) The priority of the security interest under subsection (f) of this section continues
for a reasonable time if the debtor’s right to remove the goods as against the encumbrancer
or owner terminates.
(h) A mortgage is a construction mortgage to the extent that it secures an obligation
incurred for the construction of an improvement on land, including the acquisition
cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise
provided in subsections (e) and (f) of this section, a security interest in fixtures
is subordinate to a construction mortgage if a record of the mortgage is recorded
before the goods become fixtures and the goods become fixtures before the completion
of the construction. A mortgage has this priority to the same extent as a construction
mortgage to the extent that it is given to refinance a construction mortgage.
(i) A perfected security interest in crops growing on real property has priority over
a conflicting interest of an encumbrancer or owner of the real property if the debtor
has an interest of record in or is in possession of the real property. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—335. Accessions
(a) A security interest may be created in an accession and continues in collateral that
becomes an accession.
(b) If a security interest is perfected when the collateral becomes an accession, the
security interest remains perfected in the collateral.
(c) Except as otherwise provided in subsection (d) of this section, the other provisions
of this part determine the priority of a security interest in an accession.
(d) A security interest in an accession is subordinate to a security interest in the whole
which is perfected by compliance with the requirements of a certificate-of-title statute
under subsection 9—311(b) of this title.
(e) After default, subject to Part 6 of this article, a secured party may remove an accession
from other goods if the security interest in the accession has priority over the claims
of every person having an interest in the whole.
(f) A secured party that removes an accession from other goods under subsection (e) of
this section shall promptly reimburse any encumbrancer or owner of the whole or of
the other goods, other than the debtor, for the cost of repair of any physical injury
to the whole or the other goods. The secured party need not reimburse the encumbrancer
or owner for any diminution in value of the whole or the other goods caused by the
absence of the accession removed or by any necessity for replacing it. A person entitled
to reimbursement may refuse permission to remove until the secured party gives adequate
assurance for the performance of the obligation to reimburse. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—336. Commingled goods
(a) In this section, “commingled goods” means goods that are physically united with other
goods in such a manner that their identity is lost in a product or mass.
(b) A security interest does not exist in commingled goods as such. However, a security
interest may attach to a product or mass that results when goods become commingled
goods.
(c) If collateral becomes commingled goods, a security interest attaches to the product
or mass.
(d) If a security interest in collateral is perfected before the collateral becomes commingled
goods, the security interest that attaches to the product or mass under subsection
(c) of this section is perfected.
(e) Except as otherwise provided in subsection (f) of this section, the other provisions
of this part determine the priority of a security interest that attaches to the product
or mass under subsection (c) of this section.
(f) If more than one security interest attaches to the product or mass under subsection
(c) of this section, the following rules determine priority:
(1) A security interest that is perfected under subsection (d) of this section has priority
over a security interest that is unperfected at the time the collateral becomes commingled
goods.
(2) If more than one security interest is perfected under subsection (d) of this section,
the security interests rank equally in proportion to value of the collateral at the
time it became commingled goods. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—337. Priority of security interests in goods covered by certificate of title
If, while a security interest in goods is perfected by any method under the law of
another jurisdiction, this State issues a certificate of title that does not show
that the goods are subject to the security interest or contain a statement that they
may be subject to security interests not shown on the certificate:
(1) a buyer of the goods, other than a person in the business of selling goods of that
kind, takes free of the security interest if the buyer gives value and receives delivery
of the goods after issuance of the certificate and without knowledge of the security
interest; and
(2) the security interest is subordinate to a conflicting security interest in the goods
that attaches, and is perfected under subsection 9—311(b) of this title, after issuance of the certificate and without the conflicting secured party’s knowledge
of the security interest. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—338. Priority of security interest or agricultural lien perfected by filed financing statement
providing certain incorrect information
If a security interest or agricultural lien is perfected by a filed financing statement
providing information described in subdivision 9-516(b)(5) of this title which is incorrect at the time the financing statement is filed:
(1) the security interest or agricultural lien is subordinate to a conflicting perfected
security interest in the collateral to the extent that the holder of the conflicting
security interest gives value in reasonable reliance upon the incorrect information;
and
(2) a purchaser, other than a secured party, of the collateral takes free of the security
interest or agricultural lien to the extent that, in reasonable reliance upon the
incorrect information, the purchaser gives value and, in the case of tangible chattel
paper, tangible documents, goods, instruments, or a security certificate, receives
delivery of the collateral. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015.)
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§ 9—339. Priority subject to subordination
This article does not preclude subordination by agreement by a person entitled to
priority. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—340. Effectiveness of right of recoupment or set-off against deposit account
(a) Except as otherwise provided in subsection (c) of this section, a bank with which
a deposit account is maintained may exercise any right of recoupment or set-off against
a secured party that holds a security interest in the deposit account.
(b) Except as otherwise provided in subsection (c) of this section, the application of
this article to a security interest in a deposit account does not affect a right of
recoupment or set-off of the secured party as to a deposit account maintained with
the secured party.
(c) The exercise by a bank of a set-off against a deposit account is ineffective against
a secured party that holds a security interest in the deposit account which is perfected
by control under subdivision 9—104(a)(3) of this title, if the set-off is based on a claim against the debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—341. Bank’s rights and duties with respect to deposit account
Except as otherwise provided in subsection 9—340(c) of this title, and unless the bank otherwise agrees in a signed record, a bank’s rights and duties
with respect to a deposit account maintained with the bank are not terminated, suspended,
or modified by:
(1) the creation, attachment, or perfection of a security interest in the deposit account;
(2) the bank’s knowledge of the security interest; or
(3) the bank’s receipt of instructions from the secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—342. Bank’s right to refuse to enter into or disclose existence of control agreement
This article does not require a bank to enter into an agreement of the kind described
in subdivision 9—104(a)(2) of this title, even if its customer so requests or directs. A bank that has entered into such an
agreement is not required to confirm the existence of the agreement to another person
unless requested to do so by its customer. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—401. Alienability of debtor’s rights
(a) Except as otherwise provided in subsection (b) of this section and sections 9—406 through 9—409 of this title, whether a debtor’s rights in collateral may be voluntarily or involuntarily transferred
is governed by law other than this article.
(b) An agreement between the debtor and secured party which prohibits a transfer of the
debtor’s rights in collateral or makes the transfer a default does not prevent the
transfer from taking effect. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—402. Secured party not obligated on contract of debtor or in tort
The existence of a security interest, agricultural lien, or authority given to a debtor
to dispose of or use collateral, without more, does not subject a secured party to
liability in contract or tort for the debtor’s acts or omissions. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—403. Agreement not to assert defenses against assignee
(a) In this section, “value” has the meaning provided in subsection 3—303(a) of this title.
(b) Except as otherwise provided in this section, an agreement between an account debtor
and an assignor not to assert against an assignee any claim or defense that the account
debtor may have against the assignor is enforceable by an assignee that takes an assignment:
(1) for value;
(2) in good faith;
(3) without notice of a claim of a property or possessory right to the property assigned;
and
(4) without notice of a defense or claim in recoupment of the type that may be asserted
against a person entitled to enforce a negotiable instrument under subsection 3—305(a) of this title.
(c) Subsection (b) of this section does not apply to defenses of a type that may be asserted
against a holder in due course of a negotiable instrument under subsection 3—305(b) of this title.
(d) In a consumer transaction, if a record evidences the account debtor’s obligation,
law other than this article requires that the record include a statement to the effect
that the rights of an assignee are subject to claims or defenses that the account
debtor could assert against the original obligee, and the record does not include
such a statement:
(1) the record has the same effect as if the record included such a statement; and
(2) the account debtor may assert against an assignee those claims and defenses that would
have been available if the record included such a statement.
(e) This section is subject to law other than this article which establishes a different
rule for an account debtor who is an individual and who incurred the obligation primarily
for personal, family, or household purposes.
(f) Except as otherwise provided in subsection (d) of this section, this section does
not displace law other than this article which gives effect to an agreement by an
account debtor not to assert a claim or defense against an assignee. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—404. Rights acquired by assignee; claims and defenses against assignee
(a) Unless an account debtor has made an enforceable agreement not to assert defenses
or claims, and subject to subsections (b) through (e) of this section, the rights
of an assignee are subject to:
(1) all terms of the agreement between the account debtor and assignor and any defense
or claim in recoupment arising from the transaction that gave rise to the contract;
and
(2) any other defense or claim of the account debtor against the assignor which accrues
before the account debtor receives a notification of the assignment signed by the
assignor or the assignee.
(b) Subject to subsection (c) of this section and except as otherwise provided in subsection
(d) of this section, the claim of an account debtor against an assignor may be asserted
against an assignee under subsection (a) of this section only to reduce the amount
the account debtor owes.
(c) This section is subject to law other than this article which establishes a different
rule for an account debtor who is an individual and who incurred the obligation primarily
for personal, family, or household purposes.
(d) In a consumer transaction, if a record evidences the account debtor’s obligation,
law other than this article requires that the record include a statement to the effect
that the account debtor’s recovery against an assignee with respect to claims and
defenses against the assignor may not exceed amounts paid by the account debtor under
the record, and the record does not include such a statement, the extent to which
a claim of an account debtor against the assignor may be asserted against an assignee
is determined as if the record included such a statement.
(e) This section does not apply to an assignment of a health care insurance receivable. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—405. Modification of assigned contract
(a) A modification of or substitution for an assigned contract is effective against an
assignee if made in good faith. The assignee acquires corresponding rights under the
modified or substituted contract. The assignment may provide that the modification
or substitution is a breach of contract by the assignor. This subsection is subject
to subsections (b) through (d) of this section.
(b) Subsection (a) of this section applies to the extent that:
(1) the right to payment or a part thereof under an assigned contract has not been fully
earned by performance; or
(2) the right to payment or a part thereof has been fully earned by performance and the
account debtor has not received notification of the assignment under subsection 9—406(a) of this title.
(c) This section is subject to law other than this article which establishes a different
rule for an account debtor who is an individual and who incurred the obligation primarily
for personal, family, or household purposes.
(d) This section does not apply to an assignment of a health care insurance receivable. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—406. Discharge of account debtor; notification of assignment; identification and proof
of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles,
and promissory notes ineffective
(a) Subject to subsections (b) through (i) and (l) of this section, an account debtor on an account, chattel paper, or a payment intangible
may discharge its obligation by paying the assignor until, but not after, the account
debtor receives a notification, signed by the assignor or the assignee, that the amount
due or to become due has been assigned and that payment is to be made to the assignee.
After receipt of the notification, the account debtor may discharge its obligation
by paying the assignee and may not discharge the obligation by paying the assignor.
(b) Subject to subsections (h) and (l) of this section, notification is ineffective under subsection (a) of this section:
(1) if it does not reasonably identify the rights assigned;
(2) to the extent that an agreement between an account debtor and a seller of a payment
intangible limits the account debtor’s duty to pay a person other than the seller
and the limitation is effective under law other than this article; or
(3) at the option of an account debtor, if the notification notifies the account debtor
to make less than the full amount of any installment or other periodic payment to
the assignee, even if:
(A) only a portion of the account, chattel paper, or payment intangible has been assigned
to that assignee;
(B) a portion has been assigned to another assignee; or
(C) the account debtor knows that the assignment to that assignee is limited.
(c) Subject to subsections (h) and (l) of this section, if requested by the account debtor, an assignee shall seasonably
furnish reasonable proof that the assignment has been made. Unless the assignee complies,
the account debtor may discharge its obligation by paying the assignor, even if the
account debtor has received a notification under subsection (a) of this section.
(d) In this subsection, “promissory note” includes a negotiable instrument that evidences
chattel paper. Except as otherwise provided in subsections (e) and (k) of this section
and sections 2A—303 and 9—407 of this title, and subject to subsection (h) of this section, a term in an agreement between an
account debtor and an assignor or in a promissory note is ineffective to the extent
that it:
(1) prohibits, restricts, or requires the consent of the account debtor or person obligated
on the promissory note to the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in, the account, chattel paper,
payment intangible, or promissory note; or
(2) provides that the assignment or transfer or the creation, attachment, perfection,
or enforcement of the security interest may give rise to a default, breach, right
of recoupment, claim, defense, termination, right of termination, or remedy under
the account, chattel paper, payment intangible, or promissory note.
(e) Subsection (d) of this section does not apply to the sale of a payment intangible
or promissory note, other than a sale pursuant to a disposition under section 9—610 of this title or an acceptance of collateral under section 9—620 of this title.
(f) Except as otherwise provided in subsection (k) of this section and sections 2A—303 and 9—407 of this title and subject to subsections (h) and (i) of this section, a rule of law, statute, or
regulation that prohibits, restricts, or requires the consent of a government, governmental
body or official, or account debtor to the assignment or transfer of, or creation
of a security interest in, an account or chattel paper is ineffective to the extent
that the rule of law, statute, or regulation:
(1) prohibits, restricts, or requires the consent of the government, governmental body
or official, or account debtor to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of, a security interest in the account or chattel
paper; or
(2) provides that the assignment or transfer or the creation, attachment, perfection,
or enforcement of the security interest may give rise to a default, breach, right
of recoupment, claim, defense, termination, right of termination, or remedy under
the account or chattel paper.
(g) Subject to subsections (h) and (l) of this section, an account debtor may not waive or vary its option under subdivision
(b)(3) of this section.
(h) This section is subject to law other than this article which establishes a different
rule for an account debtor who is an individual and who incurred the obligation primarily
for personal, family, or household purposes.
(i) This section does not apply to an assignment of a health care insurance receivable.
(j) This section prevails over any inconsistent provisions of this title.
(k) Subsections (d), (f), and (j) of this section do not apply to a security interest
in an ownership interest in a general partnership, limited partnership, or limited
liability company.
(l) Subsections (a), (b), (c), and (g) of this section do not apply to a controllable
account or controllable payment intangible. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 4; 2013, No. 157 (Adj. Sess.), § 1; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—407. Restrictions on creation or enforcement of security interest in leasehold interest
or in lessor’s residual interest
(a) Except as otherwise provided in subsection (b) of this section, a term in a lease
agreement is ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of a party to the lease to the assignment
or transfer of, or the creation, attachment, perfection, or enforcement of a security
interest in, an interest of a party under the lease contract or in the lessor’s residual
interest in the goods; or
(2) provides that the assignment or transfer or the creation, attachment, perfection,
or enforcement of the security interest may give rise to a default, breach, right
of recoupment, claim, defense, termination, right of termination, or remedy under
the lease.
(b) Except as otherwise provided in subsection 2A—303(7) of this title, a term described in subdivision (a)(2) of this section is effective to the extent
that there is:
(1) a transfer by the lessee of the lessee’s right of possession or use of the goods in
violation of the term; or
(2) a delegation of a material performance of either party to the lease contract in violation
of the term.
(c) The creation, attachment, perfection, or enforcement of a security interest in the
lessor’s interest under the lease contract or the lessor’s residual interest in the
goods is not a transfer that materially impairs the lessee’s prospect of obtaining
return performance or materially changes the duty of or materially increases the burden
or risk imposed on the lessee within the purview of subsection 2A—303(4) of this title unless, and then only to the extent that, enforcement actually results in a delegation
of material performance of the seller. Even in that event, the creation, attachment,
perfection, and enforcement of the security interest remain effective. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—408. Restrictions on assignment of promissory notes, health care insurance receivables,
and certain general intangibles ineffective
(a) Except as otherwise provided in subsections (b) and (f) of this section, a term in
a promissory note or in an agreement between an account debtor and a debtor which
relates to a health care insurance receivable or a general intangible, including a
contract, permit, license, or franchise, and which term prohibits, restricts, or requires
the consent of the person obligated on the promissory note or the account debtor to,
the assignment or transfer of, or creation, attachment, or perfection of a security
interest in, the promissory note, health care insurance receivable, or general intangible,
is ineffective to the extent that the term:
(1) would impair the creation, attachment, or perfection of a security interest; or
(2) provides that the assignment or transfer or the creation, attachment, or perfection
of the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the promissory
note, health care insurance receivable, or general intangible.
(b) Subsection (a) of this section applies to a security interest in a payment intangible
or promissory note only if the security interest arises out of a sale of the payment
intangible or promissory note, other than a sale pursuant to a disposition under section 9—610 of this title or an acceptance of collateral under section 9—620 of this title.
(c) Except as otherwise provided in subsection (f) of this section, a rule of law, statute,
or regulation, which prohibits, restricts, or requires the consent of a government,
governmental body or official, person obligated on a promissory note, or account debtor
to the assignment or transfer of, or creation of a security interest in, a promissory
note, health care insurance receivable, or general intangible, including a contract,
permit, license, or franchise between an account debtor and a debtor, is ineffective
to the extent that the rule of law, statute, or regulation:
(1) would impair the creation, attachment, or perfection of a security interest; or
(2) provides that the assignment or transfer or the creation, attachment, or perfection
of the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the promissory
note, health care insurance receivable, or general intangible.
(d) To the extent that a term in a promissory note or in an agreement between an account
debtor and a debtor which relates to a health care insurance receivable or general
intangible or a rule of law, statute, or regulation described in subsection (c) of
this section would be effective under law other than this article but is ineffective
under subsection (a) or (c) of this section, the creation, attachment, or perfection
of a security interest in the promissory note, health care insurance receivable, or
general intangible:
(1) is not enforceable against the person obligated on the promissory note or the account
debtor;
(2) does not impose a duty or obligation on the person obligated on the promissory note
or the account debtor;
(3) does not require the person obligated on the promissory note or the account debtor
to recognize the security interest, pay or render performance to the secured party,
or accept payment or performance from the secured party;
(4) does not entitle the secured party to use or assign the debtor’s rights under the
promissory note, health care insurance receivable, or general intangible, including
any related information or materials furnished to the debtor in the transaction giving
rise to the promissory note, health care insurance receivable, or general intangible;
(5) does not entitle the secured party to use, assign, possess, or have access to any
trade secrets or confidential information of the person obligated on the promissory
note or the account debtor; and
(6) does not entitle the secured party to enforce the security interest in the promissory
note, health care insurance receivable, or general intangible.
(e) This section prevails over any inconsistent provisions of this title.
(f) This section does not apply to a security interest in an ownership interest in a general
partnership, limited partnership, or limited liability company.
(g) In this section, “promissory note” includes a negotiable instrument that evidences
chattel paper. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—409. Restrictions on assignment of letter-of-credit rights ineffective
(a) A term in a letter of credit or a rule of law, statute, regulation, custom, or practice
applicable to the letter of credit which prohibits, restricts, or requires the consent
of an applicant, issuer, or nominated person to a beneficiary’s assignment of or creation
of a security interest in a letter-of-credit right is ineffective to the extent that
the term or rule of law, statute, regulation, custom, or practice:
(1) would impair the creation, attachment, or perfection of a security interest in the
letter-of-credit right; or
(2) provides that the assignment or the creation, attachment, or perfection of the security
interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the letter-of-credit right.
(b) To the extent that a term in a letter of credit is ineffective under subsection (a)
of this section but would be effective under law other than this article or a custom
or practice applicable to the letter of credit, to the transfer of a right to draw
or otherwise demand performance under the letter of credit, or to the assignment of
a right to proceeds of the letter of credit, the creation, attachment, or perfection
of a security interest in the letter-of-credit right:
(1) is not enforceable against the applicant, issuer, nominated person, or transferee
beneficiary;
(2) imposes no duties or obligations on the applicant, issuer, nominated person, or transferee
beneficiary; and
(3) does not require the applicant, issuer, nominated person, or transferee beneficiary
to recognize the security interest, pay or render performance to the secured party,
or accept payment or other performance from the secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—501. Filing office
(a) Except as otherwise provided in subsection (b) of this section, if the local law of
this State governs perfection of a security interest or agricultural lien, the office
in which to file a financing statement to perfect the security interest or agricultural
lien is:
(1) the office designated for the recording of a record of a mortgage on the related real
property, if:
(A) the collateral is as-extracted collateral or timber to be cut; or
(B) the financing statement is filed as a fixture filing and the collateral is goods that
are or are to become fixtures; or
(2) the Office of the Secretary of State, in all other cases, including a case in which
the collateral is goods that are or are to become fixtures and the financing statement
is not filed as a fixture filing.
(b) The office in which to file a financing statement to perfect a security interest in
collateral, including fixtures, of a transmitting utility is the Office of the Secretary
of State. The financing statement also constitutes a fixture filing as to the collateral
indicated in the financing statement which is or is to become fixtures. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—502. Contents of financing statement; record of mortgage as financing statement; time of
filing financing statement
(a) Subject to subsection (b) of this section, a financing statement is sufficient only
if it:
(1) provides the name of the debtor;
(2) provides the name of the secured party or a representative of the secured party; and
(3) indicates the collateral covered by the financing statement.
(b) Except as otherwise provided in subsection 9—501(b) of this title, to be sufficient, a financing statement that covers as-extracted collateral or timber
to be cut, or which is filed as a fixture filing and covers goods that are or are
to become fixtures, must satisfy subsection (a) of this section and also:
(1) indicate that it covers this type of collateral;
(2) indicate that it is to be filed for record in the real property records;
(3) provide a legally sufficient description of the real property to which the collateral
is related; and
(4) if the debtor does not have an interest of record in the real property, provide the
name of a record owner.
(c) A record of a mortgage is effective, from the date of recording, as a financing statement
filed as a fixture filing or as a financing statement covering as-extracted collateral
or timber to be cut only if:
(1) the record indicates the goods or accounts that it covers;
(2) the goods are or are to become fixtures related to the real property described in
the record or the collateral is related to the real property described in the record
and is as-extracted collateral or timber to be cut;
(3) the record complies with the requirements for a financing statement in this section,
but:
(A) the record need not indicate that it is to be filed in the real property records;
and
(B) the record sufficiently provides the name of a debtor who is an individual if it provides
the individual name of the debtor or the surname and first personal name of the debtor,
even if the debtor is an individual to whom subdivision 9—503(a)(4) of this title applies; and
(4) the record is recorded.
(d) A financing statement may be filed before a security agreement is made or a security
interest otherwise attaches. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—503. Name of debtor and secured party
(a) A financing statement sufficiently provides the name of the debtor:
(1) except as otherwise provided in subdivision (3) of this subsection, if the debtor
is a registered organization or the collateral is held in a trust that is a registered
organization, only if the financing statement provides the name that is stated to
be the registered organization’s name on the public organic record most recently filed
with or issued or enacted by the registered organization’s jurisdiction of organization
which purports to state, amend, or restate the registered organization’s name;
(2) subject to subsection (f) of this section, if the collateral is being administered
by the personal representative of a decedent, only if the financing statement provides,
as the name of the debtor, the name of the decedent and, in a separate part of the
financing statement, indicates that the collateral is being administered by a personal
representative;
(3) if collateral is held in a trust that is not a registered organization, only if the
financing statement:
(A) provides, as the name of the debtor:
(i) if the organic record of the trust specifies a name for the trust, the name specified;
or
(ii) if the organic record of the trust does not specify a name for the trust, the name
of the settlor or testator; and
(B) in a separate part of the financing statement:
(i) if the name is provided in accordance with subdivision (3)(A)(i) of this subsection,
indicates that the collateral is held in a trust; or
(ii) if the name is provided in accordance with subdivision (3)(A)(ii) of this subsection,
provides additional information sufficient to distinguish the trust from other trusts
having one or more of the same settlors or the same testator and indicates that the
collateral is held in a trust, unless the additional information so indicates;
(4) subject to subsection (g) of this section, if the debtor is an individual to whom
this state has issued a driver’s license that has not expired, only if the financing
statement provides the name of the individual which is indicated on the driver’s license;
(5) if the debtor is an individual to whom subdivision (4) of this subsection does not
apply, only if the financing statement provides the individual name of the debtor
or the surname and first personal name of the debtor; and
(6) in other cases:
(A) if the debtor has a name, only if the financing statement provides the organizational
name of the debtor; and
(B) if the debtor does not have a name, only if it provides the names of the partners,
members, associates, or other persons comprising the debtor, in a manner that each
name provided would be sufficient if the person named were the debtor.
(b) A financing statement that provides the name of the debtor in accordance with subsection
(a) of this section is not rendered ineffective by the absence of:
(1) a trade name or other name of the debtor; or
(2) unless required under subdivision (a)(6)(B) of this section, names of partners, members,
associates, or other persons comprising the debtor.
(c) A financing statement that provides only the debtor’s trade name does not sufficiently
provide the name of the debtor.
(d) Failure to indicate the representative capacity of a secured party or representative
of a secured party does not affect the sufficiency of a financing statement.
(e) A financing statement may provide the name of more than one debtor and the name of
more than one secured party.
(f) The name of the decedent indicated on the order appointing the personal representative
of the decedent issued by the court having jurisdiction over the collateral is sufficient
as the “name of the decedent” under subdivision (a)(2) of this section.
(g) If this state has issued to an individual more than one driver’s license of a kind
described in subdivision (a)(4) of this section, the one that was issued most recently
is the one to which subdivision (a)(4) of this section refers.
(h) In this section, the “name of the settlor or testator” means:
(1) if the settlor is a registered organization, the name that is stated to be the settlor’s
name on the public organic record most recently filed with or issued or enacted by
the settlor’s jurisdiction of organization which purports to state, amend, or restate
the settlor’s name; or
(2) in other cases, the name of the settlor or testator indicated in the trust’s organic
record. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—504. Indication of collateral
A financing statement sufficiently indicates the collateral that it covers if the
financing statement provides:
(1) a description of the collateral pursuant to section 9—108 of this title; or
(2) an indication that the financing statement covers all assets or all personal property. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—505. Filing and compliance with other statutes and treaties for consignments, leases, other
bailments, and other transactions
(a) A consignor, lessor, or other bailor of goods or a buyer of a payment intangible or
promissory note may file a financing statement, or may comply with a statute or treaty
described in subsection 9—311(a) of this title, using the terms “consignor”, “consignee”, “lessor”, “lessee”, “bailor”, “bailee”,
“owner”, “registered owner”, “buyer”, “seller”, or words of similar import, instead
of the terms “secured party” and “debtor”.
(b) This part applies to the filing of a financing statement under subsection (a) of this
section and, as appropriate, to compliance that is equivalent to filing a financing
statement under subsection 9—311(b) of this title, but the filing or compliance is not of itself a factor in determining whether the
collateral secures an obligation. If it is determined for another reason that the
collateral secures an obligation, a security interest held by the consignor, lessor,
bailor, owner, or buyer which attaches to the collateral is perfected by the filing
or compliance. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—506. Effect of errors or omissions
(a) A financing statement substantially satisfying the requirements of this part is effective,
even if it has minor errors or omissions, unless the errors or omissions make the
financing statement seriously misleading.
(b) Except as otherwise provided in subsection (c) of this section, a financing statement
that fails sufficiently to provide the name of the debtor in accordance with subsection 9—503(a) of this title is seriously misleading.
(c) If a search of the records of the filing office under the debtor’s correct name, using
the filing office’s standard search logic, if any, would disclose a financing statement
that fails sufficiently to provide the name of the debtor in accordance with subsection 9—503(a) of this title, the name provided does not make the financing statement seriously misleading.
(d) For purposes of subsection 9—508(b) of this title, the “debtor’s correct name” in subsection (c) of this section means the correct
name of the new debtor. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9-507. Effect of certain events on effectiveness of financing statement
(a) A filed financing statement remains effective with respect to collateral that is sold,
exchanged, leased, licensed, or otherwise disposed of and in which a security interest
or agricultural lien continues, even if the secured party knows of or consents to
the disposition.
(b) Except as otherwise provided in subsection (c) of this section and section 9-508 of this title, a financing statement is not rendered ineffective if, after the financing statement
is filed, the information provided in the financing statement becomes seriously misleading
under section 9-506 of this title.
(c) If the name that a filed financing statement provides for a debtor becomes insufficient
as the name of the debtor under subsection 9-503(a) of this title so that the financing statement becomes seriously misleading under section 9-506 of this title:
(1) the financing statement is effective to perfect a security interest in collateral
acquired by the debtor before, or within four months after, the financing statement
becomes seriously misleading; and
(2) the financing statement is not effective to perfect a security interest in collateral
acquired by the debtor more than four months after the filed financing statement becomes
seriously misleading, unless an amendment to the financing statement which renders
the financing statement not seriously misleading is filed within four months after
the financing statement became seriously misleading. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—508. Effectiveness of financing statement if new debtor becomes bound by security agreement
(a) Except as otherwise provided in this section, a filed financing statement naming an
original debtor is effective to perfect a security interest in collateral in which
a new debtor has or acquires rights to the extent that the financing statement would
have been effective had the original debtor acquired rights in the collateral.
(b) If the difference between the name of the original debtor and that of the new debtor
causes a filed financing statement that is effective under subsection (a) of this
section to be seriously misleading under section 9—506 of this title:
(1) the financing statement is effective to perfect a security interest in collateral
acquired by the new debtor before, and within four months after, the new debtor becomes
bound under subsection 9—203(d) of this title; and
(2) the financing statement is not effective to perfect a security interest in collateral
acquired by the new debtor more than four months after the new debtor becomes bound
under subsection 9—203(d) of this title unless an initial financing statement providing the name of the new debtor is filed
before the expiration of that time.
(c) This section does not apply to collateral as to which a filed financing statement
remains effective against the new debtor under subsection 9—507(a) of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—509. Persons entitled to file a record
(a) A person may file an initial financing statement, amendment that adds collateral covered
by a financing statement, or amendment that adds a debtor to a financing statement
only if:
(1) the debtor authorizes the filing in a signed record or pursuant to subsection (b)
or (c) of this section; or
(2) the person holds an agricultural lien that has become effective at the time of filing
and the financing statement covers only collateral in which the person holds an agricultural
lien.
(b) By signing or becoming bound as debtor by a security agreement, a debtor or new debtor
authorizes the filing of an initial financing statement, and an amendment, covering:
(1) the collateral described in the security agreement; and
(2) property that becomes collateral under subdivision 9—315(a)(2) of this title, whether or not the security agreement expressly covers proceeds.
(c) A person may file an amendment other than an amendment that adds collateral covered
by a financing statement or an amendment that adds a debtor to a financing statement
only if:
(1) the secured party of record authorizes the filing; or
(2) the amendment is a termination statement for a financing statement as to which the
secured party of record has failed to file or send a termination statement as required
by subsection 9—513(a) or (c) of this title, the debtor authorizes the filing, and
the termination statement indicates that the debtor authorized it to be filed.
(d) If there is more than one secured party of record for a financing statement, each
secured party of record may authorize the filing of an amendment under subsection
(c) of this section. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 5; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—510. Effectiveness of filed record
(a) A filed record is effective only to the extent that it was filed by a person that
may file it under section 9—509 of this title.
(b) A record authorized by one secured party of record does not affect the financing statement
with respect to another secured party of record.
(c) A continuation statement that is not filed within the six-month period prescribed
by subsection 9—515(d) of this title is ineffective. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—511. Secured party of record
(a) A secured party of record with respect to a financing statement is a person whose
name is provided as the name of the secured party or a representative of the secured
party in an initial financing statement that has been filed. If an initial financing
statement is filed under subsection 9—514(a) of this title, the assignee named in the initial financing statement is the secured party of record
with respect to the financing statement.
(b) If an amendment of a financing statement which provides the name of a person as a
secured party or a representative of a secured party is filed, the person named in
the amendment is a secured party of record. If an amendment is filed under subsection 9—514(b) of this title, the assignee named in the amendment is a secured party of record.
(c) A person remains a secured party of record until the filing of an amendment of the
financing statement which deletes the person. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—512. Amendment of financing statement
(a) Subject to section 9—509 of this title, a person may add or delete collateral covered by, continue or terminate the effectiveness
of, or, subject to subsection (e) of this section, otherwise amend the information
provided in, a financing statement by filing an amendment that:
(1) identifies, by its file number, the initial financing statement to which the amendment
relates; and
(2) if the amendment relates to an initial financing statement recorded in a filing office
described in subdivision 9—501(a)(1) of this title, provides the date that the initial financing statement was recorded and the information
specified in subsection 9—502(b) of this title.
(b) Except as otherwise provided in section 9—515 of this title, the filing of an amendment does not extend the period of effectiveness of the financing
statement.
(c) A financing statement that is amended by an amendment that adds collateral is effective
as to the added collateral only from the date of the filing of the amendment.
(d) A financing statement that is amended by an amendment that adds a debtor is effective
as to the added debtor only from the date of the filing of the amendment.
(e) An amendment is ineffective to the extent it:
(1) purports to delete all debtors and fails to provide the name of a debtor to be covered
by the financing statement; or
(2) purports to delete all secured parties of record and fails to provide the name of
a new secured party of record. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—513. Termination statement
(a) A secured party shall cause the secured party of record for a financing statement
to file a termination statement for the financing statement if the financing statement
covers consumer goods and:
(1) there is no obligation secured by the collateral covered by the financing statement
and no commitment to make an advance, incur an obligation, or otherwise give value;
or
(2) the debtor did not authorize the filing of the initial financing statement.
(b) To comply with subsection (a) of this section, a secured party shall cause the secured
party of record to file the termination statement:
(1) within one month after there is no obligation secured by the collateral covered by
the financing statement and no commitment to make an advance, incur an obligation,
or otherwise give value; or
(2) if earlier, within 20 days after the secured party receives a signed demand from a
debtor.
(c) In cases not governed by subsection (a) of this section, within 20 days after a secured
party receives a signed demand from a debtor, the secured party shall cause the secured
party of record for a financing statement to send to the debtor a termination statement
for the financing statement or file the termination statement in the filing office
if:
(1) except in the case of a financing statement covering accounts or chattel paper that
has been sold or goods that are the subject of a consignment, there is no obligation
secured by the collateral covered by the financing statement and no commitment to
make an advance, incur an obligation, or otherwise give value;
(2) the financing statement covers accounts or chattel paper that has been sold but as
to which the account debtor or other person obligated has discharged its obligation;
(3) the financing statement covers goods that were the subject of a consignment to the
debtor but are not in the debtor’s possession; or
(4) the debtor did not authorize the filing of the initial financing statement.
(d) Except as otherwise provided in section 9—510 of this title, upon the filing of a termination statement with the filing office, the financing
statement to which the termination statement relates ceases to be effective. Except
as otherwise provided in section 9—510 of this title, for purposes of subsections 9—519(g), 9—522(a), and 9—523(c) of this title, the filing with the filing office of a termination statement, relating to a financing
statement that indicates that the debtor is a transmitting utility, also causes the
effectiveness of the financing statement to lapse. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 6; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—514. Assignment of powers of secured party of record
(a) Except as otherwise provided in subsection (c) of this section, an initial financing
statement may reflect an assignment of all of the secured party’s power to authorize
an amendment to the financing statement by providing the name and mailing address
of the assignee as the name and address of the secured party.
(b) Except as otherwise provided in subsection (c) of this section, a secured party of
record may assign of record all or part of its power to authorize an amendment to
a financing statement by filing in the filing office an amendment of the financing
statement which:
(1) identifies, by its file number, the initial financing statement to which it relates;
(2) provides the name of the assignor; and
(3) provides the name and mailing address of the assignee.
(c) An assignment of record of a security interest in a fixture covered by a record of
a mortgage which is effective as a financing statement filed as a fixture filing under
subsection 9—502(c) of this title may be made only by an assignment of record of the mortgage in the manner provided
by law of this state other than this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—515. Duration and effectiveness of financing statement; effect of lapsed financing statement
(a) Except as otherwise provided in subsections (b), (e), (f), and (g) of this section,
a filed financing statement is effective for a period of five years after the date
of filing.
(b) Except as otherwise provided in subsections (e), (f), and (g) of this section, an
initial financing statement filed in connection with a public-finance transaction
or manufactured-home transaction is effective for a period of 30 years after the date
of filing if it indicates that it is filed in connection with a public-finance transaction
or manufactured-home transaction.
(c) The effectiveness of a filed financing statement lapses on the expiration of the period
of its effectiveness unless before the lapse a continuation statement is filed pursuant
to subsection (d) of this section. Upon lapse, a financing statement ceases to be
effective and any security interest or agricultural lien that was perfected by the
financing statement becomes unperfected, unless the security interest is perfected
without filing. If the security interest or agricultural lien becomes unperfected
upon lapse, it is deemed never to have been perfected as against a purchaser of the
collateral for value.
(d) A continuation statement may be filed only within six months before the expiration
of the five-year period specified in subsection (a) of this section or the 30-year
period specified in subsection (b) of this section, whichever is applicable.
(e) Except as otherwise provided in section 9—510 of this title, upon timely filing of a continuation statement, the effectiveness of the initial
financing statement continues for a period of five years commencing on the day on
which the financing statement would have become ineffective in the absence of the
filing. Upon the expiration of the five-year period, the financing statement lapses
in the same manner as provided in subsection (c) of this section, unless, before the
lapse, another continuation statement is filed pursuant to subsection (d) of this
section. Succeeding continuation statements may be filed in the same manner to continue
the effectiveness of the initial financing statement.
(f) If a debtor is a transmitting utility and a filed initial financing statement so indicates,
the financing statement is effective until a termination statement is filed.
(g) A record of a mortgage that is effective as a financing statement filed as a fixture
filing under subsection 9—502(c) of this title remains effective as a financing statement filed as a fixture filing until the mortgage
is released or satisfied of record or its effectiveness otherwise terminates as to
the real property. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—516. What constitutes filing; effectiveness of filing
(a) Except as otherwise provided in subsection (b) of this section, communication of a
record to a filing office and tender of the filing fee or acceptance of the record
by the filing office constitutes filing.
(b) Filing does not occur with respect to a record that a filing office refuses to accept
because:
(1) the record is not communicated by a method or medium of communication authorized by
the filing office;
(2) an amount equal to or greater than the applicable filing fee is not tendered;
(3) the filing office is unable to index the record because:
(A) in the case of an initial financing statement, the record does not provide a name
for the debtor;
(B) in the case of an amendment or information statement, the record:
(i) does not identify the initial financing statement as required by section 9—512 or 9—518 of this title, as applicable; or
(ii) identifies an initial financing statement whose effectiveness has lapsed under section 9—515 of this title;
(C) in the case of an initial financing statement that provides the name of a debtor identified
as an individual or an amendment that provides a name of a debtor identified as an
individual which was not previously provided in the financing statement to which the
record relates, the record does not identify the debtor’s surname; or
(D) in the case of a record recorded in the filing office described in subdivision 9—501(a)(1) of this title, the record does not provide a sufficient description of the real property to which
it relates;
(4) in the case of an initial financing statement or an amendment that adds a secured
party of record, the record does not provide a name and mailing address for the secured
party of record;
(5) in the case of an initial financing statement or an amendment that provides a name
of a debtor which was not previously provided in the financing statement to which
the amendment relates, the record does not:
(A) provide a mailing address for the debtor; or
(B) indicate whether the name provided as the name of the debtor is the name of an individual
or an organization;
(6) in the case of an assignment reflected in an initial financing statement under subsection 9—514(a) of this title or an amendment filed under subsection 9—514(b) of this title, the record does not provide a name and mailing address for the assignee; or
(7) in the case of a continuation statement, the record is not filed within the six-month
period prescribed by subsection 9—515(d) of this title.
(c) For purposes of subsection (b) of this section:
(1) a record does not provide information if the filing office is unable to read or decipher
the information; and
(2) a record that does not indicate that it is an amendment or identify an initial financing
statement to which it relates, as required by section 9—512, 9—514, or 9—518 of this title, is an initial financing statement.
(d) A record that is communicated to the filing office with tender of the filing fee,
but which the filing office refuses to accept for a reason other than one set forth
in subsection (b) of this section, is effective as a filed record except as against
a purchaser of the collateral which gives value in reasonable reliance upon the absence
of the record from the files. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—517. Effect of indexing errors
The failure of the filing office to index a record correctly does not affect the effectiveness
of the filed record. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—518. Claim concerning inaccurate or wrongfully filed record
(a) A person may file in the filing office an information statement with respect to a
record indexed there under the person’s name if the person believes that the record
is inaccurate or was wrongfully filed.
(b) An information statement shall:
(1) identify the record to which it relates by:
(A) the file number assigned to the initial financing statement to which the record relates;
and
(B) if the correction statement relates to a record filed recorded in a filing office
described in subdivision 9—501(a)(1) of this title, the date that the initial financing statement was filed or recorded, and the information
specified in subsection 9—502(b) of this title;
(2) indicate that it is an information statement; and
(3) provide the basis for the person’s belief that the record is inaccurate and indicate
the manner in which the person believes the record should be amended to cure any inaccuracy
or provide the basis for the person’s belief that the record was wrongfully filed.
(c) A person may file in the filing office an information statement with respect to a
record filed there if the person is a secured party of record with respect to the
financing statement to which the record relates and believes that the person that
filed the record was not entitled to do so under subsection 9—509(d) of this title.
(d) An information statement under subsection (c) of this section shall:
(1) identify the record to which it relates by the file number assigned to the initial
financing statement to which the record relates;
(2) indicate that it is an information statement; and
(3) provide the basis for the person’s belief that the person that filed the record was
not entitled to do so under subsection 9—509(d) of this title.
(e) The filing of an information statement does not affect the effectiveness of an initial
financing statement or other filed record. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—519. Numbering, maintaining, and indexing records; communicating information provided in
records
(a) For each record filed in a filing office, the filing office shall:
(1) assign a unique number to the filed record;
(2) create a record that bears the number assigned to the filed record and the date and
time of filing;
(3) maintain the filed record for public inspection; and
(4) index the filed record in accordance with subsections (c), (d), and (e) of this section.
(b) A file number, assigned after January 1, 2001, must include a digit that:
(1) is mathematically derived from or related to the other digits of the file number;
and
(2) enables the filing office to detect whether a number communicated as the file number
includes a single-digit or transpositional error.
(c) Except as otherwise provided in subsections (d) and (e) of this section, the filing
office shall:
(1) index an initial financing statement according to the name of the debtor and index
all filed records relating to the initial financing statement in a manner that associates
with one another an initial financing statement and all filed records relating to
the initial financing statement; and
(2) index a record that provides a name of a debtor which was not previously provided
in the financing statement to which the record relates also according to the name
that was not previously provided.
(d) If a financing statement is filed as a fixture filing or covers as-extracted collateral
or timber to be cut, it must be filed for record and the filing office shall index
it:
(1) under the names of the debtor and of each owner of record shown on the financing statement
as if they were the mortgagors under a mortgage of the real property described; and
(2) to the extent that the law of this State provides for indexing of records of mortgages
under the name of the mortgagee, under the name of the secured party as if the secured
party were the mortgagee thereunder, or, if indexing is by description, as if the
financing statement were a record of a mortgage of the real property described.
(e) If a financing statement is filed as a fixture filing or covers as-extracted collateral
or timber to be cut, the filing office shall index an assignment filed under subsection 9—514(a) of this title or an amendment filed under subsection 9—514(b) of this title:
(1) under the name of the assignor as grantor; and
(2) to the extent that the law of this State provides for indexing a record of the assignment
of a mortgage under the name of the assignee, under the name of the assignee.
(f) The filing office shall maintain a capability:
(1) to retrieve a record by the name of the debtor and:
(A) if the filing office is described in subdivision 9—501(a)(1) of this title, by the file number assigned to the initial financing statement to which the record
relates and the date that the record was recorded; or
(B) if the filing office is described in subdivision 9—501(a)(2) of this title, by the file number assigned to the initial financing statement to which the record
relates; and
(2) to associate and retrieve with one another an initial financing statement and each
filed record relating to the initial financing statement.
(g) The filing office may not remove a debtor’s name from the index until one year after
the effectiveness of a financing statement naming the debtor lapses under section 9—515 of this title with respect to all secured parties of record.
(h) The filing office shall perform the acts required by subsections (a) through (e) of
this section at the time and in the manner prescribed by filing-office rule, but not
later than two business days after the filing office receives the record in question.
(i) Subsections (b) and (h) of this section do not apply to a filing office described
in subdivision 9—501(a)(1) of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—520. Acceptance and refusal to accept record
(a) A filing office shall refuse to accept a record for filing for a reason set forth
in subsection 9—516(b) of this title and may refuse to accept a record for filing only for a reason set forth in subsection 9—516(b) of this title.
(b) If a filing office refuses to accept a record for filing, it shall communicate to
the person that presented the record the fact of and reason for the refusal and the
date and time the record would have been filed had the filing office accepted it.
The communication must be made at the time and in the manner prescribed by filing
office rule in no event more than two business days after the filing office receives
the record.
(c) A filed financing statement satisfying subsections 9—502(a) and (b) of this title
is effective, even if the filing office is required to refuse to accept it for filing
under subsection (a) of this section. However, section 9—338 of this title applies to a filed financing statement providing information described in subdivision 9—516(b)(5) of this title which is incorrect at the time the financing statement is filed.
(d) If a record communicated to a filing office provides information that relates to more
than one debtor, this part applies as to each debtor separately. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—521. Uniform form of written financing statement and amendment
(a) A filing office that accepts written records may not refuse to accept a written initial
financing statement in the following form and format except for a reason set forth
in subsection 9—516(b) of this title:
(b) A filing office that accepts written records may not refuse to accept a written record
in the following form and format except for a reason set forth in subsection 9—516(b) of this title: (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—522. Maintenance and destruction of records
(a) The filing office shall maintain a record of the information provided in a filed financing
statement for at least one year after the effectiveness of the financing statement
has lapsed under section 9—515 of this title with respect to all secured parties of record. The record must be retrievable by
using the name of the debtor and:
(1) if the record was recorded in the filing office described in subdivision 9—501(a)(1) of this title, by using the file number assigned to the initial financing statement to which the
record relates and the date that the record was recorded; or
(2) if the record was filed in the filing office described in subdivision 9—501(a)(2) of this title, by using the file number assigned to the initial financing statement to which the
record relates.
(b) Except to the extent that a statute governing disposition of public records provides
otherwise, the filing office immediately may destroy any written record evidencing
a financing statement. However, if the filing office destroys a written record, it
shall maintain another record of the financing statement which complies with subsection
(a) of this section. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—523. Information from filing office; sale or license of records
(a) If a person that files a written record requests an acknowledgment of the filing,
the filing office shall send to the person an image of the record showing the number
assigned to the record pursuant to subdivision 9—519(a)(1) of this title and the date and time of the filing of the record. However, if the person furnishes
a copy of the record to the filing office, the filing office may instead:
(1) note upon the copy the number assigned to the record pursuant to subdivision 9—519(a)(1) of this title and the date and time of the filing of the record; and
(2) send the copy to the person.
(b) If a person files a record other than a written record, the filing office shall communicate
to the person an acknowledgment that provides:
(1) the information in the record;
(2) the number assigned to the record pursuant to subdivision 9—519(a)(1) of this title; and
(3) the date and time of the filing of the record.
(c) The filing office shall communicate or otherwise make available in a record the following
information to any person that requests it:
(1) whether there is on file on a date and time specified by the filing office, but not
a date earlier than three business days before the filing office receives the request,
any financing statement that:
(A) designates a particular debtor;
(B) has not lapsed under section 9—515 of this title with respect to all secured parties of record; and
(C) if the request so states, has lapsed under section 9—515 of this title and a record of which is maintained by the filing office under subsection 9—522(a) of this title;
(2) the date and time of filing of each financing statement; and
(3) the information provided in each financing statement.
(d) In complying with its duty under subsection (c) of this section, the filing office
may communicate information in any medium. However, if requested, the filing office
shall communicate information by issuing its written certificate.
(e) The filing office shall perform the acts required by subsections (a) through (d) of
this section at the time and in the manner prescribed by filing office rule, but not
later than two business days after the filing office receives the request.
(f) At least weekly, the Office of the Secretary of State shall offer to sell or license
to the public on a nonexclusive basis, in bulk, copies of all records filed in it
under this part, in every medium from time to time available to the filing office. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—524. Delay by filing office
Delay by the filing office beyond a time limit prescribed in this part is excused
if:
(1) the delay is caused by interruption of communication or computer facilities, war,
emergency conditions, failure of equipment, or other circumstances beyond control
of the filing office; and
(2) the filing office exercises reasonable diligence under the circumstances. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—525. Fees
(a) The fee for filing and indexing a record under this article is $45.00.
(b) In addition to the fee provided in subsection (a) of this section:
(1) the fee for filing and indexing an initial financing statement of the kind described
in subsection 9-502(c) of this title is $25.00;
(2) the fee for filing and indexing a record under this article for a manufactured home,
transmitting utility, or public finance transaction is $25.00.
(c) The fee for responding to a request for information from the filing office, including
for issuing a certificate showing whether there is on file any financing statement
naming a particular debtor is $35.00.
(d) [Repealed.] (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2003, No. 70 (Adj. Sess.), § 9, eff. March 1, 2004; 2007, No. 153 (Adj. Sess.), § 32; amended 2013, No. 72, § 3; 2023, No. 77, § 44, eff. June 20, 2023.)
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§ 9—526. Filing office rules
(a) The Secretary of State shall adopt and publish rules to implement this article. The
filing office rules must be:
(1) consistent with this article; and
(2) adopted and published in accordance with 3 V.S.A. § 801.
(b) To keep the filing office rules and practices of the filing office in harmony with
the rules and practices of filing offices in other jurisdictions that enact substantially
this part, and to keep the technology used by the filing office compatible with the
technology used by filing offices in other jurisdictions that enact substantially
this part, the Secretary of State, so far as is consistent with the purposes, policies,
and provisions of this article, in adopting, amending, and repealing filing office
rules, shall:
(1) consult with filing offices in other jurisdictions that enact substantially this part;
and
(2) consult the most recent version of the model rules promulgated by the International
Association of Corporate Administrators or any successor organization; and
(3) take into consideration the rules and practices of, and the technology used by, filing
offices in other jurisdictions that enact substantially this part. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—527. Repealed. 2013, No. 142 (Adj. Sess.), § 84.
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§ 9—601. Rights after default; judicial enforcement; consignor or buyer of accounts; chattel
paper, payment intangibles, or promissory notes
(a) After default, a secured party has the rights provided in this part and, except as
otherwise provided in section 9—602 of this title, those provided by agreement of the parties. A secured party:
(1) may reduce a claim to judgment, foreclose, or otherwise enforce the claim, security
interest, or agricultural lien by any available judicial procedure; and
(2) if the collateral is documents, may proceed either as to the documents or as to the
goods they cover.
(b) A secured party in possession of collateral or control of collateral under section
7—106, 9—104, 9—105, 9—105A, 9—106, 9—107, or 9—107A of this title has the rights
and duties provided in section 9—207 of this title.
(c) The rights under subsections (a) and (b) of this section are cumulative and may be
exercised simultaneously.
(d) Except as otherwise provided in subsection (g) of this section and section 9—605 of this title, after default, a debtor and an obligor have the rights provided in this part and
by agreement of the parties.
(e) If a secured party has reduced its claim to judgment, the lien of any levy that may
be made upon the collateral by virtue of an execution based upon the judgment relates
back to the earliest of:
(1) the date of perfection of the security interest or agricultural lien in the collateral;
(2) the date of filing a financing statement covering the collateral; or
(3) any date specified in a statute under which the agricultural lien was created.
(f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural
lien by judicial procedure within the meaning of this section. A secured party may
purchase at the sale and thereafter hold the collateral free of any other requirements
of this article.
(g) Except as otherwise provided in subsection 9—607(c) of this title, this part imposes no duties upon a secured party that is a consignor or is a buyer
of accounts, chattel paper, payment intangibles, or promissory notes. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2015, No. 51, § B.9, eff. June 3, 2015; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—602. Waiver and variance of rights and duties
Except as otherwise provided in section 9—624 of this title, to the extent that they give rights to a debtor or obligor and impose duties on
a secured party, the debtor or obligor may not waive or vary the rules stated in the
following listed sections:
(1) subdivision 9—207(b)(4)(C) of this title, which deals with use and operation of the collateral by the secured party;
(2) section 9—210 of this title, which deals with requests for an accounting and requests concerning a list of collateral
and statement of account;
(3) subsection 9—607(c) of this title, which deals with collection and enforcement of collateral;
(4) subsections 9—608(a) and 9—615(c) of this title to the extent that they deal with application or payment of noncash proceeds of collection,
enforcement, or disposition;
(5) subsections 9—608(a) and 9—615(d) of this title to the extent that they require accounting for or payment of surplus proceeds of
collateral;
(6) section 9—609 of this title to the extent that it imposes upon a secured party that takes possession of collateral
without judicial process the duty to do so without breach of the peace;
(7) subsection 9—610(b) of this title, and sections 9—611, 9—613, and 9—614 of this title, which deal with disposition of collateral;
(8) subsection 9—615(f) of this title, which deals with calculation of a deficiency or surplus when a disposition is made
to the secured party, a person related to the secured party, or a secondary obligor;
(9) section 9—616 of this title, which deals with explanation of the calculation of a surplus or deficiency;
(10) sections 9—620, 9—621, and 9—622 of this title, which deal with acceptance of collateral in satisfaction
of obligation;
(11) section 9—623 of this title, which deals with redemption of collateral;
(12) section 9—624 of this title, which deals with permissible waivers; and
(13) sections 9—625 and 9—626 of this title, which deal with the secured party’s liability for failure to comply with this article. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—603. Agreement on standards concerning rights and duties
(a) The parties may determine by agreement the standards measuring the fulfillment of
the rights of a debtor or obligor and the duties of a secured party under a rule stated
in section 9—602 of this title if the standards are not manifestly unreasonable.
(b) Subsection (a) of this section does not apply to the duty under section 9—609 of this title to refrain from breaching the peace. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—604. Procedure if security agreement covers real property or fixtures
(a) If a security agreement covers both personal and real property, a secured party may
proceed:
(1) under this part as to the personal property without prejudicing any rights with respect
to the real property; or
(2) as to both the personal property and the real property in accordance with the rights
with respect to the real property, in which case the other provisions of this part
do not apply.
(b) Subject to subsection (c) of this section, if a security agreement covers goods that
are or become fixtures, a secured party may proceed:
(1) under this part; or
(2) in accordance with the rights with respect to real property, in which case the other
provisions of this part do not apply.
(c) Subject to the other provisions of this part, if a secured party holding a security
interest in fixtures has priority over all owners and encumbrancers of the real property,
the secured party, after default, may remove the collateral from the real property.
(d) A secured party that removes collateral shall promptly reimburse any encumbrancer
or owner of the real property, other than the debtor, for the cost of repair of any
physical injury caused by the removal. The secured party need not reimburse the encumbrancer
or owner for any diminution in value of the real property caused by the absence of
the goods removed or by any necessity of replacing them. A person entitled to reimbursement
may refuse permission to remove until the secured party gives adequate assurance for
the performance of the obligation to reimburse. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—605. Unknown debtor or secondary obligor
(a) Except as provided in subsection (b) of this section, a secured party does not owe
a duty based on its status as secured party:
(1) to a person that is a debtor or obligor, unless the secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a financing statement against a person,
unless the secured party knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(b) A secured party owes a duty based on its status as a secured party to a person if,
at the time the secured party obtains control of collateral that is a controllable
account, controllable electronic record, or controllable payment intangible or at
the time the security interest attaches to the collateral, whichever is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in subdivision (a)(1)(A), (B), or (C)
of this section relating to the person is not provided by the collateral, a record
attached to or logically associated with the collateral, or the system in which the
collateral is recorded. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—606. Time of default for agricultural lien
For purposes of this part, a default occurs in connection with an agricultural lien
at the time the secured party becomes entitled to enforce the lien in accordance with
the statute under which it was created. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—607. Collection and enforcement by secured party
(a) If so agreed, and in any event after default, a secured party:
(1) may notify an account debtor or other person obligated on collateral to make payment
or otherwise render performance to or for the benefit of the secured party;
(2) may take any proceeds to which the secured party is entitled under section 9—315 of this title;
(3) may enforce the obligations of an account debtor or other person obligated on collateral
and exercise the rights of the debtor with respect to the obligation of the account
debtor or other person obligated on collateral to make payment or otherwise render
performance to the debtor, and with respect to any property that secures the obligations
of the account debtor or other person obligated on the collateral;
(4) if it holds a security interest in a deposit account perfected by control under subdivision 9—104(a)(1) of this title, may apply the balance of the deposit account to the obligation secured by the deposit
account; and
(5) if it holds a security interest in a deposit account perfected by control under subdivision
9—104(a)(2) or (3) of this title, may instruct the bank to pay the balance of the
deposit account to or for the benefit of the secured party.
(b) If necessary to enable a secured party to exercise subdivision (a)(3) of this section
the right of a debtor to enforce a mortgage nonjudicially, the secured party may record
in the office in which a record of the mortgage is recorded:
(1) a copy of the security agreement that creates or provides for a security interest
in the obligation secured by the mortgage; and
(2) the secured party’s sworn affidavit in recordable form stating that:
(A) a default has occurred with respect to the obligation secured by the mortgage; and
(B) the secured party is entitled to enforce the mortgage nonjudicially.
(c) A secured party shall proceed in a commercially reasonable manner if the secured party:
(1) undertakes to collect from or enforce an obligation of an account debtor or other
person obligated on collateral; and
(2) is entitled to charge back uncollected collateral or otherwise to full or limited
recourse against the debtor or a secondary obligor.
(d) A secured party may deduct from the collections made pursuant to subsection (c) of
this section reasonable expenses of collection and enforcement, including reasonable
attorney’s fees and legal expenses incurred by the secured party.
(e) This section does not determine whether an account debtor, bank, or other person obligated
on collateral owes a duty to a secured party. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—608. Application of proceeds of collection or enforcement; liability for deficiency and
right to surplus
(a) If a security interest or agricultural lien secures payment or performance of an obligation,
the following rules apply:
(1) A secured party shall apply or pay over for application the cash proceeds of collection
or enforcement under section 9—607 of this title in the following order to:
(A) the reasonable expenses of collection and enforcement and, to the extent provided
for by agreement and not prohibited by law, reasonable attorney’s fees and legal expenses
incurred by the secured party;
(B) the satisfaction of obligations secured by the security interest or agricultural lien
under which the collection or enforcement is made; and
(C) the satisfaction of obligations secured by any subordinate security interest in or
other lien on the collateral subject to the security interest or agricultural lien
under which the collection or enforcement is made if the secured party receives a
signed demand for proceeds before distribution of the proceeds is completed.
(2) If requested by a secured party, a holder of a subordinate security interest or other
lien shall furnish reasonable proof of the interest or lien within a reasonable time.
Unless the holder complies, the secured party need not comply with the holder’s demand
under subdivision (1)(C) of this subsection.
(3) A secured party need not apply or pay over for application noncash proceeds of collection
and enforcement under section 9—607 of this title unless the failure to do so would be commercially unreasonable. A secured party that
applies or pays over for application noncash proceeds shall do so in a commercially
reasonable manner.
(4) A secured party shall account to and pay a debtor for any surplus, and the obligor
is liable for any deficiency.
(b) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles,
or promissory notes, the debtor is not entitled to any surplus, and the obligor is
not liable for any deficiency. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 7; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—609. Secured party’s right to take possession after default
(a) After default, a secured party:
(1) may take possession of the collateral; and
(2) without removal, may render equipment unusable and dispose of collateral on a debtor’s
premises under section 9—610 of this title.
(b) A secured party may proceed under subsection (a) of this section:
(1) pursuant to judicial process; or
(2) without judicial process, if it proceeds without breach of the peace.
(c) If so agreed, and in any event after default, a secured party may require the debtor
to assemble the collateral and make it available to the secured party at a place to
be designated by the secured party which is reasonably convenient to both parties. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—610. Disposition of collateral after default
(a) After default, a secured party may sell, lease, license, or otherwise dispose of any
or all of the collateral in its present condition or following any commercially reasonable
preparation or processing.
(b) Every aspect of a disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable. If commercially reasonable, a secured
party may dispose of collateral by public or private proceedings, by one or more contracts,
as a unit or in parcels, and at any time and place and on any terms.
(c) A secured party may purchase collateral:
(1) at a public disposition; or
(2) at a private disposition only if the collateral is of a kind that is customarily sold
on a recognized market or the subject of widely distributed standard price quotations.
(d) A contract for sale, lease, license, or other disposition includes the warranties
relating to title, possession, quiet enjoyment, and the like which by operation of
law accompany a voluntary disposition of property of the kind subject to the contract.
(e) A secured party may disclaim or modify warranties under subsection (d) of this section:
(1) in a manner that would be effective to disclaim or modify the warranties in a voluntary
disposition of property of the kind subject to the contract of disposition; or
(2) by communicating to the purchaser a record evidencing the contract for disposition
and including an express disclaimer or modification of the warranties.
(f) A record is sufficient to disclaim warranties under subsection (e) of this section
if it indicates “There is no warranty relating to title, possession, quiet enjoyment,
or the like in this disposition” or uses words of similar import. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—611. Notification before disposition of collateral
(a) In this section, “notification date” means the earlier of the date on which:
(1) a secured party sends to the debtor and any secondary obligor a signed notification
of disposition; or
(2) the debtor and any secondary obligor waive the right to notification.
(b) Except as otherwise provided in subsection (d) of this section, a secured party that
disposes of collateral under section 9—610 of this title shall send to the persons specified in subsection (c) of this section a reasonable
signed notification of disposition.
(c) To comply with subsection (b) of this section, the secured party shall send a signed
notification of disposition to:
(1) the debtor;
(2) any secondary obligor; and
(3) if the collateral is other than consumer goods:
(A) any other person from which the secured party has received, before the notification
date, a signed notification of a claim of an interest in the collateral;
(B) any other secured party or lienholder that, 10 days before the notification date,
held a security interest in or other lien on the collateral perfected by the filing
of a financing statement that:
(i) identified the collateral;
(ii) was indexed under the debtor’s name as of that date; and
(iii) was filed in the office in which to file a financing statement against the debtor
covering the collateral as of that date; and
(C) any other secured party that, 10 days before the notification date, held a security
interest in the collateral perfected by compliance with a statute, regulation, or
treaty described in subsection 9—311(a) of this title.
(d) Subsection (b) of this section does not apply if the collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized market.
(e) A secured party complies with the requirement for notification prescribed in subdivision
(c)(3)(B) of this section if:
(1) not later than 20 days or earlier than 30 days before the notification date, the secured
party requests, in a commercially reasonable manner, information concerning financing
statements indexed under the debtor’s name in the office indicated in subdivision
(c)(3)(B) of this section; and
(2) before the notification date, the secured party:
(A) did not receive a response to the request for information; or
(B) received a response to the request for information and sent a signed notification
of disposition to each secured party named in that response whose financing statement
covered the collateral. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—612. Timeliness of notification before disposition of collateral
(a) Except as otherwise provided in subsection (b) of this section, whether a notification
is sent within a reasonable time is a question of fact.
(b) In a transaction other than a consumer transaction, a notification of disposition
sent after default and 10 days or more before the earliest time of disposition set
forth in the notification is sent within a reasonable time before the disposition. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—613. Contents and form of notification before disposition of collateral: general
(a) Except in a consumer-goods transaction, the following rules apply:
(1) The contents of a notification of disposition are sufficient if the notification:
(A) describes the debtor and the secured party;
(B) describes the collateral that is the subject of the intended disposition;
(C) states the method of intended disposition;
(D) states that the debtor is entitled to an accounting of the unpaid indebtedness and
states the charge, if any, for an accounting; and
(E) states the time and place of a public disposition or the time after which any other
disposition is to be made.
(2) Whether the contents of a notification that lacks any of the information specified
in subdivision (1) of this section are nevertheless sufficient is a question of fact.
(3) The contents of a notification providing substantially the information specified in
subdivision (1) of this section are sufficient, even if the notification includes:
(A) information not specified by that paragraph; or
(B) minor errors that are not seriously misleading.
(4) A particular phrasing of the notification is not required.
(5) The following form of notification and the form appearing in subdivision 9—614(a)(3)
of this title, when completed in accordance with the instructions in subsection (b)
of this section and subsection 9—614(b) of this title, each provides sufficient information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to which the notification is sent)
From: (Name, address, and telephone number of secured party)
{1} Name of any debtor that is not an addressee: (Name of each debtor)
{2} We will sell (describe collateral) (to the highest qualified bidder) at public
sale. A sale could include a lease or license. The sale will be held as follows:
(Date)
(Time)
(Place)
{3} We will sell (describe collateral) at private sale sometime after (date). A sale
could include a lease or license.
{4} You are entitled to an accounting of the unpaid indebtedness secured by the property
that we intend to sell or, as applicable, lease or license.
{5} If you request an accounting you must pay a charge of $ (amount).
{6} You may request an accounting by calling us at (telephone number).
(b) The following instructions apply to the form of notification in subdivision (a)(5)
of this section:
(1) The instructions in this subsection refer to the numbers in braces before items in
the form of notification in subdivision (a)(5) of this section. Do not include the
numbers or braces in the notification. The numbers and braces are used only for the
purpose of these instructions.
(2) Include and complete item {1} only if there is a debtor that is not an addressee of
the notification and list the name or names.
(3) Include and complete either item {2}, if the notification relates to a public disposition
of the collateral, or item {3}, if the notification relates to a private disposition
of the collateral. If item {2} is included, include the words “to the highest qualified
bidder” only if applicable.
(4) Include and complete items {4} and {6}.
(5) Include and complete item {5} only if the sender will charge the recipient for an
accounting. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 8; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—614. Contents and form of notification before disposition of collateral; consumer goods
transaction
(a) In a consumer goods transaction, the following rules apply:
(1) A notification of disposition must provide the following information:
(A) the information specified in subdivision 9—613(a)(1) of this title;
(B) a description of any liability for a deficiency of the person to which the notification
is sent;
(C) a telephone number from which the amount that must be paid to the secured party to
redeem the collateral under section 9—623 of this title is available; and
(D) a telephone number or mailing address from which additional information concerning
the disposition and the obligation secured is available.
(2) A particular phrasing of the notification is not required.
(3) The following form of notification, when completed in accordance with the instructions
in subsection (b) of this section, provides sufficient information:
(Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
(Name and address of any obligor who is also a debtor)
Subject: (Identify transaction)
We have your (describe collateral), because you broke promises in our agreement.
{1} We will sell (describe collateral) at public sale. A sale could include a lease
or license. The sale will be held as follows:
Date:
Time:
Place:
You may attend the sale and bring bidders if you want.
{2} We will sell (describe collateral) at private sale sometime after (date). A sale
could include a lease or license.
{3} The money that we get from the sale, after paying our costs, will reduce the amount
you owe. If we get less money than you owe, you (will or will not, as applicable)
still owe us the difference. If we get more money than you owe, you will get the extra
money, unless we must pay it to someone else.
{4} You can get the property back at any time before we sell it by paying us the full
amount you owe, not just the past due payments, including our expenses. To learn the
exact amount you must pay, call us at (telephone number).
{5} If you want us to explain to you in (writing) (writing or in (description of electronic
record)) (description of electronic record) how we have figured the amount that you
owe us, {6} call us at (telephone number) (or) (write us at (secured party’s address))
(or contact us by (description of electronic communication method)) {7} and request
(a written explanation) (a written explanation or an explanation in (description of
electronic record)) (an explanation in (description of electronic record)).
{8} We will charge you $ (amount) for the explanation if we sent you another written
explanation of the amount you owe us within the last six months.
{9} If you need more information about the sale (call us at (telephone number)) (or)
(write us at (secured party’s address)) (or contact us by (description of electronic
communication method)).
{10} We are sending this notice to the following other people who have an interest
in (describe collateral) or who owe money under your agreement: (Names of all other
debtors and obligors, if any)
(4) A notification in the form of subdivision (3) is sufficient, even if additional information
appears at the end of the form.
(5) A notification in the form of subdivision (3) is sufficient, even if it includes errors
in information not required by subdivision (1), unless the error is misleading with
respect to rights arising under this article.
(6) If a notification under this section is not in the form of subdivision (3), law other
than this article determines the effect of including information not required by subdivision
(1).
(b) The following instructions apply to the form of notification in subdivision (a)(3)
of this section:
(1) The instructions in this subsection refer to the numbers in braces before items in
the form of notification in subdivision (a)(3) of this section. Do not include the
numbers or braces in the notification. The numbers and braces are used only for the
purpose of these instructions.
(2) Include and complete either item {1}, if the notification relates to a public disposition
of the collateral, or item {2}, if the notification relates to a private disposition
of the collateral.
(3) Include and complete items {3}, {4}, {5}, {6}, and {7}.
(4) In item {5}, include and complete any one of the three alternative methods for the
explanation—writing, writing or electronic record, or electronic record.
(5) In item {6}, include the telephone number. In addition, the sender may include and
complete either or both of the two additional alternative methods of communication—writing
or electronic communication—for the recipient of the notification to communicate with
the sender. Neither of the two additional methods of communication is required to
be included.
(6) In item {7}, include and complete the method or methods for the explanation—writing,
writing or electronic record, or electronic record—included in item {5}.
(7) Include and complete item {8} only if a written explanation is included in item {5}
as a method for communicating the explanation and the sender will charge the recipient
for another written explanation.
(8) In item {9}, include either the telephone number or the address or both the telephone
number and the address. In addition, the sender may include and complete the additional
method of communication—electronic communication—for the recipient of the notification
to communicate with the sender. The additional method of electronic communication
is not required to be included.
(9) If item {10} does not apply, insert “None” after “agreement:”. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—615. Application of proceeds of disposition; liability for deficiency and right to surplus
(a) A secured party shall apply or pay over for application the cash proceeds of disposition
under section 9—610 of this title in the following order to:
(1) the reasonable expenses of retaking, holding, preparing for disposition, processing,
and disposing, and, to the extent provided for by agreement and not prohibited by
law, reasonable attorney’s fees and legal expenses incurred by the secured party;
(2) the satisfaction of obligations secured by the security interest or agricultural lien
under which the disposition is made;
(3) the satisfaction of obligations secured by any subordinate security interest in or
other subordinate lien on the collateral if:
(A) the secured party receives from the holder of the subordinate security interest or
other lien a signed demand for proceeds before distribution of the proceeds is completed;
and
(B) in a case in which a consignor has an interest in the collateral, the subordinate
security interest or other lien is senior to the interest of the consignor; and
(4) a secured party that is a consignor of the collateral if the secured party receives
from the consignor a signed demand for proceeds before distribution of the proceeds
is completed.
(b) If requested by a secured party, a holder of a subordinate security interest or other
lien shall furnish reasonable proof of the interest or lien within a reasonable time.
Unless the holder does so, the secured party need not comply with the holder’s demand
under subdivision (a)(3) of this section.
(c) A secured party need not apply or pay over for application noncash proceeds of disposition
under section 9—610 of this title unless the failure to do so would be commercially unreasonable. A secured party that
applies or pays over for application noncash proceeds shall do so in a commercially
reasonable manner.
(d) If the security interest under which a disposition is made secures payment or performance
of an obligation, after making the payments and applications required by subsection
(a) of this section and permitted by subsection (c) of this section:
(1) unless subdivision (a)(4) of this section requires the secured party to apply or pay
over cash proceeds to a consignor, the secured party shall account to and pay a debtor
for any surplus; and
(2) the obligor is liable for any deficiency.
(e) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles,
or promissory notes:
(1) the debtor is not entitled to any surplus; and
(2) the obligor is not liable for any deficiency.
(f) The surplus or deficiency following a disposition is calculated based on the amount
of proceeds that would have been realized in a disposition complying with this part
to a transferee other than the secured party, a person related to the secured party,
or a secondary obligor if:
(1) the transferee in the disposition is the secured party, a person related to the secured
party, or a secondary obligor; and
(2) the amount of proceeds of the disposition is significantly below the range of proceeds
that a complying disposition to a person other than the secured party, a person related
to the secured party, or a secondary obligor would have brought.
(g) A secured party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security interest
or other lien that is not subordinate to the security interest or agricultural lien
under which the disposition is made:
(1) takes the cash proceeds free of the security interest or other lien;
(2) is not obligated to apply the proceeds of the disposition to the satisfaction of obligations
secured by the security interest or other lien; and
(3) is not obligated to account to or pay the holder of the security interest or other
lien for any surplus. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 9; 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—616. Explanation of calculation of surplus or deficiency
(a) In this section:
(1) “Explanation” means a record that:
(A) states the amount of the surplus or deficiency;
(B) provides an explanation in accordance with subsection (c) of this section of how the
secured party calculated the surplus or deficiency;
(C) states, if applicable, that future debits, credits, charges, including additional
credit service charges or interest, rebates, and expenses may affect the amount of
the surplus or deficiency; and
(D) provides a telephone number or mailing address from which additional information concerning
the transaction is available.
(2) “Request” means a record:
(A) signed by a debtor or consumer obligor;
(B) requesting that the recipient provide an explanation; and
(C) sent after disposition of the collateral under section 9—610 of this title.
(b) In a consumer goods transaction in which the debtor is entitled to a surplus or a
consumer obligor is liable for a deficiency under section 9—615 of this title, the secured party shall:
(1) send an explanation to the debtor or consumer obligor, as applicable, after the disposition
and:
(A) before or when the secured party accounts to the debtor and pays any surplus or first
makes demand in a record on the consumer obligor after the disposition for payment
of the deficiency; and
(B) within 14 days after receipt of a request; or
(2) in the case of a consumer obligor who is liable for a deficiency, within 14 days after
receipt of a request, send to the consumer obligor a record waiving the secured party’s
right to a deficiency.
(c) To comply with subdivision (a)(1)(B) of this section, an explanation must provide
the following information in the following order:
(1) the aggregate amount of obligations secured by the security interest under which the
disposition was made, and, if the amount reflects a rebate of unearned interest or
credit service charge, an indication of that fact, calculated as of a specified date:
(A) if the secured party takes or receives possession of the collateral after default,
not more than 35 days before the secured party takes or receives possession; or
(B) if the secured party takes or receives possession of the collateral before default
or does not take possession of the collateral, not more than 35 days before the disposition;
(2) the amount of proceeds of the disposition;
(3) the aggregate amount of the obligations after deducting the amount of proceeds;
(4) the amount, in the aggregate or by type, and types of expenses, including expenses
of retaking, holding, preparing for disposition, processing, and disposing of the
collateral, and attorney’s fees secured by the collateral which are known to the secured
party and relate to the current disposition;
(5) the amount, in the aggregate or by type, and types of credits, including rebates of
interest or credit service charges, to which the obligor is known to be entitled and
which are not reflected in the amount in subdivision (1) of this subsection; and
(6) the amount of the surplus or deficiency.
(d) A particular phrasing of the explanation is not required. An explanation complying
substantially with the requirements of subsection (a) of this section is sufficient,
even if it includes minor errors that are not seriously misleading.
(e) A debtor or consumer obligor is entitled without charge to one response to a request
under this section during any six-month period in which the secured party did not
send to the debtor or consumer obligor an explanation pursuant to subdivision (b)(1)
of this section. The secured party may require payment of a charge not exceeding $25.00
for each additional response. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—617. Rights of transferee of collateral
(a) A secured party’s disposition of collateral after default:
(1) transfers to a transferee for value all of the debtor’s rights in the collateral;
(2) discharges the security interest under which the disposition is made; and
(3) discharges any subordinate security interest or other subordinate lien.
(b) A transferee that acts in good faith takes free of the rights and interests described
in subsection (a) of this section, even if the secured party fails to comply with
this article or the requirements of any judicial proceeding.
(c) If a transferee does not take free of the rights and interests described in subsection
(a) of this section, the transferee takes the collateral subject to:
(1) the debtor’s rights in the collateral;
(2) the security interest or agricultural lien under which the disposition is made; and
(3) any security interest or other lien. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—618. Rights and duties of certain secondary obligors
(a) A secondary obligor acquires the rights and becomes obligated to perform the duties
of the secured party after the secondary obligor:
(1) receives an assignment of a secured obligation from the secured party;
(2) receives a transfer of collateral from the secured party and agrees to accept the
rights and assume the duties of the secured party; or
(3) is subrogated to the rights of a secured party with respect to collateral.
(b) An assignment, transfer, or subrogation described in subsection (a) of this section:
(1) is not a disposition of collateral under section 9—610 of this title; and
(2) relieves the secured party of further duties under this article. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—619. Transfer of record or legal title
(a) In this section, “transfer statement” means a record signed by a secured party stating:
(1) that the debtor has defaulted in connection with an obligation secured by specified
collateral;
(2) that the secured party has exercised its post-default remedies with respect to the
collateral;
(3) that, by reason of the exercise, a transferee has acquired the rights of the debtor
in the collateral; and
(4) the name and mailing address of the secured party, debtor, and transferee.
(b) A transfer statement entitles the transferee to the transfer of record of all rights
of the debtor in the collateral specified in the statement in any official filing,
recording, registration, or certificate-of-title system covering the collateral. If
a transfer statement is presented with the applicable fee and request form to the
official or office responsible for maintaining the system, the official or office
shall:
(1) accept the transfer statement;
(2) promptly amend its records to reflect the transfer; and
(3) if applicable, issue a new appropriate certificate of title in the name of the transferee.
(c) A transfer of the record or legal title to collateral to a secured party under subsection
(b) of this section or otherwise is not of itself a disposition of collateral under
this article and does not of itself relieve the secured party of its duties under
this article. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory
disposition of collateral
(a) Except as otherwise provided in subsection (g) of this section, a secured party may
accept collateral in full or partial satisfaction of the obligation it secures only
if:
(1) the debtor consents to the acceptance under subsection (c) of this section;
(2) the secured party does not receive, within the time set forth in subsection (d) of
this section, a notification of objection to the proposal signed by:
(A) a person to which the secured party was required to send a proposal under section 9—621 of this title; or
(B) any other person, other than the debtor, holding an interest in the collateral subordinate
to the security interest that is the subject of the proposal;
(3) if the collateral is consumer goods, the collateral is not in the possession of the
debtor when the debtor consents to the acceptance; and
(4) subsection (e) of this section does not require the secured party to dispose of the
collateral or the debtor waives the requirement pursuant to section 9—624 of this title.
(b) A purported or apparent acceptance of collateral under this section is ineffective
unless:
(1) the secured party consents to the acceptance in a signed record or sends a proposal
to the debtor; and
(2) the conditions of subsection (a) of this section are met.
(c) For purposes of this section:
(1) a debtor consents to an acceptance of collateral in partial satisfaction of the obligation
it secures only if the debtor agrees to the terms of the acceptance in a record signed
after default; and
(2) a debtor consents to an acceptance of collateral in full satisfaction of the obligation
it secures only if the debtor agrees to the terms of the acceptance in a record signed
after default or the secured party:
(A) sends to the debtor after default a proposal that is unconditional or subject only
to a condition that collateral not in the possession of the secured party be preserved
or maintained;
(B) in the proposal, proposes to accept collateral in full satisfaction of the obligation
it secures; and
(C) does not receive a notification of objection signed by the debtor within 20 days after
the proposal is sent.
(d) To be effective under subdivision (a)(2) of this section, a notification of objection
must be received by the secured party:
(1) in the case of a person to which the proposal was sent pursuant to section 9—621 of this title, within 20 days after notification was sent to that person; and
(2) in other cases:
(A) within 20 days after the last notification was sent pursuant to section 9—621 of this title; or
(B) if a notification was not sent, before the debtor consents to the acceptance under
subsection (c) of this section.
(e) A secured party that has taken possession of collateral shall dispose of the collateral
pursuant to section 9—610 of this title within the time specified in subsection (f) of this section if:
(1) 60 percent of the cash price has been paid in the case of a purchase-money security
interest in consumer goods; or
(2) 60 percent of the principal amount of the obligation secured has been paid in the
case of a nonpurchase-money security interest in consumer goods.
(f) To comply with subsection (e) of this section, the secured party shall dispose of
the collateral:
(1) within 90 days after taking possession; or
(2) within any longer period to which the debtor and all secondary obligors have agreed
in an agreement to that effect entered into and signed after default.
(g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction
of the obligation it secures. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—621. Notification of proposal to accept collateral
(a) A secured party that desires to accept collateral in full or partial satisfaction
of the obligation it secures shall send its proposal to:
(1) any person from which the secured party has received, before the debtor consented
to the acceptance, a signed notification of a claim of an interest in the collateral;
(2) any other secured party or lienholder that, 10 days before the debtor consented to
the acceptance, held a security interest in or other lien on the collateral perfected
by the filing of a financing statement that:
(A) identified the collateral;
(B) was indexed under the debtor’s name as of that date; and
(C) was filed in the office or offices in which to file a financing statement against
the debtor covering the collateral as of that date; and
(3) any other secured party that, 10 days before the debtor consented to the acceptance,
held a security interest in the collateral perfected by compliance with a statute,
regulation, or treaty described in subsection 9—311(a) of this title.
(b) A secured party that desires to accept collateral in partial satisfaction of the obligation
it secures shall send its proposal to any secondary obligor in addition to the persons
described in subsection (a) of this section. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—622. Effect of acceptance of collateral
(a) A secured party’s acceptance of collateral in full or partial satisfaction of the
obligation it secures:
(1) discharges the obligation to the extent consented to by the debtor;
(2) transfers to the secured party all of a debtor’s rights in the collateral;
(3) discharges the security interest or agricultural lien that is the subject of the debtor’s
consent and any subordinate security interest or other subordinate lien; and
(4) terminates any other subordinate interest.
(b) A subordinate interest is discharged or terminated under subsection (a) of this section,
whether or not the secured party sends or is required to send its proposal to the
holder of the interest. However, any person to which the secured party was required
to send, but did not send, its proposal has the remedy provided by subsection 9—625(b) of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—623. Right to redeem collateral
(a) A debtor, any secondary obligor, or any other secured party or lienholder may redeem
collateral.
(b) To redeem collateral, a person shall tender:
(1) fulfillment of all obligations secured by the collateral; and
(2) the reasonable expenses and attorney’s fees described in subdivision 9—615(a)(1) of this title.
(c) A redemption may occur at any time before a secured party:
(1) has collected collateral under section 9—607 of this title;
(2) has disposed of collateral or entered into a contract for its disposition under section 9—610 of this title; or
(3) has accepted collateral in full or partial satisfaction of the obligation it secures
under section 9—622 of this title. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—624. Waiver
(a) A debtor or secondary obligor may waive the right to notification of disposition of
collateral under section 9—611 of this title only by an agreement to that effect entered into and signed after default.
(b) A debtor may waive the right to require disposition of collateral under subsection 9—620(e) of this title only by an agreement to that effect entered into and signed after default.
(c) Except in a consumer goods transaction, a debtor or secondary obligor may waive the
right to redeem collateral under section 9—623 of this title only by an agreement to that effect entered into and signed after default. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—625. Remedies for secured party’s failure to comply with article
(a) If it is established that a secured party is not proceeding in accordance with this
article, a court may order or restrain collection, enforcement, or disposition of
collateral on appropriate terms and conditions.
(b) Subject to subsections (c), (d), and (f) of this section, a person is liable for damages
in the amount of any loss caused by a failure to comply with this article. Loss caused
by a failure to comply may include loss resulting from the debtor’s inability to obtain,
or increased costs of, alternative financing.
(c) Except as otherwise provided in section 9—628 of this title:
(1) a person that, at the time of the failure, was a debtor, was an obligor, or held a
security interest in or other lien on the collateral may recover damages under subsection
(b) of this section for its loss; and
(2) if the collateral is consumer goods, a person that was a debtor or a secondary obligor
at the time a secured party failed to comply with this part may recover for that failure
in any event an amount not less than the credit service charge plus 10 percent of
the principal amount of the obligation or the time-price differential plus 10 percent
of the cash price.
(d) A debtor whose deficiency is eliminated under section 9—626 of this title may recover damages for the loss of any surplus. However, a debtor or secondary obligor
whose deficiency is eliminated or reduced under section 9—626 of this title may not otherwise recover under subsection (b) of this section for noncompliance
with the provisions of this part relating to collection, enforcement, disposition,
or acceptance.
(e) In addition to any damages recoverable under subsection (b) of this section, the debtor,
consumer obligor, or person named as a debtor in a filed record, as applicable, may
recover $500.00 in each case from:
(1) a secured party that fails to comply with section 9—208 of this title;
(2) a secured party that fails to comply with section 9—209 of this title;
(3) a person that files a record that the person is not entitled to file under subsection 9—509(a) of this title;
(4) a secured party that fails to cause the secured party of record to file or send a
termination statement as required by subsection 9—513(a) or (c) of this title;
(5) a secured party that fails to comply with subdivision 9—616(b)(1) of this title and whose failure is part of a pattern, or consistent with a practice, of noncompliance;
or
(6) a secured party that fails to comply with subdivision 9—616(b)(2) of this title.
(f) A debtor or consumer obligor may recover damages under subsection (b) and, in addition,
$500.00 in each case from a person that, without reasonable cause, fails to comply
with a request under section 9—210 of this title. A recipient of a request under section 9—210 of this title which never claimed an interest in the collateral or obligations that are the subject
of a request under that section has a reasonable excuse for failure to comply with
the request within the meaning of this subsection.
(g) If a secured party fails to comply with a request regarding a list of collateral or
a statement of account under section 9—210 of this title, the secured party may claim a security interest only as shown in the list or statement
included in the request as against a person that is reasonably misled by the failure. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2001, No. 46, § 10.)
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§ 9—626. Action in which deficiency or surplus is in issue
(a) In an action arising from a transaction, other than a consumer transaction, in which
the amount of a deficiency or surplus is in issue, the following rules apply:
(1) A secured party need not prove compliance with the provisions of this part relating
to collection, enforcement, disposition, or acceptance unless the debtor or a secondary
obligor places the secured party’s compliance in issue.
(2) If the secured party’s compliance is placed in issue, the secured party has the burden
of establishing that the collection, enforcement, disposition, or acceptance was conducted
in accordance with this part.
(3) Except as otherwise provided in section 9—628 of this title, if a secured party fails to prove that the collection, enforcement, disposition,
or acceptance was conducted in accordance with the provisions of this part relating
to collection, enforcement, disposition, or acceptance, the liability of a debtor
or a secondary obligor for a deficiency is limited to an amount by which the sum of
the secured obligation, expenses, and attorney’s fees exceeds the greater of:
(A) the proceeds of the collection, enforcement, disposition, or acceptance; or
(B) the amount of proceeds that would have been realized had the noncomplying secured
party proceeded in accordance with the provisions of this part relating to collection,
enforcement, disposition, or acceptance.
(4) For purposes of subdivision (3)(B) of this subsection, the amount of proceeds that
would have been realized is equal to the sum of the secured obligation, expenses,
and attorney’s fees unless the secured party proves that the amount is less than that
sum.
(5) If a deficiency or surplus is calculated under subsection 9—615(f) of this title, the debtor or obligor has the burden of establishing that the amount of proceeds
of the disposition is significantly below the range of prices that a complying disposition
to a person other than the secured party, a person related to the secured party, or
a secondary obligor would have brought.
(b) The limitation of the rules in subsection (a) of this section to transactions other
than consumer transactions is intended to leave to the court the determination of
the proper rules in consumer transactions. The court may not infer from that limitation
the nature of the proper rule in consumer transactions and may continue to apply established
approaches. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—627. Determination of whether conduct was commercially reasonable
(a) The fact that a greater amount could have been obtained by a collection, enforcement,
disposition, or acceptance at a different time or in a different method from that
selected by the secured party is not of itself sufficient to preclude the secured
party from establishing that the collection, enforcement, disposition, or acceptance
was made in a commercially reasonable manner.
(b) A disposition of collateral is made in a commercially reasonable manner if the disposition
is made:
(1) in the usual manner on any recognized market;
(2) at the price current in any recognized market at the time of the disposition; or
(3) otherwise in conformity with reasonable commercial practices among dealers in the
type of property that was the subject of the disposition.
(c) A collection, enforcement, disposition, or acceptance is commercially reasonable if
it has been approved:
(1) in a judicial proceeding;
(2) by a bona fide creditors’ committee;
(3) by a representative of creditors; or
(4) by an assignee for the benefit of creditors.
(d) Approval under subsection (c) of this section need not be obtained, and lack of approval
does not mean that the collection, enforcement, disposition, or acceptance is not
commercially reasonable. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001.)
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§ 9—628. Nonliability and limitation on liability of secured party; liability of secondary
obligor
(a) Subject to subsection (f) of this section, unless a secured party knows that a person
is a debtor or obligor, knows the identity of the person, and knows how to communicate
with the person:
(1) the secured party is not liable to the person, or to a secured party or lienholder
that has filed a financing statement against the person, for failure to comply with
this article; and
(2) the secured party’s failure to comply with this article does not affect the liability
of the person for a deficiency.
(b) Subject to subsection (f) of this section, a secured party is not liable because of
its status as secured party:
(1) to a person that is a debtor or obligor, unless the secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a financing statement against a person,
unless the secured party knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(c) A secured party is not liable to any person, and a person’s liability for a deficiency
is not affected, because of any act or omission arising out of the secured party’s
reasonable belief that a transaction is not a consumer goods transaction or a consumer
transaction or that goods are not consumer goods, if the secured party’s belief is
based on its reasonable reliance on:
(1) a debtor’s representation concerning the purpose for which collateral was to be used,
acquired, or held; or
(2) an obligor’s representation concerning the purpose for which a secured obligation
was incurred.
(d) A secured party is not liable to any person under subdivision 9—625(c)(2) of this title for its failure to comply with section 9—616 of this title.
(e) A secured party is not liable under subdivision 9—625(c)(2) of this title more than once with respect to any one secured obligation.
(f) Subsections (a) and (b) of this section do not apply to limit the liability of a secured
party to a person if, at the time the secured party obtains control of collateral
that is a controllable account, controllable electronic record, or controllable payment
intangible or at the time the security interest attaches to the collateral, whichever
is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in subdivision (b)(1)(A), (B), or (C)
of this section relating to the person is not provided by the collateral, a record
attached to or logically associated with the collateral, or the system in which the
collateral is recorded. (Added 1999, No. 106 (Adj. Sess.), § 2, eff. July 1, 2001; amended 2025, No. 17, § 9, eff. July 1, 2025.)
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§ 9—701. Effective date
Act No. 106 of 2000, repealing and reenacting Article 9 of 9A V.S.A., takes effect on July 1, 2001. (Added 2001, No. 46, § 12.)
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§ 9—702. Savings clause
(a) Except as otherwise provided in this part, the provisions of this article which take
effect on July 1, 2001 apply to a transaction or lien within the scope of such provisions,
even if the transaction or lien was entered into or created before July 1, 2001.
(b) Except as otherwise provided in subsection (c) of this section and sections 9—703 through 9—709 of this title as they exist subsequent to July 1, 2001:
(1) transactions and liens that were not governed by the provisions of this title as they
existed prior to July 1, 2001, were validly entered into or created before July 1,
2001, and would be subject to the provisions of this article which take effect on
July 1, 2001 if they had been entered into or created on or after July 1, 200l, and
the rights, duties, and interests flowing from those transactions and liens remain
valid on and after July 1, 2001; and
(2) the transactions and liens may be terminated, completed, consummated, and enforced
as required or permitted by the provisions of this article as in effect on and after
July 1, 2001, or by the law that otherwise would apply if those provisions had not
taken effect.
(c) The provisions of this article as in effect on and after July 1, 2001, do not affect
an action, case, or proceeding commenced before July 1, 2001. (Added 2001, No. 46, § 12.)
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§ 9—703. Security interest perfected before effective date
(a) A security interest that is enforceable immediately before July 1, 2001, and would
have priority over the rights of a person that becomes a lien creditor at that time,
is a perfected security interest under this article as in effect on and after July
1, 2001, if, on July 1, 2001, the applicable requirements for enforceability and perfection
under this article as in effect on and after July 1, 2001, are satisfied without further
action.
(b) Except as otherwise provided in section 9—705 of this title, if, immediately before July 1, 2001, a security interest is enforceable and would
have priority over the rights of a person that becomes a lien creditor at that time,
but the applicable requirements for enforceability or perfection under the provisions
of this article as in effect on and after July 1, 2001, are not satisfied when such
provisions take effect, the security interest:
(1) is a perfected security interest until June 30, 2002;
(2) remains enforceable thereafter only if the security interest becomes enforceable under
section 9—203 of this title as in effect on and after July 1, 2001, on or before the date set forth in subdivision
(1) of this subsection; and
(3) remains perfected thereafter only if the applicable requirements for perfection under
this article as in effect on and after July 1, 2001, are satisfied before July 1,
2002. (Added 2001, No. 46, § 12.)
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§ 9—704. Security interest unperfected before effective date
A security interest that is enforceable immediately before July 1, 2001 but would
be subordinate to the rights of a person that becomes a lien creditor at that time:
(1) remains an enforceable security interest until June 30, 2002;
(2) remains enforceable thereafter if the security interest becomes enforceable under
the provisions of section 9—203 of this title as in effect on and after July 1, 2001, either on July 1, 2001, at any time thereafter
through and including June 30, 2002; and
(3) becomes perfected:
(A) without further action, on July 1, 2001 if the applicable requirements for perfection
under the provisions of this article as in effect on and after July 1, 2001, are satisfied
before or at that time; or
(B) when the applicable requirements for perfection are satisfied if the requirements
are satisfied after that time. (Added 2001, No. 46, § 12.)
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§ 9—705. Effectiveness of action taken before effective date
(a) If action, other than the filing of a financing statement, is taken before July 1,
2001 and the action would have resulted in priority of a security interest over the
rights of a person that becomes a lien creditor, had the security interest become
enforceable before the provisions of this article as in effect on and after July 1,
2001 become effective, the action is effective to perfect a security interest that
attaches under this article as in effect on and after July 1, 2001, within one year
after such provisions take effect. An attached security interest becomes unperfected
on July 1, 2002, unless the security interest becomes a perfected security interest
under the provisions of this article as in effect on and after July 1, 2001, on or
before June 30, 2002.
(b) The filing of a financing statement before July 1, 2001 is effective to perfect a
security interest to the extent the filing would satisfy the applicable requirements
for perfection under the provisions of this article as in effect on and after July
1, 2001.
(c) The provisions of this article as in effect on and after July 1, 2001 do not render
ineffective an effective financing statement that is filed before July 1, 2001 and
satisfied the applicable requirements for perfection under the law of the jurisdiction
governing perfection as provided in section 9—103 of this title as in effect prior to July 1, 2001. However, except as otherwise provided in subsections
(d) and (e) of this section and section 9—706 of this title as in effect on and after July 1, 2001, the financing statement ceases to be effective
at the earlier of:
(1) the time the financing statement would have ceased to be effective under the law of
the jurisdiction in which it is filed; or
(2) June 30, 2006.
(d) The filing of a continuation statement on or after July 1, 2001 does not continue
the effectiveness of the financing statement filed before provisions of this article
as in effect on and after July 1, 2001 take effect. However, upon the timely filing
of a continuation statement on or after July 1, 2001, and in accordance with the law
of the jurisdiction governing perfection as provided in Part 3 of this article as
in effect on and after July 1, 2001, the effectiveness of a financing statement filed
in the same office in that jurisdiction before July 1, 2001 continues for the period
provided by the law of that jurisdiction.
(e) Subdivision (c)(2) of this section applies to a financing statement that is filed
against a transmitting utility before July 1, 2001 and satisfied the applicable requirements
for perfection under the law of the jurisdiction governing perfection as provided
in section 9—103 of this title as in effect prior to July 1, 2001, only to the extent that Part 3 of this article
as in effect on and after July 1, 2001 provides that the law of a jurisdiction other
than the jurisdiction in which the financing statement is filed governs perfection
of a security interest in collateral covered by the financing statement.
(f) A financing statement that includes a financing statement filed before July 1, 2001
takes effect and a continuation statement filed on or after July 1, 2001 is effective
only to the extent that it satisfies the requirements of Part 5 of this article as
in effect on and after July 1, 2001 for an initial financing statement. (Added 2001, No. 46, § 12.)
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§ 9—706. When initial financing statement suffices as continuation statement
(a) The filing of an initial financing statement in the office specified in section 9—501 of this title as in effect on and after July 1, 2001, continues the effectiveness of a financing
statement filed before July 1, 2001 for the period provided in section 9—515 of this title as in effect on and after July 1, 2001, with respect to an initial financing statement
if:
(1) the filing of an initial financing statement in that office would be effective to
perfect a security interest under the provisions of this article as in effect on and
after July 1, 2001;
(2) the preeffective-date financing statement was filed in an office in another state
or another office in this state; and
(3) the initial financing statement satisfies subsection (c) of this section.
(b) Period of continued effectiveness. The filing of an initial financing statement under
subsection (a) of this section continues the effectiveness of the preffective-date
financing statement:
(1) if the initial financing statement is filed before July 1, 2001, for the period provided
in section 9—403 of this title as in effect prior to July 1, 2001, with respect to a financing statement; and
(2) if the financing statement is filed after July 1, 2001, for the period provided in
section 9—515 of this title as in effect on and after July 1, 2001, with respect to an initial financing statement.
(c) Requirements for initial financing statement under subsection (a) of this section.
To be effective for purposes of subsection (a) of this section, an initial financing
statement must:
(1) satisfy the requirements of Part 5 of this article for an initial financing statement;
(2) identify the preeffective-date financing statement by indicating the office in which
the financing statement was filed, and providing the dates of filing and file numbers,
if any, of the financing statement and of the most recent continuation statement filed
with respect to the financing statement; and
(3) indicate that the preeffective-date financing statement remains effective. (Added 2001, No. 46, § 12.)
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§ 9—707. Amendment of preeffective-date financing statement
(a) In this section and in section 9—706 of this title, “preeffective-date financing statement” means a financing statement filed before
July 1, 2001.
(b) After July 1, 2001, a person may add or delete collateral covered by, continue or
terminate the effectiveness of, or otherwise amend the information provided in, a
preeffective-date financing statement only in accordance with the law of the jurisdiction
governing perfection as provided in Part 3 of this article on and after July 1, 2001.
However, the effectiveness of a preeffective-date financing statement also may be
terminated in accordance with the law of the jurisdiction in which the financing statement
is filed.
(c) Except as otherwise provided in subsection (d) of this section, if the law of this
State governs perfection of a security interest, the information in a preeffective-date
financing statement may be amended after July 1, 2001 only if:
(1) the preeffective-date financing statement and an amendment are filed in the office
specified in section 9—501 of this title as in effect on and after July 1, 2001;
(2) an amendment is filed in the office specified in section 9—501 of this title as in effect on and after July 1, 2001 concurrently with, or after the filing in
that office of, an initial financing statement that satisfies subsection 9—706(b) of this title; or
(3) an initial financing statement that provides the information as amended, and satisfies
subsection 9—706(b) of this title, is filed in the office specified in section 9—501 of this title as in effect on and after July 1, 2001.
(d) If the law of this state governs perfection of a security interest, the effectiveness
of a preeffective-date financing statement may be continued only under subsections
9—705(d) and (f) or 9—706 of this title.
(e) Whether or not the law of this section governs perfection of a security interest,
the effectiveness of a preeffective-date financing statement filed in this State may
be terminated after July 1, 2001 by filing a termination statement in the office in
which the preeffective-date financing statement is filed, unless an initial financing
statement that satisfies subsection 9—706(b) of this title has been filed in the office specified by the law of the jurisdiction governing perfection
as provided in Part 3 of this article as in effect on and after July 1, 2001, as the
office in which to file a financing statement. (Added 2001, No. 46, § 12.)
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§ 9—708. Persons entitled to file initial financing statement or continuation statement
A person may file an initial financing statement or a continuation statement under
this part if:
(1) the secured party of record authorizes the filing; and
(2) the filing is necessary under this part:
(A) to continue the effectiveness of a financing statement filed before July 1, 2001;
or
(B) to perfect or continue the perfection of a security interest. (Added 2001, No. 46, § 12.)
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§ 9—709. Priority
(a) The provisions of this article as in effect prior to July 1, 2001 determine the priority
of conflicting claims to collateral if the relative priorities of the parties were
fixed before July 1, 2001. In other cases, the provisions of this article as in effect
on and after July 1, 2001 determine priority.
(b) For purposes of subsection 9—322(a) of this title as in effect on and after July 1, 2001, the priority of a security interest that
becomes a perfected security interest under section 9—704 of this title as in effect on and after July 1, 2001 dates from the time the applicable requirements
for perfection are satisfied. This subsection does not apply to conflicting security
interests, each of which becomes a perfected security interest under section 9—704 of this title as in effect on and after July 1, 2001.
(c) For purposes of subsection 9—322(a) of this title as in effect on and after July 1, 2001, the priority of a security interest that
becomes enforceable under section 9—203 of this title as in effect on and after July 1, 2001 dates from July 1, 2001 if the security interest
is perfected under the provisions of this article as in effect on and after July 1,
2001 by the filing of a financing statement before July 1, 2001 which would not have
been effective to perfect the security interest under the provisions of this article
as in effect prior to July 1, 2001. This subsection does not apply to conflicting
security interests, each of which is perfected by the filing of such a financing statement. (Added 2001, No. 46, § 12.)
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§ 9—801. Effective date
2014 Acts and Resolves No. 157, adopting the 2010 Uniform Commercial Code amendments
promulgated by the National Conference of Commissioners on Uniform State Laws, referred
to in this part as “the Act,” takes effect on July 1, 2014. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—802. Savings clause
(a) Except as otherwise provided in this part, the provisions of the Act apply to a transaction
or lien within its scope, even if the transaction or lien was entered into or created
before the Act takes effect.
(b) The provisions of the Act do not affect an action, case, or proceeding commenced before
the Act takes effect. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—803. Security interest perfected before effective date
(a) A security interest that is a perfected security interest immediately before the Act
takes effect is a perfected security interest under Article 9 of this title, as amended
by the Act if, when the Act takes effect, the applicable requirements for attachment
and perfection under Article 9 of this title, as amended by the Act, are satisfied
without further action.
(b) Except as otherwise provided in section 9-805 of this title, if, immediately before the Act takes effect, a security interest is a perfected
security interest, but the applicable requirements for perfection under Article 9
of this title, as amended by the Act, are not satisfied when the Act takes effect,
the security interest remains perfected thereafter only if the applicable requirements
for perfection under Article 9 of this title, as amended by the Act, are satisfied
within one year after the Act takes effect. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—804. Security interest unperfected before effective date
A security interest that is an unperfected security interest immediately before the
Act takes effect becomes a perfected security interest:
(1) without further action, when the Act takes effect if the applicable requirements for
perfection under Article 9 of this title, as amended by the Act, are satisfied before
or at that time; or
(2) when the applicable requirements for perfection are satisfied if the requirements
are satisfied after that time. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—805. Effectiveness of action taken before effective date
(a) The filing of a financing statement before the Act takes effect is effective to perfect
a security interest to the extent the filing would satisfy the applicable requirements
for perfection under Article 9 of this title, as amended by the Act.
(b) The Act does not render ineffective an effective financing statement that, before
the Act takes effect, is filed and satisfies the applicable requirements for perfection
under the law of the jurisdiction governing perfection as provided in Article 9 of
this title as it existed before the amendment. However, except as otherwise provided
in subsections (c) and (d) of this section and section 9—806 of this title, the financing statement ceases to be effective:
(1) if the financing statement is filed in this State, at the time the financing statement
would have ceased to be effective had the Act not taken effect; or
(2) if the financing statement is filed in another jurisdiction, at the earlier of:
(A) the time the financing statement would have ceased to be effective under the law of
that jurisdiction; or
(B) June 30, 2019.
(c) The filing of a continuation statement after the Act takes effect does not continue
the effectiveness of a financing statement filed before the Act takes effect. However,
upon the timely filing of a continuation statement after the Act takes effect and
in accordance with the law of the jurisdiction governing perfection as provided under
Article 9 of this title, as amended by the Act, the effectiveness of a financing statement
filed in the same office in that jurisdiction before the Act takes effect continues
for the period provided by the law of that jurisdiction.
(d) Subdivision (b)(2)(B) of this section applies to a financing statement that, before
the Act takes effect, is filed against a transmitting utility and satisfies the applicable
requirements for perfection under the law of the jurisdiction governing perfection
as provided in Article 9 of this title, as it existed before amendment, only to the
extent that Article 9 of this title, as amended by the Act, provides that the law
of a jurisdiction other than the jurisdiction in which the financing statement is
filed governs perfection of a security interest in collateral covered by the financing
statement.
(e) A financing statement that includes a financing statement filed before the Act takes
effect and a continuation statement filed after the Act takes effect is effective
only to the extent that it satisfies the requirements of Article 9, Part 5 of this
title, as amended by the Act, for an initial financing statement. A financing statement
that indicates that the debtor is a decedent’s estate indicates that the collateral
is being administered by a personal representative within the meaning of subdivision 9—503(a)(2) of this title, as amended by the Act. A financing statement that indicates that the debtor is
a trust or is a trustee acting with respect to property held in trust indicates that
the collateral is held in a trust within the meaning of subdivision 9—503(a)(3) of this title, as amended by the Act. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—806. When an initial financing statement suffices to continue effectiveness of a financing
statement
(a) The filing of an initial financing statement in the office specified in section 9—501 of this title continues the effectiveness of a financing statement filed before the Act takes effect
if:
(1) the filing of an initial financing statement in that office would be effective to
perfect a security interest under Article 9 of this title, as amended by the Act;
(2) the pre-effective-date financing statement was filed in an office in another state;
and
(3) the initial financing statement satisfies subsection (c) of this section.
(b) The filing of an initial financing statement under subsection (a) of this section
continues the effectiveness of the pre-effective-date financing statement:
(1) if the initial financing statement is filed before the Act takes effect, for the period
provided in section 9—515 of this title, as it existed before the Act took effect, with respect to an initial financing statement;
and
(2) if the initial financing statement is filed after the Act takes effect, for the period
provided in section 9—515 of this title, as amended by the Act, with respect to an initial financing statement.
(c) To be effective for purposes of subsection (a) of this section, an initial financing
statement shall:
(1) satisfy the requirements of Article 9, Part 5 of this title, as amended by the Act,
for an initial financing statement;
(2) identify the pre-effective-date financing statement by indicating the office in which
the financing statement was filed and provide the dates of filing and file numbers,
if any, of the financing statement and of the most recent continuation statement filed
with respect to the financing statement; and
(3) indicate that the pre-effective-date financing statement remains effective. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—807. Amendment of pre-effective-date financing statement
(a) In this section, “pre-effective-date financing statement” means a financing statement
filed before the Act takes effect.
(b) After the Act takes effect, a person may add or delete collateral covered by, continue
or terminate the effectiveness of, or otherwise amend the information provided in,
a pre-effective-date financing statement only in accordance with the law of the jurisdiction
governing perfection as provided in Article 9 of this title, as amended by the Act.
However, the effectiveness of a pre-effective-date financing statement also may be
terminated in accordance with the law of the jurisdiction in which the financing statement
is filed.
(c) Except as otherwise provided in subsection (d) of this section, if the law of this
State governs perfection of a security interest, the information in a pre effective
date financing statement may be amended after the Act takes effect only if:
(1) the pre-effective-date financing statement and an amendment are filed in the office
specified in section 9—501 of this title;
(2) an amendment is filed in the office specified in section 9—501 of this title concurrently with, or after the filing in that office of, an initial financing statement
that satisfies subsection 9—806(c) of this title; or
(3) an initial financing statement that provides the information as amended and satisfies
subsection 9—806(c) of this title is filed in the office specified in section 9—501 of this title.
(d) If the law of this State governs perfection of a security interest, the effectiveness
of a pre-effective-date financing statement may be continued only under subsections
9—805(c) and (e) or section 9—806 of this title.
(e) Whether or not the law of this state governs perfection of a security interest, the
effectiveness of a pre-effective-date financing statement filed in this State may
be terminated after the Act takes effect by filing a termination statement in the
office in which the pre-effective-date financing statement is filed, unless an initial
financing statement that satisfies subsection 9—806(c) of this title has been filed in the office specified by the law of the jurisdiction governing perfection
as provided in Article 9 of this title, as amended by the Act, as the office in which
to file a financing statement. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—808. Person entitled to file initial financing statement or continuation statement
A person may file an initial financing statement or a continuation statement pursuant
to the provisions of this section if:
(1) the secured party of record authorizes the filing; and
(2) the filing is necessary under this section:
(A) to continue the effectiveness of a financing statement filed before the Act takes
effect; or
(B) to perfect or continue the perfection of a security interest. (Added 2013, No. 157 (Adj. Sess.), § 1.)
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§ 9—809. Priority
The Act determines the priority of conflicting claims to collateral. However, if
the relative priorities of the claims were established before the Act takes effect,
Article 9 of this title, as it existed before amendment by the Act, determines priority. (Added 2013, No. 157 (Adj. Sess.), § 1.)