By Solomons H.B. No. 2606
76R5536(1) LJR
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the revision of the uniform law on secured
1-3 transactions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. SECURED TRANSACTIONS
1-6 SECTION 1.01. Chapter 9, Business & Commerce Code, is
1-7 amended to read as follows:
1-8 CHAPTER 9. SECURED TRANSACTIONS[; SALES OF ACCOUNTS
1-9 AND CHATTEL PAPER]
1-10 SUBCHAPTER A. SHORT TITLE, [APPLICABILITY AND]
1-11 DEFINITIONS, AND GENERAL CONCEPTS
1-12 Sec. 9.101. SHORT TITLE. This chapter may be cited as
1-13 Uniform Commercial Code--Secured Transactions.
1-14 Sec. 9.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
1-15 this chapter:
1-16 (1) "Accession" means goods that are physically united
1-17 with other goods in such a manner that the identity of the original
1-18 goods is not lost.
1-19 (2) "Account," except as used in "account for," means
1-20 a right to payment of a monetary obligation, whether or not earned
1-21 by performance, (i) for property that has been or is to be sold,
1-22 leased, licensed, assigned, or otherwise disposed of, (ii) for
1-23 services rendered or to be rendered, (iii) for a policy of
1-24 insurance issued or to be issued, (iv) for a secondary obligation
1-25 incurred or to be incurred, (v) for energy provided or to be
1-26 provided, (vi) for the use or hire of a vessel under a charter or
2-1 other contract, (vii) arising out of the use of a credit or charge
2-2 card or information contained on or for use with the card, or
2-3 (viii) as winnings in a lottery or other game of chance operated or
2-4 sponsored by a State, governmental unit of a State, or person
2-5 licensed or authorized to operate the game by a State or
2-6 governmental unit of a State. The term includes
2-7 health-care-insurance receivables. The term does not include (i)
2-8 rights to payment evidenced by chattel paper or an instrument, (ii)
2-9 commercial tort claims, (iii) deposit accounts, (iv) investment
2-10 property, (v) letter-of-credit rights or letters of credit, or (vi)
2-11 rights to payment for money or funds advanced or sold, other than
2-12 rights arising out of the use of a credit or charge card or
2-13 information contained on or for use with the card.
2-14 (3) "Account debtor" means a person obligated on an
2-15 account, chattel paper, or general intangible. The term does not
2-16 include persons obligated to pay a negotiable instrument, even if
2-17 the instrument constitutes part of chattel paper.
2-18 (4) "Accounting," except as used in "accounting for,"
2-19 means a record:
2-20 (A) authenticated by a secured party;
2-21 (B) indicating the aggregate unpaid secured
2-22 obligations as of a date not more than 35 days earlier or 35 days
2-23 later than the date of the record; and
2-24 (C) identifying the components of the
2-25 obligations in reasonable detail.
2-26 (5) "Agricultural lien" means an interest, other than
2-27 a security interest, in farm products:
3-1 (A) that secures payment or performance of an
3-2 obligation for:
3-3 (i) goods or services furnished in
3-4 connection with a debtor's farming operation; or
3-5 (ii) rent on real property leased by a
3-6 debtor in connection with its farming operation;
3-7 (B) that is created by statute in favor of a
3-8 person that:
3-9 (i) in the ordinary course of its business
3-10 furnished goods or services to a debtor in connection with a
3-11 debtor's farming operation; or
3-12 (ii) leased real property to a debtor in
3-13 connection with the debtor's farming operation; and
3-14 (C) whose effectiveness does not depend on the
3-15 person's possession of the personal property.
3-16 (6) "As-extracted collateral" means:
3-17 (A) oil, gas, or other minerals that are subject
3-18 to a security interest that:
3-19 (i) is created by a debtor having an
3-20 interest in the minerals before extraction; and
3-21 (ii) attaches to the minerals as
3-22 extracted; or
3-23 (B) accounts arising out of the sale at the
3-24 wellhead or minehead of oil, gas, or other minerals in which the
3-25 debtor had an interest before extraction.
3-26 (7) "Authenticate" means:
3-27 (A) to sign; or
4-1 (B) to execute or otherwise adopt a symbol, or
4-2 encrypt or similarly process a record in whole or in part, with the
4-3 present intent of the authenticating person to identify the person
4-4 and adopt or accept a record.
4-5 (8) "Bank" means an organization that is engaged in
4-6 the business of banking. The term includes savings banks, savings
4-7 and loan associations, credit unions, and trust companies.
4-8 (9) "Cash proceeds" means proceeds that are money,
4-9 checks, deposit accounts, or the like.
4-10 (10) "Certificate of title" means a certificate of
4-11 title with respect to which a statute provides for the security
4-12 interest in question to be indicated on the certificate as a
4-13 condition or result of the security interest's obtaining priority
4-14 over the rights of a lien creditor with respect to the collateral.
4-15 (11) "Chattel paper" means a record or records that
4-16 evidence both a monetary obligation and a security interest in
4-17 specific goods, a security interest in specific goods and software
4-18 used in the goods, or a lease of specific goods. The term does not
4-19 include charters or other contracts involving the use or hire of a
4-20 vessel. If a transaction is evidenced both by a security agreement
4-21 or lease and by an instrument or series of instruments, the group
4-22 of records taken together constitutes chattel paper.
4-23 (12) "Collateral" means the property subject to a
4-24 security interest or agricultural lien. The term includes:
4-25 (A) proceeds to which a security interest
4-26 attaches;
4-27 (B) accounts, chattel paper, payment
5-1 intangibles, and promissory notes that have been sold; and
5-2 (C) goods that are the subject of a consignment.
5-3 (13) "Commercial tort claim" means a claim arising in
5-4 tort with respect to which:
5-5 (A) the claimant is an organization; or
5-6 (B) the claimant is an individual and the claim:
5-7 (i) arose in the course of the claimant's
5-8 business or profession; and
5-9 (ii) does not include damages arising out
5-10 of personal injury to or the death of an individual.
5-11 (14) "Commodity account" means an account maintained
5-12 by a commodity intermediary in which a commodity contract is
5-13 carried for a commodity customer.
5-14 (15) "Commodity contract" means a commodity futures
5-15 contract, an option on a commodity futures contract, a commodity
5-16 option, or another contract if the contract or option is:
5-17 (A) traded on or subject to the rules of a board
5-18 of trade that has been designated as a contract market for such a
5-19 contract pursuant to federal commodities laws; or
5-20 (B) traded on a foreign commodity board of
5-21 trade, exchange, or market and is carried on the books of a
5-22 commodity intermediary for a commodity customer.
5-23 (16) "Commodity customer" means a person for which a
5-24 commodity intermediary carries a commodity contract on its books.
5-25 (17) "Commodity intermediary" means a person that:
5-26 (A) is registered as a futures commission
5-27 merchant under federal commodities law; or
6-1 (B) in the ordinary course of its business
6-2 provides clearance or settlement services for a board of trade that
6-3 has been designated as a contract market pursuant to federal
6-4 commodities law.
6-5 (18) "Communicate" means:
6-6 (A) to send a written or other tangible record;
6-7 (B) to transmit a record by any means agreed
6-8 upon by the persons sending and receiving the record; or
6-9 (C) in the case of transmission of a record to
6-10 or by a filing office, to transmit a record by any means prescribed
6-11 by filing-office rule.
6-12 (19) "Consignee" means a merchant to which goods are
6-13 delivered in a consignment.
6-14 (20) "Consignment" means a transaction, regardless of
6-15 its form, in which a person delivers goods to a merchant for the
6-16 purpose of sale and:
6-17 (A) the merchant:
6-18 (i) deals in goods of that kind under a
6-19 name other than the name of the person making delivery;
6-20 (ii) is not an auctioneer; and
6-21 (iii) is not generally known by its
6-22 creditors to be substantially engaged in selling the goods of
6-23 others;
6-24 (B) with respect to each delivery, the aggregate
6-25 value of the goods is $1,000 or more at the time of delivery;
6-26 (C) the goods are not consumer goods immediately
6-27 before delivery;
7-1 (D) the transaction does not create a security
7-2 interest that secures an obligation; and
7-3 (E) the transaction does not involve delivery of
7-4 a work of art to an art dealer, as provided by the Artists'
7-5 Consignment Act (Article 9018, Vernon's Texas Civil Statutes).
7-6 (21) "Consignor" means a person that delivers goods to
7-7 a consignee in a consignment.
7-8 (22) "Consumer debtor" means a debtor in a consumer
7-9 transaction.
7-10 (23) "Consumer goods" means goods that are used or
7-11 bought for use primarily for personal, family, or household
7-12 purposes.
7-13 (24) "Consumer-goods transaction" means a consumer
7-14 transaction in which:
7-15 (A) an individual incurs an obligation primarily
7-16 for personal, family, or household purposes; and
7-17 (B) a security interest in consumer goods
7-18 secures the obligation.
7-19 (25) "Consumer obligor" means an obligor who is an
7-20 individual and who incurred the obligation as part of a transaction
7-21 entered into primarily for personal, family, or household purposes.
7-22 (26) "Consumer transaction" means a transaction in
7-23 which (i) an individual incurs an obligation primarily for
7-24 personal, family, or household purposes, (ii) a security interest
7-25 secures the obligation, and (iii) the collateral is held or
7-26 acquired primarily for personal, family, or household purposes.
7-27 The term includes consumer-goods transactions.
8-1 (27) "Continuation statement" means an amendment of a
8-2 financing statement that:
8-3 (A) identifies, by its file number, the initial
8-4 financing statement to which it relates; and
8-5 (B) indicates that it is a continuation
8-6 statement for, or that it is filed to continue the effectiveness
8-7 of, the identified financing statement.
8-8 (28) "Debtor" means:
8-9 (A) a person having an interest, other than a
8-10 security interest or other lien, in the collateral, whether or not
8-11 the person is an obligor;
8-12 (B) a seller of accounts, chattel paper, payment
8-13 intangibles, or promissory notes; or
8-14 (C) a consignee.
8-15 (29) "Deposit account" means a demand, time, savings,
8-16 passbook, or similar account maintained with a bank. The term
8-17 includes a nonnegotiable certificate of deposit. The term does not
8-18 include investment property or accounts evidenced by an instrument.
8-19 (30) "Document" means a document of title or a receipt
8-20 of the type described in Section 7.201(b).
8-21 (31) "Electronic chattel paper" means chattel paper
8-22 evidenced by a record or records consisting of information stored
8-23 in an electronic medium.
8-24 (32) "Encumbrance" means a right, other than an
8-25 ownership interest, in real property. The term includes mortgages
8-26 and other liens on real property.
8-27 (33) "Equipment" means goods other than inventory,
9-1 farm products, or consumer goods.
9-2 (34) "Farm products" means goods, other than standing
9-3 timber, with respect to which the debtor is engaged in a farming
9-4 operation and which are:
9-5 (A) crops grown, growing, or to be grown,
9-6 including:
9-7 (i) crops produced on trees, vines, and
9-8 bushes; and
9-9 (ii) aquatic goods produced in
9-10 aquacultural operations;
9-11 (B) livestock, born or unborn, including aquatic
9-12 goods produced in aquacultural operations;
9-13 (C) supplies used or produced in a farming
9-14 operation; or
9-15 (D) products of crops or livestock in their
9-16 unmanufactured states.
9-17 (35) "Farming operation" means raising, cultivating,
9-18 propagating, fattening, grazing, or any other farming, livestock,
9-19 or aquacultural operation.
9-20 (36) "File number" means the number assigned to an
9-21 initial financing statement pursuant to Section 9.519(a).
9-22 (37) "Filing office" means an office designated in
9-23 Section 9.501 as the place to file a financing statement.
9-24 (38) "Filing-office rule" means a rule adopted
9-25 pursuant to Section 9.526.
9-26 (39) "Financing statement" means a record or records
9-27 composed of an initial financing statement and any filed record
10-1 relating to the initial financing statement.
10-2 (40) "Fixture filing" means the filing of a financing
10-3 statement covering goods that are or are to become fixtures and
10-4 satisfying Sections 9.502(a) and (b). The term includes the filing
10-5 of a financing statement covering goods of a transmitting utility
10-6 that are or are to become fixtures.
10-7 (41) "Fixtures" means goods that have become so
10-8 related to particular real property that an interest in them arises
10-9 under the real property law of the State in which the real property
10-10 is situated.
10-11 (42) "General intangible" means any personal property,
10-12 including things in action, other than accounts, chattel paper,
10-13 commercial tort claims, deposit accounts, documents, goods,
10-14 instruments, investment property, letter-of-credit rights, letters
10-15 of credit, money, and oil, gas, or other minerals before
10-16 extraction. The term includes payment intangibles and software.
10-17 (43) "Good faith" means honesty in fact and the
10-18 observance of reasonable commercial standards of fair dealing.
10-19 (44) "Goods" means all things that are movable when a
10-20 security interest attaches. The term includes (i) fixtures, (ii)
10-21 standing timber that is to be cut and removed under a conveyance or
10-22 contract for sale, (iii) the unborn young of animals, (iv) crops
10-23 grown, growing, or to be grown, even if the crops are produced on
10-24 trees, vines, or bushes, and (v) manufactured homes. The term also
10-25 includes a computer program embedded in goods and any supporting
10-26 information provided in connection with a transaction relating to
10-27 the program if (i) the program is associated with the goods in such
11-1 a manner that it customarily is considered part of the goods, or
11-2 (ii) by becoming the owner of the goods, a person acquires a right
11-3 to use the program in connection with the goods. The term does not
11-4 include a computer program embedded in goods that consist solely of
11-5 the medium in which the program is embedded. The term also does
11-6 not include accounts, chattel paper, commercial tort claims,
11-7 deposit accounts, documents, general intangibles, instruments,
11-8 investment property, letter-of-credit rights, letters of credit,
11-9 money, or oil, gas, or other minerals before extraction.
11-10 (45) "Governmental unit" means a subdivision, agency,
11-11 department, county, parish, municipality, or other unit of the
11-12 government of the United States, a State, or a foreign country.
11-13 The term includes an organization having a separate corporate
11-14 existence if the organization is eligible to issue debt on which
11-15 interest is exempt from income taxation under the laws of the
11-16 United States.
11-17 (46) "Health-care-insurance receivable" means an
11-18 interest in or claim under a policy of insurance that is a right to
11-19 payment of a monetary obligation for health care goods or services
11-20 provided.
11-21 (47) "Instrument" means a negotiable instrument or any
11-22 other writing that evidences a right to the payment of a monetary
11-23 obligation, is not itself a security agreement or lease, and is of
11-24 a type that in ordinary course of business is transferred by
11-25 delivery with any necessary indorsement or assignment. The term
11-26 does not include (i) investment property, (ii) letters of credit,
11-27 (iii) writings that evidence a right to payment arising out of the
12-1 use of a credit or charge card or information contained on or for
12-2 use with the card, or (iv) nonnegotiable certificates of deposit.
12-3 (48) "Inventory" means goods, other than farm
12-4 products, that:
12-5 (A) are leased by a person as lessor;
12-6 (B) are held by a person for sale or lease or to
12-7 be furnished under a contract of service;
12-8 (C) are furnished by a person under a contract
12-9 of service; or
12-10 (D) consist of raw materials, work in process,
12-11 or materials used or consumed in a business.
12-12 (49) "Investment property" means a security, whether
12-13 certificated or uncertificated, security entitlement, securities
12-14 account, commodity contract, or commodity account.
12-15 (50) "Jurisdiction of organization," with respect to a
12-16 registered organization, means the jurisdiction under whose law the
12-17 organization is organized.
12-18 (51) "Letter-of-credit right" means a right to payment
12-19 or performance under a letter of credit, whether or not the
12-20 beneficiary has demanded or is at the time entitled to demand
12-21 payment or performance. The term does not include the right of a
12-22 beneficiary to demand payment or performance under a letter of
12-23 credit.
12-24 (52) "Lien creditor" means:
12-25 (A) a creditor that has acquired a lien on the
12-26 property involved by attachment, levy, or the like;
12-27 (B) an assignee for benefit of creditors from
13-1 the time of assignment;
13-2 (C) a trustee in bankruptcy from the date of the
13-3 filing of the petition; or
13-4 (D) a receiver in equity from the time of
13-5 appointment.
13-6 (53) "Manufactured home" means a structure,
13-7 transportable in one or more sections, that, in the traveling mode,
13-8 is 8 body feet or more in width or 40 body feet or more in length,
13-9 or, when erected on site, is 320 or more square feet, and that is
13-10 built on a permanent chassis and designed to be used as a dwelling
13-11 with or without a permanent foundation when connected to the
13-12 required utilities, and includes the plumbing, heating,
13-13 air-conditioning, and electrical systems contained therein. The
13-14 term includes any structure that meets all of the requirements of
13-15 this subdivision except the size requirements and with respect to
13-16 which the manufacturer voluntarily files a certification required
13-17 by the United States secretary of housing and urban development and
13-18 complies with the standards established under Title 42 of the
13-19 United States Code.
13-20 (54) "Manufactured-home transaction" means a secured
13-21 transaction:
13-22 (A) that creates a purchase-money security
13-23 interest in a manufactured home, other than a manufactured home
13-24 held as inventory; or
13-25 (B) in which a manufactured home, other than a
13-26 manufactured home held as inventory, is the primary collateral.
13-27 (55) "Mortgage" means a consensual interest in real
14-1 property, including fixtures, that secures payment or performance
14-2 of an obligation.
14-3 (56) "New debtor" means a person that becomes bound as
14-4 debtor under Section 9.203(d) by a security agreement previously
14-5 entered into by another person.
14-6 (57) "New value" means (i) money, (ii) money's worth
14-7 in property, services, or new credit, or (iii) release by a
14-8 transferee of an interest in property previously transferred to the
14-9 transferee. The term does not include an obligation substituted
14-10 for another obligation.
14-11 (58) "Noncash proceeds" means proceeds other than cash
14-12 proceeds.
14-13 (59) "Nonnegotiable certificate of deposit" means a
14-14 writing signed by a bank that:
14-15 (A) states on its face that it is a certificate
14-16 of deposit (as defined in Section 3.104) or receipt for a book
14-17 entry;
14-18 (B) contains an acknowledgement that a sum of
14-19 money has been received by the bank, with an express or implied
14-20 agreement that the bank will repay the sum of money; and
14-21 (C) is not a negotiable instrument.
14-22 (60) "Obligor" means a person that, with respect to an
14-23 obligation secured by a security interest in or an agricultural
14-24 lien on the collateral, (i) owes payment or other performance of
14-25 the obligation, (ii) has provided property other than the
14-26 collateral to secure payment or other performance of the
14-27 obligation, or (iii) is otherwise accountable in whole or in part
15-1 for payment or other performance of the obligation. The term does
15-2 not include issuers or nominated persons under a letter of credit.
15-3 (61) "Original debtor" means a person that, as debtor,
15-4 entered into a security agreement to which a new debtor has become
15-5 bound under Section 9.203(d).
15-6 (62) "Payment intangible" means a general intangible
15-7 under which the account debtor's principal obligation is a monetary
15-8 obligation.
15-9 (63) "Person related to," with respect to an
15-10 individual, means:
15-11 (A) the spouse of the individual;
15-12 (B) a brother, brother-in-law, sister, or
15-13 sister-in-law of the individual;
15-14 (C) an ancestor or lineal descendant of the
15-15 individual or the individual's spouse; or
15-16 (D) any other relative, by blood or marriage, of
15-17 the individual or the individual's spouse who shares the same home
15-18 with the individual.
15-19 (64) "Person related to," with respect to an
15-20 organization, means:
15-21 (A) a person directly or indirectly controlling,
15-22 controlled by, or under common control with the organization;
15-23 (B) an officer or director of, or a person
15-24 performing similar functions with respect to, the organization;
15-25 (C) an officer or director of, or a person
15-26 performing similar functions with respect to, a person described in
15-27 Paragraph (A);
16-1 (D) the spouse of an individual described in
16-2 Paragraph (A), (B), or (C); or
16-3 (E) an individual who is related by blood or
16-4 marriage to an individual described in Paragraph (A), (B), (C), or
16-5 (D) and shares the same home with the individual.
16-6 (65) "Proceeds" means the following property:
16-7 (A) whatever is acquired upon the sale, lease,
16-8 license, exchange, or other disposition of collateral;
16-9 (B) whatever is collected on, or distributed on
16-10 account of, collateral;
16-11 (C) rights arising out of collateral;
16-12 (D) to the extent of the value of collateral,
16-13 claims arising out of the loss, nonconformity, or interference with
16-14 the use of, defects or infringement of rights in, or damage to the
16-15 collateral; or
16-16 (E) to the extent of the value of collateral and
16-17 to the extent payable to the debtor or the secured party, insurance
16-18 payable by reason of the loss or nonconformity of, defects or
16-19 infringement of rights in, or damage to the collateral.
16-20 (66) "Promissory note" means an instrument that
16-21 evidences a promise to pay a monetary obligation, does not evidence
16-22 an order to pay, and does not contain an acknowledgement by a bank
16-23 that the bank has received for deposit a sum of money or funds.
16-24 (67) "Proposal" means a record authenticated by a
16-25 secured party that includes the terms on which the secured party is
16-26 willing to accept collateral in full or partial satisfaction of the
16-27 obligation it secures pursuant to Sections 9.620, 9.621, and 9.622.
17-1 (68) "Public-finance transaction" means a secured
17-2 transaction in connection with which:
17-3 (A) debt securities are issued;
17-4 (B) all or a portion of the securities issued
17-5 have an initial stated maturity of at least 20 years; and
17-6 (C) the debtor, obligor, secured party, account
17-7 debtor or other person obligated on collateral, assignor or
17-8 assignee or a secured obligation, or assignor or assignee of a
17-9 security interest is a State or a governmental unit of a State.
17-10 (69) "Pursuant to commitment," with respect to an
17-11 advance made or other value given by a secured party, means
17-12 pursuant to the secured party's obligation, whether or not a
17-13 subsequent event of default or other event not within the secured
17-14 party's control has relieved or may relieve the secured party from
17-15 its obligation.
17-16 (70) "Record," except as used in "for record," "of
17-17 record," "record or legal title," and "record owner," means
17-18 information that is inscribed on a tangible medium or that is
17-19 stored in an electronic or other medium and is retrievable in
17-20 perceivable form.
17-21 (71) "Registered organization" means an organization
17-22 organized solely under the law of a single State or the United
17-23 States and as to which the State or the United States must maintain
17-24 a public record showing the organization to have been organized.
17-25 (72) "Secondary obligor" means an obligor to the
17-26 extent that:
17-27 (A) the obligor's obligation is secondary; or
18-1 (B) the obligor has a right of recourse with
18-2 respect to an obligation secured by collateral against the debtor,
18-3 another obligor, or property of either.
18-4 (73) "Secured party" means:
18-5 (A) a person in whose favor a security interest
18-6 is created or provided for under a security agreement, whether or
18-7 not any obligation to be secured is outstanding;
18-8 (B) a person that holds an agricultural lien;
18-9 (C) a consignor;
18-10 (D) a person to which accounts, chattel paper,
18-11 payment intangibles, or promissory notes have been sold;
18-12 (E) a trustee, indenture trustee, agent,
18-13 collateral agent, or other representative in whose favor a security
18-14 interest or agricultural lien is created or provided for; or
18-15 (F) a person that holds a security interest
18-16 arising under Section 2.401, 2.505, 2.711(c), 2A.508(e), 4.210, or
18-17 5.118.
18-18 (74) "Security agreement" means an agreement that
18-19 creates or provides for a security interest.
18-20 (75) "Send," in connection with a record or
18-21 notification, means:
18-22 (A) to deposit in the mail, deliver for
18-23 transmission, or transmit by any other usual means of
18-24 communication, with postage or cost of transmission provided for,
18-25 addressed to any address reasonable under the circumstances; or
18-26 (B) to cause the record or notification to be
18-27 received within the time that it would have been received if
19-1 properly sent under Paragraph (A).
19-2 (76) "Software" means a computer program and any
19-3 supporting information provided in connection with a transaction
19-4 relating to the program. The term does not include a computer
19-5 program that is included in the definition of "goods."
19-6 (77) "State" means a State of the United States, the
19-7 District of Columbia, Puerto Rico, the United States Virgin
19-8 Islands, or any territory or insular possession subject to the
19-9 jurisdiction of the United States.
19-10 (78) "Supporting obligation" means a letter-of-credit
19-11 right or secondary obligation that supports the payment or
19-12 performance of an account, chattel paper, a document, a general
19-13 intangible, an instrument, or investment property.
19-14 (79) "Tangible chattel paper" means chattel paper
19-15 evidenced by a record or records consisting of information that is
19-16 inscribed on a tangible medium.
19-17 (80) "Termination statement" means an amendment of a
19-18 financing statement that:
19-19 (A) identifies, by its file number, the initial
19-20 financing statement to which it relates; and
19-21 (B) indicates either that it is a termination
19-22 statement or that the identified financing statement is no longer
19-23 effective.
19-24 (81) "Transmitting utility" means a person primarily
19-25 engaged in the business of:
19-26 (A) operating a railroad, subway, street
19-27 railway, or trolley bus;
20-1 (B) transmitting communications electrically,
20-2 electromagnetically, or by light;
20-3 (C) transmitting goods by pipeline or sewer; or
20-4 (D) transmitting or producing and transmitting
20-5 electricity, steam, gas, or water. [POLICY AND SUBJECT MATTER OF
20-6 CHAPTER. (a) Except as otherwise provided in Section 9.104 on
20-7 excluded transactions, this chapter applies]
20-8 [(1) to any transaction (regardless of its form) which
20-9 is intended to create a security interest in personal property or
20-10 fixtures including goods, documents, instruments, general
20-11 intangibles, chattel paper or accounts; and also]
20-12 [(2) to any sale of accounts or chattel paper,
20-13 provided that the application of this chapter to the sale of
20-14 accounts or chattel paper is not to recharacterize the sale of
20-15 accounts or chattel paper as a transaction to secure indebtedness
20-16 but to protect purchasers of accounts or chattel paper by providing
20-17 a notice filing system.]
20-18 [(b) This chapter applies to security interests created by
20-19 contract including pledge, assignment, chattel mortgage, chattel
20-20 trust, trust deed, factor's lien, equipment trust, conditional
20-21 sale, trust receipt, other lien or title retention contract and
20-22 lease or consignment intended as security. This chapter does not
20-23 apply to statutory liens except as provided in Section 9.310.]
20-24 [(c) The application of this chapter to a security interest
20-25 in a secured obligation is not affected by the fact that the
20-26 obligation is itself secured by a transaction or interest to which
20-27 this chapter does not apply.]
21-1 [(d) For all purposes, in the absence of a finding of fraud
21-2 or intentional misrepresentation, the parties' characterization of
21-3 a transaction as a sale of accounts or chattel paper shall be
21-4 conclusive that the transaction is a sale and is not a secured
21-5 transaction and that title, legal and equitable, has passed to the
21-6 party characterized as the purchaser of the accounts or chattel
21-7 paper, regardless of whether the secured party has any recourse
21-8 against the debtor, whether the debtor is entitled to any surplus,
21-9 or any other term of the parties' agreement.]
21-10 [Sec. 9.103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE
21-11 STATE TRANSACTIONS. (a) Documents, instruments and ordinary
21-12 goods.]
21-13 [(1) This subsection applies to documents and
21-14 instruments and to goods other than those covered by a certificate
21-15 of title described in Subsection (b), mobile goods described in
21-16 Subsection (c), and minerals described in Subsection (e).]
21-17 [(2) Except as otherwise provided in this subsection,
21-18 perfection and the effect of perfection or non-perfection of a
21-19 security interest in collateral are governed by the law of the
21-20 jurisdiction where the collateral is when the last event occurs on
21-21 which is based the assertion that the security interest is
21-22 perfected or unperfected.]
21-23 [(3) If the parties to a transaction creating a
21-24 purchase money security interest in goods in one jurisdiction
21-25 understand at the time that the security interest attaches that the
21-26 goods will be kept in another jurisdiction, then the law of the
21-27 other jurisdiction governs the perfection and the effect of
22-1 perfection or non-perfection of the security interest from the time
22-2 it attaches until 30 days after the debtor receives possession of
22-3 the goods and thereafter if the goods are taken to the other
22-4 jurisdiction before the end of the 30-day period.]
22-5 [(4) When collateral is brought into and kept in this
22-6 state while subject to a security interest perfected under the law
22-7 of the jurisdiction from which the collateral was removed, the
22-8 security interest remains perfected, but if action is required by
22-9 Subchapter C of this chapter to perfect the security interest,]
22-10 [(A) if the action is not taken before the
22-11 expiration of the period of perfection in the other jurisdiction or
22-12 the end of four months after the collateral is brought into this
22-13 state, whichever period first expires, the security interest
22-14 becomes unperfected at the end of that period and is thereafter
22-15 deemed to have been unperfected as against a person who became a
22-16 purchaser after removal;]
22-17 [(B) if the action is taken before the
22-18 expiration of the period specified in paragraph (A), the security
22-19 interest continues perfected thereafter;]
22-20 [(C) for the purpose of priority over a buyer of
22-21 consumer goods (Subsection (b) of Section 9.307), the period of the
22-22 effectiveness of a filing in the jurisdiction from which the
22-23 collateral is removed is governed by the rules with respect to
22-24 perfection in paragraphs (A) and (B).]
22-25 [(b) Certificate of title.]
22-26 [(1) This subsection applies to goods covered by a
22-27 certificate of title issued under a statute of this state or of
23-1 another jurisdiction under the law of which indication of a
23-2 security interest on the certificate is required as a condition of
23-3 perfection.]
23-4 [(2) Except as otherwise provided in this subsection,
23-5 perfection and the effect of perfection or non-perfection of the
23-6 security interest are governed by the law (including the conflict
23-7 of laws rules) of the jurisdiction issuing the certificate until
23-8 four months after the goods are removed from that jurisdiction and
23-9 thereafter until the goods are registered in another jurisdiction,
23-10 but in any event not beyond surrender of the certificate. After
23-11 the expiration of that period, the goods are not covered by the
23-12 certificate of title within the meaning of this section.]
23-13 [(3) Except with respect to the rights of a buyer
23-14 described in the next paragraph, a security interest, perfected in
23-15 another jurisdiction otherwise than by notation on a certificate of
23-16 title, in goods brought into this state and thereafter covered by a
23-17 certificate of title issued by this state is subject to the rules
23-18 stated in paragraph (4) of Subsection (a).]
23-19 [(4) If goods are brought into this state while a
23-20 security interest therein is perfected in any manner under the law
23-21 of the jurisdiction from which the goods are removed and a
23-22 certificate of title is issued by this state and the certificate
23-23 does not show that the goods are subject to the security interest
23-24 or that they may be subject to security interests not shown on the
23-25 certificate, the security interest is subordinate to the rights of
23-26 a buyer of the goods who is not in the business of selling goods of
23-27 that kind to the extent that he gives value and receives delivery
24-1 of the goods after issuance of the certificate and without
24-2 knowledge of the security interest.]
24-3 [(c) Accounts, general intangibles and mobile goods.]
24-4 [(1) This subsection applies to accounts (other than
24-5 an account described in Subsection (e) on minerals) and general
24-6 intangibles (other than uncertificated securities) and to goods
24-7 which are mobile and which are of a type normally used in more than
24-8 one jurisdiction, such as motor vehicles, trailers, rolling stock,
24-9 airplanes, shipping containers, road building and construction
24-10 machinery and commercial harvesting machinery and the like, if the
24-11 goods are equipment or are inventory leased or held for lease by
24-12 the debtor to others, and are not covered by a certificate of title
24-13 described in Subsection (b).]
24-14 [(2) The law (including the conflict of laws rules) of
24-15 the jurisdiction in which the debtor is located governs the
24-16 perfection and the effect of perfection or non-perfection of the
24-17 security interest.]
24-18 [(3) If, however, the debtor is located in the
24-19 jurisdiction which is not a part of the United States, and which
24-20 does not provide for perfection of the security interest by filing
24-21 or recording in that jurisdiction, the law of the jurisdiction in
24-22 the United States in which the debtor has its major executive
24-23 office in the United States governs the perfection and the effect
24-24 of perfection or non-perfection of the security interest through
24-25 filing. In the alternative, if the debtor is located in a
24-26 jurisdiction which is not a part of the United States or Canada and
24-27 the collateral is accounts or general intangibles for money due or
25-1 to become due, the security interest may be perfected by
25-2 notification to the account debtor. As used in this paragraph,
25-3 "United States" includes its territories and possessions and the
25-4 Commonwealth of Puerto Rico.]
25-5 [(4) A debtor shall be deemed located at his place of
25-6 business if he has one, at his chief executive office if he has
25-7 more than one place of business, otherwise at his residence. If,
25-8 however, the debtor is a foreign air carrier under the Federal
25-9 Aviation Act of 1958, as amended, it shall be deemed located at the
25-10 designated office of the agent upon whom service of process may be
25-11 made on behalf of the foreign air carrier.]
25-12 [(5) A security interest perfected under the law of
25-13 the jurisdiction of the location of the debtor is perfected until
25-14 the expiration of four months after a change of the debtor's
25-15 location to another jurisdiction, or until perfection would have
25-16 ceased by the law of the first jurisdiction, whichever period first
25-17 expires. Unless perfected in the new jurisdiction before the end
25-18 of that period, it becomes unperfected thereafter and is deemed to
25-19 have been unperfected as against a person who became a purchaser
25-20 after the change.]
25-21 [(d) Chattel paper.]
25-22 [The rules stated for goods in Subsection (a) apply to a
25-23 possessory security interest in chattel paper. The rules stated
25-24 for accounts in Subsection (c) apply to a non-possessory security
25-25 interest in chattel paper, but the security interest may not be
25-26 perfected by notification to the account debtor.]
25-27 [(e) Minerals.]
26-1 [Perfection and the effect of perfection or non-perfection of
26-2 a security interest which is created by a debtor who has an
26-3 interest in minerals or the like (including oil and gas) before
26-4 extraction and which attaches thereto as extracted, or which
26-5 attaches to an account resulting from the sale thereof at the
26-6 wellhead or minehead are governed by the law (including the
26-7 conflict of laws rules) of the jurisdiction wherein the wellhead or
26-8 minehead is located.]
26-9 [(f) Investment property.]
26-10 [(1) This subsection applies to investment property.]
26-11 [(2) Except as otherwise provided in Subdivision (6),
26-12 during the time that a security certificate is located in a
26-13 jurisdiction, perfection of a security interest, the effect of
26-14 perfection or non-perfection, and the priority of a security
26-15 interest in the certificated security represented thereby are
26-16 governed by the local law of that jurisdiction.]
26-17 [(3) Except as otherwise provided in Subdivision (6),
26-18 perfection of a security interest, the effect of perfection or
26-19 non-perfection, and the priority of a security interest in an
26-20 uncertificated security are governed by the local law of the
26-21 issuer's jurisdiction as specified in Section 8.110(d).]
26-22 [(4) Except as otherwise provided in Subdivision (6),
26-23 perfection of a security interest, the effect of perfection or
26-24 non-perfection, and the priority of a security interest in a
26-25 security entitlement or securities account are governed by the
26-26 local law of the securities intermediary's jurisdiction as
26-27 specified in Section 8.110(e).]
27-1 [(5) Except as otherwise provided in Subdivision (6),
27-2 perfection of a security interest, the effect of perfection or
27-3 non-perfection, and the priority of a security interest in a
27-4 commodity contract or commodity account are governed by the local
27-5 law of the commodity intermediary's jurisdiction. The following
27-6 rules determine a commodity intermediary's jurisdiction for
27-7 purposes of this subdivision:]
27-8 [(A) If an agreement between the commodity
27-9 intermediary and the commodity customer specifies that it is
27-10 governed by the law of a particular jurisdiction, that jurisdiction
27-11 is the commodity intermediary's jurisdiction.]
27-12 [(B) If an agreement between the commodity
27-13 intermediary and the commodity customer does not specify the
27-14 governing law as provided in Paragraph (A), but expressly specifies
27-15 that the commodity account is maintained at an office in a
27-16 particular jurisdiction, that jurisdiction is the commodity
27-17 intermediary's jurisdiction.]
27-18 [(C) If an agreement between the commodity
27-19 intermediary and the commodity customer does not specify a
27-20 jurisdiction as provided in Paragraph (A) or (B), the commodity
27-21 intermediary's jurisdiction is the jurisdiction in which is located
27-22 the office identified in an account statement as the office serving
27-23 the commodity customer's account.]
27-24 [(D) If an agreement between the commodity
27-25 intermediary and the commodity customer does not specify a
27-26 jurisdiction as provided in Paragraph (A) or (B) and an account
27-27 statement does not identify an office serving the commodity
28-1 customer's account as provided in Paragraph (C), the commodity
28-2 intermediary's jurisdiction is the jurisdiction in which is located
28-3 the chief executive office of the commodity intermediary.]
28-4 [(6) Perfection of a security interest by filing,
28-5 automatic perfection of a security interest in investment property
28-6 granted by a broker or securities intermediary, and automatic
28-7 perfection of a security interest in a commodity contract or
28-8 commodity account granted by a commodity intermediary are governed
28-9 by the local law of the jurisdiction in which the debtor is
28-10 located.]
28-11 [Sec. 9.104. TRANSACTIONS EXCLUDED FROM CHAPTER. This
28-12 chapter does not apply]
28-13 [(1) to a security interest subject to any statute of
28-14 the United States such as the Ship Mortgage Act, 1920, to the
28-15 extent that such statute governs the rights of parties to and third
28-16 parties affected by transactions in particular types of property;
28-17 or]
28-18 [(2) to a landlord's lien; or]
28-19 [(3) to a lien given by statute or other rule of law
28-20 for services or materials except as provided in Section 9.310 on
28-21 priority of such liens; or]
28-22 [(4) to a transfer of a claim for wages, salary or
28-23 other compensation of an employee; or]
28-24 [(5) to a transfer by a government or governmental
28-25 subdivision or agency; or]
28-26 [(6) to a sale of accounts or chattel paper as part of
28-27 a sale of the business out of which they arose, or an assignment of
29-1 accounts or chattel paper which is for the purpose of collection
29-2 only, or a transfer of a right to payment under a contract to an
29-3 assignee who is also to do the performance under the contract or a
29-4 transfer of a single account to an assignee in whole or partial
29-5 satisfaction of a preexisting indebtedness; or]
29-6 [(7) to a transfer of an interest or claim in or under
29-7 any policy of insurance, except as provided with respect to
29-8 proceeds (Section 9.306) and priorities in proceeds (Section
29-9 9.312); or]
29-10 [(8) to a right represented by a judgment (other than
29-11 a judgment taken on a right to payment which was collateral); or]
29-12 [(9) to any right of set-off; or]
29-13 [(10) except to the extent that provision is made for
29-14 fixtures in Section 9.313, to the creation or transfer of an
29-15 interest in or lien on real estate, including a lease or rents
29-16 thereunder; or]
29-17 [(11) to a transfer in whole or in part of any claim
29-18 arising out of tort; or]
29-19 [(12) to a transfer of an interest in any deposit
29-20 account (Subsection (a)(5) of Section 9.105), except as provided
29-21 with respect to proceeds (Section 9.306) and priorities in proceeds
29-22 (Section 9.312).]
29-23 [Sec. 9.105. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
29-24 this chapter, unless the context otherwise requires:]
29-25 [(1) "Account debtor" means the person who is
29-26 obligated on an account, chattel paper or general intangible.]
29-27 [(2) "Chattel paper" means a writing or writings which
30-1 evidence both a monetary obligation and a security interest in or a
30-2 lease of specific goods, but a charter or other contract involving
30-3 the use or hire of a vessel is not chattel paper. When a
30-4 transaction is evidenced both by such a security agreement or a
30-5 lease and by an instrument or a series of instruments, the group of
30-6 writings taken together constitutes chattel paper.]
30-7 [(3) "Collateral" means the property subject to a
30-8 security interest, and includes accounts and chattel paper which
30-9 have been sold.]
30-10 [(4) "Debtor" means the person who owes payment or
30-11 other performance of the obligation secured, whether or not he owns
30-12 or has rights in the collateral, and includes the seller of
30-13 accounts or chattel paper. Where the debtor and the owner of the
30-14 collateral are not the same person, the term "debtor" means the
30-15 owner of the collateral in any provision of the chapter dealing
30-16 with the collateral, the obligor in any provision dealing with the
30-17 obligation, and may include both where the context so requires.]
30-18 [(5) "Deposit account" means a demand, time, savings,
30-19 passbook or like account maintained with a bank, savings and loan
30-20 association, credit union or like organization, other than an
30-21 account evidenced by a certificate of deposit or a nonnegotiable
30-22 certificate of deposit.]
30-23 [(6) "Document" means document of title as defined in
30-24 the general definitions of Chapter 1 (Section 1.201), and a receipt
30-25 of the kind described in Subsection (b) of Section 7.201.]
30-26 [(7) "Encumbrance" includes real estate mortgages and
30-27 other liens on real estate and all other rights in real estate that
31-1 are not ownership interests.]
31-2 [(8) "Goods" includes all things which are movable at
31-3 the time the security interest attaches or which are fixtures
31-4 (Section 9.313), but does not include money, documents,
31-5 instruments, investment property, accounts, chattel paper, general
31-6 intangibles, or minerals or the like (including oil and gas) before
31-7 extraction. "Goods" also includes standing timber which is to be
31-8 cut and removed under a conveyance or contract for sale, the unborn
31-9 young of animals, and growing crops.]
31-10 [(9) "Instrument" means a negotiable instrument
31-11 (defined in Section 3.104), a nonnegotiable certificate of deposit,
31-12 or any other writing which evidences a right to the payment of
31-13 money and is not itself a security agreement or lease and is of a
31-14 type which is in ordinary course of business transferred by
31-15 delivery with any necessary indorsement or assignment, but the term
31-16 does not include investment property.]
31-17 [(10) "Mortgage" means a consensual interest created
31-18 by a real estate mortgage, a trust deed on real estate, or the
31-19 like.]
31-20 [(11) An advance is made "pursuant to commitment" if
31-21 the secured party has bound himself to make it, whether or not a
31-22 subsequent event of default or other event not within his control
31-23 has relieved or may relieve him from his obligation.]
31-24 [(12) "Security agreement" means an agreement which
31-25 creates or provides for a security interest.]
31-26 [(13) "Secured party" means a lender, seller or other
31-27 person in whose favor there is a security interest, including a
32-1 person to whom accounts or chattel paper have been sold. When the
32-2 holders of obligations issued under an indenture of trust,
32-3 equipment trust agreement or the like are represented by a trustee
32-4 or other person, the representative is the secured party.]
32-5 [(14) "Nonnegotiable certificate of deposit" means a
32-6 written document issued by a bank, savings and loan association,
32-7 credit union, or similar financial organization that:]
32-8 [(A) states on its face that it is a certificate
32-9 of deposit (defined in Section 3.104) or receipt for a book entry;]
32-10 [(B) contains an acknowledgment that a sum of
32-11 money has been received by the issuer, with an express or implied
32-12 agreement that the issuer will repay the sum of money; and]
32-13 [(C) is not a negotiable instrument.]
32-14 (b) The following definitions in other chapters apply [Other
32-15 definitions applying] to this chapter [and the sections in which
32-16 they appear are]:
32-17 "Applicant" Section 5.102.
32-18 "Beneficiary" Section 5.102.
32-19 "Broker" Section 8.102.
32-20 "Certificated security" Section 8.102.
32-21 "Check" Section 3.104.
32-22 "Clearing corporation" Section 8.102.
32-23 "Contract for sale" Section 2.106.
32-24 "Customer" Section 4.104.
32-25 "Entitlement holder" Section 8.102.
32-26 "Financial asset" Section 8.102.
32-27 "Holder in due course" Section 3.302.
33-1 "Issuer" (with respect to a letter of
33-2 credit or letter-of-credit right) Section 5.102.
33-3 "Issuer" (with respect to a security) Section 8.201.
33-4 "Lease" Section 2A.103.
33-5 "Lease agreement" Section 2A.103.
33-6 "Lease contract" Section 2A.103.
33-7 "Leasehold interest" Section 2A.103.
33-8 "Lessee" Section 2A.103.
33-9 "Lessee in ordinary course of business" Section 2A.103.
33-10 "Lessor" Section 2A.103.
33-11 "Lessor's residual interest" Section 2A.103.
33-12 "Letter of credit" Section 5.102.
33-13 "Merchant" Section 2.104.
33-14 "Negotiable instrument" Section 3.104.
33-15 "Nominated person" Section 5.102.
33-16 "Note" Section 3.104.
33-17 "Proceeds of a letter of credit" Section 5.114.
33-18 "Prove" Section 3.103.
33-19 "Sale" Section 2.106.
33-20 "Securities account" Section 8.501.
33-21 "Securities intermediary" Section 8.102.
33-22 "Security" Section 8.102.
33-23 "Security certificate" Section 8.102.
33-24 "Security entitlement" Section 8.102.
33-25 "Uncertificated security" Section 8.102.
33-26 ["Account". Section 9.106.]
33-27 ["Attach". Section 9.203.]
34-1 ["Commodity contract". Section 9.115.]
34-2 ["Commodity customer". Section 9.115.]
34-3 ["Commodity intermediary". Section 9.115.]
34-4 ["Construction mortgage". Section 9.313(a).]
34-5 ["Consumer goods". Section 9.109(1).]
34-6 ["Control". Section 9.115.]
34-7 ["Equipment". Section 9.109(2).]
34-8 ["Farm products". Section 9.109(3).]
34-9 ["Fixture". Section 9.313.]
34-10 ["Fixture filing". Section 9.313.]
34-11 ["General intangibles". Section 9.106.]
34-12 ["Inventory". Section 9.109(4).]
34-13 ["Investment property". Section 9.115.]
34-14 ["Lien creditor". Section 9.301(c).]
34-15 ["Proceeds". Section 9.306(a).]
34-16 ["Purchase money security interest". Section 9.107.]
34-17 ["United States". Section 9.103.]
34-18 (c) [The following definitions in other chapters apply to
34-19 this chapter:]
34-20 ["Broker". Section 8.102.]
34-21 ["Certificated security". Section 8.102.]
34-22 ["Check". Section 3.104.]
34-23 ["Clearing corporation". Section 8.102.]
34-24 ["Contract for sale". Section 2.106.]
34-25 ["Control". Section 8.106.]
34-26 ["Delivery". Section 8.301.]
34-27 ["Entitlement holder". Section 8.102.]
35-1 ["Financial asset". Section 8.102.]
35-2 ["Holder in due course". Section 3.302.]
35-3 ["Note". Section 3.104.]
35-4 ["Sale". Section 2.106.]
35-5 ["Securities intermediary". Section 8.102.]
35-6 ["Security". Section 8.102.]
35-7 ["Security certificate". Section 8.102.]
35-8 ["Security entitlement". Section 8.102.]
35-9 ["Uncertificated security". Section 8.102.]
35-10 [(d) In addition,] Chapter 1 contains general definitions
35-11 and principles of construction and interpretation applicable
35-12 throughout this chapter.
35-13 Sec. 9.103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF
35-14 PAYMENTS; BURDEN OF ESTABLISHING. (a) In this section:
35-15 (1) "Purchase-money collateral" means goods or
35-16 software that secures a purchase-money obligation incurred with
35-17 respect to that collateral.
35-18 (2) "Purchase-money obligation" means an obligation of
35-19 an obligor incurred as all or part of the price of the collateral
35-20 or for value given to enable the debtor to acquire rights in or the
35-21 use of the collateral if the value is in fact so used.
35-22 (b) A security interest in goods is a purchase-money
35-23 security interest:
35-24 (1) to the extent that the goods are purchase-money
35-25 collateral with respect to that security interest;
35-26 (2) if the security interest is in inventory that is
35-27 or was purchase-money collateral, also to the extent that the
36-1 security interest secures a purchase-money obligation incurred with
36-2 respect to other inventory in which the secured party holds or held
36-3 a purchase-money security interest; and
36-4 (3) also to the extent that the security interest
36-5 secures a purchase-money obligation incurred with respect to
36-6 software in which the secured party holds or held a purchase-money
36-7 security interest.
36-8 (c) A security interest in software is a purchase-money
36-9 security interest to the extent that the security interest also
36-10 secures a purchase-money obligation incurred with respect to goods
36-11 in which the secured party holds or held a purchase-money security
36-12 interest if:
36-13 (1) the debtor acquired its interest in the software
36-14 in an integrated transaction in which it acquired an interest in
36-15 the goods; and
36-16 (2) the debtor acquired its interest in the software
36-17 for the principal purpose of using the software in the goods.
36-18 (d) The security interest of a consignor in goods that are
36-19 the subject of a consignment is a purchase-money security interest
36-20 in inventory.
36-21 (e) In a transaction other than a consumer-goods
36-22 transaction, if the extent to which a security interest is a
36-23 purchase-money security interest depends on the application of a
36-24 payment to a particular obligation, the payment must be applied:
36-25 (1) in accordance with any reasonable method of
36-26 application to which the parties agree;
36-27 (2) in the absence of the parties' agreement to a
37-1 reasonable method, in accordance with any intention of the obligor
37-2 manifested at or before the time of payment; or
37-3 (3) in the absence of an agreement to a reasonable
37-4 method and a timely manifestation of the obligor's intention, in
37-5 the following order:
37-6 (A) to obligations that are not secured; and
37-7 (B) if more than one obligation is secured, to
37-8 obligations secured by purchase-money security interests in the
37-9 order in which those obligations were incurred.
37-10 (f) In a transaction other than a consumer-goods
37-11 transaction, a purchase-money security interest does not lose its
37-12 status as such, even if:
37-13 (1) the purchase-money collateral also secures an
37-14 obligation that is not a purchase-money obligation;
37-15 (2) collateral that is not purchase-money collateral
37-16 also secures the purchase-money obligation; or
37-17 (3) the purchase-money obligation has been renewed,
37-18 refinanced, consolidated, or restructured.
37-19 (g) In a transaction other than a consumer-goods
37-20 transaction, a secured party claiming a purchase-money security
37-21 interest has the burden of establishing the extent to which the
37-22 security interest is a purchase-money security interest.
37-23 (h) The limitation of the rules in Subsections (e), (f), and
37-24 (g) to transactions other than consumer-goods transactions is
37-25 intended to leave to the court the determination of the proper
37-26 rules in consumer-goods transactions. The court may not infer from
37-27 that limitation the nature of the proper rule in consumer-goods
38-1 transactions and may continue to apply established approaches.
38-2 Sec. 9.104. CONTROL OF DEPOSIT ACCOUNT. (a) A secured
38-3 party has control of a deposit account if:
38-4 (1) the secured party is the bank with which the
38-5 deposit account is maintained;
38-6 (2) the debtor, secured party, and bank have agreed in
38-7 an authenticated record that the bank will comply with instructions
38-8 originated by the secured party directing disposition of the funds
38-9 in the account without further consent by the debtor; or
38-10 (3) the secured party becomes the bank's customer with
38-11 respect to the deposit account.
38-12 (b) A secured party that has satisfied Subsection (a) has
38-13 control, even if the debtor retains the right to direct the
38-14 disposition of funds from the deposit account.
38-15 Sec. 9.105. CONTROL OF ELECTRONIC CHATTEL PAPER. A secured
38-16 party has control of electronic chattel paper if the record or
38-17 records comprising the chattel paper are created, stored, and
38-18 assigned in such a manner that:
38-19 (1) a single authoritative copy of the record or
38-20 records exists that is unique, identifiable and, except as
38-21 otherwise provided in Subdivisions (4), (5), and (6), unalterable;
38-22 (2) the authoritative copy identifies the secured
38-23 party as the assignee of the record or records;
38-24 (3) the authoritative copy is communicated to and
38-25 maintained by the secured party or its designated custodian;
38-26 (4) copies or revisions that add or change an
38-27 identified assignee of the authoritative copy can be made only with
39-1 the participation of the secured party;
39-2 (5) each copy of the authoritative copy and any copy
39-3 of a copy is readily identifiable as a copy that is not the
39-4 authoritative copy; and
39-5 (6) any revision of the authoritative copy is readily
39-6 identifiable as an authorized or unauthorized revision.
39-7 Sec. 9.106. CONTROL OF INVESTMENT PROPERTY. (a) A person
39-8 has control of a certificated security, uncertificated security, or
39-9 security entitlement as provided in Section 8.106.
39-10 (b) A secured party has control of a commodity contract if:
39-11 (1) the secured party is the commodity intermediary
39-12 with which the commodity contract is carried; or
39-13 (2) the commodity customer, secured party, and
39-14 commodity intermediary have agreed that the commodity intermediary
39-15 will apply any value distributed on account of the commodity
39-16 contract as directed by the secured party without further consent
39-17 by the commodity customer.
39-18 (c) A secured party having control of all security
39-19 entitlements or commodity contracts carried in a securities account
39-20 or commodity account has control over the securities account or
39-21 commodity account.
39-22 Sec. 9.107. CONTROL OF LETTER-OF-CREDIT RIGHT. A secured
39-23 party has control of a letter-of-credit right to the extent of any
39-24 right to payment or performance by the issuer or any nominated
39-25 person if the issuer or nominated person has consented to an
39-26 assignment of proceeds of the letter of credit under Section
39-27 5.114(c) or otherwise applicable law or practice.
40-1 [Sec. 9.106. DEFINITIONS: "ACCOUNT"; "GENERAL INTANGIBLES".
40-2 "Account" means any right to payment for goods sold or leased or
40-3 for services rendered which is not evidenced by an instrument or
40-4 chattel paper, whether or not it has been earned by performance.
40-5 "General intangibles" means any personal property (including things
40-6 in action) other than goods, accounts, chattel paper, documents,
40-7 instruments, investment property, and money. All rights to payment
40-8 earned or unearned under a charter or other contract involving the
40-9 use or hire of a vessel and all rights incident to the charter or
40-10 contract are accounts.]
40-11 [Sec. 9.107. DEFINITIONS: "PURCHASE MONEY SECURITY
40-12 INTEREST". A security interest is a "purchase money security
40-13 interest" to the extent that it is]
40-14 [(1) taken or retained by the seller of the collateral
40-15 to secure all or part of its price; or]
40-16 [(2) taken by a person who by making advances or
40-17 incurring an obligation gives value to enable the debtor to acquire
40-18 rights in or the use of collateral if such value is in fact so
40-19 used.]
40-20 [Sec. 9.108. WHEN AFTER-ACQUIRED COLLATERAL NOT SECURITY FOR
40-21 ANTECEDENT DEBT. Where a secured party makes an advance, incurs an
40-22 obligation, releases a perfected security interest, or otherwise
40-23 gives new value which is to be secured in whole or in part by
40-24 after-acquired property his security interest in the after-acquired
40-25 collateral shall be deemed to be taken for new value and not as
40-26 security for an antecedent debt if the debtor acquires his rights
40-27 in such collateral either in the ordinary course of his business or
41-1 under a contract of purchase made pursuant to the security
41-2 agreement within a reasonable time after new value is given.]
41-3 [Sec. 9.109. CLASSIFICATION OF GOODS; "CONSUMER GOODS";
41-4 "EQUIPMENT"; "FARM PRODUCTS"; "INVENTORY". Goods are]
41-5 [(1) "consumer goods" if they are used or bought for
41-6 use primarily for personal, family or household purposes;]
41-7 [(2) "equipment" if they are used or bought for use
41-8 primarily in business (including farming or a profession) or by a
41-9 debtor who is a non-profit organization or a governmental
41-10 subdivision or agency or if the goods are not included in the
41-11 definitions of inventory, farm products or consumer goods;]
41-12 [(3) "farm products" if they are crops or livestock or
41-13 supplies used or produced in farming operations or if they are
41-14 products of crops or livestock in their unmanufactured states (such
41-15 as ginned cotton, wool-clip, maple syrup, milk and eggs), and if
41-16 they are in the possession of a debtor engaged in raising,
41-17 fattening, grazing or other farming operations. If goods are farm
41-18 products they are neither equipment nor inventory;]
41-19 [(4) "inventory" if they are held by a person who
41-20 holds them for sale or lease or to be furnished under contracts of
41-21 service or if he has so furnished them, or if they are raw
41-22 materials, work in process or materials used or consumed in a
41-23 business. Inventory of a person is not to be classified as his
41-24 equipment.]
41-25 Sec. 9.108 [9.110]. SUFFICIENCY OF DESCRIPTION. (a) Except
41-26 as otherwise provided in Subsections (c), (d), and (e), a [(f) of
41-27 Section 9.402, any] description of personal [property] or real
42-1 property [estate] is sufficient, [for the purposes of this chapter]
42-2 whether or not it is specific, if it reasonably identifies what is
42-3 described.
42-4 (b) Except as otherwise provided in Subsection (d), a
42-5 description of collateral reasonably identifies the collateral if
42-6 it identifies the collateral by:
42-7 (1) specific listing;
42-8 (2) category;
42-9 (3) except as otherwise provided in Subsection (e), a
42-10 type of collateral defined in this title;
42-11 (4) quantity;
42-12 (5) computational or allocational formula or
42-13 procedure; or
42-14 (6) except as otherwise provided in Subsection (c),
42-15 any other method, if the identity of the collateral is objectively
42-16 determinable.
42-17 (c) A description of collateral as "all the debtor's assets"
42-18 or "all the debtor's personal property" or using words of similar
42-19 import does not reasonably identify the collateral.
42-20 (d) Except as otherwise provided in Subsection (e), a
42-21 description of a security entitlement, securities account, or
42-22 commodity account is sufficient if it describes:
42-23 (1) the collateral by those terms or as investment
42-24 property; or
42-25 (2) the underlying financial asset or commodity
42-26 contract.
42-27 (e) A description only by type of collateral defined in this
43-1 title is an insufficient description of:
43-2 (1) a commercial tort claim; or
43-3 (2) in a consumer transaction, consumer goods, a
43-4 security entitlement, a securities account, or a commodity account.
43-5 Sec. 9.109. SCOPE. (a) Except as otherwise provided in
43-6 Subsections (c), (d), and (e), this chapter applies to:
43-7 (1) a transaction, regardless of its form, that
43-8 creates a security interest in personal property or fixtures by
43-9 contract;
43-10 (2) an agricultural lien;
43-11 (3) a sale of accounts, chattel paper, payment
43-12 intangibles, or promissory notes;
43-13 (4) a consignment;
43-14 (5) a security interest arising under Section 2.401,
43-15 2.505, 2.711(c), or 2A.508(e), as provided in Section 9.110; and
43-16 (6) a security interest arising under Section 4.210 or
43-17 5.118.
43-18 (b) The application of this chapter to a security interest
43-19 in a secured obligation is not affected by the fact that the
43-20 obligation is itself secured by a transaction or interest to which
43-21 this chapter does not apply.
43-22 (c) This chapter does not apply to the extent that:
43-23 (1) a statute, regulation, or treaty of the United
43-24 States preempts this chapter;
43-25 (2) another statute of this State expressly governs
43-26 the creation, perfection, priority, or enforcement of a security
43-27 interest created by this State or a governmental unit of this
44-1 State;
44-2 (3) a statute of another State, a foreign country, or
44-3 a governmental unit of another State or a foreign country, other
44-4 than a statute generally applicable to security interests,
44-5 expressly governs creation, perfection, priority, or enforcement of
44-6 a security interest created by the State, country, or governmental
44-7 unit; or
44-8 (4) the rights of a transferee beneficiary or
44-9 nominated person under a letter of credit are independent and
44-10 superior under Section 5.114.
44-11 (d) This chapter does not apply to:
44-12 (1) a landlord's lien, other than an agricultural
44-13 lien;
44-14 (2) a lien, other than an agricultural lien, given by
44-15 statute or other rule of law for services or materials, but Section
44-16 9.333 applies with respect to priority of the lien;
44-17 (3) an assignment of a claim for wages, salary, or
44-18 other compensation of an employee;
44-19 (4) a sale of accounts, chattel paper, payment
44-20 intangibles, or promissory notes as part of a sale of the business
44-21 out of which they arose;
44-22 (5) an assignment of accounts, chattel paper, payment
44-23 intangibles, or promissory notes that is for the purpose of
44-24 collection only;
44-25 (6) an assignment of a right to payment under a
44-26 contract to an assignee that is also obligated to perform under the
44-27 contract;
45-1 (7) an assignment of a single account, payment
45-2 intangible, or promissory note to an assignee in full or partial
45-3 satisfaction of a preexisting indebtedness;
45-4 (8) a transfer of an interest in or an assignment of
45-5 a claim under a policy of insurance, other than an assignment by or
45-6 to a health care provider of a health-care-insurance receivable and
45-7 any subsequent assignment of the right to payment, but Sections
45-8 9.315 and 9.322 apply with respect to proceeds and priorities in
45-9 proceeds;
45-10 (9) an assignment of a right represented by a
45-11 judgment, other than a judgment taken on a right to payment that
45-12 was collateral;
45-13 (10) a right of recoupment or set-off, but:
45-14 (A) Section 9.340 applies with respect to the
45-15 effectiveness of rights of recoupment or set-off against deposit
45-16 accounts; and
45-17 (B) Section 9.404 applies with respect to
45-18 defenses or claims of an account debtor;
45-19 (11) the creation or transfer of an interest in or
45-20 lien on real property, including a lease or rents thereunder,
45-21 except to the extent that provision is made for:
45-22 (A) liens on real property in Sections 9.203 and
45-23 9.308;
45-24 (B) fixtures in Section 9.334;
45-25 (C) fixture filings in Sections 9.501, 9.502,
45-26 9.512, 9.516, and 9.519; and
45-27 (D) security agreements covering personal and
46-1 real property in Section 9.604;
46-2 (12) an assignment of a claim arising in tort, other
46-3 than a commercial tort claim, but Sections 9.315 and 9.322 apply
46-4 with respect to proceeds and priorities in proceeds; or
46-5 (13) an assignment of a deposit account, other than a
46-6 nonnegotiable certificate of deposit, in a consumer transaction,
46-7 but Sections 9.315 and 9.322 apply with respect to proceeds and
46-8 priorities in proceeds.
46-9 (e) The application of this chapter to the sale of accounts,
46-10 chattel paper, payment intangibles, or promissory notes is not to
46-11 recharacterize that sale as a transaction to secure indebtedness
46-12 but to protect purchasers of those assets by providing a notice
46-13 filing system. For all purposes, in the absence of fraud or
46-14 intentional misrepresentation, the parties' characterization of a
46-15 transaction as a sale of such assets shall be conclusive that the
46-16 transaction is a sale and is not a secured transaction and that
46-17 title, legal and equitable, has passed to the party characterized
46-18 as the purchaser of those assets regardless of whether the secured
46-19 party has any recourse against the debtor, whether the debtor is
46-20 entitled to any surplus, or any other term of the parties'
46-21 agreement.
46-22 [Sec. 9.112. WHERE COLLATERAL IS NOT OWNED BY DEBTOR.
46-23 Unless otherwise agreed, when a secured party knows that collateral
46-24 is owned by a person who is not the debtor, the owner of the
46-25 collateral is entitled to receive from the secured party any
46-26 surplus under Section 9.502(b) or under Section 9.504(a), and is
46-27 not liable for the debt or for any deficiency after resale, and he
47-1 has the same right as the debtor]
47-2 [(1) to receive statements under Section 9.208;]
47-3 [(2) to receive notice of and to object to a secured
47-4 party's proposal to retain the collateral in satisfaction of the
47-5 indebtedness under Section 9.505;]
47-6 [(3) to redeem the collateral under Section 9.506;]
47-7 [(4) to obtain injunctive or other relief under
47-8 Section 9.507(a); and]
47-9 [(5) to recover losses caused to him under Section
47-10 9.208(b).]
47-11 Sec. 9.110 [9.113]. SECURITY INTERESTS ARISING UNDER CHAPTER
47-12 2 OR 2A [ON SALES OR UNDER CHAPTER ON LEASES]. A security interest
47-13 arising [solely] under Section 2.401, 2.505, 2.711(c), or 2A.508(e)
47-14 [the chapter on Sales (Chapter 2) or the chapter on Leases (Chapter
47-15 2A)] is subject to [the provisions of] this chapter. However,
47-16 until the debtor obtains [except that to the extent that and so
47-17 long as the debtor does not have or does not lawfully obtain]
47-18 possession of the goods:
47-19 (1) [no security agreement is necessary to make] the
47-20 security interest is enforceable, even if Section 9.203(b)(3) has
47-21 not been satisfied; [and]
47-22 (2) [no] filing is not required to perfect the
47-23 security interest; [and]
47-24 (3) the rights of the secured party after [on] default
47-25 by the debtor are governed by [the chapter on Sales (]Chapter 2[)]
47-26 or [by the chapter on Leases (Chapter] 2A; and
47-27 (4) the security interest has priority over a
48-1 conflicting security interest created by the debtor[) in the case
48-2 of a security interest arising solely under such chapter].
48-3 [Sec. 9.114. CONSIGNMENT. (a) A person who delivers goods
48-4 under a consignment which is not a security interest and who would
48-5 be required to file under this chapter by Subsection (c)(3) of
48-6 Section 2.326 has priority over a secured party who is or becomes a
48-7 creditor of the consignee and who would have a perfected security
48-8 interest in the goods if they were the property of the consignee,
48-9 and also has priority with respect to identifiable cash proceeds
48-10 received on or before delivery of the goods to a buyer, if]
48-11 [(1) the consignor complies with the filing provision
48-12 of the chapter on Sales with respect to consignments (Subsection
48-13 (c)(3) of Section 2.326) before the consignee receives possession
48-14 of the goods; and]
48-15 [(2) the consignor gives notification in writing to
48-16 the holder of the security interest if the holder has filed a
48-17 financing statement covering the same types of goods before the
48-18 date of the filing made by the consignor; and]
48-19 [(3) the holder of the security interest receives the
48-20 notification within five years before the consignee receives
48-21 possession of the goods; and]
48-22 [(4) the notification states that the consignor
48-23 expects to deliver goods on consignment to the consignee,
48-24 describing the goods by item or type.]
48-25 [(b) In the case of a consignment which is not a security
48-26 interest and in which the requirements of the preceding subsection
48-27 have not been met, a person who delivers goods to another is
49-1 subordinate to a person who would have a perfected security
49-2 interest in the goods if they were the property of the debtor.]
49-3 [Sec. 9.115. INVESTMENT PROPERTY. (a) In this chapter:]
49-4 [(1) "Commodity account" means an account maintained
49-5 by a commodity intermediary in which a commodity contract is
49-6 carried for a commodity customer.]
49-7 [(2) "Commodity contract" means a commodity futures
49-8 contract, an option on a commodity futures contract, a commodity
49-9 option, or other contract that, in each case, is:]
49-10 [(A) traded on or subject to the rules of a
49-11 board of trade that has been designated as a contract market for
49-12 such a contract pursuant to the federal commodities laws; or]
49-13 [(B) traded on a foreign commodity board of
49-14 trade, exchange, or market, and is carried on the books of a
49-15 commodity intermediary for a commodity customer.]
49-16 [(3) "Commodity customer" means a person for whom a
49-17 commodity intermediary carries a commodity contract on its books.]
49-18 [(4) "Commodity intermediary" means:]
49-19 [(A) a person who is registered as a futures
49-20 commission merchant under the federal commodities laws; or]
49-21 [(B) a person who in the ordinary course of its
49-22 business provides clearance or settlement services for a board of
49-23 trade that has been designated as a contract market pursuant to the
49-24 federal commodities laws.]
49-25 [(5) "Control," with respect to a certificated
49-26 security, uncertificated security, or security entitlement, has the
49-27 meaning specified in Section 8.106. A secured party has control
50-1 over a commodity contract if, by agreement among the commodity
50-2 customer, the commodity intermediary, and the secured party, the
50-3 commodity intermediary has agreed that it will apply any value
50-4 distributed on account of the commodity contract as directed by the
50-5 secured party without further consent by the commodity customer.
50-6 If a commodity customer grants a security interest in a commodity
50-7 contract to its own commodity intermediary, the commodity
50-8 intermediary as secured party has control. A secured party has
50-9 control over a securities account or commodity account if the
50-10 secured party has control over all security entitlements or
50-11 commodity contracts carried in the securities account or commodity
50-12 account.]
50-13 [(6) "Investment property" means:]
50-14 [(A) a security, whether certificated or
50-15 uncertificated;]
50-16 [(B) a security entitlement;]
50-17 [(C) a securities account;]
50-18 [(D) a commodity contract; or]
50-19 [(E) a commodity account.]
50-20 [(b) Attachment or perfection of a security interest in a
50-21 securities account is also attachment or perfection of a security
50-22 interest in all security entitlements carried in the securities
50-23 account. Attachment or perfection of a security interest in a
50-24 commodity account is also attachment or perfection of a security
50-25 interest in all commodity contracts carried in the commodity
50-26 account.]
50-27 [(c) A description of collateral in a security agreement or
51-1 financing statement is sufficient to create or perfect a security
51-2 interest in a certificated security, uncertificated security,
51-3 security entitlement, securities account, commodity contract, or
51-4 commodity account whether it describes the collateral by those
51-5 terms, or as investment property, or by description of the
51-6 underlying security, financial asset, or commodity contract. A
51-7 description of investment property collateral in a security
51-8 agreement or financing statement is sufficient if it identifies the
51-9 collateral by specific listing, by category, by quantity, by a
51-10 computational or allocational formula or procedure, or by any other
51-11 method, if the identity of the collateral is objectively
51-12 determinable.]
51-13 [(d) Perfection of a security interest in investment
51-14 property is governed by the following rules:]
51-15 [(1) A security interest in investment property may be
51-16 perfected by control.]
51-17 [(2) Except as otherwise provided in Subdivisions (3)
51-18 and (4), a security interest in investment property may be
51-19 perfected by filing.]
51-20 [(3) If the debtor is a broker or securities
51-21 intermediary, a security interest in investment property is
51-22 perfected when it attaches. The filing of a financing statement
51-23 with respect to a security interest in investment property granted
51-24 by a broker or securities intermediary has no effect for purposes
51-25 of perfection or priority with respect to that security interest.]
51-26 [(4) If a debtor is a commodity intermediary, a
51-27 security interest in a commodity contract or a commodity account is
52-1 perfected when it attaches. The filing of a financing statement
52-2 with respect to a security interest in a commodity contract or a
52-3 commodity account granted by a commodity intermediary has no effect
52-4 for purposes of perfection or priority with respect to that
52-5 security interest.]
52-6 [(e) Priority between conflicting security interests in the
52-7 same investment property is governed by the following rules:]
52-8 [(1) A security interest of a secured party who has
52-9 control over investment property has priority over a security
52-10 interest of a secured party who does not have control over the
52-11 investment property.]
52-12 [(2) Except as otherwise provided in Subdivisions (3)
52-13 and (4), conflicting security interests of secured parties each of
52-14 whom has control rank equally.]
52-15 [(3) Except as otherwise agreed on by the securities
52-16 intermediary, a security interest in a security entitlement or a
52-17 securities account granted to the debtor's own securities
52-18 intermediary has priority over any security interest granted by the
52-19 debtor to another secured party.]
52-20 [(4) Except as otherwise agreed on by the commodity
52-21 intermediary, a security interest in a commodity contract or a
52-22 commodity account granted to the debtor's own commodity
52-23 intermediary has priority over any security interest granted by the
52-24 debtor to another secured party.]
52-25 [(5) Conflicting security interests granted by a
52-26 broker, a securities intermediary, or a commodity intermediary that
52-27 are perfected without control rank equally.]
53-1 [(6) In all other cases, priority between conflicting
53-2 security interests in investment property is governed by Sections
53-3 9.312(e)-(g). Section 9.312(d) does not apply to investment
53-4 property.]
53-5 [(f) If a security certificate in registered form is
53-6 delivered to a secured party pursuant to agreement, a written
53-7 security agreement is not required for attachment or enforceability
53-8 of the security interest, delivery suffices for perfection of the
53-9 security interest, and the security interest has priority over a
53-10 conflicting security interest perfected by means other than
53-11 control, even if a necessary indorsement is lacking.]
53-12 [Sec. 9.116. SECURITY INTEREST ARISING IN PURCHASE OR
53-13 DELIVERY OF FINANCIAL ASSET. (a) If a person buys a financial
53-14 asset through a securities intermediary in a transaction in which
53-15 the buyer is obligated to pay the purchase price to the securities
53-16 intermediary at the time of the purchase, and the securities
53-17 intermediary credits the financial asset to the buyer's securities
53-18 account before the buyer pays the securities intermediary, the
53-19 securities intermediary has a security interest in the buyer's
53-20 security entitlement securing the buyer's obligation to pay. A
53-21 security agreement is not required for attachment or enforceability
53-22 of the security interest, and the security interest is
53-23 automatically perfected.]
53-24 [(b) If a certificated security or other financial asset
53-25 represented by a writing that in the ordinary course of business is
53-26 transferred by delivery with any necessary indorsement or
53-27 assignment is delivered pursuant to an agreement between persons in
54-1 the business of dealing with such securities or financial assets
54-2 and the agreement calls for delivery versus payment, the person
54-3 delivering the certificate or other financial asset has a security
54-4 interest in the certificated security or other financial asset
54-5 securing the seller's right to receive payment. A security
54-6 agreement is not required for attachment or enforceability of the
54-7 security interest, and the security interest is automatically
54-8 perfected.]
54-9 SUBCHAPTER B. EFFECTIVENESS [VALIDITY] OF SECURITY
54-10 AGREEMENT; ATTACHMENT OF SECURITY INTEREST; [AND]
54-11 RIGHTS OF PARTIES TO SECURITY AGREEMENT [THERETO]
54-12 Sec. 9.201. GENERAL EFFECTIVENESS [VALIDITY] OF SECURITY
54-13 AGREEMENT. (a) Except as otherwise provided by this title, a
54-14 security agreement is effective according to its terms between the
54-15 parties, against purchasers of the collateral, and against
54-16 creditors.
54-17 (b) A transaction subject to this chapter is subject to any
54-18 applicable rule of law that establishes a different rule for
54-19 consumers and to:
54-20 (1) Title 4, Finance Code; and
54-21 (2) Subchapter E, Chapter 17.
54-22 (c) In case of conflict between this chapter and a rule of
54-23 law, statute, or regulation described in Subsection (b), the rule
54-24 of law, statute, or regulation controls. Failure to comply with a
54-25 statute or regulation described in Subsection (b) has only the
54-26 effect the statute or regulation specifies.
54-27 (d) This [Nothing in this] chapter does not:
55-1 (1) validate [validates] any rate, charge, agreement,
55-2 or practice that violates a rule of law, [illegal under any]
55-3 statute, or regulation described in Subsection (b); [thereunder
55-4 governing usury, small loans, retail installment sales, or the
55-5 like,] or
55-6 (2) extend [extends] the application of the rule of
55-7 law, [any such] statute, or regulation to a [any] transaction not
55-8 otherwise subject to it [thereto].
55-9 Sec. 9.202. TITLE TO COLLATERAL IMMATERIAL. Except as
55-10 otherwise provided with respect to consignments or sales of
55-11 accounts, chattel paper, payment intangibles, or promissory notes,
55-12 the provisions [Each provision] of this chapter with regard to
55-13 rights and[,] obligations apply [and remedies applies] whether
55-14 title to collateral is in the secured party or [in] the debtor.
55-15 Sec. 9.203. ATTACHMENT AND ENFORCEABILITY OF SECURITY
55-16 INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS;[,] FORMAL REQUISITES.
55-17 (a) A security interest attaches to collateral when it becomes
55-18 enforceable against the debtor with respect to the collateral,
55-19 unless an agreement expressly postpones the time of attachment.
55-20 (b) Except as otherwise provided in Subsections (c)-(j)
55-21 [Subject to the provisions of Section 4.210 on the security
55-22 interest of a collecting bank, Sections 9.115 and 9.116 on security
55-23 interests in investment property, and Section 9.113 on a security
55-24 interest arising under the chapter on Sales], a security interest
55-25 is [not] enforceable against the debtor and [or] third parties with
55-26 respect to the collateral only if [and does not attach unless]:
55-27 (1) [the collateral is in the possession of the
56-1 secured party pursuant to agreement, the collateral is investment
56-2 property and the secured party has control pursuant to agreement,
56-3 or the debtor has signed a security agreement which contains a
56-4 description of the collateral and in addition, when the security
56-5 interest covers crops growing or to be grown or timber to be cut, a
56-6 description of the land concerned;]
56-7 [(2)] value has been given; [and]
56-8 (2) [(3)] the debtor has rights in the collateral or
56-9 the power to transfer rights in the collateral to a secured party;
56-10 and
56-11 (3) one of the following conditions is met:
56-12 (A) the debtor has authenticated a security
56-13 agreement that provides a description of the collateral and, if the
56-14 security interest covers timber to be cut, a description of the
56-15 land concerned;
56-16 (B) the collateral is not a certificated
56-17 security and is in the possession of the secured party under
56-18 Section 9.313 pursuant to the debtor's security agreement;
56-19 (C) the collateral is a certificated security in
56-20 registered form and the security certificate has been delivered to
56-21 the secured party under Section 8.301 pursuant to the debtor's
56-22 security agreement; or
56-23 (D) the collateral is deposit accounts,
56-24 electronic chattel paper, investment property, or letter-of-credit
56-25 rights, and the secured party has control under Section 9.104,
56-26 9.105, 9.106, or 9.107 pursuant to the debtor's security agreement.
56-27 (c) Subsection (b) is subject to Section 4.210 on the
57-1 security interest of a collecting bank, Section 5.118 on the
57-2 security interest of a letter-of-credit issuer or nominated person,
57-3 Section 9.110 on a security interest arising under Chapter 2 or 2A,
57-4 and Section 9.206 on security interests in investment property.
57-5 (d) A person becomes bound as debtor by a security agreement
57-6 entered into by another person if, by operation of law other than
57-7 this chapter or by contract:
57-8 (1) the security agreement becomes effective to create
57-9 a security interest in the person's property; or
57-10 (2) the person becomes generally obligated for the
57-11 obligations of the other person, including the obligation secured
57-12 under the security agreement, and acquires or succeeds to all or
57-13 substantially all of the assets of the other person.
57-14 (e) If a new debtor becomes bound as debtor by a security
57-15 agreement entered into by another person:
57-16 (1) the agreement satisfies Subsection (b)(3) with
57-17 respect to existing or after-acquired property of the new debtor to
57-18 the extent the property is described in the agreement; and
57-19 (2) another agreement is not necessary to make a
57-20 security interest in the property enforceable.
57-21 (f) The attachment of [(b) A security interest attaches
57-22 when it becomes enforceable against the debtor with respect to the
57-23 collateral. Attachment occurs as soon as all of the events
57-24 specified in Subsection (a) have taken place unless explicit
57-25 agreement postpones the time of attaching.]
57-26 [(c) If a secured party holds a security interest which
57-27 applies under this chapter to minerals (including oil and gas) upon
58-1 their extraction and the security interest also qualifies under
58-2 applicable law as a lien on such minerals before their extraction,
58-3 the security interest before and after production shall constitute
58-4 a single continuous and uninterrupted lien on the property. The
58-5 foregoing is declaratory of the law of this state as it has
58-6 heretofore existed and shall apply with respect to oil, gas, and
58-7 other minerals heretofore and hereafter produced.]
58-8 [(d) Unless otherwise agreed] a security interest in
58-9 collateral [agreement] gives the secured party the rights to
58-10 proceeds provided by Section 9.315 and is also attachment of a
58-11 security interest in a supporting obligation for the collateral
58-12 [9.306].
58-13 (g) The attachment of a security interest in a right to
58-14 payment or performance secured by a security interest or other lien
58-15 on personal or real property is also attachment of a security
58-16 interest in the security interest, mortgage, or other lien.
58-17 (h) The attachment of a security interest in a securities
58-18 account is also attachment of a security interest in the security
58-19 entitlements carried in the securities account.
58-20 (i) The attachment of a security interest in a commodity
58-21 account is also attachment of a security interest in the commodity
58-22 contracts carried in the commodity account.
58-23 (j) If a secured party holds a security interest that
58-24 applies under this chapter to minerals, including oil and gas, upon
58-25 their extraction and the security interest also qualifies under
58-26 applicable law as a lien on those minerals before their extraction,
58-27 the security interest before and after production is a single
59-1 continuous and uninterrupted lien on the property. This subsection
59-2 is a statement of the law of this State as it existed before the
59-3 effective date of this subsection and applies with respect to
59-4 minerals, including oil and gas, regardless of when the minerals
59-5 were extracted.
59-6 [(e) A transaction, although subject to this chapter, is
59-7 also subject to Title 79, Revised Statutes, and in the case of
59-8 conflict between the provisions of this Chapter and any such
59-9 statute, the provisions of such statute control. Failure to comply
59-10 with any applicable statute has only the effect which is specified
59-11 therein.]
59-12 Sec. 9.204. AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES. (a)
59-13 Except as provided in Subsection (b), a security agreement may
59-14 create or provide for a security interest in [that any or all
59-15 obligations covered by the security agreement are to be secured by]
59-16 after-acquired collateral.
59-17 (b) A [No] security interest does not attach [attaches]
59-18 under a term constituting an after-acquired property clause to:
59-19 (1) consumer goods, other than an accession
59-20 [accessions (Section 9.314)] when given as additional security,
59-21 unless the debtor acquires rights in them within 10 [ten] days
59-22 after the secured party gives value; or
59-23 (2) a commercial tort claim.
59-24 (c) A [Obligations covered by a] security agreement may
59-25 provide that collateral secures, or that accounts, chattel paper,
59-26 payment intangibles, or promissory notes are sold in connection
59-27 with, [include] future advances or other value, whether or not the
60-1 advances or value are given pursuant to commitment [(Subsection (a)
60-2 of Section 9.105)].
60-3 Sec. 9.205. USE OR DISPOSITION OF COLLATERAL [WITHOUT
60-4 ACCOUNTING] PERMISSIBLE. (a) A security interest is not invalid
60-5 or fraudulent against creditors solely because:
60-6 (1) [by reason of liberty in] the debtor has the right
60-7 or ability to:
60-8 (A) use, commingle, or dispose of all or part of
60-9 the collateral, [(]including returned or repossessed goods;
60-10 (B)[) or to] collect, [or] compromise, enforce,
60-11 or otherwise deal with collateral;
60-12 (C) [accounts or chattel paper, or to] accept
60-13 the return of collateral [goods] or make repossessions;[,] or
60-14 (D) [to] use, commingle, or dispose of
60-15 proceeds;[,] or
60-16 (2) [by reason of the failure of] the secured party
60-17 fails to require the debtor to account for proceeds or replace
60-18 collateral.
60-19 (b) This section does not relax the requirements of
60-20 possession if attachment, [where] perfection, or enforcement of a
60-21 security interest depends upon possession of the collateral by the
60-22 secured party [or by a bailee].
60-23 Sec. 9.206. SECURITY INTEREST ARISING IN PURCHASE OR
60-24 DELIVERY OF FINANCIAL ASSET. (a) A security interest in favor of
60-25 a securities intermediary attaches to a person's security
60-26 entitlement if:
60-27 (1) the person buys a financial asset through the
61-1 securities intermediary in a transaction in which the person is
61-2 obligated to pay the purchase price to the securities intermediary
61-3 at the time of the purchase; and
61-4 (2) the securities intermediary credits the financial
61-5 asset to the buyer's securities account before the buyer pays the
61-6 securities intermediary.
61-7 (b) The security interest described in Subsection (a)
61-8 secures the person's obligation to pay for the financial asset.
61-9 (c) A security interest in favor of a person that delivers a
61-10 certificated security or other financial asset represented by a
61-11 writing attaches to the security or other financial asset if:
61-12 (1) the security or other financial asset:
61-13 (A) in the ordinary course of business is
61-14 transferred by delivery with any necessary indorsement or
61-15 assignment; and
61-16 (B) is delivered under an agreement between
61-17 persons in the business of dealing with such securities or
61-18 financial assets; and
61-19 (2) the agreement calls for delivery against payment.
61-20 (d) The security interest described in Subsection (c)
61-21 secures the obligation to make payment for the delivery.
61-22 [AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
61-23 SALES WARRANTIES WHERE SECURITY AGREEMENT EXISTS. (a) Subject to
61-24 any statute or decision which establishes a different rule for
61-25 buyers or lessees of consumer goods, an agreement by a buyer or
61-26 lessee that he will not assert against an assignee any claim or
61-27 defense which he may have against the seller or lessor is
62-1 enforceable by an assignee who takes his assignment for value, in
62-2 good faith and without notice of a claim or defense, except as to
62-3 defenses of a type which may be asserted against a holder in due
62-4 course of a negotiable instrument under the chapter on Commercial
62-5 Paper (Chapter 3). A buyer who as part of one transaction signs
62-6 both a negotiable instrument and a security agreement makes such an
62-7 agreement.]
62-8 [(b) When a seller retains a purchase money security
62-9 interest in goods the chapter on Sales (Chapter 2) governs the sale
62-10 and any disclaimer, limitation or modification of the seller's
62-11 warranties.]
62-12 Sec. 9.207. RIGHTS AND DUTIES OF SECURED PARTY HAVING
62-13 POSSESSION OR CONTROL OF [WHEN] COLLATERAL [IS IN SECURED PARTY'S
62-14 POSSESSION]. (a) Except as otherwise provided in Subsection (d),
62-15 a [A] secured party shall [must] use reasonable care in the custody
62-16 and preservation of collateral in the secured party's [his]
62-17 possession. In the case of [an instrument or] chattel paper or an
62-18 instrument, reasonable care includes taking necessary steps to
62-19 preserve rights against prior parties unless otherwise agreed.
62-20 (b) Except as otherwise provided in Subsection (d), if a
62-21 secured party has [Unless otherwise agreed, when collateral is in
62-22 the secured party's] possession of collateral:
62-23 (1) reasonable expenses, [(]including the cost of
62-24 [any] insurance and payment of taxes or other charges,[)] incurred
62-25 in the custody, preservation, use, or operation of the collateral
62-26 are chargeable to the debtor and are secured by the collateral;
62-27 (2) the risk of accidental loss or damage is on the
63-1 debtor to the extent of any deficiency in any effective insurance
63-2 coverage;
63-3 (3) the secured party shall keep the collateral
63-4 identifiable, but fungible collateral may be commingled [may hold
63-5 as additional security any increase or profits (except money)
63-6 received from the collateral, but money so received, unless
63-7 remitted to the debtor, shall be applied in reduction of the
63-8 secured obligation]; and
63-9 (4) the secured party may use or operate the
63-10 collateral:
63-11 (A) for the purpose of preserving the collateral
63-12 or its value;
63-13 (B) as permitted by an order of a court having
63-14 competent jurisdiction; or
63-15 (C) except in the case of consumer goods, in the
63-16 manner and to the extent agreed by the debtor [must keep the
63-17 collateral identifiable but fungible collateral may be commingled;]
63-18 [(5) the secured party may repledge the collateral
63-19 upon terms which do not impair the debtor's right to redeem it].
63-20 (c) Except as otherwise provided in Subsection (d), a [A]
63-21 secured party having possession of collateral or control of
63-22 collateral under Section 9.104, 9.105, 9.106, or 9.107:
63-23 (1) may hold as additional security any proceeds,
63-24 except money or funds, received from the collateral;
63-25 (2) shall apply money or funds received from the
63-26 collateral to reduce the secured obligation, unless remitted to the
63-27 debtor; and
64-1 (3) may create a security interest in the collateral
64-2 [is liable for any loss caused by his failure to meet any
64-3 obligation imposed by the preceding subsections but does not lose
64-4 his security interest].
64-5 (d) If the secured party is a buyer of accounts, chattel
64-6 paper, payment intangibles, or promissory notes or a consignor:
64-7 (1) Subsection (a) does not apply unless the secured
64-8 party is entitled under an agreement:
64-9 (A) to charge back uncollected collateral; or
64-10 (B) otherwise to full or limited recourse
64-11 against the debtor or a secondary obligor based on the nonpayment
64-12 or other default of an account debtor or other obligor on the
64-13 collateral; and
64-14 (2) Subsections (b) and (c) do not apply. [A secured
64-15 party may use or operate the collateral for the purpose of
64-16 preserving the collateral or its value or pursuant to the order of
64-17 a court of appropriate jurisdiction or, except in the case of
64-18 consumer goods, in the manner and to the extent provided in the
64-19 security agreement.]
64-20 Sec. 9.208. ADDITIONAL DUTIES OF SECURED PARTY HAVING
64-21 CONTROL OF COLLATERAL. (a) This section applies to cases in which
64-22 there is no outstanding secured obligation and the secured party is
64-23 not committed to make advances, incur obligations, or otherwise
64-24 give value.
64-25 (b) Within 10 days after receiving an authenticated demand
64-26 by the debtor:
64-27 (1) a secured party having control of a deposit
65-1 account under Section 9.104(a)(2) shall send to the bank with which
65-2 the deposit account is maintained an authenticated statement that
65-3 releases the bank from any further obligation to comply with
65-4 instructions originated by the secured party;
65-5 (2) a secured party having control of a deposit
65-6 account under Section 9.104(a)(3) shall:
65-7 (A) pay the debtor the balance on deposit in the
65-8 deposit account; or
65-9 (B) transfer the balance on deposit into a
65-10 deposit account in the debtor's name;
65-11 (3) a secured party, other than a buyer, having
65-12 control of electronic chattel paper under Section 9.105 shall:
65-13 (A) communicate the authoritative copy of the
65-14 electronic chattel paper to the debtor or its designated custodian;
65-15 (B) if the debtor designates a custodian that is
65-16 the designated custodian with which the authoritative copy of the
65-17 electronic chattel paper is maintained for the secured party,
65-18 communicate to the custodian an authenticated record releasing the
65-19 designated custodian from any further obligation to comply with
65-20 instructions originated by the secured party and instructing the
65-21 custodian to comply with instructions originated by the debtor; and
65-22 (C) take appropriate action to enable the debtor
65-23 or its designated custodian to make copies of or revisions to the
65-24 authoritative copy that add or change an identified assignee of the
65-25 authoritative copy without the consent of the secured party;
65-26 (4) a secured party having control of investment
65-27 property under Section 8.106(d)(2) or 9.106(b) shall send to the
66-1 securities intermediary or commodity intermediary with which the
66-2 security entitlement or commodity contract is maintained an
66-3 authenticated record that releases the securities intermediary or
66-4 commodity intermediary from any further obligation to comply with
66-5 entitlement orders or directions originated by the secured party;
66-6 and
66-7 (5) a secured party having control of a
66-8 letter-of-credit right under Section 9.107 shall send to each
66-9 person having an unfulfilled obligation to pay or deliver proceeds
66-10 of the letter of credit to the secured party an authenticated
66-11 release from any further obligation to pay or deliver proceeds of
66-12 the letter of credit to the secured party.
66-13 Sec. 9.209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS
66-14 BEEN NOTIFIED OF ASSIGNMENT. (a) Except as otherwise provided in
66-15 Subsection (c), this section applies if:
66-16 (1) there is no outstanding secured obligation; and
66-17 (2) the secured party is not committed to make
66-18 advances, incur obligations, or otherwise give value.
66-19 (b) Within 10 days after receiving an authenticated demand
66-20 by the debtor, a secured party shall send to an account debtor that
66-21 has received notification of an assignment to the secured party as
66-22 assignee under Section 9.406(a) an authenticated record that
66-23 releases the account debtor from any further obligation to the
66-24 secured party.
66-25 (c) This section does not apply to an assignment
66-26 constituting the sale of an account, chattel paper, or payment
66-27 intangible.
67-1 Sec. 9.210. REQUEST FOR ACCOUNTING; REQUEST REGARDING
67-2 [STATEMENT OF ACCOUNT OR] LIST OF COLLATERAL OR STATEMENT OF
67-3 ACCOUNT. (a) In this section:
67-4 (1) "Request" means a record of a type described in
67-5 Subdivision (2), (3), or (4).
67-6 (2) "Request for an accounting" means a record
67-7 authenticated by a debtor requesting that the recipient provide an
67-8 accounting of the unpaid obligations secured by collateral and
67-9 reasonably identifying the transaction or relationship that is the
67-10 subject of the request.
67-11 (3) "Request regarding a list of collateral" means a
67-12 record authenticated by a debtor requesting that the recipient
67-13 approve or correct a list of what the debtor believes to be the
67-14 collateral securing an obligation and reasonably identifying the
67-15 transaction or relationship that is the subject of the request.
67-16 (4) "Request regarding a statement of account" means a
67-17 record authenticated by a debtor requesting that the recipient
67-18 approve or correct a statement indicating what the debtor believes
67-19 to be the aggregate amount of unpaid obligations secured by
67-20 collateral as of a specified date and reasonably identifying the
67-21 transaction or relationship that is the subject of the request. [A
67-22 debtor may sign a statement indicating what he believes to be the
67-23 aggregate amount of unpaid indebtedness as of a specified date and
67-24 may send it to the secured party with a request that the statement
67-25 be approved or corrected and returned to the debtor. When the
67-26 security agreement or any other record kept by the secured party
67-27 identifies the collateral a debtor may similarly request the
68-1 secured party to approve or correct a list of the collateral.]
68-2 (b) Subject to Subsections (c), (d), (e), and (f), a [The]
68-3 secured party, other than a buyer of accounts, chattel paper,
68-4 payment intangibles, or promissory notes or a consignor, shall
68-5 [must] comply with [such] a request within 14 days [two weeks]
68-6 after receipt:
68-7 (1) in the case of a request for an accounting, by
68-8 authenticating and sending to the debtor an accounting; and
68-9 (2) in the case of a request regarding a list of
68-10 collateral or a request regarding a statement of account, by
68-11 authenticating and sending to the debtor an approval or correction
68-12 [by sending a written correction or approval. If the secured party
68-13 claims a security interest in all of a particular type of
68-14 collateral owned by the debtor he may indicate that fact in his
68-15 reply and need not approve or correct an itemized list of such
68-16 collateral. If the secured party without reasonable excuse fails
68-17 to comply he is liable for any loss caused to the debtor thereby;
68-18 and if the debtor has properly included in his request a good faith
68-19 statement of the obligation or a list of the collateral or both the
68-20 secured party may claim a security interest only as shown in the
68-21 statement against persons misled by his failure to comply. If he
68-22 no longer has an interest in the obligation or collateral at the
68-23 time the request is received he must disclose the name and address
68-24 of any successor in interest known to him and he is liable for any
68-25 loss caused to the debtor as a result of failure to disclose. A
68-26 successor in interest is not subject to this section until a
68-27 request is received by him].
69-1 (c) A secured party that claims a security interest in all
69-2 of a particular type of collateral owned by the debtor may comply
69-3 with a request regarding a list of collateral by sending to the
69-4 debtor an authenticated record including a statement to that effect
69-5 within 14 days after receipt.
69-6 (d) A person that receives a request regarding a list of
69-7 collateral, claims no interest in the collateral when it receives
69-8 the request, and claimed an interest in the collateral at an
69-9 earlier time shall comply with the request within 14 days after
69-10 receipt by sending to the debtor an authenticated record:
69-11 (1) disclaiming any interest in the collateral; and
69-12 (2) if known to the recipient, providing the name and
69-13 mailing address of any assignee of or successor to the recipient's
69-14 security interest in the collateral.
69-15 (e) A person that receives a request for an accounting or a
69-16 request regarding a statement of account, claims no interest in the
69-17 obligations when it receives the request, and claimed an interest
69-18 in the obligations at an earlier time shall comply with the request
69-19 within 14 days after receipt by sending to the debtor an
69-20 authenticated record:
69-21 (1) disclaiming any interest in the obligations; and
69-22 (2) if known to the recipient, providing the name and
69-23 mailing address of any assignee of or successor to the recipient's
69-24 interest in the obligations.
69-25 (f) A debtor is entitled without charge to one response to a
69-26 request under this section during any six-month period. The
69-27 secured party may require payment of a charge not exceeding $25 for
70-1 each additional response [debtor is entitled to such a statement
70-2 once every six months without charge. The secured party may
70-3 require payment of a charge not exceeding $10 for each additional
70-4 statement furnished].
70-5 SUBCHAPTER C. PERFECTION AND [RIGHTS OF THIRD PARTIES;
70-6 PERFECTED AND UNPERFECTED SECURITY INTERESTS; RULES OF]
70-7 PRIORITY
70-8 Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
70-9 SECURITY INTERESTS. Except as otherwise provided in Sections 9.303
70-10 through 9.306, the following rules determine the law governing
70-11 perfection, the effect of perfection or nonperfection, and the
70-12 priority of a security interest in collateral:
70-13 (1) Except as otherwise provided in this section,
70-14 while a debtor is located in a jurisdiction, the local law of that
70-15 jurisdiction governs perfection, the effect of perfection or
70-16 nonperfection, and the priority of a security interest in
70-17 collateral.
70-18 (2) While collateral is located in a jurisdiction, the
70-19 local law of that jurisdiction governs perfection, the effect of
70-20 perfection or nonperfection, and the priority of a possessory
70-21 security interest in that collateral.
70-22 (3) Except as otherwise provided in Subdivision (4),
70-23 while negotiable documents, goods, instruments, money, or tangible
70-24 chattel paper is located in a jurisdiction, the local law of that
70-25 jurisdiction governs:
70-26 (A) perfection of a security interest in the
70-27 goods by filing a fixture filing;
71-1 (B) perfection of a security interest in timber
71-2 to be cut; and
71-3 (C) the effect of perfection or nonperfection
71-4 and the priority of a nonpossessory security interest in the
71-5 collateral.
71-6 (4) The local law of the jurisdiction in which the
71-7 wellhead or minehead is located governs perfection, the effect of
71-8 perfection or nonperfection, and the priority of a security
71-9 interest in as-extracted collateral.
71-10 Sec. 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF
71-11 AGRICULTURAL LIENS. While farm products are located in a
71-12 jurisdiction, the local law of that jurisdiction governs
71-13 perfection, the effect of perfection or nonperfection, and the
71-14 priority of an agricultural lien on the farm products.
71-15 Sec. 9.303. LAW GOVERNING PERFECTION AND PRIORITY OF
71-16 SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE. (a)
71-17 This section applies to goods covered by a certificate of title,
71-18 even if there is no other relationship between the jurisdiction
71-19 under whose certificate of title the goods are covered and the
71-20 goods or the debtor.
71-21 (b) Goods become covered by a certificate of title when a
71-22 valid application for the certificate of title and the applicable
71-23 fee are delivered to the appropriate authority. Goods cease to be
71-24 covered by a certificate of title at the earlier of the time the
71-25 certificate of title ceases to be effective under the law of the
71-26 issuing jurisdiction or the time the goods become covered
71-27 subsequently by a certificate of title issued by another
72-1 jurisdiction.
72-2 (c) The local law of the jurisdiction under whose
72-3 certificate of title the goods are covered governs perfection, the
72-4 effect of perfection or nonperfection, and the priority of a
72-5 security interest in goods covered by a certificate of title from
72-6 the time the goods become covered by the certificate of title until
72-7 the goods cease to be covered by the certificate of title.
72-8 Sec. 9.304. LAW GOVERNING PERFECTION AND PRIORITY OF
72-9 SECURITY INTERESTS IN DEPOSIT ACCOUNTS. (a) The local law of a
72-10 bank's jurisdiction governs perfection, the effect of perfection or
72-11 nonperfection, and the priority of a security interest in a deposit
72-12 account maintained with that bank.
72-13 (b) The following rules determine a bank's jurisdiction for
72-14 purposes of this subchapter:
72-15 (1) If an agreement between the bank and the debtor
72-16 governing the deposit account expressly provides that a particular
72-17 jurisdiction is the bank's jurisdiction for purposes of this
72-18 subchapter, this chapter, or this title, that jurisdiction is the
72-19 bank's jurisdiction.
72-20 (2) If Subdivision (1) does not apply and an agreement
72-21 between the bank and its customer governing the deposit account
72-22 expressly provides that the agreement is governed by the law of a
72-23 particular jurisdiction, that jurisdiction is the bank's
72-24 jurisdiction.
72-25 (3) If neither Subdivision (1) nor Subdivision (2)
72-26 applies and an agreement between the bank and its customer
72-27 governing the deposit account expressly provides that the deposit
73-1 account is maintained at an office in a particular jurisdiction,
73-2 that jurisdiction is the bank's jurisdiction.
73-3 (4) If none of the preceding subdivisions applies, the
73-4 bank's jurisdiction is the jurisdiction in which the office
73-5 identified in an account statement as the office serving the
73-6 customer's account is located.
73-7 (5) If none of the preceding subdivisions applies, the
73-8 bank's jurisdiction is the jurisdiction in which the chief
73-9 executive office of the bank is located.
73-10 Sec. 9.305. LAW GOVERNING PERFECTION AND PRIORITY OF
73-11 SECURITY INTERESTS IN INVESTMENT PROPERTY. (a) Except as
73-12 otherwise provided in Subsection (c), the following rules apply:
73-13 (1) While a security certificate is located in a
73-14 jurisdiction, the local law of that jurisdiction governs
73-15 perfection, the effect of perfection or nonperfection, and the
73-16 priority of a security interest in the certificated security
73-17 represented thereby.
73-18 (2) The local law of the issuer's jurisdiction as
73-19 specified in Section 8.110(d) governs perfection, the effect of
73-20 perfection or nonperfection, and the priority of a security
73-21 interest in an uncertificated security.
73-22 (3) The local law of the securities intermediary's
73-23 jurisdiction as specified in Section 8.110(e) governs perfection,
73-24 the effect of perfection or nonperfection, and the priority of a
73-25 security interest in a security entitlement or securities account.
73-26 (4) The local law of the commodity intermediary's
73-27 jurisdiction governs perfection, the effect of perfection or
74-1 nonperfection, and the priority of a security interest in a
74-2 commodity contract or commodity account.
74-3 (b) The following rules determine a commodity intermediary's
74-4 jurisdiction for purposes of this subchapter:
74-5 (1) If an agreement between the commodity intermediary
74-6 and commodity customer governing the commodity account expressly
74-7 provides that a particular jurisdiction is the commodity
74-8 intermediary's jurisdiction for purposes of this subchapter, this
74-9 chapter, or this title, that jurisdiction is the commodity
74-10 intermediary's jurisdiction.
74-11 (2) If Subdivision (1) does not apply and an agreement
74-12 between the commodity intermediary and commodity customer governing
74-13 the commodity account expressly provides that the agreement is
74-14 governed by the law of a particular jurisdiction, that jurisdiction
74-15 is the commodity intermediary's jurisdiction.
74-16 (3) If neither Subdivision (1) nor Subdivision (2)
74-17 applies and an agreement between the commodity intermediary and
74-18 commodity customer governing the commodity account expressly
74-19 provides that the commodity account is maintained at an office in a
74-20 particular jurisdiction, that jurisdiction is the commodity
74-21 intermediary's jurisdiction.
74-22 (4) If none of the preceding subdivisions applies, the
74-23 commodity intermediary's jurisdiction is the jurisdiction in which
74-24 the office identified in an account statement as the office serving
74-25 the commodity customer's account is located.
74-26 (5) If none of the preceding subdivisions applies, the
74-27 commodity intermediary's jurisdiction is the jurisdiction in which
75-1 the chief executive office of the commodity intermediary is
75-2 located.
75-3 (c) The local law of the jurisdiction in which the debtor is
75-4 located governs:
75-5 (1) perfection of a security interest in investment
75-6 property by filing;
75-7 (2) automatic perfection of a security interest in
75-8 investment property created by a broker or securities intermediary;
75-9 and
75-10 (3) automatic perfection of a security interest in a
75-11 commodity contract or commodity account created by a commodity
75-12 intermediary.
75-13 Sec. 9.306. LAW GOVERNING PERFECTION AND PRIORITY OF
75-14 SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS. (a) Subject to
75-15 Subsection (c), the local law of the issuer's jurisdiction or a
75-16 nominated person's jurisdiction governs perfection, the effect of
75-17 perfection or nonperfection, and the priority of a security
75-18 interest in a letter-of-credit right if the issuer's jurisdiction
75-19 or nominated person's jurisdiction is a State.
75-20 (b) For purposes of this subchapter, an issuer's
75-21 jurisdiction or nominated person's jurisdiction is the jurisdiction
75-22 whose law governs the liability of the issuer or nominated person
75-23 with respect to the letter-of-credit right as provided in Section
75-24 5.116.
75-25 (c) This section does not apply to a security interest that
75-26 is perfected only under Section 9.308(d).
75-27 Sec. 9.307. LOCATION OF DEBTOR. (a) In this section,
76-1 "place of business" means a place where a debtor conducts its
76-2 affairs.
76-3 (b) Except as otherwise provided in this section, the
76-4 following rules determine a debtor's location:
76-5 (1) A debtor who is an individual is located at the
76-6 individual's principal residence.
76-7 (2) A debtor that is an organization and has only one
76-8 place of business is located at its place of business.
76-9 (3) A debtor that is an organization and has more than
76-10 one place of business is located at its chief executive office.
76-11 (c) Subsection (b) applies only if a debtor's residence,
76-12 place of business, or chief executive office, as applicable, is
76-13 located in a jurisdiction whose law generally requires information
76-14 concerning the existence of a nonpossessory security interest to be
76-15 made generally available in a filing, recording, or registration
76-16 system as a condition or result of the security interest's
76-17 obtaining priority over the rights of a lien creditor with respect
76-18 to the collateral. If Subsection (b) does not apply, the debtor is
76-19 located in the District of Columbia.
76-20 (d) A person that ceases to exist, have a residence, or have
76-21 a place of business continues to be located in the jurisdiction
76-22 specified by Subsections (b) and (c).
76-23 (e) A registered organization that is organized under the
76-24 law of a State is located in that State.
76-25 (f) Except as otherwise provided in Subsection (i), a
76-26 registered organization that is organized under the law of the
76-27 United States and a branch or agency of a bank that is not
77-1 organized under the law of the United States or a State are
77-2 located:
77-3 (1) in the State that the law of the United States
77-4 designates, if the law designates a State of location;
77-5 (2) in the State that the registered organization,
77-6 branch, or agency designates, if the law of the United States
77-7 authorizes the registered organization, branch, or agency to
77-8 designate its State of location; or
77-9 (3) in the District of Columbia, if neither
77-10 Subdivision (1) nor Subdivision (2) applies.
77-11 (g) A registered organization continues to be located in the
77-12 jurisdiction specified by Subsection (e) or (f) notwithstanding:
77-13 (1) the suspension, revocation, forfeiture, or lapse
77-14 of the registered organization's status as such in its jurisdiction
77-15 of organization; or
77-16 (2) the dissolution, winding up, or cancellation of
77-17 the existence of the registered organization.
77-18 (h) The United States is located in the District of
77-19 Columbia.
77-20 (i) A branch or agency of a bank that is not organized under
77-21 the law of the United States or a State is located in the State in
77-22 which the branch or agency is licensed, if all branches and
77-23 agencies of the bank are licensed in only one State.
77-24 (j) A foreign air carrier under the Federal Aviation Act of
77-25 1958, as amended, is located at the designated office of the agent
77-26 upon which service of process may be made on behalf of the carrier.
77-27 (k) This section applies only for purposes of this
78-1 subchapter.
78-2 Sec. 9.308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS
78-3 PERFECTED; CONTINUITY OF PERFECTION. (a) Except as otherwise
78-4 provided in this section and Section 9.309, a security interest is
78-5 perfected if it has attached and all of the applicable requirements
78-6 for perfection in Sections 9.310 through 9.316 have been satisfied.
78-7 A security interest is perfected when it attaches if the applicable
78-8 requirements are satisfied before the security interest attaches.
78-9 (b) An agricultural lien is perfected if it has become
78-10 effective and all of the applicable requirements for perfection in
78-11 Section 9.310 have been satisfied. An agricultural lien is
78-12 perfected when it becomes effective if the applicable requirements
78-13 are satisfied before the agricultural lien becomes effective.
78-14 (c) A security interest or agricultural lien is perfected
78-15 continuously if it is originally perfected by one method under this
78-16 chapter and is later perfected by another method under this
78-17 chapter, without an intermediate period when it was unperfected.
78-18 (d) Perfection of a security interest in collateral also
78-19 perfects a security interest in a supporting obligation for the
78-20 collateral.
78-21 (e) Perfection of a security interest in a right to payment
78-22 or performance also perfects a security interest in a security
78-23 interest, mortgage, or other lien on personal or real property
78-24 securing the right.
78-25 (f) Perfection of a security interest in a securities
78-26 account also perfects a security interest in the security
78-27 entitlements carried in the securities account.
79-1 (g) Perfection of a security interest in a commodity account
79-2 also perfects a security interest in the commodity contracts
79-3 carried in the commodity account. [PERSONS WHO TAKE PRIORITY OVER
79-4 UNPERFECTED SECURITY INTERESTS; RIGHT OF "LIEN CREDITOR". (a)
79-5 Except as otherwise provided in Subsection (b), an unperfected
79-6 security interest is subordinate to the rights of:]
79-7 [(1) persons entitled to priority under Section 9.312;]
79-8 [(2) a person who becomes a lien creditor before the
79-9 security interest is perfected;]
79-10 [(3) in the case of goods, instruments, documents, and
79-11 chattel paper, a person who is not a secured party and who is a
79-12 transferee in bulk or other buyer not in ordinary course of
79-13 business, or is a buyer of farm products in ordinary course of
79-14 business, to the extent that he gives value and receives delivery
79-15 of the collateral without knowledge of the security interest and
79-16 before it is perfected;]
79-17 [(4) in the case of accounts, general intangibles, and
79-18 investment property, a person who is not a secured party and who is
79-19 a transferee to the extent that he gives value without knowledge of
79-20 the security interest and before it is perfected.]
79-21 [(b) If the secured party files with respect to a purchase
79-22 money security interest before or within 20 days after the debtor
79-23 receives possession of the collateral, he takes priority over the
79-24 rights of a transferee in bulk or of a lien creditor which arise
79-25 between the time the security interest attaches and the time of
79-26 filing.]
79-27 [(c) A "lien creditor" means a creditor who has acquired a
80-1 lien on the property involved by attachment, levy or the like and
80-2 includes an assignee for benefit of creditors from the time of
80-3 assignment, and a trustee in bankruptcy from the date of the filing
80-4 of the petition or a receiver in equity from the time of
80-5 appointment.]
80-6 [(d) A person who becomes a lien creditor while a security
80-7 interest is perfected takes subject to the security interest only
80-8 to the extent that it secures advances made before he becomes a
80-9 lien creditor or within 45 days thereafter or made without
80-10 knowledge of the lien or pursuant to a commitment entered into
80-11 without knowledge of the lien.]
80-12 Sec. 9.309 [9.302]. SECURITY INTEREST PERFECTED UPON
80-13 ATTACHMENT. The following [WHEN FILING IS REQUIRED TO PERFECT
80-14 SECURITY INTEREST; SECURITY INTERESTS TO WHICH FILING PROVISIONS OF
80-15 THIS ARTICLE DO NOT APPLY. (a) A financing statement must be
80-16 filed to perfect all] security interests are perfected when they
80-17 attach [except the following]:
80-18 (1) [a security interest in collateral in possession
80-19 of the secured party under Section 9.305;]
80-20 [(2) a security interest temporarily perfected in
80-21 instruments, certificated securities, or documents without delivery
80-22 under Section 9.304 or in proceeds for a 10 day period under
80-23 Section 9.306;]
80-24 [(3) a security interest created by an assignment of a
80-25 beneficial interest in a trust or a decedent's estate;]
80-26 [(4)] a purchase money security interest in consumer
80-27 goods, except as otherwise provided in Section 9.311(b) with
81-1 respect to consumer goods that are subject to a statute or treaty
81-2 described in Section 9.311(a)[; but notation on a certificate of
81-3 title is required for goods covered by a statute referred to in
81-4 Subsection (c)(2); and fixture filing is required for priority over
81-5 conflicting interests in fixtures to the extent provided in Section
81-6 9.313];
81-7 (2) [(5)] an assignment of accounts or payment
81-8 intangibles that [which] does not by itself [alone] or in
81-9 conjunction with other assignments to the same assignee transfer a
81-10 significant part of the assignor's outstanding accounts or payment
81-11 intangibles [of the assignor];
81-12 (3) a sale of a payment intangible;
81-13 (4) a sale of a promissory note;
81-14 (5) a security interest created by the assignment of a
81-15 health-care-insurance receivable to the provider of the health care
81-16 goods or services;
81-17 (6) a security interest arising under Section 2.401,
81-18 2.505, 2.711(c), or 2A.508(e), until the debtor obtains possession
81-19 of the collateral;
81-20 (7) a security interest of a collecting bank arising
81-21 under [(]Section 4.210[), a security interest arising under the
81-22 Chapter on Sales (see Section 9.113), or a security interest
81-23 covered in Subsection (c) of this Section];
81-24 (8) a security interest of an issuer or nominated
81-25 person arising under Section 5.118;
81-26 (9) a security interest arising in the delivery of a
81-27 financial asset under Section 9.206(c);
82-1 (10) a security interest in investment property
82-2 created by a broker or securities intermediary;
82-3 (11) a security interest in a commodity contract or a
82-4 commodity account created by a commodity intermediary;
82-5 (12) [(7)] an assignment for the benefit of all
82-6 creditors of the transferor[,] and subsequent transfers by the
82-7 assignee thereunder; and
82-8 (13) a security interest created by an assignment of a
82-9 beneficial interest in a decedent's estate [(8) a security interest
82-10 in oil or gas production or their proceeds under Section 9.319 of
82-11 this code; or]
82-12 [(9) a security interest in investment property that
82-13 is perfected without filing under Section 9.115 or 9.116].
82-14 Sec. 9.310. WHEN FILING REQUIRED TO PERFECT SECURITY
82-15 INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL
82-16 LIENS TO WHICH FILING PROVISIONS DO NOT APPLY. (a) Except as
82-17 otherwise provided in Subsection (b) and Section 9.312(b), a
82-18 financing statement must be filed to perfect all security interests
82-19 and agricultural liens.
82-20 (b) The filing of a financing statement is not necessary to
82-21 perfect a security interest:
82-22 (1) that is perfected under Section 9.308(d), (e),
82-23 (f), or (g);
82-24 (2) that is perfected under Section 9.309 when it
82-25 attaches;
82-26 (3) in property subject to a statute, regulation, or
82-27 treaty described in Section 9.311(a);
83-1 (4) in goods in possession of a bailee that is
83-2 perfected under Section 9.312(d)(1) or (2);
83-3 (5) in certificated securities, documents, goods, or
83-4 instruments which is perfected without filing or possession under
83-5 Section 9.312(e), (f), or (g);
83-6 (6) in collateral in the secured party's possession
83-7 under Section 9.313;
83-8 (7) in a certificated security that is perfected by
83-9 delivery of the security certificate to the secured party under
83-10 Section 9.313;
83-11 (8) in deposit accounts, electronic chattel paper,
83-12 investment property, or letter-of-credit rights that is perfected
83-13 by control under Section 9.314;
83-14 (9) in proceeds that is perfected under Section 9.315;
83-15 (10) that is perfected under Section 9.316; or
83-16 (11) in oil or gas production or their proceeds under
83-17 Section 9.343.
83-18 (c) [(b)] If a secured party assigns a perfected security
83-19 interest or agricultural lien, a [no] filing under this Chapter is
83-20 not required [in order] to continue the perfected status of the
83-21 security interest against creditors of and transferees from the
83-22 original debtor.
83-23 Sec. 9.311. PERFECTION OF SECURITY INTERESTS IN PROPERTY
83-24 SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES. (a)
83-25 Except as otherwise provided in Subsection (d), the [(c) The]
83-26 filing of a financing statement [otherwise required by this
83-27 Chapter] is not necessary or effective to perfect a security
84-1 interest in property subject to:
84-2 (1) a statute, regulation, or treaty of the United
84-3 States whose requirements for a security interest's obtaining
84-4 priority over the rights of a lien creditor with respect to the
84-5 property preempt Section 9.310(a); [which provides for a national
84-6 or international registration or a national or international
84-7 certificate of title or which specifies a place of filing different
84-8 from that specified in this Chapter for filing of the security
84-9 interest; or]
84-10 (2) the following statutes of this state: Chapter
84-11 501, Transportation Code, relating to the certificates of title for
84-12 motor vehicles; Subchapter B-1, Chapter 31, Parks and Wildlife
84-13 Code, [as amended,] relating to the certificates of title for
84-14 vessels [motorboat] and outboard motors; the Texas Manufactured
84-15 Housing Standards Act[, as amended] (Article 5221f, Vernon's Texas
84-16 Civil Statutes), relating to the documents of title for
84-17 manufactured homes; [but during any period in which collateral is
84-18 inventory held for sale by a person who is in the business of
84-19 selling goods of that kind, the filing provisions of this Chapter
84-20 (Subchapter D) apply to a security interest in that collateral
84-21 created by him as debtor;] or Subchapter A, Chapter 35, [Title 4,]
84-22 relating to utility security instruments; or
84-23 (3) a certificate of title statute of another
84-24 jurisdiction that provides for [under the law of which indication
84-25 of] a security interest to be indicated on the certificate [is
84-26 required] as a condition or result of the security interest's
84-27 obtaining priority over the rights of a lien creditor with respect
85-1 to the property [of perfection (Subsection (b) of Section 9.103)].
85-2 (b) [(d)] Compliance with the requirements of a statute,
85-3 regulation, or treaty described in Subsection (a) for obtaining
85-4 priority over the rights of a lien creditor [(c)] is equivalent to
85-5 the filing of a financing statement under this Chapter. Except as
85-6 otherwise provided in Subsection (d) and Sections 9.313 and
85-7 9.316(d) and (e) for goods covered by a certificate of title, [and]
85-8 a security interest in property subject to a [the] statute,
85-9 regulation, or treaty described in Subsection (a) may [can] be
85-10 perfected only by compliance with those requirements, and a
85-11 security interest so perfected remains perfected notwithstanding a
85-12 change in the use or transfer of possession of the collateral
85-13 [therewith except as provided in Section 9.103 on multiple state
85-14 transactions].
85-15 (c) Except as otherwise provided in Subsection (d) and
85-16 Sections 9.316(d) and (e), duration [Duration] and renewal of
85-17 perfection of a security interest perfected by compliance with the
85-18 requirements prescribed by a statute, regulation, or treaty
85-19 described in Subsection (a) are governed by [the provisions of]
85-20 the statute, regulation, or treaty. In[; in] other respects, the
85-21 security interest is subject to this Chapter.
85-22 (d) During any period in which collateral is inventory held
85-23 for sale or lease by a person or leased by that person as lessor
85-24 and that person is in the business of selling or leasing goods of
85-25 that kind, this section does not apply to a security interest in
85-26 that collateral created by that person as debtor.
85-27 [Sec. 9.303. WHEN SECURITY INTEREST IS PERFECTED; CONTINUITY
86-1 OF PERFECTION. (a) A security interest is perfected when it has
86-2 attached and when all of the applicable steps required for
86-3 perfection have been taken. Such steps are specified in Sections
86-4 9.115, 9.302, 9.304, 9.305 and 9.306. If such steps are taken
86-5 before the security interest attaches, it is perfected at the time
86-6 when it attaches.]
86-7 [(b) If a security interest is originally perfected in any
86-8 way permitted under this chapter and is subsequently perfected in
86-9 some other way under this chapter, without an intermediate period
86-10 when it was unperfected, the security interest shall be deemed to
86-11 be perfected continuously for the purposes of this chapter.]
86-12 Sec. 9.312 [9.304]. PERFECTION OF SECURITY INTERESTS
86-13 [INTEREST] IN CHATTEL PAPER, DEPOSIT ACCOUNTS [INSTRUMENTS],
86-14 DOCUMENTS, AND GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT
86-15 PROPERTY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY
86-16 PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER
86-17 OF POSSESSION. (a) A security interest in chattel paper, [or]
86-18 negotiable documents, instruments, or investment property may be
86-19 perfected by filing.
86-20 (b) Except as otherwise provided in Sections 9.315(c) and
86-21 (d) for proceeds:
86-22 (1) a security interest in a deposit account may be
86-23 perfected only by control under Section 9.314;
86-24 (2) and except as otherwise provided in Section
86-25 9.308(d), a security interest in a letter-of-credit right may be
86-26 perfected only by control under Section 9.314; and
86-27 (3) a [A] security interest in money may [or
87-1 instruments (other than instruments which constitute part of
87-2 chattel paper) can] be perfected only by the secured party's taking
87-3 possession under Section 9.313[, except as provided in Subsections
87-4 (d) and (e) of this section and Subsections (b) and (c) of Section
87-5 9.306 on proceeds].
87-6 (c) While goods are in the possession of a bailee that has
87-7 issued a negotiable document covering the goods:
87-8 (1) a security interest in the goods may be perfected
87-9 by perfecting a security interest in the document; and
87-10 (2) a security interest perfected in the document has
87-11 priority over any security interest that becomes perfected in the
87-12 goods by another method during that time.
87-13 (d) While goods are in the possession of a bailee that has
87-14 issued a nonnegotiable document covering the goods, a security
87-15 interest in the goods may be perfected by:
87-16 (1) issuance of a document in the name of the secured
87-17 party;
87-18 (2) the bailee's receipt of notification of the
87-19 secured party's interest; or
87-20 (3) filing as to the goods. [Possession of a
87-21 nonnegotiable certificate of deposit in which the secured party is
87-22 the issuer of the document is established when the issuer places a
87-23 restriction on withdrawals from the account on its records that
87-24 evidences the document. Possession established by the restriction
87-25 of withdrawals from an account evidenced by a nonnegotiable
87-26 certificate of deposit takes priority over any other possession
87-27 established under this chapter of which the secured party does not
88-1 have prior knowledge.]
88-2 [(b) During the period that goods are in the possession of
88-3 the issuer of a negotiable document therefor, a security interest
88-4 in the goods is perfected by perfecting a security interest in the
88-5 document, and any security interest in the goods otherwise
88-6 perfected during such period is subject thereto.]
88-7 [(c) A security interest in goods in the possession of a
88-8 bailee other than one who has issued a negotiable document therefor
88-9 is perfected by issuance of a document in the name of the secured
88-10 party or by the bailee's receipt of notification of the secured
88-11 party's interest or by filing as to the goods.]
88-12 (e) [(d)] A security interest in [instruments,] certificated
88-13 securities, [or] negotiable documents, or instruments is perfected
88-14 without filing or the taking of possession for a period of 20 [21]
88-15 days from the time it attaches to the extent that it arises for new
88-16 value given under an authenticated [a written] security agreement.
88-17 (f) [(e)] A perfected security interest in a negotiable
88-18 document or goods in possession of a bailee, other than one that
88-19 has issued a negotiable document for the goods, remains perfected
88-20 for 20 [a period of 21] days without filing if the [where a]
88-21 secured party [having a perfected security interest in an
88-22 instrument, a certificated security, a negotiable document, or
88-23 goods in possession of a bailee other than one who has issued a
88-24 negotiable document therefor:]
88-25 [(1)] makes available to the debtor the goods or
88-26 documents representing the goods for the purpose of:
88-27 (1) ultimate sale or exchange; or
89-1 (2) [for the purpose of] loading, unloading, storing,
89-2 shipping, transshipping, manufacturing, processing, or otherwise
89-3 dealing with them in a manner preliminary to their sale or
89-4 exchange[, but priority between conflicting security interests in
89-5 the goods is subject to Subsection (c) of Section 9.312; or]
89-6 [(2) delivers the instrument or certificated security
89-7 to the debtor for the purpose of ultimate sale or exchange or of
89-8 presentation, collection, renewal or registration of transfer].
89-9 (g) A perfected security interest in a certificated security
89-10 or instrument remains perfected for 20 days without filing if the
89-11 secured party delivers the security certificate or instrument to
89-12 the debtor for the purpose of:
89-13 (1) ultimate sale or exchange; or
89-14 (2) presentation, collection, enforcement, renewal, or
89-15 registration of transfer.
89-16 (h) [(f)] After the 20-day [21 day] period specified in
89-17 Subsection (e), (f), or (g) expires, [Subsections (d) and (e)]
89-18 perfection depends upon compliance with [applicable provisions of]
89-19 this chapter.
89-20 Sec. 9.313 [9.305]. WHEN POSSESSION BY OR DELIVERY TO
89-21 SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING.
89-22 (a) Except as otherwise provided in Subsection (b), a secured
89-23 party may perfect a [A] security interest in negotiable documents,
89-24 goods, instruments, money, or tangible chattel paper by [letters of
89-25 credit and advices of credit (Subsection (b)(1) of Section 5.116),
89-26 goods, instruments, money, negotiable documents or chattel paper
89-27 may be perfected by the secured party's] taking possession of the
90-1 collateral. A secured party may perfect a security interest in
90-2 certificated securities by taking delivery of the certificated
90-3 securities under Section 8.301.
90-4 (b) With respect to goods covered by a certificate of title
90-5 issued by this State, a secured party may perfect a security
90-6 interest in the goods by taking possession of the goods only in the
90-7 circumstances described in Section 9.316(d).
90-8 (c) With respect to collateral other than certificated
90-9 securities and goods covered by a document, a secured party takes
90-10 possession of collateral in the possession of a person other than
90-11 the debtor, the secured party, or a lessee of the collateral from
90-12 the debtor in the ordinary course of the debtor's business when:
90-13 (1) the person in possession authenticates a record
90-14 acknowledging that it holds possession of the collateral for the
90-15 secured party's benefit; or
90-16 (2) the person takes possession of the collateral
90-17 after having authenticated a record acknowledging that it will hold
90-18 possession of collateral for the secured party's benefit.
90-19 (d) If perfection of a security interest depends upon
90-20 possession of the collateral by a secured party, perfection occurs
90-21 no earlier than the time the secured party takes possession and
90-22 continues only while the secured party retains possession.
90-23 (e) A security interest in a certificated security in
90-24 registered form is perfected by delivery when delivery of the
90-25 certificated security occurs under Section 8.301 and remains
90-26 perfected by delivery until the debtor obtains possession of the
90-27 security certificate.
91-1 (f) A person in possession of collateral is not required to
91-2 acknowledge that it holds possession for a secured party's benefit.
91-3 (g) If a person acknowledges that it holds possession for
91-4 the secured party's benefit:
91-5 (1) the acknowledgment is effective under Subsection
91-6 (c) or Section 8.301(a), even if the acknowledgment violates the
91-7 rights of a debtor; and
91-8 (2) unless the person otherwise agrees or law other
91-9 than this chapter otherwise provides, the person does not owe any
91-10 duty to the secured party and is not required to confirm the
91-11 acknowledgment to another person.
91-12 (h) A secured party having possession of collateral does not
91-13 relinquish possession by delivering the collateral to a person
91-14 other than the debtor or a lessee of the collateral from the debtor
91-15 in the ordinary course of the debtor's business if the person was
91-16 instructed before the delivery or is instructed contemporaneously
91-17 with the delivery:
91-18 (1) to hold possession of the collateral for the
91-19 secured party's benefit; or
91-20 (2) to redeliver the collateral to the secured party.
91-21 (i) A secured party does not relinquish possession, even if
91-22 a delivery under Subsection (h) violates the rights of a debtor. A
91-23 person to which collateral is delivered under Subsection (h) does
91-24 not owe any duty to the secured party and is not required to
91-25 confirm the delivery to another person unless the person otherwise
91-26 agrees or law other than this chapter otherwise provides.
91-27 Sec. 9.314. PERFECTION BY CONTROL. (a) A security interest
92-1 in investment property, deposit accounts, letter-of-credit rights,
92-2 or electronic chattel paper may be perfected by control of the
92-3 collateral under Section 9.104, 9.105, 9.106, or 9.107.
92-4 (b) A security interest in deposit accounts, electronic
92-5 chattel paper, or letter-of-credit rights is perfected by control
92-6 under Section 9.104, 9.105, or 9.107 when the secured party obtains
92-7 control and remains perfected by control only while the secured
92-8 party retains control.
92-9 (c) A security interest in investment property is perfected
92-10 by control under Section 9.106 from the time the secured party
92-11 obtains control and remains perfected by control until:
92-12 (1) the secured party does not have control; and
92-13 (2) one of the following occurs:
92-14 (A) if the collateral is a certificated
92-15 security, the debtor has or acquires possession of the security
92-16 certificate;
92-17 (B) if the collateral is an uncertificated
92-18 security, the issuer has registered or registers the debtor as the
92-19 registered owner; or
92-20 (C) if the collateral is a security entitlement,
92-21 the debtor is or becomes the entitlement holder. [If such
92-22 collateral other than goods covered by a negotiable document is
92-23 held by a bailee, the secured party is deemed to have possession
92-24 from the time the bailee receives notification of the secured
92-25 party's interest. A security interest is perfected by possession
92-26 from the time possession is taken without relation back and
92-27 continues only so long as possession is retained, unless otherwise
93-1 specified in this chapter. The security interest may be otherwise
93-2 perfected as provided in this chapter before or after the period of
93-3 possession by the secured party.]
93-4 Sec. 9.315 [9.306]. ["PROCEEDS";] SECURED PARTY'S RIGHTS ON
93-5 DISPOSITION OF COLLATERAL AND IN PROCEEDS. (a) ["Proceeds"
93-6 includes whatever is received upon the sale, exchange, collection
93-7 or other disposition of collateral or proceeds. Insurance payable
93-8 by reason of loss or damage to the collateral is proceeds, except
93-9 to the extent that it is payable to a person other than a party to
93-10 the security agreement. Any payments or distributions made with
93-11 respect to investment property collateral are proceeds. Money,
93-12 checks, deposit accounts and the like are "cash proceeds". All
93-13 other proceeds are "non-cash proceeds".]
93-14 [(b)] Except as [where this chapter] otherwise provided in
93-15 this chapter and Section 2.403(b):
93-16 (1) [provides,] a security interest or agricultural
93-17 lien continues in collateral notwithstanding sale, lease, license,
93-18 exchange, or other disposition thereof unless [the disposition was
93-19 authorized by] the secured party authorized the disposition free of
93-20 the security interest or agricultural lien; and
93-21 (2) a security interest attaches to [in the security
93-22 agreement or otherwise, and also continues in] any identifiable
93-23 proceeds of collateral [including collections received by the
93-24 debtor].
93-25 (b) Proceeds that are commingled with other property are
93-26 identifiable proceeds:
93-27 (1) if the proceeds are goods, to the extent provided
94-1 by Section 9.336; and
94-2 (2) if the proceeds are not goods, to the extent that
94-3 the secured party identifies the proceeds by a method of tracing,
94-4 including application of equitable principles, that is permitted
94-5 under law other than this chapter with respect to commingled
94-6 property of the type involved.
94-7 (c) A [The] security interest in proceeds is a
94-8 [continuously] perfected security interest if the interest in the
94-9 original collateral was perfected.
94-10 (d) A [but it ceases to be a] perfected security interest in
94-11 proceeds [and] becomes unperfected on the 21st day [ten days] after
94-12 the security interest attaches to receipt of the proceeds [by the
94-13 debtor] unless:
94-14 (1) the following conditions are satisfied:
94-15 (A) a filed financing statement covers the
94-16 original collateral;
94-17 (B) [and] the proceeds are collateral in which a
94-18 security interest may be perfected by filing in the office in which
94-19 [or offices where] the financing statement has been filed; and[,
94-20 if]
94-21 (C) the proceeds are not acquired with cash
94-22 proceeds[, the description of collateral in the financing statement
94-23 indicates the types of property constituting the proceeds];
94-24 (2) [a filed financing statement covers the original
94-25 collateral and] the proceeds are identifiable cash proceeds; or
94-26 (3) [the original collateral was investment property
94-27 and the proceeds are identifiable cash proceeds; or]
95-1 [(4)] the security interest in the proceeds is
95-2 perfected other than under Subsection (c) when the security
95-3 interest attaches to the proceeds or within 20 days thereafter
95-4 [before the expiration of the ten day period. Except as provided
95-5 in this section, a security interest in proceeds can be perfected
95-6 only by the methods or under the circumstances permitted in this
95-7 chapter for original collateral of the same type].
95-8 (e) If a filed financing statement covers the original
95-9 collateral, a security interest in proceeds that remains perfected
95-10 under Subsection (d)(1) becomes unperfected at the later of:
95-11 (1) when the effectiveness of the filed financing
95-12 statement lapses under Section 9.515 or is terminated under Section
95-13 9.513; or
95-14 (2) the 21st day after the security interest attaches
95-15 to the proceeds.
95-16 [(d) In the event of insolvency proceedings instituted by or
95-17 against a debtor, a secured party with a perfected security
95-18 interest in proceeds has a perfected security interest only in the
95-19 following proceeds:]
95-20 [(1) in identifiable non-cash proceeds and in separate
95-21 deposit accounts containing only proceeds;]
95-22 [(2) in identifiable cash proceeds in the form of
95-23 money which is neither commingled with other money nor deposited in
95-24 a deposit account prior to the insolvency proceedings;]
95-25 [(3) in identifiable cash proceeds in the form of
95-26 checks and the like which are not deposited in a deposit account
95-27 prior to the insolvency proceedings;]
96-1 [(4) in all cash and deposit accounts of the debtor in
96-2 which proceeds have been commingled with other funds, but the
96-3 perfected security interest under this Subdivision (4) is]
96-4 [(A) subject to any right of set-off; and]
96-5 [(B) limited to an amount not greater than the
96-6 amount of any cash proceeds received by the debtor within ten days
96-7 before the institution of the insolvency proceedings less the sum
96-8 of (I) the payments to the secured party on account of cash
96-9 proceeds received by the debtor during such period and (II) the
96-10 cash proceeds received by the debtor during such period to which
96-11 the secured party is entitled under Subdivisions (1) through (3) of
96-12 this Subsection (d); and]
96-13 [(5) in all cash and deposit accounts of the debtor in
96-14 which proceeds have been commingled with other funds, if the
96-15 perfected security interest under this Subdivision (5) is provided
96-16 by Section 9.319 of this code.]
96-17 [(e) If a sale of goods results in an account or chattel
96-18 paper which is transferred by the seller to a secured party, and if
96-19 the goods are returned to or are repossessed by the seller or the
96-20 secured party, the following rules determine priorities:]
96-21 [(1) If the goods were collateral at the time of sale
96-22 for an indebtedness of the seller which is still unpaid, the
96-23 original security interest attaches again to the goods and
96-24 continues as a perfected security interest if it was perfected at
96-25 the time when the goods were sold. If the security interest was
96-26 originally perfected by a filing which is still effective, nothing
96-27 further is required to continue the perfected status; in any other
97-1 case, the secured party must take possession of the returned or
97-2 repossessed goods or must file.]
97-3 [(2) An unpaid transferee of the chattel paper has a
97-4 security interest in the goods against the transferor. Such
97-5 security interest is prior to a security interest asserted under
97-6 Subdivision (1) to the extent that the transferee of the chattel
97-7 paper was entitled to priority under Section 9.308.]
97-8 [(3) An unpaid transferee of the account has a
97-9 security interest in the goods against the transferor. Such
97-10 security interest is subordinate to a security interest asserted
97-11 under Subdivision (1).]
97-12 [(4) A security interest of an unpaid transferee
97-13 asserted under Subdivision (2) or (3) must be perfected for
97-14 protection against creditors of the transferor and purchasers of
97-15 the returned or repossessed goods.]
97-16 Sec. 9.316. CONTINUED PERFECTION OF SECURITY INTEREST
97-17 FOLLOWING CHANGE IN GOVERNING LAW. (a) A security interest
97-18 perfected pursuant to the law of the jurisdiction designated in
97-19 Section 9.301(1) or 9.305(c) remains perfected until the earliest
97-20 of:
97-21 (1) the time perfection would have ceased under the
97-22 law of that jurisdiction;
97-23 (2) the expiration of four months after a change of
97-24 the debtor's location to another jurisdiction; or
97-25 (3) the expiration of one year after a transfer of
97-26 collateral to a person that thereby becomes a debtor and is located
97-27 in another jurisdiction.
98-1 (b) If a security interest described in Subsection (a)
98-2 becomes perfected under the law of the other jurisdiction before
98-3 the earliest time or event described in that subsection, it remains
98-4 perfected thereafter. If the security interest does not become
98-5 perfected under the law of the other jurisdiction before the
98-6 earliest time or event, it becomes unperfected and is deemed never
98-7 to have been perfected as against a purchaser of the collateral for
98-8 value.
98-9 (c) A possessory security interest in collateral, other than
98-10 goods covered by a certificate of title and as-extracted collateral
98-11 consisting of goods, remains continuously perfected if:
98-12 (1) the collateral is located in one jurisdiction and
98-13 subject to a security interest perfected under the law of that
98-14 jurisdiction;
98-15 (2) thereafter the collateral is brought into another
98-16 jurisdiction; and
98-17 (3) upon entry into the other jurisdiction, the
98-18 security interest is perfected under the law of the other
98-19 jurisdiction.
98-20 (d) Except as otherwise provided in Subsection (e), a
98-21 security interest in goods covered by a certificate of title that
98-22 is perfected by any method under the law of another jurisdiction
98-23 when the goods become covered by a certificate of title from this
98-24 State remains perfected until the security interest would have
98-25 become unperfected under the law of the other jurisdiction had the
98-26 goods not become so covered.
98-27 (e) A security interest described in Subsection (d) becomes
99-1 unperfected as against a purchaser of the goods for value and is
99-2 deemed never to have been perfected as against a purchaser of the
99-3 goods for value if the applicable requirements for perfection under
99-4 Section 9.311(b) or 9.313 are not satisfied before the earlier of:
99-5 (1) the time the security interest would have become
99-6 unperfected under the law of the other jurisdiction had the goods
99-7 not become covered by a certificate of title from this State; or
99-8 (2) the expiration of four months after the goods had
99-9 become so covered.
99-10 (f) A security interest in deposit accounts,
99-11 letter-of-credit rights, or investment property that is perfected
99-12 under the law of the bank's jurisdiction, the issuer's
99-13 jurisdiction, a nominated person's jurisdiction, the securities
99-14 intermediary's jurisdiction, or the commodity intermediary's
99-15 jurisdiction, as applicable, remains perfected until the earlier
99-16 of:
99-17 (1) the time the security interest would have become
99-18 unperfected under the law of that jurisdiction; or
99-19 (2) the expiration of four months after a change of
99-20 the applicable jurisdiction to another jurisdiction.
99-21 (g) If a security interest described in Subsection (f)
99-22 becomes perfected under the law of the other jurisdiction before
99-23 the earlier of the time or the end of the period described in that
99-24 subsection, it remains perfected thereafter. If the security
99-25 interest does not become perfected under the law of the other
99-26 jurisdiction before the earlier of that time or the end of that
99-27 period, it becomes unperfected and is deemed never to have been
100-1 perfected as against a purchaser of the collateral for value.
100-2 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
100-3 OF UNPERFECTED SECURITY INTEREST OR AGRICULTURAL LIEN. (a) An
100-4 unperfected security interest or agricultural lien is subordinate
100-5 to the rights of:
100-6 (1) a person entitled to priority under Section 9.322;
100-7 and
100-8 (2) except as otherwise provided in Subsection (e), a
100-9 person that becomes a lien creditor before the earlier of the time
100-10 the security interest or agricultural lien is perfected or a
100-11 financing statement covering the collateral is filed.
100-12 (b) Except as otherwise provided in Subsection (e), a buyer,
100-13 other than a secured party, of tangible chattel paper, documents,
100-14 goods, instruments, or a security certificate takes free of a
100-15 security interest or agricultural lien if the buyer gives value and
100-16 receives delivery of the collateral without knowledge of the
100-17 security interest or agricultural lien and before it is perfected.
100-18 (c) Except as otherwise provided in Subsection (e), a lessee
100-19 of goods takes free of a security interest or agricultural lien if
100-20 the lessee gives value and receives delivery of the collateral
100-21 without knowledge of the security interest or agricultural lien and
100-22 before it is perfected.
100-23 (d) A licensee of a general intangible or a buyer, other
100-24 than a secured party, of accounts, electronic chattel paper,
100-25 general intangibles, or investment property other than a
100-26 certificated security takes free of a security interest if the
100-27 licensee or buyer gives value without knowledge of the security
101-1 interest and before it is perfected.
101-2 (e) Except as otherwise provided in Sections 9.320 and
101-3 9.321, if a person files a financing statement with respect to a
101-4 purchase-money security interest before or within 20 days after the
101-5 debtor receives delivery of the collateral, the security interest
101-6 takes priority over the rights of a buyer, lessee, or lien creditor
101-7 that arise between the time the security interest attaches and the
101-8 time of filing.
101-9 Sec. 9.318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS
101-10 SOLD; RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH
101-11 RESPECT TO CREDITORS AND PURCHASERS. (a) A debtor that has sold
101-12 an account, chattel paper, payment intangible, or promissory note
101-13 does not retain a legal or equitable interest in the collateral
101-14 sold.
101-15 (b) For purposes of determining the rights of creditors of,
101-16 and purchasers for value of an account or chattel paper from, a
101-17 debtor that has sold an account or chattel paper, while the
101-18 buyer's security interest is unperfected, the debtor is deemed to
101-19 have rights and title to the account or chattel paper identical to
101-20 those the debtor sold.
101-21 Sec. 9.319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO
101-22 CREDITORS AND PURCHASERS. (a) Except as otherwise provided in
101-23 Subsection (b), for purposes of determining the rights of creditors
101-24 of, and purchasers for value of goods from, a consignee, while the
101-25 goods are in the possession of the consignee, the consignee is
101-26 deemed to have rights and title to the goods identical to those the
101-27 consignor had or had power to transfer.
102-1 (b) For purposes of determining the rights of a creditor of
102-2 a consignee, law other than this chapter determines the rights and
102-3 title of a consignee while goods are in the consignee's possession
102-4 if, under this subchapter, a perfected security interest held by
102-5 the consignor would have priority over the rights of the creditor.
102-6 Sec. 9.320 [9.307]. [PROTECTION OF] BUYERS OF GOODS.
102-7 (a) Except as otherwise provided by Subsection (e) [(d) of this
102-8 section], a buyer in ordinary course of business, [(Subdivision (9)
102-9 of Section 1.201)] other than a person buying farm products from a
102-10 person engaged in farming operations, takes free of a security
102-11 interest created by the buyer's [his] seller, even if [though] the
102-12 security interest is perfected and [even though] the buyer knows of
102-13 its existence.
102-14 (b) Except as otherwise provided in Subsection (e) [In the
102-15 case of consumer goods], a buyer of goods from a person who used
102-16 or bought the goods for use primarily for personal, family, or
102-17 household purposes takes free of a security interest, even if
102-18 [though] perfected, if the buyer [he] buys:
102-19 (1) without knowledge of the security interest;
102-20 (2)[,] for value;
102-21 (3) primarily for the buyer's [and for his own]
102-22 personal, family, or household purposes; and
102-23 (4) before the filing of [unless prior to the purchase
102-24 the secured party has filed] a financing statement covering the
102-25 [such] goods.
102-26 (c) To the extent that it affects the priority of a security
102-27 interest over a buyer of goods under Subsection (b), the period of
103-1 effectiveness of a filing made in the jurisdiction in which the
103-2 seller is located is governed by Sections 9.316(a) and (b). [A
103-3 buyer other than a buyer in ordinary course of business (Subsection
103-4 (a) of this section) takes free of a security interest to the
103-5 extent that it secures future advances made after the secured party
103-6 acquires knowledge of the purchase, or more than 45 days after the
103-7 purchase, whichever first occurs, unless made pursuant to a
103-8 commitment entered into without knowledge of the purchase and
103-9 before the expiration of the 45 day period.]
103-10 (d) A buyer in ordinary course of business buying oil, gas,
103-11 or other minerals at the wellhead or minehead or after extraction
103-12 takes free of an interest arising out of an encumbrance.
103-13 (e) Subsections (a) and (b) do not affect a security
103-14 interest in goods in the possession of the secured party under
103-15 Section 9.313. [A secured party, including a secured party under a
103-16 security interest covered by Section 9.312(b) of this code, may not
103-17 enforce a security interest in farm products against a person who
103-18 has purchased the farm products from a person engaged in farming
103-19 operations unless the secured party gives notice of the security
103-20 interest to the buyer by certified mail, return receipt requested,
103-21 not later than the 90th day after the date of purchase. The notice
103-22 must state the terms of the security interest and the amount
103-23 claimed to be owed to the secured party.]
103-24 Sec. 9.321 [9.308]. LICENSEE OF GENERAL INTANGIBLE AND
103-25 LESSEE OF GOODS IN ORDINARY COURSE OF BUSINESS. (a) In this
103-26 section, "licensee in ordinary course of business" means a person
103-27 that becomes a licensee of a general intangible in good faith,
104-1 without knowledge that the license violates the rights of another
104-2 person in the general intangible, and in the ordinary course from a
104-3 person in the business of licensing general intangibles of that
104-4 kind. A person becomes a licensee in the ordinary course if the
104-5 license to the person comports with the usual or customary
104-6 practices in the kind of business in which the licensor is engaged
104-7 or with the licensor's own usual or customary practices.
104-8 (b) A licensee in ordinary course of business takes its
104-9 rights under a nonexclusive license free of a security interest in
104-10 the general intangible created by the licensor, even if the
104-11 security interest is perfected and the licensee knows of its
104-12 existence.
104-13 (c) A lessee in ordinary course of business takes its
104-14 leasehold interest free of a security interest in the goods created
104-15 by the lessor, even if the security interest is perfected and the
104-16 lessee knows of its existence. [PURCHASE OF CHATTEL PAPER AND
104-17 INSTRUMENTS. A purchaser of chattel paper or an instrument who
104-18 gives new value and takes possession of it in the ordinary course
104-19 of his business has priority over a security interest in the
104-20 chattel paper or instrument]
104-21 [(1) which is perfected under Section 9.304
104-22 (permissive filing and temporary perfection) or under Section 9.306
104-23 (perfection as to proceeds) if he acts without knowledge that the
104-24 specific paper or instrument is subject to a security interest; or]
104-25 [(2) which is claimed merely as proceeds of inventory
104-26 subject to a security interest (Section 9.306) even though he knows
104-27 that the specific paper or instrument is subject to the security
105-1 interest.]
105-2 [Sec. 9.309. PROTECTION OF PURCHASERS OF INSTRUMENTS,
105-3 DOCUMENTS, AND SECURITIES. Nothing in this chapter limits the
105-4 rights of a holder in due course of a negotiable instrument
105-5 (Section 3.302) or a holder to whom a negotiable document of title
105-6 has been duly negotiated (Section 7.501) or a protected purchaser
105-7 of a security (Section 8.303) and such holders or purchasers take
105-8 priority over an earlier security interest even though perfected.
105-9 Filing under this chapter does not constitute notice of the
105-10 security interest to such holders or purchasers.]
105-11 [Sec. 9.310. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
105-12 OF LAW. When a person in the ordinary course of his business
105-13 furnishes services or materials with respect to goods subject to a
105-14 security interest, a lien upon goods in the possession of such
105-15 person given by statute or rule of law for such materials or
105-16 services takes priority over a perfected security interest unless
105-17 the lien is statutory and the statute expressly provides otherwise.]
105-18 [Sec. 9.311. ALIENABILITY OF DEBTOR'S RIGHTS: JUDICIAL
105-19 PROCESS. The debtor's rights in collateral may be voluntarily or
105-20 involuntarily transferred (by way of sale, creation of a security
105-21 interest, attachment, levy, garnishment or other judicial process)
105-22 notwithstanding a provision in the security agreement prohibiting
105-23 any transfer or making the transfer constitute a default.]
105-24 Sec. 9.322 [9.312]. PRIORITIES AMONG CONFLICTING SECURITY
105-25 INTERESTS IN AND AGRICULTURAL LIENS ON [THE] SAME COLLATERAL.
105-26 (a) Except as otherwise provided in this section, priority among
105-27 conflicting security interests and agricultural liens in the same
106-1 collateral is determined according to the following rules:
106-2 (1) Conflicting perfected security interests and
106-3 agricultural liens rank according to priority in time of filing or
106-4 perfection. Priority dates from the earlier of the time a filing
106-5 covering the collateral is first made or the security interest or
106-6 agricultural lien is first perfected, if there is no period
106-7 thereafter when there is neither filing nor perfection.
106-8 (2) A perfected security interest or agricultural lien
106-9 has priority over a conflicting unperfected security interest or
106-10 agricultural lien.
106-11 (3) The first security interest or agricultural lien
106-12 to attach or become effective has priority if conflicting security
106-13 interests and agricultural liens are unperfected.
106-14 (b) For the purposes of Subsection (a)(1):
106-15 (1) the time of filing or perfection as to a security
106-16 interest in collateral is also the time of filing or perfection as
106-17 to a security interest in proceeds; and
106-18 (2) the time of filing or perfection as to a security
106-19 interest in collateral supported by a supporting obligation is also
106-20 the time of filing or perfection as to a security interest in the
106-21 supporting obligation.
106-22 (c) Except as otherwise provided in Subsection (f), a
106-23 security interest in collateral that qualifies for priority over a
106-24 conflicting security interest under Section 9.327, 9.328, 9.329,
106-25 9.330, or 9.331 also has priority over a conflicting security
106-26 interest in:
106-27 (1) any supporting obligation for the collateral; and
107-1 (2) proceeds of the collateral if:
107-2 (A) the security interest in proceeds is
107-3 perfected;
107-4 (B) the proceeds are cash proceeds or of the
107-5 same type as the collateral; and
107-6 (C) in the case of proceeds that are proceeds of
107-7 proceeds, all intervening proceeds are cash proceeds, proceeds of
107-8 the same type as the collateral, or an account relating to the
107-9 collateral.
107-10 (d) Subject to Subsection (e) and except as otherwise
107-11 provided in Subsection (f), if a security interest in chattel
107-12 paper, deposit accounts, negotiable documents, instruments,
107-13 investment property, or letter-of-credit rights is perfected by a
107-14 method other than filing, conflicting perfected security interests
107-15 in proceeds of the collateral rank according to priority in time of
107-16 filing.
107-17 (e) Subsection (d) applies only if the proceeds of the
107-18 collateral are not cash proceeds, chattel paper, negotiable
107-19 documents, instruments, investment property, or letter-of-credit
107-20 rights.
107-21 (f) Subsections (a)-(e) are subject to:
107-22 (1) Subsection (g) and the other provisions of this
107-23 subchapter;
107-24 (2) Section 4.210 with respect to a security interest
107-25 of a collecting bank;
107-26 (3) Section 5.118 with respect to a security interest
107-27 of an issuer or nominated person; and
108-1 (4) Section 9.110 with respect to a security interest
108-2 arising under Chapter 2 or 2A.
108-3 (g) A perfected agricultural lien on collateral has priority
108-4 over a conflicting security interest in or agricultural lien on the
108-5 same collateral if the statute creating the agricultural lien so
108-6 provides.
108-7 Sec. 9.323. FUTURE ADVANCES. (a) Except as otherwise
108-8 provided in Subsection (c), for purposes of determining the
108-9 priority of a perfected security interest under Section
108-10 9.322(a)(1), perfection of the security interest dates from the
108-11 time an advance is made to the extent that the security interest
108-12 secures an advance that:
108-13 (1) is made while the security interest is perfected
108-14 only:
108-15 (A) under Section 9.309 when it attaches; or
108-16 (B) temporarily under Section 9.312(e), (f), or
108-17 (g); and
108-18 (2) is not made pursuant to a commitment entered into
108-19 before or while the security interest is perfected by a method
108-20 other than under Section 9.309 or 9.312(e), (f), or (g).
108-21 (b) Except as otherwise provided in Subsection (c), a
108-22 security interest is subordinate to the rights of a person that
108-23 becomes a lien creditor while the security interest is perfected
108-24 only to the extent that it secures advances made more than 45 days
108-25 after the person becomes a lien creditor unless the advance is
108-26 made:
108-27 (1) without knowledge of the lien; or
109-1 (2) pursuant to a commitment entered into without
109-2 knowledge of the lien.
109-3 (c) Subsections (a) and (b) do not apply to a security
109-4 interest held by a secured party that is a buyer of accounts,
109-5 chattel paper, payment intangibles, or promissory notes or a
109-6 consignor.
109-7 (d) Except as otherwise provided in Subsection (e), a buyer
109-8 of goods other than a buyer in ordinary course of business takes
109-9 free of a security interest to the extent that it secures advances
109-10 made after the earlier of:
109-11 (1) the time the secured party acquires knowledge of
109-12 the buyer's purchase; or
109-13 (2) 45 days after the purchase.
109-14 (e) Subsection (d) does not apply if the advance is made
109-15 pursuant to a commitment entered into without knowledge of the
109-16 buyer's purchase and before the expiration of the 45-day period.
109-17 (f) Except as otherwise provided in Subsection (g), a lessee
109-18 of goods, other than a lessee in ordinary course of business, takes
109-19 the leasehold interest free of a security interest to the extent
109-20 that it secures advances made after the earlier of:
109-21 (1) the time the secured party acquires knowledge of
109-22 the lease; or
109-23 (2) 45 days after the lease contract becomes
109-24 enforceable.
109-25 (g) Subsection (f) does not apply if the advance is made
109-26 pursuant to a commitment entered into without knowledge of the
109-27 lease and before the expiration of the 45-day period.
110-1 Sec. 9.324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS.
110-2 (a) Except as otherwise provided in Subsection (g), a perfected
110-3 purchase-money security interest in goods other than inventory or
110-4 livestock has priority over a conflicting security interest in the
110-5 same goods, and, except as otherwise provided in Section 9.327, a
110-6 perfected security interest in its identifiable proceeds also has
110-7 priority, if the purchase-money security interest is perfected when
110-8 the debtor receives possession of the collateral or within 20 days
110-9 thereafter.
110-10 (b) Subject to Subsection (c) and except as otherwise
110-11 provided in Subsection (g), a [The rules of priority stated in
110-12 other sections of this subchapter and in the following sections
110-13 shall govern when applicable: Section 4.210 with respect to the
110-14 security interests of collecting banks in items being collected,
110-15 accompanying documents and proceeds; Section 9.103 on security
110-16 interests related to other jurisdictions; Section 9.114 on
110-17 consignments; Section 9.115 on security interests in investment
110-18 property.]
110-19 [(b) A perfected security interest in crops for new value
110-20 given to enable the debtor to produce the crops during the
110-21 production season and given not more than three months before the
110-22 crops become growing crops by planting or otherwise takes priority
110-23 over an earlier perfected security interest to the extent that such
110-24 earlier interest secures obligations due more than six months
110-25 before the crops become growing crops by planting or otherwise,
110-26 even though the person giving new value had knowledge of the
110-27 earlier security interest.]
111-1 [(c) A] perfected purchase-money [purchase money] security
111-2 interest in inventory has priority over a conflicting security
111-3 interest in the same inventory, has priority over a conflicting
111-4 security interest in chattel paper or an instrument constituting
111-5 proceeds of the inventory and in proceeds of the chattel paper, if
111-6 so provided in Section 9.330, and, except as otherwise provided in
111-7 Section 9.327, [and] also has priority in identifiable cash
111-8 proceeds of the inventory to the extent the identifiable cash
111-9 proceeds are received on or before the delivery of the inventory to
111-10 a buyer, if:
111-11 (1) the purchase-money [purchase money] security
111-12 interest is perfected when [at the time] the debtor receives
111-13 possession of the inventory; [and]
111-14 (2) except where excused by Section 9.343 [9.319] (oil
111-15 and gas production), the purchase-money [purchase money] secured
111-16 party sends an authenticated [gives] notification [in writing] to
111-17 the holder of the conflicting security interest [if the holder had
111-18 filed a financing statement covering the same types of inventory
111-19 (i) before the date of the filing made by the purchase money
111-20 secured party, or (ii) before the beginning of the 21 day period
111-21 where the purchase money security interest is temporarily perfected
111-22 without filing or possession (Subsection (e) of Section 9.304)];
111-23 [and]
111-24 (3) the holder of the conflicting security interest
111-25 receives any required notification within five years before the
111-26 debtor receives possession of the inventory; and
111-27 (4) the notification states that the person sending
112-1 [giving] the notification [notice] has or expects to acquire a
112-2 purchase-money [purchase money] security interest in inventory of
112-3 the debtor and describes the[, describing such] inventory [by item
112-4 or type].
112-5 (c) Subsections (b)(2) through (4) apply only if the holder
112-6 of the conflicting security interest had filed a financing
112-7 statement covering the same types of inventory:
112-8 (1) if the purchase-money security interest is
112-9 perfected by filing, before the date of the filing; or
112-10 (2) if the purchase-money security interest is
112-11 temporarily perfected without filing or possession under Section
112-12 9.312(f), before the beginning of the 20-day period under that
112-13 subsection.
112-14 (d) Subject to Subsection (e) and except as otherwise
112-15 provided in Subsection (g), a perfected purchase-money security
112-16 interest in livestock that are farm products has priority over a
112-17 conflicting security interest in the same livestock, and, except as
112-18 otherwise provided in Section 9.327, a perfected security interest
112-19 in their identifiable proceeds and identifiable products in their
112-20 unmanufactured states also has priority, if:
112-21 (1) the purchase-money security interest is perfected
112-22 when the debtor receives possession of the livestock;
112-23 (2) the purchase-money secured party sends an
112-24 authenticated notification to the holder of the conflicting
112-25 security interest;
112-26 (3) the holder of the conflicting security interest
112-27 receives the notification within six months before the debtor
113-1 receives possession of the livestock; and
113-2 (4) the notification states that the person sending
113-3 the notification has or expects to acquire a purchase-money
113-4 security interest in livestock of the debtor and describes the
113-5 livestock. [A purchase money security interest in collateral other
113-6 than inventory has priority over a conflicting security interest in
113-7 the same collateral or its proceeds if the purchase money security
113-8 interest is perfected at the time the debtor receives possession of
113-9 the collateral or within 20 days thereafter.]
113-10 (e) Subsections (d)(2) through (4) apply only if the holder
113-11 of the conflicting security interest had filed a financing
113-12 statement covering the same types of livestock:
113-13 (1) if the purchase-money security interest is
113-14 perfected by filing, before the date of the filing; or
113-15 (2) if the purchase-money security interest is
113-16 temporarily perfected without filing or possession under Section
113-17 9.312(f), before the beginning of the 20-day period under that
113-18 subsection. [In all cases not governed by other rules stated in
113-19 this section (including cases of purchase money security interests
113-20 which do not qualify for the special priorities set forth in
113-21 Subsections (c) and (d) of this section), priority between
113-22 conflicting security interests in the same collateral shall be
113-23 determined according to the following rules:]
113-24 [(1) Conflicting security interests rank according to
113-25 priority in time of filing or perfection. Priority dates from the
113-26 time a filing is first made covering the collateral or the time the
113-27 security interest is first perfected, whichever is earlier,
114-1 provided that there is no period thereafter when there is neither
114-2 filing nor perfection.]
114-3 [(2) So long as conflicting security interests are
114-4 unperfected, the first to attach has priority.]
114-5 (f) Except as otherwise provided in Subsection (g), a
114-6 perfected purchase-money security interest in software has priority
114-7 over a conflicting security interest in the same collateral, and,
114-8 except as otherwise provided in Section 9.327, a perfected security
114-9 interest in its identifiable proceeds also has priority, to the
114-10 extent that the purchase-money security interest in the goods in
114-11 which the software was acquired for use has priority in the goods
114-12 and proceeds of the goods under this section. [For the purposes of
114-13 Subsection (e) a date of filing or perfection as to collateral is
114-14 also a date of filing or perfection as to proceeds.]
114-15 (g) If more than one security interest qualifies for
114-16 priority in the same collateral under Subsection (a), (b), (d), or
114-17 (f):
114-18 (1) a security interest securing an obligation
114-19 incurred as all or part of the price of the collateral has priority
114-20 over a security interest securing an obligation incurred for value
114-21 given to enable the debtor to acquire rights in or the use of
114-22 collateral; and
114-23 (2) in all other cases, Section 9.322(a) applies to
114-24 the qualifying security interests [future advances are made while a
114-25 security interest is perfected by filing, the taking of possession,
114-26 or under Section 9.115 or 9.116 on investment property, the
114-27 security interest has the same priority for the purposes of
115-1 Subsection (e) or Section 9.115(e) with respect to the future
115-2 advances as it does with respect to the first advance. If a
115-3 commitment is made before or while the security interest is so
115-4 perfected, the security interest has the same priority with respect
115-5 to advances made pursuant thereto. In other cases a perfected
115-6 security interest has priority from the date the advance is made].
115-7 Sec. 9.325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED
115-8 COLLATERAL. (a) Except as otherwise provided in Subsection (b), a
115-9 security interest created by a debtor is subordinate to a security
115-10 interest in the same collateral created by another person if:
115-11 (1) the debtor acquired the collateral subject to the
115-12 security interest created by the other person;
115-13 (2) the security interest created by the other person
115-14 was perfected when the debtor acquired the collateral; and
115-15 (3) there is no period thereafter when the security
115-16 interest is unperfected.
115-17 (b) Subsection (a) subordinates a security interest only if
115-18 the security interest:
115-19 (1) otherwise would have priority solely under Section
115-20 9.322(a) or 9.324; or
115-21 (2) arose solely under Section 2.711(c) or 2A.508(e).
115-22 Sec. 9.326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW
115-23 DEBTOR. (a) Subject to Subsection (b), a security interest
115-24 created by a new debtor that is perfected by a filed financing
115-25 statement that is effective solely under Section 9.508 in
115-26 collateral in which a new debtor has or acquires rights is
115-27 subordinate to a security interest in the same collateral that is
116-1 perfected other than by a filed financing statement that is
116-2 effective solely under Section 9.508.
116-3 (b) The other provisions of this subchapter determine the
116-4 priority among conflicting security interests in the same
116-5 collateral perfected by filed financing statements that are
116-6 effective solely under Section 9.508. However, if the security
116-7 agreements to which a new debtor became bound as debtor were not
116-8 entered into by the same original debtor, the conflicting security
116-9 interests rank according to priority in time of the new debtor's
116-10 having become bound.
116-11 Sec. 9.327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT
116-12 ACCOUNT. The following rules govern priority among conflicting
116-13 security interests in the same deposit account:
116-14 (1) A security interest held by a secured party having
116-15 control of the deposit account under Section 9.104 has priority
116-16 over a conflicting security interest held by a secured party that
116-17 does not have control.
116-18 (2) Except as otherwise provided in Subdivisions (3)
116-19 and (4), security interests perfected by control under Section
116-20 9.314 rank according to priority in time of obtaining control.
116-21 (3) Except as otherwise provided in Subdivision (4), a
116-22 security interest held by the bank with which the deposit account
116-23 is maintained has priority over a conflicting security interest
116-24 held by another secured party.
116-25 (4) A security interest perfected by control under
116-26 Section 9.104(a)(3) has priority over a security interest held by
116-27 the bank with which the deposit account is maintained.
117-1 Sec. 9.328. PRIORITY OF SECURITY INTERESTS IN INVESTMENT
117-2 PROPERTY. The following rules govern priority among conflicting
117-3 security interests in the same investment property:
117-4 (1) A security interest held by a secured party having
117-5 control of investment property under Section 9.106 has priority
117-6 over a security interest held by a secured party that does not have
117-7 control of the investment property.
117-8 (2) Except as otherwise provided in Subdivisions (3)
117-9 and (4), conflicting security interests held by secured parties
117-10 each of which has control under Section 9.106 rank according to
117-11 priority in time of:
117-12 (A) if the collateral is a security, obtaining
117-13 control;
117-14 (B) if the collateral is a security entitlement
117-15 carried in a securities account and:
117-16 (i) if the secured party obtained control
117-17 under Section 8.106(d)(1), the secured party's becoming the person
117-18 for which the securities account is maintained;
117-19 (ii) if the secured party obtained control
117-20 under Section 8.106(d)(2), the securities intermediary's agreement
117-21 to comply with the secured party's entitlement orders with respect
117-22 to security entitlements carried or to be carried in the securities
117-23 account; or
117-24 (iii) if the secured party obtained
117-25 control through another person under Section 8.106(d)(3), the time
117-26 on which priority would be based under this subdivision if the
117-27 other person were the secured party; or
118-1 (C) if the collateral is a commodity contract
118-2 carried with a commodity intermediary, the satisfaction of the
118-3 requirement for control specified in Section 9.106(b)(2) with
118-4 respect to commodity contracts carried or to be carried with the
118-5 commodity intermediary.
118-6 (3) A security interest held by a securities
118-7 intermediary in a security entitlement or a securities account
118-8 maintained with the securities intermediary has priority over a
118-9 conflicting security interest held by another secured party.
118-10 (4) A security interest held by a commodity
118-11 intermediary in a commodity contract or a commodity account
118-12 maintained with the commodity intermediary has priority over a
118-13 conflicting security interest held by another secured party.
118-14 (5) A security interest in a certificated security in
118-15 registered form that is perfected by taking delivery under Section
118-16 9.313(a) and not by control under Section 9.314 has priority over a
118-17 conflicting security interest perfected by a method other than
118-18 control.
118-19 (6) Conflicting security interests created by a
118-20 broker, securities intermediary, or commodity intermediary that are
118-21 perfected without control under Section 9.106 rank equally.
118-22 (7) In all other cases, priority among conflicting
118-23 security interests in investment property is governed by Sections
118-24 9.322 and 9.323.
118-25 Sec. 9.329. PRIORITY OF SECURITY INTERESTS IN
118-26 LETTER-OF-CREDIT RIGHT. The following rules govern priority among
118-27 conflicting security interests in the same letter-of-credit right:
119-1 (1) A security interest held by a secured party having
119-2 control of the letter-of-credit right under Section 9.107 has
119-3 priority to the extent of its control over a conflicting security
119-4 interest held by a secured party that does not have control.
119-5 (2) Security interests perfected by control under
119-6 Section 9.314 rank according to priority in time of obtaining
119-7 control.
119-8 Sec. 9.330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR
119-9 INSTRUMENT. (a) A purchaser of chattel paper has priority over a
119-10 security interest in the chattel paper that is claimed merely as
119-11 proceeds of inventory subject to a security interest if:
119-12 (1) in good faith and in the ordinary course of the
119-13 purchaser's business, the purchaser gives new value and takes
119-14 possession of the chattel paper or obtains control of the chattel
119-15 paper under Section 9.105; and
119-16 (2) the chattel paper does not indicate that it has
119-17 been assigned to an identified assignee other than the purchaser.
119-18 (b) A purchaser of chattel paper has priority over a
119-19 security interest in the chattel paper that is claimed other than
119-20 merely as proceeds of inventory subject to a security interest if
119-21 the purchaser gives new value and takes possession of the chattel
119-22 paper or obtains control of the chattel paper under Section 9.105
119-23 in good faith, in the ordinary course of the purchaser's business,
119-24 and without knowledge that the purchase violates the rights of the
119-25 secured party.
119-26 (c) Except as otherwise provided in Section 9.327, a
119-27 purchaser having priority in chattel paper under Subsection (a) or
120-1 (b) also has priority in proceeds of the chattel paper to the
120-2 extent that:
120-3 (1) Section 9.322 provides for priority in the
120-4 proceeds; or
120-5 (2) the proceeds consist of the specific goods covered
120-6 by the chattel paper or cash proceeds of the specific goods, even
120-7 if the purchaser's security interest in the proceeds is
120-8 unperfected.
120-9 (d) Except as otherwise provided in Section 9.331(a), a
120-10 purchaser of an instrument has priority over a security interest in
120-11 the instrument perfected by a method other than possession if the
120-12 purchaser gives value and takes possession of the instrument in
120-13 good faith and without knowledge that the purchase violates the
120-14 rights of the secured party.
120-15 (e) For purposes of Subsections (a) and (b), the holder of a
120-16 purchase-money security interest in inventory gives new value for
120-17 chattel paper constituting proceeds of the inventory.
120-18 (f) For purposes of Subsections (b) and (d), if chattel
120-19 paper or an instrument indicates that it has been assigned to an
120-20 identified secured party other than the purchaser, a purchaser of
120-21 the chattel paper or instrument has knowledge that the purchase
120-22 violates the rights of the secured party.
120-23 Sec. 9.331. PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS,
120-24 DOCUMENTS, AND SECURITIES UNDER OTHER CHAPTERS; PRIORITY OF
120-25 INTERESTS IN FINANCIAL ASSETS AND SECURITY ENTITLEMENTS UNDER
120-26 CHAPTER 8. (a) This chapter does not limit the rights of a holder
120-27 in due course of a negotiable instrument, a holder to which a
121-1 negotiable document of title has been duly negotiated, or a
121-2 protected purchaser of a security. These holders or purchasers
121-3 take priority over an earlier security interest, even if perfected,
121-4 to the extent provided in Chapters 3, 7, and 8.
121-5 (b) This chapter does not limit the rights of or impose
121-6 liability on a person to the extent that the person is protected
121-7 against the assertion of an adverse claim under Chapter 8.
121-8 (c) Filing under this chapter does not constitute notice of
121-9 a claim or defense to the holders, or purchasers, or persons
121-10 described in Subsections (a) and (b).
121-11 Sec. 9.332. TRANSFER OF MONEY; TRANSFER OF FUNDS FROM
121-12 DEPOSIT ACCOUNT. (a) A transferee of money takes the money free
121-13 of a security interest unless the transferee acts in collusion with
121-14 the debtor in violating the rights of the secured party.
121-15 (b) A transferee of funds from a deposit account takes the
121-16 funds free of a security interest in the deposit account unless the
121-17 transferee acts in collusion with the debtor in violating the
121-18 rights of the secured party.
121-19 Sec. 9.333. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
121-20 OF LAW. (a) In this section, "possessory lien" means an interest,
121-21 other than a security interest or an agricultural lien:
121-22 (1) that secures payment or performance of an
121-23 obligation for services or materials furnished with respect to
121-24 goods by a person in the ordinary course of the person's business;
121-25 (2) that is created by statute or rule of law in favor
121-26 of the person; and
121-27 (3) whose effectiveness depends on the person's
122-1 possession of the goods.
122-2 (b) A possessory lien on goods has priority over a security
122-3 interest in the goods unless the lien is created by a statute that
122-4 expressly provides otherwise.
122-5 Sec. 9.334 [9.313]. PRIORITY OF SECURITY INTERESTS IN
122-6 FIXTURES AND CROPS. (a) [In this section and in the provisions of
122-7 Subchapter D of this chapter referring to fixture filing, unless
122-8 the context otherwise requires]
122-9 [(1) goods are "fixtures" when they become so related
122-10 to particular real estate that an interest in them arises under the
122-11 real estate law of the state in which the real estate is situated;]
122-12 [(2) a "fixture filing" is the filing in the office
122-13 where a mortgage on the real estate would be filed or recorded of a
122-14 financing statement covering goods which are or are to become
122-15 fixtures and conforming to the requirements of Subsection (e) of
122-16 Section 9.402;]
122-17 [(3) a mortgage is a "construction mortgage" to the
122-18 extent that it secures an obligation incurred for the construction
122-19 of an improvement on land including the acquisition cost of the
122-20 land, if the recorded writing so indicates.]
122-21 [(b)] A security interest under this chapter may be created
122-22 in goods that [which] are fixtures or may continue in goods that
122-23 [which] become fixtures. A[, but no] security interest does not
122-24 exist [exists] under this chapter in ordinary building materials
122-25 incorporated into an improvement on land.
122-26 (b) [(c)] This chapter does not prevent creation of an
122-27 encumbrance upon fixtures under [pursuant to] real property
123-1 [estate] law.
123-2 (c) In cases not governed by Subsections (d)-(h), a security
123-3 interest in fixtures is subordinate to a conflicting interest of
123-4 an encumbrancer or owner of the related real property other than
123-5 the debtor.
123-6 (d) Except as otherwise provided in Subsection (h), a [A]
123-7 perfected security interest in fixtures has priority over the
123-8 conflicting interest of an encumbrancer or owner of the real
123-9 property if the debtor has an interest of record in or is in
123-10 possession of the real property and: [estate where]
123-11 (1) the security interest is a purchase-money
123-12 [purchase money] security interest;
123-13 (2)[,] the interest of the encumbrancer or owner
123-14 arises before the goods become fixtures; and
123-15 (3)[,] the security interest is perfected by a fixture
123-16 filing before the goods become fixtures or within 20 [ten] days
123-17 thereafter.
123-18 (e) A perfected security interest in fixtures has priority
123-19 over a conflicting interest of an encumbrancer or owner of the real
123-20 property if:
123-21 (1) the debtor has an interest of record in the real
123-22 property or is in possession of the real property and[, and the
123-23 debtor has an interest of record in the real estate or is in
123-24 possession of the real estate; or]
123-25 [(2)] the security interest:
123-26 (A) is perfected by a fixture filing before the
123-27 interest of the encumbrancer or owner is of record; and
124-1 (B)[, the security interest] has priority over
124-2 any conflicting interest of a predecessor in title of the
124-3 encumbrancer or owner;
124-4 (2) before the goods become fixtures, the security
124-5 interest is perfected by any method permitted by this chapter and[,
124-6 and the debtor has an interest of record in the real estate or is
124-7 in possession of the real estate; or]
124-8 [(3)] the fixtures are readily removable:
124-9 (A) factory or office machines;
124-10 (B) equipment that is not primarily used or
124-11 leased for use in the operation of the real property; or
124-12 (C) [readily removable] replacements of domestic
124-13 appliances that [which] are consumer goods;
124-14 (3)[, and before the goods become fixtures the security
124-15 interest is perfected by any method permitted by this chapter; or]
124-16 [(4)] the conflicting interest is a lien on the real
124-17 property [estate] obtained by legal or equitable proceedings after
124-18 the security interest was perfected by any method permitted by this
124-19 chapter; or
124-20 (4) the security interest is:
124-21 (A) created in a manufactured home in a
124-22 manufactured-home transaction; and
124-23 (B) perfected pursuant to a statute described in
124-24 Section 9.311(a)(2).
124-25 (f) [(e)] A security interest in fixtures, whether or not
124-26 perfected, has priority over the conflicting interest of an
124-27 encumbrancer or owner of the real property if: [estate where]
125-1 (1) the encumbrancer or owner has, in an authenticated
125-2 record, consented [in writing] to the security interest or [has]
125-3 disclaimed an interest in the goods as fixtures; or
125-4 (2) the debtor has a right to remove the goods as
125-5 against the encumbrancer or owner.
125-6 (g) The [If the debtor's right terminates, the] priority of
125-7 the security interest under Subsection (f) continues for a
125-8 reasonable time if the debtor's right to remove the goods as
125-9 against the encumbrancer or owner terminates.
125-10 (h) A mortgage is a construction mortgage to the extent that
125-11 it secures an obligation incurred for the construction of an
125-12 improvement on land, including the acquisition cost of the land, if
125-13 a recorded record of the mortgage so indicates. Except as
125-14 [(f) Notwithstanding Subdivision (1) of Subsection (d) but]
125-15 otherwise provided in [subject to] Subsections [(d) and] (e) and
125-16 (f), a security interest in fixtures is subordinate to a
125-17 construction mortgage if a record of the mortgage is recorded
125-18 before the goods become fixtures [if the goods become fixtures]
125-19 before the completion of the construction. A [To the extent that
125-20 it is given to refinance a construction mortgage, a] mortgage has
125-21 this priority to the same extent as a [the] construction mortgage
125-22 to the extent that it is given to refinance a construction
125-23 mortgage.
125-24 (i) A perfected security interest in crops growing on real
125-25 property has priority over a conflicting interest of an
125-26 encumbrancer or owner of the real property if the debtor has an
125-27 interest of record in or is in possession of the real property.
126-1 [(g) In cases not within the preceding subsections, a
126-2 security interest in fixtures is subordinate to the conflicting
126-3 interest of an encumbrancer or owner of the related real estate who
126-4 is not the debtor.]
126-5 [(h) When the secured party has priority over all owners and
126-6 encumbrancers of the real estate, he may, on default, subject to
126-7 the provisions of Subchapter E, remove his collateral from the real
126-8 estate but he must reimburse any encumbrancer or owner of the real
126-9 estate who is not the debtor and who has not otherwise agreed for
126-10 the cost of repair of any physical injury, but not for any
126-11 diminution in value of the real estate caused by the absence of the
126-12 goods removed or by any necessity of replacing them. A person
126-13 entitled to reimbursement may refuse permission to remove until the
126-14 secured party gives adequate security for the performance of this
126-15 obligation.]
126-16 Sec. 9.335 [9.314]. ACCESSIONS. (a) A security interest
126-17 may be created in an accession and continues in collateral that
126-18 becomes an accession [in goods which attaches before they are
126-19 installed in or affixed to other goods takes priority as to the
126-20 goods installed or affixed (called in this section "accessions")
126-21 over the claims of all persons to the whole except as stated in
126-22 Subsection (c) and subject to Section 9.315(a)].
126-23 (b) If a security interest is perfected when the collateral
126-24 becomes an accession, the security interest remains perfected in
126-25 the collateral. [A security interest which attaches to goods after
126-26 they become part of a whole is valid against all persons
126-27 subsequently acquiring interests in the whole except as stated in
127-1 Subsection (c) but is invalid against any person with an interest
127-2 in the whole at the time the security interest attaches to the
127-3 goods who has not in writing consented to the security interest or
127-4 disclaimed an interest in the goods as part of the whole.]
127-5 (c) Except as otherwise provided in Subsection (d), the
127-6 other provisions of this subchapter determine the priority of a
127-7 security interest in an accession. [The security interests
127-8 described in Subsections (a) and (b) do not take priority over]
127-9 [(1) a subsequent purchaser for value of any interest
127-10 in the whole; or]
127-11 [(2) a creditor with a lien on the whole subsequently
127-12 obtained by judicial proceedings; or]
127-13 [(3) a creditor with a prior perfected security
127-14 interest in the whole to the extent that he makes subsequent
127-15 advances if the subsequent purchase is made, the lien by judicial
127-16 proceedings obtained or the subsequent advance under the prior
127-17 perfected security interest is made or contracted for without
127-18 knowledge of the security interest and before it is perfected. A
127-19 purchaser of the whole at a foreclosure sale other than the holder
127-20 of a perfected security interest purchasing at his own foreclosure
127-21 sale is a subsequent purchaser within this section.]
127-22 (d) A security interest in an accession is subordinate to a
127-23 security interest in the whole that is perfected by compliance with
127-24 the requirements of a certificate-of-title statute under Section
127-25 9.311(b).
127-26 (e) After [When under Subsections (a) or (b) and (c) a
127-27 secured party has an interest in accessions which has priority over
128-1 the claims of all persons who have interests in the whole, he may
128-2 on] default, subject to [the provisions of] Subchapter F, a secured
128-3 party may [E] remove an accession from other goods if the security
128-4 interest in the accession has priority over the claims of every
128-5 person having an interest in the whole.
128-6 (f) A secured party that removes an accession from other
128-7 goods under Subsection (e) shall promptly [his collateral from the
128-8 whole but he must] reimburse any holder of a security interest or
128-9 other lien on, [encumbrancer] or owner of, the whole or the other
128-10 goods, other than [who is not] the debtor, [and who has not
128-11 otherwise agreed] for the cost of repair of any physical injury to
128-12 the whole or the other goods. The secured party need [but] not
128-13 reimburse the holder or owner for any diminution in value of the
128-14 whole or the other goods caused by the absence of the accession
128-15 [goods] removed or by any necessity for replacing it [them]. A
128-16 person entitled to reimbursement may refuse permission to remove
128-17 until the secured party gives adequate assurance [security] for the
128-18 performance of the [this] obligation to reimburse.
128-19 Sec. 9.336 [9.315]. [PRIORITY WHEN GOODS ARE] COMMINGLED
128-20 GOODS [OR PROCESSED]. (a) In this section, "commingled goods"
128-21 means goods that are physically united with other goods in such a
128-22 manner that their identity is lost in a product or mass.
128-23 (b) A security interest does not exist in commingled goods
128-24 as such. However, a security interest may attach to a product or
128-25 mass that results when goods become commingled goods.
128-26 (c) If collateral becomes commingled goods, a security
128-27 interest attaches to the product or mass.
129-1 (d) If a security interest in collateral is [goods was]
129-2 perfected before the collateral becomes commingled [and
129-3 subsequently the] goods [or a part thereof have become part of a
129-4 product or mass], the security interest that attaches to the
129-5 product or mass under Subsection (c) is perfected [continues in the
129-6 product or mass if]
129-7 [(1) the goods are so manufactured, processed,
129-8 assembled or commingled that their identity is lost in the product
129-9 or mass; or]
129-10 [(2) a financing statement covering the original goods
129-11 also covers the product into which the goods have been
129-12 manufactured, processed or assembled.]
129-13 [In a case to which Subdivision (2) applies, no separate
129-14 security interest in that part of the original goods which has been
129-15 manufactured, processed or assembled into the product may be
129-16 claimed under Section 9.314].
129-17 (e) Except as otherwise provided in Subsection (f), the
129-18 other provisions of this subchapter determine the priority of a
129-19 security interest that attaches to the product or mass under
129-20 Subsection (c).
129-21 (f) If [(b) When under Subsection (a)] more than one
129-22 security interest attaches to the product or mass under Subsection
129-23 (c), the following rules determine priority:
129-24 (1) A security interest that is perfected under
129-25 Subsection (d) has priority over a security interest that is
129-26 unperfected at the time the collateral becomes commingled goods.
129-27 (2) If more than one security interest is perfected
130-1 under Subsection (d), the security interests[, they] rank equally
130-2 in proportion to value of the collateral at the time it became
130-3 commingled goods [according to the ratio that the cost of the goods
130-4 to which each interest originally attached bears to the cost of the
130-5 total product or mass].
130-6 Sec. 9.337. PRIORITY OF SECURITY INTERESTS IN GOODS COVERED
130-7 BY CERTIFICATE OF TITLE. If, while a security interest in goods is
130-8 perfected by any method under the law of another jurisdiction, this
130-9 State issues a certificate of title that does not show that the
130-10 goods are subject to the security interest or contain a statement
130-11 that they may be subject to security interests not shown on the
130-12 certificate:
130-13 (1) a buyer of the goods, other than a person in the
130-14 business of selling goods of that kind, takes free of the security
130-15 interest if the buyer gives value and receives delivery of the
130-16 goods after issuance of the certificate and without knowledge of
130-17 the security interest; and
130-18 (2) the security interest is subordinate to a
130-19 conflicting security interest in the goods that attaches, and is
130-20 perfected under Section 9.311(b), after issuance of the certificate
130-21 and without the conflicting secured party's knowledge of the
130-22 security interest.
130-23 Sec. 9.338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL
130-24 LIEN PERFECTED BY FILED FINANCING STATEMENT PROVIDING CERTAIN
130-25 INCORRECT INFORMATION. If a security interest or agricultural lien
130-26 is perfected by a filed financing statement providing information
130-27 described in Section 9.516(b)(5) that is incorrect at the time the
131-1 financing statement is filed:
131-2 (1) the security interest or agricultural lien is
131-3 subordinate to a conflicting perfected security interest in the
131-4 collateral to the extent that the holder of the conflicting
131-5 security interest gives value in reasonable reliance upon the
131-6 incorrect information; and
131-7 (2) a purchaser, other than a secured party, of the
131-8 collateral takes free of the security interest or agricultural lien
131-9 to the extent that, in reasonable reliance upon the incorrect
131-10 information, the purchaser gives value and, in the case of chattel
131-11 paper, documents, goods, instruments, or a security certificate,
131-12 receives delivery of the collateral.
131-13 Sec. 9.339 [9.316]. PRIORITY SUBJECT TO SUBORDINATION. This
131-14 [Nothing in this] chapter does not preclude [prevents]
131-15 subordination by agreement by a [any] person entitled to priority.
131-16 Sec. 9.340. EFFECTIVENESS OF RIGHT OF RECOUPMENT OR SET-OFF
131-17 AGAINST DEPOSIT ACCOUNT. (a) Except as otherwise provided in
131-18 Subsection (c), a bank with which a deposit account is maintained
131-19 may exercise any right of recoupment or set-off against a secured
131-20 party that holds a security interest in the deposit account.
131-21 (b) Except as otherwise provided in Subsection (c), the
131-22 application of this chapter to a security interest in a deposit
131-23 account does not affect a right of recoupment or set-off of the
131-24 secured party as to a deposit account maintained with the secured
131-25 party.
131-26 (c) The exercise by a bank of a set-off against a deposit
131-27 account is ineffective against a secured party that holds a
132-1 security interest in the deposit account that is perfected by
132-2 control under Section 9.104(a)(3), if the set-off is based on a
132-3 claim against the debtor.
132-4 Sec. 9.341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT
132-5 ACCOUNT. Except as otherwise provided in Section 9.340(c), and
132-6 unless the bank otherwise agrees in an authenticated record, a
132-7 bank's rights and duties with respect to a deposit account
132-8 maintained with the bank are not terminated, suspended, or modified
132-9 by:
132-10 (1) the creation, attachment, or perfection of a
132-11 security interest in the deposit account;
132-12 (2) the bank's knowledge of the security interest; or
132-13 (3) the bank's receipt of instructions from the
132-14 secured party.
132-15 Sec. 9.342. BANK'S RIGHT TO REFUSE TO ENTER INTO OR DISCLOSE
132-16 EXISTENCE OF CONTROL AGREEMENT. This chapter does not require a
132-17 bank to enter into an agreement of the kind described in Section
132-18 9.104(a)(2), even if its customer so requests or directs. A bank
132-19 that has entered into such an agreement is not required to confirm
132-20 the existence of the agreement to another person unless requested
132-21 to do so by its customer.
132-22 Sec. 9.343. OIL AND GAS INTERESTS: SECURITY INTEREST
132-23 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
132-24 provides a security interest in favor of interest owners, as
132-25 secured parties, to secure the obligations of the first purchaser
132-26 of oil and gas production, as debtor, to pay the purchase price.
132-27 An authenticated record giving the interest owner a right under
133-1 real property law operates as a security agreement created under
133-2 this chapter. The act of the first purchaser in signing an
133-3 agreement to purchase oil or gas production, in issuing a division
133-4 order, or in making any other voluntary communication to the
133-5 interest owner or any governmental agency recognizing the interest
133-6 owner's right operates as an authentication of a security agreement
133-7 in accordance with Section 9.203(b) for purposes of this chapter.
133-8 (b) The security interest provided by this section is
133-9 perfected automatically without the filing of a financing
133-10 statement. If the interest of the secured party is evidenced by a
133-11 deed, mineral deed, reservation in either, oil or gas lease,
133-12 assignment, or any other such record recorded in the real property
133-13 records of a county clerk, that record is effective as a filed
133-14 financing statement for purposes of this chapter, but no fee is
133-15 required except a fee that is otherwise required by the county
133-16 clerk, and there is no requirement of refiling every five years to
133-17 maintain effectiveness of the filing.
133-18 (c) The security interest exists in oil and gas production,
133-19 and also in the identifiable proceeds of that production owned by,
133-20 received by, or due to the first purchaser:
133-21 (1) for an unlimited time if:
133-22 (A) the proceeds are oil or gas production,
133-23 inventory of raw, refined, or manufactured oil or gas production,
133-24 or rights to or products of any of those, although the sale of
133-25 those proceeds by a first purchaser to a buyer in the ordinary
133-26 course of business as provided in Subsection (e) cuts off the
133-27 security interest in those proceeds;
134-1 (B) the proceeds are accounts, chattel paper,
134-2 instruments, documents, or payment intangibles; or
134-3 (C) the proceeds are cash proceeds, as defined
134-4 in Section 9.102; and
134-5 (2) for the length of time provided in Section 9.315
134-6 for all other proceeds.
134-7 (d) This section creates a lien that secures the payment of
134-8 all taxes that are or should be withheld or paid by the first
134-9 purchaser and a lien that secures the rights of any person who
134-10 would be entitled to a security interest under Subsection (a)
134-11 except for lack of any adoption of a security agreement by the
134-12 first purchaser or a lack of possession or record required by
134-13 Section 9.203 for the security interest to be enforceable.
134-14 (e) The security interests and liens created by this section
134-15 have priority over any purchaser who is not a buyer in the ordinary
134-16 course of the first purchaser's business, but are cut off by the
134-17 sale to a buyer from the first purchaser who is in the ordinary
134-18 course of the first purchaser's business under Section 9.320(a).
134-19 But in either case, whether or not the buyer from the first
134-20 purchaser is in ordinary course, a security interest will continue
134-21 in the proceeds of the sale by the first purchaser as provided in
134-22 Subsection (c).
134-23 (f) The security interests and all liens created by this
134-24 section have the following priorities over other Chapter 9 security
134-25 interests:
134-26 (1) A security interest created by this section is
134-27 treated as a purchase-money security interest for purposes of
135-1 determining its relative priority under Section 9.324 over other
135-2 security interests not provided for by this section. A holder of a
135-3 security interest created under this section is not required to
135-4 give the written notice every five years as provided in Section
135-5 9.324(b)(3) to have purchase-money priority over a security
135-6 interest with a prior financing statement covering inventory.
135-7 (2) A statutory lien is subordinate to all other
135-8 perfected Chapter 9 security interests and has priority over
135-9 unperfected Chapter 9 security interests and the lien creditors,
135-10 buyers, and transferees mentioned in Section 9.317.
135-11 (g) The security interests and liens created by this section
135-12 have the following priorities among themselves:
135-13 (1) If a record effective as a filed financing
135-14 statement under Subsection (b) exists, the security interests
135-15 perfected by that record have priority over a security interest
135-16 automatically perfected without filing under Subsection (b). If
135-17 several security interests perfected by records exist, they have
135-18 the same priority among themselves as established by real property
135-19 law for interests in oil and gas in place. If real property law
135-20 establishes no priority among them, they share priority pro rata.
135-21 (2) A security interest perfected automatically
135-22 without filing under Subsection (b) has priority over a lien
135-23 created under Subsection (d).
135-24 (3) A nontax lien under Subsection (d) has priority
135-25 over a lien created under that subsection that secures the payment
135-26 of taxes.
135-27 (h) The priorities for statutory liens mentioned in Section
136-1 9.333 do not apply to any security interest or statutory lien
136-2 created by this section. But if a pipeline common carrier has a
136-3 statutory or tariff lien that is effective and enforceable against
136-4 a trustee in bankruptcy and not invalidated by the Federal Tax Lien
136-5 Act, that lien has priority over the security interests and
136-6 statutory liens created by this section.
136-7 (i) If oil or gas production in which there are security
136-8 interests or statutory liens created by this section is commingled
136-9 with inventory or other production, the rules of Section 9.336
136-10 apply.
136-11 (j) A security interest or statutory lien created by this
136-12 section remains effective against the debtor and perfected against
136-13 the debtor's creditors even if assigned, regardless of whether the
136-14 assignment is perfected against the assignor's creditors. If a
136-15 deed, mineral deed, assignment of oil and gas lease, or other such
136-16 record evidencing the assignment is filed in the real property
136-17 records of the county, it will have the same effect as filing an
136-18 amended financing statement under Section 9.514.
136-19 (k) This section does not impair an operator's right to
136-20 setoff or withhold funds from other interest owners as security for
136-21 or in satisfaction of any debt or security interest. In case of a
136-22 dispute between an operator and another interest owner, a good
136-23 faith tender of funds by anyone to the person who the operator and
136-24 other interest owner agree on, to a person who otherwise shows
136-25 himself or herself to be the one entitled to the funds, or to a
136-26 court of competent jurisdiction in the event of litigation or
136-27 bankruptcy operates as a tender of the funds to both.
137-1 (l) A first purchaser who acts in good faith may terminate
137-2 an interest owner's security interest or statutory lien under this
137-3 section by paying, or by making and keeping open a tender of, the
137-4 amount the first purchaser believes to be due to the interest
137-5 owner:
137-6 (1) if the interest owner's rights are to oil or gas
137-7 production or its proceeds, either to the operator alone, in which
137-8 event the operator is considered the first purchaser, or to some
137-9 combination of the interest owner and the operator, as the first
137-10 purchaser chooses;
137-11 (2) whatever the nature of the production to which the
137-12 interest owner has rights, to the person that the interest owner
137-13 agreed to or acquiesced in; or
137-14 (3) to a court of competent jurisdiction in the event
137-15 of litigation or bankruptcy.
137-16 (m) A person who buys from a first purchaser can ensure that
137-17 the person buys free and clear of an interest owner's security
137-18 interest or statutory lien under this section:
137-19 (1) by buying in the ordinary course of the first
137-20 purchaser's business from the first purchaser under Section
137-21 9.320(a);
137-22 (2) by obtaining the interest owner's consent to the
137-23 sale under Section 9.315(a)(1);
137-24 (3) by ensuring that the first purchaser has paid the
137-25 interest owner or, provided that gas production is involved, or the
137-26 interest owner has so agreed or acquiesced, by ensuring that the
137-27 first purchaser has paid the interest owner's operator; or
138-1 (4) by ensuring that the person or the first purchaser
138-2 or some other person has withheld funds sufficient to pay amounts
138-3 in dispute and has maintained a tender of those funds to whoever
138-4 shows himself or herself to be the person entitled.
138-5 (n) If a tender under Section (m)(4) that is valid
138-6 thereafter fails, the security interest and liens governed by this
138-7 section remain effective.
138-8 (o) In addition to the usual remedy of sequestration
138-9 available to secured parties, and the remedies given in Subchapter
138-10 F, the holders of security interests and liens created by this
138-11 section have available to them, to the extent constitutionally
138-12 permitted, the remedies of replevin, attachment, and garnishment to
138-13 assist them in realizing upon their rights.
138-14 (p) The rights of any person claiming under a security
138-15 interest or lien created by this section are governed by the other
138-16 provisions of this chapter except to the extent that this section
138-17 necessarily displaces those provisions. This section does not
138-18 invalidate or otherwise affect the interests of any person in any
138-19 real property before severance of any oil or gas production.
138-20 (q) The security interest created under Subsections (a) and
138-21 (b) do not apply to proceeds of gas production that have been
138-22 withheld, in cash or account form, by a purchaser under Section
138-23 201.204(c), Tax Code.
138-24 (r) In this section:
138-25 (1) "Oil and gas production" means any oil, natural
138-26 gas, condensate of either, natural gas liquids, other gaseous,
138-27 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
139-1 substance produced as a by-product or adjunct to their production,
139-2 or any combination of these, which is severed, extracted, or
139-3 produced from the ground, the seabed, or other submerged lands
139-4 within the jurisdiction of this state. Any such substance,
139-5 including recoverable or recovered natural gas liquids, that is
139-6 transported to or in a natural gas pipeline or natural gas
139-7 gathering system, or otherwise transported or sold for use as
139-8 natural gas, or is transported or sold for the extraction of helium
139-9 or natural gas liquids is "gas production." Any such substance
139-10 that is transported or sold to persons and for purposes not
139-11 included in the foregoing natural gas definition is "oil
139-12 production."
139-13 (2) "Interest owner" means a person owning an entire
139-14 or fractional interest of any kind or nature in oil or gas
139-15 production at the time of severance, or a person who has an
139-16 express, implied, or constructive right to receive a monetary
139-17 payment determined by the value of oil or gas production or by the
139-18 amount of production.
139-19 (3) "First purchaser" means the first person that
139-20 purchases oil or gas production from an operator or interest owner
139-21 after the production is severed, or an operator that receives
139-22 production proceeds from a third-party purchaser who acts in good
139-23 faith under a division order or other agreement authenticated by
139-24 the operator under which the operator collects proceeds of
139-25 production on behalf of other interest owners. To the extent the
139-26 operator receives proceeds attributable to the interest of other
139-27 interest owners from a third-party purchaser who acts in good faith
140-1 under a division order or other agreement authenticated by such
140-2 operator, the operator is considered to be the first purchaser of
140-3 the production for all purposes under this section, notwithstanding
140-4 the characterization of other persons as first purchasers under
140-5 other laws or regulations. To the extent the operator has not
140-6 received from the third-party purchaser proceeds attributable to
140-7 the operator's interest and the interest of other interest owners,
140-8 the operator is not considered the first purchaser for the purposes
140-9 of this section and is entitled to all rights and benefits under
140-10 this section. Nothing in this section impairs or affects any
140-11 rights otherwise held by a royalty owner to take its share of oil
140-12 in kind or receive payment directly from a third-party purchaser
140-13 for the royalty owner's share of oil production with or without a
140-14 previously made agreement.
140-15 (4) "Operator" means a person engaged in the business
140-16 of severing oil or gas production from the ground, whether for the
140-17 person alone, only for other persons, or for the person and others.
140-18 [Sec. 9.317. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
140-19 DEBTOR. The mere existence of a security interest or authority
140-20 given to the debtor to dispose of or use collateral does not impose
140-21 contract or tort liability upon the secured party for the debtor's
140-22 acts or omissions.]
140-23 [Sec. 9.318. DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
140-24 CONTRACT AFTER NOTIFICATION OF ASSIGNMENT; TERM PROHIBITING
140-25 ASSIGNMENT INEFFECTIVE; IDENTIFICATION AND PROOF OF ASSIGNMENT.
140-26 (a) Unless an account debtor has made an enforceable agreement not
140-27 to assert defenses or claims arising out of a sale as provided in
141-1 Section 9.206 the rights of an assignee are subject to]
141-2 [(1) all the terms of the contract between the account
141-3 debtor and assignor and any defense or claim arising therefrom; and]
141-4 [(2) any other defense or claim of the account debtor
141-5 against the assignor which accrues before the account debtor
141-6 receives notification of the assignment.]
141-7 [(b) So far as the right to payment or a part thereof under
141-8 an assigned contract has not been fully earned by performance, and
141-9 notwithstanding notification of the assignment, any modification of
141-10 or substitution for the contract made in good faith and in
141-11 accordance with reasonable commercial standards is effective
141-12 against an assignee unless the account debtor has otherwise agreed
141-13 but the assignee acquires corresponding rights under the modified
141-14 or substituted contract. The assignment may provide that such
141-15 modification or substitution is a breach by the assignor.]
141-16 [(c) The account debtor is authorized to pay the assignor
141-17 until the account debtor receives notification that the amount due
141-18 or to become due has been assigned and that payment is to be made
141-19 to the assignee. A notification which does not reasonably identify
141-20 the rights assigned is ineffective. If requested by the account
141-21 debtor, the assignee must seasonably furnish reasonable proof that
141-22 the assignment has been made and unless he does so the account
141-23 debtor may pay the assignor.]
141-24 [(d) A term in any contract between an account debtor and an
141-25 assignor is ineffective if it prohibits assignment of an account or
141-26 prohibits creation of a security interest in a general intangible
141-27 for money due or to become due or requires the account debtor's
142-1 consent to such assignment or security interest.]
142-2 [Sec. 9.319. OIL AND GAS INTERESTS: SECURITY INTEREST
142-3 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
142-4 provides a security interest in favor of interest owners (as
142-5 secured parties) to secure the obligations of the first purchaser
142-6 of oil and gas production (as debtor) to pay the purchase price. A
142-7 signed writing giving the interest owner a right under real estate
142-8 law operates as a security agreement created under this chapter.
142-9 The act of the first purchaser in signing an agreement to purchase
142-10 oil or gas production, in issuing a division order, or in making
142-11 any other voluntary communication to the interest owner or any
142-12 governmental agency recognizing the interest owner's right operates
142-13 as an authentication and adoption of the security agreement in
142-14 accordance with Section 1.201(39) of this code for purposes of this
142-15 chapter.]
142-16 [(b) The security interest provided by this section is
142-17 perfected automatically without the filing of a financing
142-18 statement. If the interest of the secured party is evidenced by a
142-19 deed, mineral deed, reservation in either, oil or gas lease,
142-20 assignment, or any other such writing recorded in the real estate
142-21 records of a county clerk, that writing is effective as a filed
142-22 financing statement for purposes of Sections 9.302, 9.304, 9.306,
142-23 9.312, 9.401, 9.402, and 9.403 of this code, but no fee is required
142-24 except that otherwise required by the county clerk, and there is no
142-25 requirement of refiling every five years to maintain effectiveness
142-26 of the filing.]
142-27 [(c) The security interest exists in oil and gas production,
143-1 and also in the following proceeds of such production owned by,
143-2 received by, or due to the first purchaser:]
143-3 [(1) for an unlimited time if:]
143-4 [(A) the proceeds are oil or gas production,
143-5 inventory of raw, refined, or manufactured oil or gas production,
143-6 or rights to or products of any of these, although the sale of such
143-7 proceeds by a first purchaser to a buyer in the ordinary course of
143-8 business as provided in Subsection (e) will cut off the security
143-9 interest in those proceeds;]
143-10 [(B) the proceeds are accounts, chattel paper,
143-11 instruments, and documents; or]
143-12 [(C) the proceeds are "cash proceeds" as defined
143-13 in Section 9.306 of this code; and]
143-14 [(2) for the length of time provided by Section 9.306
143-15 of this code as to all other proceeds.]
143-16 [(d) This section creates a lien that secures the payment of
143-17 all taxes that are or should be withheld or paid by the first
143-18 purchaser, and a lien that secures the rights of any person who
143-19 would be entitled to a security interest under Subsection (a) of
143-20 this section except for lack of any adoption of a security
143-21 agreement by the first purchaser or a lack of possession or writing
143-22 required by Section 9.203 of this code for the security interest to
143-23 be enforceable.]
143-24 [(e) The security interests and liens created by this
143-25 section have priority over the bona fide purchasers described in
143-26 Section 9.301 of this code (transferees in bulk and other buyers
143-27 not in the ordinary course), but are cut off by the sale to a buyer
144-1 from the first purchaser who is in the ordinary course of the first
144-2 purchaser's business under Section 9.307(a) of this code. But in
144-3 either case, whether or not the buyer from the first purchaser is
144-4 in ordinary course a security interest will continue in the
144-5 proceeds of the sale by the first purchaser as provided in
144-6 Subsection (c).]
144-7 [(f) The security interests and all liens created by this
144-8 section will have the following priorities over other Chapter 9
144-9 security interests:]
144-10 [(1) security interests created by this section shall
144-11 be treated as purchase money security interests for purposes of
144-12 determining their relative priority under Section 9.312 of this
144-13 code over other security interests not provided for by this
144-14 section; holders of these security interests are not required to
144-15 give the written notice every five years as provided by Section
144-16 9.312(c) to enjoy purchase money priority over security interests
144-17 with a prior financing statement covering inventory; and]
144-18 [(2) statutory liens are subordinate to all other
144-19 perfected Chapter 9 security interests, and have priority over
144-20 unperfected Chapter 9 security interests and the lien creditors,
144-21 buyers, and transferees mentioned in Section 9.301 of this code.]
144-22 [(g) The security interests and liens created by this
144-23 section have the following priorities among themselves:]
144-24 [(1) if a writing effective as a financing statement
144-25 under Subsection (b) of this section exists, the security interests
144-26 perfected by that writing have priority over a security interest
144-27 automatically perfected without filing under Subsection (b) of this
145-1 section. If several security interests perfected by writings
145-2 exist, they have the same priority among themselves as established
145-3 by real estate law for interests in oil and gas in place. If real
145-4 estate law establishes no priority among them, they share priority
145-5 pro rata;]
145-6 [(2) a security interest perfected automatically
145-7 without filing under Subsection (b) of this section has priority
145-8 over a lien created under Subsection (d) of this section; and]
145-9 [(3) a nontax lien under Subsection (d) of this
145-10 section has priority over a lien created under that subsection that
145-11 secures the payment of taxes.]
145-12 [(h) The priorities for statutory liens mentioned in Section
145-13 9.310 of this code do not apply to any security interest or
145-14 statutory lien created by this section. But if any pipeline common
145-15 carrier has a statutory or tariff lien which is effective and
145-16 enforceable against a trustee in bankruptcy and not invalidated by
145-17 the Federal Tax Lien Act, it will have priority over the security
145-18 interests and statutory liens created by this section.]
145-19 [(i) If oil or gas production in which there are security
145-20 interests or statutory liens created by this section is commingled
145-21 with inventory or other production, the rules of Section 9.315 of
145-22 this code apply.]
145-23 [(j) A security interest or statutory lien created by this
145-24 section remains effective against the debtor and perfected against
145-25 his creditors even if assigned, regardless of whether the
145-26 assignment is perfected against the assignor's creditors. If a
145-27 deed, mineral deed, assignment of oil and gas lease, or other such
146-1 writing evidencing the assignment is filed in the real estate
146-2 records of the county, it will have the same effect as filing an
146-3 amended financing statement under Section 9.405 of this code.]
146-4 [(k) This section does not impair an operator's right to
146-5 setoff or withhold funds from other interest owners as security for
146-6 or in satisfaction of any debt or security interest. In case of a
146-7 dispute between an operator and another interest owner, a good
146-8 faith tender by anyone of funds to the person they shall agree on
146-9 or who may otherwise show himself to be the one entitled to the
146-10 funds or to a court of competent jurisdiction in the event of
146-11 litigation or bankruptcy, shall operate as a tender of the funds to
146-12 both.]
146-13 [(l) A first purchaser who acts in good faith may terminate
146-14 an interest owner's security interest or statutory lien under this
146-15 section by paying, or by making and keeping open a tender of the
146-16 amount the first purchaser believes to be due to the interest
146-17 owner:]
146-18 [(1) if the interest owner's rights are to oil or gas
146-19 production or its proceeds, either to the operator alone, in which
146-20 case the operator shall be considered the first purchaser, or to
146-21 some combination of the interest owner and the operator, as the
146-22 first purchaser chooses; or]
146-23 [(2) whatever the nature of the production to which
146-24 the interest owner has rights, to the person that the interest
146-25 owner agreed to or acquiesced in; or]
146-26 [(3) to a court of competent jurisdiction in the event
146-27 of litigation or bankruptcy.]
147-1 [(m) A person who buys from a first purchaser can assure
147-2 that he buys free and clear of an interest owner's security
147-3 interest or statutory lien under this section:]
147-4 [(1) by buying in the ordinary course of the first
147-5 purchaser's business from the first purchaser under Section
147-6 9.307(a) of this code; or]
147-7 [(2) by obtaining the interest owner's consent to the
147-8 sale under Section 9.306(b) of this code; or]
147-9 [(3) by insuring that the first purchaser has paid the
147-10 interest owner, or else, provided that gas production is involved,
147-11 or the interest owner has so agreed or acquiesced, by insuring that
147-12 the first purchaser has paid the interest owner's operator; or]
147-13 [(4) by insuring that he or the first purchaser or
147-14 some other person has withheld funds sufficient to pay amounts in
147-15 dispute and has maintained a tender of such funds to whoever may
147-16 show himself to be the person entitled. If a tender which is valid
147-17 thereafter fails, the security interest and liens governed by this
147-18 section remain effective.]
147-19 [(n) In addition to the usual remedy of sequestration
147-20 available to secured parties, and the remedies given in Subchapter
147-21 E of this chapter, the holders of security interests and liens
147-22 created by this section have available to them, to the extent
147-23 constitutionally permitted, the remedies of replevin, attachment,
147-24 and garnishment to assist them in realizing upon their rights.]
147-25 [(o) The rights of any person claiming under a security
147-26 interest or lien created by this section are governed by the other
147-27 provisions of this chapter except to the extent that this section
148-1 necessarily displaces those provisions. This section does not
148-2 invalidate or otherwise affect the interests of any person in any
148-3 real property prior to severance of any oil or gas production.]
148-4 [(p) The security interest created under Sections 9.319(a)
148-5 and (b) shall not apply to proceeds of gas production which have
148-6 been withheld, in cash or account form, by a purchaser under the
148-7 provisions of Section 201.204(c), Tax Code.]
148-8 [(q) In this section:]
148-9 [(1) "Oil and gas production" means any oil, natural
148-10 gas, condensate of either, natural gas liquids, other gaseous,
148-11 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
148-12 substance produced as a by-product or adjunct to their production,
148-13 or any combination of these, which is severed, extracted, or
148-14 produced from the ground, the seabed, or other submerged lands
148-15 within the jurisdiction of the State of Texas. Any such substance,
148-16 including recoverable or recovered natural gas liquids, which is
148-17 transported to or in a natural gas pipeline or natural gas
148-18 gathering system, or otherwise transported or sold for use as
148-19 natural gas, or is transported or sold for the extraction of helium
148-20 or natural gas liquids is "gas production". Any such substance
148-21 which is transported or sold to persons and for purposes not
148-22 included in the foregoing natural gas definition is oil production.]
148-23 [(2) "Interest owner" means a person owning an entire
148-24 or fractional interest of any kind or nature in oil or gas
148-25 production at the time of severance, or a person who has an
148-26 express, implied, or constructive right to receive a monetary
148-27 payment determined by the value of oil or gas production or by the
149-1 amount of production.]
149-2 [(3) "First purchaser" means the first person that
149-3 purchases oil or gas production from an operator or interest owner
149-4 after the production is severed, or an operator that receives
149-5 production proceeds from a third-party purchaser who acts in good
149-6 faith under a division order or other agreement signed by the
149-7 operator under which the operator collects proceeds of production
149-8 on behalf of other interest owners. To the extent the operator
149-9 receives proceeds attributable to the interest of other interest
149-10 owners from a third-party purchaser who acts in good faith under a
149-11 division order or other agreement signed by such operator, the
149-12 operator shall be considered to be the first purchaser of the
149-13 production for all purposes under this section, notwithstanding the
149-14 characterization of other persons as first purchasers under other
149-15 laws or regulations. To the extent the operator has not received
149-16 from the third-party purchaser proceeds attributable to his
149-17 interest and the interest of other interest owners, the operator is
149-18 not considered the first purchaser for the purposes of this
149-19 section, and is entitled to all rights and benefits under this
149-20 section. Nothing herein shall impair or affect any rights
149-21 otherwise held by a royalty owner to take its share of oil in kind
149-22 or receive payment directly from a third-party purchaser for such
149-23 royalty owner's share of oil production with or without a
149-24 previously made agreement.]
149-25 [(4) An "operator" is a person engaged in the business
149-26 of severing oil or gas production from the ground, whether for
149-27 himself alone, for other persons alone, or for himself and others.]
150-1 SUBCHAPTER D. RIGHTS OF THIRD PARTIES
150-2 Sec. 9.401. ALIENABILITY OF DEBTOR'S RIGHTS. (a) Except as
150-3 otherwise provided in Subsection (b) and Sections 9.406, 9.407,
150-4 9.408, and 9.409, whether a debtor's rights in collateral may be
150-5 voluntarily or involuntarily transferred is governed by law other
150-6 than this chapter.
150-7 (b) An agreement between the debtor and secured party that
150-8 prohibits a transfer of the debtor's rights in collateral or makes
150-9 the transfer a default does not prevent the transfer from taking
150-10 effect.
150-11 Sec. 9.402. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
150-12 DEBTOR OR IN TORT. The existence of a security interest,
150-13 agricultural lien, or authority given to a debtor to dispose of or
150-14 use collateral, without more, does not subject a secured party to
150-15 liability in contract or tort for the debtor's acts or omissions.
150-16 Sec. 9.403. AGREEMENT NOT TO ASSERT DEFENSES AGAINST
150-17 ASSIGNEE. (a) In this section, "value" has the meaning provided
150-18 in Section 3.303(a).
150-19 (b) Except as otherwise provided in this section, an
150-20 agreement between an account debtor and an assignor not to assert
150-21 against an assignee any claim or defense that the account debtor
150-22 may have against the assignor is enforceable by an assignee that
150-23 takes an assignment:
150-24 (1) for value;
150-25 (2) in good faith;
150-26 (3) without notice of a claim of a property or
150-27 possessory right to the property assigned; and
151-1 (4) without notice of a defense or claim in recoupment
151-2 of the type that may be asserted against a person entitled to
151-3 enforce a negotiable instrument under Section 3.305(a).
151-4 (c) Subsection (b) does not apply to defenses of a type that
151-5 may be asserted against a holder in due course of a negotiable
151-6 instrument under Section 3.305(b).
151-7 (d) In a consumer transaction, if a record evidences the
151-8 account debtor's obligation, law other than this chapter requires
151-9 that the record include a statement to the effect that the rights
151-10 of an assignee are subject to claims or defenses that the account
151-11 debtor could assert against the original obligee, and the record
151-12 does not include such a statement:
151-13 (1) the record has the same effect as if the record
151-14 included such a statement; and
151-15 (2) the account debtor may assert against an assignee
151-16 those claims and defenses that would have been available if the
151-17 record included such a statement.
151-18 (e) This section is subject to law other than this chapter
151-19 that establishes a different rule for an account debtor who is an
151-20 individual and who incurred the obligation primarily for personal,
151-21 family, or household purposes.
151-22 (f) Except as otherwise provided in Subsection (d), this
151-23 section does not displace law other than this chapter that gives
151-24 effect to an agreement by an account debtor not to assert a claim
151-25 or defense against an assignee.
151-26 Sec. 9.404. RIGHTS ACQUIRED BY ASSIGNEE; CLAIMS AND DEFENSES
151-27 AGAINST ASSIGNEE. (a) Unless an account debtor has made an
152-1 enforceable agreement not to assert defenses or claims, and subject
152-2 to Subsections (b)-(e), the rights of an assignee are subject to:
152-3 (1) all terms of the agreement between the account
152-4 debtor and assignor and any defense or claim in recoupment arising
152-5 from the transaction that gave rise to the contract; and
152-6 (2) any other defense or claim of the account debtor
152-7 against the assignor that accrues before the account debtor
152-8 receives a notification of the assignment authenticated by the
152-9 assignor or the assignee.
152-10 (b) Subject to Subsection (c) and except as otherwise
152-11 provided in Subsection (d), the claim of an account debtor against
152-12 an assignor may be asserted against an assignee under Subsection
152-13 (a) only to reduce the amount the account debtor owes.
152-14 (c) This section is subject to law other than this chapter
152-15 that establishes a different rule for an account debtor who is an
152-16 individual and who incurred the obligation primarily for personal,
152-17 family, or household purposes.
152-18 (d) In a consumer transaction, if a record evidences the
152-19 account debtor's obligation, law other than this chapter requires
152-20 that the record include a statement to the effect that the account
152-21 debtor's recovery against an assignee with respect to claims and
152-22 defenses against the assignor may not exceed amounts paid by the
152-23 account debtor under the record, and the record does not include
152-24 such a statement, the extent to which a claim of an account debtor
152-25 against the assignor may be asserted against an assignee is
152-26 determined as if the record included such a statement.
152-27 (e) This section does not apply to an assignment of a
153-1 health-care-insurance receivable.
153-2 Sec. 9.405. MODIFICATION OF ASSIGNED CONTRACT. (a) A
153-3 modification of or substitution for an assigned contract is
153-4 effective against an assignee if made in good faith. The assignee
153-5 acquires corresponding rights under the modified or substituted
153-6 contract. The assignment may provide that the modification or
153-7 substitution is a breach of contract by the assignor. This
153-8 subsection is subject to Subsections (b)-(d).
153-9 (b) Subsection (a) applies to the extent that:
153-10 (1) the right to payment or a part thereof under an
153-11 assigned contract has not been fully earned by performance; or
153-12 (2) the right to payment or a part thereof has been
153-13 fully earned by performance and the account debtor has not received
153-14 notification of the assignment under Section 9.406(a).
153-15 (c) This section is subject to law other than this chapter
153-16 that establishes a different rule for an account debtor who is an
153-17 individual and who incurred the obligation primarily for personal,
153-18 family, or household purposes.
153-19 (d) This section does not apply to an assignment of a
153-20 health-care-insurance receivable.
153-21 Sec. 9.406. DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION OF
153-22 ASSIGNMENT; IDENTIFICATION AND PROOF OF ASSIGNMENT; RESTRICTIONS ON
153-23 ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, AND
153-24 PROMISSORY NOTES INEFFECTIVE. (a) Subject to Subsections (b)-(i),
153-25 an account debtor on an account, chattel paper, or a payment
153-26 intangible may discharge its obligation by paying the assignor
153-27 until, but not after, the account debtor receives a notification,
154-1 authenticated by the assignor or the assignee, that the amount due
154-2 or to become due has been assigned and that payment is to be made
154-3 to the assignee. After receipt of the notification, the account
154-4 debtor may discharge its obligation by paying the assignee and may
154-5 not discharge the obligation by paying the assignor.
154-6 (b) Subject to Subsection (h), notification is ineffective
154-7 under Subsection (a):
154-8 (1) if it does not reasonably identify the rights
154-9 assigned;
154-10 (2) to the extent that an agreement between an account
154-11 debtor and a seller of a payment intangible limits the account
154-12 debtor's duty to pay a person other than the seller and the
154-13 limitation is effective under law other than this chapter; or
154-14 (3) at the option of an account debtor, if the
154-15 notification notifies the account debtor to make less than the full
154-16 amount of any installment or other periodic payment to the
154-17 assignee, even if:
154-18 (A) only a portion of the account, chattel
154-19 paper, or general intangible has been assigned to that assignee;
154-20 (B) a portion has been assigned to another
154-21 assignee; or
154-22 (C) the account debtor knows that the assignment
154-23 to that assignee is limited.
154-24 (c) Subject to Subsection (h), if requested by the account
154-25 debtor, an assignee shall seasonably furnish reasonable proof that
154-26 the assignment has been made. Unless the assignee complies, the
154-27 account debtor may discharge its obligation by paying the assignor,
155-1 even if the account debtor has received a notification under
155-2 Subsection (a).
155-3 (d) Except as otherwise provided in Subsection (e) and
155-4 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
155-5 an agreement between an account debtor and an assignor or in a
155-6 promissory note is ineffective to the extent that it:
155-7 (1) prohibits, restricts, or requires the consent of
155-8 the account debtor or person obligated on the promissory note to
155-9 the assignment or transfer of, or the creation, attachment,
155-10 perfection, or enforcement of a security interest in, the account,
155-11 chattel paper, payment intangible, or promissory note; or
155-12 (2) provides that the creation, attachment,
155-13 perfection, or enforcement of the security interest may give rise
155-14 to a default, breach, right of recoupment, claim, defense,
155-15 termination, right of termination, or remedy under the account,
155-16 chattel paper, payment intangible, or promissory note.
155-17 (e) Subsection (d) does not apply to the sale of a payment
155-18 intangible or promissory note.
155-19 (f) Except as otherwise provided in Sections 2A.303 and
155-20 9.407, and subject to Subsections (h) and (i), a rule of law,
155-21 statute, or regulation that prohibits, restricts, or requires the
155-22 consent of a government, governmental body or official, or account
155-23 debtor to the assignment or transfer of, or creation of a security
155-24 interest in, an account or chattel paper is ineffective to the
155-25 extent that the rule of law, statute, or regulation:
155-26 (1) prohibits, restricts, or requires the consent of
155-27 the government, governmental body or official, or account debtor to
156-1 the assignment or transfer of, or the creation, attachment,
156-2 perfection, or enforcement of a security interest in, the account
156-3 or chattel paper; or
156-4 (2) provides that the creation, attachment,
156-5 perfection, or enforcement of the security interest may give rise
156-6 to a default, breach, right of recoupment, claim, defense,
156-7 termination, right of termination, or remedy under the account or
156-8 chattel paper.
156-9 (g) Subject to Subsection (h), an account debtor may not
156-10 waive or vary its option under Subsection (b)(3).
156-11 (h) This section is subject to law other than this chapter
156-12 that establishes a different rule for an account debtor who is an
156-13 individual and who incurred the obligation primarily for personal,
156-14 family, or household purposes.
156-15 (i) This section does not apply to an assignment of a
156-16 health-care-insurance receivable.
156-17 Sec. 9.407. RESTRICTIONS ON CREATION OR ENFORCEMENT OF
156-18 SECURITY INTEREST IN LEASEHOLD INTEREST OR IN LESSOR'S RESIDUAL
156-19 INTEREST. (a) Except as otherwise provided in Subsection (b), a
156-20 term in a lease agreement is ineffective to the extent that it:
156-21 (1) prohibits, restricts, or requires the consent of a
156-22 party to the lease to the creation, attachment, perfection, or
156-23 enforcement of a security interest in an interest of a party under
156-24 the lease contract or in the lessor's residual interest in the
156-25 goods; or
156-26 (2) provides that the creation, attachment,
156-27 perfection, or enforcement of the security interest may give rise
157-1 to a default, breach, right of recoupment, claim, defense,
157-2 termination, right of termination, or remedy under the lease.
157-3 (b) Except as otherwise provided in Section 2A.303(g), a
157-4 term described in Subsection (a)(2) is effective to the extent that
157-5 there is:
157-6 (1) a transfer by the lessee of the lessee's right of
157-7 possession or use of the goods in violation of the term; or
157-8 (2) a delegation of a material performance of either
157-9 party to the lease contract in violation of the term.
157-10 (c) The creation, attachment, perfection, or enforcement of
157-11 a security interest in the lessor's interest under the lease
157-12 contract or the lessor's residual interest in the goods is not a
157-13 transfer that materially impairs the lessee's prospect of obtaining
157-14 return performance or materially changes the duty of or materially
157-15 increases the burden or risk imposed on the lessee within the
157-16 purview of Section 2A.303(d) unless, and then only to the extent
157-17 that, enforcement actually results in a delegation of material
157-18 performance of the lessor.
157-19 Sec. 9.408. RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES,
157-20 HEALTH-CARE-INSURANCE RECEIVABLES, AND CERTAIN GENERAL INTANGIBLES
157-21 INEFFECTIVE. (a) Except as otherwise provided in Subsection (b),
157-22 a term in a promissory note or in an agreement between an account
157-23 debtor and a debtor that relates to a health-care-insurance
157-24 receivable or a general intangible, including a contract, permit,
157-25 license, or franchise, and which term prohibits, restricts, or
157-26 requires the consent of the person obligated on the promissory note
157-27 or the account debtor to, the assignment or transfer of, or
158-1 creation, attachment, or perfection of a security interest in, the
158-2 promissory note, health-care-insurance receivable, or general
158-3 intangible, is ineffective to the extent that the term:
158-4 (1) would impair the creation, attachment, or
158-5 perfection of a security interest; or
158-6 (2) provides that the creation, attachment, or
158-7 perfection of the security interest may give rise to a default,
158-8 breach, right of recoupment, claim, defense, termination, right of
158-9 termination, or remedy under the promissory note,
158-10 health-care-insurance receivable, or general intangible.
158-11 (b) Subsection (a) applies to a security interest in a
158-12 payment intangible or promissory note only if the security interest
158-13 arises out of a sale of the payment intangible or promissory note.
158-14 (c) A rule of law, statute, or regulation that prohibits,
158-15 restricts, or requires the consent of a government, governmental
158-16 body or official, person obligated on a promissory note, or account
158-17 debtor to the assignment or transfer of, or creation of a security
158-18 interest in, a promissory note, health-care-insurance receivable,
158-19 or general intangible, including a contract, permit, license, or
158-20 franchise between an account debtor and a debtor, is ineffective to
158-21 the extent that the rule of law, statute, or regulation:
158-22 (1) would impair the creation, attachment, or
158-23 perfection of a security interest; or
158-24 (2) provides that the creation, attachment, or
158-25 perfection of the security interest may give rise to a default,
158-26 breach, right of recoupment, claim, defense, termination, right of
158-27 termination, or remedy under the promissory note,
159-1 health-care-insurance receivable, or general intangible.
159-2 (d) To the extent that a term in a promissory note or in an
159-3 agreement between an account debtor and a debtor that relates to a
159-4 health-care-insurance receivable or general intangible or a rule of
159-5 law, statute, or regulation described in Subsection (c) would be
159-6 effective under law other than this chapter but is ineffective
159-7 under Subsection (a) or (c), the creation, attachment, or
159-8 perfection of a security interest in the promissory note,
159-9 health-care-insurance receivable, or general intangible:
159-10 (1) is not enforceable against the person obligated on
159-11 the promissory note or the account debtor;
159-12 (2) does not impose a duty or obligation on the person
159-13 obligated on the promissory note or the account debtor;
159-14 (3) does not require the person obligated on the
159-15 promissory note or the account debtor to recognize the security
159-16 interest, pay or render performance to the secured party, or accept
159-17 payment or performance from the secured party;
159-18 (4) does not entitle the secured party to use or
159-19 assign the debtor's rights under the promissory note,
159-20 health-care-insurance receivable, or general intangible, including
159-21 any related information or materials furnished to the debtor in the
159-22 transaction giving rise to the promissory note,
159-23 health-care-insurance receivable, or general intangible;
159-24 (5) does not entitle the secured party to use, assign,
159-25 possess, or have access to any trade secrets or confidential
159-26 information of the person obligated on the promissory note or the
159-27 account debtor; and
160-1 (6) does not entitle the secured party to enforce the
160-2 security interest in the promissory note, health-care-insurance
160-3 receivable, or general intangible.
160-4 Sec. 9.409. RESTRICTIONS ON ASSIGNMENT OF LETTER-OF-CREDIT
160-5 RIGHTS INEFFECTIVE. (a) A term in a letter of credit or a rule of
160-6 law, statute, regulation, custom, or practice applicable to the
160-7 letter of credit that prohibits, restricts, or requires the consent
160-8 of an applicant, issuer, or nominated person to a beneficiary's
160-9 assignment of or creation of a security interest in a
160-10 letter-of-credit right is ineffective to the extent that the term
160-11 or rule of law, statute, regulation, custom, or practice:
160-12 (1) would impair the creation, attachment, or
160-13 perfection of a security interest in the letter-of-credit right; or
160-14 (2) provides that the creation, attachment, or
160-15 perfection of the security interest may give rise to a default,
160-16 breach, right of recoupment, claim, defense, termination, right of
160-17 termination, or remedy under the letter-of-credit right.
160-18 (b) To the extent that a term in a letter of credit is
160-19 ineffective under Subsection (a) but would be effective under law
160-20 other than this chapter or a custom or practice applicable to the
160-21 letter of credit, to the transfer of a right to draw or otherwise
160-22 demand performance under the letter of credit, or to the assignment
160-23 of a right to proceeds of the letter of credit, the creation,
160-24 attachment, or perfection of a security interest in the
160-25 letter-of-credit right:
160-26 (1) is not enforceable against the applicant, issuer,
160-27 nominated person, or transferee beneficiary;
161-1 (2) imposes no duties or obligations on the applicant,
161-2 issuer, nominated person, or transferee beneficiary; and
161-3 (3) does not require the applicant, issuer, nominated
161-4 person, or transferee beneficiary to recognize the security
161-5 interest, pay or render performance to the secured party, or accept
161-6 payment or other performance from the secured party.
161-7 SUBCHAPTER E. FILING
161-8 Sec. 9.501 [9.401]. [PLACE OF] FILING OFFICE[; ERRONEOUS
161-9 FILING; REMOVAL OF COLLATERAL]. (a) Except as otherwise provided
161-10 in Subsection (b), if the local law of this State governs
161-11 perfection of a security interest or agricultural lien, the office
161-12 in which to file a financing statement to perfect the security
161-13 interest or agricultural lien is:
161-14 (1) the office designated for the filing or recording
161-15 of a record of a mortgage on the related real property, if [The
161-16 proper place to file in order to perfect a security interest is as
161-17 follows]:
161-18 (A) [(1) when the collateral is consumer goods,
161-19 then in the office of the County Clerk in the county of the
161-20 debtor's residence or if the debtor is not a resident of this state
161-21 then in the office of the County Clerk in the county where the
161-22 goods are kept;]
161-23 [(2) when] the collateral is as-extracted collateral
161-24 or timber to be cut; or
161-25 (B) [is minerals or the like (including oil and
161-26 gas) or accounts subject to Subsection (e) of Section 9.103, or
161-27 when] the financing statement is filed as a fixture filing
162-1 [(Section 9.313)] and the collateral is goods that [which] are or
162-2 are to become fixtures; or
162-3 (2)[, then in the office of the County Clerk in the
162-4 county where a mortgage on the real estate would be filed or
162-5 recorded;]
162-6 [(3) in all other cases, in] the office of the
162-7 Secretary of State, in all other cases, including a case in which
162-8 the collateral is goods that are or are to become fixtures and the
162-9 financing statement is not filed as a fixture filing.
162-10 (b) The office in which to file a financing statement to
162-11 perfect a security interest in collateral, including fixtures, of a
162-12 transmitting utility is the office of the Secretary of State. The
162-13 financing statement also constitutes a fixture filing as to the
162-14 collateral indicated in the financing statement that is or is to
162-15 become fixtures. [A filing which is made in good faith in an
162-16 improper place or not in all of the places required by this section
162-17 is nevertheless effective with regard to any collateral as to which
162-18 the filing complied with the requirements of this chapter and is
162-19 also effective with regard to collateral covered by the financing
162-20 statement against any person who has knowledge of the contents of
162-21 such financing statement].
162-22 [(c) A filing which is made in the proper county continues
162-23 effective for four months after a change to another county of the
162-24 debtor's residence or place of business or the location of the
162-25 collateral, whichever controlled the original filing. It becomes
162-26 ineffective thereafter unless a copy of the financing statement
162-27 signed by the secured party is filed in the new county within said
163-1 period. The security interest may also be perfected in the new
163-2 county after the expiration of the four-month period; in such case
163-3 perfection dates from the time of perfection in the new county. A
163-4 change in the use of the collateral does not impair the
163-5 effectiveness of the original filing.]
163-6 [(d) The rules stated in Section 9.103 determine whether
163-7 filing is necessary in this state.]
163-8 [(e) For the purposes of this section, the residence of an
163-9 organization is its place of business if it has one or its chief
163-10 executive office if it has more than one place of business.]
163-11 [(f) A continuation statement filed to continue a security
163-12 interest perfected before September 1, 1985, in collateral that is
163-13 equipment used in farming operations, farm products, or accounts or
163-14 general intangibles arising from or relating to the sale of farm
163-15 products by a farmer must be filed in the office of the Secretary
163-16 of State, and must contain the information contained in the
163-17 original financing statement, in addition to the information
163-18 required for a continuation statement under Section 9.403 of this
163-19 code. The priority of such a security interest is not affected by
163-20 the fact that a continuation statement filed according to this
163-21 subsection is filed at a different place than the original
163-22 financing statement.]
163-23 Sec. 9.502 [9.402]. CONTENTS [FORMAL REQUISITES] OF
163-24 FINANCING STATEMENT; RECORD OF [AMENDMENTS;] MORTGAGE AS FINANCING
163-25 STATEMENT; TIME OF FILING FINANCING STATEMENT. (a) Subject to
163-26 Subsection (b), a [A] financing statement is sufficient only if it:
163-27 (1) provides [gives] the name [names] of the debtor;
164-1 (2) provides the name of [and] the secured party or a
164-2 representative of the secured party; and
164-3 (3) indicates the collateral covered by the financing
164-4 statement[, is signed by the debtor, gives an address of the
164-5 secured party from which information concerning the security
164-6 interest may be obtained, gives a mailing address of the debtor and
164-7 contains a statement indicating the types, or describing the items,
164-8 of collateral. A financing statement may be filed before a
164-9 security agreement is made or a security interest otherwise
164-10 attaches. When the financing statement covers crops growing or to
164-11 be grown, the statement must also contain a description of the real
164-12 estate concerned. When the financing statement covers timber to be
164-13 cut or covers minerals or the like (including oil and gas) or
164-14 accounts subject to Subsection (e) of Section 9.103, or when the
164-15 financing statement is filed as a fixture filing (Section 9.313)
164-16 and the collateral is goods which are or are to become fixtures,
164-17 the statement must also comply with Subsection (e). A security
164-18 agreement is sufficient as a financing statement if it contains the
164-19 above information and is signed by the debtor. A carbon,
164-20 photographic or other reproduction of a security agreement or a
164-21 financing statement is sufficient as a financing statement.]
164-22 [(b) A financing statement which otherwise complies with
164-23 Subsection (a) is sufficient when it is signed by the secured party
164-24 instead of the debtor if it is filed to perfect a security interest
164-25 in]
164-26 [(1) collateral already subject to a security interest
164-27 in another jurisdiction when it is brought into this state, or when
165-1 the debtor's location is changed to this state. Such a financing
165-2 statement must state that the collateral was brought into this
165-3 state or that the debtor's location was changed to this state under
165-4 such circumstances; or]
165-5 [(2) proceeds under Section 9.306 if the security
165-6 interest in the original collateral was perfected. Such a
165-7 financing statement must describe the original collateral; or]
165-8 [(3) collateral as to which the filing has lapsed; or]
165-9 [(4) collateral acquired after a change of name,
165-10 identity or corporate structure of the debtor (Subsection (g)).]
165-11 [(c) A form substantially as follows is sufficient to comply
165-12 with Subsection (a):]
165-13 [Name of debtor (or assignor) _________________________]
165-14 [Address ______________________________________________]
165-15 [Name of secured party (or assignee) __________________]
165-16 [Address ______________________________________________]
165-17 [1. This financing statement covers the
165-18 following types (or items) of property:]
165-19 [(Describe) _____________________________________]
165-20 [2. (If collateral is crops) The above described
165-21 crops are growing or are to be grown on:]
165-22 [(Describe Real Estate) _________________________
165-23 _______________________________________________________]
165-24 [3. (If applicable) The above goods are or are
165-25 to become fixtures on (or where appropriate substitute
165-26 either "The above timber is standing on __________" or
165-27 "The above minerals or the like (including oil and gas)
166-1 or accounts will be financed at the wellhead or
166-2 minehead of the well or mine located on __________")]
166-3 [(Describe Real Estate) ______________ and this
166-4 financing statement is to be filed for record in the
166-5 real estate records. (If the debtor does not have an
166-6 interest of record) The name of a record owner of the
166-7 real estate concerned is ______________]
166-8 [4. (If products of collateral are claimed)
166-9 Products of the Collateral are also covered.
166-10 (use _________________________________________________
166-11 whichever _____________________________________________
166-12 Signature of Debtor (or Assignor)
166-13 is ____________________________________________________
166-14 applicable) Signature of Secured Party (or Assignee)]
166-15 [(d) A financing statement may be amended by filing a
166-16 writing signed by both the debtor and the secured party, provided,
166-17 however, that an amendment to a financing statement which changes
166-18 only the name of the secured party or the required address of
166-19 either the secured party or the debtor is sufficient when it is
166-20 signed by the secured party instead of the debtor. An amendment
166-21 does not extend the period of effectiveness of a financing
166-22 statement. If any amendment adds collateral, it is effective as to
166-23 the added collateral only from the filing date of the amendment.
166-24 In this chapter, unless the context otherwise requires, the term
166-25 "financing statement" means the original financing statement and
166-26 any amendments].
166-27 (b) Except as otherwise provided in Section 9.501(b), to be
167-1 sufficient, a [(e) A] financing statement that covers as-extracted
167-2 collateral or [covering] timber to be cut, or that is [covering
167-3 minerals or the like (including oil and gas) or accounts subject to
167-4 Subsection (e) of Section 9.103, or a financing statement] filed as
167-5 a fixture filing and covers goods that are or are to become
167-6 fixtures, must satisfy Subsection (a) and also:
167-7 (1) indicate [(Section 9.313), must show] that it
167-8 covers this type of collateral;
167-9 (2) indicate[, must recite] that it is to be filed for
167-10 record in the real property [estate] records;
167-11 (3) provide[, and the financing statement must
167-12 contain] a description of the real property to which the collateral
167-13 is related [estate] sufficient [if it were contained in a mortgage
167-14 of the real estate] to give constructive notice of a [the] mortgage
167-15 under the law of this state if the description were contained in a
167-16 record of the mortgage of the real property; and
167-17 (4) if[. If] the debtor does not have an interest of
167-18 record in the real property, provide [estate, the financing
167-19 statement must show] the name of a record owner.
167-20 (c) A record of a [(f) A] mortgage is effective, from the
167-21 date of recording, as a financing statement filed as a fixture
167-22 filing or as a financing statement covering as-extracted collateral
167-23 or timber to be cut only [or covering minerals or the like
167-24 (including oil and gas) or accounts subject to Subsection (e) of
167-25 Section 9.103, from the date of its filing for record] if:
167-26 (1) the record indicates the goods or accounts that it
167-27 covers; [other collateral are described in the mortgage by item or
168-1 type,]
168-2 (2) [in the case of a fixture filing,] the goods are
168-3 or are to become fixtures related to the real property [estate]
168-4 described in the record or the collateral is related to the real
168-5 property described in the record and is as-extracted collateral or
168-6 [mortgage, (3) in the case of] timber to be cut;
168-7 (3)[, the timber is standing on the real estate
168-8 described in the mortgage, (4) in the case of minerals or the like
168-9 (including oil and gas) or accounts subject to Subsection (e) of
168-10 Section 9.103, the minerals or the like (including oil and gas) or
168-11 the accounts are to be financed at the wellhead or minehead of the
168-12 well or mine located on the real estate described in the mortgage,
168-13 (5)] the record satisfies [mortgage complies with] the requirements
168-14 for a financing statement in this section other than an indication
168-15 [a recital] that it is to be filed in the real property [estate]
168-16 records;[,] and
168-17 (4) [(6)] the record [mortgage] is duly recorded
168-18 [filed for record. No fee with reference to the financing
168-19 statement is required other than the regular recording and
168-20 satisfaction fees with respect to the mortgage].
168-21 (d) A financing statement may be filed before a security
168-22 agreement is made or a security interest otherwise attaches.
168-23 Sec. 9.503. NAME OF DEBTOR AND SECURED PARTY. (a) [(g)] A
168-24 financing statement sufficiently provides [shows] the name of the
168-25 debtor:
168-26 (1) if the debtor is a registered organization, only
168-27 if the financing statement provides the [if it gives the
169-1 individual, partnership or corporate] name of the debtor indicated
169-2 on the public record of the debtor's jurisdiction of organization
169-3 that shows the debtor to have been organized;
169-4 (2) if the debtor is a decedent's estate, only if the
169-5 financing statement provides the name of the decedent and indicates
169-6 that the debtor is an estate;
169-7 (3) if the debtor is a trust or a trustee acting with
169-8 respect to property held in trust, only if the financing statement:
169-9 (A) provides the name specified for the trust in
169-10 its organic documents or, if no name is specified, provides the
169-11 name of the settlor and additional information sufficient to
169-12 distinguish the debtor from other trusts having one or more of the
169-13 same settlors; and
169-14 (B) indicates, in the debtor's name or
169-15 otherwise, that the debtor is a trust or is a trustee acting with
169-16 respect to property held in trust; and
169-17 (4) in other cases:
169-18 (A) if the debtor has a name, only if the
169-19 financing statement provides the individual or organizational name
169-20 of the debtor; and
169-21 (B) if the debtor does not have a name, only if
169-22 the financing statement provides the names of the partners,
169-23 members, associates, or other persons comprising the debtor[,
169-24 whether or not it adds other trade names or the names of partners.
169-25 Filing under a trade name or assumed name alone shall not be
169-26 sufficient to perfect a security interest unless the trade name or
169-27 assumed name is so similar to the debtor's legal name that the
170-1 trade name or assumed name filing would be discovered in a search
170-2 of the filing officer's records pursuant to Subsection (b) of
170-3 Section 9.407, conducted in response to a request using the legal
170-4 name of the debtor. Where the debtor so changes his name or in the
170-5 case of an organization its name, identity or corporate structure
170-6 that a filed financing statement becomes seriously misleading, the
170-7 filing is not effective to perfect a security interest in
170-8 collateral acquired by the debtor more than four months after the
170-9 change, unless a new appropriate financing statement is filed
170-10 before the expiration of that time. A filed financing statement
170-11 remains effective with respect to collateral transferred by the
170-12 debtor even though the secured party knows of or consents to the
170-13 transfer].
170-14 (b) A financing statement that provides the name of the
170-15 debtor in accordance with Subsection (a) is not rendered
170-16 ineffective by the absence of:
170-17 (1) a trade name or other name of the debtor; or
170-18 (2) unless required under Subsection (a)(4)(B), names
170-19 of partners, members, associates, or other persons comprising the
170-20 debtor.
170-21 (c) A financing statement that provides only the debtor's
170-22 trade name does not sufficiently provide the name of the debtor.
170-23 (d) Failure to indicate the representative capacity of a
170-24 secured party or representative of a secured party does not affect
170-25 the sufficiency of a financing statement.
170-26 (e) A financing statement may provide the name of more than
170-27 one debtor and the name of more than one secured party.
171-1 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
171-2 sufficiently indicates the collateral that it covers only if the
171-3 financing statement provides:
171-4 (1) a description of the collateral pursuant to
171-5 Section 9.108; or
171-6 (2) an indication that the financing statement covers
171-7 all assets or all personal property.
171-8 Sec. 9.505. FILING AND COMPLIANCE WITH OTHER STATUTES AND
171-9 TREATIES FOR CONSIGNMENTS, LEASES, OTHER BAILMENTS, AND OTHER
171-10 TRANSACTIONS. (a) A consignor, lessor, or other bailor of goods,
171-11 a licensor, or a buyer of a payment intangible or promissory note
171-12 may file a financing statement, or may comply with a statute or
171-13 treaty described in Section 9.311(a), using the terms "consignor,"
171-14 "consignee," "lessor," "lessee," "bailor," "bailee," "licensor,"
171-15 "licensee," "owner," "registered owner," "buyer," or "seller," or
171-16 words of similar import, instead of the terms "secured party" and
171-17 "debtor."
171-18 (b) This subchapter applies to the filing of a financing
171-19 statement under Subsection (a) and, as appropriate, to compliance
171-20 that is equivalent to filing a financing statement under Section
171-21 9.311(b), but the filing or compliance is not of itself a factor in
171-22 determining whether the collateral secures an obligation. If it is
171-23 determined for another reason that the collateral secures an
171-24 obligation, a security interest held by the consignor, lessor,
171-25 bailor, licensor, owner, or buyer that attaches to the collateral
171-26 is perfected by the filing or compliance.
171-27 Sec. 9.506. EFFECT OF ERRORS OR OMISSIONS. (a) [(h)] A
172-1 financing statement substantially satisfying [complying with] the
172-2 requirements of this subchapter [section] is effective, even if
172-3 [though] it has [contains] minor errors or omissions, unless the
172-4 errors or omissions make the financing statement [which are not]
172-5 seriously misleading.
172-6 (b) Except as otherwise provided in Subsection (c), a
172-7 financing statement that fails sufficiently to provide the name of
172-8 the debtor in accordance with Section 9.503(a) is seriously
172-9 misleading.
172-10 (c) If a search of the records of the filing office under
172-11 the debtor's correct name, using the filing office's standard
172-12 search logic, if any, would disclose a financing statement that
172-13 fails sufficiently to provide the name of the debtor in accordance
172-14 with Section 9.503(a), the name provided does not make the
172-15 financing statement seriously misleading.
172-16 (d) For purposes of Section 9.508(b), the "debtor's correct
172-17 name" in Subsection (c) means the correct name of the new debtor.
172-18 Sec. 9.507 [9.403]. [WHAT CONSTITUTES FILING; DURATION OF
172-19 FILING;] EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING
172-20 STATEMENT [LAPSED FILING; DUTIES OF FILING OFFICER]. (a) A
172-21 [Presentation for filing of a financing statement or other
172-22 statement and tender of the filing fee or acceptance of the
172-23 financing statement or other statement by the filing officer
172-24 constitutes filing under this chapter].
172-25 [(b) Except as provided in Subsection (f) a] filed financing
172-26 statement remains [is] effective with respect to collateral that is
172-27 sold, exchanged, leased, licensed, or otherwise disposed of and in
173-1 which a security interest or agricultural lien continues, even if
173-2 the secured party knows of or consents to the disposition [for a
173-3 period of five years from the date of filing. The effectiveness of
173-4 a filed financing statement lapses on the expiration of the five
173-5 year period unless a continuation statement is filed prior to the
173-6 lapse. If a security interest perfected by filing exists at the
173-7 time insolvency proceedings are commenced by or against the debtor,
173-8 the security interest remains perfected until termination of the
173-9 insolvency proceedings and thereafter for a period of sixty days or
173-10 until expiration of the five year period, whichever occurs later.
173-11 Upon lapse the security interest becomes unperfected, unless it is
173-12 perfected without filing. If the security interest becomes
173-13 unperfected upon lapse, it is deemed to have been unperfected as
173-14 against a person who became a purchaser or lien creditor before
173-15 lapse].
173-16 (b) Except as otherwise provided in Subsection (c) and
173-17 Section 9.508, a financing statement is not rendered ineffective
173-18 if, after the financing statement is filed, the information
173-19 provided in the financing statement becomes seriously misleading
173-20 under Section 9.506.
173-21 (c) If a debtor so changes its name that a filed financing
173-22 statement becomes seriously misleading under Section 9.506:
173-23 (1) the financing statement is effective to perfect a
173-24 security interest in collateral acquired by the debtor before, or
173-25 within four months after, the change; and
173-26 (2) the financing statement is not effective to
173-27 perfect a security interest in collateral acquired by the debtor
174-1 more than four months after the change, unless an amendment to the
174-2 financing statement that renders the financing statement not
174-3 seriously misleading is filed within four months after the change.
174-4 [A continuation statement may be filed by the secured party within
174-5 six months prior to the expiration of the five year period
174-6 specified in Subsection (b). Any such continuation statement must
174-7 be signed by the secured party, identify the original statement by
174-8 file number and state that the original statement is still
174-9 effective. A continuation statement signed by a person other than
174-10 the secured party of record must be accompanied by a separate
174-11 written statement of assignment signed by the secured party of
174-12 record and complying with Subsection (b) of Section 9.405,
174-13 including payment of the required fee. Upon timely filing of the
174-14 continuation statement, the effectiveness of the original statement
174-15 is continued for five years after the last date to which the filing
174-16 was effective whereupon it lapses in the same manner as provided in
174-17 Subsection (b) unless another continuation statement is filed prior
174-18 to such lapse. Succeeding continuation statements may be filed in
174-19 the same manner to continue the effectiveness of the original
174-20 statement. Unless a statute on disposition of public records
174-21 provides otherwise, the filing officer may remove a lapsed
174-22 statement from the files and destroy it immediately if he has
174-23 retained a microfilm or other photographic record, or in other
174-24 cases after one year after the lapse. The filing officer shall so
174-25 arrange matters by physical annexation of financing statements to
174-26 continuation statements or other related filings, or by other
174-27 means, that if he physically destroys the financing statements of a
175-1 period more than five years past, those which have been continued
175-2 by a continuation statement or which are still effective under
175-3 Subsection (f) shall be retained.]
175-4 [(d) Except as provided in Subsection (g) a filing officer
175-5 shall mark each financing statement with a file number and with the
175-6 date and hour of filing and shall hold the financing statement or a
175-7 microfilm or other photographic copy thereof for public inspection.
175-8 In addition the filing officer shall index the financing statements
175-9 according to the name of the debtor and shall note in the index the
175-10 file number and the address of the debtor given in the financing
175-11 statement. The filing officer shall mark each continuation
175-12 statement with the date and hour of filing and shall note it in the
175-13 index of the original financing statement.]
175-14 [(e) The uniform fee for filing and indexing and for
175-15 stamping a copy furnished by the secured party to show the date and
175-16 place of filing for an original financing statement, for an
175-17 amendment, or for a continuation statement shall be $10 if the
175-18 statement is in the standard form prescribed by the Secretary of
175-19 State and otherwise shall be $25, plus in each case, if the
175-20 financing statement sets forth the name of more than one debtor, a
175-21 fee of $5 for the indexing of each additional debtor name, and if
175-22 the financing statement is subject to Subsection (e) of Section
175-23 9.402, an amount equal to the fee prescribed by law for recording
175-24 and indexing in the real property records of the county clerk.]
175-25 [(f) A mortgage which is effective as a filing under
175-26 Subsection (f) of Section 9.402 remains effective as such a filing
175-27 as to the types of collateral enumerated in Subsection (f) of
176-1 Section 9.402 until the mortgage is released or satisfied of record
176-2 or its effectiveness otherwise terminates as to the real estate.]
176-3 [(g) When a financing statement covers timber to be cut or
176-4 covers minerals or the like (including oil and gas) or accounts
176-5 subject to Subsection (e) of Section 9.103, or is filed as a
176-6 fixture filing, it shall be filed for record and recorded, and the
176-7 filing officer shall index it under the names of the debtor and any
176-8 owner of record shown on the financing statement in the same
176-9 fashion as if they were the mortgagors in a mortgage of the real
176-10 estate described, and, to the extent that the law of this state
176-11 provides for indexing of mortgages under the name of the mortgagee,
176-12 under the name of the secured party as if he were the mortgagee
176-13 thereunder, or where indexing is by description in the same fashion
176-14 as if the financing statement were a mortgage of the real estate
176-15 described.]
176-16 [(h) The filing and other fees paid to the Secretary of
176-17 State under this chapter shall be deposited in the general revenue
176-18 fund of the state treasury.]
176-19 Sec. 9.508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW
176-20 DEBTOR BECOMES BOUND BY SECURITY AGREEMENT. (a) Except as
176-21 otherwise provided in this section, a filed financing statement
176-22 naming an original debtor is effective to perfect a security
176-23 interest in collateral in which a new debtor has or acquires rights
176-24 to the extent that the financing statement would have been
176-25 effective had the original debtor acquired rights in the
176-26 collateral.
176-27 (b) If the difference between the name of the original
177-1 debtor and that of the new debtor causes a filed financing
177-2 statement that is effective under Subsection (a) to be seriously
177-3 misleading under Section 9.506:
177-4 (1) the financing statement is effective to perfect a
177-5 security interest in collateral acquired by the new debtor before,
177-6 and within four months after, the new debtor becomes bound under
177-7 Section 9.203(d); and
177-8 (2) the financing statement is not effective to
177-9 perfect a security interest in collateral acquired by the new
177-10 debtor more than four months after the new debtor becomes bound
177-11 under Section 9.203(d) unless an initial financing statement
177-12 providing the name of the new debtor is filed before the expiration
177-13 of that time.
177-14 (c) This section does not apply to collateral as to which a
177-15 filed financing statement remains effective against the new debtor
177-16 under Section 9.507(a).
177-17 Sec. 9.509. PERSONS ENTITLED TO FILE A RECORD. (a) A
177-18 person may file an initial financing statement, amendment that adds
177-19 collateral covered by a financing statement, or amendment that adds
177-20 a debtor to a financing statement only if:
177-21 (1) the debtor authorizes the filing in an
177-22 authenticated record; or
177-23 (2) the person holds an agricultural lien that has
177-24 become effective at the time of filing and the financing statement
177-25 covers only collateral in which the person holds an agricultural
177-26 lien.
177-27 (b) By authenticating or becoming bound as debtor by a
178-1 security agreement, a debtor or new debtor authorizes the filing of
178-2 an initial financing statement, and an amendment, covering:
178-3 (1) the collateral described in the security
178-4 agreement; and
178-5 (2) property that becomes collateral under Section
178-6 9.315(a)(2), whether or not the security agreement expressly covers
178-7 proceeds.
178-8 (c) By acquiring collateral in which a security interest or
178-9 agricultural lien continues under Section 9.315(a)(1), a debtor
178-10 authorizes the filing of an initial financing statement, and an
178-11 amendment, covering the collateral and property that becomes
178-12 collateral under Section 9.315(a)(2).
178-13 (d) A person may file an amendment other than an amendment
178-14 that adds collateral covered by a financing statement or an
178-15 amendment that adds a debtor to a financing statement only if:
178-16 (1) the secured party of record authorizes the filing;
178-17 or
178-18 (2) the amendment is a termination statement for a
178-19 financing statement as to which the secured party of record has
178-20 failed to file or send a termination statement as required by
178-21 Section 9.513(a) or (c), the debtor authorizes the filing, and the
178-22 termination statement indicates that the debtor authorized it to be
178-23 filed.
178-24 (e) If there is more than one secured party of record for a
178-25 financing statement, each secured party of record may authorize the
178-26 filing of an amendment under Subsection (d).
178-27 Sec. 9.510. EFFECTIVENESS OF FILED RECORD. (a) A filed
179-1 record is effective only to the extent that it was filed by a
179-2 person that may file it under Section 9.509.
179-3 (b) A record authorized by one secured party of record does
179-4 not affect the financing statement with respect to another secured
179-5 party of record.
179-6 (c) A continuation statement that is not filed within the
179-7 six-month period prescribed by Section 9.515(d) is ineffective.
179-8 Sec. 9.511. SECURED PARTY OF RECORD. (a) A secured party
179-9 of record with respect to a financing statement is a person whose
179-10 name is provided as the name of the secured party or a
179-11 representative of the secured party in an initial financing
179-12 statement that has been filed. If an initial financing statement
179-13 is filed under Section 9.514(a), the assignee named in the initial
179-14 financing statement is the secured party of record with respect to
179-15 the financing statement.
179-16 (b) If an amendment of a financing statement that provides
179-17 the name of a person as a secured party or a representative of a
179-18 secured party is filed, the person named in the amendment is a
179-19 secured party of record. If an amendment is filed under Section
179-20 9.514(b), the assignee named in the amendment is a secured party of
179-21 record.
179-22 (c) A person remains a secured party of record until the
179-23 filing of an amendment of the financing statement that deletes the
179-24 person.
179-25 Sec. 9.512. AMENDMENT OF FINANCING STATEMENT. (a) Subject
179-26 to Section 9.509, a person may add or delete collateral covered by,
179-27 continue or terminate the effectiveness of, or, subject to
180-1 Subsection (e), otherwise amend the information provided in a
180-2 financing statement by filing an amendment that:
180-3 (1) identifies, by its file number, the initial
180-4 financing statement to which the amendment relates; and
180-5 (2) if the amendment relates to an initial financing
180-6 statement filed or recorded in a filing office described in Section
180-7 9.501(a)(1), provides the information specified in Section
180-8 9.502(b).
180-9 (b) Except as otherwise provided in Section 9.515, the
180-10 filing of an amendment does not extend the period of effectiveness
180-11 of the financing statement.
180-12 (c) A financing statement that is amended by an amendment
180-13 that adds collateral is effective as to the added collateral only
180-14 from the date of the filing of the amendment.
180-15 (d) A financing statement that is amended by an amendment
180-16 that adds a debtor is effective as to the added debtor only from
180-17 the date of the filing of the amendment.
180-18 (e) An amendment is ineffective to the extent it:
180-19 (1) purports to delete all debtors and fails to
180-20 provide the name of a debtor to be covered by the financing
180-21 statement; or
180-22 (2) purports to delete all secured parties of record
180-23 and fails to provide the name of a new secured party of record.
180-24 (f) A secured party may change the name or mailing address
180-25 of the secured party in more than one financing statement by filing
180-26 a master amendment setting forth the name of the secured party and
180-27 file number of each financing statement and the new name or mailing
181-1 address of the secured party. The secured party must also provide
181-2 filing information in computer-readable form prescribed by the
181-3 Secretary of State.
181-4 Sec. 9.513 [9.404]. TERMINATION STATEMENT. (a) A secured
181-5 party shall cause the secured party of record for a financing
181-6 statement to file a termination statement for the financing
181-7 statement if the financing statement covers consumer goods and:
181-8 (1) there is no obligation secured by the collateral
181-9 covered by the financing statement and no commitment to make an
181-10 advance, incur an obligation, or otherwise give value; or
181-11 (2) the debtor did not authorize the filing of the
181-12 initial financing statement.
181-13 (b) To comply with Subsection (a), a secured party shall
181-14 cause the secured party of record to file the termination
181-15 statement:
181-16 (1) [If a financing statement covering consumer goods
181-17 is filed on or after January 1, 1974, then] within one month [or
181-18 within ten days following written demand by the debtor] after there
181-19 is no [outstanding secured] obligation secured by the collateral
181-20 covered by the financing statement and no commitment to make
181-21 advances, incur an obligation, [obligations] or otherwise give
181-22 value; or
181-23 (2) if earlier, within 20 days after the secured party
181-24 receives an authenticated demand from a debtor[, the secured party
181-25 must file with each filing officer with whom the financing
181-26 statement was filed, a termination statement to the effect that he
181-27 no longer claims a security interest under the financing statement,
182-1 which shall be identified by file number].
182-2 (c) In [other] cases not governed by Subsection (a), within
182-3 20 days after a secured party receives an authenticated demand from
182-4 a debtor [whenever there is no outstanding secured obligation and
182-5 no commitment to make advances, incur obligations or otherwise give
182-6 value], the secured party shall cause the secured party of record
182-7 for a financing statement to [must on written demand by the debtor]
182-8 send the debtor[, for each filing officer with whom the financing
182-9 statement was filed,] a termination statement for the financing
182-10 statement or file the termination statement in the filing office
182-11 if:
182-12 (1) except in the case of a financing statement
182-13 covering accounts or chattel paper that has been sold or goods that
182-14 are the subject of a consignment, there is no obligation secured by
182-15 the collateral covered by the financing statement and no commitment
182-16 to make an advance, incur an obligation, or otherwise give value;
182-17 (2) the financing statement covers accounts or chattel
182-18 paper that has been sold but as to which the account debtor or
182-19 other person obligated has discharged its obligation;
182-20 (3) the financing statement covers goods that were the
182-21 subject of a consignment to the debtor but are not in the debtor's
182-22 possession; or
182-23 (4) the debtor did not authorize the filing of the
182-24 initial financing statement.
182-25 (d) Except as otherwise provided in Section 9.510, upon the
182-26 filing of a termination statement with the filing office, the
182-27 financing statement to which the termination statement relates
183-1 ceases to be effective [to the effect that he no longer claims a
183-2 security interest under the financing statement, which shall be
183-3 identified by file number. A termination statement signed by a
183-4 person other than the secured party of record must be accompanied
183-5 by a separate written statement of assignment signed by the secured
183-6 party of record and complying with Subsection (b) of Section 9.405,
183-7 including payment of the required fee. If the affected secured
183-8 party fails to file such a termination statement as required by
183-9 this subsection, or to send such a termination statement within ten
183-10 days after proper demand therefor he shall be liable to the debtor
183-11 for $100, and in addition for any loss caused to the debtor by such
183-12 failure].
183-13 [(b) On presentation to the filing officer of such a
183-14 termination statement he must note it in the index. If he has
183-15 received the termination statement in duplicate, he shall return
183-16 one copy of the termination statement to the secured party stamped
183-17 to show the time of receipt thereof. If the filing officer has a
183-18 microfilm or other photographic record of the financing statement,
183-19 and of any related continuation statement, statement of assignment
183-20 and statement of release, he may remove the originals from the
183-21 files at any time after receipt of the termination statement, or if
183-22 he has no such record, he may remove them from the files at any
183-23 time after one year after receipt of the termination statement.]
183-24 [(c) If the termination statement is in the standard form
183-25 prescribed by the Secretary of State, the uniform fee for filing
183-26 and indexing the termination statement shall be $10, and otherwise
183-27 shall be $25, plus, in each case where the original financing
184-1 statement was filed pursuant to Subsection (e) of Section 9.402, an
184-2 amount equal to the fee prescribed by law for recording and
184-3 indexing in the real property records of the county clerk].
184-4 Sec. 9.514 [9.405]. ASSIGNMENT OF POWERS OF SECURED PARTY OF
184-5 RECORD [SECURITY INTEREST: DUTIES OF FILING OFFICER; FEES]. (a)
184-6 Except as otherwise provided in Subsection (c), an initial [A]
184-7 financing statement may reflect [disclose] an assignment of all of
184-8 the secured party's power to authorize an amendment to the
184-9 financing statement by providing [a security interest in the
184-10 collateral described in the financing statement by indication in
184-11 the financing statement of] the name and mailing address of the
184-12 assignee as the name and address of the secured party [or by an
184-13 assignment itself or a copy thereof on the face or back of the
184-14 financing statement. On presentation to the filing officer of such
184-15 a financing statement the filing officer shall mark the same as
184-16 provided in Section 9.403].
184-17 (b) Except as otherwise provided in Subsection (c), a [A]
184-18 secured party of record may assign of record all or a part of its
184-19 power to authorize an amendment to [his rights under] a financing
184-20 statement by [the] filing in the filing office an amendment of the
184-21 financing statement that:
184-22 (1) identifies, by its file number, the initial
184-23 financing statement to which it relates;
184-24 (2) provides the name of the assignor; and
184-25 (3) provides [place where the original financing
184-26 statement was filed of a separate written statement of assignment
184-27 signed by the secured party of record and setting forth the name of
185-1 the secured party of record and the debtor, the file number and the
185-2 date of filing of the financing statement and] the name and mailing
185-3 address of the assignee [and containing a description of the
185-4 collateral assigned. A copy of the assignment is sufficient as a
185-5 separate statement if it complies with the preceding sentence. On
185-6 presentation to the filing officer of such a separate statement,
185-7 the filing officer shall mark such separate statement with the date
185-8 and hour of the filing. He shall note the assignment on the index
185-9 of the financing statement, or in the case of a fixture filing, or
185-10 a filing covering timber to be cut, or covering minerals or the
185-11 like (including oil and gas) or accounts subject to Subsection (e)
185-12 of Section 9.103, he shall index the assignment under the name of
185-13 the assignor as grantor and, to the extent that the law of this
185-14 state provides for indexing the assignment of a mortgage under the
185-15 name of the assignee, he shall index the assignment of the
185-16 financing statement under the name of the assignee. The uniform
185-17 fee for filing, indexing and furnishing filing data about such a
185-18 separate statement of assignment shall be $10 if the statement is
185-19 in the standard form prescribed by the Secretary of State and
185-20 otherwise shall be $25. Notwithstanding the provisions of this
185-21 subsection, an assignment of record of a security interest in a
185-22 fixture contained in a mortgage effective as a fixture filing
185-23 (Subsection (f) of Section 9.402) may be made only by an assignment
185-24 of the mortgage in the manner provided by the law of this state
185-25 other than this code].
185-26 (c) An assignment of record of a security interest in a
185-27 fixture covered by a record of a mortgage that is effective as a
186-1 financing statement filed as a fixture filing under Section
186-2 9.502(c) may be made only by an assignment of record of the
186-3 mortgage in the manner provided by law of this State other than
186-4 this chapter. [After the disclosure of filing of an assignment
186-5 under this section, the assignee is the secured party of record.]
186-6 (d) A secured party of record may assign of record all of
186-7 the secured party's rights under more than one financing statement
186-8 filed with the Secretary of State by filing a master assignment
186-9 setting forth the name of the secured party of record and file
186-10 number of each financing statement and the name and mailing address
186-11 of the assignee. The secured party must also provide filing
186-12 information in computer-readable form prescribed by the Secretary
186-13 of State [The uniform fee for filing, indexing, and furnishing
186-14 filing data for a financing statement so indicating an assignment
186-15 shall be $10 if the statement is in the standard form prescribed by
186-16 the Secretary of State and otherwise shall be $25, plus, in each
186-17 case where the original financing statement was filed pursuant to
186-18 Subsection (e) of Section 9.402, an amount equal to the fee
186-19 prescribed by law for recording and indexing in the real property
186-20 records of the county clerk].
186-21 Sec. 9.515. DURATION AND EFFECTIVENESS OF FINANCING
186-22 STATEMENT; EFFECT OF LAPSED FINANCING STATEMENT. (a) Except as
186-23 otherwise provided in Subsections (b)-(g), a filed financing
186-24 statement is effective for a period of five years after the date of
186-25 filing.
186-26 (b) Except as otherwise provided in Subsections (e), (f),
186-27 and (g), an initial financing statement filed in connection with a
187-1 public-finance transaction or manufactured-home transaction is
187-2 effective for a period of 30 years after the date of filing if it
187-3 indicates that it is filed in connection with a public-finance
187-4 transaction or manufactured-home transaction.
187-5 (c) The effectiveness of a filed financing statement lapses
187-6 on the expiration of the period of its effectiveness unless before
187-7 the lapse a continuation statement is filed pursuant to Subsection
187-8 (d). Upon lapse, a financing statement ceases to be effective and
187-9 any security interest or agricultural lien that was perfected by
187-10 the financing statement becomes unperfected, unless the security
187-11 interest is perfected otherwise. If the security interest or
187-12 agricultural lien becomes unperfected upon lapse, it is deemed
187-13 never to have been perfected as against a purchaser of the
187-14 collateral for value.
187-15 (d) A continuation statement may be filed only within six
187-16 months before the expiration of the five-year period specified in
187-17 Subsection (a) or the 30-year period specified in Subsection (b),
187-18 whichever is applicable.
187-19 (e) Except as otherwise provided in Section 9.510, upon
187-20 timely filing of a continuation statement, the effectiveness of the
187-21 initial financing statement continues for a period of five years
187-22 commencing on the day on which the financing statement would have
187-23 become ineffective in the absence of the filing. Upon the
187-24 expiration of the five-year period, the financing statement lapses
187-25 in the same manner as provided in Subsection (c), unless, before
187-26 the lapse, another continuation statement is filed pursuant to
187-27 Subsection (d). Succeeding continuation statements may be filed in
188-1 the same manner to continue the effectiveness of the initial
188-2 financing statement.
188-3 (f) If a debtor is a transmitting utility and a filed
188-4 financing statement so indicates, the financing statement is
188-5 effective until a termination statement is filed.
188-6 (g) A record of a mortgage that is effective as a financing
188-7 statement filed as a fixture filing under Section 9.502(c) remains
188-8 effective as a financing statement filed as a fixture filing until
188-9 the mortgage is released or satisfied of record or its
188-10 effectiveness otherwise terminates as to the real property.
188-11 Sec. 9.516. WHAT CONSTITUTES FILING; EFFECTIVENESS OF
188-12 FILING. (a) Except as otherwise provided in Subsection (b),
188-13 communication of a record to a filing office and tender of the
188-14 filing fee or acceptance of the record by the filing office
188-15 constitutes filing.
188-16 (b) Filing does not occur with respect to a record that a
188-17 filing office refuses to accept because:
188-18 (1) the record is not communicated by a method or
188-19 medium of communication authorized by the filing office;
188-20 (2) an amount equal to or greater than the applicable
188-21 filing fee is not tendered;
188-22 (3) the filing office is unable to index the record
188-23 because:
188-24 (A) in the case of an initial financing
188-25 statement, the record does not provide a name for the debtor;
188-26 (B) in the case of an amendment or correction
188-27 statement, the record:
189-1 (i) does not identify the initial
189-2 financing statement as required by Section 9.512 or 9.518, as
189-3 applicable; or
189-4 (ii) identifies an initial financing
189-5 statement whose effectiveness has lapsed under Section 9.515;
189-6 (C) in the case of an initial financing
189-7 statement that provides the name of a debtor identified as an
189-8 individual or an amendment that provides a name of a debtor
189-9 identified as an individual that was not previously provided in the
189-10 financing statement to which the record relates, the record does
189-11 not identify the debtor's last name; or
189-12 (D) in the case of a record filed or recorded in
189-13 the filing office described in Section 9.501(a)(1), the record does
189-14 not provide a sufficient description of the real property to which
189-15 it relates;
189-16 (4) in the case of an initial financing statement or
189-17 an amendment that adds a secured party of record, the record does
189-18 not provide a name and mailing address for the secured party of
189-19 record;
189-20 (5) in the case of an initial financing statement or
189-21 an amendment that provides a name of a debtor that was not
189-22 previously provided in the financing statement to which the
189-23 amendment relates, the record does not:
189-24 (A) provide a mailing address for the debtor;
189-25 (B) indicate whether the debtor is an individual
189-26 or an organization; or
189-27 (C) if the financing statement indicates that
190-1 the debtor is an organization, provide:
190-2 (i) a type of organization for the debtor;
190-3 (ii) a jurisdiction of organization for
190-4 the debtor; or
190-5 (iii) an organizational identification
190-6 number for the debtor or indicate that the debtor has none;
190-7 (6) in the case of an assignment reflected in an
190-8 initial financing statement under Section 9.514(a) or an amendment
190-9 filed under Section 9.514(b), the record does not provide a name
190-10 and mailing address for the assignee; or
190-11 (7) in the case of a continuation statement, the
190-12 record is not filed within the six-month period prescribed by
190-13 Section 9.515(d).
190-14 (c) For purposes of Subsection (b):
190-15 (1) a record does not provide information if the
190-16 filing office is unable to read or decipher the information; and
190-17 (2) a record that does not indicate that it is an
190-18 amendment or identify an initial financing statement to which it
190-19 relates, as required by Section 9.512, 9.514, or 9.518, is an
190-20 initial financing statement.
190-21 (d) A record that is communicated to the filing office with
190-22 tender of the filing fee, but that the filing office refuses to
190-23 accept for a reason other than one set forth in Subsection (b), is
190-24 effective as a filed record except as against a purchaser of the
190-25 collateral that gives value in reasonable reliance upon the absence
190-26 of the record from the files.
190-27 Sec. 9.517. EFFECT OF INDEXING ERRORS. The failure of the
191-1 filing office to index a record correctly does not affect the
191-2 effectiveness of the filed record.
191-3 Sec. 9.518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED
191-4 RECORD. (a) A person may file in the filing office a correction
191-5 statement with respect to a record indexed there under the person's
191-6 name if the person believes that the record is inaccurate or was
191-7 wrongfully filed.
191-8 (b) A correction statement must:
191-9 (1) identify the record to which it relates by the
191-10 file number assigned to the initial financing statement to which
191-11 the record relates;
191-12 (2) indicate that it is a correction statement; and
191-13 (3) provide the basis for the person's belief that the
191-14 record is inaccurate and indicate the manner in which the person
191-15 believes the record should be amended to cure any inaccuracy or
191-16 provide the basis for the person's belief that the record was
191-17 wrongfully filed.
191-18 (c) The filing of a correction statement does not affect the
191-19 effectiveness of an initial financing statement or other filed
191-20 record.
191-21 Sec. 9.5185. FRAUDULENT FILING. (a) A person may not
191-22 intentionally or knowingly present for filing or cause to be
191-23 presented for filing a financing statement that the person knows:
191-24 (1) is forged;
191-25 (2) contains a material false statement; or
191-26 (3) is groundless.
191-27 (b) A person who violates Subsection (a) is liable to the
192-1 owner of property covered by the financing statement for:
192-2 (1) the greater of $5,000 or the owner's actual
192-3 damages;
192-4 (2) court costs; and
192-5 (3) reasonable attorney's fees.
192-6 (c) A person who violates Subsection (a) also may be
192-7 prosecuted under Section 37.101, Penal Code.
192-8 (d) An owner of property covered by a fraudulent financing
192-9 statement described in Subsection (a) also may file suit in a court
192-10 of suitable jurisdiction requesting specific relief, including, but
192-11 not limited to, release of the fraudulent financing statement. A
192-12 successful plaintiff is entitled to reasonable attorney's fees and
192-13 costs of court assessed against the person who filed the fraudulent
192-14 financing statement. If the person who filed the fraudulent
192-15 financing statement cannot be located or is a fictitious person,
192-16 the owner of the property may serve the known or unknown defendant
192-17 through publication in a newspaper of general circulation in the
192-18 county in which the suit is brought.
192-19 Sec. 9.519. NUMBERING, MAINTAINING, AND INDEXING RECORDS;
192-20 COMMUNICATING INFORMATION PROVIDED IN RECORDS. (a) For each
192-21 record filed in a filing office, the filing office shall:
192-22 (1) assign a unique number to the filed record;
192-23 (2) create a record that bears the number assigned to
192-24 the filed record and the date and time of filing;
192-25 (3) maintain the filed record for public inspection;
192-26 and
192-27 (4) index the filed record in accordance with
193-1 Subsections (c), (d), and (e).
193-2 (b) Except as provided in Subsection (i), a file number
193-3 assigned after January 1, 2002, must include a digit that:
193-4 (1) is mathematically derived from or related to the
193-5 other digits of the file number; and
193-6 (2) aids the filing office in determining whether a
193-7 number communicated as the file number includes a single-digit or
193-8 transpositional error.
193-9 (c) Except as otherwise provided in Subsections (d) and (e),
193-10 the filing office shall:
193-11 (1) index an initial financing statement according to
193-12 the name of the debtor and index all filed records relating to the
193-13 initial financing statement in a manner that associates with one
193-14 another an initial financing statement and all filed records
193-15 relating to the initial financing statement; and
193-16 (2) index a record that provides a name of a debtor
193-17 that was not previously provided in the financing statement to
193-18 which the record relates also according to the name that was not
193-19 previously provided.
193-20 (d) If a financing statement is filed as a fixture filing or
193-21 covers as-extracted collateral or timber to be cut, it must be
193-22 filed for record and the filing office shall index it:
193-23 (1) under the names of the debtor and of each owner of
193-24 record shown on the financing statement as if they were the
193-25 mortgagors under a mortgage of the real property described; and
193-26 (2) to the extent that the law of this State provides
193-27 for indexing of records of mortgages under the name of the
194-1 mortgagee, under the name of the secured party as if the secured
194-2 party were the mortgagee thereunder, or, if indexing is by
194-3 description, as if the financing statement were a record of a
194-4 mortgage of the real property described.
194-5 (e) If a financing statement is filed as a fixture filing or
194-6 covers as-extracted collateral or timber to be cut, the filing
194-7 office shall index an assignment filed under Section 9.514(a) or an
194-8 amendment filed under Section 9.514(b):
194-9 (1) under the name of the assignor as grantor; and
194-10 (2) to the extent that the law of this State provides
194-11 for indexing a record of the assignment of a mortgage under the
194-12 name of the assignee, under the name of the assignee.
194-13 (f) The filing office shall maintain a capability:
194-14 (1) to retrieve a record by the name of the debtor and
194-15 by the file number assigned to the initial financing statement to
194-16 which the record relates; and
194-17 (2) to associate and retrieve with one another an
194-18 initial financing statement and each filed record relating to the
194-19 initial financing statement.
194-20 (g) The filing office may not remove a debtor's name from
194-21 the index until one year after the effectiveness of a financing
194-22 statement naming the debtor lapses under Section 9.515 with respect
194-23 to all secured parties of record.
194-24 (h) Except as provided in Subsection (i), the filing office
194-25 shall perform the acts required by Subsections (a)-(e) at the time
194-26 and in the manner prescribed by filing-office rule, but not later
194-27 than two business days after the filing office receives the record
195-1 in question.
195-2 (i) Subsections (b) and (h) do not apply to a filing office
195-3 described in Section 9.501(a)(1).
195-4 Sec. 9.520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD. (a) A
195-5 filing office shall refuse to accept a record for filing for a
195-6 reason set forth in Section 9.516(b) and may refuse to accept a
195-7 record for filing only for a reason set forth in Section 9.516(b).
195-8 (b) If a filing office refuses to accept a record for
195-9 filing, it shall communicate to the person that presented the
195-10 record the fact of and reason for the refusal and the date and time
195-11 the record would have been filed had the filing office accepted it.
195-12 The communication must be made at the time and in the manner
195-13 prescribed by filing-office rule, but in the case of a filing
195-14 office described in Section 9.501(a)(2), in no event more than two
195-15 business days after the filing office receives the record.
195-16 (c) A filed financing statement satisfying Section 9.502(a)
195-17 and (b) is effective, even if the filing office is required to
195-18 refuse to accept it for filing under Subsection (a). However,
195-19 Section 9.338 applies to a filed financing statement providing
195-20 information described in Section 9.516(b)(5) that is incorrect at
195-21 the time the financing statement is filed.
195-22 (d) If a record communicated to a filing office provides
195-23 information that relates to more than one debtor, this subchapter
195-24 applies as to each debtor separately.
195-25 Sec. 9.521. UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND
195-26 AMENDMENT. (a) A filing office that accepts written records may
195-27 not refuse to accept a written initial financing statement in the
196-1 following form and format except for a reason set forth in Section
196-2 9.516(b):
196-3 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
196-4 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT AND
196-5 FORM FOR THE UCC FINANCING STATEMENT ADDENDUM, RESPECTIVELY. THE
196-6 CONTENTS OF THESE PAGES CANNOT BE VIEWED ON-LINE DUE TO WORD
196-7 PROCESSOR LIMITATIONS WITH GRAPHIC FILES. PLEASE CONTACT HOUSE
196-8 DOCUMENT DISTRIBUTION FOR A HARD COPY."
196-9 "SEE NOTATION ON PAGE 197." (b) A filing office that
196-10 accepts written records may not refuse to accept a written record
196-11 in the following form and format except for a reason set forth in
196-12 Section 9.516(b):
196-13 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
196-14 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT
196-15 AMENDMENT AND FORM FOR THE UCC FINANCING STATEMENT AMENDMENT
196-16 ADDENDUM, RESPECTIVELY. THE CONTENTS OF THESE PAGES CANNOT BE
196-17 VIEWED ON-LINE DUE TO WORD PROCESSOR LIMITATIONS WITH GRAPHIC
196-18 FILES. PLEASE CONTACT HOUSE DOCUMENT DISTRIBUTION FOR A HARD
196-19 COPY."
196-20 "SEE NOTATION ON PAGE 200."
196-21 Sec. 9.522. MAINTENANCE AND DESTRUCTION OF RECORDS. (a)
196-22 The filing office shall maintain a record of the information
196-23 provided in a filed financing statement for at least one year after
196-24 the effectiveness of the financing statement has lapsed under
196-25 Section 9.515 with respect to all secured parties of record. The
196-26 record must be retrievable by using the name of the debtor and by
196-27 using the file number assigned to the initial financing statement
197-1 to which the record relates.
197-2 (b) Except to the extent that a statute governing
197-3 disposition of public records provides otherwise, the filing office
197-4 immediately may destroy any written record evidencing a financing
197-5 statement. However, if the filing office destroys a written
197-6 record, it shall maintain another record of the financing statement
197-7 that complies with Subsection (a).
197-8 Sec. 9.523. INFORMATION FROM FILING OFFICE; SALE OR LICENSE
197-9 OF RECORDS. (a) If a person that files a written record requests
197-10 an acknowledgment of the filing, the filing office shall send to
197-11 the person an image of the record showing the number assigned to
197-12 the record pursuant to Section 9.519(a)(1) and the date and time of
197-13 the filing of the record. However, if the person furnishes a copy
197-14 of the record to the filing office, the filing office may instead:
197-15 (1) note upon the copy the number assigned to the
197-16 record pursuant to Section 9.519(a)(1) and the date and time of the
197-17 filing of the record; and
197-18 (2) send the copy to the person.
197-19 (b) If a person files a record other than a written record,
197-20 the filing office shall communicate to the person an acknowledgment
197-21 that provides:
197-22 (1) the information in the record;
197-23 (2) the number assigned to the record pursuant to
197-24 Section 9.519(a)(1); and
197-25 (3) the date and time of the filing of the record.
197-26 (c) The filing office shall communicate or otherwise make
197-27 available in a record the following information to any person that
198-1 requests it:
198-2 (1) whether there is on file on a date and time
198-3 specified by the filing office, but not a date earlier than three
198-4 business days before the filing office receives the request, any
198-5 financing statement that:
198-6 (A) designates a particular debtor or, if the
198-7 request so states, designates a particular debtor at the address
198-8 specified in the request;
198-9 (B) has not lapsed under Section 9.515 with
198-10 respect to all secured parties of record; and
198-11 (C) if the request so states, has lapsed under
198-12 Section 9.515 and a record of which is maintained by the filing
198-13 office under Section 9.522(a);
198-14 (2) the date and time of filing of each financing
198-15 statement; and
198-16 (3) the information provided in each financing
198-17 statement.
198-18 (d) In complying with its duty under Subsection (c), the
198-19 filing office may communicate information in any medium. However,
198-20 if requested, the filing office shall communicate information by
198-21 issuing its written certificate.
198-22 (e) The filing office shall perform the acts required by
198-23 Subsections (a)-(d) at the time and in the manner prescribed by
198-24 filing-office rule, but not later than two business days after the
198-25 filing office receives the request.
198-26 (f) At least weekly, the Secretary of State shall offer to
198-27 sell or license to the public on a nonexclusive basis, in bulk,
199-1 copies of all records filed with the Secretary under this
199-2 subchapter, in every medium from time to time available to the
199-3 Secretary.
199-4 Sec. 9.524. DELAY BY FILING OFFICE. Delay by the filing
199-5 office beyond a time limit prescribed by this subchapter is excused
199-6 if:
199-7 (1) the delay is caused by interruption of
199-8 communication or computer facilities, war, emergency conditions,
199-9 failure of equipment, or other circumstances beyond control of the
199-10 filing office; and
199-11 (2) the filing office exercises reasonable diligence
199-12 under the circumstances.
199-13 Sec. 9.525. FEES. (a) Except as otherwise provided in
199-14 Subsections (e) and (f), the fee for filing and indexing a record
199-15 under this subchapter, other than an initial financing statement of
199-16 the kind described in Section 9.502(c), is:
199-17 (1) $15 if the record is communicated in writing and
199-18 consists of one or two pages;
199-19 (2) $30 if the record is communicated in writing and
199-20 consists of more than two pages; and
199-21 (3) $5 if the record is communicated by another medium
199-22 authorized by filing-office rule.
199-23 (b) Except as otherwise provided in Subsection (e), the fee
199-24 for filing and indexing an initial financing statement of the kind
199-25 described in Section 9.502(c) is:
199-26 (1) $60 if the financing statement indicates that it
199-27 is filed in connection with a public-finance transaction; and
200-1 (2) $60 if the financing statement indicates that it
200-2 is filed in connection with a manufactured-home transaction.
200-3 (c) The number of names required to be indexed does not
200-4 affect the amount of the fee in Subsections (a) and (b).
200-5 (d) The fee for responding to a request for information from
200-6 the filing office, including for communicating whether there is on
200-7 file any financing statement naming a particular debtor, is:
200-8 (1) $15 if the request is communicated in writing; and
200-9 (2) an amount established by the filing office if the
200-10 request is communicated by another medium authorized by
200-11 filing-office rule.
200-12 (e) This section does not require a fee with respect to a
200-13 record of a mortgage that is effective as a financing statement
200-14 filed as a fixture filing or as a financing statement covering
200-15 as-extracted collateral or timber to be cut under Section 9.502(c).
200-16 However, the recording and satisfaction fees that otherwise would
200-17 be applicable to the record of the mortgage apply.
200-18 (f) The filing fee for filing, indexing, and furnishing
200-19 filing data about a statement of master amendment under Section
200-20 9.512(f) or master assignment under Section 9.514(d) is $500 plus
200-21 50 cents for each financing statement covered by the master
200-22 statement in excess of 50.
200-23 Sec. 9.526. FILING-OFFICE RULES. (a) The Secretary of
200-24 State shall adopt and publish rules to implement this chapter. The
200-25 filing-office rules must be consistent with this chapter.
200-26 (b) To keep the filing-office rules and practices of the
200-27 filing office in harmony with the rules and practices of filing
201-1 offices in other jurisdictions that enact substantially this
201-2 subchapter, and to keep the technology used by the filing office
201-3 compatible with the technology used by filing offices in other
201-4 jurisdictions that enact substantially this subchapter, the
201-5 Secretary of State, so far as is consistent with the purposes,
201-6 policies, and provisions of this chapter, in adopting, amending,
201-7 and repealing filing-office rules, shall:
201-8 (1) consult with filing offices in other jurisdictions
201-9 that enact substantially this subchapter;
201-10 (2) consult the most recent version of the Model Rules
201-11 promulgated by the International Association of Corporate
201-12 Administrators or any successor organization; and
201-13 (3) take into consideration the rules and practices
201-14 of, and the technology used by, filing offices in other
201-15 jurisdictions that enact substantially this subchapter.
201-16 Sec. 9.527. DUTY TO REPORT. The Secretary of State shall
201-17 report before January 1 of each odd-numbered year to the
201-18 Legislature on the operation of the filing office. The report must
201-19 contain a statement of the extent to which:
201-20 (1) the filing-office rules are not in harmony with
201-21 the rules of filing offices in other jurisdictions that enact
201-22 substantially this subchapter and the reasons for these variations;
201-23 and
201-24 (2) the filing-office rules are not in harmony with
201-25 the most recent version of the Model Rules promulgated by the
201-26 International Association of Corporate Administrators, or any
201-27 successor organization, and the reasons for these variations.
202-1 [Sec. 9.406. RELEASE OF COLLATERAL; DUTIES OF FILING
202-2 OFFICER; FEES. A secured party of record may by his signed
202-3 statement release all or a part of any collateral described in a
202-4 filed financing statement. The statement of release is sufficient
202-5 if it contains a description of the collateral being released, the
202-6 name and address of the debtor, the name and address of the secured
202-7 party, and the file number of the financing statement. A statement
202-8 of release signed by a person other than the secured party of
202-9 record must be accompanied by a separate written statement of
202-10 assignment signed by the secured party of record and complying with
202-11 Subsection (b) of Section 9.405, including payment of the required
202-12 fee. Upon presentation of such a statement of release to the
202-13 filing officer he shall mark the statement with the hour and date
202-14 of filing and shall note the same upon the margin of the index of
202-15 the filing of the financing statement. The uniform fee for filing
202-16 and noting such a statement of release shall be $10 if the
202-17 statement is in the standard form prescribed by the Secretary of
202-18 State and otherwise shall be $25, plus, in each case where the
202-19 original financing statement was filed pursuant to Subsection (e)
202-20 of Section 9.402, an amount equal to the fee prescribed by law for
202-21 recording and indexing in the real property records of the county
202-22 clerk.]
202-23 [Sec. 9.407. INFORMATION FROM FILING OFFICER. (a) If the
202-24 person filing any financing statement, termination statement,
202-25 statement of assignment, or statement of release, furnishes the
202-26 filing officer a copy thereof, the filing officer shall upon
202-27 request note upon the copy the file number and date and hour of the
203-1 filing of the original and deliver or send the copy to such person.]
203-2 [(b) Upon request of any person, the filing officer shall
203-3 issue his certificate showing whether there is on file on the date
203-4 and hour stated therein, any presently effective financing
203-5 statement naming a particular debtor and any statement of
203-6 assignment thereof and if there is, giving the date and hour of
203-7 filing of each such statement and the names and addresses of each
203-8 secured party therein. The filing officer of a county is required
203-9 only to provide information about financing statements and
203-10 statements of assignment on file in the financing statement records
203-11 of the county and is not required to provide information from the
203-12 real estate records of the county. The uniform fee for such a
203-13 certificate shall be $10 if the request for the certificate is in
203-14 the standard form prescribed by the Secretary of State and
203-15 otherwise shall be $25. If a certificate issued by the filing
203-16 officer of a county contains listings for more than 10 statements,
203-17 the filing officer shall add 50 cents to the uniform fee for each
203-18 statement in excess of 10. Upon request the filing officer shall
203-19 furnish a copy of any filed financing statement or statement of
203-20 assignment for a uniform fee of $1.50 per page, but not less than
203-21 $5 per request concerning a debtor.]
203-22 [Sec. 9.408. FINANCING STATEMENTS COVERING CONSIGNED OR
203-23 LEASED GOODS. A consignor or lessor of goods may file a financing
203-24 statement using the terms "consignor," "consignee," "lessor,"
203-25 "lessee" or the like instead of the terms specified in Section
203-26 9.402. The provisions of this subchapter shall apply as
203-27 appropriate to such a financing statement but its filing shall not
204-1 of itself be a factor in determining whether or not the consignment
204-2 or lease is intended as security (Section 1.201(37)). However, if
204-3 it is determined for other reasons that the consignment or lease is
204-4 so intended, a security interest of the consignor or lessor which
204-5 attaches to the consigned or leased goods is perfected by such
204-6 filing.]
204-7 [Sec. 9.409. PRESCRIBED FORMS. (a) The Secretary of State
204-8 may prescribe the forms to be used in making any filing or in
204-9 requesting any information of the filing officer under this
204-10 chapter. Where the Secretary of State has prescribed the form and
204-11 a person fails to use this form or attaches additional pages to the
204-12 prescribed form, the filing or request for information is in
204-13 nonstandard form.]
204-14 [(b) The filing and other fees paid to the Secretary of
204-15 State under this chapter shall be deposited in the General Revenue
204-16 Fund of the State Treasury.]
204-17 [Sec. 9.410. MASTER ASSIGNMENT AND AMENDMENT. (a) A
204-18 secured party may assign all of the secured party's rights under
204-19 more than one financing statement filed with the secretary of state
204-20 by filing a written statement of master assignment signed by the
204-21 secured party of record in each financing statement and setting
204-22 forth the name of the secured party of record and file number of
204-23 each financing statement and the name and address of the assignee.
204-24 The secured party must also provide filing information in
204-25 computer-readable form prescribed by the secretary of state.]
204-26 [(b) A secured party may change the name or mailing address
204-27 of the secured party in more than one financing statement by filing
205-1 a written statement of master amendment signed by the secured party
205-2 of record in each financing statement and setting forth the name of
205-3 the secured party of record and file number of each financing
205-4 statement and the new name or mailing address of the secured party.
205-5 The secured party must also provide filing information in
205-6 computer-readable form prescribed by the secretary of state.]
205-7 [(c) The filing fee for filing, indexing, and furnishing
205-8 filing data about a statement of master assignment or master
205-9 amendment is $500 plus 50 cents for each financing statement
205-10 covered by the master statement in excess of 50.]
205-11 [Sec. 9.411. RULES. The secretary of state may adopt rules
205-12 necessary to administer this subchapter.]
205-13 [Sec. 9.412. FRAUDULENT FILING. (a) A person may not
205-14 intentionally or knowingly present for filing or cause to be
205-15 presented for filing a financing statement if the person knows that
205-16 the financing statement:]
205-17 [(1) is forged;]
205-18 [(2) contains a material false statement; or]
205-19 [(3) is groundless.]
205-20 [(b) A person who violates Subsection (a) is liable to the
205-21 owner of property covered by the financing statement for:]
205-22 [(1) the greater of $5,000 or the owner's actual
205-23 damages;]
205-24 [(2) court costs; and]
205-25 [(3) reasonable attorney's fees.]
205-26 [(d) An owner of property covered by a fraudulent financing
205-27 statement described in Subsection (a) shall have the following
206-1 additional remedies:]
206-2 [(1) An owner may file suit in a court of suitable
206-3 jurisdiction, requesting specific relief including, but not limited
206-4 to, release of such fraudulent financing statement. A successful
206-5 plaintiff shall be entitled to reasonable attorney's fees and costs
206-6 of court to be assessed against the person who filed the fraudulent
206-7 financing statement. In the event the person who filed the
206-8 fraudulent financing statement cannot be located or is a fictitious
206-9 person, then the owner of the property may serve the known or
206-10 unknown defendant through publication in a newspaper of general
206-11 circulation in the county wherein the suit is brought.]
206-12 SUBCHAPTER F [E]. DEFAULT
206-13 Sec. 9.601 [9.501]. RIGHTS AFTER DEFAULT; JUDICIAL
206-14 ENFORCEMENT; CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT
206-15 INTANGIBLES, OR PROMISSORY NOTES [PROCEDURE WHEN SECURITY AGREEMENT
206-16 COVERS BOTH REAL AND PERSONAL PROPERTY]. (a) After [When a debtor
206-17 is in] default [under a security agreement], a secured party has
206-18 the rights [and remedies] provided in this subchapter and, except
206-19 as otherwise provided in Section 9.602, [as limited by Subsection
206-20 (c)] those provided by agreement of the parties. A secured party:
206-21 (1) [in the security agreement. He] may reduce a
206-22 [his] claim to judgment, foreclose, or otherwise enforce the claim,
206-23 security interest, or agricultural lien by any available judicial
206-24 procedure; and
206-25 (2) if[. If] the collateral is documents, [the
206-26 secured party] may proceed either as to the documents or as to the
206-27 goods they cover [covered thereby].
207-1 (b) A secured party in possession of collateral or control
207-2 of collateral under Section 9.104, 9.105, 9.106, or 9.107 has the
207-3 rights[, remedies] and duties provided in Section 9.207.
207-4 (c) The rights under Subsections (a) and (b) [and remedies
207-5 referred to in this subsection] are cumulative and may be exercised
207-6 simultaneously.
207-7 (d) Except as otherwise provided in Subsection (g) and
207-8 Section 9.605, after [(b) After] default, a [the] debtor and an
207-9 obligor have [has] the rights [and remedies] provided in this
207-10 subchapter and by agreement of the parties[, those provided in the
207-11 security agreement and those provided in Section 9.207].
207-12 [(c) To the extent that they give rights to the debtor and
207-13 impose duties on the secured party, the rules stated in the
207-14 subsections referred to below may not be waived or varied except as
207-15 provided with respect to compulsory disposition of collateral
207-16 (Subsection (c) of Section 9.504 and Section 9.505) and with
207-17 respect to redemption of collateral (Section 9.506) but the parties
207-18 may by agreement determine the standards by which the fulfillment
207-19 of these rights and duties is to be measured if such standards are
207-20 not manifestly unreasonable:]
207-21 [(1) Subsection (b) of Section 9.502 and Subsection
207-22 (b) of Section 9.504 insofar as they require accounting for surplus
207-23 proceeds of collateral;]
207-24 [(2) Subsection (c) of Section 9.504 and Subsection
207-25 (a) of Section 9.505 which deal with disposition of collateral;]
207-26 [(3) Subsection (b) of Section 9.505 which deals with
207-27 acceptance of collateral as discharge of obligation;]
208-1 [(4) Section 9.506 which deals with redemption of
208-2 collateral; and]
208-3 [(5) Subsection (a) of Section 9.507 which deals with
208-4 the secured party's liability for failure to comply with this
208-5 subchapter.]
208-6 [(d) If the security agreement covers both real and personal
208-7 property, the secured party may proceed under this subchapter as to
208-8 the personal property or he may proceed as to both the real and the
208-9 personal property in accordance with his rights and remedies in
208-10 respect of the real property in which case the provisions of this
208-11 subchapter do not apply.]
208-12 (e) If [When] a secured party has reduced its [his] claim to
208-13 judgment, the lien of any levy that [which] may be made upon the
208-14 [his] collateral by virtue of an [any] execution based upon the
208-15 judgment relates [shall relate] back to the earliest of:
208-16 (1) the date of perfection of the security interest or
208-17 agricultural lien in the [such] collateral;
208-18 (2) the date of filing a financing statement covering
208-19 the collateral; or
208-20 (3) any date specified in a statute under which the
208-21 agricultural lien was created.
208-22 (f) A [judicial] sale[,] pursuant to an [such] execution[,]
208-23 is a foreclosure of the security interest or agricultural lien by
208-24 judicial procedure within the meaning of this section. A[, and
208-25 the] secured party may purchase at the sale and thereafter hold the
208-26 collateral free of any other requirements of this chapter.
208-27 (g) Except as otherwise provided in Section 9.607(c), this
209-1 subchapter imposes no duties upon a secured party that is a
209-2 consignor or is a buyer of accounts, chattel paper, payment
209-3 intangibles, or promissory notes.
209-4 Sec. 9.602. WAIVER AND VARIANCE OF RIGHTS AND DUTIES.
209-5 Except as otherwise provided in Section 9.624, to the extent that
209-6 they give rights to a debtor or obligor and impose duties on a
209-7 secured party, the debtor or obligor may not waive or vary the
209-8 rules stated in the following listed sections:
209-9 (1) Section 9.207(b)(4)(C), which deals with use and
209-10 operation of the collateral by the secured party;
209-11 (2) Section 9.210, which deals with requests for an
209-12 accounting and requests concerning a list of collateral and
209-13 statement of account;
209-14 (3) Section 9.607(c), which deals with collection and
209-15 enforcement of collateral;
209-16 (4) Sections 9.608(a) and 9.615(c) to the extent that
209-17 they deal with application or payment of noncash proceeds of
209-18 collection, enforcement, or disposition;
209-19 (5) Sections 9.608(a) and 9.615(d) to the extent that
209-20 they require accounting for or payment of surplus proceeds of
209-21 collateral;
209-22 (6) Section 9.609 to the extent that it imposes upon a
209-23 secured party that takes possession of collateral without judicial
209-24 process the duty to do so without breach of the peace;
209-25 (7) Sections 9.610(b), 9.611, 9.613, and 9.614, which
209-26 deal with disposition of collateral;
209-27 (8) Section 9.615(f), which deals with calculation of
210-1 a deficiency or surplus when a disposition is made to the secured
210-2 party, a person related to the secured party, or a secondary
210-3 obligor;
210-4 (9) Section 9.616, which deals with explanation of the
210-5 calculation of a surplus or deficiency;
210-6 (10) Sections 9.620, 9.621, and 9.622, which deal with
210-7 acceptance of collateral in satisfaction of obligation;
210-8 (11) Section 9.623, which deals with redemption of
210-9 collateral;
210-10 (12) Section 9.624, which deals with permissible
210-11 waivers; and
210-12 (13) Sections 9.625 and 9.626, which deal with the
210-13 secured party's liability for failure to comply with this chapter.
210-14 Sec 9.603. AGREEMENT ON STANDARDS CONCERNING RIGHTS AND
210-15 DUTIES. (a) The parties may determine by agreement the standards
210-16 measuring the fulfillment of the rights of a debtor or obligor and
210-17 the duties of a secured party under a rule stated in Section 9.602
210-18 if the standards are not manifestly unreasonable.
210-19 (b) Subsection (a) does not apply to the duty under Section
210-20 9.609 to refrain from breaching the peace.
210-21 Sec. 9.604. PROCEDURE IF SECURITY AGREEMENT COVERS REAL
210-22 PROPERTY OR FIXTURES. (a) If a security agreement covers both
210-23 personal and real property, a secured party may proceed:
210-24 (1) under this subchapter as to the personal property
210-25 without prejudicing any rights with respect to the real property;
210-26 or
210-27 (2) as to both the personal property and the real
211-1 property in accordance with the rights with respect to the real
211-2 property, in which case the other provisions of this subchapter do
211-3 not apply.
211-4 (b) Subject to Subsection (c), if a security agreement
211-5 covers goods that are or become fixtures, a secured party may
211-6 proceed:
211-7 (1) under this subchapter; or
211-8 (2) in accordance with the rights with respect to real
211-9 property, in which case the other provisions of this subchapter do
211-10 not apply.
211-11 (c) Subject to the other provisions of this subchapter, if a
211-12 secured party holding a security interest in fixtures has priority
211-13 over all owners and encumbrancers of the real property, the secured
211-14 party, after default, may remove the collateral from the real
211-15 property.
211-16 (d) A secured party that removes collateral shall promptly
211-17 reimburse any encumbrancer or owner of the real property, other
211-18 than the debtor, for the cost of repair of any physical injury
211-19 caused by the removal. The secured party need not reimburse the
211-20 encumbrancer or owner for any diminution in value of the real
211-21 property caused by the absence of the goods removed or by any
211-22 necessity of replacing them. A person entitled to reimbursement
211-23 may refuse permission to remove until the secured party gives
211-24 adequate assurance for the performance of the obligation to
211-25 reimburse.
211-26 Sec. 9.605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. A secured
211-27 party does not owe a duty based on its status as secured party:
212-1 (1) to a person that is a debtor or obligor, unless
212-2 the secured party knows:
212-3 (A) that the person is a debtor or obligor;
212-4 (B) the identity of the person; and
212-5 (C) how to communicate with the person; or
212-6 (2) to a secured party or lienholder that has filed a
212-7 financing statement against a person, unless the secured party
212-8 knows:
212-9 (A) that the person is a debtor; and
212-10 (B) the identity of the person.
212-11 Sec. 9.606. TIME OF DEFAULT FOR AGRICULTURAL LIEN. For
212-12 purposes of this subchapter, a default occurs in connection with an
212-13 agricultural lien at the time the secured party becomes entitled to
212-14 enforce the lien in accordance with the statute under which it was
212-15 created.
212-16 Sec. 9.607 [9.502]. COLLECTION AND ENFORCEMENT BY [RIGHTS
212-17 OF] SECURED PARTY. (a) If [When] so agreed, and in any event
212-18 after [on] default, a [the] secured party:
212-19 (1) may [is entitled to] notify an account debtor or
212-20 other person obligated on collateral [the obligor on an instrument]
212-21 to make payment or otherwise render performance to or for the
212-22 benefit of the secured party;
212-23 (2) may take any proceeds to which the secured party
212-24 is entitled under Section 9.315;
212-25 (3) may enforce the obligations of an account debtor
212-26 or other person obligated on collateral and exercise the rights of
212-27 the debtor with respect to the obligation of the account debtor or
213-1 other person obligated on collateral to make payment or otherwise
213-2 render performance to the debtor, and with respect to any property
213-3 that secures the obligations of the account debtor or other person
213-4 obligated on the collateral;
213-5 (4) if it holds a security interest in a deposit
213-6 account perfected by control under Section 9.104(a)(1), may apply
213-7 the balance of the deposit account to the obligation secured by the
213-8 deposit account; and
213-9 (5) if it holds a security interest in a deposit
213-10 account perfected by control under Section 9.104(a)(2) or (3), may
213-11 instruct the bank to pay the balance of the deposit account to or
213-12 for the benefit of the secured party [to him whether or not the
213-13 assignor was theretofore making collections on the collateral, and
213-14 also to take control of any proceeds to which he is entitled under
213-15 Section 9.306].
213-16 (b) If necessary to enable a secured party to exercise under
213-17 Subsection (a)(3) the right of a debtor to enforce a mortgage
213-18 nonjudicially, the secured party may record in the office in which
213-19 a record of the mortgage is recorded:
213-20 (1) a copy of the security agreement that creates or
213-21 provides for a security interest in the obligation secured by the
213-22 mortgage; and
213-23 (2) the secured party's sworn affidavit in recordable
213-24 form stating that:
213-25 (A) a default has occurred; and
213-26 (B) the secured party is entitled to enforce the
213-27 mortgage nonjudicially.
214-1 (c) [(b)] A secured party shall [who by agreement is
214-2 entitled to charge back uncollected collateral or otherwise to full
214-3 or limited recourse against the debtor and who undertakes to
214-4 collect from the account debtors or obligors must] proceed in a
214-5 commercially reasonable manner if the secured party:
214-6 (1) undertakes to collect from or enforce an
214-7 obligation of an account debtor or other person obligated on
214-8 collateral; and
214-9 (2) is entitled to charge back uncollected collateral
214-10 or otherwise to full or limited recourse against the debtor or a
214-11 secondary obligor.
214-12 (d) A secured party [and] may deduct from the collections
214-13 made pursuant to Subsection (c) [his] reasonable expenses of
214-14 collection and enforcement, including reasonable attorney's fees
214-15 and legal expenses incurred by the secured party [realization from
214-16 the collections].
214-17 (e) This section does not determine whether an account
214-18 debtor, bank, or other person obligated on collateral owes a duty
214-19 to a secured party.
214-20 Sec. 9.608. APPLICATION OF PROCEEDS OF COLLECTION OR
214-21 ENFORCEMENT; LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS. (a)
214-22 If a security interest or agricultural lien secures payment or
214-23 performance of an obligation, the following rules apply:
214-24 (1) A secured party shall apply or pay over for
214-25 application the cash proceeds of collection or enforcement under
214-26 this section in the following order to:
214-27 (A) the reasonable expenses of collection and
215-1 enforcement and, to the extent provided for by agreement and not
215-2 prohibited by law, reasonable attorney's fees and legal expenses
215-3 incurred by the secured party;
215-4 (B) the satisfaction of obligations secured by
215-5 the security interest or agricultural lien under which the
215-6 collection or enforcement is made; and
215-7 (C) the satisfaction of obligations secured by
215-8 any subordinate security interest in or other lien on the
215-9 collateral subject to the security interest or agricultural lien
215-10 under which the collection or enforcement is made if the secured
215-11 party receives an authenticated demand for proceeds before
215-12 distribution of the proceeds is completed.
215-13 (2) If requested by a secured party, a holder of a
215-14 subordinate security interest or other lien shall furnish
215-15 reasonable proof of the interest or lien within a reasonable time.
215-16 Unless the holder complies, the secured party need not comply with
215-17 the holder's demand under Subdivision (1)(C).
215-18 (3) A secured party need not apply or pay over for
215-19 application noncash proceeds of collection and enforcement under
215-20 this section unless the failure to do so would be commercially
215-21 unreasonable. A secured party that applies or pays over for
215-22 application noncash proceeds shall do so in a commercially
215-23 reasonable manner.
215-24 (4) A secured party shall account to and pay a debtor
215-25 for any surplus, and the obligor is liable for any deficiency.
215-26 (b) If the underlying transaction is a sale of accounts,
215-27 chattel paper, payment intangibles, or promissory notes, the debtor
216-1 is not entitled to any surplus, and the obligor is not liable for
216-2 any deficiency. [If the security agreement secures an
216-3 indebtedness, the secured party must account to the debtor for any
216-4 surplus, and unless otherwise agreed, the debtor is liable for any
216-5 deficiency. But, if the underlying transaction was a sale of
216-6 accounts or chattel paper, the debtor is entitled to any surplus or
216-7 is liable for any deficiency only if the security agreement so
216-8 provides.]
216-9 Sec. 9.609 [9.503]. SECURED PARTY'S RIGHT TO TAKE POSSESSION
216-10 AFTER DEFAULT. (a) After default, [Unless otherwise agreed] a
216-11 secured party:
216-12 (1) may [has on default the right to] take possession
216-13 of the collateral; and
216-14 (2) without[. In taking possession a secured party
216-15 may proceed without judicial process if this can be done without
216-16 breach of the peace or may proceed by action. If the security
216-17 agreement so provides the secured party may require the debtor to
216-18 assemble the collateral and make it available to the secured party
216-19 at a place to be designated by the secured party which is
216-20 reasonably convenient to both parties. Without] removal, [a
216-21 secured party] may render equipment unusable[,] and [may] dispose
216-22 of collateral on a debtor's premises under Section 9.610 [9.504].
216-23 (b) A secured party may proceed under Subsection (a):
216-24 (1) pursuant to judicial process; or
216-25 (2) without judicial process, if it proceeds without
216-26 breach of the peace.
216-27 (c) If so agreed, and in any event after default, a secured
217-1 party may require the debtor to assemble the collateral and make it
217-2 available to the secured party at a place to be designated by the
217-3 secured party that is reasonably convenient to both parties.
217-4 Sec. 9.610 [9.504]. DISPOSITION [SECURED PARTY'S RIGHT TO
217-5 DISPOSE] OF COLLATERAL AFTER DEFAULT[; EFFECT OF DISPOSITION]. (a)
217-6 After default, a [A] secured party [after default] may sell, lease,
217-7 license, or otherwise dispose of any or all of the collateral in
217-8 its present [then] condition or following any commercially
217-9 reasonable preparation or processing.
217-10 (b) Every aspect of a disposition of collateral, including
217-11 the method, manner, time, place, and other terms, must be
217-12 commercially reasonable. If commercially reasonable, a secured
217-13 party may dispose [Any sale of goods is subject to the chapter on
217-14 Sales (Chapter 2). The proceeds of disposition shall be applied in
217-15 the order following to]
217-16 [(1) the reasonable expenses of retaking, holding,
217-17 preparing for sale or lease, selling, leasing and the like and, to
217-18 the extent provided for in the agreement and not prohibited by law,
217-19 the reasonable attorneys' fees and legal expenses incurred by the
217-20 secured party;]
217-21 [(2) the satisfaction of indebtedness secured by the
217-22 security interest under which the disposition is made;]
217-23 [(3) the satisfaction of indebtedness secured by any
217-24 subordinate security interest in the collateral if written
217-25 notification of demand therefor is received before distribution of
217-26 the proceeds is completed. If requested by the secured party, the
217-27 holder of a subordinate security interest must seasonably furnish
218-1 reasonable proof of his interest, and unless he does so, the
218-2 secured party need not comply with his demand.]
218-3 [(b) If the security interest secures an indebtedness, the
218-4 secured party must account to the debtor for any surplus, and,
218-5 unless otherwise agreed, the debtor is liable for any deficiency.
218-6 But if the underlying transaction was a sale of accounts or chattel
218-7 paper, the debtor is entitled to any surplus or is liable for any
218-8 deficiency only if the security agreement so provides.]
218-9 [(c) Disposition] of [the] collateral [may be] by public or
218-10 private proceedings, [and may be made] by [way of] one or more
218-11 contracts,[. Sale or other disposition may be] as a unit or in
218-12 parcels, and at any time and place and on any terms [but every
218-13 aspect of the disposition including the method, manner, time, place
218-14 and terms must be commercially reasonable. Unless collateral is
218-15 perishable or threatens to decline speedily in value or is of a
218-16 type customarily sold on a recognized market, reasonable
218-17 notification of the time and place of any public sale or reasonable
218-18 notification of the time after which any private sale or other
218-19 intended disposition is to be made shall be sent by the secured
218-20 party to the debtor, if he has not signed after default a statement
218-21 renouncing or modifying his right to notification of sale. In the
218-22 case of consumer goods no other notification need be sent. In
218-23 other cases notification shall be sent to any other secured party
218-24 who has a security interest in the same collateral and who has duly
218-25 filed in the office of the Secretary of State or of the county
218-26 clerk in the proper county in this state a financing statement
218-27 indexed in the name of the debtor or from whom the secured party
219-1 has received (before sending his notification to the debtor or
219-2 before the debtor's renunciation of his rights) written notice of a
219-3 claim of an interest in the collateral. The secured party may buy
219-4 at any public sale and if the collateral is of a type customarily
219-5 sold in a recognized market or is of a type which is the subject of
219-6 widely distributed standard price quotations he may buy at private
219-7 sale].
219-8 (c) A secured party may purchase collateral:
219-9 (1) at a public disposition; or
219-10 (2) at a private disposition only if the collateral is
219-11 of a kind that is customarily sold on a recognized market or the
219-12 subject of widely distributed standard price quotations.
219-13 (d) A contract for sale, lease, license, or other
219-14 disposition includes the warranties relating to title, possession,
219-15 quiet enjoyment, and the like that by operation of law accompany a
219-16 voluntary disposition of property of the kind subject to the
219-17 contract.
219-18 (e) A secured party may disclaim or modify warranties under
219-19 Subsection (d):
219-20 (1) in a manner that would be effective to disclaim or
219-21 modify the warranties in a voluntary disposition of property of the
219-22 kind subject to the contract of disposition; or
219-23 (2) by communicating to the purchaser a record
219-24 evidencing the contract for disposition and including an express
219-25 disclaimer or modification of the warranties.
219-26 (f) A record is sufficient to disclaim warranties under
219-27 Subsection (e) if it indicates "There is no warranty relating to
220-1 title, possession, quiet enjoyment, or the like in this
220-2 disposition" or uses words of similar import.
220-3 Sec. 9.611. NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.
220-4 (a) In this section, "notification date" means the earlier of the
220-5 date on which:
220-6 (1) a secured party sends to the debtor and any
220-7 secondary obligor an authenticated notification of disposition; or
220-8 (2) the debtor and any secondary obligor waive the
220-9 right to notification.
220-10 (b) Except as otherwise provided in Subsection (d), a
220-11 secured party that disposes of collateral under Section 9.610 shall
220-12 send to the persons specified in Subsection (c) a reasonable
220-13 authenticated notification of disposition.
220-14 (c) To comply with Subsection (b), the secured party shall
220-15 send an authenticated notification of disposition to:
220-16 (1) the debtor;
220-17 (2) any secondary obligor; and
220-18 (3) if the collateral is other than consumer goods:
220-19 (A) any other person from which the secured
220-20 party has received, before the notification date, an authenticated
220-21 notification of a claim of an interest in the collateral;
220-22 (B) any other secured party or lienholder that,
220-23 10 days before the notification date, held a security interest in
220-24 or other lien on the collateral perfected by the filing of a
220-25 financing statement that:
220-26 (i) identified the collateral;
220-27 (ii) was indexed under the debtor's name
221-1 as of that date; and
221-2 (iii) was filed in the office in which to
221-3 file a financing statement against the debtor covering the
221-4 collateral as of that date; and
221-5 (C) any other secured party that, 10 days before
221-6 the notification date, held a security interest in the collateral
221-7 perfected by compliance with a statute, regulation, or treaty
221-8 described in Section 9.311(a).
221-9 (d) Subsection (b) does not apply if the collateral is
221-10 perishable or threatens to decline speedily in value or is of a
221-11 type customarily sold on a recognized market.
221-12 (e) A secured party complies with the requirement for
221-13 notification prescribed by Subsection (c)(3)(B) if:
221-14 (1) not later than 20 days or earlier than 30 days
221-15 before the notification date, the secured party requests, in a
221-16 commercially reasonable manner, information concerning financing
221-17 statements indexed under the debtor's name in the office indicated
221-18 in Subsection (c)(3)(B); and
221-19 (2) before the notification date, the secured party:
221-20 (A) did not receive a response to the request
221-21 for information; or
221-22 (B) received a response to the request for
221-23 information and sent an authenticated notification of disposition
221-24 to each secured party or other lienholder named in that response
221-25 whose financing statement covered the collateral.
221-26 Sec. 9.612. TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF
221-27 COLLATERAL. (a) Except as otherwise provided in Subsection (b),
222-1 whether a notification is sent within a reasonable time is a
222-2 question of fact.
222-3 (b) In a transaction other than a consumer transaction, a
222-4 notification of disposition sent after default and 10 days or more
222-5 before the earliest time of disposition set forth in the
222-6 notification is sent within a reasonable time before the
222-7 disposition.
222-8 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
222-9 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
222-10 transaction, the following rules apply:
222-11 (1) The contents of a notification of disposition are
222-12 sufficient if the notification:
222-13 (A) describes the debtor and the secured party;
222-14 (B) describes the collateral that is the subject
222-15 of the intended disposition;
222-16 (C) states the method of intended disposition;
222-17 (D) states that the debtor is entitled to an
222-18 accounting of the unpaid indebtedness and states the charge, if
222-19 any, for an accounting; and
222-20 (E) states the time and place of a public sale
222-21 or the time after which any other disposition is to be made.
222-22 (2) Whether the contents of a notification that lacks
222-23 any of the information specified in Subdivision (1) are
222-24 nevertheless sufficient is a question of fact.
222-25 (3) The contents of a notification providing
222-26 substantially the information specified in Subdivision (1) are
222-27 sufficient, even if the notification includes:
223-1 (A) information not specified by that
223-2 subdivision; or
223-3 (B) minor errors that are not seriously
223-4 misleading.
223-5 (4) A particular phrasing of the notification is not
223-6 required.
223-7 (5) The following form of notification and the form
223-8 appearing in Section 9.614(3), when completed, each provide
223-9 sufficient information:
223-10 NOTIFICATION OF DISPOSITION OF COLLATERAL
223-11 To: ____________ (Name of debtor, obligor, or
223-12 other person to which the notification is sent
223-13 From: ____________ (Name, address, and telephone
223-14 number of secured party
223-15 Name of Debtor(s): ____________ (Include only if
223-16 debtor(s) are not an addressee
223-17 (For a public disposition:
223-18 We will sell (or lease or license, as applicable)
223-19 the (describe collateral) (to the highest qualified
223-20 bidder) in public as follows:
223-21 Day and Date: _______________________
223-22 Time: _______________________
223-23 Place: _______________________
223-24 (For a private disposition:
223-25 We will sell (or lease or license, as applicable)
223-26 the __________________ (describe collateral) privately
223-27 sometime after _____________ (day and date).
224-1 You are entitled to an accounting of the unpaid
224-2 indebtedness secured by the property that we intend to
224-3 sell (or lease or license, as applicable) (for a charge
224-4 of $______). You may request an accounting by calling
224-5 us at _________ (telephone number).
224-6 Sec. 9.614. CONTENTS AND FORM OF NOTIFICATION BEFORE
224-7 DISPOSITION OF COLLATERAL: CONSUMER-GOODS TRANSACTION. In a
224-8 consumer-goods transaction, the following rules apply:
224-9 (1) A notification of disposition must provide the
224-10 following information:
224-11 (A) the information specified in Section
224-12 9.613(1);
224-13 (B) a description of any liability for a
224-14 deficiency of the person to which the notification is sent;
224-15 (C) a telephone number from which the amount
224-16 that must be paid to the secured party to redeem the collateral
224-17 under Section 9.623 is available; and
224-18 (D) a telephone number or mailing address from
224-19 which additional information concerning the disposition and the
224-20 obligation secured is available.
224-21 (2) A particular phrasing of the notification is not
224-22 required.
224-23 (3) The following form of notification, when
224-24 completed, provides sufficient information:
224-25 _________________ (Name and address of secured party
224-26 __________ (Date
224-27 NOTICE OF OUR PLAN TO SELL PROPERTY
225-1 _______ (Name and address of any obligor who is also a
225-2 debtor
225-3 Subject: _________ (Identification of Transaction
225-4 We have your ___________ (describe collateral), because
225-5 you broke promises in our agreement.
225-6 (For a public disposition:
225-7 We will sell ___________ (describe collateral) at
225-8 public sale. A sale could include a lease or license.
225-9 The sale will be held as follows:
225-10 Date: __________________________
225-11 Time: __________________________
225-12 Place: __________________________
225-13 You may attend the sale and bring bidders if you want.
225-14 (For a private disposition:
225-15 We will sell __________ (describe collateral) at
225-16 private sale sometime after ______ (date). A sale
225-17 could include a lease or license.
225-18 The money that we get from the sale (after paying our
225-19 costs) will reduce the amount you owe. If we get less
225-20 money than you owe, you _______ (will or will not, as
225-21 applicable) still owe us the difference. If we get
225-22 more money than you owe, you will get the extra money,
225-23 unless we must pay it to someone else.
225-24 You can get the property back at any time before we
225-25 sell it by paying us the full amount you owe (not just
225-26 the past due payments), including our expenses. To
225-27 learn the exact amount you must pay, call us at
226-1 ______ (telephone number).
226-2 If you want us to explain to you in writing how
226-3 we have figured the amount that you owe us, you may
226-4 call us at ________ (telephone number) (or write us
226-5 at ______ (secured party's address) ______) and request
226-6 a written explanation. (We will charge you $______ for
226-7 the explanation if we sent you another written
226-8 explanation of the amount you owe us within the last
226-9 six months.
226-10 If you need more information about the sale call us
226-11 at _______ (telephone number) (or write us at _______
226-12 (secured party's address) _____).
226-13 We are sending this notice to the following other
226-14 people who have an interest in ______ (describe
226-15 collateral) or who owe money under your agreement:
226-16 _______ (Names of all other debtors and obligors, if
226-17 any
226-18 (4) A notification in the form of Subdivision (3) is
226-19 sufficient, even if additional information appears at the end of
226-20 the form.
226-21 (5) A notification in the form of Subdivision (3) is
226-22 sufficient, even if it includes errors in information not required
226-23 by Subdivision (1), unless the error is misleading with respect to
226-24 rights arising under this chapter.
226-25 (6) If a notification under this section is not in the
226-26 form of Subdivision (3), law other than this chapter determines the
226-27 effect of including information not required by Subdivision (1).
227-1 Sec. 9.615. APPLICATION OF PROCEEDS OF DISPOSITION;
227-2 LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS. (a) A secured
227-3 party shall apply or pay over for application the cash proceeds of
227-4 disposition in the following order to:
227-5 (1) the reasonable expenses of retaking, holding,
227-6 preparing for disposition, processing, and disposing and, to the
227-7 extent provided for by agreement and not prohibited by law,
227-8 reasonable attorney's fees and legal expenses incurred by the
227-9 secured party;
227-10 (2) the satisfaction of obligations secured by the
227-11 security interest or agricultural lien under which the disposition
227-12 is made;
227-13 (3) the satisfaction of obligations secured by any
227-14 subordinate security interest in or other subordinate lien on the
227-15 collateral if:
227-16 (A) the secured party receives from the holder
227-17 of the subordinate security interest or other lien an authenticated
227-18 demand for proceeds before distribution of the proceeds is
227-19 completed; and
227-20 (B) in a case in which a consignor has an
227-21 interest in the collateral, the subordinate security interest or
227-22 other lien is senior to the interest of the consignor; and
227-23 (4) a secured party that is a consignor of the
227-24 collateral if the secured party receives from the consignor an
227-25 authenticated demand for proceeds before distribution of the
227-26 proceeds is completed.
227-27 (b) If requested by a secured party, a holder of a
228-1 subordinate security interest or other lien shall furnish
228-2 reasonable proof of the interest or lien within a reasonable time.
228-3 Unless the holder does so, the secured party need not comply with
228-4 the holder's demand under Subsection (a)(3).
228-5 (c) A secured party need not apply or pay over for
228-6 application noncash proceeds of disposition under this section
228-7 unless the failure to do so would be commercially unreasonable. A
228-8 secured party that applies or pays over for application noncash
228-9 proceeds shall do so in a commercially reasonable manner.
228-10 (d) If the security interest under which a disposition is
228-11 made secures payment or performance of an obligation, after making
228-12 the payments and applications required by Subsection (a) and
228-13 permitted by Subsection (c):
228-14 (1) unless Subsection (a)(4) requires the secured
228-15 party to apply or pay over cash proceeds to a consignor, the
228-16 secured party shall account to and pay a debtor for any surplus;
228-17 and
228-18 (2) the obligor is liable for any deficiency.
228-19 (e) If the underlying transaction is a sale of accounts,
228-20 chattel paper, payment intangibles, or promissory notes:
228-21 (1) the debtor is not entitled to any surplus; and
228-22 (2) the obligor is not liable for any deficiency.
228-23 (f) The surplus or deficiency following a disposition is
228-24 calculated based on the amount of proceeds that would have been
228-25 realized in a disposition complying with this subchapter to a
228-26 transferee other than the secured party, a person related to the
228-27 secured party, or a secondary obligor if:
229-1 (1) the transferee in the disposition is the secured
229-2 party, a person related to the secured party, or a secondary
229-3 obligor; and
229-4 (2) the amount of proceeds of the disposition is
229-5 significantly below the range of proceeds that a complying
229-6 disposition to a person other than the secured party, a person
229-7 related to the secured party, or a secondary obligor would have
229-8 brought.
229-9 (g) A secured party that receives cash proceeds of a
229-10 disposition in good faith and without knowledge that the receipt
229-11 violates the rights of the holder of a security interest or other
229-12 lien that is not subordinate to the security interest or
229-13 agricultural lien under which the disposition is made:
229-14 (1) takes the cash proceeds free of the security
229-15 interest or other lien;
229-16 (2) is not obligated to apply the proceeds of the
229-17 disposition to the satisfaction of obligations secured by the
229-18 security interest or other lien; and
229-19 (3) is not obligated to account to or pay the holder
229-20 of the security interest or other lien for any surplus.
229-21 Sec. 9.616. EXPLANATION OF CALCULATION OF SURPLUS OR
229-22 DEFICIENCY. (a) In this section:
229-23 (1) "Explanation" means a writing that:
229-24 (A) states the amount of the surplus or
229-25 deficiency;
229-26 (B) provides an explanation in accordance with
229-27 Subsection (c) of how the secured party calculated the surplus or
230-1 deficiency;
230-2 (C) states, if applicable, that future debits,
230-3 credits, charges, including additional credit service charges or
230-4 interest, rebates, and expenses may affect the amount of the
230-5 surplus or deficiency; and
230-6 (D) provides a telephone number or mailing
230-7 address from which additional information concerning the
230-8 transaction is available.
230-9 (2) "Request" means a record:
230-10 (A) authenticated by a debtor or consumer
230-11 obligor;
230-12 (B) requesting that the recipient provide an
230-13 explanation; and
230-14 (C) sent after disposition of the collateral
230-15 under Section 9.610.
230-16 (b) In a consumer-goods transaction in which the debtor is
230-17 entitled to a surplus or a consumer obligor is liable for a
230-18 deficiency under Section 9.615, the secured party shall:
230-19 (1) send an explanation to the debtor or consumer
230-20 obligor, as applicable, after the disposition and:
230-21 (A) before or when the secured party accounts to
230-22 the debtor and pays any surplus or first makes written demand on
230-23 the consumer obligor after the disposition for payment of the
230-24 deficiency; and
230-25 (B) within 14 days after receipt of a request;
230-26 or
230-27 (2) in the case of a consumer obligor who is liable
231-1 for a deficiency, within 14 days after receipt of a request, send
231-2 to the consumer obligor a record waiving the secured party's right
231-3 to a deficiency.
231-4 (c) To comply with Subsection (a)(1)(B), a writing must
231-5 provide the following information in the following order:
231-6 (1) the aggregate amount of obligations secured by the
231-7 security interest under which the disposition was made and, if the
231-8 amount reflects a rebate of unearned interest or credit service
231-9 charge, an indication of that fact, calculated as of a specified
231-10 date:
231-11 (A) if the secured party takes or receives
231-12 possession of the collateral after default, not more than 35 days
231-13 before the secured party takes or receives possession; or
231-14 (B) if the secured party takes or receives
231-15 possession of the collateral before default or does not take
231-16 possession of the collateral, not more than 35 days before the
231-17 disposition;
231-18 (2) the amount of proceeds of the disposition;
231-19 (3) the aggregate amount of the obligations after
231-20 deducting the amount of proceeds;
231-21 (4) the amount, in the aggregate or by type, and types
231-22 of expenses, including expenses of retaking, holding, preparing for
231-23 disposition, processing, and disposing of the collateral, and
231-24 attorney's fees secured by the collateral which are known to the
231-25 secured party and relate to the current disposition;
231-26 (5) the amount, in the aggregate or by type, and types
231-27 of credits, including rebates of interest or credit service
232-1 charges, to which the obligor is known to be entitled and which are
232-2 not reflected in the amount in Subdivision (1); and
232-3 (6) the amount of the surplus or deficiency.
232-4 (d) A particular phrasing of the explanation is not
232-5 required. An explanation complying substantially with the
232-6 requirements of Subsection (a) is sufficient, even if it includes
232-7 minor errors that are not seriously misleading.
232-8 (e) A debtor or consumer obligor is entitled without charge
232-9 to one response to a request under this section during any
232-10 six-month period in which the secured party did not send to the
232-11 debtor or consumer obligor an explanation pursuant to Subsection
232-12 (b)(1). The secured party may require payment of a charge not
232-13 exceeding $25 for each additional response.
232-14 Sec. 9.617. RIGHTS OF TRANSFEREE OF COLLATERAL. (a) A
232-15 secured party's disposition of collateral [(d) When collateral is
232-16 disposed of by a secured party] after default:
232-17 (1)[, the disposition] transfers to a transferee
232-18 [purchaser] for value all of the debtor's rights in the collateral;
232-19 (2) [therein,] discharges the security interest under
232-20 which the disposition [it] is made; and
232-21 (3) discharges any subordinate security interest or
232-22 other subordinate lien [subordinate thereto].
232-23 (b) A transferee that acts in good faith [The purchaser]
232-24 takes free of the [all such] rights and interests described in
232-25 Subsection (a), even if [though] the secured party fails to comply
232-26 with [the requirements of] this chapter [subchapter] or the
232-27 requirements of any judicial proceeding [proceedings]
233-1 [(1) in the case of a public sale, if the purchaser
233-2 has no knowledge of any defects in the sale and if he does not buy
233-3 in collusion with the secured party, other bidders or the person
233-4 conducting the sale; or]
233-5 [(2) in any other case, if the purchaser acts in good
233-6 faith.]
233-7 [(e) A person who is liable to a secured party under a
233-8 guaranty, indorsement, repurchase agreement or the like and who
233-9 receives a transfer of collateral from the secured party or is
233-10 subrogated to his rights has thereafter the rights and duties of
233-11 the secured party. Such a transfer of collateral is not a sale or
233-12 disposition of the collateral under this chapter].
233-13 (c) If a transferee does not take free of the rights and
233-14 interests described in Subsection (a), the transferee takes the
233-15 collateral subject to:
233-16 (1) the debtor's rights in the collateral;
233-17 (2) the security interest or agricultural lien under
233-18 which the disposition is made; and
233-19 (3) any other security interest or other lien.
233-20 Sec. 9.618. RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS.
233-21 (a) A secondary obligor acquires the rights and becomes obligated
233-22 to perform the duties of the secured party after the secondary
233-23 obligor:
233-24 (1) receives an assignment of a secured obligation
233-25 from the secured party;
233-26 (2) receives a transfer of collateral from the secured
233-27 party and agrees to accept the rights and assume the duties of the
234-1 secured party; or
234-2 (3) is subrogated to the rights of a secured party
234-3 with respect to collateral.
234-4 (b) An assignment, transfer, or subrogation described in
234-5 Subsection (a):
234-6 (1) is not a disposition of collateral under Section
234-7 9.610; and
234-8 (2) relieves the secured party of further duties under
234-9 this chapter.
234-10 Sec. 9.619. TRANSFER OF RECORD OR LEGAL TITLE. (a) In this
234-11 section, "transfer statement" means a record authenticated by a
234-12 secured party stating:
234-13 (1) that the debtor has defaulted in connection with
234-14 an obligation secured by specified collateral;
234-15 (2) that the secured party has exercised its
234-16 post-default remedies with respect to the collateral;
234-17 (3) that, by reason of the exercise, a transferee has
234-18 acquired the rights of the debtor in the collateral; and
234-19 (4) the name and mailing address of the secured party,
234-20 debtor, and transferee.
234-21 (b) A transfer statement entitles the transferee to the
234-22 transfer of record of all rights of the debtor in the collateral
234-23 specified in the statement in any official filing, recording,
234-24 registration, or certificate-of-title system covering the
234-25 collateral. If a transfer statement is presented with the
234-26 applicable fee and request form to the official or office
234-27 responsible for maintaining the system, the official or office
235-1 shall:
235-2 (1) accept the transfer statement;
235-3 (2) promptly amend its records to reflect the
235-4 transfer; and
235-5 (3) if applicable, issue a new appropriate certificate
235-6 of title in the name of the transferee.
235-7 (c) A transfer of the record or legal title to collateral to
235-8 a secured party under Subsection (b) or otherwise is not of itself
235-9 a disposition of collateral under this chapter and does not of
235-10 itself relieve the secured party of its duties under this chapter.
235-11 Sec. 9.620 [9.505]. [COMPULSORY DISPOSITION OF COLLATERAL;]
235-12 ACCEPTANCE OF [THE] COLLATERAL IN FULL OR PARTIAL SATISFACTION [AS
235-13 DISCHARGE] OF OBLIGATION; COMPULSORY DISPOSITION OF COLLATERAL.
235-14 (a) Except as otherwise provided in Subsection (g), a secured
235-15 party may accept collateral in full or partial satisfaction of the
235-16 obligation it secures only if:
235-17 (1) the debtor consents to the acceptance under
235-18 Subsection (c);
235-19 (2) the secured party does not receive, within the
235-20 time set forth in Subsection (d), a notification of objection to
235-21 the proposal authenticated by:
235-22 (A) a person to which the secured party was
235-23 required to send a proposal under Section 9.621; or
235-24 (B) any other person, other than the debtor,
235-25 holding an interest in the collateral subordinate to the security
235-26 interest that is the subject of the proposal;
235-27 (3) if the collateral is consumer goods, the
236-1 collateral is not in the possession of the debtor when the debtor
236-2 consents to the acceptance; and
236-3 (4) Subsection (e) does not require the secured party
236-4 to dispose of the collateral or the debtor waives the requirement
236-5 pursuant to Section 9.624.
236-6 (b) A purported or apparent acceptance of collateral under
236-7 this section is ineffective unless:
236-8 (1) the secured party consents to the acceptance in an
236-9 authenticated record or sends a proposal to the debtor; and
236-10 (2) the conditions of Subsection (a) are met.
236-11 (c) For purposes of this section:
236-12 (1) a debtor consents to an acceptance of collateral
236-13 in partial satisfaction of the obligation it secures only if the
236-14 debtor agrees to the terms of the acceptance in a record
236-15 authenticated after default; and
236-16 (2) a debtor consents to an acceptance of collateral
236-17 in full satisfaction of the obligation it secures only if the
236-18 debtor agrees to the terms of the acceptance in a record
236-19 authenticated after default or the secured party:
236-20 (A) sends to the debtor after default a proposal
236-21 that is unconditional or subject only to a condition that
236-22 collateral not in the possession of the secured party be preserved
236-23 or maintained;
236-24 (B) in the proposal, proposes to accept
236-25 collateral in full satisfaction of the obligation it secures; and
236-26 (C) does not receive a notification of objection
236-27 authenticated by the debtor within 20 days after the proposal is
237-1 sent.
237-2 (d) To be effective under Subsection (a)(2), a notification
237-3 of objection must be received by the secured party:
237-4 (1) in the case of a person to which the proposal was
237-5 sent pursuant to Section 9.621, within 20 days after notification
237-6 was sent to that person; and
237-7 (2) in other cases:
237-8 (A) within 20 days after the last notification
237-9 was sent pursuant to Section 9.621; or
237-10 (B) if a notification was not sent, before the
237-11 debtor consents to the acceptance under Subsection (c).
237-12 (e) A secured party that has taken possession of collateral
237-13 shall dispose of the collateral pursuant to Section 9.610 within
237-14 the time specified in Subsection (f) if:
237-15 (1) 60 percent [If the debtor has paid sixty per cent]
237-16 of the cash price has been paid in the case of a purchase-money
237-17 [purchase money] security interest in consumer goods; or
237-18 (2) 60 percent of the principal amount of the
237-19 obligation secured has been paid in the case of a
237-20 non-purchase-money [sixty per cent of the loan in the case of
237-21 another] security interest in consumer goods[, and has not signed
237-22 after default a statement renouncing or modifying his rights under
237-23 this subchapter a secured party who has taken possession of
237-24 collateral must dispose of it under Section 9.504 and if he fails
237-25 to do so within ninety days after he takes possession the debtor at
237-26 his option may recover in conversion or under Section 9.507(a) on
237-27 secured party's liability].
238-1 (f) To comply with Subsection (e), the secured party shall
238-2 dispose of the collateral:
238-3 (1) within 90 days after taking possession; or
238-4 (2) within any longer period to which the debtor and
238-5 all secondary obligors have agreed in an agreement to that effect
238-6 entered into and authenticated after default.
238-7 (g) In a consumer transaction, a secured party may not
238-8 accept collateral in partial satisfaction of the obligation it
238-9 secures.
238-10 Sec. 9.621. NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL.
238-11 (a) A secured party that desires to accept [(b) In any other case
238-12 involving consumer goods or any other collateral a secured party in
238-13 possession may, after default, propose to retain the] collateral in
238-14 full or partial satisfaction of the obligation it secures shall
238-15 send its proposal to:
238-16 (1) any person from which the secured party has
238-17 received, before the debtor consented to the acceptance, an
238-18 authenticated notification of a claim of an interest in the
238-19 collateral;
238-20 (2) any other secured party or lienholder that, 10
238-21 days before the debtor consented to the acceptance, held a security
238-22 interest in or other lien on the collateral perfected by the filing
238-23 of a financing statement that:
238-24 (A) identified the collateral;
238-25 (B) was indexed under the debtor's name as of
238-26 that date; and
238-27 (C) was filed in the office or offices in which
239-1 to file a financing statement against the debtor covering the
239-2 collateral as of that date; and
239-3 (3) any other secured party that, 10 days before the
239-4 debtor consented to the acceptance, held a security interest in the
239-5 collateral perfected by compliance with a statute, regulation, or
239-6 treaty described in Section 9.311(a).
239-7 (b) A secured party that desires to accept collateral in
239-8 partial satisfaction of the obligation it secures shall send its
239-9 proposal to any secondary obligor in addition to the persons
239-10 described in Subsection (a).
239-11 Sec. 9.622. EFFECT OF ACCEPTANCE OF COLLATERAL. (a) A
239-12 secured party's acceptance of collateral in full or partial
239-13 satisfaction of the obligation it secures:
239-14 (1) discharges the obligation to the extent consented
239-15 to by the debtor;
239-16 (2) transfers to the secured party all of a debtor's
239-17 rights in the collateral;
239-18 (3) discharges the security interest or agricultural
239-19 lien that is the subject of the debtor's consent and any
239-20 subordinate security interest or other subordinate lien; and
239-21 (4) terminates any other subordinate interest.
239-22 (b) A subordinate interest is discharged or terminated under
239-23 Subsection (a), even if the secured party fails to comply with this
239-24 article. [Written notice of such proposal shall be sent to the
239-25 debtor if he has not signed after default a statement renouncing or
239-26 modifying his rights under this subsection. In the case of
239-27 consumer goods no other notice need be given. In other cases
240-1 notice shall be given to any other secured party who has a security
240-2 interest in the same collateral and who has duly filed in the
240-3 office of the Secretary of State or the County Clerk in the proper
240-4 county in this state a financing statement indexed in the name of
240-5 the debtor or from whom the secured party has received (before
240-6 sending his notice to the debtor or before the debtor's
240-7 renunciation of his rights) written notice of a claim of an
240-8 interest in the collateral. If the secured party receives
240-9 objection in writing from a person entitled to receive notification
240-10 within twenty-one days after the notice was sent, the secured party
240-11 must dispose of the collateral under Section 9.504. In the absence
240-12 of such written objection the secured party may retain the
240-13 collateral in satisfaction of the debtor's obligation.]
240-14 Sec. 9.623 [9.506]. [DEBTOR'S RIGHT] RIGHT TO REDEEM
240-15 COLLATERAL. (a) A [At any time before the secured party has
240-16 disposed of collateral or entered into a contract for its
240-17 disposition under Section 9.504 or before the obligation has been
240-18 discharged under Section 9.505(b) the] debtor, any secondary
240-19 obligor, or any other secured party or lienholder may [unless
240-20 otherwise agreed in writing after default] redeem [the]
240-21 collateral.
240-22 (b) To redeem collateral, a person shall tender:
240-23 (1) [by tendering] fulfillment of all obligations
240-24 secured by the collateral; and
240-25 (2) [as well as] the reasonable expenses and
240-26 [reasonably incurred by the secured party in retaking, holding and
240-27 preparing the collateral for disposition, in arranging for the
241-1 sale, and to the extent provided in the agreement and not
241-2 prohibited by law, his reasonable] attorneys' fees described in
241-3 Section 9.615(a)(1) [and legal expenses].
241-4 (c) A redemption may occur at any time before a secured
241-5 party:
241-6 (1) has collected collateral under Section 9.607;
241-7 (2) has disposed of collateral or entered into a
241-8 contract for its disposition under Section 9.610; or
241-9 (3) has accepted collateral in full or partial
241-10 satisfaction of the obligation it secures under Section 9.622.
241-11 Sec. 9.624. WAIVER. (a) A debtor or secondary obligor may
241-12 waive the right to notification of disposition of collateral under
241-13 Section 9.611 only by an agreement to that effect entered into and
241-14 authenticated after default.
241-15 (b) A debtor may waive the right to require disposition of
241-16 collateral under Section 9.620(e) only by an agreement to that
241-17 effect entered into and authenticated after default.
241-18 (c) Except in a consumer-goods transaction, a debtor or
241-19 secondary obligor may waive the right to redeem collateral under
241-20 Section 9.623 only by an agreement to that effect entered into and
241-21 authenticated after default.
241-22 Sec. 9.625 [9.507]. REMEDIES FOR SECURED PARTY'S [LIABILITY
241-23 FOR] FAILURE TO COMPLY WITH CHAPTER [THIS SUBCHAPTER]. (a) If it
241-24 is established that a secured party is not proceeding in accordance
241-25 with [the provisions of] this chapter, a court may order or
241-26 restrain collection, enforcement, or disposition of collateral
241-27 [subchapter disposition may be ordered or restrained] on
242-1 appropriate terms and conditions.
242-2 (b) Subject to Subsections (c), (d), and (f), a person is
242-3 liable for damages in the amount of [If the disposition has
242-4 occurred the debtor or any person entitled to notification or
242-5 whose security interest has been made known to the secured party
242-6 prior to the disposition has a right to recover from the secured
242-7 party] any loss caused by a failure to comply with [the provisions
242-8 of] this chapter [subchapter]. Loss caused by a failure to comply
242-9 with a request under Section 9.210 may include loss resulting from
242-10 the debtor's inability to obtain, or increased costs of,
242-11 alternative financing.
242-12 (c) Except as otherwise provided in Section 9.628:
242-13 (1) a person that, at the time of the failure, was a
242-14 debtor, was an obligor, or held a security interest in or other
242-15 lien on the collateral may recover damages under Subsection (b) for
242-16 its loss; and
242-17 (2) if [If] the collateral is consumer goods, a person
242-18 that was a [the] debtor or a secondary obligor at the time a
242-19 secured party failed to comply with this subchapter may [has a
242-20 right to] recover for that failure in any event an amount not less
242-21 than the credit service charge plus 10 percent [ten per cent] of
242-22 the principal amount of the obligation [debt] or the time price
242-23 differential plus 10 percent [ten per cent] of the cash price.
242-24 (d) A debtor whose deficiency is eliminated under Section
242-25 9.626 may recover damages for the loss of any surplus. However, a
242-26 debtor or secondary obligor whose deficiency is eliminated or
242-27 reduced under Section 9.626 may not otherwise recover under
243-1 Subsection (b) for noncompliance with the provisions of this
243-2 subchapter relating to collection, enforcement, disposition, or
243-3 acceptance.
243-4 (e) In addition to any damages recoverable under Subsection
243-5 (b), the debtor, consumer obligor, or person named as a debtor in a
243-6 filed record, as applicable, may recover $500 in each case from a
243-7 person that:
243-8 (1) fails to comply with Section 9.208;
243-9 (2) fails to comply with Section 9.209;
243-10 (3) files a record that the person is not entitled to
243-11 file under Section 9.509(a);
243-12 (4) fails to cause the secured party of record to file
243-13 or send a termination statement as required by Section 9.513(a) or
243-14 (c);
243-15 (5) fails to comply with Section 9.616(b)(1) and whose
243-16 failure is part of a pattern, or consistent with a practice, of
243-17 noncompliance; or
243-18 (6) fails to comply with Section 9.616(b)(2).
243-19 (f) A debtor or consumer obligor may recover damages under
243-20 Subsection (b) and, in addition, $500 in each case from a person
243-21 that, without reasonable cause, fails to comply with a request
243-22 under Section 9.210. A recipient of a request under Section 9.210
243-23 that never claimed an interest in the collateral or obligations
243-24 that are the subject of a request under that section has a
243-25 reasonable excuse for failure to comply with the request within the
243-26 meaning of this subsection.
243-27 (g) If a secured party fails to comply with a request
244-1 regarding a list of collateral or a statement of account under
244-2 Section 9.210, the secured party may claim a security interest only
244-3 as shown in the statement included in the request as against a
244-4 person that is reasonably misled by the failure.
244-5 Sec. 9.626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN
244-6 ISSUE. (a) In an action arising from a transaction, other than a
244-7 consumer transaction, in which the amount of a deficiency or
244-8 surplus is in issue, the following rules apply:
244-9 (1) A secured party need not prove compliance with the
244-10 provisions of this subchapter relating to collection, enforcement,
244-11 disposition, or acceptance unless the debtor or a secondary obligor
244-12 places the secured party's compliance in issue.
244-13 (2) If the secured party's compliance is placed in
244-14 issue, the secured party has the burden of establishing that the
244-15 collection, enforcement, disposition, or acceptance was conducted
244-16 in accordance with this subchapter.
244-17 (3) Except as otherwise provided in Section 9.628, if
244-18 a secured party fails to prove that the collection, enforcement,
244-19 disposition, or acceptance was conducted in accordance with the
244-20 provisions of this subchapter relating to collection, enforcement,
244-21 disposition, or acceptance, the liability of a debtor or a
244-22 secondary obligor for a deficiency is limited to an amount by which
244-23 the sum of the secured obligation, expenses, and attorney's fees
244-24 exceeds the greater of:
244-25 (A) the proceeds of the collection, enforcement,
244-26 disposition, or acceptance; or
244-27 (B) the amount of proceeds that would have been
245-1 realized had the noncomplying secured party proceeded in accordance
245-2 with the provisions of this subchapter relating to collection,
245-3 enforcement, disposition, or acceptance.
245-4 (4) For purposes of Subdivision (3)(B), the amount of
245-5 proceeds that would have been realized is equal to the sum of the
245-6 secured obligation, expenses, and attorney's fees unless the
245-7 secured party proves that the amount is less than that sum.
245-8 (5) If a deficiency or surplus is calculated under
245-9 Section 9.615(f), the debtor or obligor has the burden of
245-10 establishing that the amount of proceeds of the disposition is
245-11 significantly below the range of prices that a complying
245-12 disposition to a person other than the secured party, a person
245-13 related to the secured party, or a secondary obligor would have
245-14 brought.
245-15 (b) The limitation of the rules in Subsection (a) to
245-16 transactions other than consumer transactions is intended to leave
245-17 to the court the determination of the proper rules in consumer
245-18 transactions. The court may not infer from that limitation the
245-19 nature of the proper rule in consumer transactions and may continue
245-20 to apply established approaches.
245-21 Sec. 9.627. DETERMINATION OF WHETHER CONDUCT WAS
245-22 COMMERCIALLY REASONABLE. (a) [(b)] The fact that a greater amount
245-23 [better price] could have been obtained by a collection,
245-24 enforcement, disposition, or acceptance [sale] at a different time
245-25 or in a different method from that selected by the secured party is
245-26 not of itself sufficient to preclude the secured party from
245-27 establishing [establish] that the collection, enforcement,
246-1 disposition, or acceptance [sale] was [not] made in a commercially
246-2 reasonable manner.
246-3 (b) A disposition of collateral is made in a commercially
246-4 reasonable manner if the disposition is made:
246-5 (1) [If the secured party either sells the collateral]
246-6 in the usual manner on [in] any recognized market;
246-7 (2) [therefor or if he sells] at the price current in
246-8 any recognized [such] market at the time of the disposition; [his
246-9 sale] or
246-10 (3) [if he has] otherwise in conformity with
246-11 reasonable commercial practices among dealers in the type of
246-12 property that was the subject of the disposition.
246-13 (c) A collection, enforcement, disposition, or acceptance is
246-14 commercially reasonable if it [sold he has sold in a commercially
246-15 reasonable manner. The principles stated in the two preceding
246-16 sentences with respect to sales also apply as may be appropriate to
246-17 other types of disposition. A disposition which] has been
246-18 approved:
246-19 (1) in a [any] judicial proceeding;
246-20 (2) [or] by a [any] bona fide creditors' committee;
246-21 (3) by a [or] representative of creditors; or
246-22 (4) by an assignee for the benefit of creditors.
246-23 (d) Approval under Subsection (c) need not be obtained, and
246-24 lack of approval does not mean that the collection, enforcement,
246-25 disposition, or acceptance [shall conclusively be deemed to be
246-26 commercially reasonable, but this sentence does not indicate that
246-27 any such approval must be obtained in any case nor does it indicate
247-1 that any disposition not so approved] is not commercially
247-2 reasonable.
247-3 Sec. 9.628. NONLIABILITY AND LIMITATION ON LIABILITY OF
247-4 SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR. (a) Unless a
247-5 secured party knows that a person is a debtor or obligor, knows the
247-6 identity of the person, and knows how to communicate with the
247-7 person:
247-8 (1) the secured party is not liable to the person, or
247-9 to a secured party or lienholder that has filed a financing
247-10 statement against the person, for failure to comply with this
247-11 chapter; and
247-12 (2) the secured party's failure to comply with this
247-13 chapter does not affect the liability of the person for a
247-14 deficiency.
247-15 (b) A secured party is not liable because of its status as
247-16 secured party:
247-17 (1) to a person that is a debtor or obligor, unless
247-18 the secured party knows:
247-19 (A) that the person is a debtor or obligor;
247-20 (B) the identity of the person; and
247-21 (C) how to communicate with the person; or
247-22 (2) to a secured party or lienholder that has filed a
247-23 financing statement against a person, unless the secured party
247-24 knows:
247-25 (A) that the person is a debtor; and
247-26 (B) the identity of the person.
247-27 (c) A secured party is not liable to any person, and a
248-1 person's liability for a deficiency is not affected, because of any
248-2 act or omission arising out of the secured party's reasonable
248-3 belief that a transaction is not a consumer-goods transaction or a
248-4 consumer transaction or that goods are not consumer goods, if the
248-5 secured party's belief is based on its reasonable reliance on:
248-6 (1) a debtor's representation concerning the purpose
248-7 for which collateral was to be used, acquired, or held; or
248-8 (2) an obligor's representation concerning the purpose
248-9 for which a secured obligation was incurred.
248-10 (d) A secured party is not liable to any person under
248-11 Section 9.625(c)(2) for its failure to comply with Section 9.616.
248-12 (e) A secured party is not liable under Section 9.625(c)(2)
248-13 more than once with respect to any one secured obligation.
248-14 ARTICLE 2. CONFORMING AMENDMENTS
248-15 SECTION 2.01. Section 128.015(a), Agriculture Code, is
248-16 amended to read as follows:
248-17 (a) The notice of claim of lien must be filed on a form that
248-18 satisfies the requirements of a financing statement under Sections
248-19 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
248-20 (1) the lien claimant may be identified either as a
248-21 lien claimant or as a secured party;
248-22 (2) the form must be signed by the lien claimant and
248-23 is not required to be signed by the lien debtor; and
248-24 (3) in the space for the description of the
248-25 collateral, the information specified in Sections 128.013(3), (4),
248-26 (5), and (7) must be entered.
248-27 SECTION 2.02. Section 128.016, Agriculture Code, is amended
249-1 to read as follows:
249-2 Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
249-3 STATE; FEE. (a) The notice of claim of lien shall be filed and
249-4 marked in the office of the secretary of state in the same manner
249-5 as a financing statement is filed and marked under Section 9.519
249-6 [9.403], Business & Commerce Code.
249-7 (b) The uniform fee for filing and indexing and for stamping
249-8 a copy furnished by the secured party is the same as the fee
249-9 assessed under Section 9.525 [9.403], Business & Commerce Code.
249-10 SECTION 2.03. Section 128.018, Agriculture Code, is amended
249-11 to read as follows:
249-12 Sec. 128.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
249-13 The secretary of state shall recognize a notice of claim of lien
249-14 under this subchapter as a financing statement under Subchapter E,
249-15 Chapter 9 [Section 9.402], Business & Commerce Code.
249-16 SECTION 2.04. Section 128.038(e), Agriculture Code, is
249-17 amended to read as follows:
249-18 (e) The uniform filing fee for filing and indexing the
249-19 termination statement is the same as the fee assessed under Section
249-20 9.525 [9.404(c)], Business & Commerce Code.
249-21 SECTION 2.05. Section 128.039(b), Agriculture Code, is
249-22 amended to read as follows:
249-23 (b) The lienholder shall file a statement of assignment with
249-24 the secretary of state as provided by Section 9.514 [9.405],
249-25 Business & Commerce Code.
249-26 SECTION 2.06. Section 188.015(a), Agriculture Code, is
249-27 amended to read as follows:
250-1 (a) The notice of claim of lien must be filed on a form that
250-2 satisfies the requirements of a financing statement under Sections
250-3 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
250-4 (1) the lien claimant may be identified either as a
250-5 lien claimant or as a secured party;
250-6 (2) the form must be signed by the lien claimant and
250-7 is not required to be signed by the lien debtor; and
250-8 (3) in the space for the description of the
250-9 collateral, the information specified in Sections 188.013(3), (4),
250-10 (5), and (7) must be entered.
250-11 SECTION 2.07. Section 188.016, Agriculture Code, is amended
250-12 to read as follows:
250-13 Sec. 188.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
250-14 STATE; FEE. (a) The notice of claim of lien shall be filed and
250-15 marked in the office of the secretary of state in the same manner
250-16 as a financing statement is filed and marked under Section 9.519
250-17 [9.403], Business & Commerce Code.
250-18 (b) The uniform fee for filing and indexing and for stamping
250-19 a copy furnished by the secured party is the same as the fee
250-20 assessed under Section 9.525 [9.403], Business & Commerce Code.
250-21 SECTION 2.08. Section 188.018, Agriculture Code, is amended
250-22 to read as follows:
250-23 Sec. 188.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
250-24 The secretary of state shall recognize a notice of claim of lien
250-25 under this subchapter as a financing statement under Subchapter E,
250-26 Chapter 9 [Section 9.402], Business & Commerce Code.
250-27 SECTION 2.09. Section 188.038(e), Agriculture Code, is
251-1 amended to read as follows:
251-2 (e) The uniform filing fee for filing and indexing the
251-3 termination statement is the same as the fee assessed under Section
251-4 9.525 [9.404(c)], Business & Commerce Code.
251-5 SECTION 2.10. Section 188.039(b), Agriculture Code, is
251-6 amended to read as follows:
251-7 (b) The lienholder shall file a statement of assignment with
251-8 the secretary of state as provided by Section 9.514 [9.405],
251-9 Business & Commerce Code.
251-10 SECTION 2.11. Section 1.105(b), Business & Commerce Code, is
251-11 amended to read as follows:
251-12 (b) Where one of the following provisions of this title
251-13 specifies the applicable law, that provision governs and a contrary
251-14 agreement is effective only to the extent permitted by the law
251-15 (including the conflict of laws rules) so specified:
251-16 Rights of creditors against sold goods. Section 2.402.
251-17 Applicability of the chapter on Leases. Sections 2A.105 and
251-18 2A.106.
251-19 Applicability of the chapter on Bank Deposits and
251-20 Collections. Section 4.102.
251-21 Governing law in the chapter on Funds Transfers. Section
251-22 4A.507.
251-23 Applicability of the chapter on Investment Securities.
251-24 Section 8.110.
251-25 Law governing perfection, the effect of perfection or
251-26 nonperfection, and the priority of security interests. Sections
251-27 9.301-9.307. [Perfection provisions of the chapter on Secured
252-1 Transactions. Section 9.103.]
252-2 SECTION 2.12. Sections 1.201(9) and (32), Business &
252-3 Commerce Code, are amended to read as follows:
252-4 (9) "Buyer in ordinary course of business" means a
252-5 person that buys goods [who] in good faith, [and] without knowledge
252-6 that the sale violates [to him is in violation of] the [ownership]
252-7 rights [or security interest] of another person [a third party] in
252-8 the goods, and [buys] in the ordinary course from a person, other
252-9 than a pawnbroker, in the business of selling goods of that kind
252-10 [but does not include a pawnbroker]. A person buys goods in the
252-11 ordinary course if the sale to the person comports with the usual
252-12 or customary practices in the kind of business in which the seller
252-13 is engaged or with the seller's own usual or customary practices.
252-14 A person that sells oil, gas, or other minerals at the wellhead or
252-15 minehead is a person [All persons who sell minerals or the like
252-16 (including oil and gas) at wellhead or minehead shall be deemed to
252-17 be persons] in the business of selling goods of that kind. A buyer
252-18 in ordinary course of business ["Buying"] may buy [be] for cash,
252-19 [or] by exchange of other property, or on secured or unsecured
252-20 credit, and may acquire [includes receiving] goods or documents of
252-21 title under a pre-existing contract for sale [but does not include
252-22 a transfer in bulk or as security for or in total or partial
252-23 satisfaction of a money debt]. Only a buyer that takes possession
252-24 of the goods or has a right to recover the goods from the seller
252-25 under Chapter 2 may be a buyer in ordinary course of business. A
252-26 person that acquires goods in a transfer in bulk or as security for
252-27 or in total or partial satisfaction of a money debt is not a buyer
253-1 in ordinary course of business.
253-2 (32) "Purchase" includes taking by sale, discount,
253-3 negotiation, mortgage, pledge, lien, security interest, issue or
253-4 reissue, gift or any other voluntary transaction creating an
253-5 interest in property.
253-6 SECTION 2.13. Section 1.201(37)(A), Business & Commerce
253-7 Code, is amended to read as follows:
253-8 (A) "Security interest" means an interest in
253-9 personal property or fixtures that [which] secures payment or
253-10 performance of an obligation. [The retention or reservation of
253-11 title by a seller of goods notwithstanding shipment or delivery to
253-12 the buyer (Section 2.401) is limited in effect to a reservation of
253-13 a "security interest."] The term also includes any interest of a
253-14 consignor and a buyer of accounts, [or] chattel paper, a payment
253-15 intangible, or a promissory note in a transaction that [which] is
253-16 subject to Chapter 9. The special property interest of a buyer of
253-17 goods on identification of such goods to a contract for sale under
253-18 Section 2.401 is not a "security interest", but a buyer may also
253-19 acquire a "security interest" by complying with Chapter 9. Except
253-20 as otherwise provided in Section 2.505, the right of a seller or
253-21 lessor of goods under Chapter 2 or 2A to retain or acquire
253-22 possession of the goods is not a "security interest", but a seller
253-23 or lessor may also acquire a "security interest" by complying with
253-24 Chapter 9. The retention or reservation of title by a seller of
253-25 goods notwithstanding shipment or delivery to the buyer (Section
253-26 2.401) is limited in effect to a reservation of a "security
253-27 interest". [Unless a consignment is intended as security,
254-1 reservation of title thereunder is not a "security interest" but a
254-2 consignment in any event is subject to the provisions on
254-3 consignment sales (Section 2.326).]
254-4 SECTION 2.14. Section 2.103(c), Business & Commerce Code, is
254-5 amended to read as follows:
254-6 (c) The following definitions in other chapters apply to
254-7 this chapter:
254-8 "Check".
254-9 Section 3.104.
254-10 "Consignee".
254-11 Section 7.102.
254-12 "Consignor".
254-13 Section 7.102.
254-14 "Consumer goods".
254-15 Section 9.102 [9.109].
254-16 "Dishonor".
254-17 Section 3.502
254-18 [3.507].
254-19 "Draft".
254-20 Section 3.104.
254-21 SECTION 2.15. Sections 2.210(c)-(e), Business & Commerce
254-22 Code, are amended to read as follows:
254-23 (c) The creation, attachment, perfection, or enforcement of
254-24 a security interest in the seller's interest under a contract is
254-25 not a transfer that materially changes the duty of or increases
254-26 materially the burden or risk imposed on the buyer or impairs
254-27 materially the buyer's chance of obtaining return performance
255-1 within the purview of Subsection (b) unless, and then only to the
255-2 extent that, enforcement actually results in a delegation of
255-3 material performance of the seller. Even in that event, the
255-4 creation, attachment, perfection, and enforcement of the security
255-5 interest remain effective, but (i) the seller is liable to the
255-6 buyer for damages caused by the delegation to the extent that the
255-7 damages could not reasonably be prevented by the buyer, and (ii) a
255-8 court having jurisdiction may grant other appropriate relief,
255-9 including cancellation of the contract for sale or an injunction
255-10 against enforcement of the security interest or consummation of the
255-11 enforcement.
255-12 (d) Unless the circumstances indicate the contrary a
255-13 prohibition of assignment of "the contract" is to be construed as
255-14 barring only the delegation to the assignee of the assignor's
255-15 performance.
255-16 (e) [(d)] An assignment of "the contract" or of "all my
255-17 rights under the contract" or an assignment in similar general
255-18 terms is an assignment of rights and unless the language or the
255-19 circumstances (as in an assignment for security) indicate the
255-20 contrary, it is a delegation of performance of the duties of the
255-21 assignor and its acceptance by the assignee constitutes a promise
255-22 by him to perform those duties. This promise is enforceable by
255-23 either the assignor or the other party to the original contract.
255-24 (f) [(e)] The other party may treat any assignment which
255-25 delegates performance as creating reasonable grounds for insecurity
255-26 and may without prejudice to his rights against the assignor demand
255-27 assurances from the assignee (Section 2.609).
256-1 SECTION 2.16. Section 2.326, Business & Commerce Code, is
256-2 amended to read as follows:
256-3 Sec. 2.326. SALE ON APPROVAL AND SALE OR RETURN;
256-4 [CONSIGNMENT SALES AND] RIGHTS OF CREDITORS. (a) Unless otherwise
256-5 agreed, if delivered goods may be returned by the buyer even though
256-6 they conform to the contract, the transaction is
256-7 (1) a "sale on approval" if the goods are delivered
256-8 primarily for use, and
256-9 (2) a "sale or return" if the goods are delivered
256-10 primarily for resale.
256-11 (b) Goods [Except as provided in Subsection (c), goods] held
256-12 on approval are not subject to the claims of the buyer's creditors
256-13 until acceptance; goods held on sale or return are subject to such
256-14 claims while in the buyer's possession.
256-15 (c) [Where goods are delivered to a person for sale and such
256-16 person maintains a place of business at which he deals in goods of
256-17 the kind involved, under a name other than the name of the person
256-18 making delivery, then with respect to claims of creditors of the
256-19 person conducting the business the goods are deemed to be on sale
256-20 or return. The provisions of this subsection are applicable even
256-21 though an agreement purports to reserve title to the person making
256-22 delivery until payment or resale or uses such words as "on
256-23 consignment" or "on memorandum". However, this subsection is not
256-24 applicable if the person making delivery]
256-25 [(1) complies with an applicable law providing for a
256-26 consignor's interest or the like to be evidenced by a sign, or]
256-27 [(2) establishes that the person conducting the
257-1 business is generally known by his creditors to be substantially
257-2 engaged in selling the goods of others, or]
257-3 [(3) complies with the filing provisions of the
257-4 chapter on Secured Transactions (Chapter 9), or]
257-5 [(4) is delivering a work of art subject to the
257-6 Artists' Consignment Act.]
257-7 [(d)] Any "or return" term of a contract for sale is to be
257-8 treated as a separate contract for sale within the statute of
257-9 frauds section of this chapter (Section 2.201) and as contradicting
257-10 the sale aspect of the contract within the provisions of this
257-11 chapter on parol or extrinsic evidence (Section 2.202).
257-12 SECTION 2.17. Section 2.502, Business & Commerce Code, is
257-13 amended to read as follows:
257-14 Sec. 2.502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION,
257-15 FAILURE TO DELIVER, OR INSOLVENCY. (a) Subject to Subsections
257-16 [Subsection] (b) and (c) and even though the goods have not been
257-17 shipped a buyer who has paid a part or all of the price of goods in
257-18 which he has a special property under the provisions of the
257-19 immediately preceding section may on making and keeping good a
257-20 tender of any unpaid portion of their price recover them from the
257-21 seller if:
257-22 (1) in the case of goods bought for personal, family,
257-23 or household purposes, the seller repudiates or fails to deliver as
257-24 required by the contract; or
257-25 (2) in all cases, the seller becomes insolvent within
257-26 ten days after receipt of the first installment on their price.
257-27 (b) The buyer's right to recover the goods under Subsection
258-1 (a)(1) vests upon acquisition of a special property, even if the
258-2 seller had not then repudiated or failed to deliver.
258-3 (c) If the identification creating his special property has
258-4 been made by the buyer he acquires the right to recover the goods
258-5 only if they conform to the contract for sale.
258-6 SECTION 2.18. Section 2.716(c), Business & Commerce Code, is
258-7 amended to read as follows:
258-8 (c) The buyer has a right of replevin for goods identified
258-9 to the contract if after reasonable effort he is unable to effect
258-10 cover for such goods or the circumstances reasonably indicate that
258-11 such effort will be unavailing or if the goods have been shipped
258-12 under reservation and satisfaction of the security interest in them
258-13 has been made or tendered. In the case of goods bought for
258-14 personal, family, or household purposes, the buyer's right of
258-15 replevin vests upon acquisition of a special property, even if the
258-16 seller had not then repudiated or failed to deliver.
258-17 SECTION 2.19. Section 2A.103(c), Business & Commerce Code,
258-18 is amended to read as follows:
258-19 (c) The following definitions in other chapters apply to
258-20 this chapter:
258-21 "Account". Section 9.102(a)(2) [9.106].
258-22 "Between merchants". Section 2.104(c).
258-23 "Buyer". Section 2.103(a)(1).
258-24 "Chattel paper". Section 9.102(a)(11) [9.105(a)(2)].
258-25 "Consumer goods". Section 9.102(a)(23) [9.109(1)].
258-26 "Document". Section 9.102(a)(30) [9.105(a)(6)].
258-27 "Entrusting". Section 2.403(c).
259-1 "General intangible". Section 9.102(a)(42).
259-2 ["General intangibles".] [Section 9.106.]
259-3 "Good faith". Section 2.103(a)(2).
259-4 "Instrument". Section 9.102(a)(47) [9.105(a)(9)].
259-5 "Merchant". Section 2.104(a).
259-6 "Mortgage". Section 9.102(a)(55) [9.105(a)(10)].
259-7 "Pursuant to commitment". Section 9.102(a)(69) [9.105(a)(11)].
259-8 "Receipt". Section 2.103(a)(3).
259-9 "Sale". Section 2.106(a).
259-10 "Sale on approval". Section 2.326.
259-11 "Sale or return". Section 2.326.
259-12 "Seller". Section 2.103(a)(4).
259-13 SECTION 2.20. Section 2A.303, Business & Commerce Code, is
259-14 amended to read as follows:
259-15 Sec. 2A.303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE
259-16 CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF
259-17 PERFORMANCE; TRANSFER OF RIGHTS. (a) As used in this section,
259-18 "creation of a security interest" includes the sale of a lease
259-19 contract that is subject to Chapter 9 of this code, Secured
259-20 Transactions, by reason of Section 9.109(a)(3) [9.102(a)(2)].
259-21 (b) Except as provided in Section 9.407(c) [Subsections (c)
259-22 and (d)], a provision in a lease agreement which (1) prohibits the
259-23 voluntary or involuntary transfer, including a transfer by sale,
259-24 sublease, creation or enforcement of a security interest, or
259-25 attachment, levy, or other judicial process, of an interest of a
259-26 party under the lease contract or of the lessor's residual interest
259-27 in the goods, or (2) makes such a transfer an event of default,
260-1 gives rise to the rights and remedies provided in Subsection (d)
260-2 [(e) of this section], but a transfer that is prohibited or is an
260-3 event of default under the lease agreement is otherwise effective.
260-4 (c) [A provision in a lease agreement which (1) prohibits
260-5 the creation or enforcement of a security interest in an interest
260-6 of a party under the lease contract or in the lessor's residual
260-7 interest in the goods, or (2) makes such a transfer an event of
260-8 default, is not enforceable unless, and then only to the extent
260-9 that, there is an actual transfer by the lessee of the lessee's
260-10 right of possession or use of the goods in violation of the
260-11 provision or an actual delegation of a material performance of
260-12 either party to the lease contract in violation of the provision.
260-13 Neither the granting nor the enforcement of a security interest in
260-14 (1) the lessor's interest in the lease contract or (2) the lessor's
260-15 residual interest in the goods is a transfer that materially
260-16 impairs the prospect of obtaining return performance by, materially
260-17 changes the duty of, or materially increases the burden of risk
260-18 imposed on, the lessee within the purview of Subsection (e) unless,
260-19 and then only to the extent that, there is an actual delegation of
260-20 a material performance of the lessor.]
260-21 [(d)] A provision in a lease agreement which (1) prohibits a
260-22 transfer of a right to damages for default with respect to the
260-23 whole lease contract or of a right to payment arising out of the
260-24 transferor's due performance of the transferor's entire obligation,
260-25 or (2) makes such a transfer an event of default, is not
260-26 enforceable, and such a transfer is not a transfer that materially
260-27 impairs the prospect of obtaining return performance by, materially
261-1 changes the duty of, or materially increases the burden or risk
261-2 imposed on, the other party to the lease contract within the
261-3 purview of Subsection (d) [(e)].
261-4 (d) [(e)] Subject to Section 9.407(c) [Subsections (c) and
261-5 (d)]:
261-6 (1) if a transfer is made which is made an event of
261-7 default under a lease agreement, the party to the lease contract
261-8 not making the transfer, unless that party waives the default or
261-9 otherwise agrees, has the rights and remedies described in Section
261-10 2A.501(b); and
261-11 (2) if Subdivision (1) is not applicable and if a
261-12 transfer is made that (A) is prohibited under a lease agreement or
261-13 (B) materially impairs the prospect of obtaining return performance
261-14 by, materially changes the duty of, or materially increases the
261-15 burden of risk imposed on, the other party to the lease contract,
261-16 unless the party not making the transfer agrees at any time to the
261-17 transfer in the lease contract or otherwise, then, except as
261-18 limited by contract, (i) the transferor is liable to the party not
261-19 making the transfer for damages caused by the transfer to the
261-20 extent that the damages could not reasonably be prevented by the
261-21 party not making the transfer and (ii) a court having jurisdiction
261-22 may grant other appropriate relief, including cancellation of the
261-23 lease contract or an injunction against the transfer.
261-24 (e) [(f)] A transfer of "the lease" or of "all my rights
261-25 under the lease," or a transfer in similar general terms, is a
261-26 transfer of rights and, unless the language or the circumstances,
261-27 as in a transfer for security, indicate the contrary, the transfer
262-1 is a delegation of duties by the transferor to the transferee.
262-2 Acceptance by the transferee constitutes a promise by the
262-3 transferee to perform those duties. This promise is enforceable by
262-4 either the transferor or the other party to the lease contract.
262-5 (f) [(g)] Unless otherwise agreed by the lessor and the
262-6 lessee, a delegation of performance does not relieve the transferor
262-7 as against the other party of any duty to perform or of any
262-8 liability for default.
262-9 (g) [(h)] In a consumer lease, to prohibit the transfer of
262-10 an interest of a party under the lease contract or to make a
262-11 transfer an event of default, the language must be specific, by a
262-12 writing, and conspicuous.
262-13 SECTION 2.21. Sections 2A.307(b)-(d), Business & Commerce
262-14 Code, are amended to read as follows:
262-15 (b) Except as otherwise provided in Subsection [Subsections]
262-16 (c) [and (d)] and Sections 2A.306 and 2A.308, a creditor of a
262-17 lessor takes subject to the lease contract unless[:]
262-18 [(1)] the creditor holds a lien that attached to the
262-19 goods before the lease contract became enforceable[;]
262-20 [(2) the creditor holds a security interest in the
262-21 goods and the lessee did not give value and receive delivery of the
262-22 goods without knowledge of the security interest; or]
262-23 [(3) the creditor holds a security interest in the
262-24 goods which was perfected (Section 9.303) before the lease contract
262-25 became enforceable].
262-26 (c) Except as otherwise provided in Sections 9.317, 9.321,
262-27 and 9.323, a lessee takes a leasehold interest subject to a
263-1 security interest held by a creditor of the lessor. [A lessee in
263-2 the ordinary course of business takes the leasehold interest free
263-3 of a security interest in the goods created by the lessor even
263-4 though the security interest is perfected (Section 9.303) and the
263-5 lessee knows of its existence.]
263-6 [(d) A lessee other than a lessee in the ordinary course of
263-7 business takes the leasehold interest free of a security interest
263-8 to the extent that it secures future advances made after the
263-9 secured party acquires knowledge of the lease or more than 45 days
263-10 after the lease contract becomes enforceable, whichever first
263-11 occurs, unless the future advances are made pursuant to a
263-12 commitment entered into without knowledge of the lease and before
263-13 the expiration of the 45-day period.]
263-14 SECTION 2.22. Section 2A.309(a), Business & Commerce Code,
263-15 is amended to read as follows:
263-16 (a) In this section:
263-17 (1) goods are "fixtures" when they become so related
263-18 to particular real estate that an interest in them arises under
263-19 real estate law;
263-20 (2) a "fixture filing" is the filing, in the office
263-21 where a record of a mortgage on the real estate would be filed or
263-22 recorded, of a financing statement covering goods that are or are
263-23 to become fixtures and conforming to the requirements of Sections
263-24 9.502(a) and (b) [Section 9.402(e)];
263-25 (3) a lease is a "purchase money lease" unless the
263-26 lessee has possession or use of the goods or the right to
263-27 possession or use of the goods before the lease agreement is
264-1 enforceable;
264-2 (4) a mortgage is a "construction mortgage" to the
264-3 extent it secures an obligation incurred for the construction of an
264-4 improvement on land including the acquisition cost of the land, if
264-5 the recorded writing so indicates; and
264-6 (5) "encumbrance" includes real estate mortgages and
264-7 other liens on real estate and all other rights in real estate that
264-8 are not ownership interests.
264-9 SECTION 2.23. Section 4.210(c), Business & Commerce Code, is
264-10 amended to read as follows:
264-11 (c) Receipt by a collecting bank of a final settlement for
264-12 an item is a realization on its security interest in the item,
264-13 accompanying documents, and proceeds. So long as the bank does not
264-14 receive final settlement for the item or give up possession of the
264-15 item or accompanying documents for purposes other than collection,
264-16 the security interest continues to that extent and is subject to
264-17 Chapter 9, but:
264-18 (1) no security agreement is necessary to make the
264-19 security interest enforceable (Section 9.203(b)(3)(A)
264-20 [9.203(a)(1)]);
264-21 (2) no filing is required to perfect the security
264-22 interest; and
264-23 (3) the security interest has priority over
264-24 conflicting perfected security interests in the item, accompanying
264-25 documents, or proceeds.
264-26 SECTION 2.24. Chapter 5, Business & Commerce Code, is
264-27 amended by adding Section 5.118 to read as follows:
265-1 Sec. 5.118. SECURITY INTEREST OF ISSUER OR NOMINATED PERSON.
265-2 (a) An issuer or nominated person has a security interest in a
265-3 document presented under a letter of credit to the extent that the
265-4 issuer or nominated person honors or gives value for the
265-5 presentation.
265-6 (b) So long as and to the extent that an issuer or nominated
265-7 person has not been reimbursed or has not otherwise recovered the
265-8 value given with respect to a security interest in a document under
265-9 Subsection (a), the security interest continues and is subject to
265-10 Chapter 9, but:
265-11 (1) a security agreement is not necessary to make the
265-12 security interest enforceable under Section 9.203(b)(3);
265-13 (2) if the document is presented in a medium other
265-14 than a written or other tangible medium, the security interest is
265-15 perfected; and
265-16 (3) if the document is presented in a written or other
265-17 tangible medium and is not a certificated security, chattel paper,
265-18 a document of title, an instrument, or a letter of credit, the
265-19 security interest is perfected and has priority over a conflicting
265-20 security interest in the document so long as the debtor does not
265-21 have possession of the document.
265-22 SECTION 2.25. Section 7.503(a), Business & Commerce Code, is
265-23 amended to read as follows:
265-24 (a) A document of title confers no right in goods against a
265-25 person who before issuance of the document had a legal interest or
265-26 a perfected security interest in them and who neither
265-27 (1) delivered or entrusted them or any document of
266-1 title covering them to the bailor or his nominee with actual or
266-2 apparent authority to ship, store or sell or with power to obtain
266-3 delivery under this chapter (Section 7.403) or with power of
266-4 disposition under this title (Sections 2.403 and 9.320 [9.307]) or
266-5 other statute or rule of law; nor
266-6 (2) acquiesced in the procurement by the bailor or his
266-7 nominee of any document of title.
266-8 SECTION 2.26. Section 8.103(f), Business & Commerce Code, is
266-9 amended to read as follows:
266-10 (f) A commodity contract, as defined in Section 9.102(a)(15)
266-11 [9.115], is not a security or a financial asset.
266-12 SECTION 2.27. Sections 8.106(d) and (f), Business & Commerce
266-13 Code, are amended to read as follows:
266-14 (d) A purchaser has control of a security entitlement if:
266-15 (1) the purchaser becomes the entitlement holder; [or]
266-16 (2) the securities intermediary has agreed that it
266-17 will comply with entitlement orders originated by the purchaser
266-18 without further consent by the entitlement holder; or
266-19 (3) another person has control of the security
266-20 entitlement on behalf of the purchaser or, having previously
266-21 acquired control of the security entitlement, acknowledges that it
266-22 has control on behalf of the purchaser.
266-23 (f) A purchaser who has satisfied the requirements of
266-24 Subsection (c) [(c)(2)] or (d) [(d)(2)] has control, even if the
266-25 registered owner in the case of Subsection (c) [(c)(2)] or the
266-26 entitlement holder in the case of Subsection (d) [(d)(2)] retains
266-27 the right to make substitutions for the uncertificated security or
267-1 security entitlement, to originate instructions or entitlement
267-2 orders to the issuer or securities intermediary, or otherwise to
267-3 deal with the uncertificated security or security entitlement.
267-4 SECTION 2.28. Section 8.110(e), Business & Commerce Code, is
267-5 amended to read as follows:
267-6 (e) The following rules determine a "securities
267-7 intermediary's jurisdiction" for purposes of this section:
267-8 (1) If an agreement between the securities
267-9 intermediary and its entitlement holder governing the securities
267-10 account expressly provides that a particular jurisdiction is the
267-11 securities intermediary's jurisdiction for purposes of this
267-12 subchapter, this chapter, or this title [specifies that it is
267-13 governed by the law of a particular jurisdiction], that
267-14 jurisdiction is the securities intermediary's jurisdiction.
267-15 (2) If Subdivision (1) does not apply and an agreement
267-16 between the securities intermediary and its entitlement holder
267-17 governing the securities account expressly provides that the
267-18 agreement is governed by the law of a particular jurisdiction, that
267-19 jurisdiction is the securities intermediary's jurisdiction.
267-20 (3) If neither Subdivision (1) nor Subdivision (2)
267-21 applies and an agreement between the securities intermediary and
267-22 its entitlement holder governing the securities account [does not
267-23 specify the governing law as provided in Subdivision (1), but]
267-24 expressly provides [specifies] that the securities account is
267-25 maintained at an office in a particular jurisdiction, that
267-26 jurisdiction is the securities intermediary's jurisdiction.
267-27 (4) [(3)] If none of the preceding subdivisions
268-1 applies [an agreement between the securities intermediary and its
268-2 entitlement holder does not specify a jurisdiction as provided in
268-3 Subdivision (1) or (2)], the securities intermediary's jurisdiction
268-4 is the jurisdiction in which [is located] the office identified in
268-5 an account statement as the office serving the entitlement holder's
268-6 account is located.
268-7 (5) [(4)] If none of the preceding subdivisions
268-8 applies [an agreement between the securities intermediary and its
268-9 entitlement holder does not specify a jurisdiction as provided in
268-10 Subdivision (1) or (2) and an account statement does not identify
268-11 an office serving the entitlement holder's account as provided in
268-12 Subdivision (3)], the securities intermediary's jurisdiction is the
268-13 jurisdiction in which [is located] the chief executive office of
268-14 the securities intermediary is located.
268-15 SECTION 2.29. Section 8.301(a), Business & Commerce Code, is
268-16 amended to read as follows:
268-17 (a) Delivery of a certificated security to a purchaser
268-18 occurs when:
268-19 (1) the purchaser acquires possession of the security
268-20 certificate;
268-21 (2) another person, other than a securities
268-22 intermediary, either acquires possession of the security
268-23 certificate on behalf of the purchaser or, having previously
268-24 acquired possession of the certificate, acknowledges that it holds
268-25 for the purchaser; or
268-26 (3) a securities intermediary acting on behalf of the
268-27 purchaser acquires possession of the security certificate, only if
269-1 the certificate is in registered form and is (i) registered in the
269-2 name of the purchaser, (ii) payable to the order of the purchaser,
269-3 or (iii) [has been] specially indorsed to the purchaser by an
269-4 effective indorsement and has not been indorsed to the securities
269-5 intermediary or in blank.
269-6 SECTION 2.30. Section 8.302(a), Business & Commerce Code, is
269-7 amended to read as follows:
269-8 (a) Except as otherwise provided in Subsections (b) and (c),
269-9 a purchaser [on delivery] of a certificated or uncertificated
269-10 security [to a purchaser, the purchaser] acquires all rights in the
269-11 security that the transferor had or had power to transfer.
269-12 SECTION 2.31. Sections 8.510(a) and (c), Business & Commerce
269-13 Code, are amended to read as follows:
269-14 (a) In a case not covered by the priority rules in Chapter 9
269-15 or the rules stated in Subsection (c), an [An] action based on an
269-16 adverse claim to a financial asset or security entitlement, whether
269-17 framed in conversion, replevin, constructive trust, equitable lien,
269-18 or other theory, may not be asserted against a person who purchases
269-19 a security entitlement, or an interest therein, from an entitlement
269-20 holder if the purchaser gives value, does not have notice of the
269-21 adverse claim, and obtains control.
269-22 (c) In a case not covered by the priority rules in Chapter
269-23 9, a purchaser for value of a security entitlement, or an interest
269-24 therein, who obtains control has priority over a purchaser of a
269-25 security entitlement, or an interest therein, who does not obtain
269-26 control. Except as otherwise provided in Subsection (d),
269-27 purchasers [Purchasers] who have control rank [equally, except that
270-1 a] according to priority in time of:
270-2 (1) the purchaser's becoming the person for whom the
270-3 securities account, in which the security entitlement is carried,
270-4 is maintained, if the purchaser obtained control under Section
270-5 8.106(d)(1);
270-6 (2) the securities intermediary's agreement to comply
270-7 with the purchaser's entitlement orders with respect to security
270-8 entitlements carried or to be carried in the securities account in
270-9 which the security entitlement is carried, if the purchaser
270-10 obtained control under Section 8.106(d)(2); or
270-11 (3) if the purchaser obtained control through another
270-12 person under Section 8.106(d)(3), the time on which priority would
270-13 be based under this subsection if the other person were the secured
270-14 party.
270-15 (d) A securities intermediary as purchaser has priority over
270-16 a conflicting purchaser who has control unless otherwise agreed on
270-17 by the securities intermediary.
270-18 SECTION 2.32. Section 221.032, Health and Safety Code, is
270-19 amended to read as follows:
270-20 Sec. 221.032. PERFECTION OF SECURITY INTEREST. A security
270-21 interest granted by a corporation may be perfected in the manner
270-22 and with the effect provided by Chapter 9, Business & Commerce
270-23 Code[, notwithstanding Section 9.104 of that chapter].
270-24 SECTION 2.33. Section 31.053(d), Parks and Wildlife Code, is
270-25 amended to read as follows:
270-26 (d) Notwithstanding the provisions of Subsection (a) of
270-27 this section, a buyer of a new vessel or a new outboard motor in
271-1 the ordinary course of business as provided in Section 9.320(a)
271-2 [9.307(a)], Business & Commerce Code, takes the interest free of
271-3 security interests as provided in that section. A buyer of a
271-4 vessel or outboard motor that is not new shall be governed by
271-5 Subsection (a) of this section.
271-6 SECTION 2.34. Section 14.004(a), Property Code, is amended
271-7 to read as follows:
271-8 (a) If a notice of federal lien, a refiling of a notice of
271-9 federal lien, or a notice of revocation of any certificate
271-10 described in Subsection (b) is presented to a filing officer who
271-11 is:
271-12 (1) the secretary of state, he shall cause the notice
271-13 to be marked, held or placed on microtext, and indexed in
271-14 accordance with the provisions of Section 9.519, Business &
271-15 Commerce [9.403(d) of the Uniform Commercial] Code, as if the
271-16 notice were a financing statement within the meaning of that code;
271-17 or
271-18 (2) any other officer described in Section 14.002, he
271-19 shall endorse thereon his identification and the date and time of
271-20 receipt and forthwith file it alphabetically in the real property
271-21 records and if requested by the party submitting the document, in
271-22 the personal property files or enter it in an alphabetical index
271-23 for real or personal property, as appropriate, showing the name and
271-24 address of the person named in the notice, the date and time of
271-25 receipt, the title and address of the official or entity certifying
271-26 the lien, and the total amount appearing on the notice of lien.
271-27 SECTION 2.35. Section 24.0062(j), Property Code, is amended
272-1 to read as follows:
272-2 (j) Any sale of property that is subject to a lien under
272-3 this section shall be conducted in accordance with Section
272-4 [Sections] 7.210 and Subchapters D and F, Chapter 9, [9.301-9.318,
272-5 and 9.501-9.507 of the] Business & Commerce Code.
272-6 SECTION 2.36. Section 42.002(b), Property Code, is amended
272-7 to read as follows:
272-8 (b) Personal property, unless precluded from being
272-9 encumbered by other law, may be encumbered by a security interest
272-10 under Subchapter B, Chapter 9 [Section 9.203], Business & Commerce
272-11 Code, or Subchapter F, Chapter 501, Transportation Code, or by a
272-12 lien fixed by other law, and the security interest or lien may not
272-13 be avoided on the ground that the property is exempt under this
272-14 chapter.
272-15 SECTION 2.37. Sections 61.001(2) and (3), Property Code, are
272-16 amended to read as follows:
272-17 (2) "Mortgagee" means a secured party, as defined by
272-18 Section 9.102 [9.105], Business & Commerce Code, holding a lien on
272-19 a motor vehicle that has been perfected pursuant to Subchapter F,
272-20 Chapter 501, Transportation Code.
272-21 (3) "Mortgagor" means a debtor, as defined by Section
272-22 9.102 [9.105], Business & Commerce Code, giving a lien or agreeing
272-23 that a lien may be retained on a motor vehicle.
272-24 SECTION 2.38. Section 70.001(b), Property Code, is amended
272-25 to read as follows:
272-26 (b) If a worker relinquishes possession of a motor vehicle,
272-27 motorboat, vessel, or outboard motor in return for a check or money
273-1 order on which payment is stopped, has been dishonored because of
273-2 insufficient funds, no funds or because the drawer or maker of the
273-3 order has no account or the account upon which it was drawn has
273-4 been closed, the lien provided by this section continues to exist
273-5 and the worker is entitled to possession of the vehicle, motorboat,
273-6 vessel, or outboard motor until the amount due is paid, unless the
273-7 vehicle, motorboat, vessel, or outboard motor is possessed by a
273-8 person who became a bona fide purchaser of the vehicle after a stop
273-9 payment order was made. A person entitled to possession of
273-10 property under this subsection is entitled to take possession
273-11 thereof in accordance with the provisions of Section 9.609 [9.503],
273-12 Business & Commerce Code.
273-13 SECTION 2.39. Section 70.003(d)(1), Property Code, is
273-14 amended to read as follows:
273-15 (1) A cotton ginner to whom a cotton crop has been
273-16 delivered for processing or who, under an agreement, is to be paid
273-17 for harvesting a cotton crop has a lien on the cotton processed or
273-18 harvested for the amount of the charges for the processing or
273-19 harvesting. The lienholder is entitled to retain possession of the
273-20 cotton until the amount of the charge due under an agreement is
273-21 paid or, if an amount is not specified by agreement, the reasonable
273-22 and usual compensation is paid. If the cotton owner's address is
273-23 known and the amount of the charge is not paid before the 31st day
273-24 after the date the cotton ginner's work is completed or the date
273-25 payment is due under a written agreement, whichever is later, the
273-26 lienholder shall request the owner to pay the unpaid charge due and
273-27 shall notify the owner and any other person having a lien on the
274-1 cotton which is properly recorded under applicable law with the
274-2 secretary of state of the fact that unless payment is made not
274-3 later than the 15th day after the date the notice is received, the
274-4 lienholder is entitled to sell the cotton under any procedure
274-5 authorized by Section 9.610 [9.504], Business & Commerce Code. If
274-6 the cotton owner's address is not known and the amount of the
274-7 charge is not paid before the 61st day after the date the cotton
274-8 ginner's work is completed or the date payment is due under a
274-9 written agreement, whichever is later, the lienholder is entitled
274-10 to sell the cotton without notice at a commercially reasonable
274-11 sale. The proceeds of a sale under this subsection shall be
274-12 applied first to charges due under this subsection, and any
274-13 remainder shall be paid in appropriate proportion to:
274-14 (A) any other person having a lien on the cotton
274-15 which is properly recorded under applicable law with the secretary
274-16 of state; and
274-17 (B) the cotton owner.
274-18 SECTION 2.40. Section 70.005(c), Property Code, is amended
274-19 to read as follows:
274-20 (c) A person holding a lien under Section 70.003(a) on an
274-21 animal fed in confinement for slaughter may enforce that lien in
274-22 any manner authorized by Sections 9.610-9.619 [Section 9.504],
274-23 Business & Commerce Code.
274-24 SECTION 2.41. Section 70.302(b), Property Code, is amended
274-25 to read as follows:
274-26 (b) Except as provided by Subsection (c), if the holder of a
274-27 lien under this subchapter relinquishes possession of the aircraft
275-1 before the amount due is paid, the person may retake possession of
275-2 the aircraft as provided by Section 9.609 [9.503], Business &
275-3 Commerce Code.
275-4 SECTION 2.42. Section 501.002(9), Transportation Code, is
275-5 amended to read as follows:
275-6 (9) "Lien" means:
275-7 (A) a lien provided for by the constitution or
275-8 statute in a motor vehicle; or
275-9 (B) a security interest, as defined by Section
275-10 1.201, Business & Commerce Code, in a motor vehicle, other than an
275-11 absolute title, created by any written security agreement, as
275-12 defined by Section 9.102 [9.105], Business & Commerce Code,
275-13 including a lease, conditional sales contract, deed of trust,
275-14 chattel mortgage, trust receipt, or reservation of title.
275-15 SECTION 2.43. Section 4.053, Public Facility Corporation
275-16 Act (Article 717s, Revised Statutes), is amended to read as
275-17 follows:
275-18 Sec. 4.053. PERFECTION OF SECURITY INTEREST. A security
275-19 interest granted by a corporation as security for its bonds or a
275-20 credit agreement pledged as security for the obligations of the
275-21 corporation on the bonds or any credit agreement issued or entered
275-22 into in connection with the bonds is perfected until payment of the
275-23 bonds and the credit agreement, with the effect specified in
275-24 Chapter 9, Business & Commerce Code, when the bonds are registered
275-25 by the comptroller of public accounts and the proceedings
275-26 authorizing the bonds are filed with the comptroller, without any
275-27 further filing, notwithstanding Section 9.109(d) [9.104], Business
276-1 & Commerce Code.
276-2 SECTION 2.44. Sections 19(a)(1), (5), (10), and (12), Texas
276-3 Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
276-4 Civil Statutes), are amended to read as follows:
276-5 (1) "Debtor" has the same meaning as given it by
276-6 Section 9.102 [9.105(a)(4)], Business & Commerce Code.
276-7 (5) "Inventory" has the meaning given it by Section
276-8 9.102 [9.109(4)], Business & Commerce Code, as amended.
276-9 (10) "Secured party" has the meaning given it by
276-10 Section 9.102 [9.105(a)(13)], Business & Commerce Code.
276-11 (12) "Security agreement" has the meaning given it by
276-12 Section 9.102 [9.105(a)(12)], Business & Commerce Code.
276-13 SECTION 2.45. Section 19(n), Texas Manufactured Housing
276-14 Standards Act (Article 5221f, Vernon's Texas Civil Statutes), is
276-15 amended to read as follows:
276-16 (n) Notwithstanding any other provisions of this section,
276-17 the filing of a security agreement by a secured party perfecting a
276-18 lien in the inventory of a retailer may not prevent a buyer in the
276-19 ordinary course of business as defined by Sections 1.201(9) and
276-20 9.320(a), [9.307(a) of the] Business & Commerce Code, from
276-21 acquiring good title free and clear of such interest, and the
276-22 department may not consider such security interest as a lien for
276-23 the purpose of title issuance.
276-24 ARTICLE 3. EFFECTIVE DATE; TRANSITION; EMERGENCY
276-25 SECTION 3.01. EFFECTIVE DATE. This Act takes effect July 1,
276-26 2001.
276-27 SECTION 3.02. SAVINGS CLAUSE. (a) Except as otherwise
277-1 provided in this article, this Act applies to a transaction or lien
277-2 within its scope, even if the transaction or lien was entered into
277-3 or created before this Act takes effect.
277-4 (b) Except as otherwise provided in Subsection (c) of this
277-5 section and Sections 3.03-3.08 of this article:
277-6 (1) transactions and liens that were not governed by
277-7 Chapter 9, Business & Commerce Code, as it existed immediately
277-8 before the effective date of this Act, were validly entered into or
277-9 created before the effective date of this Act, and would be subject
277-10 to Chapter 9, Business & Commerce Code, as amended by this Act, if
277-11 they had been entered into or created on or after the effective
277-12 date of this Act, and the rights, duties, and interests flowing
277-13 from those transactions and liens remain valid on and after the
277-14 effective date of this Act; and
277-15 (2) the transactions and liens may be terminated,
277-16 completed, consummated, and enforced as required or permitted by
277-17 Chapter 9, Business & Commerce Code, as amended by this Act, or by
277-18 the law that otherwise would apply if this Act had not taken
277-19 effect.
277-20 (c) This Act does not affect an action, case, or proceeding
277-21 commenced before the effective date of this Act.
277-22 SECTION 3.03. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE
277-23 DATE. (a) A security interest that is enforceable immediately
277-24 before the effective date of this Act and would have priority over
277-25 the rights of a person that becomes a lien creditor at that time is
277-26 a perfected security interest under Chapter 9, Business & Commerce
277-27 Code, as amended by this Act, if, on the effective date of this
278-1 Act, the applicable requirements for enforceability and perfection
278-2 under Chapter 9, Business & Commerce Code, as amended by this Act,
278-3 are satisfied without further action.
278-4 (b) Except as otherwise provided in Section 3.05 of this
278-5 article, if, immediately before this Act takes effect, a security
278-6 interest is enforceable and would have priority over the rights of
278-7 a person that becomes a lien creditor at that time, but the
278-8 applicable requirements for enforceability or perfection under
278-9 Chapter 9, Business & Commerce Code, as amended by this Act, are
278-10 not satisfied when this Act takes effect, the security interest:
278-11 (1) is a perfected security interest until July 1,
278-12 2002;
278-13 (2) remains enforceable after June 30, 2002, only if
278-14 the security interest becomes enforceable under Section 9.203,
278-15 Business & Commerce Code, as amended by this Act, before July 1,
278-16 2002; and
278-17 (3) remains perfected after June 30, 2002, only if the
278-18 applicable requirements for perfection under Chapter 9, Business &
278-19 Commerce Code, as amended by this Act, are satisfied before July 1,
278-20 2002.
278-21 SECTION 3.04. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE
278-22 DATE. A security interest that is enforceable immediately before
278-23 this Act takes effect but that would be subordinate to the rights
278-24 of a person that becomes a lien creditor at that time:
278-25 (1) remains an enforceable security interest until
278-26 July 1, 2002;
278-27 (2) remains enforceable after June 30, 2002, if the
279-1 security interest becomes enforceable under Section 9.203, Business
279-2 & Commerce Code, as amended by this Act, before July 1, 2002; and
279-3 (3) becomes perfected:
279-4 (A) without further action, when this Act takes
279-5 effect, if the applicable requirements for perfection under Chapter
279-6 9, Business & Commerce Code, as amended by this Act, are satisfied
279-7 before or at that time; or
279-8 (B) when the applicable requirements for
279-9 perfection are satisfied if the requirements are satisfied after
279-10 this Act takes effect.
279-11 SECTION 3.05. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE
279-12 DATE. (a) If action, other than the filing of a financing
279-13 statement, is taken before this Act takes effect and the action
279-14 would have resulted in priority of a security interest over the
279-15 rights of a person that becomes a lien creditor had the security
279-16 interest become enforceable before this Act takes effect, the
279-17 action is effective to perfect a security interest that attaches
279-18 under Chapter 9, Business & Commerce Code, as amended by this Act,
279-19 within one year after the effective date of this Act. An attached
279-20 security interest becomes unperfected on July 1, 2002, unless the
279-21 security interest becomes a perfected security interest under
279-22 Chapter 9, Business & Commerce Code, as amended by this Act, before
279-23 that date.
279-24 (b) The filing of a financing statement before the effective
279-25 date of this Act is effective to perfect a security interest to the
279-26 extent the filing would satisfy the applicable requirements for
279-27 perfection under Chapter 9, Business & Commerce Code, as amended by
280-1 this Act.
280-2 (c) This Act does not render ineffective an effective
280-3 financing statement that, before the effective date of this Act, is
280-4 filed and satisfies the applicable requirements for perfection
280-5 under the law of the jurisdiction governing perfection as provided
280-6 in Section 9.103, Business & Commerce Code, as it existed
280-7 immediately before the effective date of this Act. However, except
280-8 as otherwise provided in Subsections (d) and (e) of this section
280-9 and Section 3.06 of this article, the financing statement ceases to
280-10 be effective at the earlier of:
280-11 (1) the time the financing statement would have ceased
280-12 to be effective under the law of the jurisdiction in which it is
280-13 filed; or
280-14 (2) June 30, 2006.
280-15 (d) The filing of a continuation statement after this Act
280-16 takes effect does not continue the effectiveness of the financing
280-17 statement filed before this Act takes effect. However, upon the
280-18 timely filing of a continuation statement after this Act takes
280-19 effect and in accordance with the law of the jurisdiction governing
280-20 perfection as provided in Subchapter C, Chapter 9, Business &
280-21 Commerce Code, as amended by this Act, the effectiveness of a
280-22 financing statement filed in the same office in that jurisdiction
280-23 before this Act takes effect continues for the period provided by
280-24 the law of that jurisdiction.
280-25 (e) Subsection (c)(2) of this section applies to a financing
280-26 statement that, before this Act takes effect, is filed against a
280-27 transmitting utility and satisfies the applicable requirements for
281-1 perfection under the law of the jurisdiction governing perfection
281-2 as provided in Section 9.103, as it existed immediately before the
281-3 effective date of this Act, only to the extent that Subchapter C,
281-4 Chapter 9, Business & Commerce Code, as amended by this Act,
281-5 provides that the law of a jurisdiction other than jurisdiction in
281-6 which the financing statement is filed governs perfection of a
281-7 security interest in collateral covered by the financing statement.
281-8 (f) A financing statement that includes a financing
281-9 statement filed before this Act takes effect and a continuation
281-10 statement filed after this Act takes effect is effective only to
281-11 the extent that it satisfies the requirements of Subchapter E,
281-12 Chapter 9, Business & Commerce Code, as amended by this Act, for an
281-13 initial financing statement.
281-14 SECTION 3.06. WHEN INITIAL FINANCING STATEMENT SUFFICES TO
281-15 CONTINUE EFFECTIVENESS OF FINANCING STATEMENT. (a) The filing of
281-16 an initial financing statement in the office specified in Section
281-17 9.501, Business & Commerce Code, as amended by this Act, continues
281-18 the effectiveness of a financing statement filed before this Act
281-19 takes effect if:
281-20 (1) the filing of an initial financing statement in
281-21 that office would be effective to perfect a security interest under
281-22 Chapter 9, Business & Commerce Code, as amended by this Act;
281-23 (2) the pre-effective-date financing statement was
281-24 filed in an office in another state or another office in this
281-25 state; and
281-26 (3) the initial financing statement satisfies
281-27 Subsection (c) of this section.
282-1 (b) The filing of an initial financing statement under
282-2 Subsection (a) of this section continues the effectiveness of the
282-3 pre-effective-date financing statement:
282-4 (1) if the initial financing statement is filed before
282-5 this Act takes effect, for the period provided in Section 9.403,
282-6 Business & Commerce Code, as it existed immediately before the
282-7 effective date of this Act, with respect to a financing statement;
282-8 and
282-9 (2) if the initial financing statement is filed after
282-10 this Act takes effect, for the period provided in Section 9.515,
282-11 Business & Commerce Code, as amended by this Act, with respect to
282-12 an initial financing statement.
282-13 (c) To be effective for purposes of Subsection (a) of this
282-14 section, an initial financing statement must:
282-15 (1) satisfy the requirements of Subchapter E, Chapter
282-16 9, Business & Commerce Code, as amended by this Act, for an initial
282-17 financing statement;
282-18 (2) identify the pre-effective-date financing
282-19 statement by indicating the office in which the financing statement
282-20 was filed and providing the dates of filing and file numbers, if
282-21 any, of the financing statement and of the most recent continuation
282-22 statement filed with respect to the financing statement; and
282-23 (3) indicate that the pre-effective-date financing
282-24 statement remains effective.
282-25 SECTION 3.07. PERSONS ENTITLED TO FILE INITIAL FINANCING
282-26 STATEMENT OR CONTINUATION STATEMENT. A person may file an initial
282-27 financing statement or a continuation statement under this article
283-1 if:
283-2 (1) the secured party of record authorizes the filing;
283-3 and
283-4 (2) the filing is necessary under this article:
283-5 (A) to continue the effectiveness of a financing
283-6 statement filed before this Act takes effect; or
283-7 (B) to perfect or continue the perfection of a
283-8 security interest.
283-9 SECTION 3.08. PRIORITY. (a) This Act determines the
283-10 priority of conflicting claims to collateral. However, if the
283-11 relative priorities of the claims were established before this Act
283-12 takes effect, Chapter 9, Business & Commerce Code, as it existed
283-13 before the effective date of this Act, determines priority.
283-14 (b) For purposes of Section 9.322(a), Business & Commerce
283-15 Code, as amended by this Act, the priority of a security interest
283-16 that becomes enforceable under Section 9.203, Business & Commerce
283-17 Code, as amended by this Act, dates from the time this Act takes
283-18 effect if the security interest is perfected under Chapter 9,
283-19 Business & Commerce Code, as amended by this Act, by the filing of
283-20 a financing statement before this Act takes effect that would not
283-21 have been effective to perfect the security interest under Chapter
283-22 9, Business & Commerce Code, as it existed immediately before the
283-23 effective date of this Act. This subsection does not apply to
283-24 conflicting security interests each of which is perfected by the
283-25 filing of such a financing statement.
283-26 SECTION 3.09. REPORT TO LEGISLATURE. The secretary of state
283-27 is required to file the initial report under Section 9.527,
284-1 Business & Commerce Code, as added by this Act, before January 1,
284-2 2003.
284-3 SECTION 3.10. EMERGENCY. The importance of this legislation
284-4 and the crowded condition of the calendars in both houses create an
284-5 emergency and an imperative public necessity that the
284-6 constitutional rule requiring bills to be read on three several
284-7 days in each house be suspended, and this rule is hereby suspended.