AN ACT
1-1 relating to the revision of the uniform law on secured
1-2 transactions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 ARTICLE 1. SECURED TRANSACTIONS
1-5 SECTION 1.01. Chapter 9, Business & Commerce Code, is
1-6 amended to read as follows:
1-7 CHAPTER 9. SECURED TRANSACTIONS[; SALES OF ACCOUNTS
1-8 AND CHATTEL PAPER]
1-9 SUBCHAPTER A. SHORT TITLE, [APPLICABILITY AND]
1-10 DEFINITIONS, AND GENERAL CONCEPTS
1-11 Sec. 9.101. SHORT TITLE. This chapter may be cited as
1-12 Uniform Commercial Code--Secured Transactions.
1-13 Sec. 9.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
1-14 this chapter:
1-15 (1) "Accession" means goods that are physically united
1-16 with other goods in such a manner that the identity of the original
1-17 goods is not lost.
1-18 (2) "Account," except as used in "account for," means
1-19 a right to payment of a monetary obligation, whether or not earned
1-20 by performance, (i) for property that has been or is to be sold,
1-21 leased, licensed, assigned, or otherwise disposed of, (ii) for
1-22 services rendered or to be rendered, (iii) for a policy of
1-23 insurance issued or to be issued, (iv) for a secondary obligation
1-24 incurred or to be incurred, (v) for energy provided or to be
2-1 provided, (vi) for the use or hire of a vessel under a charter or
2-2 other contract, (vii) arising out of the use of a credit or charge
2-3 card or information contained on or for use with the card, or
2-4 (viii) as winnings in a lottery or other game of chance operated or
2-5 sponsored by a state, governmental unit of a state, or person
2-6 licensed or authorized to operate the game by a state or
2-7 governmental unit of a state. The term includes
2-8 health-care-insurance receivables. The term does not include
2-9 (i) rights to payment evidenced by chattel paper or an instrument,
2-10 (ii) commercial tort claims, (iii) deposit accounts,
2-11 (iv) investment property, (v) letter-of-credit rights or letters of
2-12 credit, or (vi) rights to payment for money or funds advanced or
2-13 sold, other than rights arising out of the use of a credit or
2-14 charge card or information contained on or for use with the card.
2-15 (3) "Account debtor" means a person obligated on an
2-16 account, chattel paper, or general intangible. The term does not
2-17 include persons obligated to pay a negotiable instrument, even if
2-18 the instrument constitutes part of chattel paper.
2-19 (4) "Accounting," except as used in "accounting for,"
2-20 means a record:
2-21 (A) authenticated by a secured party;
2-22 (B) indicating the aggregate unpaid secured
2-23 obligations as of a date not more than 35 days earlier or 35 days
2-24 later than the date of the record; and
2-25 (C) identifying the components of the
2-26 obligations in reasonable detail.
3-1 (5) "Agricultural lien" means an interest, other than
3-2 a security interest, in farm products:
3-3 (A) that secures payment or performance of an
3-4 obligation for:
3-5 (i) goods or services furnished in
3-6 connection with a debtor's farming operation; or
3-7 (ii) rent on real property leased by a
3-8 debtor in connection with its farming operation;
3-9 (B) that is created by statute in favor of a
3-10 person that:
3-11 (i) in the ordinary course of its business
3-12 furnished goods or services to a debtor in connection with a
3-13 debtor's farming operation; or
3-14 (ii) leased real property to a debtor in
3-15 connection with the debtor's farming operation; and
3-16 (C) whose effectiveness does not depend on the
3-17 person's possession of the personal property.
3-18 (6) "As-extracted collateral" means:
3-19 (A) oil, gas, or other minerals that are subject
3-20 to a security interest that:
3-21 (i) is created by a debtor having an
3-22 interest in the minerals before extraction; and
3-23 (ii) attaches to the minerals as
3-24 extracted; or
3-25 (B) accounts arising out of the sale at the
3-26 wellhead or minehead of oil, gas, or other minerals in which the
4-1 debtor had an interest before extraction.
4-2 (7) "Authenticate" means:
4-3 (A) to sign; or
4-4 (B) to execute or otherwise adopt a symbol, or
4-5 encrypt or similarly process a record in whole or in part, with the
4-6 present intent of the authenticating person to identify the person
4-7 and adopt or accept a record.
4-8 (8) "Bank" means an organization that is engaged in
4-9 the business of banking. The term includes savings banks, savings
4-10 and loan associations, credit unions, and trust companies.
4-11 (9) "Cash proceeds" means proceeds that are money,
4-12 checks, deposit accounts, or the like.
4-13 (10) "Certificate of title" means a certificate of
4-14 title with respect to which a statute provides for the security
4-15 interest in question to be indicated on the certificate as a
4-16 condition or result of the security interest's obtaining priority
4-17 over the rights of a lien creditor with respect to the collateral.
4-18 (11) "Chattel paper" means a record or records that
4-19 evidence both a monetary obligation and a security interest in
4-20 specific goods, a security interest in specific goods and software
4-21 used in the goods, or a lease of specific goods. The term does not
4-22 include charters or other contracts involving the use or hire of a
4-23 vessel. If a transaction is evidenced both by a security agreement
4-24 or lease and by an instrument or series of instruments, the group
4-25 of records taken together constitutes chattel paper.
4-26 (12) "Collateral" means the property subject to a
5-1 security interest or agricultural lien. The term includes:
5-2 (A) proceeds to which a security interest
5-3 attaches;
5-4 (B) accounts, chattel paper, payment
5-5 intangibles, and promissory notes that have been sold; and
5-6 (C) goods that are the subject of a consignment.
5-7 (13) "Commercial tort claim" means a claim arising in
5-8 tort with respect to which:
5-9 (A) the claimant is an organization; or
5-10 (B) the claimant is an individual and the claim:
5-11 (i) arose in the course of the claimant's
5-12 business or profession; and
5-13 (ii) does not include damages arising out
5-14 of personal injury to or the death of an individual.
5-15 (14) "Commodity account" means an account maintained
5-16 by a commodity intermediary in which a commodity contract is
5-17 carried for a commodity customer.
5-18 (15) "Commodity contract" means a commodity futures
5-19 contract, an option on a commodity futures contract, a commodity
5-20 option, or another contract if the contract or option is:
5-21 (A) traded on or subject to the rules of a board
5-22 of trade that has been designated as a contract market for such a
5-23 contract pursuant to federal commodities laws; or
5-24 (B) traded on a foreign commodity board of
5-25 trade, exchange, or market and is carried on the books of a
5-26 commodity intermediary for a commodity customer.
6-1 (16) "Commodity customer" means a person for which a
6-2 commodity intermediary carries a commodity contract on its books.
6-3 (17) "Commodity intermediary" means a person that:
6-4 (A) is registered as a futures commission
6-5 merchant under federal commodities law; or
6-6 (B) in the ordinary course of its business
6-7 provides clearance or settlement services for a board of trade that
6-8 has been designated as a contract market pursuant to federal
6-9 commodities law.
6-10 (18) "Communicate" means:
6-11 (A) to send a written or other tangible record;
6-12 (B) to transmit a record by any means agreed
6-13 upon by the persons sending and receiving the record; or
6-14 (C) in the case of transmission of a record to
6-15 or by a filing office, to transmit a record by any means prescribed
6-16 by filing-office rule.
6-17 (19) "Consignee" means a merchant to which goods are
6-18 delivered in a consignment.
6-19 (20) "Consignment" means a transaction, regardless of
6-20 its form, in which a person delivers goods to a merchant for the
6-21 purpose of sale and:
6-22 (A) the merchant:
6-23 (i) deals in goods of that kind under a
6-24 name other than the name of the person making delivery;
6-25 (ii) is not an auctioneer; and
6-26 (iii) is not generally known by its
7-1 creditors to be substantially engaged in selling the goods of
7-2 others;
7-3 (B) with respect to each delivery, the aggregate
7-4 value of the goods is $1,000 or more at the time of delivery;
7-5 (C) the goods are not consumer goods immediately
7-6 before delivery;
7-7 (D) the transaction does not create a security
7-8 interest that secures an obligation; and
7-9 (E) the transaction does not involve delivery of
7-10 a work of art to an art dealer, as provided by the Artists'
7-11 Consignment Act (Article 9018, Vernon's Texas Civil Statutes).
7-12 (21) "Consignor" means a person that delivers goods to
7-13 a consignee in a consignment.
7-14 (22) "Consumer debtor" means a debtor in a consumer
7-15 transaction.
7-16 (23) "Consumer goods" means goods that are used or
7-17 bought for use primarily for personal, family, or household
7-18 purposes.
7-19 (24) "Consumer-goods transaction" means a consumer
7-20 transaction in which:
7-21 (A) an individual incurs an obligation primarily
7-22 for personal, family, or household purposes; and
7-23 (B) a security interest in consumer goods
7-24 secures the obligation.
7-25 (25) "Consumer obligor" means an obligor who is an
7-26 individual and who incurred the obligation as part of a transaction
8-1 entered into primarily for personal, family, or household purposes.
8-2 (26) "Consumer transaction" means a transaction in
8-3 which (i) an individual incurs an obligation primarily for
8-4 personal, family, or household purposes, (ii) a security interest
8-5 secures the obligation, and (iii) the collateral is held or
8-6 acquired primarily for personal, family, or household purposes.
8-7 The term includes consumer-goods transactions.
8-8 (27) "Continuation statement" means an amendment of a
8-9 financing statement that:
8-10 (A) identifies, by its file number, the initial
8-11 financing statement to which it relates; and
8-12 (B) indicates that it is a continuation
8-13 statement for, or that it is filed to continue the effectiveness
8-14 of, the identified financing statement.
8-15 (28) "Debtor" means:
8-16 (A) a person having an interest, other than a
8-17 security interest or other lien, in the collateral, whether or not
8-18 the person is an obligor;
8-19 (B) a seller of accounts, chattel paper, payment
8-20 intangibles, or promissory notes; or
8-21 (C) a consignee.
8-22 (29) "Deposit account" means a demand, time, savings,
8-23 passbook, or similar account maintained with a bank. The term
8-24 includes a nonnegotiable certificate of deposit. The term does not
8-25 include investment property or accounts evidenced by an instrument.
8-26 (30) "Document" means a document of title or a receipt
9-1 of the type described in Section 7.201(b).
9-2 (31) "Electronic chattel paper" means chattel paper
9-3 evidenced by a record or records consisting of information stored
9-4 in an electronic medium.
9-5 (32) "Encumbrance" means a right, other than an
9-6 ownership interest, in real property. The term includes mortgages
9-7 and other liens on real property.
9-8 (33) "Equipment" means goods other than inventory,
9-9 farm products, or consumer goods.
9-10 (34) "Farm products" means goods, other than standing
9-11 timber, with respect to which the debtor is engaged in a farming
9-12 operation and which are:
9-13 (A) crops grown, growing, or to be grown,
9-14 including:
9-15 (i) crops produced on trees, vines, and
9-16 bushes; and
9-17 (ii) aquatic goods produced in
9-18 aquacultural operations;
9-19 (B) livestock, born or unborn, including aquatic
9-20 goods produced in aquacultural operations;
9-21 (C) supplies used or produced in a farming
9-22 operation; or
9-23 (D) products of crops or livestock in their
9-24 unmanufactured states.
9-25 (35) "Farming operation" means raising, cultivating,
9-26 propagating, fattening, grazing, or any other farming, livestock,
10-1 or aquacultural operation.
10-2 (36) "File number" means the number assigned to an
10-3 initial financing statement pursuant to Section 9.519(a).
10-4 (37) "Filing office" means an office designated in
10-5 Section 9.501 as the place to file a financing statement.
10-6 (38) "Filing-office rule" means a rule adopted
10-7 pursuant to Section 9.526.
10-8 (39) "Financing statement" means a record or records
10-9 composed of an initial financing statement and any filed record
10-10 relating to the initial financing statement.
10-11 (40) "Fixture filing" means the filing of a financing
10-12 statement covering goods that are or are to become fixtures and
10-13 satisfying Sections 9.502(a) and (b). The term includes the filing
10-14 of a financing statement covering goods of a transmitting utility
10-15 that are or are to become fixtures.
10-16 (41) "Fixtures" means goods that have become so
10-17 related to particular real property that an interest in them arises
10-18 under the real property law of the state in which the real property
10-19 is situated.
10-20 (42) "General intangible" means any personal property,
10-21 including things in action, other than accounts, chattel paper,
10-22 commercial tort claims, deposit accounts, documents, goods,
10-23 instruments, investment property, letter-of-credit rights, letters
10-24 of credit, money, and oil, gas, or other minerals before
10-25 extraction. The term includes payment intangibles and software.
10-26 (43) "Good faith" means honesty in fact and the
11-1 observance of reasonable commercial standards of fair dealing.
11-2 (44) "Goods" means all things that are movable when a
11-3 security interest attaches. The term includes (i) fixtures,
11-4 (ii) standing timber that is to be cut and removed under a
11-5 conveyance or contract for sale, (iii) the unborn young of animals,
11-6 (iv) crops grown, growing, or to be grown, even if the crops are
11-7 produced on trees, vines, or bushes, and (v) manufactured homes.
11-8 The term also includes a computer program embedded in goods and any
11-9 supporting information provided in connection with a transaction
11-10 relating to the program if (i) the program is associated with the
11-11 goods in such a manner that it customarily is considered part of
11-12 the goods, or (ii) by becoming the owner of the goods, a person
11-13 acquires a right to use the program in connection with the goods.
11-14 The term does not include a computer program embedded in goods that
11-15 consist solely of the medium in which the program is embedded. The
11-16 term also does not include accounts, chattel paper, commercial tort
11-17 claims, deposit accounts, documents, general intangibles,
11-18 instruments, investment property, letter-of-credit rights, letters
11-19 of credit, money, or oil, gas, or other minerals before extraction.
11-20 (45) "Governmental unit" means a subdivision, agency,
11-21 department, county, parish, municipality, or other unit of the
11-22 government of the United States, a state, or a foreign country.
11-23 The term includes an organization having a separate corporate
11-24 existence if the organization is eligible to issue debt on which
11-25 interest is exempt from income taxation under the laws of the
11-26 United States.
12-1 (46) "Health care insurance receivable" means an
12-2 interest in or claim under a policy of insurance that is a right to
12-3 payment of a monetary obligation for health care goods or services
12-4 provided.
12-5 (47) "Instrument" means a negotiable instrument or any
12-6 other writing that evidences a right to the payment of a monetary
12-7 obligation, is not itself a security agreement or lease, and is of
12-8 a type that in ordinary course of business is transferred by
12-9 delivery with any necessary indorsement or assignment. The term
12-10 does not include (i) investment property, (ii) letters of credit,
12-11 (iii) writings that evidence a right to payment arising out of the
12-12 use of a credit or charge card or information contained on or for
12-13 use with the card, or (iv) nonnegotiable certificates of deposit.
12-14 (48) "Inventory" means goods, other than farm
12-15 products, that:
12-16 (A) are leased by a person as lessor;
12-17 (B) are held by a person for sale or lease or to
12-18 be furnished under a contract of service;
12-19 (C) are furnished by a person under a contract
12-20 of service; or
12-21 (D) consist of raw materials, work in process,
12-22 or materials used or consumed in a business.
12-23 (49) "Investment property" means a security, whether
12-24 certificated or uncertificated, security entitlement, securities
12-25 account, commodity contract, or commodity account.
12-26 (50) "Jurisdiction of organization," with respect to a
13-1 registered organization, means the jurisdiction under whose law the
13-2 organization is organized.
13-3 (51) "Letter-of-credit right" means a right to payment
13-4 or performance under a letter of credit, whether or not the
13-5 beneficiary has demanded or is at the time entitled to demand
13-6 payment or performance. The term does not include the right of a
13-7 beneficiary to demand payment or performance under a letter of
13-8 credit.
13-9 (52) "Lien creditor" means:
13-10 (A) a creditor that has acquired a lien on the
13-11 property involved by attachment, levy, or the like;
13-12 (B) an assignee for benefit of creditors from
13-13 the time of assignment;
13-14 (C) a trustee in bankruptcy from the date of the
13-15 filing of the petition; or
13-16 (D) a receiver in equity from the time of
13-17 appointment.
13-18 (53) "Manufactured home" means a structure,
13-19 transportable in one or more sections, that, in the traveling mode,
13-20 is eight body feet or more in width or 40 body feet or more in
13-21 length, or, when erected on site, is 320 or more square feet, and
13-22 that is built on a permanent chassis and designed to be used as a
13-23 dwelling with or without a permanent foundation when connected to
13-24 the required utilities, and includes the plumbing, heating,
13-25 air-conditioning, and electrical systems contained therein. The
13-26 term includes any structure that meets all of the requirements of
14-1 this subdivision except the size requirements and with respect to
14-2 which the manufacturer voluntarily files a certification required
14-3 by the United States secretary of housing and urban development and
14-4 complies with the standards established under Title 42 of the
14-5 United States Code.
14-6 (54) "Manufactured-home transaction" means a secured
14-7 transaction:
14-8 (A) that creates a purchase-money security
14-9 interest in a manufactured home, other than a manufactured home
14-10 held as inventory; or
14-11 (B) in which a manufactured home, other than a
14-12 manufactured home held as inventory, is the primary collateral.
14-13 (55) "Mortgage" means a consensual interest in real
14-14 property, including fixtures, that secures payment or performance
14-15 of an obligation.
14-16 (56) "New debtor" means a person that becomes bound as
14-17 debtor under Section 9.203(d) by a security agreement previously
14-18 entered into by another person.
14-19 (57) "New value" means (i) money, (ii) money's worth
14-20 in property, services, or new credit, or (iii) release by a
14-21 transferee of an interest in property previously transferred to the
14-22 transferee. The term does not include an obligation substituted
14-23 for another obligation.
14-24 (58) "Noncash proceeds" means proceeds other than cash
14-25 proceeds.
14-26 (59) "Nonnegotiable certificate of deposit" means a
15-1 writing signed by a bank that:
15-2 (A) states on its face that it is a certificate
15-3 of deposit, as defined in Section 3.104, or receipt for a book
15-4 entry;
15-5 (B) contains an acknowledgement that a sum of
15-6 money has been received by the bank, with an express or implied
15-7 agreement that the bank will repay the sum of money; and
15-8 (C) is not a negotiable instrument.
15-9 (60) "Obligor" means a person that, with respect to an
15-10 obligation secured by a security interest in or an agricultural
15-11 lien on the collateral, (i) owes payment or other performance of
15-12 the obligation, (ii) has provided property other than the
15-13 collateral to secure payment or other performance of the
15-14 obligation, or (iii) is otherwise accountable in whole or in part
15-15 for payment or other performance of the obligation. The term does
15-16 not include issuers or nominated persons under a letter of credit.
15-17 (61) "Original debtor" means a person that, as debtor,
15-18 entered into a security agreement to which a new debtor has become
15-19 bound under Section 9.203(d).
15-20 (62) "Payment intangible" means a general intangible
15-21 under which the account debtor's principal obligation is a monetary
15-22 obligation.
15-23 (63) "Person related to," with respect to an
15-24 individual, means:
15-25 (A) the spouse of the individual;
15-26 (B) a brother, brother-in-law, sister, or
16-1 sister-in-law of the individual;
16-2 (C) an ancestor or lineal descendant of the
16-3 individual or the individual's spouse; or
16-4 (D) any other relative, by blood or marriage, of
16-5 the individual or the individual's spouse who shares the same home
16-6 with the individual.
16-7 (64) "Person related to," with respect to an
16-8 organization, means:
16-9 (A) a person directly or indirectly controlling,
16-10 controlled by, or under common control with the organization;
16-11 (B) an officer or director of, or a person
16-12 performing similar functions with respect to, the organization;
16-13 (C) an officer or director of, or a person
16-14 performing similar functions with respect to, a person described in
16-15 Paragraph (A);
16-16 (D) the spouse of an individual described in
16-17 Paragraph (A), (B), or (C); or
16-18 (E) an individual who is related by blood or
16-19 marriage to an individual described in Paragraph (A), (B), (C), or
16-20 (D) and shares the same home with the individual.
16-21 (65) "Proceeds" means the following property:
16-22 (A) whatever is acquired upon the sale, lease,
16-23 license, exchange, or other disposition of collateral;
16-24 (B) whatever is collected on, or distributed on
16-25 account of, collateral;
16-26 (C) rights arising out of collateral;
17-1 (D) to the extent of the value of collateral,
17-2 claims arising out of the loss, nonconformity, or interference with
17-3 the use of, defects or infringement of rights in, or damage to the
17-4 collateral; or
17-5 (E) to the extent of the value of collateral and
17-6 to the extent payable to the debtor or the secured party, insurance
17-7 payable by reason of the loss or nonconformity of, defects or
17-8 infringement of rights in, or damage to the collateral.
17-9 (66) "Promissory note" means an instrument that
17-10 evidences a promise to pay a monetary obligation, does not evidence
17-11 an order to pay, and does not contain an acknowledgement by a bank
17-12 that the bank has received for deposit a sum of money or funds.
17-13 (67) "Proposal" means a record authenticated by a
17-14 secured party that includes the terms on which the secured party is
17-15 willing to accept collateral in full or partial satisfaction of the
17-16 obligation it secures pursuant to Sections 9.620, 9.621, and 9.622.
17-17 (68) "Public-finance transaction" means a secured
17-18 transaction in connection with which:
17-19 (A) debt securities are issued;
17-20 (B) all or a portion of the securities issued
17-21 have an initial stated maturity of at least 20 years; and
17-22 (C) the debtor, obligor, secured party, account
17-23 debtor or other person obligated on collateral, assignor or
17-24 assignee or a secured obligation, or assignor or assignee of a
17-25 security interest is a state or a governmental unit of a state.
17-26 (69) "Pursuant to commitment," with respect to an
18-1 advance made or other value given by a secured party, means
18-2 pursuant to the secured party's obligation, whether or not a
18-3 subsequent event of default or other event not within the secured
18-4 party's control has relieved or may relieve the secured party from
18-5 its obligation.
18-6 (70) "Record," except as used in "for record," "of
18-7 record," "record or legal title," and "record owner," means
18-8 information that is inscribed on a tangible medium or that is
18-9 stored in an electronic or other medium and is retrievable in
18-10 perceivable form.
18-11 (71) "Registered organization" means an organization
18-12 organized solely under the law of a single state or the United
18-13 States and as to which the state or the United States must maintain
18-14 a public record showing the organization to have been organized.
18-15 (72) "Secondary obligor" means an obligor to the
18-16 extent that:
18-17 (A) the obligor's obligation is secondary; or
18-18 (B) the obligor has a right of recourse with
18-19 respect to an obligation secured by collateral against the debtor,
18-20 another obligor, or property of either.
18-21 (73) "Secured party" means:
18-22 (A) a person in whose favor a security interest
18-23 is created or provided for under a security agreement, whether or
18-24 not any obligation to be secured is outstanding;
18-25 (B) a person that holds an agricultural lien;
18-26 (C) a consignor;
19-1 (D) a person to which accounts, chattel paper,
19-2 payment intangibles, or promissory notes have been sold;
19-3 (E) a trustee, indenture trustee, agent,
19-4 collateral agent, or other representative in whose favor a security
19-5 interest or agricultural lien is created or provided for; or
19-6 (F) a person that holds a security interest
19-7 arising under Section 2.401, 2.505, 2.711(c), 2A.508(e), 4.210, or
19-8 5.118.
19-9 (74) "Security agreement" means an agreement that
19-10 creates or provides for a security interest.
19-11 (75) "Send," in connection with a record or
19-12 notification, means:
19-13 (A) to deposit in the mail, deliver for
19-14 transmission, or transmit by any other usual means of
19-15 communication, with postage or cost of transmission provided for,
19-16 addressed to any address reasonable under the circumstances; or
19-17 (B) to cause the record or notification to be
19-18 received within the time that it would have been received if
19-19 properly sent under Paragraph (A).
19-20 (76) "Software" means a computer program and any
19-21 supporting information provided in connection with a transaction
19-22 relating to the program. The term does not include a computer
19-23 program that is included in the definition of "goods."
19-24 (77) "State" means a state of the United States, the
19-25 District of Columbia, Puerto Rico, the United States Virgin
19-26 Islands, or any territory or insular possession subject to the
20-1 jurisdiction of the United States.
20-2 (78) "Supporting obligation" means a letter-of-credit
20-3 right or secondary obligation that supports the payment or
20-4 performance of an account, chattel paper, a document, a general
20-5 intangible, an instrument, or investment property.
20-6 (79) "Tangible chattel paper" means chattel paper
20-7 evidenced by a record or records consisting of information that is
20-8 inscribed on a tangible medium.
20-9 (80) "Termination statement" means an amendment of a
20-10 financing statement that:
20-11 (A) identifies, by its file number, the initial
20-12 financing statement to which it relates; and
20-13 (B) indicates either that it is a termination
20-14 statement or that the identified financing statement is no longer
20-15 effective.
20-16 (81) "Transmitting utility" means a person primarily
20-17 engaged in the business of:
20-18 (A) operating a railroad, subway, street
20-19 railway, or trolley bus;
20-20 (B) transmitting communications electrically,
20-21 electromagnetically, or by light;
20-22 (C) transmitting goods by pipeline or sewer; or
20-23 (D) transmitting or producing and transmitting
20-24 electricity, steam, gas, or water. [POLICY AND SUBJECT MATTER OF
20-25 CHAPTER. (a) Except as otherwise provided in Section 9.104 on
20-26 excluded transactions, this chapter applies]
21-1 [(1) to any transaction (regardless of its form) which
21-2 is intended to create a security interest in personal property or
21-3 fixtures including goods, documents, instruments, general
21-4 intangibles, chattel paper or accounts; and also]
21-5 [(2) to any sale of accounts or chattel paper,
21-6 provided that the application of this chapter to the sale of
21-7 accounts or chattel paper is not to recharacterize the sale of
21-8 accounts or chattel paper as a transaction to secure indebtedness
21-9 but to protect purchasers of accounts or chattel paper by providing
21-10 a notice filing system.]
21-11 [(b) This chapter applies to security interests created by
21-12 contract including pledge, assignment, chattel mortgage, chattel
21-13 trust, trust deed, factor's lien, equipment trust, conditional
21-14 sale, trust receipt, other lien or title retention contract and
21-15 lease or consignment intended as security. This chapter does not
21-16 apply to statutory liens except as provided in Section 9.310.]
21-17 [(c) The application of this chapter to a security interest
21-18 in a secured obligation is not affected by the fact that the
21-19 obligation is itself secured by a transaction or interest to which
21-20 this chapter does not apply.]
21-21 [(d) For all purposes, in the absence of a finding of fraud
21-22 or intentional misrepresentation, the parties' characterization of
21-23 a transaction as a sale of accounts or chattel paper shall be
21-24 conclusive that the transaction is a sale and is not a secured
21-25 transaction and that title, legal and equitable, has passed to the
21-26 party characterized as the purchaser of the accounts or chattel
22-1 paper, regardless of whether the secured party has any recourse
22-2 against the debtor, whether the debtor is entitled to any surplus,
22-3 or any other term of the parties' agreement.]
22-4 [Sec. 9.103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE
22-5 STATE TRANSACTIONS. (a) Documents, instruments and ordinary
22-6 goods.]
22-7 [(1) This subsection applies to documents and
22-8 instruments and to goods other than those covered by a certificate
22-9 of title described in Subsection (b), mobile goods described in
22-10 Subsection (c), and minerals described in Subsection (e).]
22-11 [(2) Except as otherwise provided in this subsection,
22-12 perfection and the effect of perfection or non-perfection of a
22-13 security interest in collateral are governed by the law of the
22-14 jurisdiction where the collateral is when the last event occurs on
22-15 which is based the assertion that the security interest is
22-16 perfected or unperfected.]
22-17 [(3) If the parties to a transaction creating a
22-18 purchase money security interest in goods in one jurisdiction
22-19 understand at the time that the security interest attaches that the
22-20 goods will be kept in another jurisdiction, then the law of the
22-21 other jurisdiction governs the perfection and the effect of
22-22 perfection or non-perfection of the security interest from the time
22-23 it attaches until 30 days after the debtor receives possession of
22-24 the goods and thereafter if the goods are taken to the other
22-25 jurisdiction before the end of the 30-day period.]
22-26 [(4) When collateral is brought into and kept in this
23-1 state while subject to a security interest perfected under the law
23-2 of the jurisdiction from which the collateral was removed, the
23-3 security interest remains perfected, but if action is required by
23-4 Subchapter C of this chapter to perfect the security interest,]
23-5 [(A) if the action is not taken before the
23-6 expiration of the period of perfection in the other jurisdiction or
23-7 the end of four months after the collateral is brought into this
23-8 state, whichever period first expires, the security interest
23-9 becomes unperfected at the end of that period and is thereafter
23-10 deemed to have been unperfected as against a person who became a
23-11 purchaser after removal;]
23-12 [(B) if the action is taken before the
23-13 expiration of the period specified in paragraph (A), the security
23-14 interest continues perfected thereafter;]
23-15 [(C) for the purpose of priority over a buyer of
23-16 consumer goods (Subsection (b) of Section 9.307), the period of the
23-17 effectiveness of a filing in the jurisdiction from which the
23-18 collateral is removed is governed by the rules with respect to
23-19 perfection in paragraphs (A) and (B).]
23-20 [(b) Certificate of title.]
23-21 [(1) This subsection applies to goods covered by a
23-22 certificate of title issued under a statute of this state or of
23-23 another jurisdiction under the law of which indication of a
23-24 security interest on the certificate is required as a condition of
23-25 perfection.]
23-26 [(2) Except as otherwise provided in this subsection,
24-1 perfection and the effect of perfection or non-perfection of the
24-2 security interest are governed by the law (including the conflict
24-3 of laws rules) of the jurisdiction issuing the certificate until
24-4 four months after the goods are removed from that jurisdiction and
24-5 thereafter until the goods are registered in another jurisdiction,
24-6 but in any event not beyond surrender of the certificate. After
24-7 the expiration of that period, the goods are not covered by the
24-8 certificate of title within the meaning of this section.]
24-9 [(3) Except with respect to the rights of a buyer
24-10 described in the next paragraph, a security interest, perfected in
24-11 another jurisdiction otherwise than by notation on a certificate of
24-12 title, in goods brought into this state and thereafter covered by a
24-13 certificate of title issued by this state is subject to the rules
24-14 stated in paragraph (4) of Subsection (a).]
24-15 [(4) If goods are brought into this state while a
24-16 security interest therein is perfected in any manner under the law
24-17 of the jurisdiction from which the goods are removed and a
24-18 certificate of title is issued by this state and the certificate
24-19 does not show that the goods are subject to the security interest
24-20 or that they may be subject to security interests not shown on the
24-21 certificate, the security interest is subordinate to the rights of
24-22 a buyer of the goods who is not in the business of selling goods of
24-23 that kind to the extent that he gives value and receives delivery
24-24 of the goods after issuance of the certificate and without
24-25 knowledge of the security interest.]
24-26 [(c) Accounts, general intangibles and mobile goods.]
25-1 [(1) This subsection applies to accounts (other than
25-2 an account described in Subsection (e) on minerals) and general
25-3 intangibles (other than uncertificated securities) and to goods
25-4 which are mobile and which are of a type normally used in more than
25-5 one jurisdiction, such as motor vehicles, trailers, rolling stock,
25-6 airplanes, shipping containers, road building and construction
25-7 machinery and commercial harvesting machinery and the like, if the
25-8 goods are equipment or are inventory leased or held for lease by
25-9 the debtor to others, and are not covered by a certificate of title
25-10 described in Subsection (b).]
25-11 [(2) The law (including the conflict of laws rules) of
25-12 the jurisdiction in which the debtor is located governs the
25-13 perfection and the effect of perfection or non-perfection of the
25-14 security interest.]
25-15 [(3) If, however, the debtor is located in the
25-16 jurisdiction which is not a part of the United States, and which
25-17 does not provide for perfection of the security interest by filing
25-18 or recording in that jurisdiction, the law of the jurisdiction in
25-19 the United States in which the debtor has its major executive
25-20 office in the United States governs the perfection and the effect
25-21 of perfection or non-perfection of the security interest through
25-22 filing. In the alternative, if the debtor is located in a
25-23 jurisdiction which is not a part of the United States or Canada and
25-24 the collateral is accounts or general intangibles for money due or
25-25 to become due, the security interest may be perfected by
25-26 notification to the account debtor. As used in this paragraph,
26-1 "United States" includes its territories and possessions and the
26-2 Commonwealth of Puerto Rico.]
26-3 [(4) A debtor shall be deemed located at his place of
26-4 business if he has one, at his chief executive office if he has
26-5 more than one place of business, otherwise at his residence. If,
26-6 however, the debtor is a foreign air carrier under the Federal
26-7 Aviation Act of 1958, as amended, it shall be deemed located at the
26-8 designated office of the agent upon whom service of process may be
26-9 made on behalf of the foreign air carrier.]
26-10 [(5) A security interest perfected under the law of
26-11 the jurisdiction of the location of the debtor is perfected until
26-12 the expiration of four months after a change of the debtor's
26-13 location to another jurisdiction, or until perfection would have
26-14 ceased by the law of the first jurisdiction, whichever period first
26-15 expires. Unless perfected in the new jurisdiction before the end
26-16 of that period, it becomes unperfected thereafter and is deemed to
26-17 have been unperfected as against a person who became a purchaser
26-18 after the change.]
26-19 [(d) Chattel paper.]
26-20 [The rules stated for goods in Subsection (a) apply to a
26-21 possessory security interest in chattel paper. The rules stated
26-22 for accounts in Subsection (c) apply to a non-possessory security
26-23 interest in chattel paper, but the security interest may not be
26-24 perfected by notification to the account debtor.]
26-25 [(e) Minerals.]
26-26 [Perfection and the effect of perfection or non-perfection of
27-1 a security interest which is created by a debtor who has an
27-2 interest in minerals or the like (including oil and gas) before
27-3 extraction and which attaches thereto as extracted, or which
27-4 attaches to an account resulting from the sale thereof at the
27-5 wellhead or minehead are governed by the law (including the
27-6 conflict of laws rules) of the jurisdiction wherein the wellhead or
27-7 minehead is located.]
27-8 [(f) Investment property.]
27-9 [(1) This subsection applies to investment property.]
27-10 [(2) Except as otherwise provided in Subdivision (6),
27-11 during the time that a security certificate is located in a
27-12 jurisdiction, perfection of a security interest, the effect of
27-13 perfection or non-perfection, and the priority of a security
27-14 interest in the certificated security represented thereby are
27-15 governed by the local law of that jurisdiction.]
27-16 [(3) Except as otherwise provided in Subdivision (6),
27-17 perfection of a security interest, the effect of perfection or
27-18 non-perfection, and the priority of a security interest in an
27-19 uncertificated security are governed by the local law of the
27-20 issuer's jurisdiction as specified in Section 8.110(d).]
27-21 [(4) Except as otherwise provided in Subdivision (6),
27-22 perfection of a security interest, the effect of perfection or
27-23 non-perfection, and the priority of a security interest in a
27-24 security entitlement or securities account are governed by the
27-25 local law of the securities intermediary's jurisdiction as
27-26 specified in Section 8.110(e).]
28-1 [(5) Except as otherwise provided in Subdivision (6),
28-2 perfection of a security interest, the effect of perfection or
28-3 non-perfection, and the priority of a security interest in a
28-4 commodity contract or commodity account are governed by the local
28-5 law of the commodity intermediary's jurisdiction. The following
28-6 rules determine a commodity intermediary's jurisdiction for
28-7 purposes of this subdivision:]
28-8 [(A) If an agreement between the commodity
28-9 intermediary and the commodity customer specifies that it is
28-10 governed by the law of a particular jurisdiction, that jurisdiction
28-11 is the commodity intermediary's jurisdiction.]
28-12 [(B) If an agreement between the commodity
28-13 intermediary and the commodity customer does not specify the
28-14 governing law as provided in Paragraph (A), but expressly specifies
28-15 that the commodity account is maintained at an office in a
28-16 particular jurisdiction, that jurisdiction is the commodity
28-17 intermediary's jurisdiction.]
28-18 [(C) If an agreement between the commodity
28-19 intermediary and the commodity customer does not specify a
28-20 jurisdiction as provided in Paragraph (A) or (B), the commodity
28-21 intermediary's jurisdiction is the jurisdiction in which is located
28-22 the office identified in an account statement as the office serving
28-23 the commodity customer's account.]
28-24 [(D) If an agreement between the commodity
28-25 intermediary and the commodity customer does not specify a
28-26 jurisdiction as provided in Paragraph (A) or (B) and an account
29-1 statement does not identify an office serving the commodity
29-2 customer's account as provided in Paragraph (C), the commodity
29-3 intermediary's jurisdiction is the jurisdiction in which is located
29-4 the chief executive office of the commodity intermediary.]
29-5 [(6) Perfection of a security interest by filing,
29-6 automatic perfection of a security interest in investment property
29-7 granted by a broker or securities intermediary, and automatic
29-8 perfection of a security interest in a commodity contract or
29-9 commodity account granted by a commodity intermediary are governed
29-10 by the local law of the jurisdiction in which the debtor is
29-11 located.]
29-12 [Sec. 9.104. TRANSACTIONS EXCLUDED FROM CHAPTER. This
29-13 chapter does not apply]
29-14 [(1) to a security interest subject to any statute of
29-15 the United States such as the Ship Mortgage Act, 1920, to the
29-16 extent that such statute governs the rights of parties to and third
29-17 parties affected by transactions in particular types of property;
29-18 or]
29-19 [(2) to a landlord's lien; or]
29-20 [(3) to a lien given by statute or other rule of law
29-21 for services or materials except as provided in Section 9.310 on
29-22 priority of such liens; or]
29-23 [(4) to a transfer of a claim for wages, salary or
29-24 other compensation of an employee; or]
29-25 [(5) to a transfer by a government or governmental
29-26 subdivision or agency; or]
30-1 [(6) to a sale of accounts or chattel paper as part of
30-2 a sale of the business out of which they arose, or an assignment of
30-3 accounts or chattel paper which is for the purpose of collection
30-4 only, or a transfer of a right to payment under a contract to an
30-5 assignee who is also to do the performance under the contract or a
30-6 transfer of a single account to an assignee in whole or partial
30-7 satisfaction of a preexisting indebtedness; or]
30-8 [(7) to a transfer of an interest or claim in or under
30-9 any policy of insurance, except as provided with respect to
30-10 proceeds (Section 9.306) and priorities in proceeds (Section
30-11 9.312); or]
30-12 [(8) to a right represented by a judgment (other than
30-13 a judgment taken on a right to payment which was collateral); or]
30-14 [(9) to any right of set-off; or]
30-15 [(10) except to the extent that provision is made for
30-16 fixtures in Section 9.313, to the creation or transfer of an
30-17 interest in or lien on real estate, including a lease or rents
30-18 thereunder; or]
30-19 [(11) to a transfer in whole or in part of any claim
30-20 arising out of tort; or]
30-21 [(12) to a transfer of an interest in any deposit
30-22 account (Subsection (a)(5) of Section 9.105), except as provided
30-23 with respect to proceeds (Section 9.306) and priorities in proceeds
30-24 (Section 9.312).]
30-25 [Sec. 9.105. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
30-26 this chapter, unless the context otherwise requires:]
31-1 [(1) "Account debtor" means the person who is
31-2 obligated on an account, chattel paper or general intangible.]
31-3 [(2) "Chattel paper" means a writing or writings which
31-4 evidence both a monetary obligation and a security interest in or a
31-5 lease of specific goods, but a charter or other contract involving
31-6 the use or hire of a vessel is not chattel paper. When a
31-7 transaction is evidenced both by such a security agreement or a
31-8 lease and by an instrument or a series of instruments, the group of
31-9 writings taken together constitutes chattel paper.]
31-10 [(3) "Collateral" means the property subject to a
31-11 security interest, and includes accounts and chattel paper which
31-12 have been sold.]
31-13 [(4) "Debtor" means the person who owes payment or
31-14 other performance of the obligation secured, whether or not he owns
31-15 or has rights in the collateral, and includes the seller of
31-16 accounts or chattel paper. Where the debtor and the owner of the
31-17 collateral are not the same person, the term "debtor" means the
31-18 owner of the collateral in any provision of the chapter dealing
31-19 with the collateral, the obligor in any provision dealing with the
31-20 obligation, and may include both where the context so requires.]
31-21 [(5) "Deposit account" means a demand, time, savings,
31-22 passbook or like account maintained with a bank, savings and loan
31-23 association, credit union or like organization, other than an
31-24 account evidenced by a certificate of deposit or a nonnegotiable
31-25 certificate of deposit.]
31-26 [(6) "Document" means document of title as defined in
32-1 the general definitions of Chapter 1 (Section 1.201), and a receipt
32-2 of the kind described in Subsection (b) of Section 7.201.]
32-3 [(7) "Encumbrance" includes real estate mortgages and
32-4 other liens on real estate and all other rights in real estate that
32-5 are not ownership interests.]
32-6 [(8) "Goods" includes all things which are movable at
32-7 the time the security interest attaches or which are fixtures
32-8 (Section 9.313), but does not include money, documents,
32-9 instruments, investment property, accounts, chattel paper, general
32-10 intangibles, or minerals or the like (including oil and gas) before
32-11 extraction. "Goods" also includes standing timber which is to be
32-12 cut and removed under a conveyance or contract for sale, the unborn
32-13 young of animals, and growing crops.]
32-14 [(9) "Instrument" means a negotiable instrument
32-15 (defined in Section 3.104), a nonnegotiable certificate of deposit,
32-16 or any other writing which evidences a right to the payment of
32-17 money and is not itself a security agreement or lease and is of a
32-18 type which is in ordinary course of business transferred by
32-19 delivery with any necessary indorsement or assignment, but the term
32-20 does not include investment property.]
32-21 [(10) "Mortgage" means a consensual interest created
32-22 by a real estate mortgage, a trust deed on real estate, or the
32-23 like.]
32-24 [(11) An advance is made "pursuant to commitment" if
32-25 the secured party has bound himself to make it, whether or not a
32-26 subsequent event of default or other event not within his control
33-1 has relieved or may relieve him from his obligation.]
33-2 [(12) "Security agreement" means an agreement which
33-3 creates or provides for a security interest.]
33-4 [(13) "Secured party" means a lender, seller or other
33-5 person in whose favor there is a security interest, including a
33-6 person to whom accounts or chattel paper have been sold. When the
33-7 holders of obligations issued under an indenture of trust,
33-8 equipment trust agreement or the like are represented by a trustee
33-9 or other person, the representative is the secured party.]
33-10 [(14) "Nonnegotiable certificate of deposit" means a
33-11 written document issued by a bank, savings and loan association,
33-12 credit union, or similar financial organization that:]
33-13 [(A) states on its face that it is a certificate
33-14 of deposit (defined in Section 3.104) or receipt for a book entry;]
33-15 [(B) contains an acknowledgment that a sum of
33-16 money has been received by the issuer, with an express or implied
33-17 agreement that the issuer will repay the sum of money; and]
33-18 [(C) is not a negotiable instrument.]
33-19 (b) The following definitions in other chapters apply [Other
33-20 definitions applying] to this chapter [and the sections in which
33-21 they appear are]:
33-22 "Applicant" Section 5.102.
33-23 "Beneficiary" Section 5.102.
33-24 "Broker" Section 8.102.
33-25 "Certificated security" Section 8.102.
33-26 "Check" Section 3.104.
34-1 "Clearing corporation" Section 8.102.
34-2 "Contract for sale" Section 2.106.
34-3 "Customer" Section 4.104.
34-4 "Entitlement holder" Section 8.102.
34-5 "Financial asset" Section 8.102.
34-6 "Holder in due course" Section 3.302.
34-7 "Issuer" (with respect to a letter of
34-8 credit or letter-of-credit right) Section 5.102.
34-9 "Issuer" (with respect to a security) Section 8.201.
34-10 "Lease" Section 2A.103.
34-11 "Lease agreement" Section 2A.103.
34-12 "Lease contract" Section 2A.103.
34-13 "Leasehold interest" Section 2A.103.
34-14 "Lessee" Section 2A.103.
34-15 "Lessee in ordinary course of business" Section 2A.103.
34-16 "Lessor" Section 2A.103.
34-17 "Lessor's residual interest" Section 2A.103.
34-18 "Letter of credit" Section 5.102.
34-19 "Merchant" Section 2.104.
34-20 "Negotiable instrument" Section 3.104.
34-21 "Nominated person" Section 5.102.
34-22 "Note" Section 3.104.
34-23 "Proceeds of a letter of credit" Section 5.114.
34-24 "Prove" Section 3.103.
34-25 "Sale" Section 2.106.
34-26 "Securities account" Section 8.501.
35-1 "Securities intermediary" Section 8.102.
35-2 "Security" Section 8.102.
35-3 "Security certificate" Section 8.102.
35-4 "Security entitlement" Section 8.102.
35-5 "Uncertificated security" Section 8.102.
35-6 ["Account". Section 9.106.]
35-7 ["Attach". Section 9.203.]
35-8 ["Commodity contract". Section 9.115.]
35-9 ["Commodity customer". Section 9.115.]
35-10 ["Commodity intermediary". Section 9.115.]
35-11 ["Construction mortgage". Section 9.313(a).]
35-12 ["Consumer goods". Section 9.109(1).]
35-13 ["Control". Section 9.115.]
35-14 ["Equipment". Section 9.109(2).]
35-15 ["Farm products". Section 9.109(3).]
35-16 ["Fixture". Section 9.313.]
35-17 ["Fixture filing". Section 9.313.]
35-18 ["General intangibles". Section 9.106.]
35-19 ["Inventory". Section 9.109(4).]
35-20 ["Investment property". Section 9.115.]
35-21 ["Lien creditor". Section 9.301(c).]
35-22 ["Proceeds". Section 9.306(a).]
35-23 ["Purchase money security interest". Section 9.107.]
35-24 ["United States". Section 9.103.]
35-25 (c) [The following definitions in other chapters apply to
35-26 this chapter:]
36-1 ["Broker". Section 8.102.]
36-2 ["Certificated security". Section 8.102.]
36-3 ["Check". Section 3.104.]
36-4 ["Clearing corporation". Section 8.102.]
36-5 ["Contract for sale". Section 2.106.]
36-6 ["Control". Section 8.106.]
36-7 ["Delivery". Section 8.301.]
36-8 ["Entitlement holder". Section 8.102.]
36-9 ["Financial asset". Section 8.102.]
36-10 ["Holder in due course". Section 3.302.]
36-11 ["Note". Section 3.104.]
36-12 ["Sale". Section 2.106.]
36-13 ["Securities intermediary". Section 8.102.]
36-14 ["Security". Section 8.102.]
36-15 ["Security certificate". Section 8.102.]
36-16 ["Security entitlement". Section 8.102.]
36-17 ["Uncertificated security". Section 8.102.]
36-18 [(d) In addition,] Chapter 1 contains general definitions
36-19 and principles of construction and interpretation applicable
36-20 throughout this chapter.
36-21 Sec. 9.103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF
36-22 PAYMENTS; BURDEN OF ESTABLISHING. (a) In this section:
36-23 (1) "Purchase-money collateral" means goods or
36-24 software that secures a purchase-money obligation incurred with
36-25 respect to that collateral.
36-26 (2) "Purchase-money obligation" means an obligation of
37-1 an obligor incurred as all or part of the price of the collateral
37-2 or for value given to enable the debtor to acquire rights in or the
37-3 use of the collateral if the value is in fact so used.
37-4 (b) A security interest in goods is a purchase-money
37-5 security interest:
37-6 (1) to the extent that the goods are purchase-money
37-7 collateral with respect to that security interest;
37-8 (2) if the security interest is in inventory that is
37-9 or was purchase-money collateral, also to the extent that the
37-10 security interest secures a purchase-money obligation incurred with
37-11 respect to other inventory in which the secured party holds or held
37-12 a purchase-money security interest; and
37-13 (3) also to the extent that the security interest
37-14 secures a purchase-money obligation incurred with respect to
37-15 software in which the secured party holds or held a purchase-money
37-16 security interest.
37-17 (c) A security interest in software is a purchase-money
37-18 security interest to the extent that the security interest also
37-19 secures a purchase-money obligation incurred with respect to goods
37-20 in which the secured party holds or held a purchase-money security
37-21 interest if:
37-22 (1) the debtor acquired its interest in the software
37-23 in an integrated transaction in which it acquired an interest in
37-24 the goods; and
37-25 (2) the debtor acquired its interest in the software
37-26 for the principal purpose of using the software in the goods.
38-1 (d) The security interest of a consignor in goods that are
38-2 the subject of a consignment is a purchase-money security interest
38-3 in inventory.
38-4 (e) In a transaction other than a consumer-goods
38-5 transaction, if the extent to which a security interest is a
38-6 purchase-money security interest depends on the application of a
38-7 payment to a particular obligation, the payment must be applied:
38-8 (1) in accordance with any reasonable method of
38-9 application to which the parties agree;
38-10 (2) in the absence of the parties' agreement to a
38-11 reasonable method, in accordance with any intention of the obligor
38-12 manifested at or before the time of payment; or
38-13 (3) in the absence of an agreement to a reasonable
38-14 method and a timely manifestation of the obligor's intention, in
38-15 the following order:
38-16 (A) to obligations that are not secured; and
38-17 (B) if more than one obligation is secured, to
38-18 obligations secured by purchase-money security interests in the
38-19 order in which those obligations were incurred.
38-20 (f) In a transaction other than a consumer-goods
38-21 transaction, a purchase-money security interest does not lose its
38-22 status as such, even if:
38-23 (1) the purchase-money collateral also secures an
38-24 obligation that is not a purchase-money obligation;
38-25 (2) collateral that is not purchase-money collateral
38-26 also secures the purchase-money obligation; or
39-1 (3) the purchase-money obligation has been renewed,
39-2 refinanced, consolidated, or restructured.
39-3 (g) In a transaction other than a consumer-goods
39-4 transaction, a secured party claiming a purchase-money security
39-5 interest has the burden of establishing the extent to which the
39-6 security interest is a purchase-money security interest.
39-7 (h) The limitation of the rules in Subsections (e), (f), and
39-8 (g) to transactions other than consumer-goods transactions is
39-9 intended to leave to the court the determination of the proper
39-10 rules in consumer-goods transactions. The court may not infer from
39-11 that limitation the nature of the proper rule in consumer-goods
39-12 transactions and may continue to apply established approaches.
39-13 Sec. 9.104. CONTROL OF DEPOSIT ACCOUNT. (a) A secured
39-14 party has control of a deposit account if:
39-15 (1) the secured party is the bank with which the
39-16 deposit account is maintained;
39-17 (2) the debtor, secured party, and bank have agreed in
39-18 an authenticated record that the bank will comply with instructions
39-19 originated by the secured party directing disposition of the funds
39-20 in the account without further consent by the debtor; or
39-21 (3) the secured party becomes the bank's customer with
39-22 respect to the deposit account.
39-23 (b) A secured party that has satisfied Subsection (a) has
39-24 control, even if the debtor retains the right to direct the
39-25 disposition of funds from the deposit account.
39-26 Sec. 9.105. CONTROL OF ELECTRONIC CHATTEL PAPER. A secured
40-1 party has control of electronic chattel paper if the record or
40-2 records comprising the chattel paper are created, stored, and
40-3 assigned in such a manner that:
40-4 (1) a single authoritative copy of the record or
40-5 records exists that is unique, identifiable and, except as
40-6 otherwise provided in Subdivisions (4), (5), and (6), unalterable;
40-7 (2) the authoritative copy identifies the secured
40-8 party as the assignee of the record or records;
40-9 (3) the authoritative copy is communicated to and
40-10 maintained by the secured party or its designated custodian;
40-11 (4) copies or revisions that add or change an
40-12 identified assignee of the authoritative copy can be made only with
40-13 the participation of the secured party;
40-14 (5) each copy of the authoritative copy and any copy
40-15 of a copy is readily identifiable as a copy that is not the
40-16 authoritative copy; and
40-17 (6) any revision of the authoritative copy is readily
40-18 identifiable as an authorized or unauthorized revision.
40-19 Sec. 9.106. CONTROL OF INVESTMENT PROPERTY. (a) A person
40-20 has control of a certificated security, uncertificated security, or
40-21 security entitlement as provided in Section 8.106.
40-22 (b) A secured party has control of a commodity contract if:
40-23 (1) the secured party is the commodity intermediary
40-24 with which the commodity contract is carried; or
40-25 (2) the commodity customer, secured party, and
40-26 commodity intermediary have agreed that the commodity intermediary
41-1 will apply any value distributed on account of the commodity
41-2 contract as directed by the secured party without further consent
41-3 by the commodity customer.
41-4 (c) A secured party having control of all security
41-5 entitlements or commodity contracts carried in a securities account
41-6 or commodity account has control over the securities account or
41-7 commodity account.
41-8 Sec. 9.107. CONTROL OF LETTER-OF-CREDIT RIGHT. A secured
41-9 party has control of a letter-of-credit right to the extent of any
41-10 right to payment or performance by the issuer or any nominated
41-11 person if the issuer or nominated person has consented to an
41-12 assignment of proceeds of the letter of credit under Section
41-13 5.114(c) or otherwise applicable law or practice.
41-14 [Sec. 9.106. DEFINITIONS: "ACCOUNT"; "GENERAL INTANGIBLES".
41-15 "Account" means any right to payment for goods sold or leased or
41-16 for services rendered which is not evidenced by an instrument or
41-17 chattel paper, whether or not it has been earned by performance.
41-18 "General intangibles" means any personal property (including things
41-19 in action) other than goods, accounts, chattel paper, documents,
41-20 instruments, investment property, and money. All rights to payment
41-21 earned or unearned under a charter or other contract involving the
41-22 use or hire of a vessel and all rights incident to the charter or
41-23 contract are accounts.]
41-24 [Sec. 9.107. DEFINITIONS: "PURCHASE MONEY SECURITY
41-25 INTEREST". A security interest is a "purchase money security
41-26 interest" to the extent that it is]
42-1 [(1) taken or retained by the seller of the collateral
42-2 to secure all or part of its price; or]
42-3 [(2) taken by a person who by making advances or
42-4 incurring an obligation gives value to enable the debtor to acquire
42-5 rights in or the use of collateral if such value is in fact so
42-6 used.]
42-7 [Sec. 9.108. WHEN AFTER-ACQUIRED COLLATERAL NOT SECURITY FOR
42-8 ANTECEDENT DEBT. Where a secured party makes an advance, incurs an
42-9 obligation, releases a perfected security interest, or otherwise
42-10 gives new value which is to be secured in whole or in part by
42-11 after-acquired property his security interest in the after-acquired
42-12 collateral shall be deemed to be taken for new value and not as
42-13 security for an antecedent debt if the debtor acquires his rights
42-14 in such collateral either in the ordinary course of his business or
42-15 under a contract of purchase made pursuant to the security
42-16 agreement within a reasonable time after new value is given.]
42-17 [Sec. 9.109. CLASSIFICATION OF GOODS; "CONSUMER GOODS";
42-18 "EQUIPMENT"; "FARM PRODUCTS"; "INVENTORY". Goods are]
42-19 [(1) "consumer goods" if they are used or bought for
42-20 use primarily for personal, family or household purposes;]
42-21 [(2) "equipment" if they are used or bought for use
42-22 primarily in business (including farming or a profession) or by a
42-23 debtor who is a non-profit organization or a governmental
42-24 subdivision or agency or if the goods are not included in the
42-25 definitions of inventory, farm products or consumer goods;]
42-26 [(3) "farm products" if they are crops or livestock or
43-1 supplies used or produced in farming operations or if they are
43-2 products of crops or livestock in their unmanufactured states (such
43-3 as ginned cotton, wool-clip, maple syrup, milk and eggs), and if
43-4 they are in the possession of a debtor engaged in raising,
43-5 fattening, grazing or other farming operations. If goods are farm
43-6 products they are neither equipment nor inventory;]
43-7 [(4) "inventory" if they are held by a person who
43-8 holds them for sale or lease or to be furnished under contracts of
43-9 service or if he has so furnished them, or if they are raw
43-10 materials, work in process or materials used or consumed in a
43-11 business. Inventory of a person is not to be classified as his
43-12 equipment.]
43-13 Sec. 9.108 [9.110]. SUFFICIENCY OF DESCRIPTION. (a) Except
43-14 as otherwise provided in Subsections (c), (d), and (e), a [(f) of
43-15 Section 9.402, any] description of personal [property] or real
43-16 property [estate] is sufficient, [for the purposes of this chapter]
43-17 whether or not it is specific, if it reasonably identifies what is
43-18 described.
43-19 (b) Except as otherwise provided in Subsection (d), a
43-20 description of collateral reasonably identifies the collateral if
43-21 it identifies the collateral by:
43-22 (1) specific listing;
43-23 (2) category;
43-24 (3) except as otherwise provided in Subsection (e), a
43-25 type of collateral defined in this title;
43-26 (4) quantity;
44-1 (5) computational or allocational formula or
44-2 procedure; or
44-3 (6) except as otherwise provided in Subsection (c),
44-4 any other method, if the identity of the collateral is objectively
44-5 determinable.
44-6 (c) A description of collateral as "all the debtor's assets"
44-7 or "all the debtor's personal property" or using words of similar
44-8 import does not reasonably identify the collateral.
44-9 (d) Except as otherwise provided in Subsection (e), a
44-10 description of a security entitlement, securities account, or
44-11 commodity account is sufficient if it describes:
44-12 (1) the collateral by those terms or as investment
44-13 property; or
44-14 (2) the underlying financial asset or commodity
44-15 contract.
44-16 (e) A description only by type of collateral defined in this
44-17 title is an insufficient description of:
44-18 (1) a commercial tort claim; or
44-19 (2) in a consumer transaction, consumer goods, a
44-20 security entitlement, a securities account, or a commodity account.
44-21 Sec. 9.109. SCOPE. (a) Except as otherwise provided in
44-22 Subsections (c), (d), and (e), this chapter applies to:
44-23 (1) a transaction, regardless of its form, that
44-24 creates a security interest in personal property or fixtures by
44-25 contract;
44-26 (2) an agricultural lien;
45-1 (3) a sale of accounts, chattel paper, payment
45-2 intangibles, or promissory notes;
45-3 (4) a consignment;
45-4 (5) a security interest arising under Section 2.401,
45-5 2.505, 2.711(c), or 2A.508(e), as provided in Section 9.110; and
45-6 (6) a security interest arising under Section 4.210 or
45-7 5.118.
45-8 (b) The application of this chapter to a security interest
45-9 in a secured obligation is not affected by the fact that the
45-10 obligation is itself secured by a transaction or interest to which
45-11 this chapter does not apply.
45-12 (c) This chapter does not apply to the extent that:
45-13 (1) a statute, regulation, or treaty of the United
45-14 States preempts this chapter;
45-15 (2) another statute of this state expressly governs
45-16 the creation, perfection, priority, or enforcement of a security
45-17 interest created by this state or a governmental unit of this
45-18 state;
45-19 (3) a statute of another state, a foreign country, or
45-20 a governmental unit of another state or a foreign country, other
45-21 than a statute generally applicable to security interests,
45-22 expressly governs creation, perfection, priority, or enforcement of
45-23 a security interest created by the state, country, or governmental
45-24 unit; or
45-25 (4) the rights of a transferee beneficiary or
45-26 nominated person under a letter of credit are independent and
46-1 superior under Section 5.114.
46-2 (d) This chapter does not apply to:
46-3 (1) a landlord's lien, other than an agricultural
46-4 lien;
46-5 (2) a lien, other than an agricultural lien, given by
46-6 statute or other rule of law for services or materials, but Section
46-7 9.333 applies with respect to priority of the lien;
46-8 (3) an assignment of a claim for wages, salary, or
46-9 other compensation of an employee;
46-10 (4) a sale of accounts, chattel paper, payment
46-11 intangibles, or promissory notes as part of a sale of the business
46-12 out of which they arose;
46-13 (5) an assignment of accounts, chattel paper, payment
46-14 intangibles, or promissory notes that is for the purpose of
46-15 collection only;
46-16 (6) an assignment of a right to payment under a
46-17 contract to an assignee that is also obligated to perform under the
46-18 contract;
46-19 (7) an assignment of a single account, payment
46-20 intangible, or promissory note to an assignee in full or partial
46-21 satisfaction of a preexisting indebtedness;
46-22 (8) a transfer of an interest in or an assignment of
46-23 a claim under a policy of insurance, other than an assignment by or
46-24 to a health care provider of a health-care-insurance receivable and
46-25 any subsequent assignment of the right to payment, but Sections
46-26 9.315 and 9.322 apply with respect to proceeds and priorities in
47-1 proceeds;
47-2 (9) an assignment of a right represented by a
47-3 judgment, other than a judgment taken on a right to payment that
47-4 was collateral;
47-5 (10) a right of recoupment or set-off, but:
47-6 (A) Section 9.340 applies with respect to the
47-7 effectiveness of rights of recoupment or set-off against deposit
47-8 accounts; and
47-9 (B) Section 9.404 applies with respect to
47-10 defenses or claims of an account debtor;
47-11 (11) the creation or transfer of an interest in or
47-12 lien on real property, including a lease or rents thereunder, the
47-13 interest of a vendor or vendee in a contract for deed to purchase
47-14 an interest in real property, or the interest of an optionor or
47-15 optionee in an option to purchase an interest in real property,
47-16 except to the extent that provision is made for:
47-17 (A) liens on real property in Sections 9.203 and
47-18 9.308;
47-19 (B) fixtures in Section 9.334;
47-20 (C) fixture filings in Sections 9.501, 9.502,
47-21 9.512, 9.516, and 9.519; and
47-22 (D) security agreements covering personal and
47-23 real property in Section 9.604;
47-24 (12) an assignment of a claim arising in tort, other
47-25 than a commercial tort claim, but Sections 9.315 and 9.322 apply
47-26 with respect to proceeds and priorities in proceeds; or
48-1 (13) an assignment of a deposit account, other than a
48-2 nonnegotiable certificate of deposit, in a consumer transaction,
48-3 but Sections 9.315 and 9.322 apply with respect to proceeds and
48-4 priorities in proceeds.
48-5 (e) The application of this chapter to the sale of accounts,
48-6 chattel paper, payment intangibles, or promissory notes is not to
48-7 recharacterize that sale as a transaction to secure indebtedness
48-8 but to protect purchasers of those assets by providing a notice
48-9 filing system. For all purposes, in the absence of fraud or
48-10 intentional misrepresentation, the parties' characterization of a
48-11 transaction as a sale of such assets shall be conclusive that the
48-12 transaction is a sale and is not a secured transaction and that
48-13 title, legal and equitable, has passed to the party characterized
48-14 as the purchaser of those assets regardless of whether the secured
48-15 party has any recourse against the debtor, whether the debtor is
48-16 entitled to any surplus, or any other term of the parties'
48-17 agreement.
48-18 [Sec. 9.112. WHERE COLLATERAL IS NOT OWNED BY DEBTOR.
48-19 Unless otherwise agreed, when a secured party knows that collateral
48-20 is owned by a person who is not the debtor, the owner of the
48-21 collateral is entitled to receive from the secured party any
48-22 surplus under Section 9.502(b) or under Section 9.504(a), and is
48-23 not liable for the debt or for any deficiency after resale, and he
48-24 has the same right as the debtor]
48-25 [(1) to receive statements under Section 9.208;]
48-26 [(2) to receive notice of and to object to a secured
49-1 party's proposal to retain the collateral in satisfaction of the
49-2 indebtedness under Section 9.505;]
49-3 [(3) to redeem the collateral under Section 9.506;]
49-4 [(4) to obtain injunctive or other relief under
49-5 Section 9.507(a); and]
49-6 [(5) to recover losses caused to him under Section
49-7 9.208(b).]
49-8 Sec. 9.110 [9.113]. SECURITY INTERESTS ARISING UNDER CHAPTER
49-9 2 OR 2A [ON SALES OR UNDER CHAPTER ON LEASES]. A security interest
49-10 arising [solely] under Section 2.401, 2.505, 2.711(c), or 2A.508(e)
49-11 [the chapter on Sales (Chapter 2) or the chapter on Leases (Chapter
49-12 2A)] is subject to [the provisions of] this chapter. However,
49-13 until the debtor obtains [except that to the extent that and so
49-14 long as the debtor does not have or does not lawfully obtain]
49-15 possession of the goods:
49-16 (1) [no security agreement is necessary to make] the
49-17 security interest is enforceable, even if Section 9.203(b)(3) has
49-18 not been satisfied; [and]
49-19 (2) [no] filing is not required to perfect the
49-20 security interest; [and]
49-21 (3) the rights of the secured party after [on] default
49-22 by the debtor are governed by [the chapter on Sales (]Chapter 2[)]
49-23 or [by the chapter on Leases (Chapter] 2A; and
49-24 (4) the security interest has priority over a
49-25 conflicting security interest created by the debtor[) in the case
49-26 of a security interest arising solely under such chapter].
50-1 [Sec. 9.114. CONSIGNMENT. (a) A person who delivers goods
50-2 under a consignment which is not a security interest and who would
50-3 be required to file under this chapter by Subsection (c)(3) of
50-4 Section 2.326 has priority over a secured party who is or becomes a
50-5 creditor of the consignee and who would have a perfected security
50-6 interest in the goods if they were the property of the consignee,
50-7 and also has priority with respect to identifiable cash proceeds
50-8 received on or before delivery of the goods to a buyer, if]
50-9 [(1) the consignor complies with the filing provision
50-10 of the chapter on Sales with respect to consignments (Subsection
50-11 (c)(3) of Section 2.326) before the consignee receives possession
50-12 of the goods; and]
50-13 [(2) the consignor gives notification in writing to
50-14 the holder of the security interest if the holder has filed a
50-15 financing statement covering the same types of goods before the
50-16 date of the filing made by the consignor; and]
50-17 [(3) the holder of the security interest receives the
50-18 notification within five years before the consignee receives
50-19 possession of the goods; and]
50-20 [(4) the notification states that the consignor
50-21 expects to deliver goods on consignment to the consignee,
50-22 describing the goods by item or type.]
50-23 [(b) In the case of a consignment which is not a security
50-24 interest and in which the requirements of the preceding subsection
50-25 have not been met, a person who delivers goods to another is
50-26 subordinate to a person who would have a perfected security
51-1 interest in the goods if they were the property of the debtor.]
51-2 [Sec. 9.115. INVESTMENT PROPERTY. (a) In this chapter:]
51-3 [(1) "Commodity account" means an account maintained
51-4 by a commodity intermediary in which a commodity contract is
51-5 carried for a commodity customer.]
51-6 [(2) "Commodity contract" means a commodity futures
51-7 contract, an option on a commodity futures contract, a commodity
51-8 option, or other contract that, in each case, is:]
51-9 [(A) traded on or subject to the rules of a
51-10 board of trade that has been designated as a contract market for
51-11 such a contract pursuant to the federal commodities laws; or]
51-12 [(B) traded on a foreign commodity board of
51-13 trade, exchange, or market, and is carried on the books of a
51-14 commodity intermediary for a commodity customer.]
51-15 [(3) "Commodity customer" means a person for whom a
51-16 commodity intermediary carries a commodity contract on its books.]
51-17 [(4) "Commodity intermediary" means:]
51-18 [(A) a person who is registered as a futures
51-19 commission merchant under the federal commodities laws; or]
51-20 [(B) a person who in the ordinary course of its
51-21 business provides clearance or settlement services for a board of
51-22 trade that has been designated as a contract market pursuant to the
51-23 federal commodities laws.]
51-24 [(5) "Control," with respect to a certificated
51-25 security, uncertificated security, or security entitlement, has the
51-26 meaning specified in Section 8.106. A secured party has control
52-1 over a commodity contract if, by agreement among the commodity
52-2 customer, the commodity intermediary, and the secured party, the
52-3 commodity intermediary has agreed that it will apply any value
52-4 distributed on account of the commodity contract as directed by the
52-5 secured party without further consent by the commodity customer.
52-6 If a commodity customer grants a security interest in a commodity
52-7 contract to its own commodity intermediary, the commodity
52-8 intermediary as secured party has control. A secured party has
52-9 control over a securities account or commodity account if the
52-10 secured party has control over all security entitlements or
52-11 commodity contracts carried in the securities account or commodity
52-12 account.]
52-13 [(6) "Investment property" means:]
52-14 [(A) a security, whether certificated or
52-15 uncertificated;]
52-16 [(B) a security entitlement;]
52-17 [(C) a securities account;]
52-18 [(D) a commodity contract; or]
52-19 [(E) a commodity account.]
52-20 [(b) Attachment or perfection of a security interest in a
52-21 securities account is also attachment or perfection of a security
52-22 interest in all security entitlements carried in the securities
52-23 account. Attachment or perfection of a security interest in a
52-24 commodity account is also attachment or perfection of a security
52-25 interest in all commodity contracts carried in the commodity
52-26 account.]
53-1 [(c) A description of collateral in a security agreement or
53-2 financing statement is sufficient to create or perfect a security
53-3 interest in a certificated security, uncertificated security,
53-4 security entitlement, securities account, commodity contract, or
53-5 commodity account whether it describes the collateral by those
53-6 terms, or as investment property, or by description of the
53-7 underlying security, financial asset, or commodity contract. A
53-8 description of investment property collateral in a security
53-9 agreement or financing statement is sufficient if it identifies the
53-10 collateral by specific listing, by category, by quantity, by a
53-11 computational or allocational formula or procedure, or by any other
53-12 method, if the identity of the collateral is objectively
53-13 determinable.]
53-14 [(d) Perfection of a security interest in investment
53-15 property is governed by the following rules:]
53-16 [(1) A security interest in investment property may be
53-17 perfected by control.]
53-18 [(2) Except as otherwise provided in Subdivisions (3)
53-19 and (4), a security interest in investment property may be
53-20 perfected by filing.]
53-21 [(3) If the debtor is a broker or securities
53-22 intermediary, a security interest in investment property is
53-23 perfected when it attaches. The filing of a financing statement
53-24 with respect to a security interest in investment property granted
53-25 by a broker or securities intermediary has no effect for purposes
53-26 of perfection or priority with respect to that security interest.]
54-1 [(4) If a debtor is a commodity intermediary, a
54-2 security interest in a commodity contract or a commodity account is
54-3 perfected when it attaches. The filing of a financing statement
54-4 with respect to a security interest in a commodity contract or a
54-5 commodity account granted by a commodity intermediary has no effect
54-6 for purposes of perfection or priority with respect to that
54-7 security interest.]
54-8 [(e) Priority between conflicting security interests in the
54-9 same investment property is governed by the following rules:]
54-10 [(1) A security interest of a secured party who has
54-11 control over investment property has priority over a security
54-12 interest of a secured party who does not have control over the
54-13 investment property.]
54-14 [(2) Except as otherwise provided in Subdivisions (3)
54-15 and (4), conflicting security interests of secured parties each of
54-16 whom has control rank equally.]
54-17 [(3) Except as otherwise agreed on by the securities
54-18 intermediary, a security interest in a security entitlement or a
54-19 securities account granted to the debtor's own securities
54-20 intermediary has priority over any security interest granted by the
54-21 debtor to another secured party.]
54-22 [(4) Except as otherwise agreed on by the commodity
54-23 intermediary, a security interest in a commodity contract or a
54-24 commodity account granted to the debtor's own commodity
54-25 intermediary has priority over any security interest granted by the
54-26 debtor to another secured party.]
55-1 [(5) Conflicting security interests granted by a
55-2 broker, a securities intermediary, or a commodity intermediary that
55-3 are perfected without control rank equally.]
55-4 [(6) In all other cases, priority between conflicting
55-5 security interests in investment property is governed by Sections
55-6 9.312(e)-(g). Section 9.312(d) does not apply to investment
55-7 property.]
55-8 [(f) If a security certificate in registered form is
55-9 delivered to a secured party pursuant to agreement, a written
55-10 security agreement is not required for attachment or enforceability
55-11 of the security interest, delivery suffices for perfection of the
55-12 security interest, and the security interest has priority over a
55-13 conflicting security interest perfected by means other than
55-14 control, even if a necessary indorsement is lacking.]
55-15 [Sec. 9.116. SECURITY INTEREST ARISING IN PURCHASE OR
55-16 DELIVERY OF FINANCIAL ASSET. (a) If a person buys a financial
55-17 asset through a securities intermediary in a transaction in which
55-18 the buyer is obligated to pay the purchase price to the securities
55-19 intermediary at the time of the purchase, and the securities
55-20 intermediary credits the financial asset to the buyer's securities
55-21 account before the buyer pays the securities intermediary, the
55-22 securities intermediary has a security interest in the buyer's
55-23 security entitlement securing the buyer's obligation to pay. A
55-24 security agreement is not required for attachment or enforceability
55-25 of the security interest, and the security interest is
55-26 automatically perfected.]
56-1 [(b) If a certificated security or other financial asset
56-2 represented by a writing that in the ordinary course of business is
56-3 transferred by delivery with any necessary indorsement or
56-4 assignment is delivered pursuant to an agreement between persons in
56-5 the business of dealing with such securities or financial assets
56-6 and the agreement calls for delivery versus payment, the person
56-7 delivering the certificate or other financial asset has a security
56-8 interest in the certificated security or other financial asset
56-9 securing the seller's right to receive payment. A security
56-10 agreement is not required for attachment or enforceability of the
56-11 security interest, and the security interest is automatically
56-12 perfected.]
56-13 SUBCHAPTER B. EFFECTIVENESS [VALIDITY] OF SECURITY
56-14 AGREEMENT; ATTACHMENT OF SECURITY INTEREST; [AND]
56-15 RIGHTS OF PARTIES TO SECURITY AGREEMENT [THERETO]
56-16 Sec. 9.201. GENERAL EFFECTIVENESS [VALIDITY] OF SECURITY
56-17 AGREEMENT. (a) Except as otherwise provided by this title, a
56-18 security agreement is effective according to its terms between the
56-19 parties, against purchasers of the collateral, and against
56-20 creditors.
56-21 (b) A transaction subject to this chapter is subject to any
56-22 applicable rule of law that establishes a different rule for
56-23 consumers and to:
56-24 (1) Title 4, Finance Code; and
56-25 (2) Subchapter E, Chapter 17.
56-26 (c) In case of conflict between this chapter and a rule of
57-1 law, statute, or regulation described in Subsection (b), the rule
57-2 of law, statute, or regulation controls. Failure to comply with a
57-3 statute or regulation described in Subsection (b) has only the
57-4 effect the statute or regulation specifies.
57-5 (d) This [Nothing in this] chapter does not:
57-6 (1) validate [validates] any rate, charge, agreement,
57-7 or practice that violates a rule of law, [illegal under any]
57-8 statute, or regulation described in Subsection (b); [thereunder
57-9 governing usury, small loans, retail installment sales, or the
57-10 like,] or
57-11 (2) extend [extends] the application of the rule of
57-12 law, [any such] statute, or regulation to a [any] transaction not
57-13 otherwise subject to it [thereto].
57-14 Sec. 9.202. TITLE TO COLLATERAL IMMATERIAL. Except as
57-15 otherwise provided with respect to consignments or sales of
57-16 accounts, chattel paper, payment intangibles, or promissory notes,
57-17 the provisions [Each provision] of this chapter with regard to
57-18 rights and[,] obligations apply [and remedies applies] whether
57-19 title to collateral is in the secured party or [in] the debtor.
57-20 Sec. 9.203. ATTACHMENT AND ENFORCEABILITY OF SECURITY
57-21 INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS;[,] FORMAL REQUISITES.
57-22 (a) A security interest attaches to collateral when it becomes
57-23 enforceable against the debtor with respect to the collateral,
57-24 unless an agreement expressly postpones the time of attachment.
57-25 (b) Except as otherwise provided in Subsections (c)-(j)
57-26 [Subject to the provisions of Section 4.210 on the security
58-1 interest of a collecting bank, Sections 9.115 and 9.116 on security
58-2 interests in investment property, and Section 9.113 on a security
58-3 interest arising under the chapter on Sales], a security interest
58-4 is [not] enforceable against the debtor and [or] third parties with
58-5 respect to the collateral only if [and does not attach unless]:
58-6 (1) [the collateral is in the possession of the
58-7 secured party pursuant to agreement, the collateral is investment
58-8 property and the secured party has control pursuant to agreement,
58-9 or the debtor has signed a security agreement which contains a
58-10 description of the collateral and in addition, when the security
58-11 interest covers crops growing or to be grown or timber to be cut, a
58-12 description of the land concerned;]
58-13 [(2)] value has been given; [and]
58-14 (2) [(3)] the debtor has rights in the collateral or
58-15 the power to transfer rights in the collateral to a secured party;
58-16 and
58-17 (3) one of the following conditions is met:
58-18 (A) the debtor has authenticated a security
58-19 agreement that provides a description of the collateral and, if the
58-20 security interest covers timber to be cut, a description of the
58-21 land concerned;
58-22 (B) the collateral is not a certificated
58-23 security and is in the possession of the secured party under
58-24 Section 9.313 pursuant to the debtor's security agreement;
58-25 (C) the collateral is a certificated security in
58-26 registered form and the security certificate has been delivered to
59-1 the secured party under Section 8.301 pursuant to the debtor's
59-2 security agreement; or
59-3 (D) the collateral is deposit accounts,
59-4 electronic chattel paper, investment property, or letter-of-credit
59-5 rights, and the secured party has control under Section 9.104,
59-6 9.105, 9.106, or 9.107 pursuant to the debtor's security agreement.
59-7 (c) Subsection (b) is subject to Section 4.210 on the
59-8 security interest of a collecting bank, Section 5.118 on the
59-9 security interest of a letter-of-credit issuer or nominated person,
59-10 Section 9.110 on a security interest arising under Chapter 2 or 2A,
59-11 and Section 9.206 on security interests in investment property.
59-12 (d) A person becomes bound as debtor by a security agreement
59-13 entered into by another person if, by operation of law other than
59-14 this chapter or by contract:
59-15 (1) the security agreement becomes effective to create
59-16 a security interest in the person's property; or
59-17 (2) the person becomes generally obligated for the
59-18 obligations of the other person, including the obligation secured
59-19 under the security agreement, and acquires or succeeds to all or
59-20 substantially all of the assets of the other person.
59-21 (e) If a new debtor becomes bound as debtor by a security
59-22 agreement entered into by another person:
59-23 (1) the agreement satisfies Subsection (b)(3) with
59-24 respect to existing or after-acquired property of the new debtor to
59-25 the extent the property is described in the agreement; and
59-26 (2) another agreement is not necessary to make a
60-1 security interest in the property enforceable.
60-2 (f) The attachment of [(b) A security interest attaches
60-3 when it becomes enforceable against the debtor with respect to the
60-4 collateral. Attachment occurs as soon as all of the events
60-5 specified in Subsection (a) have taken place unless explicit
60-6 agreement postpones the time of attaching.]
60-7 [(c) If a secured party holds a security interest which
60-8 applies under this chapter to minerals (including oil and gas) upon
60-9 their extraction and the security interest also qualifies under
60-10 applicable law as a lien on such minerals before their extraction,
60-11 the security interest before and after production shall constitute
60-12 a single continuous and uninterrupted lien on the property. The
60-13 foregoing is declaratory of the law of this state as it has
60-14 heretofore existed and shall apply with respect to oil, gas, and
60-15 other minerals heretofore and hereafter produced.]
60-16 [(d) Unless otherwise agreed] a security interest in
60-17 collateral [agreement] gives the secured party the rights to
60-18 proceeds provided by Section 9.315 and is also attachment of a
60-19 security interest in a supporting obligation for the collateral
60-20 [9.306].
60-21 (g) The attachment of a security interest in a right to
60-22 payment or performance secured by a security interest or other lien
60-23 on personal or real property is also attachment of a security
60-24 interest in the security interest, mortgage, or other lien.
60-25 (h) The attachment of a security interest in a securities
60-26 account is also attachment of a security interest in the security
61-1 entitlements carried in the securities account.
61-2 (i) The attachment of a security interest in a commodity
61-3 account is also attachment of a security interest in the commodity
61-4 contracts carried in the commodity account.
61-5 (j) If a secured party holds a security interest that
61-6 applies under this chapter to minerals, including oil and gas, upon
61-7 their extraction and the security interest also qualifies under
61-8 applicable law as a lien on those minerals before their extraction,
61-9 the security interest before and after production is a single
61-10 continuous and uninterrupted lien on the property. This subsection
61-11 is a statement of the law of this state as it existed before the
61-12 effective date of this subsection and applies with respect to
61-13 minerals, including oil and gas, regardless of when the minerals
61-14 were extracted.
61-15 [(e) A transaction, although subject to this chapter, is
61-16 also subject to Title 79, Revised Statutes, and in the case of
61-17 conflict between the provisions of this Chapter and any such
61-18 statute, the provisions of such statute control. Failure to comply
61-19 with any applicable statute has only the effect which is specified
61-20 therein.]
61-21 Sec. 9.204. AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES.
61-22 (a) Except as provided in Subsection (b), a security agreement may
61-23 create or provide for a security interest in [that any or all
61-24 obligations covered by the security agreement are to be secured by]
61-25 after-acquired collateral.
61-26 (b) A [No] security interest does not attach [attaches]
62-1 under a term constituting an after-acquired property clause to:
62-2 (1) consumer goods, other than an accession
62-3 [accessions (Section 9.314)] when given as additional security,
62-4 unless the debtor acquires rights in them within 10 [ten] days
62-5 after the secured party gives value; or
62-6 (2) a commercial tort claim.
62-7 (c) A [Obligations covered by a] security agreement may
62-8 provide that collateral secures, or that accounts, chattel paper,
62-9 payment intangibles, or promissory notes are sold in connection
62-10 with, [include] future advances or other value, whether or not the
62-11 advances or value are given pursuant to commitment [(Subsection (a)
62-12 of Section 9.105)].
62-13 Sec. 9.205. USE OR DISPOSITION OF COLLATERAL [WITHOUT
62-14 ACCOUNTING] PERMISSIBLE. (a) A security interest is not invalid
62-15 or fraudulent against creditors solely because:
62-16 (1) [by reason of liberty in] the debtor has the right
62-17 or ability to:
62-18 (A) use, commingle, or dispose of all or part of
62-19 the collateral, [(]including returned or repossessed goods;
62-20 (B)[) or to] collect, [or] compromise, enforce,
62-21 or otherwise deal with collateral;
62-22 (C) [accounts or chattel paper, or to] accept
62-23 the return of collateral [goods] or make repossessions;[,] or
62-24 (D) [to] use, commingle, or dispose of
62-25 proceeds;[,] or
62-26 (2) [by reason of the failure of] the secured party
63-1 fails to require the debtor to account for proceeds or replace
63-2 collateral.
63-3 (b) This section does not relax the requirements of
63-4 possession if attachment, [where] perfection, or enforcement of a
63-5 security interest depends upon possession of the collateral by the
63-6 secured party [or by a bailee].
63-7 Sec. 9.206. SECURITY INTEREST ARISING IN PURCHASE OR
63-8 DELIVERY OF FINANCIAL ASSET. (a) A security interest in favor of
63-9 a securities intermediary attaches to a person's security
63-10 entitlement if:
63-11 (1) the person buys a financial asset through the
63-12 securities intermediary in a transaction in which the person is
63-13 obligated to pay the purchase price to the securities intermediary
63-14 at the time of the purchase; and
63-15 (2) the securities intermediary credits the financial
63-16 asset to the buyer's securities account before the buyer pays the
63-17 securities intermediary.
63-18 (b) The security interest described in Subsection (a)
63-19 secures the person's obligation to pay for the financial asset.
63-20 (c) A security interest in favor of a person that delivers a
63-21 certificated security or other financial asset represented by a
63-22 writing attaches to the security or other financial asset if:
63-23 (1) the security or other financial asset:
63-24 (A) in the ordinary course of business is
63-25 transferred by delivery with any necessary indorsement or
63-26 assignment; and
64-1 (B) is delivered under an agreement between
64-2 persons in the business of dealing with such securities or
64-3 financial assets; and
64-4 (2) the agreement calls for delivery against payment.
64-5 (d) The security interest described in Subsection (c)
64-6 secures the obligation to make payment for the delivery.
64-7 [AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
64-8 SALES WARRANTIES WHERE SECURITY AGREEMENT EXISTS. (a) Subject to
64-9 any statute or decision which establishes a different rule for
64-10 buyers or lessees of consumer goods, an agreement by a buyer or
64-11 lessee that he will not assert against an assignee any claim or
64-12 defense which he may have against the seller or lessor is
64-13 enforceable by an assignee who takes his assignment for value, in
64-14 good faith and without notice of a claim or defense, except as to
64-15 defenses of a type which may be asserted against a holder in due
64-16 course of a negotiable instrument under the chapter on Commercial
64-17 Paper (Chapter 3). A buyer who as part of one transaction signs
64-18 both a negotiable instrument and a security agreement makes such an
64-19 agreement.]
64-20 [(b) When a seller retains a purchase money security
64-21 interest in goods the chapter on Sales (Chapter 2) governs the sale
64-22 and any disclaimer, limitation or modification of the seller's
64-23 warranties.]
64-24 Sec. 9.207. RIGHTS AND DUTIES OF SECURED PARTY HAVING
64-25 POSSESSION OR CONTROL OF [WHEN] COLLATERAL [IS IN SECURED PARTY'S
64-26 POSSESSION]. (a) Except as otherwise provided in Subsection (d),
65-1 a [A] secured party shall [must] use reasonable care in the custody
65-2 and preservation of collateral in the secured party's [his]
65-3 possession. In the case of [an instrument or] chattel paper or an
65-4 instrument, reasonable care includes taking necessary steps to
65-5 preserve rights against prior parties unless otherwise agreed.
65-6 (b) Except as otherwise provided in Subsection (d), if a
65-7 secured party has [Unless otherwise agreed, when collateral is in
65-8 the secured party's] possession of collateral:
65-9 (1) reasonable expenses, [(]including the cost of
65-10 [any] insurance and payment of taxes or other charges,[)] incurred
65-11 in the custody, preservation, use, or operation of the collateral
65-12 are chargeable to the debtor and are secured by the collateral;
65-13 (2) the risk of accidental loss or damage is on the
65-14 debtor to the extent of any deficiency in any effective insurance
65-15 coverage;
65-16 (3) the secured party shall keep the collateral
65-17 identifiable, but fungible collateral may be commingled [may hold
65-18 as additional security any increase or profits (except money)
65-19 received from the collateral, but money so received, unless
65-20 remitted to the debtor, shall be applied in reduction of the
65-21 secured obligation]; and
65-22 (4) the secured party may use or operate the
65-23 collateral:
65-24 (A) for the purpose of preserving the collateral
65-25 or its value;
65-26 (B) as permitted by an order of a court having
66-1 competent jurisdiction; or
66-2 (C) except in the case of consumer goods, in the
66-3 manner and to the extent agreed by the debtor [must keep the
66-4 collateral identifiable but fungible collateral may be commingled;]
66-5 [(5) the secured party may repledge the collateral
66-6 upon terms which do not impair the debtor's right to redeem it].
66-7 (c) Except as otherwise provided in Subsection (d), a [A]
66-8 secured party having possession of collateral or control of
66-9 collateral under Section 9.104, 9.105, 9.106, or 9.107:
66-10 (1) may hold as additional security any proceeds,
66-11 except money or funds, received from the collateral;
66-12 (2) shall apply money or funds received from the
66-13 collateral to reduce the secured obligation, unless remitted to the
66-14 debtor; and
66-15 (3) may create a security interest in the collateral
66-16 [is liable for any loss caused by his failure to meet any
66-17 obligation imposed by the preceding subsections but does not lose
66-18 his security interest].
66-19 (d) If the secured party is a buyer of accounts, chattel
66-20 paper, payment intangibles, or promissory notes or a consignor:
66-21 (1) Subsection (a) does not apply unless the secured
66-22 party is entitled under an agreement:
66-23 (A) to charge back uncollected collateral; or
66-24 (B) otherwise to full or limited recourse
66-25 against the debtor or a secondary obligor based on the nonpayment
66-26 or other default of an account debtor or other obligor on the
67-1 collateral; and
67-2 (2) Subsections (b) and (c) do not apply. [A secured
67-3 party may use or operate the collateral for the purpose of
67-4 preserving the collateral or its value or pursuant to the order of
67-5 a court of appropriate jurisdiction or, except in the case of
67-6 consumer goods, in the manner and to the extent provided in the
67-7 security agreement.]
67-8 Sec. 9.208. ADDITIONAL DUTIES OF SECURED PARTY HAVING
67-9 CONTROL OF COLLATERAL. (a) This section applies to cases in which
67-10 there is no outstanding secured obligation and the secured party is
67-11 not committed to make advances, incur obligations, or otherwise
67-12 give value.
67-13 (b) Within 10 days after receiving an authenticated demand
67-14 by the debtor:
67-15 (1) a secured party having control of a deposit
67-16 account under Section 9.104(a)(2) shall send to the bank with which
67-17 the deposit account is maintained an authenticated statement that
67-18 releases the bank from any further obligation to comply with
67-19 instructions originated by the secured party;
67-20 (2) a secured party having control of a deposit
67-21 account under Section 9.104(a)(3) shall:
67-22 (A) pay the debtor the balance on deposit in the
67-23 deposit account; or
67-24 (B) transfer the balance on deposit into a
67-25 deposit account in the debtor's name;
67-26 (3) a secured party, other than a buyer, having
68-1 control of electronic chattel paper under Section 9.105 shall:
68-2 (A) communicate the authoritative copy of the
68-3 electronic chattel paper to the debtor or its designated custodian;
68-4 (B) if the debtor designates a custodian that is
68-5 the designated custodian with which the authoritative copy of the
68-6 electronic chattel paper is maintained for the secured party,
68-7 communicate to the custodian an authenticated record releasing the
68-8 designated custodian from any further obligation to comply with
68-9 instructions originated by the secured party and instructing the
68-10 custodian to comply with instructions originated by the debtor; and
68-11 (C) take appropriate action to enable the debtor
68-12 or its designated custodian to make copies of or revisions to the
68-13 authoritative copy that add or change an identified assignee of the
68-14 authoritative copy without the consent of the secured party;
68-15 (4) a secured party having control of investment
68-16 property under Section 8.106(d)(2) or 9.106(b) shall send to the
68-17 securities intermediary or commodity intermediary with which the
68-18 security entitlement or commodity contract is maintained an
68-19 authenticated record that releases the securities intermediary or
68-20 commodity intermediary from any further obligation to comply with
68-21 entitlement orders or directions originated by the secured party;
68-22 and
68-23 (5) a secured party having control of a
68-24 letter-of-credit right under Section 9.107 shall send to each
68-25 person having an unfulfilled obligation to pay or deliver proceeds
68-26 of the letter of credit to the secured party an authenticated
69-1 release from any further obligation to pay or deliver proceeds of
69-2 the letter of credit to the secured party.
69-3 Sec. 9.209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS
69-4 BEEN NOTIFIED OF ASSIGNMENT. (a) Except as otherwise provided in
69-5 Subsection (c), this section applies if:
69-6 (1) there is no outstanding secured obligation; and
69-7 (2) the secured party is not committed to make
69-8 advances, incur obligations, or otherwise give value.
69-9 (b) Within 10 days after receiving an authenticated demand
69-10 by the debtor, a secured party shall send to an account debtor that
69-11 has received notification of an assignment to the secured party as
69-12 assignee under Section 9.406(a) an authenticated record that
69-13 releases the account debtor from any further obligation to the
69-14 secured party.
69-15 (c) This section does not apply to an assignment
69-16 constituting the sale of an account, chattel paper, or payment
69-17 intangible.
69-18 Sec. 9.210. REQUEST FOR ACCOUNTING; REQUEST REGARDING
69-19 [STATEMENT OF ACCOUNT OR] LIST OF COLLATERAL OR STATEMENT OF
69-20 ACCOUNT. (a) In this section:
69-21 (1) "Request" means a record of a type described in
69-22 Subdivision (2), (3), or (4).
69-23 (2) "Request for an accounting" means a record
69-24 authenticated by a debtor requesting that the recipient provide an
69-25 accounting of the unpaid obligations secured by collateral and
69-26 reasonably identifying the transaction or relationship that is the
70-1 subject of the request.
70-2 (3) "Request regarding a list of collateral" means a
70-3 record authenticated by a debtor requesting that the recipient
70-4 approve or correct a list of what the debtor believes to be the
70-5 collateral securing an obligation and reasonably identifying the
70-6 transaction or relationship that is the subject of the request.
70-7 (4) "Request regarding a statement of account" means a
70-8 record authenticated by a debtor requesting that the recipient
70-9 approve or correct a statement indicating what the debtor believes
70-10 to be the aggregate amount of unpaid obligations secured by
70-11 collateral as of a specified date and reasonably identifying the
70-12 transaction or relationship that is the subject of the request. [A
70-13 debtor may sign a statement indicating what he believes to be the
70-14 aggregate amount of unpaid indebtedness as of a specified date and
70-15 may send it to the secured party with a request that the statement
70-16 be approved or corrected and returned to the debtor. When the
70-17 security agreement or any other record kept by the secured party
70-18 identifies the collateral a debtor may similarly request the
70-19 secured party to approve or correct a list of the collateral.]
70-20 (b) Subject to Subsections (c), (d), (e), and (f), a [The]
70-21 secured party, other than a buyer of accounts, chattel paper,
70-22 payment intangibles, or promissory notes or a consignor, shall
70-23 [must] comply with [such] a request within 14 days [two weeks]
70-24 after receipt:
70-25 (1) in the case of a request for an accounting, by
70-26 authenticating and sending to the debtor an accounting; and
71-1 (2) in the case of a request regarding a list of
71-2 collateral or a request regarding a statement of account, by
71-3 authenticating and sending to the debtor an approval or correction
71-4 [by sending a written correction or approval. If the secured party
71-5 claims a security interest in all of a particular type of
71-6 collateral owned by the debtor he may indicate that fact in his
71-7 reply and need not approve or correct an itemized list of such
71-8 collateral. If the secured party without reasonable excuse fails
71-9 to comply he is liable for any loss caused to the debtor thereby;
71-10 and if the debtor has properly included in his request a good faith
71-11 statement of the obligation or a list of the collateral or both the
71-12 secured party may claim a security interest only as shown in the
71-13 statement against persons misled by his failure to comply. If he
71-14 no longer has an interest in the obligation or collateral at the
71-15 time the request is received he must disclose the name and address
71-16 of any successor in interest known to him and he is liable for any
71-17 loss caused to the debtor as a result of failure to disclose. A
71-18 successor in interest is not subject to this section until a
71-19 request is received by him].
71-20 (c) A secured party that claims a security interest in all
71-21 of a particular type of collateral owned by the debtor may comply
71-22 with a request regarding a list of collateral by sending to the
71-23 debtor an authenticated record including a statement to that effect
71-24 within 14 days after receipt.
71-25 (d) A person that receives a request regarding a list of
71-26 collateral, claims no interest in the collateral when it receives
72-1 the request, and claimed an interest in the collateral at an
72-2 earlier time shall comply with the request within 14 days after
72-3 receipt by sending to the debtor an authenticated record:
72-4 (1) disclaiming any interest in the collateral; and
72-5 (2) if known to the recipient, providing the name and
72-6 mailing address of any assignee of or successor to the recipient's
72-7 security interest in the collateral.
72-8 (e) A person that receives a request for an accounting or a
72-9 request regarding a statement of account, claims no interest in the
72-10 obligations when it receives the request, and claimed an interest
72-11 in the obligations at an earlier time shall comply with the request
72-12 within 14 days after receipt by sending to the debtor an
72-13 authenticated record:
72-14 (1) disclaiming any interest in the obligations; and
72-15 (2) if known to the recipient, providing the name and
72-16 mailing address of any assignee of or successor to the recipient's
72-17 interest in the obligations.
72-18 (f) A debtor is entitled without charge to one response to a
72-19 request under this section during any six-month period. The
72-20 secured party may require payment of a charge not exceeding $25 for
72-21 each additional response [debtor is entitled to such a statement
72-22 once every six months without charge. The secured party may
72-23 require payment of a charge not exceeding $10 for each additional
72-24 statement furnished].
73-1 SUBCHAPTER C. PERFECTION AND [RIGHTS OF THIRD PARTIES;
73-2 PERFECTED AND UNPERFECTED SECURITY INTERESTS; RULES OF]
73-3 PRIORITY
73-4 Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
73-5 SECURITY INTERESTS. Except as otherwise provided in Sections 9.303
73-6 through 9.306, the following rules determine the law governing
73-7 perfection, the effect of perfection or nonperfection, and the
73-8 priority of a security interest in collateral:
73-9 (1) Except as otherwise provided in this section,
73-10 while a debtor is located in a jurisdiction, the local law of that
73-11 jurisdiction governs perfection, the effect of perfection or
73-12 nonperfection, and the priority of a security interest in
73-13 collateral.
73-14 (2) While collateral is located in a jurisdiction, the
73-15 local law of that jurisdiction governs perfection, the effect of
73-16 perfection or nonperfection, and the priority of a possessory
73-17 security interest in that collateral.
73-18 (3) Except as otherwise provided in Subdivision (4),
73-19 while negotiable documents, goods, instruments, money, or tangible
73-20 chattel paper is located in a jurisdiction, the local law of that
73-21 jurisdiction governs:
73-22 (A) perfection of a security interest in the
73-23 goods by filing a fixture filing;
73-24 (B) perfection of a security interest in timber
73-25 to be cut; and
73-26 (C) the effect of perfection or nonperfection
74-1 and the priority of a nonpossessory security interest in the
74-2 collateral.
74-3 (4) The local law of the jurisdiction in which the
74-4 wellhead or minehead is located governs perfection, the effect of
74-5 perfection or nonperfection, and the priority of a security
74-6 interest in as-extracted collateral.
74-7 Sec. 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF
74-8 AGRICULTURAL LIENS. While farm products are located in a
74-9 jurisdiction, the local law of that jurisdiction governs
74-10 perfection, the effect of perfection or nonperfection, and the
74-11 priority of an agricultural lien on the farm products.
74-12 Sec. 9.303. LAW GOVERNING PERFECTION AND PRIORITY OF
74-13 SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE.
74-14 (a) This section applies to goods covered by a certificate of
74-15 title, even if there is no other relationship between the
74-16 jurisdiction under whose certificate of title the goods are covered
74-17 and the goods or the debtor.
74-18 (b) Goods become covered by a certificate of title when a
74-19 valid application for the certificate of title and the applicable
74-20 fee are delivered to the appropriate authority. Goods cease to be
74-21 covered by a certificate of title at the earlier of the time the
74-22 certificate of title ceases to be effective under the law of the
74-23 issuing jurisdiction or the time the goods become covered
74-24 subsequently by a certificate of title issued by another
74-25 jurisdiction.
74-26 (c) The local law of the jurisdiction under whose
75-1 certificate of title the goods are covered governs perfection, the
75-2 effect of perfection or nonperfection, and the priority of a
75-3 security interest in goods covered by a certificate of title from
75-4 the time the goods become covered by the certificate of title until
75-5 the goods cease to be covered by the certificate of title.
75-6 Sec. 9.304. LAW GOVERNING PERFECTION AND PRIORITY OF
75-7 SECURITY INTERESTS IN DEPOSIT ACCOUNTS. (a) The local law of a
75-8 bank's jurisdiction governs perfection, the effect of perfection or
75-9 nonperfection, and the priority of a security interest in a deposit
75-10 account maintained with that bank.
75-11 (b) The following rules determine a bank's jurisdiction for
75-12 purposes of this subchapter:
75-13 (1) If an agreement between the bank and the debtor
75-14 governing the deposit account expressly provides that a particular
75-15 jurisdiction is the bank's jurisdiction for purposes of this
75-16 subchapter, this chapter, or this title, that jurisdiction is the
75-17 bank's jurisdiction.
75-18 (2) If Subdivision (1) does not apply and an agreement
75-19 between the bank and its customer governing the deposit account
75-20 expressly provides that the agreement is governed by the law of a
75-21 particular jurisdiction, that jurisdiction is the bank's
75-22 jurisdiction.
75-23 (3) If neither Subdivision (1) nor Subdivision (2)
75-24 applies and an agreement between the bank and its customer
75-25 governing the deposit account expressly provides that the deposit
75-26 account is maintained at an office in a particular jurisdiction,
76-1 that jurisdiction is the bank's jurisdiction.
76-2 (4) If none of the preceding subdivisions applies, the
76-3 bank's jurisdiction is the jurisdiction in which the office
76-4 identified in an account statement as the office serving the
76-5 customer's account is located.
76-6 (5) If none of the preceding subdivisions applies, the
76-7 bank's jurisdiction is the jurisdiction in which the chief
76-8 executive office of the bank is located.
76-9 Sec. 9.305. LAW GOVERNING PERFECTION AND PRIORITY OF
76-10 SECURITY INTERESTS IN INVESTMENT PROPERTY. (a) Except as
76-11 otherwise provided in Subsection (c), the following rules apply:
76-12 (1) While a security certificate is located in a
76-13 jurisdiction, the local law of that jurisdiction governs
76-14 perfection, the effect of perfection or nonperfection, and the
76-15 priority of a security interest in the certificated security
76-16 represented thereby.
76-17 (2) The local law of the issuer's jurisdiction as
76-18 specified in Section 8.110(d) governs perfection, the effect of
76-19 perfection or nonperfection, and the priority of a security
76-20 interest in an uncertificated security.
76-21 (3) The local law of the securities intermediary's
76-22 jurisdiction as specified in Section 8.110(e) governs perfection,
76-23 the effect of perfection or nonperfection, and the priority of a
76-24 security interest in a security entitlement or securities account.
76-25 (4) The local law of the commodity intermediary's
76-26 jurisdiction governs perfection, the effect of perfection or
77-1 nonperfection, and the priority of a security interest in a
77-2 commodity contract or commodity account.
77-3 (b) The following rules determine a commodity intermediary's
77-4 jurisdiction for purposes of this subchapter:
77-5 (1) If an agreement between the commodity intermediary
77-6 and commodity customer governing the commodity account expressly
77-7 provides that a particular jurisdiction is the commodity
77-8 intermediary's jurisdiction for purposes of this subchapter, this
77-9 chapter, or this title, that jurisdiction is the commodity
77-10 intermediary's jurisdiction.
77-11 (2) If Subdivision (1) does not apply and an agreement
77-12 between the commodity intermediary and commodity customer governing
77-13 the commodity account expressly provides that the agreement is
77-14 governed by the law of a particular jurisdiction, that jurisdiction
77-15 is the commodity intermediary's jurisdiction.
77-16 (3) If neither Subdivision (1) nor Subdivision (2)
77-17 applies and an agreement between the commodity intermediary and
77-18 commodity customer governing the commodity account expressly
77-19 provides that the commodity account is maintained at an office in a
77-20 particular jurisdiction, that jurisdiction is the commodity
77-21 intermediary's jurisdiction.
77-22 (4) If none of the preceding subdivisions applies, the
77-23 commodity intermediary's jurisdiction is the jurisdiction in which
77-24 the office identified in an account statement as the office serving
77-25 the commodity customer's account is located.
77-26 (5) If none of the preceding subdivisions applies, the
78-1 commodity intermediary's jurisdiction is the jurisdiction in which
78-2 the chief executive office of the commodity intermediary is
78-3 located.
78-4 (c) The local law of the jurisdiction in which the debtor is
78-5 located governs:
78-6 (1) perfection of a security interest in investment
78-7 property by filing;
78-8 (2) automatic perfection of a security interest in
78-9 investment property created by a broker or securities intermediary;
78-10 and
78-11 (3) automatic perfection of a security interest in a
78-12 commodity contract or commodity account created by a commodity
78-13 intermediary.
78-14 Sec. 9.306. LAW GOVERNING PERFECTION AND PRIORITY OF
78-15 SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS. (a) Subject to
78-16 Subsection (c), the local law of the issuer's jurisdiction or a
78-17 nominated person's jurisdiction governs perfection, the effect of
78-18 perfection or nonperfection, and the priority of a security
78-19 interest in a letter-of-credit right if the issuer's jurisdiction
78-20 or nominated person's jurisdiction is a state.
78-21 (b) For purposes of this subchapter, an issuer's
78-22 jurisdiction or nominated person's jurisdiction is the jurisdiction
78-23 whose law governs the liability of the issuer or nominated person
78-24 with respect to the letter-of-credit right as provided in Section
78-25 5.116.
78-26 (c) This section does not apply to a security interest that
79-1 is perfected only under Section 9.308(d).
79-2 Sec. 9.307. LOCATION OF DEBTOR. (a) In this section,
79-3 "place of business" means a place where a debtor conducts its
79-4 affairs.
79-5 (b) Except as otherwise provided in this section, the
79-6 following rules determine a debtor's location:
79-7 (1) A debtor who is an individual is located at the
79-8 individual's principal residence.
79-9 (2) A debtor that is an organization and has only one
79-10 place of business is located at its place of business.
79-11 (3) A debtor that is an organization and has more than
79-12 one place of business is located at its chief executive office.
79-13 (c) Subsection (b) applies only if a debtor's residence,
79-14 place of business, or chief executive office, as applicable, is
79-15 located in a jurisdiction whose law generally requires information
79-16 concerning the existence of a nonpossessory security interest to be
79-17 made generally available in a filing, recording, or registration
79-18 system as a condition or result of the security interest's
79-19 obtaining priority over the rights of a lien creditor with respect
79-20 to the collateral. If Subsection (b) does not apply, the debtor is
79-21 located in the District of Columbia.
79-22 (d) A person that ceases to exist, have a residence, or have
79-23 a place of business continues to be located in the jurisdiction
79-24 specified by Subsections (b) and (c).
79-25 (e) A registered organization that is organized under the
79-26 law of a state is located in that state.
80-1 (f) Except as otherwise provided in Subsection (i), a
80-2 registered organization that is organized under the law of the
80-3 United States and a branch or agency of a bank that is not
80-4 organized under the law of the United States or a state are
80-5 located:
80-6 (1) in the state that the law of the United States
80-7 designates, if the law designates a state of location;
80-8 (2) in the state that the registered organization,
80-9 branch, or agency designates, if the law of the United States
80-10 authorizes the registered organization, branch, or agency to
80-11 designate its state of location; or
80-12 (3) in the District of Columbia, if neither
80-13 Subdivision (1) nor Subdivision (2) applies.
80-14 (g) A registered organization continues to be located in the
80-15 jurisdiction specified by Subsection (e) or (f) notwithstanding:
80-16 (1) the suspension, revocation, forfeiture, or lapse
80-17 of the registered organization's status as such in its jurisdiction
80-18 of organization; or
80-19 (2) the dissolution, winding up, or cancellation of
80-20 the existence of the registered organization.
80-21 (h) The United States is located in the District of
80-22 Columbia.
80-23 (i) A branch or agency of a bank that is not organized under
80-24 the law of the United States or a state is located in the state in
80-25 which the branch or agency is licensed, if all branches and
80-26 agencies of the bank are licensed in only one state.
81-1 (j) A foreign air carrier under the Federal Aviation Act of
81-2 1958, as amended, is located at the designated office of the agent
81-3 upon which service of process may be made on behalf of the carrier.
81-4 (k) This section applies only for purposes of this
81-5 subchapter.
81-6 Sec. 9.308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS
81-7 PERFECTED; CONTINUITY OF PERFECTION. (a) Except as otherwise
81-8 provided in this section and Section 9.309, a security interest is
81-9 perfected if it has attached and all of the applicable requirements
81-10 for perfection in Sections 9.310 through 9.316 have been satisfied.
81-11 A security interest is perfected when it attaches if the applicable
81-12 requirements are satisfied before the security interest attaches.
81-13 (b) An agricultural lien is perfected if it has become
81-14 effective and all of the applicable requirements for perfection in
81-15 Section 9.310 have been satisfied. An agricultural lien is
81-16 perfected when it becomes effective if the applicable requirements
81-17 are satisfied before the agricultural lien becomes effective.
81-18 (c) A security interest or agricultural lien is perfected
81-19 continuously if it is originally perfected by one method under this
81-20 chapter and is later perfected by another method under this
81-21 chapter, without an intermediate period when it was unperfected.
81-22 (d) Perfection of a security interest in collateral also
81-23 perfects a security interest in a supporting obligation for the
81-24 collateral.
81-25 (e) Perfection of a security interest in a right to payment
81-26 or performance also perfects a security interest in a security
82-1 interest, mortgage, or other lien on personal or real property
82-2 securing the right.
82-3 (f) Perfection of a security interest in a securities
82-4 account also perfects a security interest in the security
82-5 entitlements carried in the securities account.
82-6 (g) Perfection of a security interest in a commodity account
82-7 also perfects a security interest in the commodity contracts
82-8 carried in the commodity account. [PERSONS WHO TAKE PRIORITY OVER
82-9 UNPERFECTED SECURITY INTERESTS; RIGHT OF "LIEN CREDITOR".
82-10 (a) Except as otherwise provided in Subsection (b), an unperfected
82-11 security interest is subordinate to the rights of:]
82-12 [(1) persons entitled to priority under Section 9.312;]
82-13 [(2) a person who becomes a lien creditor before the
82-14 security interest is perfected;]
82-15 [(3) in the case of goods, instruments, documents, and
82-16 chattel paper, a person who is not a secured party and who is a
82-17 transferee in bulk or other buyer not in ordinary course of
82-18 business, or is a buyer of farm products in ordinary course of
82-19 business, to the extent that he gives value and receives delivery
82-20 of the collateral without knowledge of the security interest and
82-21 before it is perfected;]
82-22 [(4) in the case of accounts, general intangibles, and
82-23 investment property, a person who is not a secured party and who is
82-24 a transferee to the extent that he gives value without knowledge of
82-25 the security interest and before it is perfected.]
82-26 [(b) If the secured party files with respect to a purchase
83-1 money security interest before or within 20 days after the debtor
83-2 receives possession of the collateral, he takes priority over the
83-3 rights of a transferee in bulk or of a lien creditor which arise
83-4 between the time the security interest attaches and the time of
83-5 filing.]
83-6 [(c) A "lien creditor" means a creditor who has acquired a
83-7 lien on the property involved by attachment, levy or the like and
83-8 includes an assignee for benefit of creditors from the time of
83-9 assignment, and a trustee in bankruptcy from the date of the filing
83-10 of the petition or a receiver in equity from the time of
83-11 appointment.]
83-12 [(d) A person who becomes a lien creditor while a security
83-13 interest is perfected takes subject to the security interest only
83-14 to the extent that it secures advances made before he becomes a
83-15 lien creditor or within 45 days thereafter or made without
83-16 knowledge of the lien or pursuant to a commitment entered into
83-17 without knowledge of the lien.]
83-18 Sec. 9.309 [9.302]. SECURITY INTEREST PERFECTED UPON
83-19 ATTACHMENT. The following [WHEN FILING IS REQUIRED TO PERFECT
83-20 SECURITY INTEREST; SECURITY INTERESTS TO WHICH FILING PROVISIONS OF
83-21 THIS ARTICLE DO NOT APPLY. (a) A financing statement must be
83-22 filed to perfect all] security interests are perfected when they
83-23 attach [except the following]:
83-24 (1) [a security interest in collateral in possession
83-25 of the secured party under Section 9.305;]
83-26 [(2) a security interest temporarily perfected in
84-1 instruments, certificated securities, or documents without delivery
84-2 under Section 9.304 or in proceeds for a 10 day period under
84-3 Section 9.306;]
84-4 [(3) a security interest created by an assignment of a
84-5 beneficial interest in a trust or a decedent's estate;]
84-6 [(4)] a purchase money security interest in consumer
84-7 goods, except as otherwise provided in Section 9.311(b) with
84-8 respect to consumer goods that are subject to a statute or treaty
84-9 described in Section 9.311(a)[; but notation on a certificate of
84-10 title is required for goods covered by a statute referred to in
84-11 Subsection (c)(2); and fixture filing is required for priority over
84-12 conflicting interests in fixtures to the extent provided in Section
84-13 9.313];
84-14 (2) [(5)] an assignment of accounts or payment
84-15 intangibles that [which] does not by itself [alone] or in
84-16 conjunction with other assignments to the same assignee transfer a
84-17 significant part of the assignor's outstanding accounts or payment
84-18 intangibles [of the assignor];
84-19 (3) a sale of a payment intangible;
84-20 (4) a sale of a promissory note;
84-21 (5) a security interest created by the assignment of a
84-22 health-care-insurance receivable to the provider of the health care
84-23 goods or services;
84-24 (6) a security interest arising under Section 2.401,
84-25 2.505, 2.711(c), or 2A.508(e), until the debtor obtains possession
84-26 of the collateral;
85-1 (7) a security interest of a collecting bank arising
85-2 under [(]Section 4.210[), a security interest arising under the
85-3 Chapter on Sales (see Section 9.113), or a security interest
85-4 covered in Subsection (c) of this Section];
85-5 (8) a security interest of an issuer or nominated
85-6 person arising under Section 5.118;
85-7 (9) a security interest arising in the delivery of a
85-8 financial asset under Section 9.206(c);
85-9 (10) a security interest in investment property
85-10 created by a broker or securities intermediary;
85-11 (11) a security interest in a commodity contract or a
85-12 commodity account created by a commodity intermediary;
85-13 (12) [(7)] an assignment for the benefit of all the
85-14 creditors of the transferor[,] and subsequent transfers by the
85-15 assignee thereunder; and
85-16 (13) a security interest created by an assignment of a
85-17 beneficial interest in a decedent's estate [(8) a security interest
85-18 in oil or gas production or their proceeds under Section 9.319 of
85-19 this code; or]
85-20 [(9) a security interest in investment property that
85-21 is perfected without filing under Section 9.115 or 9.116].
85-22 Sec. 9.310. WHEN FILING REQUIRED TO PERFECT SECURITY
85-23 INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL
85-24 LIENS TO WHICH FILING PROVISIONS DO NOT APPLY. (a) Except as
85-25 otherwise provided in Subsection (b) and Section 9.312(b), a
85-26 financing statement must be filed to perfect all security interests
86-1 and agricultural liens.
86-2 (b) The filing of a financing statement is not necessary to
86-3 perfect a security interest:
86-4 (1) that is perfected under Section 9.308(d), (e),
86-5 (f), or (g);
86-6 (2) that is perfected under Section 9.309 when it
86-7 attaches;
86-8 (3) in property subject to a statute, regulation, or
86-9 treaty described in Section 9.311(a);
86-10 (4) in goods in possession of a bailee that is
86-11 perfected under Section 9.312(d)(1) or (2);
86-12 (5) in certificated securities, documents, goods, or
86-13 instruments which is perfected without filing or possession under
86-14 Section 9.312(e), (f), or (g);
86-15 (6) in collateral in the secured party's possession
86-16 under Section 9.313;
86-17 (7) in a certificated security that is perfected by
86-18 delivery of the security certificate to the secured party under
86-19 Section 9.313;
86-20 (8) in deposit accounts, electronic chattel paper,
86-21 investment property, or letter-of-credit rights that is perfected
86-22 by control under Section 9.314;
86-23 (9) in proceeds that is perfected under Section 9.315;
86-24 (10) that is perfected under Section 9.316; or
86-25 (11) in oil or gas production or their proceeds under
86-26 Section 9.343.
87-1 (c) [(b)] If a secured party assigns a perfected security
87-2 interest or agricultural lien, a [no] filing under this Chapter is
87-3 not required [in order] to continue the perfected status of the
87-4 security interest against creditors of and transferees from the
87-5 original debtor.
87-6 Sec. 9.311. PERFECTION OF SECURITY INTERESTS IN PROPERTY
87-7 SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES.
87-8 (a) Except as otherwise provided in Subsection (d), the [(c) The]
87-9 filing of a financing statement [otherwise required by this
87-10 Chapter] is not necessary or effective to perfect a security
87-11 interest in property subject to:
87-12 (1) a statute, regulation, or treaty of the United
87-13 States whose requirements for a security interest's obtaining
87-14 priority over the rights of a lien creditor with respect to the
87-15 property preempt Section 9.310(a); [which provides for a national
87-16 or international registration or a national or international
87-17 certificate of title or which specifies a place of filing different
87-18 from that specified in this Chapter for filing of the security
87-19 interest; or]
87-20 (2) the following statutes of this state: Chapter
87-21 501, Transportation Code, relating to the certificates of title for
87-22 motor vehicles; Subchapter B-1, Chapter 31, Parks and Wildlife
87-23 Code, [as amended,] relating to the certificates of title for
87-24 vessels [motorboat] and outboard motors; the Texas Manufactured
87-25 Housing Standards Act[, as amended] (Article 5221f, Vernon's Texas
87-26 Civil Statutes), relating to the documents of title for
88-1 manufactured homes; [but during any period in which collateral is
88-2 inventory held for sale by a person who is in the business of
88-3 selling goods of that kind, the filing provisions of this Chapter
88-4 (Subchapter D) apply to a security interest in that collateral
88-5 created by him as debtor;] or Subchapter A, Chapter 35, [Title 4,]
88-6 relating to utility security instruments; or
88-7 (3) a certificate of title statute of another
88-8 jurisdiction that provides for [under the law of which indication
88-9 of] a security interest to be indicated on the certificate [is
88-10 required] as a condition or result of the security interest's
88-11 obtaining priority over the rights of a lien creditor with respect
88-12 to the property [of perfection (Subsection (b) of Section 9.103)].
88-13 (b) [(d)] Compliance with the requirements of a statute,
88-14 regulation, or treaty described in Subsection (a) for obtaining
88-15 priority over the rights of a lien creditor [(c)] is equivalent to
88-16 the filing of a financing statement under this Chapter. Except as
88-17 otherwise provided in Subsection (d) and Sections 9.313 and
88-18 9.316(d) and (e) for goods covered by a certificate of title, [and]
88-19 a security interest in property subject to a [the] statute,
88-20 regulation, or treaty described in Subsection (a) may [can] be
88-21 perfected only by compliance with those requirements, and a
88-22 security interest so perfected remains perfected notwithstanding a
88-23 change in the use or transfer of possession of the collateral
88-24 [therewith except as provided in Section 9.103 on multiple state
88-25 transactions].
88-26 (c) Except as otherwise provided in Subsection (d) and
89-1 Sections 9.316(d) and (e), duration [Duration] and renewal of
89-2 perfection of a security interest perfected by compliance with the
89-3 requirements prescribed by a statute, regulation, or treaty
89-4 described in Subsection (a) are governed by [the provisions of] the
89-5 statute, regulation, or treaty. In[; in] other respects, the
89-6 security interest is subject to this Chapter.
89-7 (d) During any period in which collateral is inventory held
89-8 for sale or lease by a person or leased by that person as lessor
89-9 and that person is in the business of selling or leasing goods of
89-10 that kind, this section does not apply to a security interest in
89-11 that collateral created by that person as debtor.
89-12 [Sec. 9.303. WHEN SECURITY INTEREST IS PERFECTED; CONTINUITY
89-13 OF PERFECTION. (a) A security interest is perfected when it has
89-14 attached and when all of the applicable steps required for
89-15 perfection have been taken. Such steps are specified in Sections
89-16 9.115, 9.302, 9.304, 9.305 and 9.306. If such steps are taken
89-17 before the security interest attaches, it is perfected at the time
89-18 when it attaches.]
89-19 [(b) If a security interest is originally perfected in any
89-20 way permitted under this chapter and is subsequently perfected in
89-21 some other way under this chapter, without an intermediate period
89-22 when it was unperfected, the security interest shall be deemed to
89-23 be perfected continuously for the purposes of this chapter.]
89-24 Sec. 9.312 [9.304]. PERFECTION OF SECURITY INTERESTS
89-25 [INTEREST] IN CHATTEL PAPER, DEPOSIT ACCOUNTS [INSTRUMENTS],
89-26 DOCUMENTS, AND GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT
90-1 PROPERTY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY
90-2 PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER
90-3 OF POSSESSION. (a) A security interest in chattel paper, [or]
90-4 negotiable documents, instruments, or investment property may be
90-5 perfected by filing.
90-6 (b) Except as otherwise provided in Sections 9.315(c) and
90-7 (d) for proceeds:
90-8 (1) a security interest in a deposit account may be
90-9 perfected only by control under Section 9.314;
90-10 (2) and except as otherwise provided in Section
90-11 9.308(d), a security interest in a letter-of-credit right may be
90-12 perfected only by control under Section 9.314; and
90-13 (3) a [A] security interest in money may [or
90-14 instruments (other than instruments which constitute part of
90-15 chattel paper) can] be perfected only by the secured party's taking
90-16 possession under Section 9.313.
90-17 (c) While goods are in the possession of a bailee that has
90-18 issued a negotiable document covering the goods:
90-19 (1) a security interest in the goods may be perfected
90-20 by perfecting a security interest in the document; and
90-21 (2) a security interest perfected in the document has
90-22 priority over any security interest that becomes perfected in the
90-23 goods by another method during that time.
90-24 (d) While goods are in the possession of a bailee that has
90-25 issued a nonnegotiable document covering the goods, a security
90-26 interest in the goods may be perfected by:
91-1 (1) issuance of a document in the name of the secured
91-2 party;
91-3 (2) the bailee's receipt of notification of the
91-4 secured party's interest; or
91-5 (3) filing as to the goods[, except as provided in
91-6 Subsections (d) and (e) of this section and Subsections (b) and (c)
91-7 of Section 9.306 on proceeds. Possession of a nonnegotiable
91-8 certificate of deposit in which the secured party is the issuer of
91-9 the document is established when the issuer places a restriction on
91-10 withdrawals from the account on its records that evidences
91-11 the document. Possession established by the restriction of
91-12 withdrawals from an account evidenced by a nonnegotiable
91-13 certificate of deposit takes priority over any other possession
91-14 established under this chapter of which the secured party does not
91-15 have prior knowledge].
91-16 (e) [(b) During the period that goods are in the possession
91-17 of the issuer of a negotiable document therefor, a security
91-18 interest in the goods is perfected by perfecting a security
91-19 interest in the document, and any security interest in the goods
91-20 otherwise perfected during such period is subject thereto.]
91-21 [(c) A security interest in goods in the possession of a
91-22 bailee other than one who has issued a negotiable document therefor
91-23 is perfected by issuance of a document in the name of the secured
91-24 party or by the bailee's receipt of notification of the secured
91-25 party's interest or by filing as to the goods.]
91-26 [(d)] A security interest in [instruments,] certificated
92-1 securities, [or] negotiable documents, or instruments is perfected
92-2 without filing or the taking of possession for a period of 20 [21]
92-3 days from the time it attaches to the extent that it arises for new
92-4 value given under an authenticated [a written] security agreement.
92-5 (f) [(e)] A perfected security interest in a negotiable
92-6 document or goods in possession of a bailee, other than one that
92-7 has issued a negotiable document for the goods, remains perfected
92-8 for 20 [a period of 21] days without filing if the [where a]
92-9 secured party [having a perfected security interest in an
92-10 instrument, a certificated security, a negotiable document, or
92-11 goods in possession of a bailee other than one who has issued a
92-12 negotiable document therefor:]
92-13 [(1)] makes available to the debtor the goods or
92-14 documents representing the goods for the purpose of:
92-15 (1) ultimate sale or exchange; or
92-16 (2) [for the purpose of] loading, unloading, storing,
92-17 shipping, transshipping, manufacturing, processing, or otherwise
92-18 dealing with them in a manner preliminary to their sale or
92-19 exchange[, but priority between conflicting security interests in
92-20 the goods is subject to Subsection (c) of Section 9.312; or]
92-21 [(2) delivers the instrument or certificated security
92-22 to the debtor for the purpose of ultimate sale or exchange or of
92-23 presentation, collection, renewal or registration of transfer].
92-24 (g) A perfected security interest in a certificated security
92-25 or instrument remains perfected for 20 days without filing if the
92-26 secured party delivers the security certificate or instrument to
93-1 the debtor for the purpose of:
93-2 (1) ultimate sale or exchange; or
93-3 (2) presentation, collection, enforcement, renewal, or
93-4 registration of transfer.
93-5 (h) [(f)] After the 20-day [21 day] period specified in
93-6 Subsection (e), (f), or (g) expires, [Subsections (d) and (e)]
93-7 perfection depends upon compliance with [applicable provisions of]
93-8 this chapter.
93-9 Sec. 9.313 [9.305]. WHEN POSSESSION BY OR DELIVERY TO
93-10 SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING.
93-11 (a) Except as otherwise provided in Subsection (b), a secured
93-12 party may perfect a [A] security interest in negotiable documents,
93-13 goods, instruments, money, or tangible chattel paper by [letters of
93-14 credit and advices of credit (Subsection (b)(1) of Section 5.116),
93-15 goods, instruments, money, negotiable documents or chattel paper
93-16 may be perfected by the secured party's] taking possession of the
93-17 collateral. A secured party may perfect a security interest in
93-18 certificated securities by taking delivery of the certificated
93-19 securities under Section 8.301.
93-20 (b) With respect to goods covered by a certificate of title
93-21 issued by this state, a secured party may perfect a security
93-22 interest in the goods by taking possession of the goods only in the
93-23 circumstances described in Section 9.316(d).
93-24 (c) With respect to collateral other than certificated
93-25 securities and goods covered by a document, a secured party takes
93-26 possession of collateral in the possession of a person other than
94-1 the debtor, the secured party, or a lessee of the collateral from
94-2 the debtor in the ordinary course of the debtor's business when:
94-3 (1) the person in possession authenticates a record
94-4 acknowledging that it holds possession of the collateral for the
94-5 secured party's benefit; or
94-6 (2) the person takes possession of the collateral
94-7 after having authenticated a record acknowledging that it will hold
94-8 possession of collateral for the secured party's benefit.
94-9 (d) If perfection of a security interest depends upon
94-10 possession of the collateral by a secured party, perfection occurs
94-11 no earlier than the time the secured party takes possession and
94-12 continues only while the secured party retains possession.
94-13 (e) A security interest in a certificated security in
94-14 registered form is perfected by delivery when delivery of the
94-15 certificated security occurs under Section 8.301 and remains
94-16 perfected by delivery until the debtor obtains possession of the
94-17 security certificate.
94-18 (f) A person in possession of collateral is not required to
94-19 acknowledge that it holds possession for a secured party's benefit.
94-20 (g) If a person acknowledges that it holds possession for
94-21 the secured party's benefit:
94-22 (1) the acknowledgment is effective under Subsection
94-23 (c) or Section 8.301(a), even if the acknowledgment violates the
94-24 rights of a debtor; and
94-25 (2) unless the person otherwise agrees or law other
94-26 than this chapter otherwise provides, the person does not owe any
95-1 duty to the secured party and is not required to confirm the
95-2 acknowledgment to another person.
95-3 (h) A secured party having possession of collateral does not
95-4 relinquish possession by delivering the collateral to a person
95-5 other than the debtor or a lessee of the collateral from the debtor
95-6 in the ordinary course of the debtor's business if the person was
95-7 instructed before the delivery or is instructed contemporaneously
95-8 with the delivery:
95-9 (1) to hold possession of the collateral for the
95-10 secured party's benefit; or
95-11 (2) to redeliver the collateral to the secured party.
95-12 (i) A secured party does not relinquish possession, even if
95-13 a delivery under Subsection (h) violates the rights of a debtor. A
95-14 person to which collateral is delivered under Subsection (h) does
95-15 not owe any duty to the secured party and is not required to
95-16 confirm the delivery to another person unless the person otherwise
95-17 agrees or law other than this chapter otherwise provides.
95-18 Sec. 9.314. PERFECTION BY CONTROL. (a) A security interest
95-19 in investment property, deposit accounts, letter-of-credit rights,
95-20 or electronic chattel paper may be perfected by control of the
95-21 collateral under Section 9.104, 9.105, 9.106, or 9.107.
95-22 (b) A security interest in deposit accounts, electronic
95-23 chattel paper, or letter-of-credit rights is perfected by control
95-24 under Section 9.104, 9.105, or 9.107 when the secured party obtains
95-25 control and remains perfected by control only while the secured
95-26 party retains control.
96-1 (c) A security interest in investment property is perfected
96-2 by control under Section 9.106 from the time the secured party
96-3 obtains control and remains perfected by control until:
96-4 (1) the secured party does not have control; and
96-5 (2) one of the following occurs:
96-6 (A) if the collateral is a certificated
96-7 security, the debtor has or acquires possession of the security
96-8 certificate;
96-9 (B) if the collateral is an uncertificated
96-10 security, the issuer has registered or registers the debtor as the
96-11 registered owner; or
96-12 (C) if the collateral is a security entitlement,
96-13 the debtor is or becomes the entitlement holder. [If such
96-14 collateral other than goods covered by a negotiable document is
96-15 held by a bailee, the secured party is deemed to have possession
96-16 from the time the bailee receives notification of the secured
96-17 party's interest. A security interest is perfected by possession
96-18 from the time possession is taken without relation back and
96-19 continues only so long as possession is retained, unless otherwise
96-20 specified in this chapter. The security interest may be otherwise
96-21 perfected as provided in this chapter before or after the period of
96-22 possession by the secured party.]
96-23 Sec. 9.315 [9.306]. ["PROCEEDS";] SECURED PARTY'S RIGHTS ON
96-24 DISPOSITION OF COLLATERAL AND IN PROCEEDS. (a) ["Proceeds"
96-25 includes whatever is received upon the sale, exchange, collection
96-26 or other disposition of collateral or proceeds. Insurance payable
97-1 by reason of loss or damage to the collateral is proceeds, except
97-2 to the extent that it is payable to a person other than a party to
97-3 the security agreement. Any payments or distributions made with
97-4 respect to investment property collateral are proceeds. Money,
97-5 checks, deposit accounts and the like are "cash proceeds". All
97-6 other proceeds are "non-cash proceeds".]
97-7 [(b)] Except as [where this chapter] otherwise provided in
97-8 this chapter and Section 2.403(b):
97-9 (1) [provides,] a security interest or agricultural
97-10 lien continues in collateral notwithstanding sale, lease, license,
97-11 exchange, or other disposition thereof unless [the disposition was
97-12 authorized by] the secured party authorized the disposition free of
97-13 the security interest or agricultural lien; and
97-14 (2) a security interest attaches to [in the security
97-15 agreement or otherwise, and also continues in] any identifiable
97-16 proceeds of collateral [including collections received by the
97-17 debtor].
97-18 (b) Proceeds that are commingled with other property are
97-19 identifiable proceeds:
97-20 (1) if the proceeds are goods, to the extent provided
97-21 by Section 9.336; and
97-22 (2) if the proceeds are not goods, to the extent that
97-23 the secured party identifies the proceeds by a method of tracing,
97-24 including application of equitable principles, that is permitted
97-25 under law other than this chapter with respect to commingled
97-26 property of the type involved.
98-1 (c) A [The] security interest in proceeds is a
98-2 [continuously] perfected security interest if the interest in the
98-3 original collateral was perfected.
98-4 (d) A [but it ceases to be a] perfected security interest in
98-5 proceeds [and] becomes unperfected on the 21st day [ten days] after
98-6 the security interest attaches to receipt of the proceeds [by the
98-7 debtor] unless:
98-8 (1) the following conditions are satisfied:
98-9 (A) a filed financing statement covers the
98-10 original collateral;
98-11 (B) [and] the proceeds are collateral in which a
98-12 security interest may be perfected by filing in the office in which
98-13 [or offices where] the financing statement has been filed; and
98-14 (C) [, if] the proceeds are not acquired with
98-15 cash proceeds[, the description of collateral in the financing
98-16 statement indicates the types of property constituting the
98-17 proceeds];
98-18 (2) [a filed financing statement covers the original
98-19 collateral and] the proceeds are identifiable cash proceeds; or
98-20 (3) [the original collateral was investment property
98-21 and the proceeds are identifiable cash proceeds; or]
98-22 [(4)] the security interest in the proceeds is
98-23 perfected other than under Subsection (c) when the security
98-24 interest attaches to the proceeds or within 20 days thereafter
98-25 [before the expiration of the ten day period. Except as provided
98-26 in this section, a security interest in proceeds can be perfected
99-1 only by the methods or under the circumstances permitted in this
99-2 chapter for original collateral of the same type].
99-3 (e) If a filed financing statement covers the original
99-4 collateral, a security interest in proceeds that remains perfected
99-5 under Subsection (d)(1) becomes unperfected at the later of:
99-6 (1) when the effectiveness of the filed financing
99-7 statement lapses under Section 9.515 or is terminated under Section
99-8 9.513; or
99-9 (2) the 21st day after the security interest attaches
99-10 to the proceeds.
99-11 [(d) In the event of insolvency proceedings instituted by or
99-12 against a debtor, a secured party with a perfected security
99-13 interest in proceeds has a perfected security interest only in the
99-14 following proceeds:]
99-15 [(1) in identifiable non-cash proceeds and in separate
99-16 deposit accounts containing only proceeds;]
99-17 [(2) in identifiable cash proceeds in the form of
99-18 money which is neither commingled with other money nor deposited in
99-19 a deposit account prior to the insolvency proceedings;]
99-20 [(3) in identifiable cash proceeds in the form of
99-21 checks and the like which are not deposited in a deposit account
99-22 prior to the insolvency proceedings;]
99-23 [(4) in all cash and deposit accounts of the debtor in
99-24 which proceeds have been commingled with other funds, but the
99-25 perfected security interest under this Subdivision (4) is]
99-26 [(A) subject to any right of set-off; and]
100-1 [(B) limited to an amount not greater than the
100-2 amount of any cash proceeds received by the debtor within ten days
100-3 before the institution of the insolvency proceedings less the sum
100-4 of (I) the payments to the secured party on account of cash
100-5 proceeds received by the debtor during such period and (II) the
100-6 cash proceeds received by the debtor during such period to which
100-7 the secured party is entitled under Subdivisions (1) through (3) of
100-8 this Subsection (d); and]
100-9 [(5) in all cash and deposit accounts of the debtor in
100-10 which proceeds have been commingled with other funds, if the
100-11 perfected security interest under this Subdivision (5) is provided
100-12 by Section 9.319 of this code.]
100-13 [(e) If a sale of goods results in an account or chattel
100-14 paper which is transferred by the seller to a secured party, and if
100-15 the goods are returned to or are repossessed by the seller or the
100-16 secured party, the following rules determine priorities:]
100-17 [(1) If the goods were collateral at the time of sale
100-18 for an indebtedness of the seller which is still unpaid, the
100-19 original security interest attaches again to the goods and
100-20 continues as a perfected security interest if it was perfected at
100-21 the time when the goods were sold. If the security interest was
100-22 originally perfected by a filing which is still effective, nothing
100-23 further is required to continue the perfected status; in any other
100-24 case, the secured party must take possession of the returned or
100-25 repossessed goods or must file.]
100-26 [(2) An unpaid transferee of the chattel paper has a
101-1 security interest in the goods against the transferor. Such
101-2 security interest is prior to a security interest asserted under
101-3 Subdivision (1) to the extent that the transferee of the chattel
101-4 paper was entitled to priority under Section 9.308.]
101-5 [(3) An unpaid transferee of the account has a
101-6 security interest in the goods against the transferor. Such
101-7 security interest is subordinate to a security interest asserted
101-8 under Subdivision (1).]
101-9 [(4) A security interest of an unpaid transferee
101-10 asserted under Subdivision (2) or (3) must be perfected for
101-11 protection against creditors of the transferor and purchasers of
101-12 the returned or repossessed goods.]
101-13 Sec. 9.316. CONTINUED PERFECTION OF SECURITY INTEREST
101-14 FOLLOWING CHANGE IN GOVERNING LAW. (a) A security interest
101-15 perfected pursuant to the law of the jurisdiction designated in
101-16 Section 9.301(1) or 9.305(c) remains perfected until the earliest
101-17 of:
101-18 (1) the time perfection would have ceased under the
101-19 law of that jurisdiction;
101-20 (2) the expiration of four months after a change of
101-21 the debtor's location to another jurisdiction; or
101-22 (3) the expiration of one year after a transfer of
101-23 collateral to a person that thereby becomes a debtor and is located
101-24 in another jurisdiction.
101-25 (b) If a security interest described in Subsection (a)
101-26 becomes perfected under the law of the other jurisdiction before
102-1 the earliest time or event described in that subsection, it remains
102-2 perfected thereafter. If the security interest does not become
102-3 perfected under the law of the other jurisdiction before the
102-4 earliest time or event, it becomes unperfected and is deemed never
102-5 to have been perfected as against a purchaser of the collateral for
102-6 value.
102-7 (c) A possessory security interest in collateral, other than
102-8 goods covered by a certificate of title and as-extracted collateral
102-9 consisting of goods, remains continuously perfected if:
102-10 (1) the collateral is located in one jurisdiction and
102-11 subject to a security interest perfected under the law of that
102-12 jurisdiction;
102-13 (2) thereafter the collateral is brought into another
102-14 jurisdiction; and
102-15 (3) upon entry into the other jurisdiction, the
102-16 security interest is perfected under the law of the other
102-17 jurisdiction.
102-18 (d) Except as otherwise provided in Subsection (e), a
102-19 security interest in goods covered by a certificate of title that
102-20 is perfected by any method under the law of another jurisdiction
102-21 when the goods become covered by a certificate of title from this
102-22 state remains perfected until the security interest would have
102-23 become unperfected under the law of the other jurisdiction had the
102-24 goods not become so covered.
102-25 (e) A security interest described in Subsection (d) becomes
102-26 unperfected as against a purchaser of the goods for value and is
103-1 deemed never to have been perfected as against a purchaser of the
103-2 goods for value if the applicable requirements for perfection under
103-3 Section 9.311(b) or 9.313 are not satisfied before the earlier of:
103-4 (1) the time the security interest would have become
103-5 unperfected under the law of the other jurisdiction had the goods
103-6 not become covered by a certificate of title from this State; or
103-7 (2) the expiration of four months after the goods had
103-8 become so covered.
103-9 (f) A security interest in deposit accounts,
103-10 letter-of-credit rights, or investment property that is perfected
103-11 under the law of the bank's jurisdiction, the issuer's
103-12 jurisdiction, a nominated person's jurisdiction, the securities
103-13 intermediary's jurisdiction, or the commodity intermediary's
103-14 jurisdiction, as applicable, remains perfected until the earlier
103-15 of:
103-16 (1) the time the security interest would have become
103-17 unperfected under the law of that jurisdiction; or
103-18 (2) the expiration of four months after a change of
103-19 the applicable jurisdiction to another jurisdiction.
103-20 (g) If a security interest described in Subsection (f)
103-21 becomes perfected under the law of the other jurisdiction before
103-22 the earlier of the time or the end of the period described in that
103-23 subsection, it remains perfected thereafter. If the security
103-24 interest does not become perfected under the law of the other
103-25 jurisdiction before the earlier of that time or the end of that
103-26 period, it becomes unperfected and is deemed never to have been
104-1 perfected as against a purchaser of the collateral for value.
104-2 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
104-3 OF UNPERFECTED SECURITY INTEREST OR AGRICULTURAL LIEN. (a) An
104-4 unperfected security interest or agricultural lien is subordinate
104-5 to the rights of:
104-6 (1) a person entitled to priority under Section 9.322;
104-7 and
104-8 (2) except as otherwise provided in Subsection (e), a
104-9 person that becomes a lien creditor before the earlier of the time
104-10 the security interest or agricultural lien is perfected or a
104-11 financing statement covering the collateral is filed.
104-12 (b) Except as otherwise provided in Subsection (e), a buyer,
104-13 other than a secured party, of tangible chattel paper, documents,
104-14 goods, instruments, or a security certificate takes free of a
104-15 security interest or agricultural lien if the buyer gives value and
104-16 receives delivery of the collateral without knowledge of the
104-17 security interest or agricultural lien and before it is perfected.
104-18 (c) Except as otherwise provided in Subsection (e), a lessee
104-19 of goods takes free of a security interest or agricultural lien if
104-20 the lessee gives value and receives delivery of the collateral
104-21 without knowledge of the security interest or agricultural lien and
104-22 before it is perfected.
104-23 (d) A licensee of a general intangible or a buyer, other
104-24 than a secured party, of accounts, electronic chattel paper,
104-25 general intangibles, or investment property other than a
104-26 certificated security takes free of a security interest if the
105-1 licensee or buyer gives value without knowledge of the security
105-2 interest and before it is perfected.
105-3 (e) Except as otherwise provided in Sections 9.320 and
105-4 9.321, if a person files a financing statement with respect to a
105-5 purchase-money security interest before or within 20 days after the
105-6 debtor receives delivery of the collateral, the security interest
105-7 takes priority over the rights of a buyer, lessee, or lien creditor
105-8 that arise between the time the security interest attaches and the
105-9 time of filing.
105-10 Sec. 9.318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS
105-11 SOLD; RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH
105-12 RESPECT TO CREDITORS AND PURCHASERS. (a) A debtor that has sold
105-13 an account, chattel paper, payment intangible, or promissory note
105-14 does not retain a legal or equitable interest in the collateral
105-15 sold.
105-16 (b) For purposes of determining the rights of creditors of,
105-17 and purchasers for value of an account or chattel paper from, a
105-18 debtor that has sold an account or chattel paper, while the buyer's
105-19 security interest is unperfected, the debtor is deemed to have
105-20 rights and title to the account or chattel paper identical to those
105-21 the debtor sold.
105-22 Sec. 9.319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO
105-23 CREDITORS AND PURCHASERS. (a) Except as otherwise provided in
105-24 Subsection (b), for purposes of determining the rights of creditors
105-25 of, and purchasers for value of goods from, a consignee, while the
105-26 goods are in the possession of the consignee, the consignee is
106-1 deemed to have rights and title to the goods identical to those the
106-2 consignor had or had power to transfer.
106-3 (b) For purposes of determining the rights of a creditor of
106-4 a consignee, law other than this chapter determines the rights and
106-5 title of a consignee while goods are in the consignee's possession
106-6 if, under this subchapter, a perfected security interest held by
106-7 the consignor would have priority over the rights of the creditor.
106-8 Sec. 9.320 [9.307]. [PROTECTION OF] BUYERS OF GOODS.
106-9 (a) Except as otherwise provided by Subsection (e) [(d) of this
106-10 section], a buyer in ordinary course of business, [(Subdivision (9)
106-11 of Section 1.201)] other than a person buying farm products from a
106-12 person engaged in farming operations, takes free of a security
106-13 interest created by the buyer's [his] seller, even if [though] the
106-14 security interest is perfected and [even though] the buyer knows of
106-15 its existence.
106-16 (b) Except as otherwise provided in Subsection (e) [In the
106-17 case of consumer goods], a buyer of goods from a person who used or
106-18 bought the goods for use primarily for personal, family, or
106-19 household purposes takes free of a security interest, even if
106-20 [though] perfected, if the buyer [he] buys:
106-21 (1) without knowledge of the security interest;
106-22 (2)[,] for value;
106-23 (3) primarily for the buyer's [and for his own]
106-24 personal, family, or household purposes; and
106-25 (4) before the filing of [unless prior to the purchase
106-26 the secured party has filed] a financing statement covering the
107-1 [such] goods.
107-2 (c) To the extent that it affects the priority of a security
107-3 interest over a buyer of goods under Subsection (b), the period of
107-4 effectiveness of a filing made in the jurisdiction in which the
107-5 seller is located is governed by Sections 9.316(a) and (b). [A
107-6 buyer other than a buyer in ordinary course of business (Subsection
107-7 (a) of this section) takes free of a security interest to the
107-8 extent that it secures future advances made after the secured party
107-9 acquires knowledge of the purchase, or more than 45 days after the
107-10 purchase, whichever first occurs, unless made pursuant to a
107-11 commitment entered into without knowledge of the purchase and
107-12 before the expiration of the 45 day period.]
107-13 (d) A buyer in ordinary course of business buying oil, gas,
107-14 or other minerals at the wellhead or minehead or after extraction
107-15 takes free of an interest arising out of an encumbrance.
107-16 (e) Subsections (a) and (b) do not affect a security
107-17 interest in goods in the possession of the secured party under
107-18 Section 9.313. [A secured party, including a secured party under a
107-19 security interest covered by Section 9.312(b) of this code, may not
107-20 enforce a security interest in farm products against a person who
107-21 has purchased the farm products from a person engaged in farming
107-22 operations unless the secured party gives notice of the security
107-23 interest to the buyer by certified mail, return receipt requested,
107-24 not later than the 90th day after the date of purchase. The notice
107-25 must state the terms of the security interest and the amount
107-26 claimed to be owed to the secured party.]
108-1 Sec. 9.321 [9.308]. LICENSEE OF GENERAL INTANGIBLE AND
108-2 LESSEE OF GOODS IN ORDINARY COURSE OF BUSINESS. (a) In this
108-3 section, "licensee in ordinary course of business" means a person
108-4 that becomes a licensee of a general intangible in good faith,
108-5 without knowledge that the license violates the rights of another
108-6 person in the general intangible, and in the ordinary course from a
108-7 person in the business of licensing general intangibles of that
108-8 kind. A person becomes a licensee in the ordinary course if the
108-9 license to the person comports with the usual or customary
108-10 practices in the kind of business in which the licensor is engaged
108-11 or with the licensor's own usual or customary practices.
108-12 (b) A licensee in ordinary course of business takes its
108-13 rights under a nonexclusive license free of a security interest in
108-14 the general intangible created by the licensor, even if the
108-15 security interest is perfected and the licensee knows of its
108-16 existence.
108-17 (c) A lessee in ordinary course of business takes its
108-18 leasehold interest free of a security interest in the goods created
108-19 by the lessor, even if the security interest is perfected and the
108-20 lessee knows of its existence. [PURCHASE OF CHATTEL PAPER AND
108-21 INSTRUMENTS. A purchaser of chattel paper or an instrument who
108-22 gives new value and takes possession of it in the ordinary course
108-23 of his business has priority over a security interest in the
108-24 chattel paper or instrument]
108-25 [(1) which is perfected under Section 9.304
108-26 (permissive filing and temporary perfection) or under Section 9.306
109-1 (perfection as to proceeds) if he acts without knowledge that the
109-2 specific paper or instrument is subject to a security interest; or]
109-3 [(2) which is claimed merely as proceeds of inventory
109-4 subject to a security interest (Section 9.306) even though he knows
109-5 that the specific paper or instrument is subject to the security
109-6 interest.]
109-7 [Sec. 9.309. PROTECTION OF PURCHASERS OF INSTRUMENTS,
109-8 DOCUMENTS, AND SECURITIES. Nothing in this chapter limits the
109-9 rights of a holder in due course of a negotiable instrument
109-10 (Section 3.302) or a holder to whom a negotiable document of title
109-11 has been duly negotiated (Section 7.501) or a protected purchaser
109-12 of a security (Section 8.303) and such holders or purchasers take
109-13 priority over an earlier security interest even though perfected.
109-14 Filing under this chapter does not constitute notice of the
109-15 security interest to such holders or purchasers.]
109-16 [Sec. 9.310. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
109-17 OF LAW. When a person in the ordinary course of his business
109-18 furnishes services or materials with respect to goods subject to a
109-19 security interest, a lien upon goods in the possession of such
109-20 person given by statute or rule of law for such materials or
109-21 services takes priority over a perfected security interest unless
109-22 the lien is statutory and the statute expressly provides otherwise.]
109-23 [Sec. 9.311. ALIENABILITY OF DEBTOR'S RIGHTS: JUDICIAL
109-24 PROCESS. The debtor's rights in collateral may be voluntarily or
109-25 involuntarily transferred (by way of sale, creation of a security
109-26 interest, attachment, levy, garnishment or other judicial process)
110-1 notwithstanding a provision in the security agreement prohibiting
110-2 any transfer or making the transfer constitute a default.]
110-3 Sec. 9.322 [9.312]. PRIORITIES AMONG CONFLICTING SECURITY
110-4 INTERESTS IN AND AGRICULTURAL LIENS ON [THE] SAME COLLATERAL.
110-5 (a) Except as otherwise provided in this section, priority among
110-6 conflicting security interests and agricultural liens in the same
110-7 collateral is determined according to the following rules:
110-8 (1) Conflicting perfected security interests and
110-9 agricultural liens rank according to priority in time of filing or
110-10 perfection. Priority dates from the earlier of the time a filing
110-11 covering the collateral is first made or the security interest or
110-12 agricultural lien is first perfected, if there is no period
110-13 thereafter when there is neither filing nor perfection.
110-14 (2) A perfected security interest or agricultural lien
110-15 has priority over a conflicting unperfected security interest or
110-16 agricultural lien.
110-17 (3) The first security interest or agricultural lien
110-18 to attach or become effective has priority if conflicting security
110-19 interests and agricultural liens are unperfected.
110-20 (b) For the purposes of Subsection (a)(1):
110-21 (1) the time of filing or perfection as to a security
110-22 interest in collateral is also the time of filing or perfection as
110-23 to a security interest in proceeds; and
110-24 (2) the time of filing or perfection as to a security
110-25 interest in collateral supported by a supporting obligation is also
110-26 the time of filing or perfection as to a security interest in the
111-1 supporting obligation.
111-2 (c) Except as otherwise provided in Subsection (f), a
111-3 security interest in collateral that qualifies for priority over a
111-4 conflicting security interest under Section 9.327, 9.328, 9.329,
111-5 9.330, or 9.331 also has priority over a conflicting security
111-6 interest in:
111-7 (1) any supporting obligation for the collateral; and
111-8 (2) proceeds of the collateral if:
111-9 (A) the security interest in proceeds is
111-10 perfected;
111-11 (B) the proceeds are cash proceeds or of the
111-12 same type as the collateral; and
111-13 (C) in the case of proceeds that are proceeds of
111-14 proceeds, all intervening proceeds are cash proceeds, proceeds of
111-15 the same type as the collateral, or an account relating to the
111-16 collateral.
111-17 (d) Subject to Subsection (e) and except as otherwise
111-18 provided in Subsection (f), if a security interest in chattel
111-19 paper, deposit accounts, negotiable documents, instruments,
111-20 investment property, or letter-of-credit rights is perfected by a
111-21 method other than filing, conflicting perfected security interests
111-22 in proceeds of the collateral rank according to priority in time of
111-23 filing.
111-24 (e) Subsection (d) applies only if the proceeds of the
111-25 collateral are not cash proceeds, chattel paper, negotiable
111-26 documents, instruments, investment property, or letter-of-credit
112-1 rights.
112-2 (f) Subsections (a)-(e) are subject to:
112-3 (1) Subsection (g) and the other provisions of this
112-4 subchapter;
112-5 (2) Section 4.210 with respect to a security interest
112-6 of a collecting bank;
112-7 (3) Section 5.118 with respect to a security interest
112-8 of an issuer or nominated person; and
112-9 (4) Section 9.110 with respect to a security interest
112-10 arising under Chapter 2 or 2A.
112-11 (g) A perfected agricultural lien on collateral has priority
112-12 over a conflicting security interest in or agricultural lien on the
112-13 same collateral if the statute creating the agricultural lien so
112-14 provides.
112-15 Sec. 9.323. FUTURE ADVANCES. (a) Except as otherwise
112-16 provided in Subsection (c), for purposes of determining the
112-17 priority of a perfected security interest under Section
112-18 9.322(a)(1), perfection of the security interest dates from the
112-19 time an advance is made to the extent that the security interest
112-20 secures an advance that:
112-21 (1) is made while the security interest is perfected
112-22 only:
112-23 (A) under Section 9.309 when it attaches; or
112-24 (B) temporarily under Section 9.312(e), (f), or
112-25 (g); and
112-26 (2) is not made pursuant to a commitment entered into
113-1 before or while the security interest is perfected by a method
113-2 other than under Section 9.309 or 9.312(e), (f), or (g).
113-3 (b) Except as otherwise provided in Subsection (c), a
113-4 security interest is subordinate to the rights of a person that
113-5 becomes a lien creditor while the security interest is perfected
113-6 only to the extent that it secures advances made more than 45 days
113-7 after the person becomes a lien creditor unless the advance is
113-8 made:
113-9 (1) without knowledge of the lien; or
113-10 (2) pursuant to a commitment entered into without
113-11 knowledge of the lien.
113-12 (c) Subsections (a) and (b) do not apply to a security
113-13 interest held by a secured party that is a buyer of accounts,
113-14 chattel paper, payment intangibles, or promissory notes or a
113-15 consignor.
113-16 (d) Except as otherwise provided in Subsection (e), a buyer
113-17 of goods other than a buyer in ordinary course of business takes
113-18 free of a security interest to the extent that it secures advances
113-19 made after the earlier of:
113-20 (1) the time the secured party acquires knowledge of
113-21 the buyer's purchase; or
113-22 (2) 45 days after the purchase.
113-23 (e) Subsection (d) does not apply if the advance is made
113-24 pursuant to a commitment entered into without knowledge of the
113-25 buyer's purchase and before the expiration of the 45-day period.
113-26 (f) Except as otherwise provided in Subsection (g), a lessee
114-1 of goods, other than a lessee in ordinary course of business, takes
114-2 the leasehold interest free of a security interest to the extent
114-3 that it secures advances made after the earlier of:
114-4 (1) the time the secured party acquires knowledge of
114-5 the lease; or
114-6 (2) 45 days after the lease contract becomes
114-7 enforceable.
114-8 (g) Subsection (f) does not apply if the advance is made
114-9 pursuant to a commitment entered into without knowledge of the
114-10 lease and before the expiration of the 45-day period.
114-11 Sec. 9.324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS.
114-12 (a) Except as otherwise provided in Subsection (g), a perfected
114-13 purchase-money security interest in goods other than inventory or
114-14 livestock has priority over a conflicting security interest in the
114-15 same goods, and, except as otherwise provided in Section 9.327, a
114-16 perfected security interest in its identifiable proceeds also has
114-17 priority, if the purchase-money security interest is perfected when
114-18 the debtor receives possession of the collateral or within 20 days
114-19 thereafter.
114-20 (b) Subject to Subsection (c) and except as otherwise
114-21 provided in Subsection (g), a [The rules of priority stated in
114-22 other sections of this subchapter and in the following sections
114-23 shall govern when applicable: Section 4.210 with respect to the
114-24 security interests of collecting banks in items being collected,
114-25 accompanying documents and proceeds; Section 9.103 on security
114-26 interests related to other jurisdictions; Section 9.114 on
115-1 consignments; Section 9.115 on security interests in investment
115-2 property.]
115-3 [(b) A perfected security interest in crops for new value
115-4 given to enable the debtor to produce the crops during the
115-5 production season and given not more than three months before the
115-6 crops become growing crops by planting or otherwise takes priority
115-7 over an earlier perfected security interest to the extent that such
115-8 earlier interest secures obligations due more than six months
115-9 before the crops become growing crops by planting or otherwise,
115-10 even though the person giving new value had knowledge of the
115-11 earlier security interest.]
115-12 [(c) A] perfected purchase-money [purchase money] security
115-13 interest in inventory has priority over a conflicting security
115-14 interest in the same inventory, has priority over a conflicting
115-15 security interest in chattel paper or an instrument constituting
115-16 proceeds of the inventory and in proceeds of the chattel paper, if
115-17 so provided in Section 9.330, and, except as otherwise provided in
115-18 Section 9.327, [and] also has priority in identifiable cash
115-19 proceeds of the inventory to the extent the identifiable cash
115-20 proceeds are received on or before the delivery of the inventory to
115-21 a buyer, if:
115-22 (1) the purchase-money [purchase money] security
115-23 interest is perfected when [at the time] the debtor receives
115-24 possession of the inventory; [and]
115-25 (2) except where excused by Section 9.343 [9.319] (oil
115-26 and gas production), the purchase-money [purchase money] secured
116-1 party sends an authenticated [gives] notification [in writing] to
116-2 the holder of the conflicting security interest [if the holder had
116-3 filed a financing statement covering the same types of inventory
116-4 (i) before the date of the filing made by the purchase money
116-5 secured party, or (ii) before the beginning of the 21 day period
116-6 where the purchase money security interest is temporarily perfected
116-7 without filing or possession (Subsection (e) of Section 9.304)];
116-8 [and]
116-9 (3) the holder of the conflicting security interest
116-10 receives any required notification within five years before the
116-11 debtor receives possession of the inventory; and
116-12 (4) the notification states that the person sending
116-13 [giving] the notification [notice] has or expects to acquire a
116-14 purchase-money [purchase money] security interest in inventory of
116-15 the debtor and describes the[, describing such] inventory [by item
116-16 or type].
116-17 (c) Subsections (b)(2)-(4) apply only if the holder of the
116-18 conflicting security interest had filed a financing statement
116-19 covering the same types of inventory:
116-20 (1) if the purchase-money security interest is
116-21 perfected by filing, before the date of the filing; or
116-22 (2) if the purchase-money security interest is
116-23 temporarily perfected without filing or possession under Section
116-24 9.312(f), before the beginning of the 20-day period under that
116-25 subsection.
116-26 (d) Subject to Subsection (e) and except as otherwise
117-1 provided in Subsection (g), a perfected purchase-money security
117-2 interest in livestock that are farm products has priority over a
117-3 conflicting security interest in the same livestock, and, except as
117-4 otherwise provided in Section 9.327, a perfected security interest
117-5 in their identifiable proceeds and identifiable products in their
117-6 unmanufactured states also has priority, if:
117-7 (1) the purchase-money security interest is perfected
117-8 when the debtor receives possession of the livestock;
117-9 (2) the purchase-money secured party sends an
117-10 authenticated notification to the holder of the conflicting
117-11 security interest;
117-12 (3) the holder of the conflicting security interest
117-13 receives the notification within six months before the debtor
117-14 receives possession of the livestock; and
117-15 (4) the notification states that the person sending
117-16 the notification has or expects to acquire a purchase-money
117-17 security interest in livestock of the debtor and describes the
117-18 livestock. [A purchase money security interest in collateral other
117-19 than inventory has priority over a conflicting security interest in
117-20 the same collateral or its proceeds if the purchase money security
117-21 interest is perfected at the time the debtor receives possession of
117-22 the collateral or within 20 days thereafter.]
117-23 (e) Subsections (d)(2)-(4) apply only if the holder of the
117-24 conflicting security interest had filed a financing statement
117-25 covering the same types of livestock:
117-26 (1) if the purchase-money security interest is
118-1 perfected by filing, before the date of the filing; or
118-2 (2) if the purchase-money security interest is
118-3 temporarily perfected without filing or possession under Section
118-4 9.312(f), before the beginning of the 20-day period under that
118-5 subsection. [In all cases not governed by other rules stated in
118-6 this section (including cases of purchase money security interests
118-7 which do not qualify for the special priorities set forth in
118-8 Subsections (c) and (d) of this section), priority between
118-9 conflicting security interests in the same collateral shall be
118-10 determined according to the following rules:]
118-11 [(1) Conflicting security interests rank according to
118-12 priority in time of filing or perfection. Priority dates from the
118-13 time a filing is first made covering the collateral or the time the
118-14 security interest is first perfected, whichever is earlier,
118-15 provided that there is no period thereafter when there is neither
118-16 filing nor perfection.]
118-17 [(2) So long as conflicting security interests are
118-18 unperfected, the first to attach has priority.]
118-19 (f) Except as otherwise provided in Subsection (g), a
118-20 perfected purchase-money security interest in software has priority
118-21 over a conflicting security interest in the same collateral, and,
118-22 except as otherwise provided in Section 9.327, a perfected security
118-23 interest in its identifiable proceeds also has priority, to the
118-24 extent that the purchase-money security interest in the goods in
118-25 which the software was acquired for use has priority in the goods
118-26 and proceeds of the goods under this section. [For the purposes of
119-1 Subsection (e) a date of filing or perfection as to collateral is
119-2 also a date of filing or perfection as to proceeds.]
119-3 (g) If more than one security interest qualifies for
119-4 priority in the same collateral under Subsection (a), (b), (d), or
119-5 (f):
119-6 (1) a security interest securing an obligation
119-7 incurred as all or part of the price of the collateral has priority
119-8 over a security interest securing an obligation incurred for value
119-9 given to enable the debtor to acquire rights in or the use of
119-10 collateral; and
119-11 (2) in all other cases, Section 9.322(a) applies to
119-12 the qualifying security interests [future advances are made while a
119-13 security interest is perfected by filing, the taking of possession,
119-14 or under Section 9.115 or 9.116 on investment property, the
119-15 security interest has the same priority for the purposes of
119-16 Subsection (e) or Section 9.115(e) with respect to the future
119-17 advances as it does with respect to the first advance. If a
119-18 commitment is made before or while the security interest is so
119-19 perfected, the security interest has the same priority with respect
119-20 to advances made pursuant thereto. In other cases a perfected
119-21 security interest has priority from the date the advance is made].
119-22 Sec. 9.325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED
119-23 COLLATERAL. (a) Except as otherwise provided in Subsection (b), a
119-24 security interest created by a debtor is subordinate to a security
119-25 interest in the same collateral created by another person if:
119-26 (1) the debtor acquired the collateral subject to the
120-1 security interest created by the other person;
120-2 (2) the security interest created by the other person
120-3 was perfected when the debtor acquired the collateral; and
120-4 (3) there is no period thereafter when the security
120-5 interest is unperfected.
120-6 (b) Subsection (a) subordinates a security interest only if
120-7 the security interest:
120-8 (1) otherwise would have priority solely under Section
120-9 9.322(a) or 9.324; or
120-10 (2) arose solely under Section 2.711(c) or 2A.508(e).
120-11 Sec. 9.326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW
120-12 DEBTOR. (a) Subject to Subsection (b), a security interest
120-13 created by a new debtor that is perfected by a filed financing
120-14 statement that is effective solely under Section 9.508 in
120-15 collateral in which a new debtor has or acquires rights is
120-16 subordinate to a security interest in the same collateral that is
120-17 perfected other than by a filed financing statement that is
120-18 effective solely under Section 9.508.
120-19 (b) The other provisions of this subchapter determine the
120-20 priority among conflicting security interests in the same
120-21 collateral perfected by filed financing statements that are
120-22 effective solely under Section 9.508. However, if the security
120-23 agreements to which a new debtor became bound as debtor were not
120-24 entered into by the same original debtor, the conflicting security
120-25 interests rank according to priority in time of the new debtor's
120-26 having become bound.
121-1 Sec. 9.327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT
121-2 ACCOUNT. The following rules govern priority among conflicting
121-3 security interests in the same deposit account:
121-4 (1) A security interest held by a secured party having
121-5 control of the deposit account under Section 9.104 has priority
121-6 over a conflicting security interest held by a secured party that
121-7 does not have control.
121-8 (2) Except as otherwise provided in Subdivisions (3)
121-9 and (4), security interests perfected by control under Section
121-10 9.314 rank according to priority in time of obtaining control.
121-11 (3) Except as otherwise provided in Subdivision (4), a
121-12 security interest held by the bank with which the deposit account
121-13 is maintained has priority over a conflicting security interest
121-14 held by another secured party.
121-15 (4) A security interest perfected by control under
121-16 Section 9.104(a)(3) has priority over a security interest held by
121-17 the bank with which the deposit account is maintained.
121-18 Sec. 9.328. PRIORITY OF SECURITY INTERESTS IN INVESTMENT
121-19 PROPERTY. The following rules govern priority among conflicting
121-20 security interests in the same investment property:
121-21 (1) A security interest held by a secured party having
121-22 control of investment property under Section 9.106 has priority
121-23 over a security interest held by a secured party that does not have
121-24 control of the investment property.
121-25 (2) Except as otherwise provided in Subdivisions (3)
121-26 and (4), conflicting security interests held by secured parties
122-1 each of which has control under Section 9.106 rank according to
122-2 priority in time of:
122-3 (A) if the collateral is a security, obtaining
122-4 control;
122-5 (B) if the collateral is a security entitlement
122-6 carried in a securities account and:
122-7 (i) if the secured party obtained control
122-8 under Section 8.106(d)(1), the secured party's becoming the person
122-9 for which the securities account is maintained;
122-10 (ii) if the secured party obtained control
122-11 under Section 8.106(d)(2), the securities intermediary's agreement
122-12 to comply with the secured party's entitlement orders with respect
122-13 to security entitlements carried or to be carried in the securities
122-14 account; or
122-15 (iii) if the secured party obtained
122-16 control through another person under Section 8.106(d)(3), the time
122-17 on which priority would be based under this subdivision if the
122-18 other person were the secured party; or
122-19 (C) if the collateral is a commodity contract
122-20 carried with a commodity intermediary, the satisfaction of the
122-21 requirement for control specified in Section 9.106(b)(2) with
122-22 respect to commodity contracts carried or to be carried with the
122-23 commodity intermediary.
122-24 (3) A security interest held by a securities
122-25 intermediary in a security entitlement or a securities account
122-26 maintained with the securities intermediary has priority over a
123-1 conflicting security interest held by another secured party.
123-2 (4) A security interest held by a commodity
123-3 intermediary in a commodity contract or a commodity account
123-4 maintained with the commodity intermediary has priority over a
123-5 conflicting security interest held by another secured party.
123-6 (5) A security interest in a certificated security in
123-7 registered form that is perfected by taking delivery under Section
123-8 9.313(a) and not by control under Section 9.314 has priority over a
123-9 conflicting security interest perfected by a method other than
123-10 control.
123-11 (6) Conflicting security interests created by a
123-12 broker, securities intermediary, or commodity intermediary that are
123-13 perfected without control under Section 9.106 rank equally.
123-14 (7) In all other cases, priority among conflicting
123-15 security interests in investment property is governed by Sections
123-16 9.322 and 9.323.
123-17 Sec. 9.329. PRIORITY OF SECURITY INTERESTS IN
123-18 LETTER-OF-CREDIT RIGHT. The following rules govern priority among
123-19 conflicting security interests in the same letter-of-credit right:
123-20 (1) A security interest held by a secured party having
123-21 control of the letter-of-credit right under Section 9.107 has
123-22 priority to the extent of its control over a conflicting security
123-23 interest held by a secured party that does not have control.
123-24 (2) Security interests perfected by control under
123-25 Section 9.314 rank according to priority in time of obtaining
123-26 control.
124-1 Sec. 9.330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR
124-2 INSTRUMENT. (a) A purchaser of chattel paper has priority over a
124-3 security interest in the chattel paper that is claimed merely as
124-4 proceeds of inventory subject to a security interest if:
124-5 (1) in good faith and in the ordinary course of the
124-6 purchaser's business, the purchaser gives new value and takes
124-7 possession of the chattel paper or obtains control of the chattel
124-8 paper under Section 9.105; and
124-9 (2) the chattel paper does not indicate that it has
124-10 been assigned to an identified assignee other than the purchaser.
124-11 (b) A purchaser of chattel paper has priority over a
124-12 security interest in the chattel paper that is claimed other than
124-13 merely as proceeds of inventory subject to a security interest if
124-14 the purchaser gives new value and takes possession of the chattel
124-15 paper or obtains control of the chattel paper under Section 9.105
124-16 in good faith, in the ordinary course of the purchaser's business,
124-17 and without knowledge that the purchase violates the rights of the
124-18 secured party.
124-19 (c) Except as otherwise provided in Section 9.327, a
124-20 purchaser having priority in chattel paper under Subsection (a) or
124-21 (b) also has priority in proceeds of the chattel paper to the
124-22 extent that:
124-23 (1) Section 9.322 provides for priority in the
124-24 proceeds; or
124-25 (2) the proceeds consist of the specific goods covered
124-26 by the chattel paper or cash proceeds of the specific goods, even
125-1 if the purchaser's security interest in the proceeds is
125-2 unperfected.
125-3 (d) Except as otherwise provided in Section 9.331(a), a
125-4 purchaser of an instrument has priority over a security interest in
125-5 the instrument perfected by a method other than possession if the
125-6 purchaser gives value and takes possession of the instrument in
125-7 good faith and without knowledge that the purchase violates the
125-8 rights of the secured party.
125-9 (e) For purposes of Subsections (a) and (b), the holder of a
125-10 purchase-money security interest in inventory gives new value for
125-11 chattel paper constituting proceeds of the inventory.
125-12 (f) For purposes of Subsections (b) and (d), if chattel
125-13 paper or an instrument indicates that it has been assigned to an
125-14 identified secured party other than the purchaser, a purchaser of
125-15 the chattel paper or instrument has knowledge that the purchase
125-16 violates the rights of the secured party.
125-17 Sec. 9.331. PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS,
125-18 DOCUMENTS, AND SECURITIES UNDER OTHER CHAPTERS; PRIORITY OF
125-19 INTERESTS IN FINANCIAL ASSETS AND SECURITY ENTITLEMENTS UNDER
125-20 CHAPTER 8. (a) This chapter does not limit the rights of a holder
125-21 in due course of a negotiable instrument, a holder to which a
125-22 negotiable document of title has been duly negotiated, or a
125-23 protected purchaser of a security. These holders or purchasers
125-24 take priority over an earlier security interest, even if perfected,
125-25 to the extent provided in Chapters 3, 7, and 8.
125-26 (b) This chapter does not limit the rights of or impose
126-1 liability on a person to the extent that the person is protected
126-2 against the assertion of an adverse claim under Chapter 8.
126-3 (c) Filing under this chapter does not constitute notice of
126-4 a claim or defense to the holders, or purchasers, or persons
126-5 described in Subsections (a) and (b).
126-6 Sec. 9.332. TRANSFER OF MONEY; TRANSFER OF FUNDS FROM
126-7 DEPOSIT ACCOUNT. (a) A transferee of money takes the money free
126-8 of a security interest unless the transferee acts in collusion with
126-9 the debtor in violating the rights of the secured party.
126-10 (b) A transferee of funds from a deposit account takes the
126-11 funds free of a security interest in the deposit account unless the
126-12 transferee acts in collusion with the debtor in violating the
126-13 rights of the secured party.
126-14 Sec. 9.333. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
126-15 OF LAW. (a) In this section, "possessory lien" means an interest,
126-16 other than a security interest or an agricultural lien:
126-17 (1) that secures payment or performance of an
126-18 obligation for services or materials furnished with respect to
126-19 goods by a person in the ordinary course of the person's business;
126-20 (2) that is created by statute or rule of law in favor
126-21 of the person; and
126-22 (3) whose effectiveness depends on the person's
126-23 possession of the goods.
126-24 (b) A possessory lien on goods has priority over a security
126-25 interest in the goods unless the lien is created by a statute that
126-26 expressly provides otherwise.
127-1 Sec. 9.334 [9.313]. PRIORITY OF SECURITY INTERESTS IN
127-2 FIXTURES AND CROPS. (a) [In this section and in the provisions of
127-3 Subchapter D of this chapter referring to fixture filing, unless
127-4 the context otherwise requires]
127-5 [(1) goods are "fixtures" when they become so related
127-6 to particular real estate that an interest in them arises under the
127-7 real estate law of the state in which the real estate is situated;]
127-8 [(2) a "fixture filing" is the filing in the office
127-9 where a mortgage on the real estate would be filed or recorded of a
127-10 financing statement covering goods which are or are to become
127-11 fixtures and conforming to the requirements of Subsection (e) of
127-12 Section 9.402;]
127-13 [(3) a mortgage is a "construction mortgage" to the
127-14 extent that it secures an obligation incurred for the construction
127-15 of an improvement on land including the acquisition cost of the
127-16 land, if the recorded writing so indicates.]
127-17 [(b)] A security interest under this chapter may be created
127-18 in goods that [which] are fixtures or may continue in goods that
127-19 [which] become fixtures. A[, but no] security interest does not
127-20 exist [exists] under this chapter in ordinary building materials
127-21 incorporated into an improvement on land.
127-22 (b) [(c)] This chapter does not prevent creation of an
127-23 encumbrance upon fixtures under [pursuant to] real property
127-24 [estate] law.
127-25 (c) In cases not governed by Subsections (d)-(h), a security
127-26 interest in fixtures is subordinate to a conflicting interest of an
128-1 encumbrancer or owner of the related real property other than the
128-2 debtor.
128-3 (d) Except as otherwise provided in Subsection (h), a [A]
128-4 perfected security interest in fixtures has priority over the
128-5 conflicting interest of an encumbrancer or owner of the real
128-6 property if the debtor has an interest of record in or is in
128-7 possession of the real property and: [estate where]
128-8 (1) the security interest is a purchase-money
128-9 [purchase money] security interest;
128-10 (2) [,] the interest of the encumbrancer or owner
128-11 arises before the goods become fixtures; and
128-12 (3) [,] the security interest is perfected by a
128-13 fixture filing before the goods become fixtures or within 20 [ten]
128-14 days thereafter.
128-15 (e) A perfected security interest in fixtures has priority
128-16 over a conflicting interest of an encumbrancer or owner of the real
128-17 property if:
128-18 (1) the debtor has an interest of record in the real
128-19 property or is in possession of the real property and[, and the
128-20 debtor has an interest of record in the real estate or is in
128-21 possession of the real estate; or]
128-22 [(2)] the security interest:
128-23 (A) is perfected by a fixture filing before the
128-24 interest of the encumbrancer or owner is of record; and
128-25 (B) [, the security interest] has priority over
128-26 any conflicting interest of a predecessor in title of the
129-1 encumbrancer or owner;
129-2 (2) before the goods become fixtures, the security
129-3 interest is perfected by any method permitted by this chapter and[,
129-4 and the debtor has an interest of record in the real estate or is
129-5 in possession of the real estate; or]
129-6 [(3)] the fixtures are readily removable:
129-7 (A) factory or office machines;
129-8 (B) equipment that is not primarily used or
129-9 leased for use in the operation of the real property; or
129-10 (C) [readily removable] replacements of domestic
129-11 appliances that [which] are consumer goods;
129-12 (3)[, and before the goods become fixtures the security
129-13 interest is perfected by any method permitted by this chapter; or]
129-14 [(4)] the conflicting interest is a lien on the real
129-15 property [estate] obtained by legal or equitable proceedings after
129-16 the security interest was perfected by any method permitted by this
129-17 chapter; or
129-18 (4) the security interest is:
129-19 (A) created in a manufactured home in a
129-20 manufactured-home transaction; and
129-21 (B) perfected pursuant to a statute described in
129-22 Section 9.311(a)(2).
129-23 (f) [(e)] A security interest in fixtures, whether or not
129-24 perfected, has priority over the conflicting interest of an
129-25 encumbrancer or owner of the real property if: [estate where]
129-26 (1) the encumbrancer or owner has, in an authenticated
130-1 record, consented [in writing] to the security interest or [has]
130-2 disclaimed an interest in the goods as fixtures; or
130-3 (2) the debtor has a right to remove the goods as
130-4 against the encumbrancer or owner.
130-5 (g) The [If the debtor's right terminates, the] priority of
130-6 the security interest under Subsection (f) continues for a
130-7 reasonable time if the debtor's right to remove the goods as
130-8 against the encumbrancer or owner terminates.
130-9 (h) A mortgage is a construction mortgage to the extent that
130-10 it secures an obligation incurred for the construction of an
130-11 improvement on land, including the acquisition cost of the land, if
130-12 a recorded record of the mortgage so indicates. Except as
130-13 [(f) Notwithstanding Subdivision (1) of Subsection (d) but]
130-14 otherwise provided in [subject to] Subsections [(d) and] (e) and
130-15 (f), a security interest in fixtures is subordinate to a
130-16 construction mortgage if a record of the mortgage is recorded
130-17 before the goods become fixtures [if the goods become fixtures]
130-18 before the completion of the construction. A [To the extent that
130-19 it is given to refinance a construction mortgage, a] mortgage has
130-20 this priority to the same extent as a [the] construction mortgage
130-21 to the extent that it is given to refinance a construction
130-22 mortgage.
130-23 (i) A perfected security interest in crops growing on real
130-24 property has priority over a conflicting interest of an
130-25 encumbrancer or owner of the real property if the debtor has an
130-26 interest of record in or is in possession of the real property.
131-1 [(g) In cases not within the preceding subsections, a
131-2 security interest in fixtures is subordinate to the conflicting
131-3 interest of an encumbrancer or owner of the related real estate who
131-4 is not the debtor.]
131-5 [(h) When the secured party has priority over all owners and
131-6 encumbrancers of the real estate, he may, on default, subject to
131-7 the provisions of Subchapter E, remove his collateral from the real
131-8 estate but he must reimburse any encumbrancer or owner of the real
131-9 estate who is not the debtor and who has not otherwise agreed for
131-10 the cost of repair of any physical injury, but not for any
131-11 diminution in value of the real estate caused by the absence of the
131-12 goods removed or by any necessity of replacing them. A person
131-13 entitled to reimbursement may refuse permission to remove until the
131-14 secured party gives adequate security for the performance of this
131-15 obligation.]
131-16 Sec. 9.335 [9.314]. ACCESSIONS. (a) A security interest
131-17 may be created in an accession and continues in collateral that
131-18 becomes an accession [in goods which attaches before they are
131-19 installed in or affixed to other goods takes priority as to the
131-20 goods installed or affixed (called in this section "accessions")
131-21 over the claims of all persons to the whole except as stated in
131-22 Subsection (c) and subject to Section 9.315(a)].
131-23 (b) If a security interest is perfected when the collateral
131-24 becomes an accession, the security interest remains perfected in
131-25 the collateral. [A security interest which attaches to goods after
131-26 they become part of a whole is valid against all persons
132-1 subsequently acquiring interests in the whole except as stated in
132-2 Subsection (c) but is invalid against any person with an interest
132-3 in the whole at the time the security interest attaches to the
132-4 goods who has not in writing consented to the security interest or
132-5 disclaimed an interest in the goods as part of the whole.]
132-6 (c) Except as otherwise provided in Subsection (d), the
132-7 other provisions of this subchapter determine the priority of a
132-8 security interest in an accession. [The security interests
132-9 described in Subsections (a) and (b) do not take priority over]
132-10 [(1) a subsequent purchaser for value of any interest
132-11 in the whole; or]
132-12 [(2) a creditor with a lien on the whole subsequently
132-13 obtained by judicial proceedings; or]
132-14 [(3) a creditor with a prior perfected security
132-15 interest in the whole to the extent that he makes subsequent
132-16 advances if the subsequent purchase is made, the lien by judicial
132-17 proceedings obtained or the subsequent advance under the prior
132-18 perfected security interest is made or contracted for without
132-19 knowledge of the security interest and before it is perfected. A
132-20 purchaser of the whole at a foreclosure sale other than the holder
132-21 of a perfected security interest purchasing at his own foreclosure
132-22 sale is a subsequent purchaser within this section.]
132-23 (d) A security interest in an accession is subordinate to a
132-24 security interest in the whole that is perfected by compliance with
132-25 the requirements of a certificate-of-title statute under Section
132-26 9.311(b).
133-1 (e) After [When under Subsections (a) or (b) and (c) a
133-2 secured party has an interest in accessions which has priority over
133-3 the claims of all persons who have interests in the whole, he may
133-4 on] default, subject to [the provisions of] Subchapter F, a secured
133-5 party may [E] remove an accession from other goods if the security
133-6 interest in the accession has priority over the claims of every
133-7 person having an interest in the whole.
133-8 (f) A secured party that removes an accession from other
133-9 goods under Subsection (e) shall promptly [his collateral from the
133-10 whole but he must] reimburse any holder of a security interest or
133-11 other lien on, [encumbrancer] or owner of, the whole or the other
133-12 goods, other than [who is not] the debtor, [and who has not
133-13 otherwise agreed] for the cost of repair of any physical injury to
133-14 the whole or the other goods. The secured party need [but] not
133-15 reimburse the holder or owner for any diminution in value of the
133-16 whole or the other goods caused by the absence of the accession
133-17 [goods] removed or by any necessity for replacing it [them]. A
133-18 person entitled to reimbursement may refuse permission to remove
133-19 until the secured party gives adequate assurance [security] for the
133-20 performance of the [this] obligation to reimburse.
133-21 Sec. 9.336 [9.315]. [PRIORITY WHEN GOODS ARE] COMMINGLED
133-22 GOODS [OR PROCESSED]. (a) In this section, "commingled goods"
133-23 means goods that are physically united with other goods in such a
133-24 manner that their identity is lost in a product or mass.
133-25 (b) A security interest does not exist in commingled goods
133-26 as such. However, a security interest may attach to a product or
134-1 mass that results when goods become commingled goods.
134-2 (c) If collateral becomes commingled goods, a security
134-3 interest attaches to the product or mass.
134-4 (d) If a security interest in collateral is [goods was]
134-5 perfected before the collateral becomes commingled [and
134-6 subsequently the] goods [or a part thereof have become part of a
134-7 product or mass], the security interest that attaches to the
134-8 product or mass under Subsection (c) is perfected [continues in the
134-9 product or mass if]
134-10 [(1) the goods are so manufactured, processed,
134-11 assembled or commingled that their identity is lost in the product
134-12 or mass; or]
134-13 [(2) a financing statement covering the original goods
134-14 also covers the product into which the goods have been
134-15 manufactured, processed or assembled.]
134-16 [In a case to which Subdivision (2) applies, no separate
134-17 security interest in that part of the original goods which has been
134-18 manufactured, processed or assembled into the product may be
134-19 claimed under Section 9.314].
134-20 (e) Except as otherwise provided in Subsection (f), the
134-21 other provisions of this subchapter determine the priority of a
134-22 security interest that attaches to the product or mass under
134-23 Subsection (c).
134-24 (f) If [(b) When under Subsection (a)] more than one
134-25 security interest attaches to the product or mass under Subsection
134-26 (c), the following rules determine priority:
135-1 (1) A security interest that is perfected under
135-2 Subsection (d) has priority over a security interest that is
135-3 unperfected at the time the collateral becomes commingled goods.
135-4 (2) If more than one security interest is perfected
135-5 under Subsection (d), the security interests[, they] rank equally
135-6 in proportion to value of the collateral at the time it became
135-7 commingled goods [according to the ratio that the cost of the goods
135-8 to which each interest originally attached bears to the cost of the
135-9 total product or mass].
135-10 Sec. 9.337. PRIORITY OF SECURITY INTERESTS IN GOODS COVERED
135-11 BY CERTIFICATE OF TITLE. If, while a security interest in goods is
135-12 perfected by any method under the law of another jurisdiction, this
135-13 state issues a certificate of title that does not show that the
135-14 goods are subject to the security interest or contain a statement
135-15 that they may be subject to security interests not shown on the
135-16 certificate:
135-17 (1) a buyer of the goods, other than a person in the
135-18 business of selling goods of that kind, takes free of the security
135-19 interest if the buyer gives value and receives delivery of the
135-20 goods after issuance of the certificate and without knowledge of
135-21 the security interest; and
135-22 (2) the security interest is subordinate to a
135-23 conflicting security interest in the goods that attaches, and is
135-24 perfected under Section 9.311(b), after issuance of the certificate
135-25 and without the conflicting secured party's knowledge of the
135-26 security interest.
136-1 Sec. 9.338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL
136-2 LIEN PERFECTED BY FILED FINANCING STATEMENT PROVIDING CERTAIN
136-3 INCORRECT INFORMATION. If a security interest or agricultural lien
136-4 is perfected by a filed financing statement providing information
136-5 described in Section 9.516(b)(5) that is incorrect at the time the
136-6 financing statement is filed:
136-7 (1) the security interest or agricultural lien is
136-8 subordinate to a conflicting perfected security interest in the
136-9 collateral to the extent that the holder of the conflicting
136-10 security interest gives value in reasonable reliance upon the
136-11 incorrect information; and
136-12 (2) a purchaser, other than a secured party, of the
136-13 collateral takes free of the security interest or agricultural lien
136-14 to the extent that, in reasonable reliance upon the incorrect
136-15 information, the purchaser gives value and, in the case of chattel
136-16 paper, documents, goods, instruments, or a security certificate,
136-17 receives delivery of the collateral.
136-18 Sec. 9.339 [9.316]. PRIORITY SUBJECT TO SUBORDINATION. This
136-19 [Nothing in this] chapter does not preclude [prevents]
136-20 subordination by agreement by a [any] person entitled to priority.
136-21 Sec. 9.340. EFFECTIVENESS OF RIGHT OF RECOUPMENT OR SET-OFF
136-22 AGAINST DEPOSIT ACCOUNT. (a) Except as otherwise provided in
136-23 Subsection (c), a bank with which a deposit account is maintained
136-24 may exercise any right of recoupment or set-off against a secured
136-25 party that holds a security interest in the deposit account.
136-26 (b) Except as otherwise provided in Subsection (c), the
137-1 application of this chapter to a security interest in a deposit
137-2 account does not affect a right of recoupment or set-off of the
137-3 secured party as to a deposit account maintained with the secured
137-4 party.
137-5 (c) The exercise by a bank of a set-off against a deposit
137-6 account is ineffective against a secured party that holds a
137-7 security interest in the deposit account that is perfected by
137-8 control under Section 9.104(a)(3), if the set-off is based on a
137-9 claim against the debtor.
137-10 Sec. 9.341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT
137-11 ACCOUNT. Except as otherwise provided in Section 9.340(c), and
137-12 unless the bank otherwise agrees in an authenticated record, a
137-13 bank's rights and duties with respect to a deposit account
137-14 maintained with the bank are not terminated, suspended, or modified
137-15 by:
137-16 (1) the creation, attachment, or perfection of a
137-17 security interest in the deposit account;
137-18 (2) the bank's knowledge of the security interest; or
137-19 (3) the bank's receipt of instructions from the
137-20 secured party.
137-21 Sec. 9.342. BANK'S RIGHT TO REFUSE TO ENTER INTO OR DISCLOSE
137-22 EXISTENCE OF CONTROL AGREEMENT. This chapter does not require a
137-23 bank to enter into an agreement of the kind described in Section
137-24 9.104(a)(2), even if its customer so requests or directs. A bank
137-25 that has entered into such an agreement is not required to confirm
137-26 the existence of the agreement to another person unless requested
138-1 to do so by its customer.
138-2 Sec. 9.343. OIL AND GAS INTERESTS: SECURITY INTEREST
138-3 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
138-4 provides a security interest in favor of interest owners, as
138-5 secured parties, to secure the obligations of the first purchaser
138-6 of oil and gas production, as debtor, to pay the purchase price.
138-7 An authenticated record giving the interest owner a right under
138-8 real property law operates as a security agreement created under
138-9 this chapter. The act of the first purchaser in signing an
138-10 agreement to purchase oil or gas production, in issuing a division
138-11 order, or in making any other voluntary communication to the
138-12 interest owner or any governmental agency recognizing the interest
138-13 owner's right operates as an authentication of a security agreement
138-14 in accordance with Section 9.203(b) for purposes of this chapter.
138-15 (b) The security interest provided by this section is
138-16 perfected automatically without the filing of a financing
138-17 statement. If the interest of the secured party is evidenced by a
138-18 deed, mineral deed, reservation in either, oil or gas lease,
138-19 assignment, or any other such record recorded in the real property
138-20 records of a county clerk, that record is effective as a filed
138-21 financing statement for purposes of this chapter, but no fee is
138-22 required except a fee that is otherwise required by the county
138-23 clerk, and there is no requirement of refiling every five years to
138-24 maintain effectiveness of the filing.
138-25 (c) The security interest exists in oil and gas production,
138-26 and also in the identifiable proceeds of that production owned by,
139-1 received by, or due to the first purchaser:
139-2 (1) for an unlimited time if:
139-3 (A) the proceeds are oil or gas production,
139-4 inventory of raw, refined, or manufactured oil or gas production,
139-5 or rights to or products of any of those, although the sale of
139-6 those proceeds by a first purchaser to a buyer in the ordinary
139-7 course of business as provided in Subsection (e) cuts off the
139-8 security interest in those proceeds;
139-9 (B) the proceeds are accounts, chattel paper,
139-10 instruments, documents, or payment intangibles; or
139-11 (C) the proceeds are cash proceeds, as defined
139-12 in Section 9.102; and
139-13 (2) for the length of time provided in Section 9.315
139-14 for all other proceeds.
139-15 (d) This section creates a lien that secures the payment of
139-16 all taxes that are or should be withheld or paid by the first
139-17 purchaser and a lien that secures the rights of any person who
139-18 would be entitled to a security interest under Subsection (a)
139-19 except for lack of any adoption of a security agreement by the
139-20 first purchaser or a lack of possession or record required by
139-21 Section 9.203 for the security interest to be enforceable.
139-22 (e) The security interests and liens created by this section
139-23 have priority over any purchaser who is not a buyer in the ordinary
139-24 course of the first purchaser's business, but are cut off by the
139-25 sale to a buyer from the first purchaser who is in the ordinary
139-26 course of the first purchaser's business under Section 9.320(a).
140-1 But in either case, whether or not the buyer from the first
140-2 purchaser is in ordinary course, a security interest will continue
140-3 in the proceeds of the sale by the first purchaser as provided in
140-4 Subsection (c).
140-5 (f) The security interests and all liens created by this
140-6 section have the following priorities over other Chapter 9 security
140-7 interests:
140-8 (1) A security interest created by this section is
140-9 treated as a purchase-money security interest for purposes of
140-10 determining its relative priority under Section 9.324 over other
140-11 security interests not provided for by this section. A holder of a
140-12 security interest created under this section is not required to
140-13 give the written notice every five years as provided in Section
140-14 9.324(b)(3) to have purchase-money priority over a security
140-15 interest with a prior financing statement covering inventory.
140-16 (2) A statutory lien is subordinate to all other
140-17 perfected Chapter 9 security interests and has priority over
140-18 unperfected Chapter 9 security interests and the lien creditors,
140-19 buyers, and transferees mentioned in Section 9.317.
140-20 (g) The security interests and liens created by this section
140-21 have the following priorities among themselves:
140-22 (1) If a record effective as a filed financing
140-23 statement under Subsection (b) exists, the security interests
140-24 perfected by that record have priority over a security interest
140-25 automatically perfected without filing under Subsection (b). If
140-26 several security interests perfected by records exist, they have
141-1 the same priority among themselves as established by real property
141-2 law for interests in oil and gas in place. If real property law
141-3 establishes no priority among them, they share priority pro rata.
141-4 (2) A security interest perfected automatically
141-5 without filing under Subsection (b) has priority over a lien
141-6 created under Subsection (d).
141-7 (3) A nontax lien under Subsection (d) has priority
141-8 over a lien created under that subsection that secures the payment
141-9 of taxes.
141-10 (h) The priorities for statutory liens mentioned in Section
141-11 9.333 do not apply to any security interest or statutory lien
141-12 created by this section. But if a pipeline common carrier has a
141-13 statutory or tariff lien that is effective and enforceable against
141-14 a trustee in bankruptcy and not invalidated by the Federal Tax Lien
141-15 Act, that lien has priority over the security interests and
141-16 statutory liens created by this section.
141-17 (i) If oil or gas production in which there are security
141-18 interests or statutory liens created by this section is commingled
141-19 with inventory or other production, the rules of Section 9.336
141-20 apply.
141-21 (j) A security interest or statutory lien created by this
141-22 section remains effective against the debtor and perfected against
141-23 the debtor's creditors even if assigned, regardless of whether the
141-24 assignment is perfected against the assignor's creditors. If a
141-25 deed, mineral deed, assignment of oil and gas lease, or other such
141-26 record evidencing the assignment is filed in the real property
142-1 records of the county, it will have the same effect as filing an
142-2 amended financing statement under Section 9.514.
142-3 (k) This section does not impair an operator's right to
142-4 set-off or withhold funds from other interest owners as security
142-5 for or in satisfaction of any debt or security interest. In case
142-6 of a dispute between an operator and another interest owner, a good
142-7 faith tender of funds by anyone to the person who the operator and
142-8 other interest owner agree on, to a person who otherwise shows
142-9 himself or herself to be the one entitled to the funds, or to a
142-10 court of competent jurisdiction in the event of litigation or
142-11 bankruptcy operates as a tender of the funds to both.
142-12 (l) A first purchaser who acts in good faith may terminate
142-13 an interest owner's security interest or statutory lien under this
142-14 section by paying, or by making and keeping open a tender of, the
142-15 amount the first purchaser believes to be due to the interest
142-16 owner:
142-17 (1) if the interest owner's rights are to oil or gas
142-18 production or its proceeds, either to the operator alone, in which
142-19 event the operator is considered the first purchaser, or to some
142-20 combination of the interest owner and the operator, as the first
142-21 purchaser chooses;
142-22 (2) whatever the nature of the production to which the
142-23 interest owner has rights, to the person that the interest owner
142-24 agreed to or acquiesced in; or
142-25 (3) to a court of competent jurisdiction in the event
142-26 of litigation or bankruptcy.
143-1 (m) A person who buys from a first purchaser can ensure that
143-2 the person buys free and clear of an interest owner's security
143-3 interest or statutory lien under this section:
143-4 (1) by buying in the ordinary course of the first
143-5 purchaser's business from the first purchaser under Section
143-6 9.320(a);
143-7 (2) by obtaining the interest owner's consent to the
143-8 sale under Section 9.315(a)(1);
143-9 (3) by ensuring that the first purchaser has paid the
143-10 interest owner or, provided that gas production is involved, or the
143-11 interest owner has so agreed or acquiesced, by ensuring that the
143-12 first purchaser has paid the interest owner's operator; or
143-13 (4) by ensuring that the person or the first purchaser
143-14 or some other person has withheld funds sufficient to pay amounts
143-15 in dispute and has maintained a tender of those funds to whoever
143-16 shows himself or herself to be the person entitled.
143-17 (n) If a tender under Subsection (m)(4) that is valid
143-18 thereafter fails, the security interest and liens governed by this
143-19 section remain effective.
143-20 (o) In addition to the usual remedy of sequestration
143-21 available to secured parties, and the remedies given in Subchapter
143-22 F, the holders of security interests and liens created by this
143-23 section have available to them, to the extent constitutionally
143-24 permitted, the remedies of replevin, attachment, and garnishment to
143-25 assist them in realizing upon their rights.
143-26 (p) The rights of any person claiming under a security
144-1 interest or lien created by this section are governed by the other
144-2 provisions of this chapter except to the extent that this section
144-3 necessarily displaces those provisions. This section does not
144-4 invalidate or otherwise affect the interests of any person in any
144-5 real property before severance of any oil or gas production.
144-6 (q) The security interest created under Subsections (a) and
144-7 (b) do not apply to proceeds of gas production that have been
144-8 withheld, in cash or account form, by a purchaser under Section
144-9 201.204(c), Tax Code.
144-10 (r) In this section:
144-11 (1) "Oil and gas production" means any oil, natural
144-12 gas, condensate of either, natural gas liquids, other gaseous,
144-13 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
144-14 substance produced as a by-product or adjunct to their production,
144-15 or any combination of these, which is severed, extracted, or
144-16 produced from the ground, the seabed, or other submerged lands
144-17 within the jurisdiction of this state. Any such substance,
144-18 including recoverable or recovered natural gas liquids, that is
144-19 transported to or in a natural gas pipeline or natural gas
144-20 gathering system, or otherwise transported or sold for use as
144-21 natural gas, or is transported or sold for the extraction of helium
144-22 or natural gas liquids is "gas production." Any such substance
144-23 that is transported or sold to persons and for purposes not
144-24 included in the foregoing natural gas definition is "oil
144-25 production."
144-26 (2) "Interest owner" means a person owning an entire
145-1 or fractional interest of any kind or nature in oil or gas
145-2 production at the time of severance, or a person who has an
145-3 express, implied, or constructive right to receive a monetary
145-4 payment determined by the value of oil or gas production or by the
145-5 amount of production.
145-6 (3) "First purchaser" means the first person that
145-7 purchases oil or gas production from an operator or interest owner
145-8 after the production is severed, or an operator that receives
145-9 production proceeds from a third-party purchaser who acts in good
145-10 faith under a division order or other agreement authenticated by
145-11 the operator under which the operator collects proceeds of
145-12 production on behalf of other interest owners. To the extent the
145-13 operator receives proceeds attributable to the interest of other
145-14 interest owners from a third-party purchaser who acts in good faith
145-15 under a division order or other agreement authenticated by such
145-16 operator, the operator is considered to be the first purchaser of
145-17 the production for all purposes under this section, notwithstanding
145-18 the characterization of other persons as first purchasers under
145-19 other laws or regulations. To the extent the operator has not
145-20 received from the third-party purchaser proceeds attributable to
145-21 the operator's interest and the interest of other interest owners,
145-22 the operator is not considered the first purchaser for the purposes
145-23 of this section and is entitled to all rights and benefits under
145-24 this section. Nothing in this section impairs or affects any
145-25 rights otherwise held by a royalty owner to take its share of oil
145-26 in kind or receive payment directly from a third-party purchaser
146-1 for the royalty owner's share of oil production with or without a
146-2 previously made agreement.
146-3 (4) "Operator" means a person engaged in the business
146-4 of severing oil or gas production from the ground, whether for the
146-5 person alone, only for other persons, or for the person and others.
146-6 [Sec. 9.317. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
146-7 DEBTOR. The mere existence of a security interest or authority
146-8 given to the debtor to dispose of or use collateral does not impose
146-9 contract or tort liability upon the secured party for the debtor's
146-10 acts or omissions.]
146-11 [Sec. 9.318. DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
146-12 CONTRACT AFTER NOTIFICATION OF ASSIGNMENT; TERM PROHIBITING
146-13 ASSIGNMENT INEFFECTIVE; IDENTIFICATION AND PROOF OF ASSIGNMENT.
146-14 (a) Unless an account debtor has made an enforceable agreement not
146-15 to assert defenses or claims arising out of a sale as provided in
146-16 Section 9.206 the rights of an assignee are subject to]
146-17 [(1) all the terms of the contract between the account
146-18 debtor and assignor and any defense or claim arising therefrom; and]
146-19 [(2) any other defense or claim of the account debtor
146-20 against the assignor which accrues before the account debtor
146-21 receives notification of the assignment.]
146-22 [(b) So far as the right to payment or a part thereof under
146-23 an assigned contract has not been fully earned by performance, and
146-24 notwithstanding notification of the assignment, any modification of
146-25 or substitution for the contract made in good faith and in
146-26 accordance with reasonable commercial standards is effective
147-1 against an assignee unless the account debtor has otherwise agreed
147-2 but the assignee acquires corresponding rights under the modified
147-3 or substituted contract. The assignment may provide that such
147-4 modification or substitution is a breach by the assignor.]
147-5 [(c) The account debtor is authorized to pay the assignor
147-6 until the account debtor receives notification that the amount due
147-7 or to become due has been assigned and that payment is to be made
147-8 to the assignee. A notification which does not reasonably identify
147-9 the rights assigned is ineffective. If requested by the account
147-10 debtor, the assignee must seasonably furnish reasonable proof that
147-11 the assignment has been made and unless he does so the account
147-12 debtor may pay the assignor.]
147-13 [(d) A term in any contract between an account debtor and an
147-14 assignor is ineffective if it prohibits assignment of an account or
147-15 prohibits creation of a security interest in a general intangible
147-16 for money due or to become due or requires the account debtor's
147-17 consent to such assignment or security interest.]
147-18 [Sec. 9.319. OIL AND GAS INTERESTS: SECURITY INTEREST
147-19 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
147-20 provides a security interest in favor of interest owners (as
147-21 secured parties) to secure the obligations of the first purchaser
147-22 of oil and gas production (as debtor) to pay the purchase price. A
147-23 signed writing giving the interest owner a right under real estate
147-24 law operates as a security agreement created under this chapter.
147-25 The act of the first purchaser in signing an agreement to purchase
147-26 oil or gas production, in issuing a division order, or in making
148-1 any other voluntary communication to the interest owner or any
148-2 governmental agency recognizing the interest owner's right operates
148-3 as an authentication and adoption of the security agreement in
148-4 accordance with Section 1.201(39) of this code for purposes of this
148-5 chapter.]
148-6 [(b) The security interest provided by this section is
148-7 perfected automatically without the filing of a financing
148-8 statement. If the interest of the secured party is evidenced by a
148-9 deed, mineral deed, reservation in either, oil or gas lease,
148-10 assignment, or any other such writing recorded in the real estate
148-11 records of a county clerk, that writing is effective as a filed
148-12 financing statement for purposes of Sections 9.302, 9.304, 9.306,
148-13 9.312, 9.401, 9.402, and 9.403 of this code, but no fee is required
148-14 except that otherwise required by the county clerk, and there is no
148-15 requirement of refiling every five years to maintain effectiveness
148-16 of the filing.]
148-17 [(c) The security interest exists in oil and gas production,
148-18 and also in the following proceeds of such production owned by,
148-19 received by, or due to the first purchaser:]
148-20 [(1) for an unlimited time if:]
148-21 [(A) the proceeds are oil or gas production,
148-22 inventory of raw, refined, or manufactured oil or gas production,
148-23 or rights to or products of any of these, although the sale of such
148-24 proceeds by a first purchaser to a buyer in the ordinary course of
148-25 business as provided in Subsection (e) will cut off the security
148-26 interest in those proceeds;]
149-1 [(B) the proceeds are accounts, chattel paper,
149-2 instruments, and documents; or]
149-3 [(C) the proceeds are "cash proceeds" as defined
149-4 in Section 9.306 of this code; and]
149-5 [(2) for the length of time provided by Section 9.306
149-6 of this code as to all other proceeds.]
149-7 [(d) This section creates a lien that secures the payment of
149-8 all taxes that are or should be withheld or paid by the first
149-9 purchaser, and a lien that secures the rights of any person who
149-10 would be entitled to a security interest under Subsection (a) of
149-11 this section except for lack of any adoption of a security
149-12 agreement by the first purchaser or a lack of possession or writing
149-13 required by Section 9.203 of this code for the security interest to
149-14 be enforceable.]
149-15 [(e) The security interests and liens created by this
149-16 section have priority over the bona fide purchasers described in
149-17 Section 9.301 of this code (transferees in bulk and other buyers
149-18 not in the ordinary course), but are cut off by the sale to a buyer
149-19 from the first purchaser who is in the ordinary course of the first
149-20 purchaser's business under Section 9.307(a) of this code. But in
149-21 either case, whether or not the buyer from the first purchaser is
149-22 in ordinary course a security interest will continue in the
149-23 proceeds of the sale by the first purchaser as provided in
149-24 Subsection (c).]
149-25 [(f) The security interests and all liens created by this
149-26 section will have the following priorities over other Chapter 9
150-1 security interests:]
150-2 [(1) security interests created by this section shall
150-3 be treated as purchase money security interests for purposes of
150-4 determining their relative priority under Section 9.312 of this
150-5 code over other security interests not provided for by this
150-6 section; holders of these security interests are not required to
150-7 give the written notice every five years as provided by Section
150-8 9.312(c) to enjoy purchase money priority over security interests
150-9 with a prior financing statement covering inventory; and]
150-10 [(2) statutory liens are subordinate to all other
150-11 perfected Chapter 9 security interests, and have priority over
150-12 unperfected Chapter 9 security interests and the lien creditors,
150-13 buyers, and transferees mentioned in Section 9.301 of this code.]
150-14 [(g) The security interests and liens created by this
150-15 section have the following priorities among themselves:]
150-16 [(1) if a writing effective as a financing statement
150-17 under Subsection (b) of this section exists, the security interests
150-18 perfected by that writing have priority over a security interest
150-19 automatically perfected without filing under Subsection (b) of this
150-20 section. If several security interests perfected by writings
150-21 exist, they have the same priority among themselves as established
150-22 by real estate law for interests in oil and gas in place. If real
150-23 estate law establishes no priority among them, they share priority
150-24 pro rata;]
150-25 [(2) a security interest perfected automatically
150-26 without filing under Subsection (b) of this section has priority
151-1 over a lien created under Subsection (d) of this section; and]
151-2 [(3) a nontax lien under Subsection (d) of this
151-3 section has priority over a lien created under that subsection that
151-4 secures the payment of taxes.]
151-5 [(h) The priorities for statutory liens mentioned in Section
151-6 9.310 of this code do not apply to any security interest or
151-7 statutory lien created by this section. But if any pipeline common
151-8 carrier has a statutory or tariff lien which is effective and
151-9 enforceable against a trustee in bankruptcy and not invalidated by
151-10 the Federal Tax Lien Act, it will have priority over the security
151-11 interests and statutory liens created by this section.]
151-12 [(i) If oil or gas production in which there are security
151-13 interests or statutory liens created by this section is commingled
151-14 with inventory or other production, the rules of Section 9.315 of
151-15 this code apply.]
151-16 [(j) A security interest or statutory lien created by this
151-17 section remains effective against the debtor and perfected against
151-18 his creditors even if assigned, regardless of whether the
151-19 assignment is perfected against the assignor's creditors. If a
151-20 deed, mineral deed, assignment of oil and gas lease, or other such
151-21 writing evidencing the assignment is filed in the real estate
151-22 records of the county, it will have the same effect as filing an
151-23 amended financing statement under Section 9.405 of this code.]
151-24 [(k) This section does not impair an operator's right to
151-25 setoff or withhold funds from other interest owners as security for
151-26 or in satisfaction of any debt or security interest. In case of a
152-1 dispute between an operator and another interest owner, a good
152-2 faith tender by anyone of funds to the person they shall agree on
152-3 or who may otherwise show himself to be the one entitled to the
152-4 funds or to a court of competent jurisdiction in the event of
152-5 litigation or bankruptcy, shall operate as a tender of the funds to
152-6 both.]
152-7 [(l) A first purchaser who acts in good faith may terminate
152-8 an interest owner's security interest or statutory lien under this
152-9 section by paying, or by making and keeping open a tender of the
152-10 amount the first purchaser believes to be due to the interest
152-11 owner:]
152-12 [(1) if the interest owner's rights are to oil or gas
152-13 production or its proceeds, either to the operator alone, in which
152-14 case the operator shall be considered the first purchaser, or to
152-15 some combination of the interest owner and the operator, as the
152-16 first purchaser chooses; or]
152-17 [(2) whatever the nature of the production to which
152-18 the interest owner has rights, to the person that the interest
152-19 owner agreed to or acquiesced in; or]
152-20 [(3) to a court of competent jurisdiction in the event
152-21 of litigation or bankruptcy.]
152-22 [(m) A person who buys from a first purchaser can assure
152-23 that he buys free and clear of an interest owner's security
152-24 interest or statutory lien under this section:]
152-25 [(1) by buying in the ordinary course of the first
152-26 purchaser's business from the first purchaser under Section
153-1 9.307(a) of this code; or]
153-2 [(2) by obtaining the interest owner's consent to the
153-3 sale under Section 9.306(b) of this code; or]
153-4 [(3) by insuring that the first purchaser has paid the
153-5 interest owner, or else, provided that gas production is involved,
153-6 or the interest owner has so agreed or acquiesced, by insuring that
153-7 the first purchaser has paid the interest owner's operator; or]
153-8 [(4) by insuring that he or the first purchaser or
153-9 some other person has withheld funds sufficient to pay amounts in
153-10 dispute and has maintained a tender of such funds to whoever may
153-11 show himself to be the person entitled. If a tender which is valid
153-12 thereafter fails, the security interest and liens governed by this
153-13 section remain effective.]
153-14 [(n) In addition to the usual remedy of sequestration
153-15 available to secured parties, and the remedies given in Subchapter
153-16 E of this chapter, the holders of security interests and liens
153-17 created by this section have available to them, to the extent
153-18 constitutionally permitted, the remedies of replevin, attachment,
153-19 and garnishment to assist them in realizing upon their rights.]
153-20 [(o) The rights of any person claiming under a security
153-21 interest or lien created by this section are governed by the other
153-22 provisions of this chapter except to the extent that this section
153-23 necessarily displaces those provisions. This section does not
153-24 invalidate or otherwise affect the interests of any person in any
153-25 real property prior to severance of any oil or gas production.]
153-26 [(p) The security interest created under Sections 9.319(a)
154-1 and (b) shall not apply to proceeds of gas production which have
154-2 been withheld, in cash or account form, by a purchaser under the
154-3 provisions of Section 201.204(c), Tax Code.]
154-4 [(q) In this section:]
154-5 [(1) "Oil and gas production" means any oil, natural
154-6 gas, condensate of either, natural gas liquids, other gaseous,
154-7 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
154-8 substance produced as a by-product or adjunct to their production,
154-9 or any combination of these, which is severed, extracted, or
154-10 produced from the ground, the seabed, or other submerged lands
154-11 within the jurisdiction of the State of Texas. Any such substance,
154-12 including recoverable or recovered natural gas liquids, which is
154-13 transported to or in a natural gas pipeline or natural gas
154-14 gathering system, or otherwise transported or sold for use as
154-15 natural gas, or is transported or sold for the extraction of helium
154-16 or natural gas liquids is "gas production". Any such substance
154-17 which is transported or sold to persons and for purposes not
154-18 included in the foregoing natural gas definition is oil production.]
154-19 [(2) "Interest owner" means a person owning an entire
154-20 or fractional interest of any kind or nature in oil or gas
154-21 production at the time of severance, or a person who has an
154-22 express, implied, or constructive right to receive a monetary
154-23 payment determined by the value of oil or gas production or by the
154-24 amount of production.]
154-25 [(3) "First purchaser" means the first person that
154-26 purchases oil or gas production from an operator or interest owner
155-1 after the production is severed, or an operator that receives
155-2 production proceeds from a third-party purchaser who acts in good
155-3 faith under a division order or other agreement signed by the
155-4 operator under which the operator collects proceeds of production
155-5 on behalf of other interest owners. To the extent the operator
155-6 receives proceeds attributable to the interest of other interest
155-7 owners from a third-party purchaser who acts in good faith under a
155-8 division order or other agreement signed by such operator, the
155-9 operator shall be considered to be the first purchaser of the
155-10 production for all purposes under this section, notwithstanding the
155-11 characterization of other persons as first purchasers under other
155-12 laws or regulations. To the extent the operator has not received
155-13 from the third-party purchaser proceeds attributable to his
155-14 interest and the interest of other interest owners, the operator is
155-15 not considered the first purchaser for the purposes of this
155-16 section, and is entitled to all rights and benefits under this
155-17 section. Nothing herein shall impair or affect any rights
155-18 otherwise held by a royalty owner to take its share of oil in kind
155-19 or receive payment directly from a third-party purchaser for such
155-20 royalty owner's share of oil production with or without a
155-21 previously made agreement.]
155-22 [(4) An "operator" is a person engaged in the business
155-23 of severing oil or gas production from the ground, whether for
155-24 himself alone, for other persons alone, or for himself and others.]
155-25 SUBCHAPTER D. RIGHTS OF THIRD PARTIES
155-26 Sec. 9.401. ALIENABILITY OF DEBTOR'S RIGHTS. (a) Except as
156-1 otherwise provided in Subsection (b) and Sections 9.406, 9.407,
156-2 9.408, and 9.409, whether a debtor's rights in collateral may be
156-3 voluntarily or involuntarily transferred is governed by law other
156-4 than this chapter.
156-5 (b) An agreement between the debtor and secured party that
156-6 prohibits a transfer of the debtor's rights in collateral or makes
156-7 the transfer a default does not prevent the transfer from taking
156-8 effect.
156-9 Sec. 9.402. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
156-10 DEBTOR OR IN TORT. The existence of a security interest,
156-11 agricultural lien, or authority given to a debtor to dispose of or
156-12 use collateral, without more, does not subject a secured party to
156-13 liability in contract or tort for the debtor's acts or omissions.
156-14 Sec. 9.403. AGREEMENT NOT TO ASSERT DEFENSES AGAINST
156-15 ASSIGNEE. (a) In this section, "value" has the meaning provided
156-16 in Section 3.303(a).
156-17 (b) Except as otherwise provided in this section, an
156-18 agreement between an account debtor and an assignor not to assert
156-19 against an assignee any claim or defense that the account debtor
156-20 may have against the assignor is enforceable by an assignee that
156-21 takes an assignment:
156-22 (1) for value;
156-23 (2) in good faith;
156-24 (3) without notice of a claim of a property or
156-25 possessory right to the property assigned; and
156-26 (4) without notice of a defense or claim in recoupment
157-1 of the type that may be asserted against a person entitled to
157-2 enforce a negotiable instrument under Section 3.305(a).
157-3 (c) Subsection (b) does not apply to defenses of a type that
157-4 may be asserted against a holder in due course of a negotiable
157-5 instrument under Section 3.305(b).
157-6 (d) In a consumer transaction, if a record evidences the
157-7 account debtor's obligation, law other than this chapter requires
157-8 that the record include a statement to the effect that the rights
157-9 of an assignee are subject to claims or defenses that the account
157-10 debtor could assert against the original obligee, and the record
157-11 does not include such a statement:
157-12 (1) the record has the same effect as if the record
157-13 included such a statement; and
157-14 (2) the account debtor may assert against an assignee
157-15 those claims and defenses that would have been available if the
157-16 record included such a statement.
157-17 (e) This section is subject to law other than this chapter
157-18 that establishes a different rule for an account debtor who is an
157-19 individual and who incurred the obligation primarily for personal,
157-20 family, or household purposes.
157-21 (f) Except as otherwise provided in Subsection (d), this
157-22 section does not displace law other than this chapter that gives
157-23 effect to an agreement by an account debtor not to assert a claim
157-24 or defense against an assignee.
157-25 Sec. 9.404. RIGHTS ACQUIRED BY ASSIGNEE; CLAIMS AND DEFENSES
157-26 AGAINST ASSIGNEE. (a) Unless an account debtor has made an
158-1 enforceable agreement not to assert defenses or claims, and subject
158-2 to Subsections (b)-(e), the rights of an assignee are subject to:
158-3 (1) all terms of the agreement between the account
158-4 debtor and assignor and any defense or claim in recoupment arising
158-5 from the transaction that gave rise to the contract; and
158-6 (2) any other defense or claim of the account debtor
158-7 against the assignor that accrues before the account debtor
158-8 receives a notification of the assignment authenticated by the
158-9 assignor or the assignee.
158-10 (b) Subject to Subsection (c) and except as otherwise
158-11 provided in Subsection (d), the claim of an account debtor against
158-12 an assignor may be asserted against an assignee under Subsection
158-13 (a) only to reduce the amount the account debtor owes.
158-14 (c) This section is subject to law other than this chapter
158-15 that establishes a different rule for an account debtor who is an
158-16 individual and who incurred the obligation primarily for personal,
158-17 family, or household purposes.
158-18 (d) In a consumer transaction, if a record evidences the
158-19 account debtor's obligation, law other than this chapter requires
158-20 that the record include a statement to the effect that the account
158-21 debtor's recovery against an assignee with respect to claims and
158-22 defenses against the assignor may not exceed amounts paid by the
158-23 account debtor under the record, and the record does not include
158-24 such a statement, the extent to which a claim of an account debtor
158-25 against the assignor may be asserted against an assignee is
158-26 determined as if the record included such a statement.
159-1 (e) This section does not apply to an assignment of a
159-2 health-care-insurance receivable.
159-3 Sec. 9.405. MODIFICATION OF ASSIGNED CONTRACT. (a) A
159-4 modification of or substitution for an assigned contract is
159-5 effective against an assignee if made in good faith. The assignee
159-6 acquires corresponding rights under the modified or substituted
159-7 contract. The assignment may provide that the modification or
159-8 substitution is a breach of contract by the assignor. This
159-9 subsection is subject to Subsections (b)-(d).
159-10 (b) Subsection (a) applies to the extent that:
159-11 (1) the right to payment or a part thereof under an
159-12 assigned contract has not been fully earned by performance; or
159-13 (2) the right to payment or a part thereof has been
159-14 fully earned by performance and the account debtor has not received
159-15 notification of the assignment under Section 9.406(a).
159-16 (c) This section is subject to law other than this chapter
159-17 that establishes a different rule for an account debtor who is an
159-18 individual and who incurred the obligation primarily for personal,
159-19 family, or household purposes.
159-20 (d) This section does not apply to an assignment of a
159-21 health-care-insurance receivable.
159-22 Sec. 9.406. DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION OF
159-23 ASSIGNMENT; IDENTIFICATION AND PROOF OF ASSIGNMENT; RESTRICTIONS ON
159-24 ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, AND
159-25 PROMISSORY NOTES INEFFECTIVE. (a) Subject to Subsections (b)-(i),
159-26 an account debtor on an account, chattel paper, or a payment
160-1 intangible may discharge its obligation by paying the assignor
160-2 until, but not after, the account debtor receives a notification,
160-3 authenticated by the assignor or the assignee, that the amount due
160-4 or to become due has been assigned and that payment is to be made
160-5 to the assignee. After receipt of the notification, the account
160-6 debtor may discharge its obligation by paying the assignee and may
160-7 not discharge the obligation by paying the assignor.
160-8 (b) Subject to Subsection (h), notification is ineffective
160-9 under Subsection (a):
160-10 (1) if it does not reasonably identify the rights
160-11 assigned;
160-12 (2) to the extent that an agreement between an account
160-13 debtor and a seller of a payment intangible limits the account
160-14 debtor's duty to pay a person other than the seller and the
160-15 limitation is effective under law other than this chapter; or
160-16 (3) at the option of an account debtor, if the
160-17 notification notifies the account debtor to make less than the full
160-18 amount of any installment or other periodic payment to the
160-19 assignee, even if:
160-20 (A) only a portion of the account, chattel
160-21 paper, or general intangible has been assigned to that assignee;
160-22 (B) a portion has been assigned to another
160-23 assignee; or
160-24 (C) the account debtor knows that the assignment
160-25 to that assignee is limited.
160-26 (c) Subject to Subsection (h), if requested by the account
161-1 debtor, an assignee shall seasonably furnish reasonable proof that
161-2 the assignment has been made. Unless the assignee complies, the
161-3 account debtor may discharge its obligation by paying the assignor,
161-4 even if the account debtor has received a notification under
161-5 Subsection (a).
161-6 (d) Except as otherwise provided in Subsection (e) and
161-7 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
161-8 an agreement between an account debtor and an assignor or in a
161-9 promissory note is ineffective to the extent that it:
161-10 (1) prohibits, restricts, or requires the consent of
161-11 the account debtor or person obligated on the promissory note to
161-12 the assignment or transfer of, or the creation, attachment,
161-13 perfection, or enforcement of a security interest in, the account,
161-14 chattel paper, payment intangible, or promissory note; or
161-15 (2) provides that the creation, attachment,
161-16 perfection, or enforcement of the security interest may give rise
161-17 to a default, breach, right of recoupment, claim, defense,
161-18 termination, right of termination, or remedy under the account,
161-19 chattel paper, payment intangible, or promissory note.
161-20 (e) Subsection (d) does not apply to the sale of a payment
161-21 intangible or promissory note.
161-22 (f) Except as otherwise provided in Sections 2A.303 and
161-23 9.407, and subject to Subsections (h) and (i), a rule of law,
161-24 statute, or regulation that prohibits, restricts, or requires the
161-25 consent of a government, governmental body or official, or account
161-26 debtor to the assignment or transfer of, or creation of a security
162-1 interest in, an account or chattel paper is ineffective to the
162-2 extent that the rule of law, statute, or regulation:
162-3 (1) prohibits, restricts, or requires the consent of
162-4 the government, governmental body or official, or account debtor to
162-5 the assignment or transfer of, or the creation, attachment,
162-6 perfection, or enforcement of a security interest in, the account
162-7 or chattel paper; or
162-8 (2) provides that the creation, attachment,
162-9 perfection, or enforcement of the security interest may give rise
162-10 to a default, breach, right of recoupment, claim, defense,
162-11 termination, right of termination, or remedy under the account or
162-12 chattel paper.
162-13 (g) Subject to Subsection (h), an account debtor may not
162-14 waive or vary its option under Subsection (b)(3).
162-15 (h) This section is subject to law other than this chapter
162-16 that establishes a different rule for an account debtor who is an
162-17 individual and who incurred the obligation primarily for personal,
162-18 family, or household purposes.
162-19 (i) This section does not apply to an assignment of a
162-20 health-care-insurance receivable.
162-21 Sec. 9.407. RESTRICTIONS ON CREATION OR ENFORCEMENT OF
162-22 SECURITY INTEREST IN LEASEHOLD INTEREST OR IN LESSOR'S RESIDUAL
162-23 INTEREST. (a) Except as otherwise provided in Subsection (b), a
162-24 term in a lease agreement is ineffective to the extent that it:
162-25 (1) prohibits, restricts, or requires the consent of a
162-26 party to the lease to the creation, attachment, perfection, or
163-1 enforcement of a security interest in an interest of a party under
163-2 the lease contract or in the lessor's residual interest in the
163-3 goods; or
163-4 (2) provides that the creation, attachment,
163-5 perfection, or enforcement of the security interest may give rise
163-6 to a default, breach, right of recoupment, claim, defense,
163-7 termination, right of termination, or remedy under the lease.
163-8 (b) Except as otherwise provided in Section 2A.303(g), a
163-9 term described in Subsection (a)(2) is effective to the extent that
163-10 there is:
163-11 (1) a transfer by the lessee of the lessee's right of
163-12 possession or use of the goods in violation of the term; or
163-13 (2) a delegation of a material performance of either
163-14 party to the lease contract in violation of the term.
163-15 (c) The creation, attachment, perfection, or enforcement of
163-16 a security interest in the lessor's interest under the lease
163-17 contract or the lessor's residual interest in the goods is not a
163-18 transfer that materially impairs the lessee's prospect of obtaining
163-19 return performance or materially changes the duty of or materially
163-20 increases the burden or risk imposed on the lessee within the
163-21 purview of Section 2A.303(d) unless, and then only to the extent
163-22 that, enforcement actually results in a delegation of material
163-23 performance of the lessor.
163-24 Sec. 9.408. RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES,
163-25 HEALTH-CARE-INSURANCE RECEIVABLES, AND CERTAIN GENERAL INTANGIBLES
163-26 INEFFECTIVE. (a) Except as otherwise provided in Subsection (b),
164-1 a term in a promissory note or in an agreement between an account
164-2 debtor and a debtor that relates to a health-care-insurance
164-3 receivable or a general intangible, including a contract, permit,
164-4 license, or franchise, and which term prohibits, restricts, or
164-5 requires the consent of the person obligated on the promissory note
164-6 or the account debtor to, the assignment or transfer of, or
164-7 creation, attachment, or perfection of a security interest in, the
164-8 promissory note, health-care-insurance receivable, or general
164-9 intangible, is ineffective to the extent that the term:
164-10 (1) would impair the creation, attachment, or
164-11 perfection of a security interest; or
164-12 (2) provides that the creation, attachment, or
164-13 perfection of the security interest may give rise to a default,
164-14 breach, right of recoupment, claim, defense, termination, right of
164-15 termination, or remedy under the promissory note,
164-16 health-care-insurance receivable, or general intangible.
164-17 (b) Subsection (a) applies to a security interest in a
164-18 payment intangible or promissory note only if the security interest
164-19 arises out of a sale of the payment intangible or promissory note.
164-20 (c) A rule of law, statute, or regulation that prohibits,
164-21 restricts, or requires the consent of a government, governmental
164-22 body or official, person obligated on a promissory note, or account
164-23 debtor to the assignment or transfer of, or creation of a security
164-24 interest in, a promissory note, health-care-insurance receivable,
164-25 or general intangible, including a contract, permit, license, or
164-26 franchise between an account debtor and a debtor, is ineffective to
165-1 the extent that the rule of law, statute, or regulation:
165-2 (1) would impair the creation, attachment, or
165-3 perfection of a security interest; or
165-4 (2) provides that the creation, attachment, or
165-5 perfection of the security interest may give rise to a default,
165-6 breach, right of recoupment, claim, defense, termination, right of
165-7 termination, or remedy under the promissory note,
165-8 health-care-insurance receivable, or general intangible.
165-9 (d) To the extent that a term in a promissory note or in an
165-10 agreement between an account debtor and a debtor that relates to a
165-11 health-care-insurance receivable or general intangible or a rule of
165-12 law, statute, or regulation described in Subsection (c) would be
165-13 effective under law other than this chapter but is ineffective
165-14 under Subsection (a) or (c), the creation, attachment, or
165-15 perfection of a security interest in the promissory note,
165-16 health-care-insurance receivable, or general intangible:
165-17 (1) is not enforceable against the person obligated on
165-18 the promissory note or the account debtor;
165-19 (2) does not impose a duty or obligation on the person
165-20 obligated on the promissory note or the account debtor;
165-21 (3) does not require the person obligated on the
165-22 promissory note or the account debtor to recognize the security
165-23 interest, pay or render performance to the secured party, or accept
165-24 payment or performance from the secured party;
165-25 (4) does not entitle the secured party to use or
165-26 assign the debtor's rights under the promissory note,
166-1 health-care-insurance receivable, or general intangible, including
166-2 any related information or materials furnished to the debtor in the
166-3 transaction giving rise to the promissory note,
166-4 health-care-insurance receivable, or general intangible;
166-5 (5) does not entitle the secured party to use, assign,
166-6 possess, or have access to any trade secrets or confidential
166-7 information of the person obligated on the promissory note or the
166-8 account debtor; and
166-9 (6) does not entitle the secured party to enforce the
166-10 security interest in the promissory note, health-care-insurance
166-11 receivable, or general intangible.
166-12 Sec. 9.409. RESTRICTIONS ON ASSIGNMENT OF LETTER-OF-CREDIT
166-13 RIGHTS INEFFECTIVE. (a) A term in a letter of credit or a rule of
166-14 law, statute, regulation, custom, or practice applicable to the
166-15 letter of credit that prohibits, restricts, or requires the consent
166-16 of an applicant, issuer, or nominated person to a beneficiary's
166-17 assignment of or creation of a security interest in a
166-18 letter-of-credit right is ineffective to the extent that the term
166-19 or rule of law, statute, regulation, custom, or practice:
166-20 (1) would impair the creation, attachment, or
166-21 perfection of a security interest in the letter-of-credit right; or
166-22 (2) provides that the creation, attachment, or
166-23 perfection of the security interest may give rise to a default,
166-24 breach, right of recoupment, claim, defense, termination, right of
166-25 termination, or remedy under the letter-of-credit right.
166-26 (b) To the extent that a term in a letter of credit is
167-1 ineffective under Subsection (a) but would be effective under law
167-2 other than this chapter or a custom or practice applicable to the
167-3 letter of credit, to the transfer of a right to draw or otherwise
167-4 demand performance under the letter of credit, or to the assignment
167-5 of a right to proceeds of the letter of credit, the creation,
167-6 attachment, or perfection of a security interest in the
167-7 letter-of-credit right:
167-8 (1) is not enforceable against the applicant, issuer,
167-9 nominated person, or transferee beneficiary;
167-10 (2) imposes no duties or obligations on the applicant,
167-11 issuer, nominated person, or transferee beneficiary; and
167-12 (3) does not require the applicant, issuer, nominated
167-13 person, or transferee beneficiary to recognize the security
167-14 interest, pay or render performance to the secured party, or accept
167-15 payment or other performance from the secured party.
167-16 SUBCHAPTER E. FILING
167-17 Sec. 9.501 [9.401]. [PLACE OF] FILING OFFICE[; ERRONEOUS
167-18 FILING; REMOVAL OF COLLATERAL]. (a) Except as otherwise provided
167-19 in Subsection (b), if the local law of this state governs
167-20 perfection of a security interest or agricultural lien, the office
167-21 in which to file a financing statement to perfect the security
167-22 interest or agricultural lien is:
167-23 (1) the office designated for the filing or recording
167-24 of a record of a mortgage on the related real property, if [The
167-25 proper place to file in order to perfect a security interest is as
167-26 follows]:
168-1 (A) [(1) when the collateral is consumer goods,
168-2 then in the office of the County Clerk in the county of the
168-3 debtor's residence or if the debtor is not a resident of this state
168-4 then in the office of the County Clerk in the county where the
168-5 goods are kept;]
168-6 [(2) when] the collateral is as-extracted collateral
168-7 or timber to be cut; or
168-8 (B) [is minerals or the like (including oil and
168-9 gas) or accounts subject to Subsection (e) of Section 9.103, or
168-10 when] the financing statement is filed as a fixture filing
168-11 [(Section 9.313)] and the collateral is goods that [which] are or
168-12 are to become fixtures; or
168-13 (2)[, then in the office of the County Clerk in the
168-14 county where a mortgage on the real estate would be filed or
168-15 recorded;]
168-16 [(3) in all other cases, in] the office of the
168-17 Secretary of State, in all other cases, including a case in which
168-18 the collateral is goods that are or are to become fixtures and the
168-19 financing statement is not filed as a fixture filing.
168-20 (b) The office in which to file a financing statement to
168-21 perfect a security interest in collateral, including fixtures, of a
168-22 transmitting utility is the office of the Secretary of State. The
168-23 financing statement also constitutes a fixture filing as to the
168-24 collateral indicated in the financing statement that is or is to
168-25 become fixtures. [A filing which is made in good faith in an
168-26 improper place or not in all of the places required by this section
169-1 is nevertheless effective with regard to any collateral as to which
169-2 the filing complied with the requirements of this chapter and is
169-3 also effective with regard to collateral covered by the financing
169-4 statement against any person who has knowledge of the contents of
169-5 such financing statement].
169-6 [(c) A filing which is made in the proper county continues
169-7 effective for four months after a change to another county of the
169-8 debtor's residence or place of business or the location of the
169-9 collateral, whichever controlled the original filing. It becomes
169-10 ineffective thereafter unless a copy of the financing statement
169-11 signed by the secured party is filed in the new county within said
169-12 period. The security interest may also be perfected in the new
169-13 county after the expiration of the four-month period; in such case
169-14 perfection dates from the time of perfection in the new county. A
169-15 change in the use of the collateral does not impair the
169-16 effectiveness of the original filing.]
169-17 [(d) The rules stated in Section 9.103 determine whether
169-18 filing is necessary in this state.]
169-19 [(e) For the purposes of this section, the residence of an
169-20 organization is its place of business if it has one or its chief
169-21 executive office if it has more than one place of business.]
169-22 [(f) A continuation statement filed to continue a security
169-23 interest perfected before September 1, 1985, in collateral that is
169-24 equipment used in farming operations, farm products, or accounts or
169-25 general intangibles arising from or relating to the sale of farm
169-26 products by a farmer must be filed in the office of the Secretary
170-1 of State, and must contain the information contained in the
170-2 original financing statement, in addition to the information
170-3 required for a continuation statement under Section 9.403 of this
170-4 code. The priority of such a security interest is not affected by
170-5 the fact that a continuation statement filed according to this
170-6 subsection is filed at a different place than the original
170-7 financing statement.]
170-8 Sec. 9.502 [9.402]. CONTENTS [FORMAL REQUISITES] OF
170-9 FINANCING STATEMENT; RECORD OF [AMENDMENTS;] MORTGAGE AS FINANCING
170-10 STATEMENT; TIME OF FILING FINANCING STATEMENT. (a) Subject to
170-11 Subsection (b), a [A] financing statement is sufficient only if it:
170-12 (1) provides [gives] the name [names] of the debtor;
170-13 (2) provides the name of [and] the secured party or a
170-14 representative of the secured party; and
170-15 (3) indicates the collateral covered by the financing
170-16 statement[, is signed by the debtor, gives an address of the
170-17 secured party from which information concerning the security
170-18 interest may be obtained, gives a mailing address of the debtor and
170-19 contains a statement indicating the types, or describing the items,
170-20 of collateral. A financing statement may be filed before a
170-21 security agreement is made or a security interest otherwise
170-22 attaches. When the financing statement covers crops growing or to
170-23 be grown, the statement must also contain a description of the real
170-24 estate concerned. When the financing statement covers timber to be
170-25 cut or covers minerals or the like (including oil and gas) or
170-26 accounts subject to Subsection (e) of Section 9.103, or when the
171-1 financing statement is filed as a fixture filing (Section 9.313)
171-2 and the collateral is goods which are or are to become fixtures,
171-3 the statement must also comply with Subsection (e). A security
171-4 agreement is sufficient as a financing statement if it contains the
171-5 above information and is signed by the debtor. A carbon,
171-6 photographic or other reproduction of a security agreement or a
171-7 financing statement is sufficient as a financing statement.]
171-8 [(b) A financing statement which otherwise complies with
171-9 Subsection (a) is sufficient when it is signed by the secured party
171-10 instead of the debtor if it is filed to perfect a security interest
171-11 in]
171-12 [(1) collateral already subject to a security interest
171-13 in another jurisdiction when it is brought into this state, or when
171-14 the debtor's location is changed to this state. Such a financing
171-15 statement must state that the collateral was brought into this
171-16 state or that the debtor's location was changed to this state under
171-17 such circumstances; or]
171-18 [(2) proceeds under Section 9.306 if the security
171-19 interest in the original collateral was perfected. Such a
171-20 financing statement must describe the original collateral; or]
171-21 [(3) collateral as to which the filing has lapsed; or]
171-22 [(4) collateral acquired after a change of name,
171-23 identity or corporate structure of the debtor (Subsection (g)).]
171-24 [(c) A form substantially as follows is sufficient to comply
171-25 with Subsection (a):]
171-26 [Name of debtor (or assignor) _________________________]
172-1 [Address ______________________________________________]
172-2 [Name of secured party (or assignee) __________________]
172-3 [Address ______________________________________________]
172-4 [1. This financing statement covers the
172-5 following types (or items) of property:]
172-6 [(Describe) _____________________________________]
172-7 [2. (If collateral is crops) The above described
172-8 crops are growing or are to be grown on:]
172-9 [(Describe Real Estate) _________________________
172-10 _______________________________________________________]
172-11 [3. (If applicable) The above goods are or are
172-12 to become fixtures on (or where appropriate substitute
172-13 either "The above timber is standing on __________" or
172-14 "The above minerals or the like (including oil and gas)
172-15 or accounts will be financed at the wellhead or
172-16 minehead of the well or mine located on __________")]
172-17 [(Describe Real Estate) ______________ and this
172-18 financing statement is to be filed for record in the
172-19 real estate records. (If the debtor does not have an
172-20 interest of record) The name of a record owner of the
172-21 real estate concerned is ______________]
172-22 [4. (If products of collateral are claimed)
172-23 Products of the Collateral are also covered.
172-24 (use _________________________________________________
172-25 whichever _____________________________________________
172-26 Signature of Debtor (or Assignor)
173-1 is ____________________________________________________
173-2 applicable) Signature of Secured Party (or Assignee)]
173-3 [(d) A financing statement may be amended by filing a
173-4 writing signed by both the debtor and the secured party, provided,
173-5 however, that an amendment to a financing statement which changes
173-6 only the name of the secured party or the required address of
173-7 either the secured party or the debtor is sufficient when it is
173-8 signed by the secured party instead of the debtor. An amendment
173-9 does not extend the period of effectiveness of a financing
173-10 statement. If any amendment adds collateral, it is effective as to
173-11 the added collateral only from the filing date of the amendment.
173-12 In this chapter, unless the context otherwise requires, the term
173-13 "financing statement" means the original financing statement and
173-14 any amendments].
173-15 (b) Except as otherwise provided in Section 9.501(b), to be
173-16 sufficient, a [(e) A] financing statement that covers as-extracted
173-17 collateral or [covering] timber to be cut, or that is [covering
173-18 minerals or the like (including oil and gas) or accounts subject to
173-19 Subsection (e) of Section 9.103, or a financing statement] filed as
173-20 a fixture filing and covers goods that are or are to become
173-21 fixtures, must satisfy Subsection (a) and also:
173-22 (1) indicate [(Section 9.313), must show] that it
173-23 covers this type of collateral;
173-24 (2) indicate[, must recite] that it is to be filed for
173-25 record in the real property [estate] records;
173-26 (3) provide[, and the financing statement must
174-1 contain] a description of the real property to which the collateral
174-2 is related [estate] sufficient [if it were contained in a mortgage
174-3 of the real estate] to give constructive notice of a [the] mortgage
174-4 under the law of this state if the description were contained in a
174-5 record of the mortgage of the real property; and
174-6 (4) if[. If] the debtor does not have an interest of
174-7 record in the real property, provide [estate, the financing
174-8 statement must show] the name of a record owner.
174-9 (c) A record of a [(f) A] mortgage is effective, from the
174-10 date of recording, as a financing statement filed as a fixture
174-11 filing or as a financing statement covering as-extracted collateral
174-12 or timber to be cut only [or covering minerals or the like
174-13 (including oil and gas) or accounts subject to Subsection (e) of
174-14 Section 9.103, from the date of its filing for record] if:
174-15 (1) the record indicates the goods or accounts that it
174-16 covers; [other collateral are described in the mortgage by item or
174-17 type,]
174-18 (2) [in the case of a fixture filing,] the goods are
174-19 or are to become fixtures related to the real property [estate]
174-20 described in the record or the collateral is related to the real
174-21 property described in the record and is as-extracted collateral or
174-22 [mortgage, (3) in the case of] timber to be cut;
174-23 (3)[, the timber is standing on the real estate
174-24 described in the mortgage, (4) in the case of minerals or the like
174-25 (including oil and gas) or accounts subject to Subsection (e) of
174-26 Section 9.103, the minerals or the like (including oil and gas) or
175-1 the accounts are to be financed at the wellhead or minehead of the
175-2 well or mine located on the real estate described in the mortgage,
175-3 (5)] the record satisfies [mortgage complies with] the requirements
175-4 for a financing statement in this section other than an indication
175-5 [a recital] that it is to be filed in the real property [estate]
175-6 records;[,] and
175-7 (4) [(6)] the record [mortgage] is duly recorded
175-8 [filed for record. No fee with reference to the financing
175-9 statement is required other than the regular recording and
175-10 satisfaction fees with respect to the mortgage].
175-11 (d) A financing statement may be filed before a security
175-12 agreement is made or a security interest otherwise attaches.
175-13 Sec. 9.503. NAME OF DEBTOR AND SECURED PARTY. (a) [(g)] A
175-14 financing statement sufficiently provides [shows] the name of the
175-15 debtor:
175-16 (1) if the debtor is a registered organization, only
175-17 if the financing statement provides the [if it gives the
175-18 individual, partnership or corporate] name of the debtor indicated
175-19 on the public record of the debtor's jurisdiction of organization
175-20 that shows the debtor to have been organized;
175-21 (2) if the debtor is a decedent's estate, only if the
175-22 financing statement provides the name of the decedent and indicates
175-23 that the debtor is an estate;
175-24 (3) if the debtor is a trust or a trustee acting with
175-25 respect to property held in trust, only if the financing statement:
175-26 (A) provides the name specified for the trust in
176-1 its organic documents or, if no name is specified, provides the
176-2 name of the settlor and additional information sufficient to
176-3 distinguish the debtor from other trusts having one or more of the
176-4 same settlors; and
176-5 (B) indicates, in the debtor's name or
176-6 otherwise, that the debtor is a trust or is a trustee acting with
176-7 respect to property held in trust; and
176-8 (4) in other cases:
176-9 (A) if the debtor has a name, only if the
176-10 financing statement provides the individual or organizational name
176-11 of the debtor; and
176-12 (B) if the debtor does not have a name, only if
176-13 the financing statement provides the names of the partners,
176-14 members, associates, or other persons comprising the debtor[,
176-15 whether or not it adds other trade names or the names of partners.
176-16 Filing under a trade name or assumed name alone shall not be
176-17 sufficient to perfect a security interest unless the trade name or
176-18 assumed name is so similar to the debtor's legal name that the
176-19 trade name or assumed name filing would be discovered in a search
176-20 of the filing officer's records pursuant to Subsection (b) of
176-21 Section 9.407, conducted in response to a request using the legal
176-22 name of the debtor. Where the debtor so changes his name or in the
176-23 case of an organization its name, identity or corporate structure
176-24 that a filed financing statement becomes seriously misleading, the
176-25 filing is not effective to perfect a security interest in
176-26 collateral acquired by the debtor more than four months after the
177-1 change, unless a new appropriate financing statement is filed
177-2 before the expiration of that time. A filed financing statement
177-3 remains effective with respect to collateral transferred by the
177-4 debtor even though the secured party knows of or consents to the
177-5 transfer].
177-6 (b) A financing statement that provides the name of the
177-7 debtor in accordance with Subsection (a) is not rendered
177-8 ineffective by the absence of:
177-9 (1) a trade name or other name of the debtor; or
177-10 (2) unless required under Subsection (a)(4)(B), names
177-11 of partners, members, associates, or other persons comprising the
177-12 debtor.
177-13 (c) A financing statement that provides only the debtor's
177-14 trade name does not sufficiently provide the name of the debtor.
177-15 (d) Failure to indicate the representative capacity of a
177-16 secured party or representative of a secured party does not affect
177-17 the sufficiency of a financing statement.
177-18 (e) A financing statement may provide the name of more than
177-19 one debtor and the name of more than one secured party.
177-20 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
177-21 sufficiently indicates the collateral that it covers only if the
177-22 financing statement provides:
177-23 (1) a description of the collateral pursuant to
177-24 Section 9.108; or
177-25 (2) an indication that the financing statement covers
177-26 all assets or all personal property.
178-1 Sec. 9.505. FILING AND COMPLIANCE WITH OTHER STATUTES AND
178-2 TREATIES FOR CONSIGNMENTS, LEASES, OTHER BAILMENTS, AND OTHER
178-3 TRANSACTIONS. (a) A consignor, lessor, or other bailor of goods,
178-4 a licensor, or a buyer of a payment intangible or promissory note
178-5 may file a financing statement, or may comply with a statute or
178-6 treaty described in Section 9.311(a), using the terms "consignor,"
178-7 "consignee," "lessor," "lessee," "bailor," "bailee," "licensor,"
178-8 "licensee," "owner," "registered owner," "buyer," or "seller," or
178-9 words of similar import, instead of the terms "secured party" and
178-10 "debtor."
178-11 (b) This subchapter applies to the filing of a financing
178-12 statement under Subsection (a) and, as appropriate, to compliance
178-13 that is equivalent to filing a financing statement under Section
178-14 9.311(b), but the filing or compliance is not of itself a factor in
178-15 determining whether the collateral secures an obligation. If it is
178-16 determined for another reason that the collateral secures an
178-17 obligation, a security interest held by the consignor, lessor,
178-18 bailor, licensor, owner, or buyer that attaches to the collateral
178-19 is perfected by the filing or compliance.
178-20 Sec. 9.506. EFFECT OF ERRORS OR OMISSIONS. (a) [(h)] A
178-21 financing statement substantially satisfying [complying with] the
178-22 requirements of this subchapter [section] is effective, even if
178-23 [though] it has [contains] minor errors or omissions, unless the
178-24 errors or omissions make the financing statement [which are not]
178-25 seriously misleading.
178-26 (b) Except as otherwise provided in Subsection (c), a
179-1 financing statement that fails sufficiently to provide the name of
179-2 the debtor in accordance with Section 9.503(a) is seriously
179-3 misleading.
179-4 (c) If a search of the records of the filing office under
179-5 the debtor's correct name, using the filing office's standard
179-6 search logic, if any, would disclose a financing statement that
179-7 fails sufficiently to provide the name of the debtor in accordance
179-8 with Section 9.503(a), the name provided does not make the
179-9 financing statement seriously misleading.
179-10 (d) For purposes of Section 9.508(b), the "debtor's correct
179-11 name" in Subsection (c) means the correct name of the new debtor.
179-12 Sec. 9.507 [9.403]. [WHAT CONSTITUTES FILING; DURATION OF
179-13 FILING;] EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING
179-14 STATEMENT [LAPSED FILING; DUTIES OF FILING OFFICER]. (a) A
179-15 [Presentation for filing of a financing statement or other
179-16 statement and tender of the filing fee or acceptance of the
179-17 financing statement or other statement by the filing officer
179-18 constitutes filing under this chapter].
179-19 [(b) Except as provided in Subsection (f) a] filed financing
179-20 statement remains [is] effective with respect to collateral that is
179-21 sold, exchanged, leased, licensed, or otherwise disposed of and in
179-22 which a security interest or agricultural lien continues, even if
179-23 the secured party knows of or consents to the disposition [for a
179-24 period of five years from the date of filing. The effectiveness of
179-25 a filed financing statement lapses on the expiration of the five
179-26 year period unless a continuation statement is filed prior to the
180-1 lapse. If a security interest perfected by filing exists at the
180-2 time insolvency proceedings are commenced by or against the debtor,
180-3 the security interest remains perfected until termination of the
180-4 insolvency proceedings and thereafter for a period of sixty days or
180-5 until expiration of the five year period, whichever occurs later.
180-6 Upon lapse the security interest becomes unperfected, unless it is
180-7 perfected without filing. If the security interest becomes
180-8 unperfected upon lapse, it is deemed to have been unperfected as
180-9 against a person who became a purchaser or lien creditor before
180-10 lapse].
180-11 (b) Except as otherwise provided in Subsection (c) and
180-12 Section 9.508, a financing statement is not rendered ineffective
180-13 if, after the financing statement is filed, the information
180-14 provided in the financing statement becomes seriously misleading
180-15 under Section 9.506.
180-16 (c) If a debtor so changes its name that a filed financing
180-17 statement becomes seriously misleading under Section 9.506:
180-18 (1) the financing statement is effective to perfect a
180-19 security interest in collateral acquired by the debtor before, or
180-20 within four months after, the change; and
180-21 (2) the financing statement is not effective to
180-22 perfect a security interest in collateral acquired by the debtor
180-23 more than four months after the change, unless an amendment to the
180-24 financing statement that renders the financing statement not
180-25 seriously misleading is filed within four months after the change.
180-26 [A continuation statement may be filed by the secured party within
181-1 six months prior to the expiration of the five year period
181-2 specified in Subsection (b). Any such continuation statement must
181-3 be signed by the secured party, identify the original statement by
181-4 file number and state that the original statement is still
181-5 effective. A continuation statement signed by a person other than
181-6 the secured party of record must be accompanied by a separate
181-7 written statement of assignment signed by the secured party of
181-8 record and complying with Subsection (b) of Section 9.405,
181-9 including payment of the required fee. Upon timely filing of the
181-10 continuation statement, the effectiveness of the original statement
181-11 is continued for five years after the last date to which the filing
181-12 was effective whereupon it lapses in the same manner as provided in
181-13 Subsection (b) unless another continuation statement is filed prior
181-14 to such lapse. Succeeding continuation statements may be filed in
181-15 the same manner to continue the effectiveness of the original
181-16 statement. Unless a statute on disposition of public records
181-17 provides otherwise, the filing officer may remove a lapsed
181-18 statement from the files and destroy it immediately if he has
181-19 retained a microfilm or other photographic record, or in other
181-20 cases after one year after the lapse. The filing officer shall so
181-21 arrange matters by physical annexation of financing statements to
181-22 continuation statements or other related filings, or by other
181-23 means, that if he physically destroys the financing statements of a
181-24 period more than five years past, those which have been continued
181-25 by a continuation statement or which are still effective under
181-26 Subsection (f) shall be retained.]
182-1 [(d) Except as provided in Subsection (g) a filing officer
182-2 shall mark each financing statement with a file number and with the
182-3 date and hour of filing and shall hold the financing statement or a
182-4 microfilm or other photographic copy thereof for public inspection.
182-5 In addition the filing officer shall index the financing statements
182-6 according to the name of the debtor and shall note in the index the
182-7 file number and the address of the debtor given in the financing
182-8 statement. The filing officer shall mark each continuation
182-9 statement with the date and hour of filing and shall note it in the
182-10 index of the original financing statement.]
182-11 [(e) The uniform fee for filing and indexing and for
182-12 stamping a copy furnished by the secured party to show the date and
182-13 place of filing for an original financing statement, for an
182-14 amendment, or for a continuation statement shall be $10 if the
182-15 statement is in the standard form prescribed by the Secretary of
182-16 State and otherwise shall be $25, plus in each case, if the
182-17 financing statement sets forth the name of more than one debtor, a
182-18 fee of $5 for the indexing of each additional debtor name, and if
182-19 the financing statement is subject to Subsection (e) of Section
182-20 9.402, an amount equal to the fee prescribed by law for recording
182-21 and indexing in the real property records of the county clerk.]
182-22 [(f) A mortgage which is effective as a filing under
182-23 Subsection (f) of Section 9.402 remains effective as such a filing
182-24 as to the types of collateral enumerated in Subsection (f) of
182-25 Section 9.402 until the mortgage is released or satisfied of record
182-26 or its effectiveness otherwise terminates as to the real estate.]
183-1 [(g) When a financing statement covers timber to be cut or
183-2 covers minerals or the like (including oil and gas) or accounts
183-3 subject to Subsection (e) of Section 9.103, or is filed as a
183-4 fixture filing, it shall be filed for record and recorded, and the
183-5 filing officer shall index it under the names of the debtor and any
183-6 owner of record shown on the financing statement in the same
183-7 fashion as if they were the mortgagors in a mortgage of the real
183-8 estate described, and, to the extent that the law of this state
183-9 provides for indexing of mortgages under the name of the mortgagee,
183-10 under the name of the secured party as if he were the mortgagee
183-11 thereunder, or where indexing is by description in the same fashion
183-12 as if the financing statement were a mortgage of the real estate
183-13 described.]
183-14 [(h) The filing and other fees paid to the Secretary of
183-15 State under this chapter shall be deposited in the general revenue
183-16 fund of the state treasury.]
183-17 Sec. 9.508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW
183-18 DEBTOR BECOMES BOUND BY SECURITY AGREEMENT. (a) Except as
183-19 otherwise provided in this section, a filed financing statement
183-20 naming an original debtor is effective to perfect a security
183-21 interest in collateral in which a new debtor has or acquires rights
183-22 to the extent that the financing statement would have been
183-23 effective had the original debtor acquired rights in the
183-24 collateral.
183-25 (b) If the difference between the name of the original
183-26 debtor and that of the new debtor causes a filed financing
184-1 statement that is effective under Subsection (a) to be seriously
184-2 misleading under Section 9.506:
184-3 (1) the financing statement is effective to perfect a
184-4 security interest in collateral acquired by the new debtor before,
184-5 and within four months after, the new debtor becomes bound under
184-6 Section 9.203(d); and
184-7 (2) the financing statement is not effective to
184-8 perfect a security interest in collateral acquired by the new
184-9 debtor more than four months after the new debtor becomes bound
184-10 under Section 9.203(d) unless an initial financing statement
184-11 providing the name of the new debtor is filed before the expiration
184-12 of that time.
184-13 (c) This section does not apply to collateral as to which a
184-14 filed financing statement remains effective against the new debtor
184-15 under Section 9.507(a).
184-16 Sec. 9.509. PERSONS ENTITLED TO FILE A RECORD. (a) A
184-17 person may file an initial financing statement, amendment that adds
184-18 collateral covered by a financing statement, or amendment that adds
184-19 a debtor to a financing statement only if:
184-20 (1) the debtor authorizes the filing in an
184-21 authenticated record; or
184-22 (2) the person holds an agricultural lien that has
184-23 become effective at the time of filing and the financing statement
184-24 covers only collateral in which the person holds an agricultural
184-25 lien.
184-26 (b) By authenticating or becoming bound as debtor by a
185-1 security agreement, a debtor or new debtor authorizes the filing of
185-2 an initial financing statement, and an amendment, covering:
185-3 (1) the collateral described in the security
185-4 agreement; and
185-5 (2) property that becomes collateral under Section
185-6 9.315(a)(2), whether or not the security agreement expressly covers
185-7 proceeds.
185-8 (c) By acquiring collateral in which a security interest or
185-9 agricultural lien continues under Section 9.315(a)(1), a debtor
185-10 authorizes the filing of an initial financing statement, and an
185-11 amendment, covering the collateral and property that becomes
185-12 collateral under Section 9.315(a)(2).
185-13 (d) A person may file an amendment other than an amendment
185-14 that adds collateral covered by a financing statement or an
185-15 amendment that adds a debtor to a financing statement only if:
185-16 (1) the secured party of record authorizes the filing;
185-17 or
185-18 (2) the amendment is a termination statement for a
185-19 financing statement as to which the secured party of record has
185-20 failed to file or send a termination statement as required by
185-21 Section 9.513(a) or (c), the debtor authorizes the filing, and the
185-22 termination statement indicates that the debtor authorized it to be
185-23 filed.
185-24 (e) If there is more than one secured party of record for a
185-25 financing statement, each secured party of record may authorize the
185-26 filing of an amendment under Subsection (d).
186-1 Sec. 9.510. EFFECTIVENESS OF FILED RECORD. (a) A filed
186-2 record is effective only to the extent that it was filed by a
186-3 person that may file it under Section 9.509.
186-4 (b) A record authorized by one secured party of record does
186-5 not affect the financing statement with respect to another secured
186-6 party of record.
186-7 (c) A continuation statement that is not filed within the
186-8 six-month period prescribed by Section 9.515(d) is ineffective.
186-9 Sec. 9.511. SECURED PARTY OF RECORD. (a) A secured party
186-10 of record with respect to a financing statement is a person whose
186-11 name is provided as the name of the secured party or a
186-12 representative of the secured party in an initial financing
186-13 statement that has been filed. If an initial financing statement
186-14 is filed under Section 9.514(a), the assignee named in the initial
186-15 financing statement is the secured party of record with respect to
186-16 the financing statement.
186-17 (b) If an amendment of a financing statement that provides
186-18 the name of a person as a secured party or a representative of a
186-19 secured party is filed, the person named in the amendment is a
186-20 secured party of record. If an amendment is filed under Section
186-21 9.514(b), the assignee named in the amendment is a secured party of
186-22 record.
186-23 (c) A person remains a secured party of record until the
186-24 filing of an amendment of the financing statement that deletes the
186-25 person.
186-26 Sec. 9.512. AMENDMENT OF FINANCING STATEMENT. (a) Subject
187-1 to Section 9.509, a person may add or delete collateral covered by,
187-2 continue or terminate the effectiveness of, or, subject to
187-3 Subsection (e), otherwise amend the information provided in a
187-4 financing statement by filing an amendment that:
187-5 (1) identifies, by its file number, the initial
187-6 financing statement to which the amendment relates; and
187-7 (2) if the amendment relates to an initial financing
187-8 statement filed or recorded in a filing office described in Section
187-9 9.501(a)(1), provides the information specified in Section
187-10 9.502(b).
187-11 (b) Except as otherwise provided in Section 9.515, the
187-12 filing of an amendment does not extend the period of effectiveness
187-13 of the financing statement.
187-14 (c) A financing statement that is amended by an amendment
187-15 that adds collateral is effective as to the added collateral only
187-16 from the date of the filing of the amendment.
187-17 (d) A financing statement that is amended by an amendment
187-18 that adds a debtor is effective as to the added debtor only from
187-19 the date of the filing of the amendment.
187-20 (e) An amendment is ineffective to the extent it:
187-21 (1) purports to delete all debtors and fails to
187-22 provide the name of a debtor to be covered by the financing
187-23 statement; or
187-24 (2) purports to delete all secured parties of record
187-25 and fails to provide the name of a new secured party of record.
187-26 (f) A secured party may change the name or mailing address
188-1 of the secured party in more than one financing statement by filing
188-2 a master amendment setting forth the name of the secured party and
188-3 file number of each financing statement and the new name or mailing
188-4 address of the secured party. The secured party must also provide
188-5 filing information in computer-readable form prescribed by the
188-6 Secretary of State.
188-7 Sec. 9.513 [9.404]. TERMINATION STATEMENT. (a) A secured
188-8 party shall cause the secured party of record for a financing
188-9 statement to file a termination statement for the financing
188-10 statement if the financing statement covers consumer goods and:
188-11 (1) there is no obligation secured by the collateral
188-12 covered by the financing statement and no commitment to make an
188-13 advance, incur an obligation, or otherwise give value; or
188-14 (2) the debtor did not authorize the filing of the
188-15 initial financing statement.
188-16 (b) To comply with Subsection (a), a secured party shall
188-17 cause the secured party of record to file the termination
188-18 statement:
188-19 (1) [If a financing statement covering consumer goods
188-20 is filed on or after January 1, 1974, then] within one month [or
188-21 within ten days following written demand by the debtor] after there
188-22 is no [outstanding secured] obligation secured by the collateral
188-23 covered by the financing statement and no commitment to make
188-24 advances, incur an obligation, [obligations] or otherwise give
188-25 value; or
188-26 (2) if earlier, within 20 days after the secured party
189-1 receives an authenticated demand from a debtor[, the secured party
189-2 must file with each filing officer with whom the financing
189-3 statement was filed, a termination statement to the effect that he
189-4 no longer claims a security interest under the financing statement,
189-5 which shall be identified by file number].
189-6 (c) In [other] cases not governed by Subsection (a), within
189-7 20 days after a secured party receives an authenticated demand from
189-8 a debtor [whenever there is no outstanding secured obligation and
189-9 no commitment to make advances, incur obligations or otherwise give
189-10 value], the secured party shall cause the secured party of record
189-11 for a financing statement to [must on written demand by the debtor]
189-12 send the debtor[, for each filing officer with whom the financing
189-13 statement was filed,] a termination statement for the financing
189-14 statement or file the termination statement in the filing office
189-15 if:
189-16 (1) except in the case of a financing statement
189-17 covering accounts or chattel paper that has been sold or goods that
189-18 are the subject of a consignment, there is no obligation secured by
189-19 the collateral covered by the financing statement and no commitment
189-20 to make an advance, incur an obligation, or otherwise give value;
189-21 (2) the financing statement covers accounts or chattel
189-22 paper that has been sold but as to which the account debtor or
189-23 other person obligated has discharged its obligation;
189-24 (3) the financing statement covers goods that were the
189-25 subject of a consignment to the debtor but are not in the debtor's
189-26 possession; or
190-1 (4) the debtor did not authorize the filing of the
190-2 initial financing statement.
190-3 (d) Except as otherwise provided in Section 9.510, upon the
190-4 filing of a termination statement with the filing office, the
190-5 financing statement to which the termination statement relates
190-6 ceases to be effective [to the effect that he no longer claims a
190-7 security interest under the financing statement, which shall be
190-8 identified by file number. A termination statement signed by a
190-9 person other than the secured party of record must be accompanied
190-10 by a separate written statement of assignment signed by the secured
190-11 party of record and complying with Subsection (b) of Section 9.405,
190-12 including payment of the required fee. If the affected secured
190-13 party fails to file such a termination statement as required by
190-14 this subsection, or to send such a termination statement within ten
190-15 days after proper demand therefor he shall be liable to the debtor
190-16 for $100, and in addition for any loss caused to the debtor by such
190-17 failure.]
190-18 [(b) On presentation to the filing officer of such a
190-19 termination statement he must note it in the index. If he has
190-20 received the termination statement in duplicate, he shall return
190-21 one copy of the termination statement to the secured party stamped
190-22 to show the time of receipt thereof. If the filing officer has a
190-23 microfilm or other photographic record of the financing statement,
190-24 and of any related continuation statement, statement of assignment
190-25 and statement of release, he may remove the originals from the
190-26 files at any time after receipt of the termination statement, or if
191-1 he has no such record, he may remove them from the files at any
191-2 time after one year after receipt of the termination statement.]
191-3 [(c) If the termination statement is in the standard form
191-4 prescribed by the Secretary of State, the uniform fee for filing
191-5 and indexing the termination statement shall be $10, and otherwise
191-6 shall be $25, plus, in each case where the original financing
191-7 statement was filed pursuant to Subsection (e) of Section 9.402, an
191-8 amount equal to the fee prescribed by law for recording and
191-9 indexing in the real property records of the county clerk].
191-10 Sec. 9.514 [9.405]. ASSIGNMENT OF POWERS OF SECURED PARTY OF
191-11 RECORD [SECURITY INTEREST: DUTIES OF FILING OFFICER; FEES].
191-12 (a) Except as otherwise provided in Subsection (c), an initial [A]
191-13 financing statement may reflect [disclose] an assignment of all of
191-14 the secured party's power to authorize an amendment to the
191-15 financing statement by providing [a security interest in the
191-16 collateral described in the financing statement by indication in
191-17 the financing statement of] the name and mailing address of the
191-18 assignee as the name and address of the secured party [or by an
191-19 assignment itself or a copy thereof on the face or back of the
191-20 financing statement. On presentation to the filing officer of such
191-21 a financing statement the filing officer shall mark the same as
191-22 provided in Section 9.403].
191-23 (b) Except as otherwise provided in Subsection (c), a [A]
191-24 secured party of record may assign of record all or a part of its
191-25 power to authorize an amendment to [his rights under] a financing
191-26 statement by [the] filing in the filing office an amendment of the
192-1 financing statement that:
192-2 (1) identifies, by its file number, the initial
192-3 financing statement to which it relates;
192-4 (2) provides the name of the assignor; and
192-5 (3) provides [place where the original financing
192-6 statement was filed of a separate written statement of assignment
192-7 signed by the secured party of record and setting forth the name of
192-8 the secured party of record and the debtor, the file number and the
192-9 date of filing of the financing statement and] the name and mailing
192-10 address of the assignee [and containing a description of the
192-11 collateral assigned. A copy of the assignment is sufficient as a
192-12 separate statement if it complies with the preceding sentence. On
192-13 presentation to the filing officer of such a separate statement,
192-14 the filing officer shall mark such separate statement with the date
192-15 and hour of the filing. He shall note the assignment on the index
192-16 of the financing statement, or in the case of a fixture filing, or
192-17 a filing covering timber to be cut, or covering minerals or the
192-18 like (including oil and gas) or accounts subject to Subsection (e)
192-19 of Section 9.103, he shall index the assignment under the name of
192-20 the assignor as grantor and, to the extent that the law of this
192-21 state provides for indexing the assignment of a mortgage under the
192-22 name of the assignee, he shall index the assignment of the
192-23 financing statement under the name of the assignee. The uniform
192-24 fee for filing, indexing and furnishing filing data about such a
192-25 separate statement of assignment shall be $10 if the statement is
192-26 in the standard form prescribed by the Secretary of State and
193-1 otherwise shall be $25. Notwithstanding the provisions of this
193-2 subsection, an assignment of record of a security interest in a
193-3 fixture contained in a mortgage effective as a fixture filing
193-4 (Subsection (f) of Section 9.402) may be made only by an assignment
193-5 of the mortgage in the manner provided by the law of this state
193-6 other than this code].
193-7 (c) An assignment of record of a security interest in a
193-8 fixture covered by a record of a mortgage that is effective as a
193-9 financing statement filed as a fixture filing under Section
193-10 9.502(c) may be made only by an assignment of record of the
193-11 mortgage in the manner provided by law of this state other than
193-12 this chapter. [After the disclosure of filing of an assignment
193-13 under this section, the assignee is the secured party of record.]
193-14 (d) A secured party of record may assign of record all of
193-15 the secured party's rights under more than one financing statement
193-16 filed with the Secretary of State by filing a master assignment
193-17 setting forth the name of the secured party of record and file
193-18 number of each financing statement and the name and mailing address
193-19 of the assignee. The secured party must also provide filing
193-20 information in computer-readable form prescribed by the Secretary
193-21 of State [The uniform fee for filing, indexing, and furnishing
193-22 filing data for a financing statement so indicating an assignment
193-23 shall be $10 if the statement is in the standard form prescribed by
193-24 the Secretary of State and otherwise shall be $25, plus, in each
193-25 case where the original financing statement was filed pursuant to
193-26 Subsection (e) of Section 9.402, an amount equal to the fee
194-1 prescribed by law for recording and indexing in the real property
194-2 records of the county clerk].
194-3 Sec. 9.515. DURATION AND EFFECTIVENESS OF FINANCING
194-4 STATEMENT; EFFECT OF LAPSED FINANCING STATEMENT. (a) Except as
194-5 otherwise provided in Subsections (b)-(g), a filed financing
194-6 statement is effective for a period of five years after the date of
194-7 filing.
194-8 (b) Except as otherwise provided in Subsections (e), (f),
194-9 and (g), an initial financing statement filed in connection with a
194-10 public-finance transaction or manufactured-home transaction is
194-11 effective for a period of 30 years after the date of filing if it
194-12 indicates that it is filed in connection with a public-finance
194-13 transaction or manufactured-home transaction.
194-14 (c) The effectiveness of a filed financing statement lapses
194-15 on the expiration of the period of its effectiveness unless before
194-16 the lapse a continuation statement is filed pursuant to Subsection
194-17 (d). Upon lapse, a financing statement ceases to be effective and
194-18 any security interest or agricultural lien that was perfected by
194-19 the financing statement becomes unperfected, unless the security
194-20 interest is perfected otherwise. If the security interest or
194-21 agricultural lien becomes unperfected upon lapse, it is deemed
194-22 never to have been perfected as against a purchaser of the
194-23 collateral for value.
194-24 (d) A continuation statement may be filed only within six
194-25 months before the expiration of the five-year period specified in
194-26 Subsection (a) or the 30-year period specified in Subsection (b),
195-1 whichever is applicable.
195-2 (e) Except as otherwise provided in Section 9.510, upon
195-3 timely filing of a continuation statement, the effectiveness of the
195-4 initial financing statement continues for a period of five years
195-5 commencing on the day on which the financing statement would have
195-6 become ineffective in the absence of the filing. Upon the
195-7 expiration of the five-year period, the financing statement lapses
195-8 in the same manner as provided in Subsection (c), unless, before
195-9 the lapse, another continuation statement is filed pursuant to
195-10 Subsection (d). Succeeding continuation statements may be filed in
195-11 the same manner to continue the effectiveness of the initial
195-12 financing statement.
195-13 (f) If a debtor is a transmitting utility and a filed
195-14 financing statement so indicates, the financing statement is
195-15 effective until a termination statement is filed.
195-16 (g) A record of a mortgage that is effective as a financing
195-17 statement filed as a fixture filing under Section 9.502(c) remains
195-18 effective as a financing statement filed as a fixture filing until
195-19 the mortgage is released or satisfied of record or its
195-20 effectiveness otherwise terminates as to the real property.
195-21 Sec. 9.516. WHAT CONSTITUTES FILING; EFFECTIVENESS OF
195-22 FILING. (a) Except as otherwise provided in Subsection (b),
195-23 communication of a record to a filing office and tender of the
195-24 filing fee or acceptance of the record by the filing office
195-25 constitutes filing.
195-26 (b) Filing does not occur with respect to a record that a
196-1 filing office refuses to accept because:
196-2 (1) the record is not communicated by a method or
196-3 medium of communication authorized by the filing office;
196-4 (2) an amount equal to or greater than the applicable
196-5 filing fee is not tendered;
196-6 (3) the filing office is unable to index the record
196-7 because:
196-8 (A) in the case of an initial financing
196-9 statement, the record does not provide a name for the debtor;
196-10 (B) in the case of an amendment or correction
196-11 statement, the record:
196-12 (i) does not identify the initial
196-13 financing statement as required by Section 9.512 or 9.518, as
196-14 applicable; or
196-15 (ii) identifies an initial financing
196-16 statement whose effectiveness has lapsed under Section 9.515;
196-17 (C) in the case of an initial financing
196-18 statement that provides the name of a debtor identified as an
196-19 individual or an amendment that provides a name of a debtor
196-20 identified as an individual that was not previously provided in the
196-21 financing statement to which the record relates, the record does
196-22 not identify the debtor's last name; or
196-23 (D) in the case of a record filed or recorded in
196-24 the filing office described in Section 9.501(a)(1), the record does
196-25 not provide a sufficient description of the real property to which
196-26 it relates;
197-1 (4) in the case of an initial financing statement or
197-2 an amendment that adds a secured party of record, the record does
197-3 not provide a name and mailing address for the secured party of
197-4 record;
197-5 (5) in the case of an initial financing statement or
197-6 an amendment that provides a name of a debtor that was not
197-7 previously provided in the financing statement to which the
197-8 amendment relates, the record does not:
197-9 (A) provide a mailing address for the debtor;
197-10 (B) indicate whether the debtor is an individual
197-11 or an organization; or
197-12 (C) if the financing statement indicates that
197-13 the debtor is an organization, provide:
197-14 (i) a type of organization for the debtor;
197-15 (ii) a jurisdiction of organization for
197-16 the debtor; or
197-17 (iii) an organizational identification
197-18 number for the debtor or indicate that the debtor has none;
197-19 (6) in the case of an assignment reflected in an
197-20 initial financing statement under Section 9.514(a) or an amendment
197-21 filed under Section 9.514(b), the record does not provide a name
197-22 and mailing address for the assignee; or
197-23 (7) in the case of a continuation statement, the
197-24 record is not filed within the six-month period prescribed by
197-25 Section 9.515(d).
197-26 (c) For purposes of Subsection (b):
198-1 (1) a record does not provide information if the
198-2 filing office is unable to read or decipher the information; and
198-3 (2) a record that does not indicate that it is an
198-4 amendment or identify an initial financing statement to which it
198-5 relates, as required by Section 9.512, 9.514, or 9.518, is an
198-6 initial financing statement.
198-7 (d) A record that is communicated to the filing office with
198-8 tender of the filing fee, but that the filing office refuses to
198-9 accept for a reason other than one set forth in Subsection (b), is
198-10 effective as a filed record except as against a purchaser of the
198-11 collateral that gives value in reasonable reliance upon the absence
198-12 of the record from the files.
198-13 Sec. 9.517. EFFECT OF INDEXING ERRORS. The failure of the
198-14 filing office to index a record correctly does not affect the
198-15 effectiveness of the filed record.
198-16 Sec. 9.518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED
198-17 RECORD. (a) A person may file in the filing office a correction
198-18 statement with respect to a record indexed there under the person's
198-19 name if the person believes that the record is inaccurate or was
198-20 wrongfully filed.
198-21 (b) A correction statement must:
198-22 (1) identify the record to which it relates by the
198-23 file number assigned to the initial financing statement to which
198-24 the record relates;
198-25 (2) indicate that it is a correction statement; and
198-26 (3) provide the basis for the person's belief that the
199-1 record is inaccurate and indicate the manner in which the person
199-2 believes the record should be amended to cure any inaccuracy or
199-3 provide the basis for the person's belief that the record was
199-4 wrongfully filed.
199-5 (c) The filing of a correction statement does not affect the
199-6 effectiveness of an initial financing statement or other filed
199-7 record.
199-8 Sec. 9.5185. FRAUDULENT FILING. (a) A person may not
199-9 intentionally or knowingly present for filing or cause to be
199-10 presented for filing a financing statement that the person knows:
199-11 (1) is forged;
199-12 (2) contains a material false statement; or
199-13 (3) is groundless.
199-14 (b) A person who violates Subsection (a) is liable to the
199-15 owner of property covered by the financing statement for:
199-16 (1) the greater of $5,000 or the owner's actual
199-17 damages;
199-18 (2) court costs; and
199-19 (3) reasonable attorney's fees.
199-20 (c) A person who violates Subsection (a) also may be
199-21 prosecuted under Section 37.101, Penal Code.
199-22 (d) An owner of property covered by a fraudulent financing
199-23 statement described in Subsection (a) also may file suit in a court
199-24 of suitable jurisdiction requesting specific relief, including, but
199-25 not limited to, release of the fraudulent financing statement. A
199-26 successful plaintiff is entitled to reasonable attorney's fees and
200-1 costs of court assessed against the person who filed the fraudulent
200-2 financing statement. If the person who filed the fraudulent
200-3 financing statement cannot be located or is a fictitious person,
200-4 the owner of the property may serve the known or unknown defendant
200-5 through publication in a newspaper of general circulation in the
200-6 county in which the suit is brought.
200-7 Sec. 9.519. NUMBERING, MAINTAINING, AND INDEXING RECORDS;
200-8 COMMUNICATING INFORMATION PROVIDED IN RECORDS. (a) For each
200-9 record filed in a filing office, the filing office shall:
200-10 (1) assign a unique number to the filed record;
200-11 (2) create a record that bears the number assigned to
200-12 the filed record and the date and time of filing;
200-13 (3) maintain the filed record for public inspection;
200-14 and
200-15 (4) index the filed record in accordance with
200-16 Subsections (c), (d), and (e).
200-17 (b) Except as provided in Subsection (i), a file number
200-18 assigned after January 1, 2002, must include a digit that:
200-19 (1) is mathematically derived from or related to the
200-20 other digits of the file number; and
200-21 (2) aids the filing office in determining whether a
200-22 number communicated as the file number includes a single-digit or
200-23 transpositional error.
200-24 (c) Except as otherwise provided in Subsections (d) and (e),
200-25 the filing office shall:
200-26 (1) index an initial financing statement according to
201-1 the name of the debtor and index all filed records relating to the
201-2 initial financing statement in a manner that associates with one
201-3 another an initial financing statement and all filed records
201-4 relating to the initial financing statement; and
201-5 (2) index a record that provides a name of a debtor
201-6 that was not previously provided in the financing statement to
201-7 which the record relates also according to the name that was not
201-8 previously provided.
201-9 (d) If a financing statement is filed as a fixture filing or
201-10 covers as-extracted collateral or timber to be cut, it must be
201-11 filed for record and the filing office shall index it:
201-12 (1) under the names of the debtor and of each owner of
201-13 record shown on the financing statement as if they were the
201-14 mortgagors under a mortgage of the real property described; and
201-15 (2) to the extent that the law of this state provides
201-16 for indexing of records of mortgages under the name of the
201-17 mortgagee, under the name of the secured party as if the secured
201-18 party were the mortgagee thereunder, or, if indexing is by
201-19 description, as if the financing statement were a record of a
201-20 mortgage of the real property described.
201-21 (e) If a financing statement is filed as a fixture filing or
201-22 covers as-extracted collateral or timber to be cut, the filing
201-23 office shall index an assignment filed under Section 9.514(a) or an
201-24 amendment filed under Section 9.514(b):
201-25 (1) under the name of the assignor as grantor; and
201-26 (2) to the extent that the law of this state provides
202-1 for indexing a record of the assignment of a mortgage under the
202-2 name of the assignee, under the name of the assignee.
202-3 (f) The filing office shall maintain a capability:
202-4 (1) to retrieve a record by the name of the debtor and
202-5 by the file number assigned to the initial financing statement to
202-6 which the record relates; and
202-7 (2) to associate and retrieve with one another an
202-8 initial financing statement and each filed record relating to the
202-9 initial financing statement.
202-10 (g) The filing office may not remove a debtor's name from
202-11 the index until one year after the effectiveness of a financing
202-12 statement naming the debtor lapses under Section 9.515 with respect
202-13 to all secured parties of record.
202-14 (h) Except as provided in Subsection (i), the filing office
202-15 shall perform the acts required by Subsections (a)-(e) at the time
202-16 and in the manner prescribed by filing-office rule, but not later
202-17 than two business days after the filing office receives the record
202-18 in question.
202-19 (i) Subsections (b) and (h) do not apply to a filing office
202-20 described in Section 9.501(a)(1).
202-21 Sec. 9.520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD. (a) A
202-22 filing office shall refuse to accept a record for filing for a
202-23 reason set forth in Section 9.516(b) and may refuse to accept a
202-24 record for filing only for a reason set forth in Section 9.516(b).
202-25 (b) If a filing office refuses to accept a record for
202-26 filing, it shall communicate to the person that presented the
203-1 record the fact of and reason for the refusal and the date and time
203-2 the record would have been filed had the filing office accepted it.
203-3 The communication must be made at the time and in the manner
203-4 prescribed by filing-office rule, but in the case of a filing
203-5 office described in Section 9.501(a)(2), in no event more than two
203-6 business days after the filing office receives the record.
203-7 (c) A filed financing statement satisfying Sections 9.502(a)
203-8 and (b) is effective, even if the filing office is required to
203-9 refuse to accept it for filing under Subsection (a). However,
203-10 Section 9.338 applies to a filed financing statement providing
203-11 information described in Section 9.516(b)(5) that is incorrect at
203-12 the time the financing statement is filed.
203-13 (d) If a record communicated to a filing office provides
203-14 information that relates to more than one debtor, this subchapter
203-15 applies as to each debtor separately.
203-16 Sec. 9.521. UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND
203-17 AMENDMENT. (a) A filing office that accepts written records may
203-18 not refuse to accept a written initial financing statement in the
203-19 following form and format except for a reason set forth in Section
203-20 9.516(b):
203-21 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
203-22 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT AND
203-23 FORM FOR THE UCC FINANCING STATEMENT ADDENDUM, RESPECTIVELY. THE
203-24 CONTENTS OF THESE PAGES CANNOT BE VIEWED ON-LINE DUE TO WORD
203-25 PROCESSOR LIMITATIONS WITH GRAPHIC FILES. PLEASE CONTACT SENATE
203-26 DOCUMENT DISTRIBUTION FOR A HARD COPY."
204-1 "SEE NOTATION ON PAGE 204." (b) A filing office that
204-2 accepts written records may not refuse to accept a written record
204-3 in the following form and format except for a reason set forth in
204-4 Section 9.516(b):
204-5 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
204-6 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT
204-7 AMENDMENT AND FORM FOR THE UCC FINANCING STATEMENT AMENDMENT
204-8 ADDENDUM, RESPECTIVELY. THE CONTENTS OF THESE PAGES CANNOT BE
204-9 VIEWED ON-LINE DUE TO WORD PROCESSOR LIMITATIONS WITH GRAPHIC
204-10 FILES. PLEASE CONTACT SENATE DOCUMENT DISTRIBUTION FOR A HARD
204-11 COPY."
204-12 "SEE NOTATION ON PAGE 207."
204-13 Sec. 9.522. MAINTENANCE AND DESTRUCTION OF RECORDS.
204-14 (a) The filing office shall maintain a record of the information
204-15 provided in a filed financing statement for at least one year after
204-16 the effectiveness of the financing statement has lapsed under
204-17 Section 9.515 with respect to all secured parties of record. The
204-18 record must be retrievable by using the name of the debtor and by
204-19 using the file number assigned to the initial financing statement
204-20 to which the record relates.
204-21 (b) Except to the extent that a statute governing
204-22 disposition of public records provides otherwise, the filing office
204-23 immediately may destroy any written record evidencing a financing
204-24 statement. However, if the filing office destroys a written
204-25 record, it shall maintain another record of the financing statement
204-26 that complies with Subsection (a).
205-1 Sec. 9.523. INFORMATION FROM FILING OFFICE; SALE OR LICENSE
205-2 OF RECORDS. (a) If a person that files a written record requests
205-3 an acknowledgment of the filing, the filing office shall send to
205-4 the person an image of the record showing the number assigned to
205-5 the record pursuant to Section 9.519(a)(1) and the date and time of
205-6 the filing of the record. However, if the person furnishes a copy
205-7 of the record to the filing office, the filing office may instead:
205-8 (1) note upon the copy the number assigned to the
205-9 record pursuant to Section 9.519(a)(1) and the date and time of the
205-10 filing of the record; and
205-11 (2) send the copy to the person.
205-12 (b) If a person files a record other than a written record,
205-13 the filing office shall communicate to the person an acknowledgment
205-14 that provides:
205-15 (1) the information in the record;
205-16 (2) the number assigned to the record pursuant to
205-17 Section 9.519(a)(1); and
205-18 (3) the date and time of the filing of the record.
205-19 (c) The filing office shall communicate or otherwise make
205-20 available in a record the following information to any person that
205-21 requests it:
205-22 (1) whether there is on file on a date and time
205-23 specified by the filing office, but not a date earlier than three
205-24 business days before the filing office receives the request, any
205-25 financing statement that:
205-26 (A) designates a particular debtor or, if the
206-1 request so states, designates a particular debtor at the address
206-2 specified in the request;
206-3 (B) has not lapsed under Section 9.515 with
206-4 respect to all secured parties of record; and
206-5 (C) if the request so states, has lapsed under
206-6 Section 9.515 and a record of which is maintained by the filing
206-7 office under Section 9.522(a);
206-8 (2) the date and time of filing of each financing
206-9 statement; and
206-10 (3) the information provided in each financing
206-11 statement.
206-12 (d) In complying with its duty under Subsection (c), the
206-13 filing office may communicate information in any medium. However,
206-14 if requested, the filing office shall communicate information by
206-15 issuing its written certificate.
206-16 (e) The filing office shall perform the acts required by
206-17 Subsections (a)-(d) at the time and in the manner prescribed by
206-18 filing-office rule, but not later than two business days after the
206-19 filing office receives the request.
206-20 (f) At least weekly, the Secretary of State shall offer to
206-21 sell or license to the public on a nonexclusive basis, in bulk,
206-22 copies of all records filed with the Secretary under this
206-23 subchapter, in every medium from time to time available to the
206-24 Secretary.
206-25 Sec. 9.524. DELAY BY FILING OFFICE. Delay by the filing
206-26 office beyond a time limit prescribed by this subchapter is excused
207-1 if:
207-2 (1) the delay is caused by interruption of
207-3 communication or computer facilities, war, emergency conditions,
207-4 failure of equipment, or other circumstances beyond control of the
207-5 filing office; and
207-6 (2) the filing office exercises reasonable diligence
207-7 under the circumstances.
207-8 Sec. 9.525. FEES. (a) Except as otherwise provided in
207-9 Subsections (e) and (f), the fee for filing and indexing a record
207-10 under this subchapter, other than an initial financing statement of
207-11 the kind described in Section 9.502(c), is:
207-12 (1) $15 if the record is communicated in writing and
207-13 consists of one or two pages;
207-14 (2) $30 if the record is communicated in writing and
207-15 consists of more than two pages; and
207-16 (3) $5 if the record is communicated by another medium
207-17 authorized by filing-office rule.
207-18 (b) Except as otherwise provided in Subsection (e), the fee
207-19 for filing and indexing an initial financing statement of the kind
207-20 described in Section 9.502(c) is:
207-21 (1) $60 if the financing statement indicates that it
207-22 is filed in connection with a public-finance transaction; and
207-23 (2) $60 if the financing statement indicates that it
207-24 is filed in connection with a manufactured-home transaction.
207-25 (c) The number of names required to be indexed does not
207-26 affect the amount of the fee in Subsections (a) and (b).
208-1 (d) The fee for responding to a request for information from
208-2 the filing office, including for communicating whether there is on
208-3 file any financing statement naming a particular debtor, is:
208-4 (1) $15 if the request is communicated in writing; and
208-5 (2) an amount established by the filing office if the
208-6 request is communicated by another medium authorized by
208-7 filing-office rule.
208-8 (e) This section does not require a fee with respect to a
208-9 record of a mortgage that is effective as a financing statement
208-10 filed as a fixture filing or as a financing statement covering
208-11 as-extracted collateral or timber to be cut under Section 9.502(c).
208-12 However, the recording and satisfaction fees that otherwise would
208-13 be applicable to the record of the mortgage apply.
208-14 (f) The filing fee for filing, indexing, and furnishing
208-15 filing data about a statement of master amendment under Section
208-16 9.512(f) or master assignment under Section 9.514(d) is $500 plus
208-17 50 cents for each financing statement covered by the master
208-18 statement in excess of 50.
208-19 Sec. 9.526. FILING-OFFICE RULES. (a) The Secretary of
208-20 State shall adopt and publish rules to implement this chapter. The
208-21 filing-office rules must be consistent with this chapter.
208-22 (b) To keep the filing-office rules and practices of the
208-23 filing office in harmony with the rules and practices of filing
208-24 offices in other jurisdictions that enact substantially this
208-25 subchapter, and to keep the technology used by the filing office
208-26 compatible with the technology used by filing offices in other
209-1 jurisdictions that enact substantially this subchapter, the
209-2 Secretary of State, so far as is consistent with the purposes,
209-3 policies, and provisions of this chapter, in adopting, amending,
209-4 and repealing filing-office rules, shall:
209-5 (1) consult with filing offices in other jurisdictions
209-6 that enact substantially this subchapter;
209-7 (2) consult the most recent version of the Model
209-8 Administrative Rules promulgated by the International Association
209-9 of Corporation Administrators or any successor organization; and
209-10 (3) take into consideration the rules and practices
209-11 of, and the technology used by, filing offices in other
209-12 jurisdictions that enact substantially this subchapter.
209-13 Sec. 9.527. DUTY TO REPORT. The Secretary of State shall
209-14 report before January 1 of each odd-numbered year to the
209-15 Legislature on the operation of the filing office. The report must
209-16 contain a statement of the extent to which:
209-17 (1) the filing-office rules are not in harmony with
209-18 the rules of filing offices in other jurisdictions that enact
209-19 substantially this subchapter and the reasons for these variations;
209-20 and
209-21 (2) the filing-office rules are not in harmony with
209-22 the most recent version of the Model Administrative Rules
209-23 promulgated by the International Association of Corporation
209-24 Administrators, or any successor organization, and the reasons for
209-25 these variations.
209-26 [Sec. 9.406. RELEASE OF COLLATERAL; DUTIES OF FILING
210-1 OFFICER; FEES. A secured party of record may by his signed
210-2 statement release all or a part of any collateral described in a
210-3 filed financing statement. The statement of release is sufficient
210-4 if it contains a description of the collateral being released, the
210-5 name and address of the debtor, the name and address of the secured
210-6 party, and the file number of the financing statement. A statement
210-7 of release signed by a person other than the secured party of
210-8 record must be accompanied by a separate written statement of
210-9 assignment signed by the secured party of record and complying with
210-10 Subsection (b) of Section 9.405, including payment of the required
210-11 fee. Upon presentation of such a statement of release to the
210-12 filing officer he shall mark the statement with the hour and date
210-13 of filing and shall note the same upon the margin of the index of
210-14 the filing of the financing statement. The uniform fee for filing
210-15 and noting such a statement of release shall be $10 if the
210-16 statement is in the standard form prescribed by the Secretary of
210-17 State and otherwise shall be $25, plus, in each case where the
210-18 original financing statement was filed pursuant to Subsection (e)
210-19 of Section 9.402, an amount equal to the fee prescribed by law for
210-20 recording and indexing in the real property records of the county
210-21 clerk.]
210-22 [Sec. 9.407. INFORMATION FROM FILING OFFICER. (a) If the
210-23 person filing any financing statement, termination statement,
210-24 statement of assignment, or statement of release, furnishes the
210-25 filing officer a copy thereof, the filing officer shall upon
210-26 request note upon the copy the file number and date and hour of the
211-1 filing of the original and deliver or send the copy to such person.]
211-2 [(b) Upon request of any person, the filing officer shall
211-3 issue his certificate showing whether there is on file on the date
211-4 and hour stated therein, any presently effective financing
211-5 statement naming a particular debtor and any statement of
211-6 assignment thereof and if there is, giving the date and hour of
211-7 filing of each such statement and the names and addresses of each
211-8 secured party therein. The filing officer of a county is required
211-9 only to provide information about financing statements and
211-10 statements of assignment on file in the financing statement records
211-11 of the county and is not required to provide information from the
211-12 real estate records of the county. The uniform fee for such a
211-13 certificate shall be $10 if the request for the certificate is in
211-14 the standard form prescribed by the Secretary of State and
211-15 otherwise shall be $25. If a certificate issued by the filing
211-16 officer of a county contains listings for more than 10 statements,
211-17 the filing officer shall add 50 cents to the uniform fee for each
211-18 statement in excess of 10. Upon request the filing officer shall
211-19 furnish a copy of any filed financing statement or statement of
211-20 assignment for a uniform fee of $1.50 per page, but not less than
211-21 $5 per request concerning a debtor.]
211-22 [Sec. 9.408. FINANCING STATEMENTS COVERING CONSIGNED OR
211-23 LEASED GOODS. A consignor or lessor of goods may file a financing
211-24 statement using the terms "consignor," "consignee," "lessor,"
211-25 "lessee" or the like instead of the terms specified in Section
211-26 9.402. The provisions of this subchapter shall apply as
212-1 appropriate to such a financing statement but its filing shall not
212-2 of itself be a factor in determining whether or not the consignment
212-3 or lease is intended as security (Section 1.201(37)). However, if
212-4 it is determined for other reasons that the consignment or lease is
212-5 so intended, a security interest of the consignor or lessor which
212-6 attaches to the consigned or leased goods is perfected by such
212-7 filing.]
212-8 [Sec. 9.409. PRESCRIBED FORMS. (a) The Secretary of State
212-9 may prescribe the forms to be used in making any filing or in
212-10 requesting any information of the filing officer under this
212-11 chapter. Where the Secretary of State has prescribed the form and
212-12 a person fails to use this form or attaches additional pages to the
212-13 prescribed form, the filing or request for information is in
212-14 nonstandard form.]
212-15 [(b) The filing and other fees paid to the Secretary of
212-16 State under this chapter shall be deposited in the General Revenue
212-17 Fund of the State Treasury.]
212-18 [Sec. 9.410. MASTER ASSIGNMENT AND AMENDMENT. (a) A
212-19 secured party may assign all of the secured party's rights under
212-20 more than one financing statement filed with the secretary of state
212-21 by filing a written statement of master assignment signed by the
212-22 secured party of record in each financing statement and setting
212-23 forth the name of the secured party of record and file number of
212-24 each financing statement and the name and address of the assignee.
212-25 The secured party must also provide filing information in
212-26 computer-readable form prescribed by the secretary of state.]
213-1 [(b) A secured party may change the name or mailing address
213-2 of the secured party in more than one financing statement by filing
213-3 a written statement of master amendment signed by the secured party
213-4 of record in each financing statement and setting forth the name of
213-5 the secured party of record and file number of each financing
213-6 statement and the new name or mailing address of the secured party.
213-7 The secured party must also provide filing information in
213-8 computer-readable form prescribed by the secretary of state.]
213-9 [(c) The filing fee for filing, indexing, and furnishing
213-10 filing data about a statement of master assignment or master
213-11 amendment is $500 plus 50 cents for each financing statement
213-12 covered by the master statement in excess of 50.]
213-13 [Sec. 9.411. RULES. The secretary of state may adopt rules
213-14 necessary to administer this subchapter.]
213-15 [Sec. 9.412. FRAUDULENT FILING. (a) A person may not
213-16 intentionally or knowingly present for filing or cause to be
213-17 presented for filing a financing statement if the person knows that
213-18 the financing statement:]
213-19 [(1) is forged;]
213-20 [(2) contains a material false statement; or]
213-21 [(3) is groundless.]
213-22 [(b) A person who violates Subsection (a) is liable to the
213-23 owner of property covered by the financing statement for:]
213-24 [(1) the greater of $5,000 or the owner's actual
213-25 damages;]
213-26 [(2) court costs; and]
214-1 [(3) reasonable attorney's fees.]
214-2 [(d) An owner of property covered by a fraudulent financing
214-3 statement described in Subsection (a) shall have the following
214-4 additional remedies:]
214-5 [(1) An owner may file suit in a court of suitable
214-6 jurisdiction, requesting specific relief including, but not limited
214-7 to, release of such fraudulent financing statement. A successful
214-8 plaintiff shall be entitled to reasonable attorney's fees and costs
214-9 of court to be assessed against the person who filed the fraudulent
214-10 financing statement. In the event the person who filed the
214-11 fraudulent financing statement cannot be located or is a fictitious
214-12 person, then the owner of the property may serve the known or
214-13 unknown defendant through publication in a newspaper of general
214-14 circulation in the county wherein the suit is brought.]
214-15 SUBCHAPTER F [E]. DEFAULT
214-16 Sec. 9.601 [9.501]. RIGHTS AFTER DEFAULT; JUDICIAL
214-17 ENFORCEMENT; CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT
214-18 INTANGIBLES, OR PROMISSORY NOTES [PROCEDURE WHEN SECURITY AGREEMENT
214-19 COVERS BOTH REAL AND PERSONAL PROPERTY]. (a) After [When a debtor
214-20 is in] default [under a security agreement], a secured party has
214-21 the rights [and remedies] provided in this subchapter and, except
214-22 as otherwise provided in Section 9.602, [as limited by Subsection
214-23 (c)] those provided by agreement of the parties. A secured party:
214-24 (1) [in the security agreement. He] may reduce a
214-25 [his] claim to judgment, foreclose, or otherwise enforce the claim,
214-26 security interest, or agricultural lien by any available judicial
215-1 procedure; and
215-2 (2) if[. If] the collateral is documents, [the
215-3 secured party] may proceed either as to the documents or as to the
215-4 goods they cover [covered thereby].
215-5 (b) A secured party in possession of collateral or control
215-6 of collateral under Section 9.104, 9.105, 9.106, or 9.107 has the
215-7 rights[, remedies] and duties provided in Section 9.207.
215-8 (c) The rights under Subsections (a) and (b) [and remedies
215-9 referred to in this subsection] are cumulative and may be exercised
215-10 simultaneously.
215-11 (d) Except as otherwise provided in Subsection (g) and
215-12 Section 9.605, after [(b) After] default, a [the] debtor and an
215-13 obligor have [has] the rights [and remedies] provided in this
215-14 subchapter and by agreement of the parties[, those provided in the
215-15 security agreement and those provided in Section 9.207].
215-16 [(c) To the extent that they give rights to the debtor and
215-17 impose duties on the secured party, the rules stated in the
215-18 subsections referred to below may not be waived or varied except as
215-19 provided with respect to compulsory disposition of collateral
215-20 (Subsection (c) of Section 9.504 and Section 9.505) and with
215-21 respect to redemption of collateral (Section 9.506) but the parties
215-22 may by agreement determine the standards by which the fulfillment
215-23 of these rights and duties is to be measured if such standards are
215-24 not manifestly unreasonable:]
215-25 [(1) Subsection (b) of Section 9.502 and Subsection
215-26 (b) of Section 9.504 insofar as they require accounting for surplus
216-1 proceeds of collateral;]
216-2 [(2) Subsection (c) of Section 9.504 and Subsection
216-3 (a) of Section 9.505 which deal with disposition of collateral;]
216-4 [(3) Subsection (b) of Section 9.505 which deals with
216-5 acceptance of collateral as discharge of obligation;]
216-6 [(4) Section 9.506 which deals with redemption of
216-7 collateral; and]
216-8 [(5) Subsection (a) of Section 9.507 which deals with
216-9 the secured party's liability for failure to comply with this
216-10 subchapter.]
216-11 [(d) If the security agreement covers both real and personal
216-12 property, the secured party may proceed under this subchapter as to
216-13 the personal property or he may proceed as to both the real and the
216-14 personal property in accordance with his rights and remedies in
216-15 respect of the real property in which case the provisions of this
216-16 subchapter do not apply.]
216-17 (e) If [When] a secured party has reduced its [his] claim to
216-18 judgment, the lien of any levy that [which] may be made upon the
216-19 [his] collateral by virtue of an [any] execution based upon the
216-20 judgment relates [shall relate] back to the earliest of:
216-21 (1) the date of the perfection of the security
216-22 interest or agricultural lien in the [such] collateral;
216-23 (2) the date of filing a financing statement covering
216-24 the collateral; or
216-25 (3) any date specified in a statute under which the
216-26 agricultural lien was created.
217-1 (f) A [judicial] sale[,] pursuant to an [such] execution[,]
217-2 is a foreclosure of the security interest or agricultural lien by
217-3 judicial procedure within the meaning of this section. A[, and
217-4 the] secured party may purchase at the sale and thereafter hold the
217-5 collateral free of any other requirements of this chapter.
217-6 (g) Except as otherwise provided in Section 9.607(c), this
217-7 subchapter imposes no duties upon a secured party that is a
217-8 consignor or is a buyer of accounts, chattel paper, payment
217-9 intangibles, or promissory notes.
217-10 Sec. 9.602. WAIVER AND VARIANCE OF RIGHTS AND DUTIES.
217-11 Except as otherwise provided in Section 9.624, to the extent that
217-12 they give rights to a debtor or obligor and impose duties on a
217-13 secured party, the debtor or obligor may not waive or vary the
217-14 rules stated in the following listed sections:
217-15 (1) Section 9.207(b)(4)(C), which deals with use and
217-16 operation of the collateral by the secured party;
217-17 (2) Section 9.210, which deals with requests for an
217-18 accounting and requests concerning a list of collateral and
217-19 statement of account;
217-20 (3) Section 9.607(c), which deals with collection and
217-21 enforcement of collateral;
217-22 (4) Sections 9.608(a) and 9.615(c) to the extent that
217-23 they deal with application or payment of noncash proceeds of
217-24 collection, enforcement, or disposition;
217-25 (5) Sections 9.608(a) and 9.615(d) to the extent that
217-26 they require accounting for or payment of surplus proceeds of
218-1 collateral;
218-2 (6) Section 9.609 to the extent that it imposes upon a
218-3 secured party that takes possession of collateral without judicial
218-4 process the duty to do so without breach of the peace;
218-5 (7) Sections 9.610(b), 9.611, 9.613, and 9.614, which
218-6 deal with disposition of collateral;
218-7 (8) Section 9.615(f), which deals with calculation of
218-8 a deficiency or surplus when a disposition is made to the secured
218-9 party, a person related to the secured party, or a secondary
218-10 obligor;
218-11 (9) Section 9.616, which deals with explanation of the
218-12 calculation of a surplus or deficiency;
218-13 (10) Sections 9.620, 9.621, and 9.622, which deal with
218-14 acceptance of collateral in satisfaction of obligation;
218-15 (11) Section 9.623, which deals with redemption of
218-16 collateral;
218-17 (12) Section 9.624, which deals with permissible
218-18 waivers; and
218-19 (13) Sections 9.625 and 9.626, which deal with the
218-20 secured party's liability for failure to comply with this chapter.
218-21 Sec. 9.603. AGREEMENT ON STANDARDS CONCERNING RIGHTS AND
218-22 DUTIES. (a) The parties may determine by agreement the standards
218-23 measuring the fulfillment of the rights of a debtor or obligor and
218-24 the duties of a secured party under a rule stated in Section 9.602
218-25 if the standards are not manifestly unreasonable.
218-26 (b) Subsection (a) does not apply to the duty under Section
219-1 9.609 to refrain from breaching the peace.
219-2 Sec. 9.604. PROCEDURE IF SECURITY AGREEMENT COVERS REAL
219-3 PROPERTY OR FIXTURES. (a) If a security agreement covers both
219-4 personal and real property, a secured party may proceed:
219-5 (1) under this subchapter as to the personal property
219-6 without prejudicing any rights with respect to the real property;
219-7 or
219-8 (2) as to both the personal property and the real
219-9 property in accordance with the rights with respect to the real
219-10 property, in which case the other provisions of this subchapter do
219-11 not apply.
219-12 (b) Subject to Subsection (c), if a security agreement
219-13 covers goods that are or become fixtures, a secured party may
219-14 proceed:
219-15 (1) under this subchapter; or
219-16 (2) in accordance with the rights with respect to real
219-17 property, in which case the other provisions of this subchapter do
219-18 not apply.
219-19 (c) Subject to the other provisions of this subchapter, if a
219-20 secured party holding a security interest in fixtures has priority
219-21 over all owners and encumbrancers of the real property, the secured
219-22 party, after default, may remove the collateral from the real
219-23 property.
219-24 (d) A secured party that removes collateral shall promptly
219-25 reimburse any encumbrancer or owner of the real property, other
219-26 than the debtor, for the cost of repair of any physical injury
220-1 caused by the removal. The secured party need not reimburse the
220-2 encumbrancer or owner for any diminution in value of the real
220-3 property caused by the absence of the goods removed or by any
220-4 necessity of replacing them. A person entitled to reimbursement
220-5 may refuse permission to remove until the secured party gives
220-6 adequate assurance for the performance of the obligation to
220-7 reimburse.
220-8 Sec. 9.605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. A secured
220-9 party does not owe a duty based on its status as secured party:
220-10 (1) to a person that is a debtor or obligor, unless
220-11 the secured party knows:
220-12 (A) that the person is a debtor or obligor;
220-13 (B) the identity of the person; and
220-14 (C) how to communicate with the person; or
220-15 (2) to a secured party or lienholder that has filed a
220-16 financing statement against a person, unless the secured party
220-17 knows:
220-18 (A) that the person is a debtor; and
220-19 (B) the identity of the person.
220-20 Sec. 9.606. TIME OF DEFAULT FOR AGRICULTURAL LIEN. For
220-21 purposes of this subchapter, a default occurs in connection with an
220-22 agricultural lien at the time the secured party becomes entitled to
220-23 enforce the lien in accordance with the statute under which it was
220-24 created.
220-25 Sec. 9.607 [9.502]. COLLECTION AND ENFORCEMENT BY [RIGHTS
220-26 OF] SECURED PARTY. (a) If [When] so agreed, and in any event
221-1 after [on] default, a [the] secured party:
221-2 (1) may [is entitled to] notify an account debtor or
221-3 other person obligated on collateral [the obligor on an instrument]
221-4 to make payment or otherwise render performance to or for the
221-5 benefit of the secured party;
221-6 (2) may take any proceeds to which the secured party
221-7 is entitled under Section 9.315;
221-8 (3) may enforce the obligations of an account debtor
221-9 or other person obligated on collateral and exercise the rights of
221-10 the debtor with respect to the obligation of the account debtor or
221-11 other person obligated on collateral to make payment or otherwise
221-12 render performance to the debtor, and with respect to any property
221-13 that secures the obligations of the account debtor or other person
221-14 obligated on the collateral;
221-15 (4) if it holds a security interest in a deposit
221-16 account perfected by control under Section 9.104(a)(1), may apply
221-17 the balance of the deposit account to the obligation secured by the
221-18 deposit account; and
221-19 (5) if it holds a security interest in a deposit
221-20 account perfected by control under Section 9.104(a)(2) or (3), may
221-21 instruct the bank to pay the balance of the deposit account to or
221-22 for the benefit of the secured party [to him whether or not the
221-23 assignor was theretofore making collections on the collateral, and
221-24 also to take control of any proceeds to which he is entitled under
221-25 Section 9.306].
221-26 (b) If necessary to enable a secured party to exercise under
222-1 Subsection (a)(3) the right of a debtor to enforce a mortgage
222-2 nonjudicially, the secured party may record in the office in which
222-3 a record of the mortgage is recorded:
222-4 (1) a copy of the security agreement that creates or
222-5 provides for a security interest in the obligation secured by the
222-6 mortgage; and
222-7 (2) the secured party's sworn affidavit in recordable
222-8 form stating that:
222-9 (A) a default has occurred; and
222-10 (B) the secured party is entitled to enforce the
222-11 mortgage nonjudicially.
222-12 (c) [(b)] A secured party shall [who by agreement is
222-13 entitled to charge back uncollected collateral or otherwise to full
222-14 or limited recourse against the debtor and who undertakes to
222-15 collect from the account debtors or obligors must] proceed in a
222-16 commercially reasonable manner if the secured party:
222-17 (1) undertakes to collect from or enforce an
222-18 obligation of an account debtor or other person obligated on
222-19 collateral; and
222-20 (2) is entitled to charge back uncollected collateral
222-21 or otherwise to full or limited recourse against the debtor or a
222-22 secondary obligor.
222-23 (d) A secured party [and] may deduct from the collections
222-24 made pursuant to Subsection (c) [his] reasonable expenses of
222-25 collection and enforcement, including reasonable attorney's fees
222-26 and legal expenses incurred by the secured party [realization from
223-1 the collections].
223-2 (e) This section does not determine whether an account
223-3 debtor, bank, or other person obligated on collateral owes a duty
223-4 to a secured party.
223-5 Sec. 9.608. APPLICATION OF PROCEEDS OF COLLECTION OR
223-6 ENFORCEMENT; LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS.
223-7 (a) If a security interest or agricultural lien secures payment or
223-8 performance of an obligation, the following rules apply:
223-9 (1) A secured party shall apply or pay over for
223-10 application the cash proceeds of collection or enforcement under
223-11 this section in the following order to:
223-12 (A) the reasonable expenses of collection and
223-13 enforcement and, to the extent provided for by agreement and not
223-14 prohibited by law, reasonable attorney's fees and legal expenses
223-15 incurred by the secured party;
223-16 (B) the satisfaction of obligations secured by
223-17 the security interest or agricultural lien under which the
223-18 collection or enforcement is made; and
223-19 (C) the satisfaction of obligations secured by
223-20 any subordinate security interest in or other lien on the
223-21 collateral subject to the security interest or agricultural lien
223-22 under which the collection or enforcement is made if the secured
223-23 party receives an authenticated demand for proceeds before
223-24 distribution of the proceeds is completed.
223-25 (2) If requested by a secured party, a holder of a
223-26 subordinate security interest or other lien shall furnish
224-1 reasonable proof of the interest or lien within a reasonable time.
224-2 Unless the holder complies, the secured party need not comply with
224-3 the holder's demand under Subdivision (1)(C).
224-4 (3) A secured party need not apply or pay over for
224-5 application noncash proceeds of collection and enforcement under
224-6 this section unless the failure to do so would be commercially
224-7 unreasonable. A secured party that applies or pays over for
224-8 application noncash proceeds shall do so in a commercially
224-9 reasonable manner.
224-10 (4) A secured party shall account to and pay a debtor
224-11 for any surplus, and the obligor is liable for any deficiency.
224-12 (b) If the underlying transaction is a sale of accounts,
224-13 chattel paper, payment intangibles, or promissory notes, the debtor
224-14 is not entitled to any surplus, and the obligor is not liable for
224-15 any deficiency. [If the security agreement secures an
224-16 indebtedness, the secured party must account to the debtor for any
224-17 surplus, and unless otherwise agreed, the debtor is liable for any
224-18 deficiency. But, if the underlying transaction was a sale of
224-19 accounts or chattel paper, the debtor is entitled to any surplus or
224-20 is liable for any deficiency only if the security agreement so
224-21 provides.]
224-22 Sec. 9.609 [9.503]. SECURED PARTY'S RIGHT TO TAKE POSSESSION
224-23 AFTER DEFAULT. (a) After default, [Unless otherwise agreed] a
224-24 secured party:
224-25 (1) may [has on default the right to] take possession
224-26 of the collateral; and
225-1 (2) without[. In taking possession a secured party
225-2 may proceed without judicial process if this can be done without
225-3 breach of the peace or may proceed by action. If the security
225-4 agreement so provides the secured party may require the debtor to
225-5 assemble the collateral and make it available to the secured party
225-6 at a place to be designated by the secured party which is
225-7 reasonably convenient to both parties. Without] removal, [a
225-8 secured party] may render equipment unusable[,] and [may] dispose
225-9 of collateral on the debtor's premises under Section 9.610 [9.504].
225-10 (b) A secured party may proceed under Subsection (a):
225-11 (1) pursuant to judicial process; or
225-12 (2) without judicial process, if it proceeds without
225-13 breach of the peace.
225-14 (c) If so agreed, and in any event after default, a secured
225-15 party may require the debtor to assemble the collateral and make it
225-16 available to the secured party at a place to be designated by the
225-17 secured party that is reasonably convenient to both parties.
225-18 Sec. 9.610 [9.504]. DISPOSITION [SECURED PARTY'S RIGHT TO
225-19 DISPOSE] OF COLLATERAL AFTER DEFAULT[; EFFECT OF DISPOSITION].
225-20 (a) After default, a [A] secured party [after default] may sell,
225-21 lease, license, or otherwise dispose of any or all of the
225-22 collateral in its present [then] condition or following any
225-23 commercially reasonable preparation or processing.
225-24 (b) Every aspect of a disposition of collateral, including
225-25 the method, manner, time, place, and other terms, must be
225-26 commercially reasonable. If commercially reasonable, a secured
226-1 party may dispose [Any sale of goods is subject to the chapter on
226-2 Sales (Chapter 2). The proceeds of disposition shall be applied in
226-3 the order following to]
226-4 [(1) the reasonable expenses of retaking, holding,
226-5 preparing for sale or lease, selling, leasing and the like and, to
226-6 the extent provided for in the agreement and not prohibited by law,
226-7 the reasonable attorneys' fees and legal expenses incurred by the
226-8 secured party;]
226-9 [(2) the satisfaction of indebtedness secured by the
226-10 security interest under which the disposition is made;]
226-11 [(3) the satisfaction of indebtedness secured by any
226-12 subordinate security interest in the collateral if written
226-13 notification of demand therefor is received before distribution of
226-14 the proceeds is completed. If requested by the secured party, the
226-15 holder of a subordinate security interest must seasonably furnish
226-16 reasonable proof of his interest, and unless he does so, the
226-17 secured party need not comply with his demand.]
226-18 [(b) If the security interest secures an indebtedness, the
226-19 secured party must account to the debtor for any surplus, and,
226-20 unless otherwise agreed, the debtor is liable for any deficiency.
226-21 But if the underlying transaction was a sale of accounts or chattel
226-22 paper, the debtor is entitled to any surplus or is liable for any
226-23 deficiency only if the security agreement so provides.]
226-24 [(c) Disposition] of [the] collateral [may be] by public or
226-25 private proceedings, [and may be made] by [way of] one or more
226-26 contracts,[. Sale or other disposition may be] as a unit or in
227-1 parcels, and at any time and place and on any terms [but every
227-2 aspect of the disposition including the method, manner, time, place
227-3 and terms must be commercially reasonable. Unless collateral is
227-4 perishable or threatens to decline speedily in value or is of a
227-5 type customarily sold on a recognized market, reasonable
227-6 notification of the time and place of any public sale or reasonable
227-7 notification of the time after which any private sale or other
227-8 intended disposition is to be made shall be sent by the secured
227-9 party to the debtor, if he has not signed after default a statement
227-10 renouncing or modifying his right to notification of sale. In the
227-11 case of consumer goods no other notification need be sent. In
227-12 other cases notification shall be sent to any other secured party
227-13 who has a security interest in the same collateral and who has duly
227-14 filed in the office of the Secretary of State or of the county
227-15 clerk in the proper county in this state a financing statement
227-16 indexed in the name of the debtor or from whom the secured party
227-17 has received (before sending his notification to the debtor or
227-18 before the debtor's renunciation of his rights) written notice of a
227-19 claim of an interest in the collateral. The secured party may buy
227-20 at any public sale and if the collateral is of a type customarily
227-21 sold in a recognized market or is of a type which is the subject of
227-22 widely distributed standard price quotations he may buy at private
227-23 sale].
227-24 (c) A secured party may purchase collateral:
227-25 (1) at a public disposition; or
227-26 (2) at a private disposition only if the collateral is
228-1 of a kind that is customarily sold on a recognized market or the
228-2 subject of widely distributed standard price quotations.
228-3 (d) A contract for sale, lease, license, or other
228-4 disposition includes the warranties relating to title, possession,
228-5 quiet enjoyment, and the like that by operation of law accompany a
228-6 voluntary disposition of property of the kind subject to the
228-7 contract.
228-8 (e) A secured party may disclaim or modify warranties under
228-9 Subsection (d):
228-10 (1) in a manner that would be effective to disclaim or
228-11 modify the warranties in a voluntary disposition of property of the
228-12 kind subject to the contract of disposition; or
228-13 (2) by communicating to the purchaser a record
228-14 evidencing the contract for disposition and including an express
228-15 disclaimer or modification of the warranties.
228-16 (f) A record is sufficient to disclaim warranties under
228-17 Subsection (e) if it indicates "There is no warranty relating to
228-18 title, possession, quiet enjoyment, or the like in this
228-19 disposition" or uses words of similar import.
228-20 Sec. 9.611. NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.
228-21 (a) In this section, "notification date" means the earlier of the
228-22 date on which:
228-23 (1) a secured party sends to the debtor and any
228-24 secondary obligor an authenticated notification of disposition; or
228-25 (2) the debtor and any secondary obligor waive the
228-26 right to notification.
229-1 (b) Except as otherwise provided in Subsection (d), a
229-2 secured party that disposes of collateral under Section 9.610 shall
229-3 send to the persons specified in Subsection (c) a reasonable
229-4 authenticated notification of disposition.
229-5 (c) To comply with Subsection (b), the secured party shall
229-6 send an authenticated notification of disposition to:
229-7 (1) the debtor;
229-8 (2) any secondary obligor; and
229-9 (3) if the collateral is other than consumer goods:
229-10 (A) any other person from which the secured
229-11 party has received, before the notification date, an authenticated
229-12 notification of a claim of an interest in the collateral;
229-13 (B) any other secured party or lienholder that,
229-14 10 days before the notification date, held a security interest in
229-15 or other lien on the collateral perfected by the filing of a
229-16 financing statement that:
229-17 (i) identified the collateral;
229-18 (ii) was indexed under the debtor's name
229-19 as of that date; and
229-20 (iii) was filed in the office in which to
229-21 file a financing statement against the debtor covering the
229-22 collateral as of that date; and
229-23 (C) any other secured party that, 10 days before
229-24 the notification date, held a security interest in the collateral
229-25 perfected by compliance with a statute, regulation, or treaty
229-26 described in Section 9.311(a).
230-1 (d) Subsection (b) does not apply if the collateral is
230-2 perishable or threatens to decline speedily in value or is of a
230-3 type customarily sold on a recognized market.
230-4 (e) A secured party complies with the requirement for
230-5 notification prescribed by Subsection (c)(3)(B) if:
230-6 (1) not later than 20 days or earlier than 30 days
230-7 before the notification date, the secured party requests, in a
230-8 commercially reasonable manner, information concerning financing
230-9 statements indexed under the debtor's name in the office indicated
230-10 in Subsection (c)(3)(B); and
230-11 (2) before the notification date, the secured party:
230-12 (A) did not receive a response to the request
230-13 for information; or
230-14 (B) received a response to the request for
230-15 information and sent an authenticated notification of disposition
230-16 to each secured party or other lienholder named in that response
230-17 whose financing statement covered the collateral.
230-18 Sec. 9.612. TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF
230-19 COLLATERAL. (a) Except as otherwise provided in Subsection (b),
230-20 whether a notification is sent within a reasonable time is a
230-21 question of fact.
230-22 (b) In a transaction other than a consumer transaction, a
230-23 notification of disposition sent after default and 10 days or more
230-24 before the earliest time of disposition set forth in the
230-25 notification is sent within a reasonable time before the
230-26 disposition.
231-1 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
231-2 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
231-3 transaction, the following rules apply:
231-4 (1) The contents of a notification of disposition are
231-5 sufficient if the notification:
231-6 (A) describes the debtor and the secured party;
231-7 (B) describes the collateral that is the subject
231-8 of the intended disposition;
231-9 (C) states the method of intended disposition;
231-10 (D) states that the debtor is entitled to an
231-11 accounting of the unpaid indebtedness and states the charge, if
231-12 any, for an accounting; and
231-13 (E) states the time and place of a public sale
231-14 or the time after which any other disposition is to be made.
231-15 (2) Whether the contents of a notification that lacks
231-16 any of the information specified in Subdivision (1) are
231-17 nevertheless sufficient is a question of fact.
231-18 (3) The contents of a notification providing
231-19 substantially the information specified in Subdivision (1) are
231-20 sufficient, even if the notification includes:
231-21 (A) information not specified by that
231-22 subdivision; or
231-23 (B) minor errors that are not seriously
231-24 misleading.
231-25 (4) A particular phrasing of the notification is not
231-26 required.
232-1 (5) The following form of notification and the form
232-2 appearing in Section 9.614(3), when completed, each provide
232-3 sufficient information:
232-4 NOTIFICATION OF DISPOSITION OF COLLATERAL
232-5 To: _________________________________ (Name of
232-6 debtor, obligor, or other person to which the
232-7 notification is sent
232-8 From: __________ (Name, address, and telephone
232-9 number of secured party
232-10 Name of Debtor(s): __________ (Include only if
232-11 debtor(s) are not an addressee
232-12 (For a public disposition:
232-13 We will sell (or lease or license, as applicable)
232-14 the (describe collateral) (to the highest qualified
232-15 bidder) in public as follows:
232-16 Day and Date:____________________________________
232-17 Time:____________________________________________
232-18 Place:___________________________________________
232-19 (For a private disposition:
232-20 We will sell (or lease or license, as applicable
232-21 the ___________________ (describe collateral) privately
232-22 sometime after _____________ (day and date).
232-23 You are entitled to an accounting of the unpaid
232-24 indebtedness secured by the property that we intend to
232-25 sell (or lease or license, as applicable) (for a charge
232-26 of $______). You may request an accounting by calling
233-1 us at _________ (telephone number).
233-2 Sec. 9.614. CONTENTS AND FORM OF NOTIFICATION BEFORE
233-3 DISPOSITION OF COLLATERAL: CONSUMER-GOODS TRANSACTION. In a
233-4 consumer-goods transaction, the following rules apply:
233-5 (1) A notification of disposition must provide the
233-6 following information:
233-7 (A) the information specified in Section
233-8 9.613(1);
233-9 (B) a description of any liability for a
233-10 deficiency of the person to which the notification is sent;
233-11 (C) a telephone number from which the amount
233-12 that must be paid to the secured party to redeem the collateral
233-13 under Section 9.623 is available; and
233-14 (D) a telephone number or mailing address from
233-15 which additional information concerning the disposition and the
233-16 obligation secured is available.
233-17 (2) A particular phrasing of the notification is not
233-18 required.
233-19 (3) The following form of notification, when
233-20 completed, provides sufficient information:
233-21 __________________ (Name and address of secured party
233-22 __________ (Date
233-23 NOTICE OF OUR PLAN TO SELL PROPERTY
233-24 _______ (Name and address of any obligor who is also a
233-25 debtor
233-26 Subject: _________ (Identification of Transaction
234-1 We have your ___________ (describe collateral), because
234-2 you broke promises in our agreement.
234-3 (For a public disposition:
234-4 We will sell ___________ (describe collateral) at
234-5 public sale. A sale could include a lease or license.
234-6 The sale will be held as follows:
234-7 Date:___________________________________________
234-8 Time:___________________________________________
234-9 Place:__________________________________________
234-10 You may attend the sale and bring bidders if you want.
234-11 (For a private disposition:
234-12 We will sell __________ (describe collateral) at
234-13 private sale sometime after ______ (date). A sale
234-14 could include a lease or license.
234-15 The money that we get from the sale (after paying our
234-16 costs) will reduce the amount you owe. If we get less
234-17 money than you owe, you _______ (will or will not, as
234-18 applicable) still owe us the difference. If we get
234-19 more money than you owe, you will get the extra money,
234-20 unless we must pay it to someone else.
234-21 You can get the property back at any time before we
234-22 sell it by paying us the full amount you owe (not just
234-23 the past due payments), including our expenses. To
234-24 learn the exact amount you must pay, call us at
234-25 ______ (telephone number).
234-26 If you want us to explain to you in writing how
235-1 we have figured the amount that you owe us, you may
235-2 call us at ________ (telephone number) (or write us
235-3 at ______ (secured party's address) ______) and request
235-4 a written explanation. (We will charge you $______ for
235-5 the explanation if we sent you another written
235-6 explanation of the amount you owe us within the last
235-7 six months.
235-8 If you need more information about the sale call us
235-9 at _______ (telephone number) (or write us at _______
235-10 (secured party's address) _____).
235-11 We are sending this notice to the following other
235-12 people who have an interest in ______ (describe
235-13 collateral) or who owe money under your agreement:
235-14 _______ (Names of all other debtors and obligors, if
235-15 any
235-16 (4) A notification in the form of Subdivision (3) is
235-17 sufficient, even if additional information appears at the end of
235-18 the form.
235-19 (5) A notification in the form of Subdivision (3) is
235-20 sufficient, even if it includes errors in information not required
235-21 by Subdivision (1), unless the error is misleading with respect to
235-22 rights arising under this chapter.
235-23 (6) If a notification under this section is not in the
235-24 form of Subdivision (3), law other than this chapter determines the
235-25 effect of including information not required by Subdivision (1).
235-26 Sec. 9.615. APPLICATION OF PROCEEDS OF DISPOSITION;
236-1 LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS. (a) A secured
236-2 party shall apply or pay over for application the cash proceeds of
236-3 disposition in the following order to:
236-4 (1) the reasonable expenses of retaking, holding,
236-5 preparing for disposition, processing, and disposing and, to the
236-6 extent provided for by agreement and not prohibited by law,
236-7 reasonable attorney's fees and legal expenses incurred by the
236-8 secured party;
236-9 (2) the satisfaction of obligations secured by the
236-10 security interest or agricultural lien under which the disposition
236-11 is made;
236-12 (3) the satisfaction of obligations secured by any
236-13 subordinate security interest in or other subordinate lien on the
236-14 collateral if:
236-15 (A) the secured party receives from the holder
236-16 of the subordinate security interest or other lien an authenticated
236-17 demand for proceeds before distribution of the proceeds is
236-18 completed; and
236-19 (B) in a case in which a consignor has an
236-20 interest in the collateral, the subordinate security interest or
236-21 other lien is senior to the interest of the consignor; and
236-22 (4) a secured party that is a consignor of the
236-23 collateral if the secured party receives from the consignor an
236-24 authenticated demand for proceeds before distribution of the
236-25 proceeds is completed.
236-26 (b) If requested by a secured party, a holder of a
237-1 subordinate security interest or other lien shall furnish
237-2 reasonable proof of the interest or lien within a reasonable time.
237-3 Unless the holder does so, the secured party need not comply with
237-4 the holder's demand under Subsection (a)(3).
237-5 (c) A secured party need not apply or pay over for
237-6 application noncash proceeds of disposition under this section
237-7 unless the failure to do so would be commercially unreasonable. A
237-8 secured party that applies or pays over for application noncash
237-9 proceeds shall do so in a commercially reasonable manner.
237-10 (d) If the security interest under which a disposition is
237-11 made secures payment or performance of an obligation, after making
237-12 the payments and applications required by Subsection (a) and
237-13 permitted by Subsection (c):
237-14 (1) unless Subsection (a)(4) requires the secured
237-15 party to apply or pay over cash proceeds to a consignor, the
237-16 secured party shall account to and pay a debtor for any surplus;
237-17 and
237-18 (2) the obligor is liable for any deficiency.
237-19 (e) If the underlying transaction is a sale of accounts,
237-20 chattel paper, payment intangibles, or promissory notes:
237-21 (1) the debtor is not entitled to any surplus; and
237-22 (2) the obligor is not liable for any deficiency.
237-23 (f) The surplus or deficiency following a disposition is
237-24 calculated based on the amount of proceeds that would have been
237-25 realized in a disposition complying with this subchapter to a
237-26 transferee other than the secured party, a person related to the
238-1 secured party, or a secondary obligor if:
238-2 (1) the transferee in the disposition is the secured
238-3 party, a person related to the secured party, or a secondary
238-4 obligor; and
238-5 (2) the amount of proceeds of the disposition is
238-6 significantly below the range of proceeds that a complying
238-7 disposition to a person other than the secured party, a person
238-8 related to the secured party, or a secondary obligor would have
238-9 brought.
238-10 (g) A secured party that receives cash proceeds of a
238-11 disposition in good faith and without knowledge that the receipt
238-12 violates the rights of the holder of a security interest or other
238-13 lien that is not subordinate to the security interest or
238-14 agricultural lien under which the disposition is made:
238-15 (1) takes the cash proceeds free of the security
238-16 interest or other lien;
238-17 (2) is not obligated to apply the proceeds of the
238-18 disposition to the satisfaction of obligations secured by the
238-19 security interest or other lien; and
238-20 (3) is not obligated to account to or pay the holder
238-21 of the security interest or other lien for any surplus.
238-22 Sec. 9.616. EXPLANATION OF CALCULATION OF SURPLUS OR
238-23 DEFICIENCY. (a) In this section:
238-24 (1) "Explanation" means a writing that:
238-25 (A) states the amount of the surplus or
238-26 deficiency;
239-1 (B) provides an explanation in accordance with
239-2 Subsection (c) of how the secured party calculated the surplus or
239-3 deficiency;
239-4 (C) states, if applicable, that future debits,
239-5 credits, charges, including additional credit service charges or
239-6 interest, rebates, and expenses may affect the amount of the
239-7 surplus or deficiency; and
239-8 (D) provides a telephone number or mailing
239-9 address from which additional information concerning the
239-10 transaction is available.
239-11 (2) "Request" means a record:
239-12 (A) authenticated by a debtor or consumer
239-13 obligor;
239-14 (B) requesting that the recipient provide an
239-15 explanation; and
239-16 (C) sent after disposition of the collateral
239-17 under Section 9.610.
239-18 (b) In a consumer-goods transaction in which the debtor is
239-19 entitled to a surplus or a consumer obligor is liable for a
239-20 deficiency under Section 9.615, the secured party shall:
239-21 (1) send an explanation to the debtor or consumer
239-22 obligor, as applicable, after the disposition and:
239-23 (A) before or when the secured party accounts to
239-24 the debtor and pays any surplus or first makes written demand on
239-25 the consumer obligor after the disposition for payment of the
239-26 deficiency; and
240-1 (B) within 14 days after receipt of a request;
240-2 or
240-3 (2) in the case of a consumer obligor who is liable
240-4 for a deficiency, within 14 days after receipt of a request, send
240-5 to the consumer obligor a record waiving the secured party's right
240-6 to a deficiency.
240-7 (c) To comply with Subsection (a)(1)(B), a writing must
240-8 provide the following information in the following order:
240-9 (1) the aggregate amount of obligations secured by the
240-10 security interest under which the disposition was made and, if the
240-11 amount reflects a rebate of unearned interest or credit service
240-12 charge, an indication of that fact, calculated as of a specified
240-13 date:
240-14 (A) if the secured party takes or receives
240-15 possession of the collateral after default, not more than 35 days
240-16 before the secured party takes or receives possession; or
240-17 (B) if the secured party takes or receives
240-18 possession of the collateral before default or does not take
240-19 possession of the collateral, not more than 35 days before the
240-20 disposition;
240-21 (2) the amount of proceeds of the disposition;
240-22 (3) the aggregate amount of the obligations after
240-23 deducting the amount of proceeds;
240-24 (4) the amount, in the aggregate or by type, and types
240-25 of expenses, including expenses of retaking, holding, preparing for
240-26 disposition, processing, and disposing of the collateral, and
241-1 attorney's fees secured by the collateral which are known to the
241-2 secured party and relate to the current disposition;
241-3 (5) the amount, in the aggregate or by type, and types
241-4 of credits, including rebates of interest or credit service
241-5 charges, to which the obligor is known to be entitled and which are
241-6 not reflected in the amount in Subdivision (1); and
241-7 (6) the amount of the surplus or deficiency.
241-8 (d) A particular phrasing of the explanation is not
241-9 required. An explanation complying substantially with the
241-10 requirements of Subsection (a) is sufficient, even if it includes
241-11 minor errors that are not seriously misleading.
241-12 (e) A debtor or consumer obligor is entitled without charge
241-13 to one response to a request under this section during any
241-14 six-month period in which the secured party did not send to the
241-15 debtor or consumer obligor an explanation pursuant to Subsection
241-16 (b)(1). The secured party may require payment of a charge not
241-17 exceeding $25 for each additional response.
241-18 Sec. 9.617. RIGHTS OF TRANSFEREE OF COLLATERAL. (a) A
241-19 secured party's disposition of collateral [(d) When collateral is
241-20 disposed of by a secured party] after default:
241-21 (1) [, the disposition] transfers to a transferee
241-22 [purchaser] for value all of the debtor's rights in the collateral;
241-23 (2) [therein,] discharges the security interest under
241-24 which the disposition [it] is made; and
241-25 (3) discharges any subordinate security interest or
241-26 other subordinate lien [subordinate thereto].
242-1 (b) A transferee that acts in good faith [The purchaser]
242-2 takes free of the [all such] rights and interests described in
242-3 Subsection (a), even if [though] the secured party fails to comply
242-4 with [the requirements of] this chapter [subchapter] or the
242-5 requirements of any judicial proceeding [proceedings]
242-6 [(1) in the case of a public sale, if the purchaser
242-7 has no knowledge of any defects in the sale and if he does not buy
242-8 in collusion with the secured party, other bidders or the person
242-9 conducting the sale; or]
242-10 [(2) in any other case, if the purchaser acts in good
242-11 faith.]
242-12 [(e) A person who is liable to a secured party under a
242-13 guaranty, indorsement, repurchase agreement or the like and who
242-14 receives a transfer of collateral from the secured party or is
242-15 subrogated to his rights has thereafter the rights and duties of
242-16 the secured party. Such a transfer of collateral is not a sale or
242-17 disposition of the collateral under this chapter].
242-18 (c) If a transferee does not take free of the rights and
242-19 interests described in Subsection (a), the transferee takes the
242-20 collateral subject to:
242-21 (1) the debtor's rights in the collateral;
242-22 (2) the security interest or agricultural lien under
242-23 which the disposition is made; and
242-24 (3) any other security interest or other lien.
242-25 Sec. 9.618. RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS.
242-26 (a) A secondary obligor acquires the rights and becomes obligated
243-1 to perform the duties of the secured party after the secondary
243-2 obligor:
243-3 (1) receives an assignment of a secured obligation
243-4 from the secured party;
243-5 (2) receives a transfer of collateral from the secured
243-6 party and agrees to accept the rights and assume the duties of the
243-7 secured party; or
243-8 (3) is subrogated to the rights of a secured party
243-9 with respect to collateral.
243-10 (b) An assignment, transfer, or subrogation described in
243-11 Subsection (a):
243-12 (1) is not a disposition of collateral under Section
243-13 9.610; and
243-14 (2) relieves the secured party of further duties under
243-15 this chapter.
243-16 Sec. 9.619. TRANSFER OF RECORD OR LEGAL TITLE. (a) In this
243-17 section, "transfer statement" means a record authenticated by a
243-18 secured party stating:
243-19 (1) that the debtor has defaulted in connection with
243-20 an obligation secured by specified collateral;
243-21 (2) that the secured party has exercised its
243-22 post-default remedies with respect to the collateral;
243-23 (3) that, by reason of the exercise, a transferee has
243-24 acquired the rights of the debtor in the collateral; and
243-25 (4) the name and mailing address of the secured party,
243-26 debtor, and transferee.
244-1 (b) A transfer statement entitles the transferee to the
244-2 transfer of record of all rights of the debtor in the collateral
244-3 specified in the statement in any official filing, recording,
244-4 registration, or certificate-of-title system covering the
244-5 collateral. If a transfer statement is presented with the
244-6 applicable fee and request form to the official or office
244-7 responsible for maintaining the system, the official or office
244-8 shall:
244-9 (1) accept the transfer statement;
244-10 (2) promptly amend its records to reflect the
244-11 transfer; and
244-12 (3) if applicable, issue a new appropriate certificate
244-13 of title in the name of the transferee.
244-14 (c) A transfer of the record or legal title to collateral to
244-15 a secured party under Subsection (b) or otherwise is not of itself
244-16 a disposition of collateral under this chapter and does not of
244-17 itself relieve the secured party of its duties under this chapter.
244-18 Sec. 9.620 [9.505]. [COMPULSORY DISPOSITION OF COLLATERAL;]
244-19 ACCEPTANCE OF [THE] COLLATERAL IN FULL OR PARTIAL SATISFACTION [AS
244-20 DISCHARGE] OF OBLIGATION; COMPULSORY DISPOSITION OF COLLATERAL.
244-21 (a) Except as otherwise provided in Subsection (g), a secured
244-22 party may accept collateral in full or partial satisfaction of the
244-23 obligation it secures only if:
244-24 (1) the debtor consents to the acceptance under
244-25 Subsection (c);
244-26 (2) the secured party does not receive, within the
245-1 time set forth in Subsection (d), a notification of objection to
245-2 the proposal authenticated by:
245-3 (A) a person to which the secured party was
245-4 required to send a proposal under Section 9.621; or
245-5 (B) any other person, other than the debtor,
245-6 holding an interest in the collateral subordinate to the security
245-7 interest that is the subject of the proposal;
245-8 (3) if the collateral is consumer goods, the
245-9 collateral is not in the possession of the debtor when the debtor
245-10 consents to the acceptance; and
245-11 (4) Subsection (e) does not require the secured party
245-12 to dispose of the collateral or the debtor waives the requirement
245-13 pursuant to Section 9.624.
245-14 (b) A purported or apparent acceptance of collateral under
245-15 this section is ineffective unless:
245-16 (1) the secured party consents to the acceptance in an
245-17 authenticated record or sends a proposal to the debtor; and
245-18 (2) the conditions of Subsection (a) are met.
245-19 (c) For purposes of this section:
245-20 (1) a debtor consents to an acceptance of collateral
245-21 in partial satisfaction of the obligation it secures only if the
245-22 debtor agrees to the terms of the acceptance in a record
245-23 authenticated after default; and
245-24 (2) a debtor consents to an acceptance of collateral
245-25 in full satisfaction of the obligation it secures only if the
245-26 debtor agrees to the terms of the acceptance in a record
246-1 authenticated after default or the secured party:
246-2 (A) sends to the debtor after default a proposal
246-3 that is unconditional or subject only to a condition that
246-4 collateral not in the possession of the secured party be preserved
246-5 or maintained;
246-6 (B) in the proposal, proposes to accept
246-7 collateral in full satisfaction of the obligation it secures; and
246-8 (C) does not receive a notification of objection
246-9 authenticated by the debtor within 20 days after the proposal is
246-10 sent.
246-11 (d) To be effective under Subsection (a)(2), a notification
246-12 of objection must be received by the secured party:
246-13 (1) in the case of a person to which the proposal was
246-14 sent pursuant to Section 9.621, within 20 days after notification
246-15 was sent to that person; and
246-16 (2) in other cases:
246-17 (A) within 20 days after the last notification
246-18 was sent pursuant to Section 9.621; or
246-19 (B) if a notification was not sent, before the
246-20 debtor consents to the acceptance under Subsection (c).
246-21 (e) A secured party that has taken possession of collateral
246-22 shall dispose of the collateral pursuant to Section 9.610 within
246-23 the time specified in Subsection (f) if:
246-24 (1) 60 percent [If the debtor has paid sixty per cent]
246-25 of the cash price has been paid in the case of a purchase-money
246-26 [purchase money] security interest in consumer goods; or
247-1 (2) 60 percent of the principal amount of the
247-2 obligation secured has been paid in the case of a
247-3 non-purchase-money [sixty per cent of the loan in the case of
247-4 another] security interest in consumer goods[, and has not signed
247-5 after default a statement renouncing or modifying his rights under
247-6 this subchapter a secured party who has taken possession of
247-7 collateral must dispose of it under Section 9.504 and if he fails
247-8 to do so within ninety days after he takes possession the debtor at
247-9 his option may recover in conversion or under Section 9.507(a) on
247-10 secured party's liability].
247-11 (f) To comply with Subsection (e), the secured party shall
247-12 dispose of the collateral:
247-13 (1) within 90 days after taking possession; or
247-14 (2) within any longer period to which the debtor and
247-15 all secondary obligors have agreed in an agreement to that effect
247-16 entered into and authenticated after default.
247-17 (g) In a consumer transaction, a secured party may not
247-18 accept collateral in partial satisfaction of the obligation it
247-19 secures.
247-20 Sec. 9.621. NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL.
247-21 (a) A secured party that desires to accept [(b) In any other case
247-22 involving consumer goods or any other collateral a secured party in
247-23 possession may, after default, propose to retain the] collateral in
247-24 full or partial satisfaction of the obligation it secures shall
247-25 send its proposal to:
247-26 (1) any person from which the secured party has
248-1 received, before the debtor consented to the acceptance, an
248-2 authenticated notification of a claim of an interest in the
248-3 collateral;
248-4 (2) any other secured party or lienholder that, 10
248-5 days before the debtor consented to the acceptance, held a security
248-6 interest in or other lien on the collateral perfected by the filing
248-7 of a financing statement that:
248-8 (A) identified the collateral;
248-9 (B) was indexed under the debtor's name as of
248-10 that date; and
248-11 (C) was filed in the office or offices in which
248-12 to file a financing statement against the debtor covering the
248-13 collateral as of that date; and
248-14 (3) any other secured party that, 10 days before the
248-15 debtor consented to the acceptance, held a security interest in the
248-16 collateral perfected by compliance with a statute, regulation, or
248-17 treaty described in Section 9.311(a).
248-18 (b) A secured party that desires to accept collateral in
248-19 partial satisfaction of the obligation it secures shall send its
248-20 proposal to any secondary obligor in addition to the persons
248-21 described in Subsection (a).
248-22 Sec. 9.622. EFFECT OF ACCEPTANCE OF COLLATERAL. (a) A
248-23 secured party's acceptance of collateral in full or partial
248-24 satisfaction of the obligation it secures:
248-25 (1) discharges the obligation to the extent consented
248-26 to by the debtor;
249-1 (2) transfers to the secured party all of a debtor's
249-2 rights in the collateral;
249-3 (3) discharges the security interest or agricultural
249-4 lien that is the subject of the debtor's consent and any
249-5 subordinate security interest or other subordinate lien; and
249-6 (4) terminates any other subordinate interest.
249-7 (b) A subordinate interest is discharged or terminated under
249-8 Subsection (a), even if the secured party fails to comply with this
249-9 chapter. [Written notice of such proposal shall be sent to the
249-10 debtor if he has not signed after default a statement renouncing or
249-11 modifying his rights under this subsection. In the case of
249-12 consumer goods no other notice need be given. In other cases
249-13 notice shall be given to any other secured party who has a security
249-14 interest in the same collateral and who has duly filed in the
249-15 office of the Secretary of State or the County Clerk in the proper
249-16 county in this state a financing statement indexed in the name of
249-17 the debtor or from whom the secured party has received (before
249-18 sending his notice to the debtor or before the debtor's
249-19 renunciation of his rights) written notice of a claim of an
249-20 interest in the collateral. If the secured party receives
249-21 objection in writing from a person entitled to receive notification
249-22 within twenty-one days after the notice was sent, the secured party
249-23 must dispose of the collateral under Section 9.504. In the absence
249-24 of such written objection the secured party may retain the
249-25 collateral in satisfaction of the debtor's obligation.]
249-26 Sec. 9.623 [9.506]. [DEBTOR'S] RIGHT TO REDEEM COLLATERAL.
250-1 (a) A [At any time before the secured party has disposed of
250-2 collateral or entered into a contract for its disposition under
250-3 Section 9.504 or before the obligation has been discharged under
250-4 Section 9.505(b) the] debtor, any secondary obligor, or any other
250-5 secured party or lienholder may [unless otherwise agreed in writing
250-6 after default] redeem [the] collateral.
250-7 (b) To redeem collateral, a person shall tender:
250-8 (1) [by tendering] fulfillment of all obligations
250-9 secured by the collateral; and
250-10 (2) [as well as] the reasonable expenses and
250-11 [reasonably incurred by the secured party in retaking, holding and
250-12 preparing the collateral for disposition, in arranging for the
250-13 sale, and to the extent provided in the agreement and not
250-14 prohibited by law, his reasonable] attorneys' fees described in
250-15 Section 9.615(a)(1) [and legal expenses].
250-16 (c) A redemption may occur at any time before a secured
250-17 party:
250-18 (1) has collected collateral under Section 9.607;
250-19 (2) has disposed of collateral or entered into a
250-20 contract for its disposition under Section 9.610; or
250-21 (3) has accepted collateral in full or partial
250-22 satisfaction of the obligation it secures under Section 9.622.
250-23 Sec. 9.624. WAIVER. (a) A debtor or secondary obligor may
250-24 waive the right to notification of disposition of collateral under
250-25 Section 9.611 only by an agreement to that effect entered into and
250-26 authenticated after default.
251-1 (b) A debtor may waive the right to require disposition of
251-2 collateral under Section 9.620(e) only by an agreement to that
251-3 effect entered into and authenticated after default.
251-4 (c) Except in a consumer-goods transaction, a debtor or
251-5 secondary obligor may waive the right to redeem collateral under
251-6 Section 9.623 only by an agreement to that effect entered into and
251-7 authenticated after default.
251-8 Sec. 9.625 [9.507]. REMEDIES FOR SECURED PARTY'S [LIABILITY
251-9 FOR] FAILURE TO COMPLY WITH CHAPTER [THIS SUBCHAPTER]. (a) If it
251-10 is established that a [the] secured party is not proceeding in
251-11 accordance with [the provisions of] this chapter, a court may order
251-12 or restrain collection, enforcement, or disposition of collateral
251-13 [subchapter disposition may be ordered or restrained] on
251-14 appropriate terms and conditions.
251-15 (b) Subject to Subsections (c), (d), and (f), a person is
251-16 liable for damages in the amount of [If the disposition has
251-17 occurred the debtor or any person entitled to notification or whose
251-18 security interest has been made known to the secured party prior to
251-19 the disposition has a right to recover from the secured party] any
251-20 loss caused by a failure to comply with [the provisions of] this
251-21 chapter [subchapter]. Loss caused by a failure to comply with a
251-22 request under Section 9.210 may include loss resulting from the
251-23 debtor's inability to obtain, or increased costs of, alternative
251-24 financing.
251-25 (c) Except as otherwise provided in Section 9.628:
251-26 (1) a person that, at the time of the failure, was a
252-1 debtor, was an obligor, or held a security interest in or other
252-2 lien on the collateral may recover damages under Subsection (b) for
252-3 its loss; and
252-4 (2) if [If] the collateral is consumer goods, a person
252-5 that was a [the] debtor or a secondary obligor at the time a
252-6 secured party failed to comply with this subchapter may [has a
252-7 right to] recover for that failure in any event an amount not less
252-8 than the credit service charge plus 10 percent [ten per cent] of
252-9 the principal amount of the obligation [debt] or the time price
252-10 differential plus 10 percent [ten per cent] of the cash price.
252-11 (d) A debtor whose deficiency is eliminated under Section
252-12 9.626 may recover damages for the loss of any surplus. However, a
252-13 debtor or secondary obligor whose deficiency is eliminated or
252-14 reduced under Section 9.626 may not otherwise recover under
252-15 Subsection (b) for noncompliance with the provisions of this
252-16 subchapter relating to collection, enforcement, disposition, or
252-17 acceptance.
252-18 (e) In addition to any damages recoverable under Subsection
252-19 (b), the debtor, consumer obligor, or person named as a debtor in a
252-20 filed record, as applicable, may recover $500 in each case from a
252-21 person that:
252-22 (1) fails to comply with Section 9.208;
252-23 (2) fails to comply with Section 9.209;
252-24 (3) files a record that the person is not entitled to
252-25 file under Section 9.509(a);
252-26 (4) fails to cause the secured party of record to file
253-1 or send a termination statement as required by Section 9.513(a) or
253-2 (c);
253-3 (5) fails to comply with Section 9.616(b)(1) and whose
253-4 failure is part of a pattern, or consistent with a practice, of
253-5 noncompliance; or
253-6 (6) fails to comply with Section 9.616(b)(2).
253-7 (f) A debtor or consumer obligor may recover damages under
253-8 Subsection (b) and, in addition, $500 in each case from a person
253-9 that, without reasonable cause, fails to comply with a request
253-10 under Section 9.210. A recipient of a request under Section 9.210
253-11 that never claimed an interest in the collateral or obligations
253-12 that are the subject of a request under that section has a
253-13 reasonable excuse for failure to comply with the request within the
253-14 meaning of this subsection.
253-15 (g) If a secured party fails to comply with a request
253-16 regarding a list of collateral or a statement of account under
253-17 Section 9.210, the secured party may claim a security interest only
253-18 as shown in the statement included in the request as against a
253-19 person that is reasonably misled by the failure.
253-20 Sec. 9.626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN
253-21 ISSUE. (a) In an action arising from a transaction, other than a
253-22 consumer transaction, in which the amount of a deficiency or
253-23 surplus is in issue, the following rules apply:
253-24 (1) A secured party need not prove compliance with the
253-25 provisions of this subchapter relating to collection, enforcement,
253-26 disposition, or acceptance unless the debtor or a secondary obligor
254-1 places the secured party's compliance in issue.
254-2 (2) If the secured party's compliance is placed in
254-3 issue, the secured party has the burden of establishing that the
254-4 collection, enforcement, disposition, or acceptance was conducted
254-5 in accordance with this subchapter.
254-6 (3) Except as otherwise provided in Section 9.628, if
254-7 a secured party fails to prove that the collection, enforcement,
254-8 disposition, or acceptance was conducted in accordance with the
254-9 provisions of this subchapter relating to collection, enforcement,
254-10 disposition, or acceptance, the liability of a debtor or a
254-11 secondary obligor for a deficiency is limited to an amount by which
254-12 the sum of the secured obligation, expenses, and attorney's fees
254-13 exceeds the greater of:
254-14 (A) the proceeds of the collection, enforcement,
254-15 disposition, or acceptance; or
254-16 (B) the amount of proceeds that would have been
254-17 realized had the noncomplying secured party proceeded in accordance
254-18 with the provisions of this subchapter relating to collection,
254-19 enforcement, disposition, or acceptance.
254-20 (4) For purposes of Subdivision (3)(B), the amount of
254-21 proceeds that would have been realized is equal to the sum of the
254-22 secured obligation, expenses, and attorney's fees unless the
254-23 secured party proves that the amount is less than that sum.
254-24 (5) If a deficiency or surplus is calculated under
254-25 Section 9.615(f), the debtor or obligor has the burden of
254-26 establishing that the amount of proceeds of the disposition is
255-1 significantly below the range of prices that a complying
255-2 disposition to a person other than the secured party, a person
255-3 related to the secured party, or a secondary obligor would have
255-4 brought.
255-5 (b) The limitation of the rules in Subsection (a) to
255-6 transactions other than consumer transactions is intended to leave
255-7 to the court the determination of the proper rules in consumer
255-8 transactions. The court may not infer from that limitation the
255-9 nature of the proper rule in consumer transactions and may continue
255-10 to apply established approaches.
255-11 Sec. 9.627. DETERMINATION OF WHETHER CONDUCT WAS
255-12 COMMERCIALLY REASONABLE. (a) [(b)] The fact that a greater amount
255-13 [better price] could have been obtained by a collection,
255-14 enforcement, disposition, or acceptance [sale] at a different time
255-15 or in a different method from that selected by the secured party is
255-16 not of itself sufficient to preclude the secured party from
255-17 establishing [establish] that the collection, enforcement,
255-18 disposition, or acceptance [sale] was [not] made in a commercially
255-19 reasonable manner.
255-20 (b) A disposition of collateral is made in a commercially
255-21 reasonable manner if the disposition is made:
255-22 (1) [If the secured party either sells the collateral]
255-23 in the usual manner on [in] any recognized market;
255-24 (2) [therefor or if he sells] at the price current in
255-25 any recognized [such] market at the time of the disposition; [his
255-26 sale] or
256-1 (3) [if he has] otherwise [sold] in conformity with
256-2 reasonable commercial practices among dealers in the type of
256-3 property that was the subject of the disposition.
256-4 (c) A collection, enforcement, disposition, or acceptance is
256-5 commercially reasonable if it [sold he has sold in a commercially
256-6 reasonable manner. The principles stated in the two preceding
256-7 sentences with respect to sales also apply as may be appropriate to
256-8 other types of disposition. A disposition which] has been
256-9 approved:
256-10 (1) in a [any] judicial proceeding;
256-11 (2) [or] by a [any] bona fide creditors' committee;
256-12 (3) by a [or] representative of creditors; or
256-13 (4) by an assignee for the benefit of creditors.
256-14 (d) Approval under Subsection (c) need not be obtained, and
256-15 lack of approval does not mean that the collection, enforcement,
256-16 disposition, or acceptance [shall conclusively be deemed to be
256-17 commercially reasonable, but this sentence does not indicate that
256-18 any such approval must be obtained in any case nor does it indicate
256-19 that any disposition not so approved] is not commercially
256-20 reasonable.
256-21 Sec. 9.628. NONLIABILITY AND LIMITATION ON LIABILITY OF
256-22 SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR. (a) Unless a
256-23 secured party knows that a person is a debtor or obligor, knows the
256-24 identity of the person, and knows how to communicate with the
256-25 person:
256-26 (1) the secured party is not liable to the person, or
257-1 to a secured party or lienholder that has filed a financing
257-2 statement against the person, for failure to comply with this
257-3 chapter; and
257-4 (2) the secured party's failure to comply with this
257-5 chapter does not affect the liability of the person for a
257-6 deficiency.
257-7 (b) A secured party is not liable because of its status as
257-8 secured party:
257-9 (1) to a person that is a debtor or obligor, unless
257-10 the secured party knows:
257-11 (A) that the person is a debtor or obligor;
257-12 (B) the identity of the person; and
257-13 (C) how to communicate with the person; or
257-14 (2) to a secured party or lienholder that has filed a
257-15 financing statement against a person, unless the secured party
257-16 knows:
257-17 (A) that the person is a debtor; and
257-18 (B) the identity of the person.
257-19 (c) A secured party is not liable to any person, and a
257-20 person's liability for a deficiency is not affected, because of any
257-21 act or omission arising out of the secured party's reasonable
257-22 belief that a transaction is not a consumer-goods transaction or a
257-23 consumer transaction or that goods are not consumer goods, if the
257-24 secured party's belief is based on its reasonable reliance on:
257-25 (1) a debtor's representation concerning the purpose
257-26 for which collateral was to be used, acquired, or held; or
258-1 (2) an obligor's representation concerning the purpose
258-2 for which a secured obligation was incurred.
258-3 (d) A secured party is not liable to any person under
258-4 Section 9.625(c)(2) for its failure to comply with Section 9.616.
258-5 (e) A secured party is not liable under Section 9.625(c)(2)
258-6 more than once with respect to any one secured obligation.
258-7 ARTICLE 2. CONFORMING AMENDMENTS
258-8 SECTION 2.01. Section 128.015(a), Agriculture Code, is
258-9 amended to read as follows:
258-10 (a) The notice of claim of lien must be filed on a form that
258-11 satisfies the requirements of a financing statement under Sections
258-12 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
258-13 (1) the lien claimant may be identified either as a
258-14 lien claimant or as a secured party;
258-15 (2) the form must be signed by the lien claimant and
258-16 is not required to be signed by the lien debtor; and
258-17 (3) in the space for the description of the
258-18 collateral, the information specified in Sections 128.013(3), (4),
258-19 (5), and (7) must be entered.
258-20 SECTION 2.02. Section 128.016, Agriculture Code, is amended
258-21 to read as follows:
258-22 Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
258-23 STATE; FEE. (a) The notice of claim of lien shall be filed and
258-24 marked in the office of the secretary of state in the same manner
258-25 as a financing statement is filed and marked under Section 9.519
258-26 [9.403], Business & Commerce Code.
259-1 (b) The uniform fee for filing and indexing and for stamping
259-2 a copy furnished by the secured party is the same as the fee
259-3 assessed under Section 9.525 [9.403], Business & Commerce Code.
259-4 SECTION 2.03. Section 128.018, Agriculture Code, is amended
259-5 to read as follows:
259-6 Sec. 128.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
259-7 The secretary of state shall recognize a notice of claim of lien
259-8 under this subchapter as a financing statement under Subchapter E,
259-9 Chapter 9 [Section 9.402], Business & Commerce Code.
259-10 SECTION 2.04. Section 128.038(e), Agriculture Code, is
259-11 amended to read as follows:
259-12 (e) The uniform filing fee for filing and indexing the
259-13 termination statement is the same as the fee assessed under Section
259-14 9.525 [9.404(c)], Business & Commerce Code.
259-15 SECTION 2.05. Section 128.039(b), Agriculture Code, is
259-16 amended to read as follows:
259-17 (b) The lienholder shall file a statement of assignment with
259-18 the secretary of state as provided by Section 9.514 [9.405],
259-19 Business & Commerce Code.
259-20 SECTION 2.06. Section 188.015(a), Agriculture Code, is
259-21 amended to read as follows:
259-22 (a) The notice of claim of lien must be filed on a form that
259-23 satisfies the requirements of a financing statement under Sections
259-24 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
259-25 (1) the lien claimant may be identified either as a
259-26 lien claimant or as a secured party;
260-1 (2) the form must be signed by the lien claimant and
260-2 is not required to be signed by the lien debtor; and
260-3 (3) in the space for the description of the
260-4 collateral, the information specified in Sections 188.013(3), (4),
260-5 (5), and (7) must be entered.
260-6 SECTION 2.07. Section 188.016, Agriculture Code, is amended
260-7 to read as follows:
260-8 Sec. 188.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
260-9 STATE; FEE. (a) The notice of claim of lien shall be filed and
260-10 marked in the office of the secretary of state in the same manner
260-11 as a financing statement is filed and marked under Section 9.519
260-12 [9.403], Business & Commerce Code.
260-13 (b) The uniform fee for filing and indexing and for stamping
260-14 a copy furnished by the secured party is the same as the fee
260-15 assessed under Section 9.525 [9.403], Business & Commerce Code.
260-16 SECTION 2.08. Section 188.018, Agriculture Code, is amended
260-17 to read as follows:
260-18 Sec. 188.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
260-19 The secretary of state shall recognize a notice of claim of lien
260-20 under this subchapter as a financing statement under Subchapter E,
260-21 Chapter 9 [Section 9.402], Business & Commerce Code.
260-22 SECTION 2.09. Section 188.038(e), Agriculture Code, is
260-23 amended to read as follows:
260-24 (e) The uniform filing fee for filing and indexing the
260-25 termination statement is the same as the fee assessed under Section
260-26 9.525 [9.404(c)], Business & Commerce Code.
261-1 SECTION 2.10. Section 188.039(b), Agriculture Code, is
261-2 amended to read as follows:
261-3 (b) The lienholder shall file a statement of assignment with
261-4 the secretary of state as provided by Section 9.514 [9.405],
261-5 Business & Commerce Code.
261-6 SECTION 2.11. Section 1.105(b), Business & Commerce Code, is
261-7 amended to read as follows:
261-8 (b) Where one of the following provisions of this title
261-9 specifies the applicable law, that provision governs and a contrary
261-10 agreement is effective only to the extent permitted by the law
261-11 (including the conflict of laws rules) so specified:
261-12 Rights of creditors against sold goods. Section 2.402.
261-13 Applicability of the chapter on Leases. Sections 2A.105 and
261-14 2A.106.
261-15 Applicability of the chapter on Bank Deposits and
261-16 Collections. Section 4.102.
261-17 Governing law in the chapter on Funds Transfers. Section
261-18 4A.507.
261-19 Applicability of the chapter on Investment Securities.
261-20 Section 8.110.
261-21 Law governing perfection, the effect of perfection or
261-22 nonperfection, and the priority of security interests. Sections
261-23 9.301-9.307. [Perfection provisions of the chapter on Secured
261-24 Transactions. Section 9.103.]
261-25 SECTION 2.12. Sections 1.201(9) and (32), Business &
261-26 Commerce Code, are amended to read as follows:
262-1 (9) "Buyer in ordinary course of business" means a
262-2 person that buys goods [who] in good faith, [and] without knowledge
262-3 that the sale violates [to him is in violation of] the [ownership]
262-4 rights [or security interest] of another person [a third party] in
262-5 the goods, and [buys] in the ordinary course from a person, other
262-6 than a pawnbroker, in the business of selling goods of that kind
262-7 [but does not include a pawnbroker]. A person buys goods in the
262-8 ordinary course if the sale to the person comports with the usual
262-9 or customary practices in the kind of business in which the seller
262-10 is engaged or with the seller's own usual or customary practices.
262-11 A person that sells oil, gas, or other minerals at the wellhead or
262-12 minehead is a person [All persons who sell minerals or the like
262-13 (including oil and gas) at wellhead or minehead shall be deemed to
262-14 be persons] in the business of selling goods of that kind. A buyer
262-15 in ordinary course of business ["Buying"] may buy [be] for cash,
262-16 [or] by exchange of other property, or on secured or unsecured
262-17 credit, and may acquire [includes receiving] goods or documents of
262-18 title under a pre-existing contract for sale [but does not include
262-19 a transfer in bulk or as security for or in total or partial
262-20 satisfaction of a money debt]. Only a buyer that takes possession
262-21 of the goods or has a right to recover the goods from the seller
262-22 under Chapter 2 may be a buyer in ordinary course of business. A
262-23 person that acquires goods in a transfer in bulk or as security for
262-24 or in total or partial satisfaction of a money debt is not a buyer
262-25 in ordinary course of business.
262-26 (32) "Purchase" includes taking by sale, discount,
263-1 negotiation, mortgage, pledge, lien, security interest, issue or
263-2 reissue, gift or any other voluntary transaction creating an
263-3 interest in property.
263-4 SECTION 2.13. Section 1.201(37)(A), Business & Commerce
263-5 Code, is amended to read as follows:
263-6 (A) "Security interest" means an interest in
263-7 personal property or fixtures that [which] secures payment or
263-8 performance of an obligation. [The retention or reservation of
263-9 title by a seller of goods notwithstanding shipment or delivery to
263-10 the buyer (Section 2.401) is limited in effect to a reservation of
263-11 a "security interest."] The term also includes any interest of a
263-12 consignor and a buyer of accounts, [or] chattel paper, a payment
263-13 intangible, or a promissory note in a transaction that [which] is
263-14 subject to Chapter 9. The special property interest of a buyer of
263-15 goods on identification of such goods to a contract for sale under
263-16 Section 2.401 is not a "security interest", but a buyer may also
263-17 acquire a "security interest" by complying with Chapter 9. Except
263-18 as otherwise provided in Section 2.505, the right of a seller or
263-19 lessor of goods under Chapter 2 or 2A to retain or acquire
263-20 possession of the goods is not a "security interest", but a seller
263-21 or lessor may also acquire a "security interest" by complying with
263-22 Chapter 9. The retention or reservation of title by a seller of
263-23 goods notwithstanding shipment or delivery to the buyer (Section
263-24 2.401) is limited in effect to a reservation of a "security
263-25 interest". [Unless a consignment is intended as security,
263-26 reservation of title thereunder is not a "security interest" but a
264-1 consignment in any event is subject to the provisions on
264-2 consignment sales (Section 2.326).]
264-3 SECTION 2.14. Section 2.103(c), Business & Commerce Code, is
264-4 amended to read as follows:
264-5 (c) The following definitions in other chapters apply to
264-6 this chapter:
264-7 "Check".
264-8 Section 3.104.
264-9 "Consignee".
264-10 Section 7.102.
264-11 "Consignor".
264-12 Section 7.102.
264-13 "Consumer goods".
264-14 Section 9.102 [9.109].
264-15 "Dishonor".
264-16 Section 3.502
264-17 [3.507].
264-18 "Draft".
264-19 Section 3.104.
264-20 SECTION 2.15. Sections 2.210(c)-(e), Business & Commerce
264-21 Code, are amended to read as follows:
264-22 (c) The creation, attachment, perfection, or enforcement of
264-23 a security interest in the seller's interest under a contract is
264-24 not a transfer that materially changes the duty of or increases
264-25 materially the burden or risk imposed on the buyer or impairs
264-26 materially the buyer's chance of obtaining return performance
265-1 within the purview of Subsection (b) unless, and then only to the
265-2 extent that, enforcement actually results in a delegation of
265-3 material performance of the seller. Even in that event, the
265-4 creation, attachment, perfection, and enforcement of the security
265-5 interest remain effective, but (i) the seller is liable to the
265-6 buyer for damages caused by the delegation to the extent that the
265-7 damages could not reasonably be prevented by the buyer, and (ii) a
265-8 court having jurisdiction may grant other appropriate relief,
265-9 including cancellation of the contract for sale or an injunction
265-10 against enforcement of the security interest or consummation of the
265-11 enforcement.
265-12 (d) Unless the circumstances indicate the contrary a
265-13 prohibition of assignment of "the contract" is to be construed as
265-14 barring only the delegation to the assignee of the assignor's
265-15 performance.
265-16 (e) [(d)] An assignment of "the contract" or of "all my
265-17 rights under the contract" or an assignment in similar general
265-18 terms is an assignment of rights and unless the language or the
265-19 circumstances (as in an assignment for security) indicate the
265-20 contrary, it is a delegation of performance of the duties of the
265-21 assignor and its acceptance by the assignee constitutes a promise
265-22 by him to perform those duties. This promise is enforceable by
265-23 either the assignor or the other party to the original contract.
265-24 (f) [(e)] The other party may treat any assignment which
265-25 delegates performance as creating reasonable grounds for insecurity
265-26 and may without prejudice to his rights against the assignor demand
266-1 assurances from the assignee (Section 2.609).
266-2 SECTION 2.16. Section 2.326, Business & Commerce Code, is
266-3 amended to read as follows:
266-4 Sec. 2.326. SALE ON APPROVAL AND SALE OR RETURN;
266-5 [CONSIGNMENT SALES AND] RIGHTS OF CREDITORS. (a) Unless otherwise
266-6 agreed, if delivered goods may be returned by the buyer even though
266-7 they conform to the contract, the transaction is
266-8 (1) a "sale on approval" if the goods are delivered
266-9 primarily for use, and
266-10 (2) a "sale or return" if the goods are delivered
266-11 primarily for resale.
266-12 (b) Goods [Except as provided in Subsection (c), goods] held
266-13 on approval are not subject to the claims of the buyer's creditors
266-14 until acceptance; goods held on sale or return are subject to such
266-15 claims while in the buyer's possession.
266-16 (c) [Where goods are delivered to a person for sale and such
266-17 person maintains a place of business at which he deals in goods of
266-18 the kind involved, under a name other than the name of the person
266-19 making delivery, then with respect to claims of creditors of the
266-20 person conducting the business the goods are deemed to be on sale
266-21 or return. The provisions of this subsection are applicable even
266-22 though an agreement purports to reserve title to the person making
266-23 delivery until payment or resale or uses such words as "on
266-24 consignment" or "on memorandum". However, this subsection is not
266-25 applicable if the person making delivery]
266-26 [(1) complies with an applicable law providing for a
267-1 consignor's interest or the like to be evidenced by a sign, or]
267-2 [(2) establishes that the person conducting the
267-3 business is generally known by his creditors to be substantially
267-4 engaged in selling the goods of others, or]
267-5 [(3) complies with the filing provisions of the
267-6 chapter on Secured Transactions (Chapter 9), or]
267-7 [(4) is delivering a work of art subject to the
267-8 Artists' Consignment Act.]
267-9 [(d)] Any "or return" term of a contract for sale is to be
267-10 treated as a separate contract for sale within the statute of
267-11 frauds section of this chapter (Section 2.201) and as contradicting
267-12 the sale aspect of the contract within the provisions of this
267-13 chapter on parol or extrinsic evidence (Section 2.202).
267-14 SECTION 2.17. Section 2.502, Business & Commerce Code, is
267-15 amended to read as follows:
267-16 Sec. 2.502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION,
267-17 FAILURE TO DELIVER, OR INSOLVENCY. (a) Subject to Subsections
267-18 [Subsection] (b) and (c) and even though the goods have not been
267-19 shipped a buyer who has paid a part or all of the price of goods in
267-20 which he has a special property under the provisions of the
267-21 immediately preceding section may on making and keeping good a
267-22 tender of any unpaid portion of their price recover them from the
267-23 seller if:
267-24 (1) in the case of goods bought for personal, family,
267-25 or household purposes, the seller repudiates or fails to deliver as
267-26 required by the contract; or
268-1 (2) in all cases, the seller becomes insolvent within
268-2 ten days after receipt of the first installment on their price.
268-3 (b) The buyer's right to recover the goods under Subsection
268-4 (a)(1) vests upon acquisition of a special property, even if the
268-5 seller had not then repudiated or failed to deliver.
268-6 (c) If the identification creating his special property has
268-7 been made by the buyer he acquires the right to recover the goods
268-8 only if they conform to the contract for sale.
268-9 SECTION 2.18. Section 2.716(c), Business & Commerce Code, is
268-10 amended to read as follows:
268-11 (c) The buyer has a right of replevin for goods identified
268-12 to the contract if after reasonable effort he is unable to effect
268-13 cover for such goods or the circumstances reasonably indicate that
268-14 such effort will be unavailing or if the goods have been shipped
268-15 under reservation and satisfaction of the security interest in them
268-16 has been made or tendered. In the case of goods bought for
268-17 personal, family, or household purposes, the buyer's right of
268-18 replevin vests upon acquisition of a special property, even if the
268-19 seller had not then repudiated or failed to deliver.
268-20 SECTION 2.19. Section 2A.103(c), Business & Commerce Code,
268-21 is amended to read as follows:
268-22 (c) The following definitions in other chapters apply to
268-23 this chapter:
268-24 "Account". Section 9.102(a)(2) [9.106].
268-25 "Between merchants". Section 2.104(c).
268-26 "Buyer". Section 2.103(a)(1).
269-1 "Chattel paper". Section 9.102(a)(11) [9.105(a)(2)].
269-2 "Consumer goods". Section 9.102(a)(23) [9.109(1)].
269-3 "Document". Section 9.102(a)(30) [9.105(a)(6)].
269-4 "Entrusting". Section 2.403(c).
269-5 "General intangible". Section 9.102(a)(42).
269-6 ["General intangibles".] [Section 9.106.]
269-7 "Good faith". Section 2.103(a)(2).
269-8 "Instrument". Section 9.102(a)(47) [9.105(a)(9)].
269-9 "Merchant". Section 2.104(a).
269-10 "Mortgage". Section 9.102(a)(55) [9.105(a)(10)].
269-11 "Pursuant to commitment". Section 9.102(a)(69) [9.105(a)(11)].
269-12 "Receipt". Section 2.103(a)(3).
269-13 "Sale". Section 2.106(a).
269-14 "Sale on approval". Section 2.326.
269-15 "Sale or return". Section 2.326.
269-16 "Seller". Section 2.103(a)(4).
269-17 SECTION 2.20. Section 2A.303, Business & Commerce Code, is
269-18 amended to read as follows:
269-19 Sec. 2A.303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE
269-20 CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF
269-21 PERFORMANCE; TRANSFER OF RIGHTS. (a) As used in this section,
269-22 "creation of a security interest" includes the sale of a lease
269-23 contract that is subject to Chapter 9 of this code, Secured
269-24 Transactions, by reason of Section 9.109(a)(3) [9.102(a)(2)].
269-25 (b) Except as provided in Section 9.407(c) [Subsections (c)
269-26 and (d)], a provision in a lease agreement which (1) prohibits the
270-1 voluntary or involuntary transfer, including a transfer by sale,
270-2 sublease, creation or enforcement of a security interest, or
270-3 attachment, levy, or other judicial process, of an interest of a
270-4 party under the lease contract or of the lessor's residual interest
270-5 in the goods, or (2) makes such a transfer an event of default,
270-6 gives rise to the rights and remedies provided in Subsection (d)
270-7 [(e) of this section], but a transfer that is prohibited or is an
270-8 event of default under the lease agreement is otherwise effective.
270-9 (c) [A provision in a lease agreement which (1) prohibits
270-10 the creation or enforcement of a security interest in an interest
270-11 of a party under the lease contract or in the lessor's residual
270-12 interest in the goods, or (2) makes such a transfer an event of
270-13 default, is not enforceable unless, and then only to the extent
270-14 that, there is an actual transfer by the lessee of the lessee's
270-15 right of possession or use of the goods in violation of the
270-16 provision or an actual delegation of a material performance of
270-17 either party to the lease contract in violation of the provision.
270-18 Neither the granting nor the enforcement of a security interest in
270-19 (1) the lessor's interest in the lease contract or (2) the lessor's
270-20 residual interest in the goods is a transfer that materially
270-21 impairs the prospect of obtaining return performance by, materially
270-22 changes the duty of, or materially increases the burden of risk
270-23 imposed on, the lessee within the purview of Subsection (e) unless,
270-24 and then only to the extent that, there is an actual delegation of
270-25 a material performance of the lessor.]
270-26 [(d)] A provision in a lease agreement which (1) prohibits a
271-1 transfer of a right to damages for default with respect to the
271-2 whole lease contract or of a right to payment arising out of the
271-3 transferor's due performance of the transferor's entire obligation,
271-4 or (2) makes such a transfer an event of default, is not
271-5 enforceable, and such a transfer is not a transfer that materially
271-6 impairs the prospect of obtaining return performance by, materially
271-7 changes the duty of, or materially increases the burden or risk
271-8 imposed on, the other party to the lease contract within the
271-9 purview of Subsection (d) [(e)].
271-10 (d) [(e)] Subject to Section 9.407(c) [Subsections (c) and
271-11 (d)]:
271-12 (1) if a transfer is made which is made an event of
271-13 default under a lease agreement, the party to the lease contract
271-14 not making the transfer, unless that party waives the default or
271-15 otherwise agrees, has the rights and remedies described in Section
271-16 2A.501(b); and
271-17 (2) if Subdivision (1) is not applicable and if a
271-18 transfer is made that (A) is prohibited under a lease agreement or
271-19 (B) materially impairs the prospect of obtaining return performance
271-20 by, materially changes the duty of, or materially increases the
271-21 burden of risk imposed on, the other party to the lease contract,
271-22 unless the party not making the transfer agrees at any time to the
271-23 transfer in the lease contract or otherwise, then, except as
271-24 limited by contract, (i) the transferor is liable to the party not
271-25 making the transfer for damages caused by the transfer to the
271-26 extent that the damages could not reasonably be prevented by the
272-1 party not making the transfer and (ii) a court having jurisdiction
272-2 may grant other appropriate relief, including cancellation of the
272-3 lease contract or an injunction against the transfer.
272-4 (e) [(f)] A transfer of "the lease" or of "all my rights
272-5 under the lease," or a transfer in similar general terms, is a
272-6 transfer of rights and, unless the language or the circumstances,
272-7 as in a transfer for security, indicate the contrary, the transfer
272-8 is a delegation of duties by the transferor to the transferee.
272-9 Acceptance by the transferee constitutes a promise by the
272-10 transferee to perform those duties. This promise is enforceable by
272-11 either the transferor or the other party to the lease contract.
272-12 (f) [(g)] Unless otherwise agreed by the lessor and the
272-13 lessee, a delegation of performance does not relieve the transferor
272-14 as against the other party of any duty to perform or of any
272-15 liability for default.
272-16 (g) [(h)] In a consumer lease, to prohibit the transfer of
272-17 an interest of a party under the lease contract or to make a
272-18 transfer an event of default, the language must be specific, by a
272-19 writing, and conspicuous.
272-20 SECTION 2.21. Sections 2A.307(b)-(d), Business & Commerce
272-21 Code, are amended to read as follows:
272-22 (b) Except as otherwise provided in Subsection [Subsections]
272-23 (c) [and (d)] and Sections 2A.306 and 2A.308, a creditor of a
272-24 lessor takes subject to the lease contract unless[:]
272-25 [(1)] the creditor holds a lien that attached to the
272-26 goods before the lease contract became enforceable[;]
273-1 [(2) the creditor holds a security interest in the
273-2 goods and the lessee did not give value and receive delivery of the
273-3 goods without knowledge of the security interest; or]
273-4 [(3) the creditor holds a security interest in the
273-5 goods which was perfected (Section 9.303) before the lease contract
273-6 became enforceable].
273-7 (c) Except as otherwise provided in Sections 9.317, 9.321,
273-8 and 9.323, a lessee takes a leasehold interest subject to a
273-9 security interest held by a creditor of the lessor. [A lessee in
273-10 the ordinary course of business takes the leasehold interest free
273-11 of a security interest in the goods created by the lessor even
273-12 though the security interest is perfected (Section 9.303) and the
273-13 lessee knows of its existence.]
273-14 [(d) A lessee other than a lessee in the ordinary course of
273-15 business takes the leasehold interest free of a security interest
273-16 to the extent that it secures future advances made after the
273-17 secured party acquires knowledge of the lease or more than 45 days
273-18 after the lease contract becomes enforceable, whichever first
273-19 occurs, unless the future advances are made pursuant to a
273-20 commitment entered into without knowledge of the lease and before
273-21 the expiration of the 45-day period.]
273-22 SECTION 2.22. Section 2A.309(a), Business & Commerce Code,
273-23 is amended to read as follows:
273-24 (a) In this section:
273-25 (1) goods are "fixtures" when they become so related
273-26 to particular real estate that an interest in them arises under
274-1 real estate law;
274-2 (2) a "fixture filing" is the filing, in the office
274-3 where a record of a mortgage on the real estate would be filed or
274-4 recorded, of a financing statement covering goods that are or are
274-5 to become fixtures and conforming to the requirements of Sections
274-6 9.502(a) and (b) [Section 9.402(e)];
274-7 (3) a lease is a "purchase money lease" unless the
274-8 lessee has possession or use of the goods or the right to
274-9 possession or use of the goods before the lease agreement is
274-10 enforceable;
274-11 (4) a mortgage is a "construction mortgage" to the
274-12 extent it secures an obligation incurred for the construction of an
274-13 improvement on land including the acquisition cost of the land, if
274-14 the recorded writing so indicates; and
274-15 (5) "encumbrance" includes real estate mortgages and
274-16 other liens on real estate and all other rights in real estate that
274-17 are not ownership interests.
274-18 SECTION 2.23. Section 4.210(c), Business & Commerce Code, is
274-19 amended to read as follows:
274-20 (c) Receipt by a collecting bank of a final settlement for
274-21 an item is a realization on its security interest in the item,
274-22 accompanying documents, and proceeds. So long as the bank does not
274-23 receive final settlement for the item or give up possession of the
274-24 item or accompanying documents for purposes other than collection,
274-25 the security interest continues to that extent and is subject to
274-26 Chapter 9, but:
275-1 (1) no security agreement is necessary to make the
275-2 security interest enforceable (Section 9.203(b)(3)(A)
275-3 [9.203(a)(1)]);
275-4 (2) no filing is required to perfect the security
275-5 interest; and
275-6 (3) the security interest has priority over
275-7 conflicting perfected security interests in the item, accompanying
275-8 documents, or proceeds.
275-9 SECTION 2.24. Chapter 5, Business & Commerce Code, is
275-10 amended by adding Section 5.118 to read as follows:
275-11 Sec. 5.118. SECURITY INTEREST OF ISSUER OR NOMINATED PERSON.
275-12 (a) An issuer or nominated person has a security interest in a
275-13 document presented under a letter of credit to the extent that the
275-14 issuer or nominated person honors or gives value for the
275-15 presentation.
275-16 (b) So long as and to the extent that an issuer or nominated
275-17 person has not been reimbursed or has not otherwise recovered the
275-18 value given with respect to a security interest in a document under
275-19 Subsection (a), the security interest continues and is subject to
275-20 Chapter 9, but:
275-21 (1) a security agreement is not necessary to make the
275-22 security interest enforceable under Section 9.203(b)(3);
275-23 (2) if the document is presented in a medium other
275-24 than a written or other tangible medium, the security interest is
275-25 perfected; and
275-26 (3) if the document is presented in a written or other
276-1 tangible medium and is not a certificated security, chattel paper,
276-2 a document of title, an instrument, or a letter of credit, the
276-3 security interest is perfected and has priority over a conflicting
276-4 security interest in the document so long as the debtor does not
276-5 have possession of the document.
276-6 SECTION 2.25. Section 7.503(a), Business & Commerce Code, is
276-7 amended to read as follows:
276-8 (a) A document of title confers no right in goods against a
276-9 person who before issuance of the document had a legal interest or
276-10 a perfected security interest in them and who neither
276-11 (1) delivered or entrusted them or any document of
276-12 title covering them to the bailor or his nominee with actual or
276-13 apparent authority to ship, store or sell or with power to obtain
276-14 delivery under this chapter (Section 7.403) or with power of
276-15 disposition under this title (Sections 2.403 and 9.320 [9.307]) or
276-16 other statute or rule of law; nor
276-17 (2) acquiesced in the procurement by the bailor or his
276-18 nominee of any document of title.
276-19 SECTION 2.26. Section 8.103(f), Business & Commerce Code, is
276-20 amended to read as follows:
276-21 (f) A commodity contract, as defined in Section 9.102(a)(15)
276-22 [9.115], is not a security or a financial asset.
276-23 SECTION 2.27. Sections 8.106(d) and (f), Business & Commerce
276-24 Code, are amended to read as follows:
276-25 (d) A purchaser has control of a security entitlement if:
276-26 (1) the purchaser becomes the entitlement holder; [or]
277-1 (2) the securities intermediary has agreed that it
277-2 will comply with entitlement orders originated by the purchaser
277-3 without further consent by the entitlement holder; or
277-4 (3) another person has control of the security
277-5 entitlement on behalf of the purchaser or, having previously
277-6 acquired control of the security entitlement, acknowledges that it
277-7 has control on behalf of the purchaser.
277-8 (f) A purchaser who has satisfied the requirements of
277-9 Subsection (c) [(c)(2)] or (d) [(d)(2)] has control, even if the
277-10 registered owner in the case of Subsection (c) [(c)(2)] or the
277-11 entitlement holder in the case of Subsection (d) [(d)(2)] retains
277-12 the right to make substitutions for the uncertificated security or
277-13 security entitlement, to originate instructions or entitlement
277-14 orders to the issuer or securities intermediary, or otherwise to
277-15 deal with the uncertificated security or security entitlement.
277-16 SECTION 2.28. Section 8.110(e), Business & Commerce Code, is
277-17 amended to read as follows:
277-18 (e) The following rules determine a securities
277-19 intermediary's jurisdiction for purposes of this section:
277-20 (1) If an agreement between the securities
277-21 intermediary and its entitlement holder governing the securities
277-22 account expressly provides that a particular jurisdiction is the
277-23 securities intermediary's jurisdiction for purposes of this
277-24 subchapter, this chapter, or this title [specifies that it is
277-25 governed by the law of a particular jurisdiction], that
277-26 jurisdiction is the securities intermediary's jurisdiction.
278-1 (2) If Subdivision (1) does not apply and an agreement
278-2 between the securities intermediary and its entitlement holder
278-3 governing the securities account expressly provides that the
278-4 agreement is governed by the law of a particular jurisdiction, that
278-5 jurisdiction is the securities intermediary's jurisdiction.
278-6 (3) If neither Subdivision (1) nor Subdivision (2)
278-7 applies and an agreement between the securities intermediary and
278-8 its entitlement holder governing the securities account [does not
278-9 specify the governing law as provided in Subdivision (1), but]
278-10 expressly provides [specifies] that the securities account is
278-11 maintained at an office in a particular jurisdiction, that
278-12 jurisdiction is the securities intermediary's jurisdiction.
278-13 (4) [(3)] If none of the preceding subdivisions
278-14 applies [an agreement between the securities intermediary and its
278-15 entitlement holder does not specify a jurisdiction as provided in
278-16 Subdivision (1) or (2)], the securities intermediary's jurisdiction
278-17 is the jurisdiction in which [is located] the office identified in
278-18 an account statement as the office serving the entitlement holder's
278-19 account is located.
278-20 (5) [(4)] If none of the preceding subdivisions
278-21 applies [an agreement between the securities intermediary and its
278-22 entitlement holder does not specify a jurisdiction as provided in
278-23 Subdivision (1) or (2) and an account statement does not identify
278-24 an office serving the entitlement holder's account as provided in
278-25 Subdivision (3)], the securities intermediary's jurisdiction is the
278-26 jurisdiction in which [is located] the chief executive office of
279-1 the securities intermediary is located.
279-2 SECTION 2.29. Section 8.301(a), Business & Commerce Code, is
279-3 amended to read as follows:
279-4 (a) Delivery of a certificated security to a purchaser
279-5 occurs when:
279-6 (1) the purchaser acquires possession of the security
279-7 certificate;
279-8 (2) another person, other than a securities
279-9 intermediary, either acquires possession of the security
279-10 certificate on behalf of the purchaser or, having previously
279-11 acquired possession of the certificate, acknowledges that it holds
279-12 for the purchaser; or
279-13 (3) a securities intermediary acting on behalf of the
279-14 purchaser acquires possession of the security certificate, only if
279-15 the certificate is in registered form and is (i) registered in the
279-16 name of the purchaser, (ii) payable to the order of the purchaser,
279-17 or (iii) [has been] specially indorsed to the purchaser by an
279-18 effective indorsement and has not been indorsed to the securities
279-19 intermediary or in blank.
279-20 SECTION 2.30. Section 8.302(a), Business & Commerce Code, is
279-21 amended to read as follows:
279-22 (a) Except as otherwise provided in Subsections (b) and (c),
279-23 a purchaser [on delivery] of a certificated or uncertificated
279-24 security [to a purchaser, the purchaser] acquires all rights in the
279-25 security that the transferor had or had power to transfer.
279-26 SECTION 2.31. Sections 8.510(a) and (c), Business & Commerce
280-1 Code, are amended to read as follows:
280-2 (a) In a case not covered by the priority rules in Chapter 9
280-3 or the rules stated in Subsection (c), an [An] action based on an
280-4 adverse claim to a financial asset or security entitlement, whether
280-5 framed in conversion, replevin, constructive trust, equitable lien,
280-6 or other theory, may not be asserted against a person who purchases
280-7 a security entitlement, or an interest therein, from an entitlement
280-8 holder if the purchaser gives value, does not have notice of the
280-9 adverse claim, and obtains control.
280-10 (c) In a case not covered by the priority rules in Chapter
280-11 9, a purchaser for value of a security entitlement, or an interest
280-12 therein, who obtains control has priority over a purchaser of a
280-13 security entitlement, or an interest therein, who does not obtain
280-14 control. Except as otherwise provided in Subsection (d),
280-15 purchasers [Purchasers] who have control rank according to priority
280-16 in time of:
280-17 (1) the purchaser's becoming the person for whom the
280-18 securities account, in which the security entitlement is carried,
280-19 is maintained, if the purchaser obtained control under Section
280-20 8.106(d)(1);
280-21 (2) the securities intermediary's agreement to comply
280-22 with the purchaser's entitlement orders with respect to security
280-23 entitlements carried or to be carried in the securities account in
280-24 which the security entitlement is carried, if the purchaser
280-25 obtained control under Section 8.106(d)(2); or
280-26 (3) if the purchaser obtained control through another
281-1 person under Section 8.106(d)(3), the time on which priority would
281-2 be based under this subsection if the other person were the secured
281-3 party.
281-4 (d) A [equally, except that a] securities intermediary as
281-5 purchaser has priority over a conflicting purchaser who has control
281-6 unless otherwise agreed on by the securities intermediary.
281-7 SECTION 2.32. Section 221.032, Health and Safety Code, is
281-8 amended to read as follows:
281-9 Sec. 221.032. PERFECTION OF SECURITY INTEREST. A security
281-10 interest granted by a corporation may be perfected in the manner
281-11 and with the effect provided by Chapter 9, Business & Commerce
281-12 Code[, notwithstanding Section 9.104 of that chapter].
281-13 SECTION 2.33. Section 31.053(d), Parks and Wildlife Code, is
281-14 amended to read as follows:
281-15 (d) Notwithstanding the provisions of Subsection (a) of this
281-16 section, a buyer of a new vessel or a new outboard motor in the
281-17 ordinary course of business as provided in Section 9.320(a)
281-18 [9.307(a)], Business & Commerce Code, takes the interest free of
281-19 security interests as provided in that section. A buyer of a
281-20 vessel or outboard motor that is not new shall be governed by
281-21 Subsection (a) of this section.
281-22 SECTION 2.34. Section 14.004(a), Property Code, is amended
281-23 to read as follows:
281-24 (a) If a notice of federal lien, a refiling of a notice of
281-25 federal lien, or a notice of revocation of any certificate
281-26 described in Subsection (b) is presented to a filing officer who
282-1 is:
282-2 (1) the secretary of state, he shall cause the notice
282-3 to be marked, held or placed on microtext, and indexed in
282-4 accordance with the provisions of Section 9.519, Business &
282-5 Commerce [9.403(d) of the Uniform Commercial] Code, as if the
282-6 notice were a financing statement within the meaning of that code;
282-7 or
282-8 (2) any other officer described in Section 14.002, he
282-9 shall endorse thereon his identification and the date and time of
282-10 receipt and forthwith file it alphabetically in the real property
282-11 records and if requested by the party submitting the document, in
282-12 the personal property files or enter it in an alphabetical index
282-13 for real or personal property, as appropriate, showing the name and
282-14 address of the person named in the notice, the date and time of
282-15 receipt, the title and address of the official or entity certifying
282-16 the lien, and the total amount appearing on the notice of lien.
282-17 SECTION 2.35. Section 24.0062(j), Property Code, is amended
282-18 to read as follows:
282-19 (j) Any sale of property that is subject to a lien under
282-20 this section shall be conducted in accordance with Section
282-21 [Sections] 7.210 and Subchapters D and F, Chapter 9, [9.301-9.318,
282-22 and 9.501-9.507 of the] Business & Commerce Code.
282-23 SECTION 2.36. Section 42.002(b), Property Code, is amended
282-24 to read as follows:
282-25 (b) Personal property, unless precluded from being
282-26 encumbered by other law, may be encumbered by a security interest
283-1 under Subchapter B, Chapter 9 [Section 9.203], Business & Commerce
283-2 Code, or Subchapter F, Chapter 501, Transportation Code, or by a
283-3 lien fixed by other law, and the security interest or lien may not
283-4 be avoided on the ground that the property is exempt under this
283-5 chapter.
283-6 SECTION 2.37. Sections 61.001(2) and (3), Property Code, are
283-7 amended to read as follows:
283-8 (2) "Mortgagee" means a secured party, as defined by
283-9 Section 9.102 [9.105], Business & Commerce Code, holding a lien on
283-10 a motor vehicle that has been perfected pursuant to Subchapter F,
283-11 Chapter 501, Transportation Code.
283-12 (3) "Mortgagor" means a debtor, as defined by Section
283-13 9.102 [9.105], Business & Commerce Code, giving a lien or agreeing
283-14 that a lien may be retained on a motor vehicle.
283-15 SECTION 2.38. Section 70.001(b), Property Code, is amended
283-16 to read as follows:
283-17 (b) If a worker relinquishes possession of a motor vehicle,
283-18 motorboat, vessel, or outboard motor in return for a check or money
283-19 order on which payment is stopped, has been dishonored because of
283-20 insufficient funds, no funds or because the drawer or maker of the
283-21 order has no account or the account upon which it was drawn has
283-22 been closed, the lien provided by this section continues to exist
283-23 and the worker is entitled to possession of the vehicle, motorboat,
283-24 vessel, or outboard motor until the amount due is paid, unless the
283-25 vehicle, motorboat, vessel, or outboard motor is possessed by a
283-26 person who became a bona fide purchaser of the vehicle after a stop
284-1 payment order was made. A person entitled to possession of
284-2 property under this subsection is entitled to take possession
284-3 thereof in accordance with the provisions of Section 9.609 [9.503],
284-4 Business & Commerce Code.
284-5 SECTION 2.39. Section 70.003(d)(1), Property Code, is
284-6 amended to read as follows:
284-7 (1) A cotton ginner to whom a cotton crop has been
284-8 delivered for processing or who, under an agreement, is to be paid
284-9 for harvesting a cotton crop has a lien on the cotton processed or
284-10 harvested for the amount of the charges for the processing or
284-11 harvesting. The lienholder is entitled to retain possession of the
284-12 cotton until the amount of the charge due under an agreement is
284-13 paid or, if an amount is not specified by agreement, the reasonable
284-14 and usual compensation is paid. If the cotton owner's address is
284-15 known and the amount of the charge is not paid before the 31st day
284-16 after the date the cotton ginner's work is completed or the date
284-17 payment is due under a written agreement, whichever is later, the
284-18 lienholder shall request the owner to pay the unpaid charge due and
284-19 shall notify the owner and any other person having a lien on the
284-20 cotton which is properly recorded under applicable law with the
284-21 secretary of state of the fact that unless payment is made not
284-22 later than the 15th day after the date the notice is received, the
284-23 lienholder is entitled to sell the cotton under any procedure
284-24 authorized by Section 9.610 [9.504], Business & Commerce Code. If
284-25 the cotton owner's address is not known and the amount of the
284-26 charge is not paid before the 61st day after the date the cotton
285-1 ginner's work is completed or the date payment is due under a
285-2 written agreement, whichever is later, the lienholder is entitled
285-3 to sell the cotton without notice at a commercially reasonable
285-4 sale. The proceeds of a sale under this subsection shall be
285-5 applied first to charges due under this subsection, and any
285-6 remainder shall be paid in appropriate proportion to:
285-7 (A) any other person having a lien on the cotton
285-8 which is properly recorded under applicable law with the secretary
285-9 of state; and
285-10 (B) the cotton owner.
285-11 SECTION 2.40. Section 70.005(c), Property Code, is amended
285-12 to read as follows:
285-13 (c) A person holding a lien under Section 70.003(a) on an
285-14 animal fed in confinement for slaughter may enforce that lien in
285-15 any manner authorized by Sections 9.610-9.619 [Section 9.504],
285-16 Business & Commerce Code.
285-17 SECTION 2.41. Section 70.302(b), Property Code, is amended
285-18 to read as follows:
285-19 (b) Except as provided by Subsection (c), if the holder of a
285-20 lien under this subchapter relinquishes possession of the aircraft
285-21 before the amount due is paid, the person may retake possession of
285-22 the aircraft as provided by Section 9.609 [9.503], Business &
285-23 Commerce Code.
285-24 SECTION 2.42. Section 501.002(9), Transportation Code, is
285-25 amended to read as follows:
285-26 (9) "Lien" means:
286-1 (A) a lien provided for by the constitution or
286-2 statute in a motor vehicle; or
286-3 (B) a security interest, as defined by Section
286-4 1.201, Business & Commerce Code, in a motor vehicle, other than an
286-5 absolute title, created by any written security agreement, as
286-6 defined by Section 9.102 [9.105], Business & Commerce Code,
286-7 including a lease, conditional sales contract, deed of trust,
286-8 chattel mortgage, trust receipt, or reservation of title.
286-9 SECTION 2.43. Section 4.053, Public Facility Corporation
286-10 Act (Article 717s, Revised Statutes), is amended to read as
286-11 follows:
286-12 Sec. 4.053. PERFECTION OF SECURITY INTEREST. A security
286-13 interest granted by a corporation as security for its bonds or a
286-14 credit agreement pledged as security for the obligations of the
286-15 corporation on the bonds or any credit agreement issued or entered
286-16 into in connection with the bonds is perfected until payment of the
286-17 bonds and the credit agreement, with the effect specified in
286-18 Chapter 9, Business & Commerce Code, when the bonds are registered
286-19 by the comptroller of public accounts and the proceedings
286-20 authorizing the bonds are filed with the comptroller, without any
286-21 further filing, notwithstanding Section 9.109(d) [9.104], Business
286-22 & Commerce Code.
286-23 SECTION 2.44. Sections 19(a)(1), (5), (10), and (12), Texas
286-24 Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
286-25 Civil Statutes), are amended to read as follows:
286-26 (1) "Debtor" has the same meaning as given it by
287-1 Section 9.102 [9.105(a)(4)], Business & Commerce Code.
287-2 (5) "Inventory" has the meaning given it by Section
287-3 9.102 [9.109(4)], Business & Commerce Code, as amended.
287-4 (10) "Secured party" has the meaning given it by
287-5 Section 9.102 [9.105(a)(13)], Business & Commerce Code.
287-6 (12) "Security agreement" has the meaning given it by
287-7 Section 9.102 [9.105(a)(12)], Business & Commerce Code.
287-8 SECTION 2.45. Section 19(n), Texas Manufactured Housing
287-9 Standards Act (Article 5221f, Vernon's Texas Civil Statutes), is
287-10 amended to read as follows:
287-11 (n) Notwithstanding any other provisions of this section,
287-12 the filing of a security agreement by a secured party perfecting a
287-13 lien in the inventory of a retailer may not prevent a buyer in the
287-14 ordinary course of business as defined by Sections 1.201(9) and
287-15 9.320(a), [9.307(a) of the] Business & Commerce Code, from
287-16 acquiring good title free and clear of such interest, and the
287-17 department may not consider such security interest as a lien for
287-18 the purpose of title issuance.
287-19 SECTION 2.46. Subchapter A, Chapter 2A, Business & Commerce
287-20 Code, is amended by adding Section 2A.110 to read as follows:
287-21 Sec. 2A.110. DIGITAL SIGNATURE. (a) A written electronic
287-22 communication sent from within or received in this state in
287-23 connection with a transaction governed by this chapter is
287-24 considered signed if a digital signature is transmitted with the
287-25 communication.
287-26 (b) This section does not preclude any symbol from being
288-1 valid as a signature under other applicable law, including Section
288-2 1.201(39).
288-3 (c) The use of a digital signature under this section is
288-4 subject to criminal laws pertaining to fraud and computer crimes,
288-5 including Chapters 32 and 33, Penal Code.
288-6 (d) In this section "digital signature" means an electronic
288-7 identifier intended by the person using it to have the same force
288-8 and effect as the use of a manual signature.
288-9 SECTION 2.47. Section 9.203, Business & Commerce Code, is
288-10 amended by adding Subsection (f) to read as follows:
288-11 (f) A written electronic security agreement sent from within
288-12 or received in this state in connection with a transaction governed
288-13 by this chapter is considered signed if a digital signature is
288-14 transmitted with the communication. This subsection does not
288-15 preclude any symbol from being valid as a signature under other
288-16 applicable law, including Section 1.201(39). The use of a digital
288-17 signature under this subsection is subject to criminal laws
288-18 pertaining to fraud and computer crimes, including Chapters 32 and
288-19 33, Penal Code. In this subsection "digital signature" means an
288-20 electronic identifier intended by the person using it to have the
288-21 same force and effect as the use of a manual signature.
288-22 ARTICLE 3. EFFECTIVE DATE; TRANSITION; EMERGENCY
288-23 SECTION 3.01. EFFECTIVE DATES. (a) Except as provided by
288-24 Subsection (b) of this section, this Act takes effect July 1, 2001.
288-25 (b) Section 2A.110, Business & Commerce Code, as added by
288-26 Section 2.46 of this Act, and Subsection (f), Section 9.203,
289-1 Business & Commerce Code, as added by Section 2.47 of this Act,
289-2 take effect immediately.
289-3 SECTION 3.02. SAVING CLAUSE. (a) Except as otherwise
289-4 provided in this article, this Act applies to a transaction or lien
289-5 within its scope, even if the transaction or lien was entered into
289-6 or created before this Act takes effect.
289-7 (b) Except as otherwise provided in Subsection (c) of this
289-8 section and Sections 3.03-3.08 of this article:
289-9 (1) transactions and liens that were not governed by
289-10 Chapter 9, Business & Commerce Code, as it existed immediately
289-11 before the effective date of this Act, were validly entered into or
289-12 created before the effective date of this Act, and would be subject
289-13 to Chapter 9, Business & Commerce Code, as amended by this Act, if
289-14 they had been entered into or created on or after the effective
289-15 date of this Act, and the rights, duties, and interests flowing
289-16 from those transactions and liens remain valid on and after the
289-17 effective date of this Act; and
289-18 (2) the transactions and liens may be terminated,
289-19 completed, consummated, and enforced as required or permitted by
289-20 Chapter 9, Business & Commerce Code, as amended by this Act, or by
289-21 the law that otherwise would apply if this Act had not taken
289-22 effect.
289-23 (c) This Act does not affect an action, case, or proceeding
289-24 commenced before the effective date of this Act.
289-25 SECTION 3.03. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE
289-26 DATE. (a) A security interest that is enforceable immediately
290-1 before the effective date of this Act and would have priority over
290-2 the rights of a person that becomes a lien creditor at that time is
290-3 a perfected security interest under Chapter 9, Business & Commerce
290-4 Code, as amended by this Act, if, on the effective date of this
290-5 Act, the applicable requirements for enforceability and perfection
290-6 under Chapter 9, Business & Commerce Code, as amended by this Act,
290-7 are satisfied without further action.
290-8 (b) Except as otherwise provided in Section 3.05 of this
290-9 article, if, immediately before this Act takes effect, a security
290-10 interest is enforceable and would have priority over the rights of
290-11 a person that becomes a lien creditor at that time, but the
290-12 applicable requirements for enforceability or perfection under
290-13 Chapter 9, Business & Commerce Code, as amended by this Act, are
290-14 not satisfied when this Act takes effect, the security interest:
290-15 (1) is a perfected security interest until July 1,
290-16 2002;
290-17 (2) remains enforceable after June 30, 2002, only if
290-18 the security interest becomes enforceable under Section 9.203,
290-19 Business & Commerce Code, as amended by this Act, before July 1,
290-20 2002; and
290-21 (3) remains perfected after June 30, 2002, only if the
290-22 applicable requirements for perfection under Chapter 9, Business &
290-23 Commerce Code, as amended by this Act, are satisfied before July 1,
290-24 2002.
290-25 SECTION 3.04. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE
290-26 DATE. A security interest that is enforceable immediately before
291-1 this Act takes effect but that would be subordinate to the rights
291-2 of a person that becomes a lien creditor at that time:
291-3 (1) remains an enforceable security interest until
291-4 July 1, 2002;
291-5 (2) remains enforceable after June 30, 2002, if the
291-6 security interest becomes enforceable under Section 9.203, Business
291-7 & Commerce Code, as amended by this Act, before July 1, 2002; and
291-8 (3) becomes perfected:
291-9 (A) without further action, when this Act takes
291-10 effect, if the applicable requirements for perfection under Chapter
291-11 9, Business & Commerce Code, as amended by this Act, are satisfied
291-12 before or at that time; or
291-13 (B) when the applicable requirements for
291-14 perfection are satisfied if the requirements are satisfied after
291-15 this Act takes effect.
291-16 SECTION 3.05. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE
291-17 DATE. (a) If action, other than the filing of a financing
291-18 statement, is taken before this Act takes effect and the action
291-19 would have resulted in priority of a security interest over the
291-20 rights of a person that becomes a lien creditor had the security
291-21 interest become enforceable before this Act takes effect, the
291-22 action is effective to perfect a security interest that attaches
291-23 under Chapter 9, Business & Commerce Code, as amended by this Act,
291-24 within one year after the effective date of this Act. An attached
291-25 security interest becomes unperfected on July 1, 2002, unless the
291-26 security interest becomes a perfected security interest under
292-1 Chapter 9, Business & Commerce Code, as amended by this Act, before
292-2 that date.
292-3 (b) The filing of a financing statement before the effective
292-4 date of this Act is effective to perfect a security interest to the
292-5 extent the filing would satisfy the applicable requirements for
292-6 perfection under Chapter 9, Business & Commerce Code, as amended by
292-7 this Act.
292-8 (c) This Act does not render ineffective an effective
292-9 financing statement that, before the effective date of this Act, is
292-10 filed and satisfies the applicable requirements for perfection
292-11 under the law of the jurisdiction governing perfection as provided
292-12 in Section 9.103, Business & Commerce Code, as it existed
292-13 immediately before the effective date of this Act. However, except
292-14 as otherwise provided in Subsections (d) and (e) of this section
292-15 and Section 3.06 of this article, the financing statement ceases to
292-16 be effective at the earlier of:
292-17 (1) the time the financing statement would have ceased
292-18 to be effective under the law of the jurisdiction in which it is
292-19 filed; or
292-20 (2) June 30, 2006.
292-21 (d) The filing of a continuation statement after this Act
292-22 takes effect does not continue the effectiveness of the financing
292-23 statement filed before this Act takes effect. However, upon the
292-24 timely filing of a continuation statement after this Act takes
292-25 effect and in accordance with the law of the jurisdiction governing
292-26 perfection as provided in Subchapter C, Chapter 9, Business &
293-1 Commerce Code, as amended by this Act, the effectiveness of a
293-2 financing statement filed in the same office in that jurisdiction
293-3 before this Act takes effect continues for the period provided by
293-4 the law of that jurisdiction.
293-5 (e) Subsection (c)(2) of this section applies to a financing
293-6 statement that, before this Act takes effect, is filed against a
293-7 transmitting utility and satisfies the applicable requirements for
293-8 perfection under the law of the jurisdiction governing perfection
293-9 as provided in Section 9.103, as it existed immediately before the
293-10 effective date of this Act, only to the extent that Subchapter C,
293-11 Chapter 9, Business & Commerce Code, as amended by this Act,
293-12 provides that the law of a jurisdiction other than jurisdiction in
293-13 which the financing statement is filed governs perfection of a
293-14 security interest in collateral covered by the financing statement.
293-15 (f) A financing statement that includes a financing
293-16 statement filed before this Act takes effect and a continuation
293-17 statement filed after this Act takes effect is effective only to
293-18 the extent that it satisfies the requirements of Subchapter E,
293-19 Chapter 9, Business & Commerce Code, as amended by this Act, for an
293-20 initial financing statement.
293-21 SECTION 3.06. WHEN INITIAL FINANCING STATEMENT SUFFICES TO
293-22 CONTINUE EFFECTIVENESS OF FINANCING STATEMENT. (a) The filing of
293-23 an initial financing statement in the office specified in Section
293-24 9.501, Business & Commerce Code, as amended by this Act, continues
293-25 the effectiveness of a financing statement filed before this Act
293-26 takes effect if:
294-1 (1) the filing of an initial financing statement in
294-2 that office would be effective to perfect a security interest under
294-3 Chapter 9, Business & Commerce Code, as amended by this Act;
294-4 (2) the pre-effective-date financing statement was
294-5 filed in an office in another state or another office in this
294-6 state; and
294-7 (3) the initial financing statement satisfies
294-8 Subsection (c) of this section.
294-9 (b) The filing of an initial financing statement under
294-10 Subsection (a) of this section continues the effectiveness of the
294-11 pre-effective-date financing statement:
294-12 (1) if the initial financing statement is filed before
294-13 this Act takes effect, for the period provided in Section 9.403,
294-14 Business & Commerce Code, as it existed immediately before the
294-15 effective date of this Act, with respect to a financing statement;
294-16 and
294-17 (2) if the initial financing statement is filed after
294-18 this Act takes effect, for the period provided in Section 9.515,
294-19 Business & Commerce Code, as amended by this Act, with respect to
294-20 an initial financing statement.
294-21 (c) To be effective for purposes of Subsection (a) of this
294-22 section, an initial financing statement must:
294-23 (1) satisfy the requirements of Subchapter E, Chapter
294-24 9, Business & Commerce Code, as amended by this Act, for an initial
294-25 financing statement;
294-26 (2) identify the pre-effective-date financing
295-1 statement by indicating the office in which the financing statement
295-2 was filed and providing the dates of filing and file numbers, if
295-3 any, of the financing statement and of the most recent continuation
295-4 statement filed with respect to the financing statement; and
295-5 (3) indicate that the pre-effective-date financing
295-6 statement remains effective.
295-7 SECTION 3.07. PERSONS ENTITLED TO FILE INITIAL FINANCING
295-8 STATEMENT OR CONTINUATION STATEMENT. A person may file an initial
295-9 financing statement or a continuation statement under this article
295-10 if:
295-11 (1) the secured party of record authorizes the filing;
295-12 and
295-13 (2) the filing is necessary under this article:
295-14 (A) to continue the effectiveness of a financing
295-15 statement filed before this Act takes effect; or
295-16 (B) to perfect or continue the perfection of a
295-17 security interest.
295-18 SECTION 3.08. PRIORITY. (a) This Act determines the
295-19 priority of conflicting claims to collateral. However, if the
295-20 relative priorities of the claims were established before this Act
295-21 takes effect, Chapter 9, Business & Commerce Code, as it existed
295-22 before the effective date of this Act, determines priority.
295-23 (b) For purposes of Section 9.322(a), Business & Commerce
295-24 Code, as amended by this Act, the priority of a security interest
295-25 that becomes enforceable under Section 9.203, Business & Commerce
295-26 Code, as amended by this Act, dates from the time this Act takes
296-1 effect if the security interest is perfected under Chapter 9,
296-2 Business & Commerce Code, as amended by this Act, by the filing of
296-3 a financing statement before this Act takes effect that would not
296-4 have been effective to perfect the security interest under Chapter
296-5 9, Business & Commerce Code, as it existed immediately before the
296-6 effective date of this Act. This subsection does not apply to
296-7 conflicting security interests each of which is perfected by the
296-8 filing of such a financing statement.
296-9 SECTION 3.09. REPORT TO LEGISLATURE. The secretary of state
296-10 is required to file the initial report under Section 9.527,
296-11 Business & Commerce Code, as added by this Act, before January 1,
296-12 2003.
296-13 SECTION 3.10. EMERGENCY. The importance of this legislation
296-14 and the crowded condition of the calendars in both houses create an
296-15 emergency and an imperative public necessity that the
296-16 constitutional rule requiring bills to be read on three several
296-17 days in each house be suspended, and this rule is hereby suspended,
296-18 and that this Act take effect and be in force according to its
296-19 terms, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1058 passed the Senate on
April 15, 1999, by a viva-voce vote; and that the Senate concurred
in House amendment on May 17, 1999, by the following vote:
Yeas 30, Nays 1.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1058 passed the House, with
amendment, on May 12, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor