1-1 By: Carona S.B. No. 1058
1-2 (In the Senate - Filed March 9, 1999; March 10, 1999, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 9, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 5, Nays 0; April 9, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1058 By: Carona
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the revision of the uniform law on secured
1-11 transactions.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 ARTICLE 1. SECURED TRANSACTIONS
1-14 SECTION 1.01. Chapter 9, Business & Commerce Code, is
1-15 amended to read as follows:
1-16 CHAPTER 9. SECURED TRANSACTIONS[; SALES OF ACCOUNTS
1-17 AND CHATTEL PAPER]
1-18 SUBCHAPTER A. SHORT TITLE, [APPLICABILITY AND]
1-19 DEFINITIONS, AND GENERAL CONCEPTS
1-20 Sec. 9.101. SHORT TITLE. This chapter may be cited as
1-21 Uniform Commercial Code--Secured Transactions.
1-22 Sec. 9.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
1-23 this chapter:
1-24 (1) "Accession" means goods that are physically united
1-25 with other goods in such a manner that the identity of the original
1-26 goods is not lost.
1-27 (2) "Account," except as used in "account for," means
1-28 a right to payment of a monetary obligation, whether or not earned
1-29 by performance, (i) for property that has been or is to be sold,
1-30 leased, licensed, assigned, or otherwise disposed of, (ii) for
1-31 services rendered or to be rendered, (iii) for a policy of
1-32 insurance issued or to be issued, (iv) for a secondary obligation
1-33 incurred or to be incurred, (v) for energy provided or to be
1-34 provided, (vi) for the use or hire of a vessel under a charter or
1-35 other contract, (vii) arising out of the use of a credit or charge
1-36 card or information contained on or for use with the card, or
1-37 (viii) as winnings in a lottery or other game of chance operated or
1-38 sponsored by a State, governmental unit of a State, or person
1-39 licensed or authorized to operate the game by a State or
1-40 governmental unit of a State. The term includes
1-41 health-care-insurance receivables. The term does not include (i)
1-42 rights to payment evidenced by chattel paper or an instrument, (ii)
1-43 commercial tort claims, (iii) deposit accounts, (iv) investment
1-44 property, (v) letter-of-credit rights or letters of credit, or (vi)
1-45 rights to payment for money or funds advanced or sold, other than
1-46 rights arising out of the use of a credit or charge card or
1-47 information contained on or for use with the card.
1-48 (3) "Account debtor" means a person obligated on an
1-49 account, chattel paper, or general intangible. The term does not
1-50 include persons obligated to pay a negotiable instrument, even if
1-51 the instrument constitutes part of chattel paper.
1-52 (4) "Accounting," except as used in "accounting for,"
1-53 means a record:
1-54 (A) authenticated by a secured party;
1-55 (B) indicating the aggregate unpaid secured
1-56 obligations as of a date not more than 35 days earlier or 35 days
1-57 later than the date of the record; and
1-58 (C) identifying the components of the
1-59 obligations in reasonable detail.
1-60 (5) "Agricultural lien" means an interest, other than
1-61 a security interest, in farm products:
1-62 (A) that secures payment or performance of an
1-63 obligation for:
1-64 (i) goods or services furnished in
2-1 connection with a debtor's farming operation; or
2-2 (ii) rent on real property leased by a
2-3 debtor in connection with its farming operation;
2-4 (B) that is created by statute in favor of a
2-5 person that:
2-6 (i) in the ordinary course of its business
2-7 furnished goods or services to a debtor in connection with a
2-8 debtor's farming operation; or
2-9 (ii) leased real property to a debtor in
2-10 connection with the debtor's farming operation; and
2-11 (C) whose effectiveness does not depend on the
2-12 person's possession of the personal property.
2-13 (6) "As-extracted collateral" means:
2-14 (A) oil, gas, or other minerals that are subject
2-15 to a security interest that:
2-16 (i) is created by a debtor having an
2-17 interest in the minerals before extraction; and
2-18 (ii) attaches to the minerals as
2-19 extracted; or
2-20 (B) accounts arising out of the sale at the
2-21 wellhead or minehead of oil, gas, or other minerals in which the
2-22 debtor had an interest before extraction.
2-23 (7) "Authenticate" means:
2-24 (A) to sign; or
2-25 (B) to execute or otherwise adopt a symbol, or
2-26 encrypt or similarly process a record in whole or in part, with the
2-27 present intent of the authenticating person to identify the person
2-28 and adopt or accept a record.
2-29 (8) "Bank" means an organization that is engaged in
2-30 the business of banking. The term includes savings banks, savings
2-31 and loan associations, credit unions, and trust companies.
2-32 (9) "Cash proceeds" means proceeds that are money,
2-33 checks, deposit accounts, or the like.
2-34 (10) "Certificate of title" means a certificate of
2-35 title with respect to which a statute provides for the security
2-36 interest in question to be indicated on the certificate as a
2-37 condition or result of the security interest's obtaining priority
2-38 over the rights of a lien creditor with respect to the collateral.
2-39 (11) "Chattel paper" means a record or records that
2-40 evidence both a monetary obligation and a security interest in
2-41 specific goods, a security interest in specific goods and software
2-42 used in the goods, or a lease of specific goods. The term does not
2-43 include charters or other contracts involving the use or hire of a
2-44 vessel. If a transaction is evidenced both by a security agreement
2-45 or lease and by an instrument or series of instruments, the group
2-46 of records taken together constitutes chattel paper.
2-47 (12) "Collateral" means the property subject to a
2-48 security interest or agricultural lien. The term includes:
2-49 (A) proceeds to which a security interest
2-50 attaches;
2-51 (B) accounts, chattel paper, payment
2-52 intangibles, and promissory notes that have been sold; and
2-53 (C) goods that are the subject of a consignment.
2-54 (13) "Commercial tort claim" means a claim arising in
2-55 tort with respect to which:
2-56 (A) the claimant is an organization; or
2-57 (B) the claimant is an individual and the claim:
2-58 (i) arose in the course of the claimant's
2-59 business or profession; and
2-60 (ii) does not include damages arising out
2-61 of personal injury to or the death of an individual.
2-62 (14) "Commodity account" means an account maintained
2-63 by a commodity intermediary in which a commodity contract is
2-64 carried for a commodity customer.
2-65 (15) "Commodity contract" means a commodity futures
2-66 contract, an option on a commodity futures contract, a commodity
2-67 option, or another contract if the contract or option is:
2-68 (A) traded on or subject to the rules of a board
2-69 of trade that has been designated as a contract market for such a
3-1 contract pursuant to federal commodities laws; or
3-2 (B) traded on a foreign commodity board of
3-3 trade, exchange, or market and is carried on the books of a
3-4 commodity intermediary for a commodity customer.
3-5 (16) "Commodity customer" means a person for which a
3-6 commodity intermediary carries a commodity contract on its books.
3-7 (17) "Commodity intermediary" means a person that:
3-8 (A) is registered as a futures commission
3-9 merchant under federal commodities law; or
3-10 (B) in the ordinary course of its business
3-11 provides clearance or settlement services for a board of trade that
3-12 has been designated as a contract market pursuant to federal
3-13 commodities law.
3-14 (18) "Communicate" means:
3-15 (A) to send a written or other tangible record;
3-16 (B) to transmit a record by any means agreed
3-17 upon by the persons sending and receiving the record; or
3-18 (C) in the case of transmission of a record to
3-19 or by a filing office, to transmit a record by any means prescribed
3-20 by filing-office rule.
3-21 (19) "Consignee" means a merchant to which goods are
3-22 delivered in a consignment.
3-23 (20) "Consignment" means a transaction, regardless of
3-24 its form, in which a person delivers goods to a merchant for the
3-25 purpose of sale and:
3-26 (A) the merchant:
3-27 (i) deals in goods of that kind under a
3-28 name other than the name of the person making delivery;
3-29 (ii) is not an auctioneer; and
3-30 (iii) is not generally known by its
3-31 creditors to be substantially engaged in selling the goods of
3-32 others;
3-33 (B) with respect to each delivery, the aggregate
3-34 value of the goods is $1,000 or more at the time of delivery;
3-35 (C) the goods are not consumer goods immediately
3-36 before delivery;
3-37 (D) the transaction does not create a security
3-38 interest that secures an obligation; and
3-39 (E) the transaction does not involve delivery of
3-40 a work of art to an art dealer, as provided by the Artists'
3-41 Consignment Act (Article 9018, Vernon's Texas Civil Statutes).
3-42 (21) "Consignor" means a person that delivers goods to
3-43 a consignee in a consignment.
3-44 (22) "Consumer debtor" means a debtor in a consumer
3-45 transaction.
3-46 (23) "Consumer goods" means goods that are used or
3-47 bought for use primarily for personal, family, or household
3-48 purposes.
3-49 (24) "Consumer-goods transaction" means a consumer
3-50 transaction in which:
3-51 (A) an individual incurs an obligation primarily
3-52 for personal, family, or household purposes; and
3-53 (B) a security interest in consumer goods
3-54 secures the obligation.
3-55 (25) "Consumer obligor" means an obligor who is an
3-56 individual and who incurred the obligation as part of a transaction
3-57 entered into primarily for personal, family, or household purposes.
3-58 (26) "Consumer transaction" means a transaction in
3-59 which (i) an individual incurs an obligation primarily for
3-60 personal, family, or household purposes, (ii) a security interest
3-61 secures the obligation, and (iii) the collateral is held or
3-62 acquired primarily for personal, family, or household purposes.
3-63 The term includes consumer-goods transactions.
3-64 (27) "Continuation statement" means an amendment of a
3-65 financing statement that:
3-66 (A) identifies, by its file number, the initial
3-67 financing statement to which it relates; and
3-68 (B) indicates that it is a continuation
3-69 statement for, or that it is filed to continue the effectiveness
4-1 of, the identified financing statement.
4-2 (28) "Debtor" means:
4-3 (A) a person having an interest, other than a
4-4 security interest or other lien, in the collateral, whether or not
4-5 the person is an obligor;
4-6 (B) a seller of accounts, chattel paper, payment
4-7 intangibles, or promissory notes; or
4-8 (C) a consignee.
4-9 (29) "Deposit account" means a demand, time, savings,
4-10 passbook, or similar account maintained with a bank. The term
4-11 includes a nonnegotiable certificate of deposit. The term does not
4-12 include investment property or accounts evidenced by an instrument.
4-13 (30) "Document" means a document of title or a receipt
4-14 of the type described in Section 7.201(b).
4-15 (31) "Electronic chattel paper" means chattel paper
4-16 evidenced by a record or records consisting of information stored
4-17 in an electronic medium.
4-18 (32) "Encumbrance" means a right, other than an
4-19 ownership interest, in real property. The term includes mortgages
4-20 and other liens on real property.
4-21 (33) "Equipment" means goods other than inventory,
4-22 farm products, or consumer goods.
4-23 (34) "Farm products" means goods, other than standing
4-24 timber, with respect to which the debtor is engaged in a farming
4-25 operation and which are:
4-26 (A) crops grown, growing, or to be grown,
4-27 including:
4-28 (i) crops produced on trees, vines, and
4-29 bushes; and
4-30 (ii) aquatic goods produced in
4-31 aquacultural operations;
4-32 (B) livestock, born or unborn, including aquatic
4-33 goods produced in aquacultural operations;
4-34 (C) supplies used or produced in a farming
4-35 operation; or
4-36 (D) products of crops or livestock in their
4-37 unmanufactured states.
4-38 (35) "Farming operation" means raising, cultivating,
4-39 propagating, fattening, grazing, or any other farming, livestock,
4-40 or aquacultural operation.
4-41 (36) "File number" means the number assigned to an
4-42 initial financing statement pursuant to Section 9.519(a).
4-43 (37) "Filing office" means an office designated in
4-44 Section 9.501 as the place to file a financing statement.
4-45 (38) "Filing-office rule" means a rule adopted
4-46 pursuant to Section 9.526.
4-47 (39) "Financing statement" means a record or records
4-48 composed of an initial financing statement and any filed record
4-49 relating to the initial financing statement.
4-50 (40) "Fixture filing" means the filing of a financing
4-51 statement covering goods that are or are to become fixtures and
4-52 satisfying Sections 9.502(a) and (b). The term includes the filing
4-53 of a financing statement covering goods of a transmitting utility
4-54 that are or are to become fixtures.
4-55 (41) "Fixtures" means goods that have become so
4-56 related to particular real property that an interest in them arises
4-57 under the real property law of the State in which the real property
4-58 is situated.
4-59 (42) "General intangible" means any personal property,
4-60 including things in action, other than accounts, chattel paper,
4-61 commercial tort claims, deposit accounts, documents, goods,
4-62 instruments, investment property, letter-of-credit rights, letters
4-63 of credit, money, and oil, gas, or other minerals before
4-64 extraction. The term includes payment intangibles and software.
4-65 (43) "Good faith" means honesty in fact and the
4-66 observance of reasonable commercial standards of fair dealing.
4-67 (44) "Goods" means all things that are movable when a
4-68 security interest attaches. The term includes (i) fixtures, (ii)
4-69 standing timber that is to be cut and removed under a conveyance or
5-1 contract for sale, (iii) the unborn young of animals, (iv) crops
5-2 grown, growing, or to be grown, even if the crops are produced on
5-3 trees, vines, or bushes, and (v) manufactured homes. The term also
5-4 includes a computer program embedded in goods and any supporting
5-5 information provided in connection with a transaction relating to
5-6 the program if (i) the program is associated with the goods in such
5-7 a manner that it customarily is considered part of the goods, or
5-8 (ii) by becoming the owner of the goods, a person acquires a right
5-9 to use the program in connection with the goods. The term does not
5-10 include a computer program embedded in goods that consist solely of
5-11 the medium in which the program is embedded. The term also does
5-12 not include accounts, chattel paper, commercial tort claims,
5-13 deposit accounts, documents, general intangibles, instruments,
5-14 investment property, letter-of-credit rights, letters of credit,
5-15 money, or oil, gas, or other minerals before extraction.
5-16 (45) "Governmental unit" means a subdivision, agency,
5-17 department, county, parish, municipality, or other unit of the
5-18 government of the United States, a State, or a foreign country.
5-19 The term includes an organization having a separate corporate
5-20 existence if the organization is eligible to issue debt on which
5-21 interest is exempt from income taxation under the laws of the
5-22 United States.
5-23 (46) "Health-care-insurance receivable" means an
5-24 interest in or claim under a policy of insurance that is a right to
5-25 payment of a monetary obligation for health care goods or services
5-26 provided.
5-27 (47) "Instrument" means a negotiable instrument or any
5-28 other writing that evidences a right to the payment of a monetary
5-29 obligation, is not itself a security agreement or lease, and is of
5-30 a type that in ordinary course of business is transferred by
5-31 delivery with any necessary indorsement or assignment. The term
5-32 does not include (i) investment property, (ii) letters of credit,
5-33 (iii) writings that evidence a right to payment arising out of the
5-34 use of a credit or charge card or information contained on or for
5-35 use with the card, or (iv) nonnegotiable certificates of deposit.
5-36 (48) "Inventory" means goods, other than farm
5-37 products, that:
5-38 (A) are leased by a person as lessor;
5-39 (B) are held by a person for sale or lease or to
5-40 be furnished under a contract of service;
5-41 (C) are furnished by a person under a contract
5-42 of service; or
5-43 (D) consist of raw materials, work in process,
5-44 or materials used or consumed in a business.
5-45 (49) "Investment property" means a security, whether
5-46 certificated or uncertificated, security entitlement, securities
5-47 account, commodity contract, or commodity account.
5-48 (50) "Jurisdiction of organization," with respect to a
5-49 registered organization, means the jurisdiction under whose law the
5-50 organization is organized.
5-51 (51) "Letter-of-credit right" means a right to payment
5-52 or performance under a letter of credit, whether or not the
5-53 beneficiary has demanded or is at the time entitled to demand
5-54 payment or performance. The term does not include the right of a
5-55 beneficiary to demand payment or performance under a letter of
5-56 credit.
5-57 (52) "Lien creditor" means:
5-58 (A) a creditor that has acquired a lien on the
5-59 property involved by attachment, levy, or the like;
5-60 (B) an assignee for benefit of creditors from
5-61 the time of assignment;
5-62 (C) a trustee in bankruptcy from the date of the
5-63 filing of the petition; or
5-64 (D) a receiver in equity from the time of
5-65 appointment.
5-66 (53) "Manufactured home" means a structure,
5-67 transportable in one or more sections, that, in the traveling mode,
5-68 is 8 body feet or more in width or 40 body feet or more in length,
5-69 or, when erected on site, is 320 or more square feet, and that is
6-1 built on a permanent chassis and designed to be used as a dwelling
6-2 with or without a permanent foundation when connected to the
6-3 required utilities, and includes the plumbing, heating,
6-4 air-conditioning, and electrical systems contained therein. The
6-5 term includes any structure that meets all of the requirements of
6-6 this subdivision except the size requirements and with respect to
6-7 which the manufacturer voluntarily files a certification required
6-8 by the United States secretary of housing and urban development and
6-9 complies with the standards established under Title 42 of the
6-10 United States Code.
6-11 (54) "Manufactured-home transaction" means a secured
6-12 transaction:
6-13 (A) that creates a purchase-money security
6-14 interest in a manufactured home, other than a manufactured home
6-15 held as inventory; or
6-16 (B) in which a manufactured home, other than a
6-17 manufactured home held as inventory, is the primary collateral.
6-18 (55) "Mortgage" means a consensual interest in real
6-19 property, including fixtures, that secures payment or performance
6-20 of an obligation.
6-21 (56) "New debtor" means a person that becomes bound as
6-22 debtor under Section 9.203(d) by a security agreement previously
6-23 entered into by another person.
6-24 (57) "New value" means (i) money, (ii) money's worth
6-25 in property, services, or new credit, or (iii) release by a
6-26 transferee of an interest in property previously transferred to the
6-27 transferee. The term does not include an obligation substituted
6-28 for another obligation.
6-29 (58) "Noncash proceeds" means proceeds other than cash
6-30 proceeds.
6-31 (59) "Nonnegotiable certificate of deposit" means a
6-32 writing signed by a bank that:
6-33 (A) states on its face that it is a certificate
6-34 of deposit (as defined in Section 3.104) or receipt for a book
6-35 entry;
6-36 (B) contains an acknowledgement that a sum of
6-37 money has been received by the bank, with an express or implied
6-38 agreement that the bank will repay the sum of money; and
6-39 (C) is not a negotiable instrument.
6-40 (60) "Obligor" means a person that, with respect to an
6-41 obligation secured by a security interest in or an agricultural
6-42 lien on the collateral, (i) owes payment or other performance of
6-43 the obligation, (ii) has provided property other than the
6-44 collateral to secure payment or other performance of the
6-45 obligation, or (iii) is otherwise accountable in whole or in part
6-46 for payment or other performance of the obligation. The term does
6-47 not include issuers or nominated persons under a letter of credit.
6-48 (61) "Original debtor" means a person that, as debtor,
6-49 entered into a security agreement to which a new debtor has become
6-50 bound under Section 9.203(d).
6-51 (62) "Payment intangible" means a general intangible
6-52 under which the account debtor's principal obligation is a monetary
6-53 obligation.
6-54 (63) "Person related to," with respect to an
6-55 individual, means:
6-56 (A) the spouse of the individual;
6-57 (B) a brother, brother-in-law, sister, or
6-58 sister-in-law of the individual;
6-59 (C) an ancestor or lineal descendant of the
6-60 individual or the individual's spouse; or
6-61 (D) any other relative, by blood or marriage, of
6-62 the individual or the individual's spouse who shares the same home
6-63 with the individual.
6-64 (64) "Person related to," with respect to an
6-65 organization, means:
6-66 (A) a person directly or indirectly controlling,
6-67 controlled by, or under common control with the organization;
6-68 (B) an officer or director of, or a person
6-69 performing similar functions with respect to, the organization;
7-1 (C) an officer or director of, or a person
7-2 performing similar functions with respect to, a person described in
7-3 Paragraph (A);
7-4 (D) the spouse of an individual described in
7-5 Paragraph (A), (B), or (C); or
7-6 (E) an individual who is related by blood or
7-7 marriage to an individual described in Paragraph (A), (B), (C), or
7-8 (D) and shares the same home with the individual.
7-9 (65) "Proceeds" means the following property:
7-10 (A) whatever is acquired upon the sale, lease,
7-11 license, exchange, or other disposition of collateral;
7-12 (B) whatever is collected on, or distributed on
7-13 account of, collateral;
7-14 (C) rights arising out of collateral;
7-15 (D) to the extent of the value of collateral,
7-16 claims arising out of the loss, nonconformity, or interference with
7-17 the use of, defects or infringement of rights in, or damage to the
7-18 collateral; or
7-19 (E) to the extent of the value of collateral and
7-20 to the extent payable to the debtor or the secured party, insurance
7-21 payable by reason of the loss or nonconformity of, defects or
7-22 infringement of rights in, or damage to the collateral.
7-23 (66) "Promissory note" means an instrument that
7-24 evidences a promise to pay a monetary obligation, does not evidence
7-25 an order to pay, and does not contain an acknowledgement by a bank
7-26 that the bank has received for deposit a sum of money or funds.
7-27 (67) "Proposal" means a record authenticated by a
7-28 secured party that includes the terms on which the secured party is
7-29 willing to accept collateral in full or partial satisfaction of the
7-30 obligation it secures pursuant to Sections 9.620, 9.621, and 9.622.
7-31 (68) "Public-finance transaction" means a secured
7-32 transaction in connection with which:
7-33 (A) debt securities are issued;
7-34 (B) all or a portion of the securities issued
7-35 have an initial stated maturity of at least 20 years; and
7-36 (C) the debtor, obligor, secured party, account
7-37 debtor or other person obligated on collateral, assignor or
7-38 assignee or a secured obligation, or assignor or assignee of a
7-39 security interest is a State or a governmental unit of a State.
7-40 (69) "Pursuant to commitment," with respect to an
7-41 advance made or other value given by a secured party, means
7-42 pursuant to the secured party's obligation, whether or not a
7-43 subsequent event of default or other event not within the secured
7-44 party's control has relieved or may relieve the secured party from
7-45 its obligation.
7-46 (70) "Record," except as used in "for record," "of
7-47 record," "record or legal title," and "record owner," means
7-48 information that is inscribed on a tangible medium or that is
7-49 stored in an electronic or other medium and is retrievable in
7-50 perceivable form.
7-51 (71) "Registered organization" means an organization
7-52 organized solely under the law of a single State or the United
7-53 States and as to which the State or the United States must maintain
7-54 a public record showing the organization to have been organized.
7-55 (72) "Secondary obligor" means an obligor to the
7-56 extent that:
7-57 (A) the obligor's obligation is secondary; or
7-58 (B) the obligor has a right of recourse with
7-59 respect to an obligation secured by collateral against the debtor,
7-60 another obligor, or property of either.
7-61 (73) "Secured party" means:
7-62 (A) a person in whose favor a security interest
7-63 is created or provided for under a security agreement, whether or
7-64 not any obligation to be secured is outstanding;
7-65 (B) a person that holds an agricultural lien;
7-66 (C) a consignor;
7-67 (D) a person to which accounts, chattel paper,
7-68 payment intangibles, or promissory notes have been sold;
7-69 (E) a trustee, indenture trustee, agent,
8-1 collateral agent, or other representative in whose favor a security
8-2 interest or agricultural lien is created or provided for; or
8-3 (F) a person that holds a security interest
8-4 arising under Section 2.401, 2.505, 2.711(c), 2A.508(e), 4.210, or
8-5 5.118.
8-6 (74) "Security agreement" means an agreement that
8-7 creates or provides for a security interest.
8-8 (75) "Send," in connection with a record or
8-9 notification, means:
8-10 (A) to deposit in the mail, deliver for
8-11 transmission, or transmit by any other usual means of
8-12 communication, with postage or cost of transmission provided for,
8-13 addressed to any address reasonable under the circumstances; or
8-14 (B) to cause the record or notification to be
8-15 received within the time that it would have been received if
8-16 properly sent under Paragraph (A).
8-17 (76) "Software" means a computer program and any
8-18 supporting information provided in connection with a transaction
8-19 relating to the program. The term does not include a computer
8-20 program that is included in the definition of "goods."
8-21 (77) "State" means a State of the United States, the
8-22 District of Columbia, Puerto Rico, the United States Virgin
8-23 Islands, or any territory or insular possession subject to the
8-24 jurisdiction of the United States.
8-25 (78) "Supporting obligation" means a letter-of-credit
8-26 right or secondary obligation that supports the payment or
8-27 performance of an account, chattel paper, a document, a general
8-28 intangible, an instrument, or investment property.
8-29 (79) "Tangible chattel paper" means chattel paper
8-30 evidenced by a record or records consisting of information that is
8-31 inscribed on a tangible medium.
8-32 (80) "Termination statement" means an amendment of a
8-33 financing statement that:
8-34 (A) identifies, by its file number, the initial
8-35 financing statement to which it relates; and
8-36 (B) indicates either that it is a termination
8-37 statement or that the identified financing statement is no longer
8-38 effective.
8-39 (81) "Transmitting utility" means a person primarily
8-40 engaged in the business of:
8-41 (A) operating a railroad, subway, street
8-42 railway, or trolley bus;
8-43 (B) transmitting communications electrically,
8-44 electromagnetically, or by light;
8-45 (C) transmitting goods by pipeline or sewer; or
8-46 (D) transmitting or producing and transmitting
8-47 electricity, steam, gas, or water. [POLICY AND SUBJECT MATTER OF
8-48 CHAPTER. (a) Except as otherwise provided in Section 9.104 on
8-49 excluded transactions, this chapter applies]
8-50 [(1) to any transaction (regardless of its form) which
8-51 is intended to create a security interest in personal property or
8-52 fixtures including goods, documents, instruments, general
8-53 intangibles, chattel paper or accounts; and also]
8-54 [(2) to any sale of accounts or chattel paper,
8-55 provided that the application of this chapter to the sale of
8-56 accounts or chattel paper is not to recharacterize the sale of
8-57 accounts or chattel paper as a transaction to secure indebtedness
8-58 but to protect purchasers of accounts or chattel paper by providing
8-59 a notice filing system.]
8-60 [(b) This chapter applies to security interests created by
8-61 contract including pledge, assignment, chattel mortgage, chattel
8-62 trust, trust deed, factor's lien, equipment trust, conditional
8-63 sale, trust receipt, other lien or title retention contract and
8-64 lease or consignment intended as security. This chapter does not
8-65 apply to statutory liens except as provided in Section 9.310.]
8-66 [(c) The application of this chapter to a security interest
8-67 in a secured obligation is not affected by the fact that the
8-68 obligation is itself secured by a transaction or interest to which
8-69 this chapter does not apply.]
9-1 [(d) For all purposes, in the absence of a finding of fraud
9-2 or intentional misrepresentation, the parties' characterization of
9-3 a transaction as a sale of accounts or chattel paper shall be
9-4 conclusive that the transaction is a sale and is not a secured
9-5 transaction and that title, legal and equitable, has passed to the
9-6 party characterized as the purchaser of the accounts or chattel
9-7 paper, regardless of whether the secured party has any recourse
9-8 against the debtor, whether the debtor is entitled to any surplus,
9-9 or any other term of the parties' agreement.]
9-10 [Sec. 9.103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE
9-11 STATE TRANSACTIONS. (a) Documents, instruments and ordinary
9-12 goods.]
9-13 [(1) This subsection applies to documents and
9-14 instruments and to goods other than those covered by a certificate
9-15 of title described in Subsection (b), mobile goods described in
9-16 Subsection (c), and minerals described in Subsection (e).]
9-17 [(2) Except as otherwise provided in this subsection,
9-18 perfection and the effect of perfection or non-perfection of a
9-19 security interest in collateral are governed by the law of the
9-20 jurisdiction where the collateral is when the last event occurs on
9-21 which is based the assertion that the security interest is
9-22 perfected or unperfected.]
9-23 [(3) If the parties to a transaction creating a
9-24 purchase money security interest in goods in one jurisdiction
9-25 understand at the time that the security interest attaches that the
9-26 goods will be kept in another jurisdiction, then the law of the
9-27 other jurisdiction governs the perfection and the effect of
9-28 perfection or non-perfection of the security interest from the time
9-29 it attaches until 30 days after the debtor receives possession of
9-30 the goods and thereafter if the goods are taken to the other
9-31 jurisdiction before the end of the 30-day period.]
9-32 [(4) When collateral is brought into and kept in this
9-33 state while subject to a security interest perfected under the law
9-34 of the jurisdiction from which the collateral was removed, the
9-35 security interest remains perfected, but if action is required by
9-36 Subchapter C of this chapter to perfect the security interest,]
9-37 [(A) if the action is not taken before the
9-38 expiration of the period of perfection in the other jurisdiction or
9-39 the end of four months after the collateral is brought into this
9-40 state, whichever period first expires, the security interest
9-41 becomes unperfected at the end of that period and is thereafter
9-42 deemed to have been unperfected as against a person who became a
9-43 purchaser after removal;]
9-44 [(B) if the action is taken before the
9-45 expiration of the period specified in paragraph (A), the security
9-46 interest continues perfected thereafter;]
9-47 [(C) for the purpose of priority over a buyer of
9-48 consumer goods (Subsection (b) of Section 9.307), the period of the
9-49 effectiveness of a filing in the jurisdiction from which the
9-50 collateral is removed is governed by the rules with respect to
9-51 perfection in paragraphs (A) and (B).]
9-52 [(b) Certificate of title.]
9-53 [(1) This subsection applies to goods covered by a
9-54 certificate of title issued under a statute of this state or of
9-55 another jurisdiction under the law of which indication of a
9-56 security interest on the certificate is required as a condition of
9-57 perfection.]
9-58 [(2) Except as otherwise provided in this subsection,
9-59 perfection and the effect of perfection or non-perfection of the
9-60 security interest are governed by the law (including the conflict
9-61 of laws rules) of the jurisdiction issuing the certificate until
9-62 four months after the goods are removed from that jurisdiction and
9-63 thereafter until the goods are registered in another jurisdiction,
9-64 but in any event not beyond surrender of the certificate. After
9-65 the expiration of that period, the goods are not covered by the
9-66 certificate of title within the meaning of this section.]
9-67 [(3) Except with respect to the rights of a buyer
9-68 described in the next paragraph, a security interest, perfected in
9-69 another jurisdiction otherwise than by notation on a certificate of
10-1 title, in goods brought into this state and thereafter covered by a
10-2 certificate of title issued by this state is subject to the rules
10-3 stated in paragraph (4) of Subsection (a).]
10-4 [(4) If goods are brought into this state while a
10-5 security interest therein is perfected in any manner under the law
10-6 of the jurisdiction from which the goods are removed and a
10-7 certificate of title is issued by this state and the certificate
10-8 does not show that the goods are subject to the security interest
10-9 or that they may be subject to security interests not shown on the
10-10 certificate, the security interest is subordinate to the rights of
10-11 a buyer of the goods who is not in the business of selling goods of
10-12 that kind to the extent that he gives value and receives delivery
10-13 of the goods after issuance of the certificate and without
10-14 knowledge of the security interest.]
10-15 [(c) Accounts, general intangibles and mobile goods.]
10-16 [(1) This subsection applies to accounts (other than
10-17 an account described in Subsection (e) on minerals) and general
10-18 intangibles (other than uncertificated securities) and to goods
10-19 which are mobile and which are of a type normally used in more than
10-20 one jurisdiction, such as motor vehicles, trailers, rolling stock,
10-21 airplanes, shipping containers, road building and construction
10-22 machinery and commercial harvesting machinery and the like, if the
10-23 goods are equipment or are inventory leased or held for lease by
10-24 the debtor to others, and are not covered by a certificate of title
10-25 described in Subsection (b).]
10-26 [(2) The law (including the conflict of laws rules) of
10-27 the jurisdiction in which the debtor is located governs the
10-28 perfection and the effect of perfection or non-perfection of the
10-29 security interest.]
10-30 [(3) If, however, the debtor is located in the
10-31 jurisdiction which is not a part of the United States, and which
10-32 does not provide for perfection of the security interest by filing
10-33 or recording in that jurisdiction, the law of the jurisdiction in
10-34 the United States in which the debtor has its major executive
10-35 office in the United States governs the perfection and the effect
10-36 of perfection or non-perfection of the security interest through
10-37 filing. In the alternative, if the debtor is located in a
10-38 jurisdiction which is not a part of the United States or Canada and
10-39 the collateral is accounts or general intangibles for money due or
10-40 to become due, the security interest may be perfected by
10-41 notification to the account debtor. As used in this paragraph,
10-42 "United States" includes its territories and possessions and the
10-43 Commonwealth of Puerto Rico.]
10-44 [(4) A debtor shall be deemed located at his place of
10-45 business if he has one, at his chief executive office if he has
10-46 more than one place of business, otherwise at his residence. If,
10-47 however, the debtor is a foreign air carrier under the Federal
10-48 Aviation Act of 1958, as amended, it shall be deemed located at the
10-49 designated office of the agent upon whom service of process may be
10-50 made on behalf of the foreign air carrier.]
10-51 [(5) A security interest perfected under the law of
10-52 the jurisdiction of the location of the debtor is perfected until
10-53 the expiration of four months after a change of the debtor's
10-54 location to another jurisdiction, or until perfection would have
10-55 ceased by the law of the first jurisdiction, whichever period first
10-56 expires. Unless perfected in the new jurisdiction before the end
10-57 of that period, it becomes unperfected thereafter and is deemed to
10-58 have been unperfected as against a person who became a purchaser
10-59 after the change.]
10-60 [(d) Chattel paper.]
10-61 [The rules stated for goods in Subsection (a) apply to a
10-62 possessory security interest in chattel paper. The rules stated
10-63 for accounts in Subsection (c) apply to a non-possessory security
10-64 interest in chattel paper, but the security interest may not be
10-65 perfected by notification to the account debtor.]
10-66 [(e) Minerals.]
10-67 [Perfection and the effect of perfection or non-perfection of
10-68 a security interest which is created by a debtor who has an
10-69 interest in minerals or the like (including oil and gas) before
11-1 extraction and which attaches thereto as extracted, or which
11-2 attaches to an account resulting from the sale thereof at the
11-3 wellhead or minehead are governed by the law (including the
11-4 conflict of laws rules) of the jurisdiction wherein the wellhead or
11-5 minehead is located.]
11-6 [(f) Investment property.]
11-7 [(1) This subsection applies to investment property.]
11-8 [(2) Except as otherwise provided in Subdivision (6),
11-9 during the time that a security certificate is located in a
11-10 jurisdiction, perfection of a security interest, the effect of
11-11 perfection or non-perfection, and the priority of a security
11-12 interest in the certificated security represented thereby are
11-13 governed by the local law of that jurisdiction.]
11-14 [(3) Except as otherwise provided in Subdivision (6),
11-15 perfection of a security interest, the effect of perfection or
11-16 non-perfection, and the priority of a security interest in an
11-17 uncertificated security are governed by the local law of the
11-18 issuer's jurisdiction as specified in Section 8.110(d).]
11-19 [(4) Except as otherwise provided in Subdivision (6),
11-20 perfection of a security interest, the effect of perfection or
11-21 non-perfection, and the priority of a security interest in a
11-22 security entitlement or securities account are governed by the
11-23 local law of the securities intermediary's jurisdiction as
11-24 specified in Section 8.110(e).]
11-25 [(5) Except as otherwise provided in Subdivision (6),
11-26 perfection of a security interest, the effect of perfection or
11-27 non-perfection, and the priority of a security interest in a
11-28 commodity contract or commodity account are governed by the local
11-29 law of the commodity intermediary's jurisdiction. The following
11-30 rules determine a commodity intermediary's jurisdiction for
11-31 purposes of this subdivision:]
11-32 [(A) If an agreement between the commodity
11-33 intermediary and the commodity customer specifies that it is
11-34 governed by the law of a particular jurisdiction, that jurisdiction
11-35 is the commodity intermediary's jurisdiction.]
11-36 [(B) If an agreement between the commodity
11-37 intermediary and the commodity customer does not specify the
11-38 governing law as provided in Paragraph (A), but expressly specifies
11-39 that the commodity account is maintained at an office in a
11-40 particular jurisdiction, that jurisdiction is the commodity
11-41 intermediary's jurisdiction.]
11-42 [(C) If an agreement between the commodity
11-43 intermediary and the commodity customer does not specify a
11-44 jurisdiction as provided in Paragraph (A) or (B), the commodity
11-45 intermediary's jurisdiction is the jurisdiction in which is located
11-46 the office identified in an account statement as the office serving
11-47 the commodity customer's account.]
11-48 [(D) If an agreement between the commodity
11-49 intermediary and the commodity customer does not specify a
11-50 jurisdiction as provided in Paragraph (A) or (B) and an account
11-51 statement does not identify an office serving the commodity
11-52 customer's account as provided in Paragraph (C), the commodity
11-53 intermediary's jurisdiction is the jurisdiction in which is located
11-54 the chief executive office of the commodity intermediary.]
11-55 [(6) Perfection of a security interest by filing,
11-56 automatic perfection of a security interest in investment property
11-57 granted by a broker or securities intermediary, and automatic
11-58 perfection of a security interest in a commodity contract or
11-59 commodity account granted by a commodity intermediary are governed
11-60 by the local law of the jurisdiction in which the debtor is
11-61 located.]
11-62 [Sec. 9.104. TRANSACTIONS EXCLUDED FROM CHAPTER. This
11-63 chapter does not apply]
11-64 [(1) to a security interest subject to any statute of
11-65 the United States such as the Ship Mortgage Act, 1920, to the
11-66 extent that such statute governs the rights of parties to and third
11-67 parties affected by transactions in particular types of property;
11-68 or]
11-69 [(2) to a landlord's lien; or]
12-1 [(3) to a lien given by statute or other rule of law
12-2 for services or materials except as provided in Section 9.310 on
12-3 priority of such liens; or]
12-4 [(4) to a transfer of a claim for wages, salary or
12-5 other compensation of an employee; or]
12-6 [(5) to a transfer by a government or governmental
12-7 subdivision or agency; or]
12-8 [(6) to a sale of accounts or chattel paper as part of
12-9 a sale of the business out of which they arose, or an assignment of
12-10 accounts or chattel paper which is for the purpose of collection
12-11 only, or a transfer of a right to payment under a contract to an
12-12 assignee who is also to do the performance under the contract or a
12-13 transfer of a single account to an assignee in whole or partial
12-14 satisfaction of a preexisting indebtedness; or]
12-15 [(7) to a transfer of an interest or claim in or under
12-16 any policy of insurance, except as provided with respect to
12-17 proceeds (Section 9.306) and priorities in proceeds (Section
12-18 9.312); or]
12-19 [(8) to a right represented by a judgment (other than
12-20 a judgment taken on a right to payment which was collateral); or]
12-21 [(9) to any right of set-off; or]
12-22 [(10) except to the extent that provision is made for
12-23 fixtures in Section 9.313, to the creation or transfer of an
12-24 interest in or lien on real estate, including a lease or rents
12-25 thereunder; or]
12-26 [(11) to a transfer in whole or in part of any claim
12-27 arising out of tort; or]
12-28 [(12) to a transfer of an interest in any deposit
12-29 account (Subsection (a)(5) of Section 9.105), except as provided
12-30 with respect to proceeds (Section 9.306) and priorities in proceeds
12-31 (Section 9.312).]
12-32 [Sec. 9.105. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
12-33 this chapter, unless the context otherwise requires:]
12-34 [(1) "Account debtor" means the person who is
12-35 obligated on an account, chattel paper or general intangible.]
12-36 [(2) "Chattel paper" means a writing or writings which
12-37 evidence both a monetary obligation and a security interest in or a
12-38 lease of specific goods, but a charter or other contract involving
12-39 the use or hire of a vessel is not chattel paper. When a
12-40 transaction is evidenced both by such a security agreement or a
12-41 lease and by an instrument or a series of instruments, the group of
12-42 writings taken together constitutes chattel paper.]
12-43 [(3) "Collateral" means the property subject to a
12-44 security interest, and includes accounts and chattel paper which
12-45 have been sold.]
12-46 [(4) "Debtor" means the person who owes payment or
12-47 other performance of the obligation secured, whether or not he owns
12-48 or has rights in the collateral, and includes the seller of
12-49 accounts or chattel paper. Where the debtor and the owner of the
12-50 collateral are not the same person, the term "debtor" means the
12-51 owner of the collateral in any provision of the chapter dealing
12-52 with the collateral, the obligor in any provision dealing with the
12-53 obligation, and may include both where the context so requires.]
12-54 [(5) "Deposit account" means a demand, time, savings,
12-55 passbook or like account maintained with a bank, savings and loan
12-56 association, credit union or like organization, other than an
12-57 account evidenced by a certificate of deposit or a nonnegotiable
12-58 certificate of deposit.]
12-59 [(6) "Document" means document of title as defined in
12-60 the general definitions of Chapter 1 (Section 1.201), and a receipt
12-61 of the kind described in Subsection (b) of Section 7.201.]
12-62 [(7) "Encumbrance" includes real estate mortgages and
12-63 other liens on real estate and all other rights in real estate that
12-64 are not ownership interests.]
12-65 [(8) "Goods" includes all things which are movable at
12-66 the time the security interest attaches or which are fixtures
12-67 (Section 9.313), but does not include money, documents,
12-68 instruments, investment property, accounts, chattel paper, general
12-69 intangibles, or minerals or the like (including oil and gas) before
13-1 extraction. "Goods" also includes standing timber which is to be
13-2 cut and removed under a conveyance or contract for sale, the unborn
13-3 young of animals, and growing crops.]
13-4 [(9) "Instrument" means a negotiable instrument
13-5 (defined in Section 3.104), a nonnegotiable certificate of deposit,
13-6 or any other writing which evidences a right to the payment of
13-7 money and is not itself a security agreement or lease and is of a
13-8 type which is in ordinary course of business transferred by
13-9 delivery with any necessary indorsement or assignment, but the term
13-10 does not include investment property.]
13-11 [(10) "Mortgage" means a consensual interest created
13-12 by a real estate mortgage, a trust deed on real estate, or the
13-13 like.]
13-14 [(11) An advance is made "pursuant to commitment" if
13-15 the secured party has bound himself to make it, whether or not a
13-16 subsequent event of default or other event not within his control
13-17 has relieved or may relieve him from his obligation.]
13-18 [(12) "Security agreement" means an agreement which
13-19 creates or provides for a security interest.]
13-20 [(13) "Secured party" means a lender, seller or other
13-21 person in whose favor there is a security interest, including a
13-22 person to whom accounts or chattel paper have been sold. When the
13-23 holders of obligations issued under an indenture of trust,
13-24 equipment trust agreement or the like are represented by a trustee
13-25 or other person, the representative is the secured party.]
13-26 [(14) "Nonnegotiable certificate of deposit" means a
13-27 written document issued by a bank, savings and loan association,
13-28 credit union, or similar financial organization that:]
13-29 [(A) states on its face that it is a certificate
13-30 of deposit (defined in Section 3.104) or receipt for a book entry;]
13-31 [(B) contains an acknowledgment that a sum of
13-32 money has been received by the issuer, with an express or implied
13-33 agreement that the issuer will repay the sum of money; and]
13-34 [(C) is not a negotiable instrument.]
13-35 (b) The following definitions in other chapters apply [Other
13-36 definitions applying] to this chapter [and the sections in which
13-37 they appear are]:
13-38 "Applicant" Section 5.102.
13-39 "Beneficiary" Section 5.102.
13-40 "Broker" Section 8.102.
13-41 "Certificated security" Section 8.102.
13-42 "Check" Section 3.104.
13-43 "Clearing corporation" Section 8.102.
13-44 "Contract for sale" Section 2.106.
13-45 "Customer" Section 4.104.
13-46 "Entitlement holder" Section 8.102.
13-47 "Financial asset" Section 8.102.
13-48 "Holder in due course" Section 3.302.
13-49 "Issuer" (with respect to a letter of
13-50 credit or letter-of-credit right) Section 5.102.
13-51 "Issuer" (with respect to a security) Section 8.201.
13-52 "Lease" Section 2A.103.
13-53 "Lease agreement" Section 2A.103.
13-54 "Lease contract" Section 2A.103.
13-55 "Leasehold interest" Section 2A.103.
13-56 "Lessee" Section 2A.103.
13-57 "Lessee in ordinary course of business" Section 2A.103.
13-58 "Lessor" Section 2A.103.
13-59 "Lessor's residual interest" Section 2A.103.
13-60 "Letter of credit" Section 5.102.
13-61 "Merchant" Section 2.104.
13-62 "Negotiable instrument" Section 3.104.
13-63 "Nominated person" Section 5.102.
13-64 "Note" Section 3.104.
13-65 "Proceeds of a letter of credit" Section 5.114.
13-66 "Prove" Section 3.103.
13-67 "Sale" Section 2.106.
13-68 "Securities account" Section 8.501.
13-69 "Securities intermediary" Section 8.102.
14-1 "Security" Section 8.102.
14-2 "Security certificate" Section 8.102.
14-3 "Security entitlement" Section 8.102.
14-4 "Uncertificated security" Section 8.102.
14-5 ["Account". Section 9.106.]
14-6 ["Attach". Section 9.203.]
14-7 ["Commodity contract". Section 9.115.]
14-8 ["Commodity customer". Section 9.115.]
14-9 ["Commodity intermediary". Section 9.115.]
14-10 ["Construction mortgage". Section 9.313(a).]
14-11 ["Consumer goods". Section 9.109(1).]
14-12 ["Control". Section 9.115.]
14-13 ["Equipment". Section 9.109(2).]
14-14 ["Farm products". Section 9.109(3).]
14-15 ["Fixture". Section 9.313.]
14-16 ["Fixture filing". Section 9.313.]
14-17 ["General intangibles". Section 9.106.]
14-18 ["Inventory". Section 9.109(4).]
14-19 ["Investment property". Section 9.115.]
14-20 ["Lien creditor". Section 9.301(c).]
14-21 ["Proceeds". Section 9.306(a).]
14-22 ["Purchase money security interest". Section 9.107.]
14-23 ["United States". Section 9.103.]
14-24 (c) [The following definitions in other chapters apply to
14-25 this chapter:]
14-26 ["Broker". Section 8.102.]
14-27 ["Certificated security". Section 8.102.]
14-28 ["Check". Section 3.104.]
14-29 ["Clearing corporation". Section 8.102.]
14-30 ["Contract for sale". Section 2.106.]
14-31 ["Control". Section 8.106.]
14-32 ["Delivery". Section 8.301.]
14-33 ["Entitlement holder". Section 8.102.]
14-34 ["Financial asset". Section 8.102.]
14-35 ["Holder in due course". Section 3.302.]
14-36 ["Note". Section 3.104.]
14-37 ["Sale". Section 2.106.]
14-38 ["Securities intermediary". Section 8.102.]
14-39 ["Security". Section 8.102.]
14-40 ["Security certificate". Section 8.102.]
14-41 ["Security entitlement". Section 8.102.]
14-42 ["Uncertificated security". Section 8.102.]
14-43 [(d) In addition,] Chapter 1 contains general definitions
14-44 and principles of construction and interpretation applicable
14-45 throughout this chapter.
14-46 Sec. 9.103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF
14-47 PAYMENTS; BURDEN OF ESTABLISHING. (a) In this section:
14-48 (1) "Purchase-money collateral" means goods or
14-49 software that secures a purchase-money obligation incurred with
14-50 respect to that collateral.
14-51 (2) "Purchase-money obligation" means an obligation of
14-52 an obligor incurred as all or part of the price of the collateral
14-53 or for value given to enable the debtor to acquire rights in or the
14-54 use of the collateral if the value is in fact so used.
14-55 (b) A security interest in goods is a purchase-money
14-56 security interest:
14-57 (1) to the extent that the goods are purchase-money
14-58 collateral with respect to that security interest;
14-59 (2) if the security interest is in inventory that is
14-60 or was purchase-money collateral, also to the extent that the
14-61 security interest secures a purchase-money obligation incurred with
14-62 respect to other inventory in which the secured party holds or held
14-63 a purchase-money security interest; and
14-64 (3) also to the extent that the security interest
14-65 secures a purchase-money obligation incurred with respect to
14-66 software in which the secured party holds or held a purchase-money
14-67 security interest.
14-68 (c) A security interest in software is a purchase-money
14-69 security interest to the extent that the security interest also
15-1 secures a purchase-money obligation incurred with respect to goods
15-2 in which the secured party holds or held a purchase-money security
15-3 interest if:
15-4 (1) the debtor acquired its interest in the software
15-5 in an integrated transaction in which it acquired an interest in
15-6 the goods; and
15-7 (2) the debtor acquired its interest in the software
15-8 for the principal purpose of using the software in the goods.
15-9 (d) The security interest of a consignor in goods that are
15-10 the subject of a consignment is a purchase-money security interest
15-11 in inventory.
15-12 (e) In a transaction other than a consumer-goods
15-13 transaction, if the extent to which a security interest is a
15-14 purchase-money security interest depends on the application of a
15-15 payment to a particular obligation, the payment must be applied:
15-16 (1) in accordance with any reasonable method of
15-17 application to which the parties agree;
15-18 (2) in the absence of the parties' agreement to a
15-19 reasonable method, in accordance with any intention of the obligor
15-20 manifested at or before the time of payment; or
15-21 (3) in the absence of an agreement to a reasonable
15-22 method and a timely manifestation of the obligor's intention, in
15-23 the following order:
15-24 (A) to obligations that are not secured; and
15-25 (B) if more than one obligation is secured, to
15-26 obligations secured by purchase-money security interests in the
15-27 order in which those obligations were incurred.
15-28 (f) In a transaction other than a consumer-goods
15-29 transaction, a purchase-money security interest does not lose its
15-30 status as such, even if:
15-31 (1) the purchase-money collateral also secures an
15-32 obligation that is not a purchase-money obligation;
15-33 (2) collateral that is not purchase-money collateral
15-34 also secures the purchase-money obligation; or
15-35 (3) the purchase-money obligation has been renewed,
15-36 refinanced, consolidated, or restructured.
15-37 (g) In a transaction other than a consumer-goods
15-38 transaction, a secured party claiming a purchase-money security
15-39 interest has the burden of establishing the extent to which the
15-40 security interest is a purchase-money security interest.
15-41 (h) The limitation of the rules in Subsections (e), (f), and
15-42 (g) to transactions other than consumer-goods transactions is
15-43 intended to leave to the court the determination of the proper
15-44 rules in consumer-goods transactions. The court may not infer from
15-45 that limitation the nature of the proper rule in consumer-goods
15-46 transactions and may continue to apply established approaches.
15-47 Sec. 9.104. CONTROL OF DEPOSIT ACCOUNT. (a) A secured
15-48 party has control of a deposit account if:
15-49 (1) the secured party is the bank with which the
15-50 deposit account is maintained;
15-51 (2) the debtor, secured party, and bank have agreed in
15-52 an authenticated record that the bank will comply with instructions
15-53 originated by the secured party directing disposition of the funds
15-54 in the account without further consent by the debtor; or
15-55 (3) the secured party becomes the bank's customer with
15-56 respect to the deposit account.
15-57 (b) A secured party that has satisfied Subsection (a) has
15-58 control, even if the debtor retains the right to direct the
15-59 disposition of funds from the deposit account.
15-60 Sec. 9.105. CONTROL OF ELECTRONIC CHATTEL PAPER. A secured
15-61 party has control of electronic chattel paper if the record or
15-62 records comprising the chattel paper are created, stored, and
15-63 assigned in such a manner that:
15-64 (1) a single authoritative copy of the record or
15-65 records exists that is unique, identifiable and, except as
15-66 otherwise provided in Subdivisions (4), (5), and (6), unalterable;
15-67 (2) the authoritative copy identifies the secured
15-68 party as the assignee of the record or records;
15-69 (3) the authoritative copy is communicated to and
16-1 maintained by the secured party or its designated custodian;
16-2 (4) copies or revisions that add or change an
16-3 identified assignee of the authoritative copy can be made only with
16-4 the participation of the secured party;
16-5 (5) each copy of the authoritative copy and any copy
16-6 of a copy is readily identifiable as a copy that is not the
16-7 authoritative copy; and
16-8 (6) any revision of the authoritative copy is readily
16-9 identifiable as an authorized or unauthorized revision.
16-10 Sec. 9.106. CONTROL OF INVESTMENT PROPERTY. (a) A person
16-11 has control of a certificated security, uncertificated security, or
16-12 security entitlement as provided in Section 8.106.
16-13 (b) A secured party has control of a commodity contract if:
16-14 (1) the secured party is the commodity intermediary
16-15 with which the commodity contract is carried; or
16-16 (2) the commodity customer, secured party, and
16-17 commodity intermediary have agreed that the commodity intermediary
16-18 will apply any value distributed on account of the commodity
16-19 contract as directed by the secured party without further consent
16-20 by the commodity customer.
16-21 (c) A secured party having control of all security
16-22 entitlements or commodity contracts carried in a securities account
16-23 or commodity account has control over the securities account or
16-24 commodity account.
16-25 Sec. 9.107. CONTROL OF LETTER-OF-CREDIT RIGHT. A secured
16-26 party has control of a letter-of-credit right to the extent of any
16-27 right to payment or performance by the issuer or any nominated
16-28 person if the issuer or nominated person has consented to an
16-29 assignment of proceeds of the letter of credit under Section
16-30 5.114(c) or otherwise applicable law or practice.
16-31 [Sec. 9.106. DEFINITIONS: "ACCOUNT"; "GENERAL INTANGIBLES".
16-32 "Account" means any right to payment for goods sold or leased or
16-33 for services rendered which is not evidenced by an instrument or
16-34 chattel paper, whether or not it has been earned by performance.
16-35 "General intangibles" means any personal property (including things
16-36 in action) other than goods, accounts, chattel paper, documents,
16-37 instruments, investment property, and money. All rights to payment
16-38 earned or unearned under a charter or other contract involving the
16-39 use or hire of a vessel and all rights incident to the charter or
16-40 contract are accounts.]
16-41 [Sec. 9.107. DEFINITIONS: "PURCHASE MONEY SECURITY
16-42 INTEREST". A security interest is a "purchase money security
16-43 interest" to the extent that it is]
16-44 [(1) taken or retained by the seller of the collateral
16-45 to secure all or part of its price; or]
16-46 [(2) taken by a person who by making advances or
16-47 incurring an obligation gives value to enable the debtor to acquire
16-48 rights in or the use of collateral if such value is in fact so
16-49 used.]
16-50 [Sec. 9.108. WHEN AFTER-ACQUIRED COLLATERAL NOT SECURITY FOR
16-51 ANTECEDENT DEBT. Where a secured party makes an advance, incurs an
16-52 obligation, releases a perfected security interest, or otherwise
16-53 gives new value which is to be secured in whole or in part by
16-54 after-acquired property his security interest in the after-acquired
16-55 collateral shall be deemed to be taken for new value and not as
16-56 security for an antecedent debt if the debtor acquires his rights
16-57 in such collateral either in the ordinary course of his business or
16-58 under a contract of purchase made pursuant to the security
16-59 agreement within a reasonable time after new value is given.]
16-60 [Sec. 9.109. CLASSIFICATION OF GOODS; "CONSUMER GOODS";
16-61 "EQUIPMENT"; "FARM PRODUCTS"; "INVENTORY". Goods are]
16-62 [(1) "consumer goods" if they are used or bought for
16-63 use primarily for personal, family or household purposes;]
16-64 [(2) "equipment" if they are used or bought for use
16-65 primarily in business (including farming or a profession) or by a
16-66 debtor who is a non-profit organization or a governmental
16-67 subdivision or agency or if the goods are not included in the
16-68 definitions of inventory, farm products or consumer goods;]
16-69 [(3) "farm products" if they are crops or livestock or
17-1 supplies used or produced in farming operations or if they are
17-2 products of crops or livestock in their unmanufactured states (such
17-3 as ginned cotton, wool-clip, maple syrup, milk and eggs), and if
17-4 they are in the possession of a debtor engaged in raising,
17-5 fattening, grazing or other farming operations. If goods are farm
17-6 products they are neither equipment nor inventory;]
17-7 [(4) "inventory" if they are held by a person who
17-8 holds them for sale or lease or to be furnished under contracts of
17-9 service or if he has so furnished them, or if they are raw
17-10 materials, work in process or materials used or consumed in a
17-11 business. Inventory of a person is not to be classified as his
17-12 equipment.]
17-13 Sec. 9.108 [9.110]. SUFFICIENCY OF DESCRIPTION. (a) Except
17-14 as otherwise provided in Subsections (c), (d), and (e), a [(f) of
17-15 Section 9.402, any] description of personal [property] or real
17-16 property [estate] is sufficient, [for the purposes of this chapter]
17-17 whether or not it is specific, if it reasonably identifies what is
17-18 described.
17-19 (b) Except as otherwise provided in Subsection (d), a
17-20 description of collateral reasonably identifies the collateral if
17-21 it identifies the collateral by:
17-22 (1) specific listing;
17-23 (2) category;
17-24 (3) except as otherwise provided in Subsection (e), a
17-25 type of collateral defined in this title;
17-26 (4) quantity;
17-27 (5) computational or allocational formula or
17-28 procedure; or
17-29 (6) except as otherwise provided in Subsection (c),
17-30 any other method, if the identity of the collateral is objectively
17-31 determinable.
17-32 (c) A description of collateral as "all the debtor's assets"
17-33 or "all the debtor's personal property" or using words of similar
17-34 import does not reasonably identify the collateral.
17-35 (d) Except as otherwise provided in Subsection (e), a
17-36 description of a security entitlement, securities account, or
17-37 commodity account is sufficient if it describes:
17-38 (1) the collateral by those terms or as investment
17-39 property; or
17-40 (2) the underlying financial asset or commodity
17-41 contract.
17-42 (e) A description only by type of collateral defined in this
17-43 title is an insufficient description of:
17-44 (1) a commercial tort claim; or
17-45 (2) in a consumer transaction, consumer goods, a
17-46 security entitlement, a securities account, or a commodity account.
17-47 Sec. 9.109. SCOPE. (a) Except as otherwise provided in
17-48 Subsections (c), (d), and (e), this chapter applies to:
17-49 (1) a transaction, regardless of its form, that
17-50 creates a security interest in personal property or fixtures by
17-51 contract;
17-52 (2) an agricultural lien;
17-53 (3) a sale of accounts, chattel paper, payment
17-54 intangibles, or promissory notes;
17-55 (4) a consignment;
17-56 (5) a security interest arising under Section 2.401,
17-57 2.505, 2.711(c), or 2A.508(e), as provided in Section 9.110; and
17-58 (6) a security interest arising under Section 4.210 or
17-59 5.118.
17-60 (b) The application of this chapter to a security interest
17-61 in a secured obligation is not affected by the fact that the
17-62 obligation is itself secured by a transaction or interest to which
17-63 this chapter does not apply.
17-64 (c) This chapter does not apply to the extent that:
17-65 (1) a statute, regulation, or treaty of the United
17-66 States preempts this chapter;
17-67 (2) another statute of this State expressly governs
17-68 the creation, perfection, priority, or enforcement of a security
17-69 interest created by this State or a governmental unit of this
18-1 State;
18-2 (3) a statute of another State, a foreign country, or
18-3 a governmental unit of another State or a foreign country, other
18-4 than a statute generally applicable to security interests,
18-5 expressly governs creation, perfection, priority, or enforcement of
18-6 a security interest created by the State, country, or governmental
18-7 unit; or
18-8 (4) the rights of a transferee beneficiary or
18-9 nominated person under a letter of credit are independent and
18-10 superior under Section 5.114.
18-11 (d) This chapter does not apply to:
18-12 (1) a landlord's lien, other than an agricultural
18-13 lien;
18-14 (2) a lien, other than an agricultural lien, given by
18-15 statute or other rule of law for services or materials, but Section
18-16 9.333 applies with respect to priority of the lien;
18-17 (3) an assignment of a claim for wages, salary, or
18-18 other compensation of an employee;
18-19 (4) a sale of accounts, chattel paper, payment
18-20 intangibles, or promissory notes as part of a sale of the business
18-21 out of which they arose;
18-22 (5) an assignment of accounts, chattel paper, payment
18-23 intangibles, or promissory notes that is for the purpose of
18-24 collection only;
18-25 (6) an assignment of a right to payment under a
18-26 contract to an assignee that is also obligated to perform under the
18-27 contract;
18-28 (7) an assignment of a single account, payment
18-29 intangible, or promissory note to an assignee in full or partial
18-30 satisfaction of a preexisting indebtedness;
18-31 (8) a transfer of an interest in or an assignment of
18-32 a claim under a policy of insurance, other than an assignment by or
18-33 to a health care provider of a health-care-insurance receivable and
18-34 any subsequent assignment of the right to payment, but Sections
18-35 9.315 and 9.322 apply with respect to proceeds and priorities in
18-36 proceeds;
18-37 (9) an assignment of a right represented by a
18-38 judgment, other than a judgment taken on a right to payment that
18-39 was collateral;
18-40 (10) a right of recoupment or set-off, but:
18-41 (A) Section 9.340 applies with respect to the
18-42 effectiveness of rights of recoupment or set-off against deposit
18-43 accounts; and
18-44 (B) Section 9.404 applies with respect to
18-45 defenses or claims of an account debtor;
18-46 (11) the creation or transfer of an interest in or
18-47 lien on real property, including a lease or rents thereunder, the
18-48 interest of a vendor or vendee in a contract for deed to purchase
18-49 an interest in real property, or the interest of an optionor or
18-50 optionee in an option to purchase an interest in real property,
18-51 except to the extent that provision is made for:
18-52 (A) liens on real property in Sections 9.203 and
18-53 9.308;
18-54 (B) fixtures in Section 9.334;
18-55 (C) fixture filings in Sections 9.501, 9.502,
18-56 9.512, 9.516, and 9.519; and
18-57 (D) security agreements covering personal and
18-58 real property in Section 9.604;
18-59 (12) an assignment of a claim arising in tort, other
18-60 than a commercial tort claim, but Sections 9.315 and 9.322 apply
18-61 with respect to proceeds and priorities in proceeds; or
18-62 (13) an assignment of a deposit account, other than a
18-63 nonnegotiable certificate of deposit, in a consumer transaction,
18-64 but Sections 9.315 and 9.322 apply with respect to proceeds and
18-65 priorities in proceeds.
18-66 (e) The application of this chapter to the sale of accounts,
18-67 chattel paper, payment intangibles, or promissory notes is not to
18-68 recharacterize that sale as a transaction to secure indebtedness
18-69 but to protect purchasers of those assets by providing a notice
19-1 filing system. For all purposes, in the absence of fraud or
19-2 intentional misrepresentation, the parties' characterization of a
19-3 transaction as a sale of such assets shall be conclusive that the
19-4 transaction is a sale and is not a secured transaction and that
19-5 title, legal and equitable, has passed to the party characterized
19-6 as the purchaser of those assets regardless of whether the secured
19-7 party has any recourse against the debtor, whether the debtor is
19-8 entitled to any surplus, or any other term of the parties'
19-9 agreement.
19-10 [Sec. 9.112. WHERE COLLATERAL IS NOT OWNED BY DEBTOR.
19-11 Unless otherwise agreed, when a secured party knows that collateral
19-12 is owned by a person who is not the debtor, the owner of the
19-13 collateral is entitled to receive from the secured party any
19-14 surplus under Section 9.502(b) or under Section 9.504(a), and is
19-15 not liable for the debt or for any deficiency after resale, and he
19-16 has the same right as the debtor]
19-17 [(1) to receive statements under Section 9.208;]
19-18 [(2) to receive notice of and to object to a secured
19-19 party's proposal to retain the collateral in satisfaction of the
19-20 indebtedness under Section 9.505;]
19-21 [(3) to redeem the collateral under Section 9.506;]
19-22 [(4) to obtain injunctive or other relief under
19-23 Section 9.507(a); and]
19-24 [(5) to recover losses caused to him under Section
19-25 9.208(b).]
19-26 Sec. 9.110 [9.113]. SECURITY INTERESTS ARISING UNDER CHAPTER
19-27 2 OR 2A [ON SALES OR UNDER CHAPTER ON LEASES]. A security interest
19-28 arising [solely] under Section 2.401, 2.505, 2.711(c), or 2A.508(e)
19-29 [the chapter on Sales (Chapter 2) or the chapter on Leases (Chapter
19-30 2A)] is subject to [the provisions of] this chapter. However,
19-31 until the debtor obtains [except that to the extent that and so
19-32 long as the debtor does not have or does not lawfully obtain]
19-33 possession of the goods:
19-34 (1) [no security agreement is necessary to make] the
19-35 security interest is enforceable, even if Section 9.203(b)(3) has
19-36 not been satisfied; [and]
19-37 (2) [no] filing is not required to perfect the
19-38 security interest; [and]
19-39 (3) the rights of the secured party after [on] default
19-40 by the debtor are governed by [the chapter on Sales (]Chapter 2[)]
19-41 or [by the chapter on Leases (Chapter] 2A; and
19-42 (4) the security interest has priority over a
19-43 conflicting security interest created by the debtor[) in the case
19-44 of a security interest arising solely under such chapter].
19-45 [Sec. 9.114. CONSIGNMENT. (a) A person who delivers goods
19-46 under a consignment which is not a security interest and who would
19-47 be required to file under this chapter by Subsection (c)(3) of
19-48 Section 2.326 has priority over a secured party who is or becomes a
19-49 creditor of the consignee and who would have a perfected security
19-50 interest in the goods if they were the property of the consignee,
19-51 and also has priority with respect to identifiable cash proceeds
19-52 received on or before delivery of the goods to a buyer, if]
19-53 [(1) the consignor complies with the filing provision
19-54 of the chapter on Sales with respect to consignments (Subsection
19-55 (c)(3) of Section 2.326) before the consignee receives possession
19-56 of the goods; and]
19-57 [(2) the consignor gives notification in writing to
19-58 the holder of the security interest if the holder has filed a
19-59 financing statement covering the same types of goods before the
19-60 date of the filing made by the consignor; and]
19-61 [(3) the holder of the security interest receives the
19-62 notification within five years before the consignee receives
19-63 possession of the goods; and]
19-64 [(4) the notification states that the consignor
19-65 expects to deliver goods on consignment to the consignee,
19-66 describing the goods by item or type.]
19-67 [(b) In the case of a consignment which is not a security
19-68 interest and in which the requirements of the preceding subsection
19-69 have not been met, a person who delivers goods to another is
20-1 subordinate to a person who would have a perfected security
20-2 interest in the goods if they were the property of the debtor.]
20-3 [Sec. 9.115. INVESTMENT PROPERTY. (a) In this chapter:]
20-4 [(1) "Commodity account" means an account maintained
20-5 by a commodity intermediary in which a commodity contract is
20-6 carried for a commodity customer.]
20-7 [(2) "Commodity contract" means a commodity futures
20-8 contract, an option on a commodity futures contract, a commodity
20-9 option, or other contract that, in each case, is:]
20-10 [(A) traded on or subject to the rules of a
20-11 board of trade that has been designated as a contract market for
20-12 such a contract pursuant to the federal commodities laws; or]
20-13 [(B) traded on a foreign commodity board of
20-14 trade, exchange, or market, and is carried on the books of a
20-15 commodity intermediary for a commodity customer.]
20-16 [(3) "Commodity customer" means a person for whom a
20-17 commodity intermediary carries a commodity contract on its books.]
20-18 [(4) "Commodity intermediary" means:]
20-19 [(A) a person who is registered as a futures
20-20 commission merchant under the federal commodities laws; or]
20-21 [(B) a person who in the ordinary course of its
20-22 business provides clearance or settlement services for a board of
20-23 trade that has been designated as a contract market pursuant to the
20-24 federal commodities laws.]
20-25 [(5) "Control," with respect to a certificated
20-26 security, uncertificated security, or security entitlement, has the
20-27 meaning specified in Section 8.106. A secured party has control
20-28 over a commodity contract if, by agreement among the commodity
20-29 customer, the commodity intermediary, and the secured party, the
20-30 commodity intermediary has agreed that it will apply any value
20-31 distributed on account of the commodity contract as directed by the
20-32 secured party without further consent by the commodity customer.
20-33 If a commodity customer grants a security interest in a commodity
20-34 contract to its own commodity intermediary, the commodity
20-35 intermediary as secured party has control. A secured party has
20-36 control over a securities account or commodity account if the
20-37 secured party has control over all security entitlements or
20-38 commodity contracts carried in the securities account or commodity
20-39 account.]
20-40 [(6) "Investment property" means:]
20-41 [(A) a security, whether certificated or
20-42 uncertificated;]
20-43 [(B) a security entitlement;]
20-44 [(C) a securities account;]
20-45 [(D) a commodity contract; or]
20-46 [(E) a commodity account.]
20-47 [(b) Attachment or perfection of a security interest in a
20-48 securities account is also attachment or perfection of a security
20-49 interest in all security entitlements carried in the securities
20-50 account. Attachment or perfection of a security interest in a
20-51 commodity account is also attachment or perfection of a security
20-52 interest in all commodity contracts carried in the commodity
20-53 account.]
20-54 [(c) A description of collateral in a security agreement or
20-55 financing statement is sufficient to create or perfect a security
20-56 interest in a certificated security, uncertificated security,
20-57 security entitlement, securities account, commodity contract, or
20-58 commodity account whether it describes the collateral by those
20-59 terms, or as investment property, or by description of the
20-60 underlying security, financial asset, or commodity contract. A
20-61 description of investment property collateral in a security
20-62 agreement or financing statement is sufficient if it identifies the
20-63 collateral by specific listing, by category, by quantity, by a
20-64 computational or allocational formula or procedure, or by any other
20-65 method, if the identity of the collateral is objectively
20-66 determinable.]
20-67 [(d) Perfection of a security interest in investment
20-68 property is governed by the following rules:]
20-69 [(1) A security interest in investment property may be
21-1 perfected by control.]
21-2 [(2) Except as otherwise provided in Subdivisions (3)
21-3 and (4), a security interest in investment property may be
21-4 perfected by filing.]
21-5 [(3) If the debtor is a broker or securities
21-6 intermediary, a security interest in investment property is
21-7 perfected when it attaches. The filing of a financing statement
21-8 with respect to a security interest in investment property granted
21-9 by a broker or securities intermediary has no effect for purposes
21-10 of perfection or priority with respect to that security interest.]
21-11 [(4) If a debtor is a commodity intermediary, a
21-12 security interest in a commodity contract or a commodity account is
21-13 perfected when it attaches. The filing of a financing statement
21-14 with respect to a security interest in a commodity contract or a
21-15 commodity account granted by a commodity intermediary has no effect
21-16 for purposes of perfection or priority with respect to that
21-17 security interest.]
21-18 [(e) Priority between conflicting security interests in the
21-19 same investment property is governed by the following rules:]
21-20 [(1) A security interest of a secured party who has
21-21 control over investment property has priority over a security
21-22 interest of a secured party who does not have control over the
21-23 investment property.]
21-24 [(2) Except as otherwise provided in Subdivisions (3)
21-25 and (4), conflicting security interests of secured parties each of
21-26 whom has control rank equally.]
21-27 [(3) Except as otherwise agreed on by the securities
21-28 intermediary, a security interest in a security entitlement or a
21-29 securities account granted to the debtor's own securities
21-30 intermediary has priority over any security interest granted by the
21-31 debtor to another secured party.]
21-32 [(4) Except as otherwise agreed on by the commodity
21-33 intermediary, a security interest in a commodity contract or a
21-34 commodity account granted to the debtor's own commodity
21-35 intermediary has priority over any security interest granted by the
21-36 debtor to another secured party.]
21-37 [(5) Conflicting security interests granted by a
21-38 broker, a securities intermediary, or a commodity intermediary that
21-39 are perfected without control rank equally.]
21-40 [(6) In all other cases, priority between conflicting
21-41 security interests in investment property is governed by Sections
21-42 9.312(e)-(g). Section 9.312(d) does not apply to investment
21-43 property.]
21-44 [(f) If a security certificate in registered form is
21-45 delivered to a secured party pursuant to agreement, a written
21-46 security agreement is not required for attachment or enforceability
21-47 of the security interest, delivery suffices for perfection of the
21-48 security interest, and the security interest has priority over a
21-49 conflicting security interest perfected by means other than
21-50 control, even if a necessary indorsement is lacking.]
21-51 [Sec. 9.116. SECURITY INTEREST ARISING IN PURCHASE OR
21-52 DELIVERY OF FINANCIAL ASSET. (a) If a person buys a financial
21-53 asset through a securities intermediary in a transaction in which
21-54 the buyer is obligated to pay the purchase price to the securities
21-55 intermediary at the time of the purchase, and the securities
21-56 intermediary credits the financial asset to the buyer's securities
21-57 account before the buyer pays the securities intermediary, the
21-58 securities intermediary has a security interest in the buyer's
21-59 security entitlement securing the buyer's obligation to pay. A
21-60 security agreement is not required for attachment or enforceability
21-61 of the security interest, and the security interest is
21-62 automatically perfected.]
21-63 [(b) If a certificated security or other financial asset
21-64 represented by a writing that in the ordinary course of business is
21-65 transferred by delivery with any necessary indorsement or
21-66 assignment is delivered pursuant to an agreement between persons in
21-67 the business of dealing with such securities or financial assets
21-68 and the agreement calls for delivery versus payment, the person
21-69 delivering the certificate or other financial asset has a security
22-1 interest in the certificated security or other financial asset
22-2 securing the seller's right to receive payment. A security
22-3 agreement is not required for attachment or enforceability of the
22-4 security interest, and the security interest is automatically
22-5 perfected.]
22-6 SUBCHAPTER B. EFFECTIVENESS [VALIDITY] OF SECURITY
22-7 AGREEMENT; ATTACHMENT OF SECURITY INTEREST; [AND]
22-8 RIGHTS OF PARTIES TO SECURITY AGREEMENT [THERETO]
22-9 Sec. 9.201. GENERAL EFFECTIVENESS [VALIDITY] OF SECURITY
22-10 AGREEMENT. (a) Except as otherwise provided by this title, a
22-11 security agreement is effective according to its terms between the
22-12 parties, against purchasers of the collateral, and against
22-13 creditors.
22-14 (b) A transaction subject to this chapter is subject to any
22-15 applicable rule of law that establishes a different rule for
22-16 consumers and to:
22-17 (1) Title 4, Finance Code; and
22-18 (2) Subchapter E, Chapter 17.
22-19 (c) In case of conflict between this chapter and a rule of
22-20 law, statute, or regulation described in Subsection (b), the rule
22-21 of law, statute, or regulation controls. Failure to comply with a
22-22 statute or regulation described in Subsection (b) has only the
22-23 effect the statute or regulation specifies.
22-24 (d) This [Nothing in this] chapter does not:
22-25 (1) validate [validates] any rate, charge, agreement,
22-26 or practice that violates a rule of law, [illegal under any]
22-27 statute, or regulation described in Subsection (b); [thereunder
22-28 governing usury, small loans, retail installment sales, or the
22-29 like,] or
22-30 (2) extend [extends] the application of the rule of
22-31 law, [any such] statute, or regulation to a [any] transaction not
22-32 otherwise subject to it [thereto].
22-33 Sec. 9.202. TITLE TO COLLATERAL IMMATERIAL. Except as
22-34 otherwise provided with respect to consignments or sales of
22-35 accounts, chattel paper, payment intangibles, or promissory notes,
22-36 the provisions [Each provision] of this chapter with regard to
22-37 rights and[,] obligations apply [and remedies applies] whether
22-38 title to collateral is in the secured party or [in] the debtor.
22-39 Sec. 9.203. ATTACHMENT AND ENFORCEABILITY OF SECURITY
22-40 INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS;[,] FORMAL REQUISITES.
22-41 (a) A security interest attaches to collateral when it becomes
22-42 enforceable against the debtor with respect to the collateral,
22-43 unless an agreement expressly postpones the time of attachment.
22-44 (b) Except as otherwise provided in Subsections (c)-(j)
22-45 [Subject to the provisions of Section 4.210 on the security
22-46 interest of a collecting bank, Sections 9.115 and 9.116 on security
22-47 interests in investment property, and Section 9.113 on a security
22-48 interest arising under the chapter on Sales], a security interest
22-49 is [not] enforceable against the debtor and [or] third parties with
22-50 respect to the collateral only if [and does not attach unless]:
22-51 (1) [the collateral is in the possession of the
22-52 secured party pursuant to agreement, the collateral is investment
22-53 property and the secured party has control pursuant to agreement,
22-54 or the debtor has signed a security agreement which contains a
22-55 description of the collateral and in addition, when the security
22-56 interest covers crops growing or to be grown or timber to be cut, a
22-57 description of the land concerned;]
22-58 [(2)] value has been given; [and]
22-59 (2) [(3)] the debtor has rights in the collateral or
22-60 the power to transfer rights in the collateral to a secured party;
22-61 and
22-62 (3) one of the following conditions is met:
22-63 (A) the debtor has authenticated a security
22-64 agreement that provides a description of the collateral and, if the
22-65 security interest covers timber to be cut, a description of the
22-66 land concerned;
22-67 (B) the collateral is not a certificated
22-68 security and is in the possession of the secured party under
22-69 Section 9.313 pursuant to the debtor's security agreement;
23-1 (C) the collateral is a certificated security in
23-2 registered form and the security certificate has been delivered to
23-3 the secured party under Section 8.301 pursuant to the debtor's
23-4 security agreement; or
23-5 (D) the collateral is deposit accounts,
23-6 electronic chattel paper, investment property, or letter-of-credit
23-7 rights, and the secured party has control under Section 9.104,
23-8 9.105, 9.106, or 9.107 pursuant to the debtor's security agreement.
23-9 (c) Subsection (b) is subject to Section 4.210 on the
23-10 security interest of a collecting bank, Section 5.118 on the
23-11 security interest of a letter-of-credit issuer or nominated person,
23-12 Section 9.110 on a security interest arising under Chapter 2 or 2A,
23-13 and Section 9.206 on security interests in investment property.
23-14 (d) A person becomes bound as debtor by a security agreement
23-15 entered into by another person if, by operation of law other than
23-16 this chapter or by contract:
23-17 (1) the security agreement becomes effective to create
23-18 a security interest in the person's property; or
23-19 (2) the person becomes generally obligated for the
23-20 obligations of the other person, including the obligation secured
23-21 under the security agreement, and acquires or succeeds to all or
23-22 substantially all of the assets of the other person.
23-23 (e) If a new debtor becomes bound as debtor by a security
23-24 agreement entered into by another person:
23-25 (1) the agreement satisfies Subsection (b)(3) with
23-26 respect to existing or after-acquired property of the new debtor to
23-27 the extent the property is described in the agreement; and
23-28 (2) another agreement is not necessary to make a
23-29 security interest in the property enforceable.
23-30 (f) The attachment of [(b) A security interest attaches
23-31 when it becomes enforceable against the debtor with respect to the
23-32 collateral. Attachment occurs as soon as all of the events
23-33 specified in Subsection (a) have taken place unless explicit
23-34 agreement postpones the time of attaching.]
23-35 [(c) If a secured party holds a security interest which
23-36 applies under this chapter to minerals (including oil and gas) upon
23-37 their extraction and the security interest also qualifies under
23-38 applicable law as a lien on such minerals before their extraction,
23-39 the security interest before and after production shall constitute
23-40 a single continuous and uninterrupted lien on the property. The
23-41 foregoing is declaratory of the law of this state as it has
23-42 heretofore existed and shall apply with respect to oil, gas, and
23-43 other minerals heretofore and hereafter produced.]
23-44 [(d) Unless otherwise agreed] a security interest in
23-45 collateral [agreement] gives the secured party the rights to
23-46 proceeds provided by Section 9.315 and is also attachment of a
23-47 security interest in a supporting obligation for the collateral
23-48 [9.306].
23-49 (g) The attachment of a security interest in a right to
23-50 payment or performance secured by a security interest or other lien
23-51 on personal or real property is also attachment of a security
23-52 interest in the security interest, mortgage, or other lien.
23-53 (h) The attachment of a security interest in a securities
23-54 account is also attachment of a security interest in the security
23-55 entitlements carried in the securities account.
23-56 (i) The attachment of a security interest in a commodity
23-57 account is also attachment of a security interest in the commodity
23-58 contracts carried in the commodity account.
23-59 (j) If a secured party holds a security interest that
23-60 applies under this chapter to minerals, including oil and gas, upon
23-61 their extraction and the security interest also qualifies under
23-62 applicable law as a lien on those minerals before their extraction,
23-63 the security interest before and after production is a single
23-64 continuous and uninterrupted lien on the property. This subsection
23-65 is a statement of the law of this State as it existed before the
23-66 effective date of this subsection and applies with respect to
23-67 minerals, including oil and gas, regardless of when the minerals
23-68 were extracted.
23-69 [(e) A transaction, although subject to this chapter, is
24-1 also subject to Title 79, Revised Statutes, and in the case of
24-2 conflict between the provisions of this Chapter and any such
24-3 statute, the provisions of such statute control. Failure to comply
24-4 with any applicable statute has only the effect which is specified
24-5 therein.]
24-6 Sec. 9.204. AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES.
24-7 (a) Except as provided in Subsection (b), a security agreement may
24-8 create or provide for a security interest in [that any or all
24-9 obligations covered by the security agreement are to be secured by]
24-10 after-acquired collateral.
24-11 (b) A [No] security interest does not attach [attaches]
24-12 under a term constituting an after-acquired property clause to:
24-13 (1) consumer goods, other than an accession
24-14 [accessions (Section 9.314)] when given as additional security,
24-15 unless the debtor acquires rights in them within 10 [ten] days
24-16 after the secured party gives value; or
24-17 (2) a commercial tort claim.
24-18 (c) A [Obligations covered by a] security agreement may
24-19 provide that collateral secures, or that accounts, chattel paper,
24-20 payment intangibles, or promissory notes are sold in connection
24-21 with, [include] future advances or other value, whether or not the
24-22 advances or value are given pursuant to commitment [(Subsection (a)
24-23 of Section 9.105)].
24-24 Sec. 9.205. USE OR DISPOSITION OF COLLATERAL [WITHOUT
24-25 ACCOUNTING] PERMISSIBLE. (a) A security interest is not invalid
24-26 or fraudulent against creditors solely because:
24-27 (1) [by reason of liberty in] the debtor has the right
24-28 or ability to:
24-29 (A) use, commingle, or dispose of all or part of
24-30 the collateral, [(]including returned or repossessed goods;
24-31 (B)[) or to] collect, [or] compromise, enforce,
24-32 or otherwise deal with collateral;
24-33 (C) [accounts or chattel paper, or to] accept
24-34 the return of collateral [goods] or make repossessions;[,] or
24-35 (D) [to] use, commingle, or dispose of
24-36 proceeds;[,] or
24-37 (2) [by reason of the failure of] the secured party
24-38 fails to require the debtor to account for proceeds or replace
24-39 collateral.
24-40 (b) This section does not relax the requirements of
24-41 possession if attachment, [where] perfection, or enforcement of a
24-42 security interest depends upon possession of the collateral by the
24-43 secured party [or by a bailee].
24-44 Sec. 9.206. SECURITY INTEREST ARISING IN PURCHASE OR
24-45 DELIVERY OF FINANCIAL ASSET. (a) A security interest in favor of
24-46 a securities intermediary attaches to a person's security
24-47 entitlement if:
24-48 (1) the person buys a financial asset through the
24-49 securities intermediary in a transaction in which the person is
24-50 obligated to pay the purchase price to the securities intermediary
24-51 at the time of the purchase; and
24-52 (2) the securities intermediary credits the financial
24-53 asset to the buyer's securities account before the buyer pays the
24-54 securities intermediary.
24-55 (b) The security interest described in Subsection (a)
24-56 secures the person's obligation to pay for the financial asset.
24-57 (c) A security interest in favor of a person that delivers a
24-58 certificated security or other financial asset represented by a
24-59 writing attaches to the security or other financial asset if:
24-60 (1) the security or other financial asset:
24-61 (A) in the ordinary course of business is
24-62 transferred by delivery with any necessary indorsement or
24-63 assignment; and
24-64 (B) is delivered under an agreement between
24-65 persons in the business of dealing with such securities or
24-66 financial assets; and
24-67 (2) the agreement calls for delivery against payment.
24-68 (d) The security interest described in Subsection (c)
24-69 secures the obligation to make payment for the delivery.
25-1 [AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
25-2 SALES WARRANTIES WHERE SECURITY AGREEMENT EXISTS. (a) Subject to
25-3 any statute or decision which establishes a different rule for
25-4 buyers or lessees of consumer goods, an agreement by a buyer or
25-5 lessee that he will not assert against an assignee any claim or
25-6 defense which he may have against the seller or lessor is
25-7 enforceable by an assignee who takes his assignment for value, in
25-8 good faith and without notice of a claim or defense, except as to
25-9 defenses of a type which may be asserted against a holder in due
25-10 course of a negotiable instrument under the chapter on Commercial
25-11 Paper (Chapter 3). A buyer who as part of one transaction signs
25-12 both a negotiable instrument and a security agreement makes such an
25-13 agreement.]
25-14 [(b) When a seller retains a purchase money security
25-15 interest in goods the chapter on Sales (Chapter 2) governs the sale
25-16 and any disclaimer, limitation or modification of the seller's
25-17 warranties.]
25-18 Sec. 9.207. RIGHTS AND DUTIES OF SECURED PARTY HAVING
25-19 POSSESSION OR CONTROL OF [WHEN] COLLATERAL [IS IN SECURED PARTY'S
25-20 POSSESSION]. (a) Except as otherwise provided in Subsection (d),
25-21 a [A] secured party shall [must] use reasonable care in the custody
25-22 and preservation of collateral in the secured party's [his]
25-23 possession. In the case of [an instrument or] chattel paper or an
25-24 instrument, reasonable care includes taking necessary steps to
25-25 preserve rights against prior parties unless otherwise agreed.
25-26 (b) Except as otherwise provided in Subsection (d), if a
25-27 secured party has [Unless otherwise agreed, when collateral is in
25-28 the secured party's] possession of collateral:
25-29 (1) reasonable expenses, [(]including the cost of
25-30 [any] insurance and payment of taxes or other charges,[)] incurred
25-31 in the custody, preservation, use, or operation of the collateral
25-32 are chargeable to the debtor and are secured by the collateral;
25-33 (2) the risk of accidental loss or damage is on the
25-34 debtor to the extent of any deficiency in any effective insurance
25-35 coverage;
25-36 (3) the secured party shall keep the collateral
25-37 identifiable, but fungible collateral may be commingled [may hold
25-38 as additional security any increase or profits (except money)
25-39 received from the collateral, but money so received, unless
25-40 remitted to the debtor, shall be applied in reduction of the
25-41 secured obligation]; and
25-42 (4) the secured party may use or operate the
25-43 collateral:
25-44 (A) for the purpose of preserving the collateral
25-45 or its value;
25-46 (B) as permitted by an order of a court having
25-47 competent jurisdiction; or
25-48 (C) except in the case of consumer goods, in the
25-49 manner and to the extent agreed by the debtor [must keep the
25-50 collateral identifiable but fungible collateral may be commingled;]
25-51 [(5) the secured party may repledge the collateral
25-52 upon terms which do not impair the debtor's right to redeem it].
25-53 (c) Except as otherwise provided in Subsection (d), a [A]
25-54 secured party having possession of collateral or control of
25-55 collateral under Section 9.104, 9.105, 9.106, or 9.107:
25-56 (1) may hold as additional security any proceeds,
25-57 except money or funds, received from the collateral;
25-58 (2) shall apply money or funds received from the
25-59 collateral to reduce the secured obligation, unless remitted to the
25-60 debtor; and
25-61 (3) may create a security interest in the collateral
25-62 [is liable for any loss caused by his failure to meet any
25-63 obligation imposed by the preceding subsections but does not lose
25-64 his security interest].
25-65 (d) If the secured party is a buyer of accounts, chattel
25-66 paper, payment intangibles, or promissory notes or a consignor:
25-67 (1) Subsection (a) does not apply unless the secured
25-68 party is entitled under an agreement:
25-69 (A) to charge back uncollected collateral; or
26-1 (B) otherwise to full or limited recourse
26-2 against the debtor or a secondary obligor based on the nonpayment
26-3 or other default of an account debtor or other obligor on the
26-4 collateral; and
26-5 (2) Subsections (b) and (c) do not apply. [A secured
26-6 party may use or operate the collateral for the purpose of
26-7 preserving the collateral or its value or pursuant to the order of
26-8 a court of appropriate jurisdiction or, except in the case of
26-9 consumer goods, in the manner and to the extent provided in the
26-10 security agreement.]
26-11 Sec. 9.208. ADDITIONAL DUTIES OF SECURED PARTY HAVING
26-12 CONTROL OF COLLATERAL. (a) This section applies to cases in which
26-13 there is no outstanding secured obligation and the secured party is
26-14 not committed to make advances, incur obligations, or otherwise
26-15 give value.
26-16 (b) Within 10 days after receiving an authenticated demand
26-17 by the debtor:
26-18 (1) a secured party having control of a deposit
26-19 account under Section 9.104(a)(2) shall send to the bank with which
26-20 the deposit account is maintained an authenticated statement that
26-21 releases the bank from any further obligation to comply with
26-22 instructions originated by the secured party;
26-23 (2) a secured party having control of a deposit
26-24 account under Section 9.104(a)(3) shall:
26-25 (A) pay the debtor the balance on deposit in the
26-26 deposit account; or
26-27 (B) transfer the balance on deposit into a
26-28 deposit account in the debtor's name;
26-29 (3) a secured party, other than a buyer, having
26-30 control of electronic chattel paper under Section 9.105 shall:
26-31 (A) communicate the authoritative copy of the
26-32 electronic chattel paper to the debtor or its designated custodian;
26-33 (B) if the debtor designates a custodian that is
26-34 the designated custodian with which the authoritative copy of the
26-35 electronic chattel paper is maintained for the secured party,
26-36 communicate to the custodian an authenticated record releasing the
26-37 designated custodian from any further obligation to comply with
26-38 instructions originated by the secured party and instructing the
26-39 custodian to comply with instructions originated by the debtor; and
26-40 (C) take appropriate action to enable the debtor
26-41 or its designated custodian to make copies of or revisions to the
26-42 authoritative copy that add or change an identified assignee of the
26-43 authoritative copy without the consent of the secured party;
26-44 (4) a secured party having control of investment
26-45 property under Section 8.106(d)(2) or 9.106(b) shall send to the
26-46 securities intermediary or commodity intermediary with which the
26-47 security entitlement or commodity contract is maintained an
26-48 authenticated record that releases the securities intermediary or
26-49 commodity intermediary from any further obligation to comply with
26-50 entitlement orders or directions originated by the secured party;
26-51 and
26-52 (5) a secured party having control of a
26-53 letter-of-credit right under Section 9.107 shall send to each
26-54 person having an unfulfilled obligation to pay or deliver proceeds
26-55 of the letter of credit to the secured party an authenticated
26-56 release from any further obligation to pay or deliver proceeds of
26-57 the letter of credit to the secured party.
26-58 Sec. 9.209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS
26-59 BEEN NOTIFIED OF ASSIGNMENT. (a) Except as otherwise provided in
26-60 Subsection (c), this section applies if:
26-61 (1) there is no outstanding secured obligation; and
26-62 (2) the secured party is not committed to make
26-63 advances, incur obligations, or otherwise give value.
26-64 (b) Within 10 days after receiving an authenticated demand
26-65 by the debtor, a secured party shall send to an account debtor that
26-66 has received notification of an assignment to the secured party as
26-67 assignee under Section 9.406(a) an authenticated record that
26-68 releases the account debtor from any further obligation to the
26-69 secured party.
27-1 (c) This section does not apply to an assignment
27-2 constituting the sale of an account, chattel paper, or payment
27-3 intangible.
27-4 Sec. 9.210. REQUEST FOR ACCOUNTING; REQUEST REGARDING
27-5 [STATEMENT OF ACCOUNT OR] LIST OF COLLATERAL OR STATEMENT OF
27-6 ACCOUNT. (a) In this section:
27-7 (1) "Request" means a record of a type described in
27-8 Subdivision (2), (3), or (4).
27-9 (2) "Request for an accounting" means a record
27-10 authenticated by a debtor requesting that the recipient provide an
27-11 accounting of the unpaid obligations secured by collateral and
27-12 reasonably identifying the transaction or relationship that is the
27-13 subject of the request.
27-14 (3) "Request regarding a list of collateral" means a
27-15 record authenticated by a debtor requesting that the recipient
27-16 approve or correct a list of what the debtor believes to be the
27-17 collateral securing an obligation and reasonably identifying the
27-18 transaction or relationship that is the subject of the request.
27-19 (4) "Request regarding a statement of account" means a
27-20 record authenticated by a debtor requesting that the recipient
27-21 approve or correct a statement indicating what the debtor believes
27-22 to be the aggregate amount of unpaid obligations secured by
27-23 collateral as of a specified date and reasonably identifying the
27-24 transaction or relationship that is the subject of the request. [A
27-25 debtor may sign a statement indicating what he believes to be the
27-26 aggregate amount of unpaid indebtedness as of a specified date and
27-27 may send it to the secured party with a request that the statement
27-28 be approved or corrected and returned to the debtor. When the
27-29 security agreement or any other record kept by the secured party
27-30 identifies the collateral a debtor may similarly request the
27-31 secured party to approve or correct a list of the collateral.]
27-32 (b) Subject to Subsections (c), (d), (e), and (f), a [The]
27-33 secured party, other than a buyer of accounts, chattel paper,
27-34 payment intangibles, or promissory notes or a consignor, shall
27-35 [must] comply with [such] a request within 14 days [two weeks]
27-36 after receipt:
27-37 (1) in the case of a request for an accounting, by
27-38 authenticating and sending to the debtor an accounting; and
27-39 (2) in the case of a request regarding a list of
27-40 collateral or a request regarding a statement of account, by
27-41 authenticating and sending to the debtor an approval or correction
27-42 [by sending a written correction or approval. If the secured party
27-43 claims a security interest in all of a particular type of
27-44 collateral owned by the debtor he may indicate that fact in his
27-45 reply and need not approve or correct an itemized list of such
27-46 collateral. If the secured party without reasonable excuse fails
27-47 to comply he is liable for any loss caused to the debtor thereby;
27-48 and if the debtor has properly included in his request a good faith
27-49 statement of the obligation or a list of the collateral or both the
27-50 secured party may claim a security interest only as shown in the
27-51 statement against persons misled by his failure to comply. If he
27-52 no longer has an interest in the obligation or collateral at the
27-53 time the request is received he must disclose the name and address
27-54 of any successor in interest known to him and he is liable for any
27-55 loss caused to the debtor as a result of failure to disclose. A
27-56 successor in interest is not subject to this section until a
27-57 request is received by him].
27-58 (c) A secured party that claims a security interest in all
27-59 of a particular type of collateral owned by the debtor may comply
27-60 with a request regarding a list of collateral by sending to the
27-61 debtor an authenticated record including a statement to that effect
27-62 within 14 days after receipt.
27-63 (d) A person that receives a request regarding a list of
27-64 collateral, claims no interest in the collateral when it receives
27-65 the request, and claimed an interest in the collateral at an
27-66 earlier time shall comply with the request within 14 days after
27-67 receipt by sending to the debtor an authenticated record:
27-68 (1) disclaiming any interest in the collateral; and
27-69 (2) if known to the recipient, providing the name and
28-1 mailing address of any assignee of or successor to the recipient's
28-2 security interest in the collateral.
28-3 (e) A person that receives a request for an accounting or a
28-4 request regarding a statement of account, claims no interest in the
28-5 obligations when it receives the request, and claimed an interest
28-6 in the obligations at an earlier time shall comply with the request
28-7 within 14 days after receipt by sending to the debtor an
28-8 authenticated record:
28-9 (1) disclaiming any interest in the obligations; and
28-10 (2) if known to the recipient, providing the name and
28-11 mailing address of any assignee of or successor to the recipient's
28-12 interest in the obligations.
28-13 (f) A debtor is entitled without charge to one response to a
28-14 request under this section during any six-month period. The
28-15 secured party may require payment of a charge not exceeding $25 for
28-16 each additional response [debtor is entitled to such a statement
28-17 once every six months without charge. The secured party may
28-18 require payment of a charge not exceeding $10 for each additional
28-19 statement furnished].
28-20 SUBCHAPTER C. PERFECTION AND [RIGHTS OF THIRD PARTIES;
28-21 PERFECTED AND UNPERFECTED SECURITY INTERESTS; RULES OF]
28-22 PRIORITY
28-23 Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
28-24 SECURITY INTERESTS. Except as otherwise provided in Sections 9.303
28-25 through 9.306, the following rules determine the law governing
28-26 perfection, the effect of perfection or nonperfection, and the
28-27 priority of a security interest in collateral:
28-28 (1) Except as otherwise provided in this section,
28-29 while a debtor is located in a jurisdiction, the local law of that
28-30 jurisdiction governs perfection, the effect of perfection or
28-31 nonperfection, and the priority of a security interest in
28-32 collateral.
28-33 (2) While collateral is located in a jurisdiction, the
28-34 local law of that jurisdiction governs perfection, the effect of
28-35 perfection or nonperfection, and the priority of a possessory
28-36 security interest in that collateral.
28-37 (3) Except as otherwise provided in Subdivision (4),
28-38 while negotiable documents, goods, instruments, money, or tangible
28-39 chattel paper is located in a jurisdiction, the local law of that
28-40 jurisdiction governs:
28-41 (A) perfection of a security interest in the
28-42 goods by filing a fixture filing;
28-43 (B) perfection of a security interest in timber
28-44 to be cut; and
28-45 (C) the effect of perfection or nonperfection
28-46 and the priority of a nonpossessory security interest in the
28-47 collateral.
28-48 (4) The local law of the jurisdiction in which the
28-49 wellhead or minehead is located governs perfection, the effect of
28-50 perfection or nonperfection, and the priority of a security
28-51 interest in as-extracted collateral.
28-52 Sec. 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF
28-53 AGRICULTURAL LIENS. While farm products are located in a
28-54 jurisdiction, the local law of that jurisdiction governs
28-55 perfection, the effect of perfection or nonperfection, and the
28-56 priority of an agricultural lien on the farm products.
28-57 Sec. 9.303. LAW GOVERNING PERFECTION AND PRIORITY OF
28-58 SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE.
28-59 (a) This section applies to goods covered by a certificate of
28-60 title, even if there is no other relationship between the
28-61 jurisdiction under whose certificate of title the goods are covered
28-62 and the goods or the debtor.
28-63 (b) Goods become covered by a certificate of title when a
28-64 valid application for the certificate of title and the applicable
28-65 fee are delivered to the appropriate authority. Goods cease to be
28-66 covered by a certificate of title at the earlier of the time the
28-67 certificate of title ceases to be effective under the law of the
28-68 issuing jurisdiction or the time the goods become covered
28-69 subsequently by a certificate of title issued by another
29-1 jurisdiction.
29-2 (c) The local law of the jurisdiction under whose
29-3 certificate of title the goods are covered governs perfection, the
29-4 effect of perfection or nonperfection, and the priority of a
29-5 security interest in goods covered by a certificate of title from
29-6 the time the goods become covered by the certificate of title until
29-7 the goods cease to be covered by the certificate of title.
29-8 Sec. 9.304. LAW GOVERNING PERFECTION AND PRIORITY OF
29-9 SECURITY INTERESTS IN DEPOSIT ACCOUNTS. (a) The local law of a
29-10 bank's jurisdiction governs perfection, the effect of perfection or
29-11 nonperfection, and the priority of a security interest in a deposit
29-12 account maintained with that bank.
29-13 (b) The following rules determine a bank's jurisdiction for
29-14 purposes of this subchapter:
29-15 (1) If an agreement between the bank and the debtor
29-16 governing the deposit account expressly provides that a particular
29-17 jurisdiction is the bank's jurisdiction for purposes of this
29-18 subchapter, this chapter, or this title, that jurisdiction is the
29-19 bank's jurisdiction.
29-20 (2) If Subdivision (1) does not apply and an agreement
29-21 between the bank and its customer governing the deposit account
29-22 expressly provides that the agreement is governed by the law of a
29-23 particular jurisdiction, that jurisdiction is the bank's
29-24 jurisdiction.
29-25 (3) If neither Subdivision (1) nor Subdivision (2)
29-26 applies and an agreement between the bank and its customer
29-27 governing the deposit account expressly provides that the deposit
29-28 account is maintained at an office in a particular jurisdiction,
29-29 that jurisdiction is the bank's jurisdiction.
29-30 (4) If none of the preceding subdivisions applies, the
29-31 bank's jurisdiction is the jurisdiction in which the office
29-32 identified in an account statement as the office serving the
29-33 customer's account is located.
29-34 (5) If none of the preceding subdivisions applies, the
29-35 bank's jurisdiction is the jurisdiction in which the chief
29-36 executive office of the bank is located.
29-37 Sec. 9.305. LAW GOVERNING PERFECTION AND PRIORITY OF
29-38 SECURITY INTERESTS IN INVESTMENT PROPERTY. (a) Except as
29-39 otherwise provided in Subsection (c), the following rules apply:
29-40 (1) While a security certificate is located in a
29-41 jurisdiction, the local law of that jurisdiction governs
29-42 perfection, the effect of perfection or nonperfection, and the
29-43 priority of a security interest in the certificated security
29-44 represented thereby.
29-45 (2) The local law of the issuer's jurisdiction as
29-46 specified in Section 8.110(d) governs perfection, the effect of
29-47 perfection or nonperfection, and the priority of a security
29-48 interest in an uncertificated security.
29-49 (3) The local law of the securities intermediary's
29-50 jurisdiction as specified in Section 8.110(e) governs perfection,
29-51 the effect of perfection or nonperfection, and the priority of a
29-52 security interest in a security entitlement or securities account.
29-53 (4) The local law of the commodity intermediary's
29-54 jurisdiction governs perfection, the effect of perfection or
29-55 nonperfection, and the priority of a security interest in a
29-56 commodity contract or commodity account.
29-57 (b) The following rules determine a commodity intermediary's
29-58 jurisdiction for purposes of this subchapter:
29-59 (1) If an agreement between the commodity intermediary
29-60 and commodity customer governing the commodity account expressly
29-61 provides that a particular jurisdiction is the commodity
29-62 intermediary's jurisdiction for purposes of this subchapter, this
29-63 chapter, or this title, that jurisdiction is the commodity
29-64 intermediary's jurisdiction.
29-65 (2) If Subdivision (1) does not apply and an agreement
29-66 between the commodity intermediary and commodity customer governing
29-67 the commodity account expressly provides that the agreement is
29-68 governed by the law of a particular jurisdiction, that jurisdiction
29-69 is the commodity intermediary's jurisdiction.
30-1 (3) If neither Subdivision (1) nor Subdivision (2)
30-2 applies and an agreement between the commodity intermediary and
30-3 commodity customer governing the commodity account expressly
30-4 provides that the commodity account is maintained at an office in a
30-5 particular jurisdiction, that jurisdiction is the commodity
30-6 intermediary's jurisdiction.
30-7 (4) If none of the preceding subdivisions applies, the
30-8 commodity intermediary's jurisdiction is the jurisdiction in which
30-9 the office identified in an account statement as the office serving
30-10 the commodity customer's account is located.
30-11 (5) If none of the preceding subdivisions applies, the
30-12 commodity intermediary's jurisdiction is the jurisdiction in which
30-13 the chief executive office of the commodity intermediary is
30-14 located.
30-15 (c) The local law of the jurisdiction in which the debtor is
30-16 located governs:
30-17 (1) perfection of a security interest in investment
30-18 property by filing;
30-19 (2) automatic perfection of a security interest in
30-20 investment property created by a broker or securities intermediary;
30-21 and
30-22 (3) automatic perfection of a security interest in a
30-23 commodity contract or commodity account created by a commodity
30-24 intermediary.
30-25 Sec. 9.306. LAW GOVERNING PERFECTION AND PRIORITY OF
30-26 SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS. (a) Subject to
30-27 Subsection (c), the local law of the issuer's jurisdiction or a
30-28 nominated person's jurisdiction governs perfection, the effect of
30-29 perfection or nonperfection, and the priority of a security
30-30 interest in a letter-of-credit right if the issuer's jurisdiction
30-31 or nominated person's jurisdiction is a State.
30-32 (b) For purposes of this subchapter, an issuer's
30-33 jurisdiction or nominated person's jurisdiction is the jurisdiction
30-34 whose law governs the liability of the issuer or nominated person
30-35 with respect to the letter-of-credit right as provided in Section
30-36 5.116.
30-37 (c) This section does not apply to a security interest that
30-38 is perfected only under Section 9.308(d).
30-39 Sec. 9.307. LOCATION OF DEBTOR. (a) In this section,
30-40 "place of business" means a place where a debtor conducts its
30-41 affairs.
30-42 (b) Except as otherwise provided in this section, the
30-43 following rules determine a debtor's location:
30-44 (1) A debtor who is an individual is located at the
30-45 individual's principal residence.
30-46 (2) A debtor that is an organization and has only one
30-47 place of business is located at its place of business.
30-48 (3) A debtor that is an organization and has more than
30-49 one place of business is located at its chief executive office.
30-50 (c) Subsection (b) applies only if a debtor's residence,
30-51 place of business, or chief executive office, as applicable, is
30-52 located in a jurisdiction whose law generally requires information
30-53 concerning the existence of a nonpossessory security interest to be
30-54 made generally available in a filing, recording, or registration
30-55 system as a condition or result of the security interest's
30-56 obtaining priority over the rights of a lien creditor with respect
30-57 to the collateral. If Subsection (b) does not apply, the debtor is
30-58 located in the District of Columbia.
30-59 (d) A person that ceases to exist, have a residence, or have
30-60 a place of business continues to be located in the jurisdiction
30-61 specified by Subsections (b) and (c).
30-62 (e) A registered organization that is organized under the
30-63 law of a State is located in that State.
30-64 (f) Except as otherwise provided in Subsection (i), a
30-65 registered organization that is organized under the law of the
30-66 United States and a branch or agency of a bank that is not
30-67 organized under the law of the United States or a State are
30-68 located:
30-69 (1) in the State that the law of the United States
31-1 designates, if the law designates a State of location;
31-2 (2) in the State that the registered organization,
31-3 branch, or agency designates, if the law of the United States
31-4 authorizes the registered organization, branch, or agency to
31-5 designate its State of location; or
31-6 (3) in the District of Columbia, if neither
31-7 Subdivision (1) nor Subdivision (2) applies.
31-8 (g) A registered organization continues to be located in the
31-9 jurisdiction specified by Subsection (e) or (f) notwithstanding:
31-10 (1) the suspension, revocation, forfeiture, or lapse
31-11 of the registered organization's status as such in its jurisdiction
31-12 of organization; or
31-13 (2) the dissolution, winding up, or cancellation of
31-14 the existence of the registered organization.
31-15 (h) The United States is located in the District of
31-16 Columbia.
31-17 (i) A branch or agency of a bank that is not organized under
31-18 the law of the United States or a State is located in the State in
31-19 which the branch or agency is licensed, if all branches and
31-20 agencies of the bank are licensed in only one State.
31-21 (j) A foreign air carrier under the Federal Aviation Act of
31-22 1958, as amended, is located at the designated office of the agent
31-23 upon which service of process may be made on behalf of the carrier.
31-24 (k) This section applies only for purposes of this
31-25 subchapter.
31-26 Sec. 9.308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS
31-27 PERFECTED; CONTINUITY OF PERFECTION. (a) Except as otherwise
31-28 provided in this section and Section 9.309, a security interest is
31-29 perfected if it has attached and all of the applicable requirements
31-30 for perfection in Sections 9.310 through 9.316 have been satisfied.
31-31 A security interest is perfected when it attaches if the applicable
31-32 requirements are satisfied before the security interest attaches.
31-33 (b) An agricultural lien is perfected if it has become
31-34 effective and all of the applicable requirements for perfection in
31-35 Section 9.310 have been satisfied. An agricultural lien is
31-36 perfected when it becomes effective if the applicable requirements
31-37 are satisfied before the agricultural lien becomes effective.
31-38 (c) A security interest or agricultural lien is perfected
31-39 continuously if it is originally perfected by one method under this
31-40 chapter and is later perfected by another method under this
31-41 chapter, without an intermediate period when it was unperfected.
31-42 (d) Perfection of a security interest in collateral also
31-43 perfects a security interest in a supporting obligation for the
31-44 collateral.
31-45 (e) Perfection of a security interest in a right to payment
31-46 or performance also perfects a security interest in a security
31-47 interest, mortgage, or other lien on personal or real property
31-48 securing the right.
31-49 (f) Perfection of a security interest in a securities
31-50 account also perfects a security interest in the security
31-51 entitlements carried in the securities account.
31-52 (g) Perfection of a security interest in a commodity account
31-53 also perfects a security interest in the commodity contracts
31-54 carried in the commodity account. [PERSONS WHO TAKE PRIORITY OVER
31-55 UNPERFECTED SECURITY INTERESTS; RIGHT OF "LIEN CREDITOR".
31-56 (a) Except as otherwise provided in Subsection (b), an unperfected
31-57 security interest is subordinate to the rights of:]
31-58 [(1) persons entitled to priority under Section 9.312;]
31-59 [(2) a person who becomes a lien creditor before the
31-60 security interest is perfected;]
31-61 [(3) in the case of goods, instruments, documents, and
31-62 chattel paper, a person who is not a secured party and who is a
31-63 transferee in bulk or other buyer not in ordinary course of
31-64 business, or is a buyer of farm products in ordinary course of
31-65 business, to the extent that he gives value and receives delivery
31-66 of the collateral without knowledge of the security interest and
31-67 before it is perfected;]
31-68 [(4) in the case of accounts, general intangibles, and
31-69 investment property, a person who is not a secured party and who is
32-1 a transferee to the extent that he gives value without knowledge of
32-2 the security interest and before it is perfected.]
32-3 [(b) If the secured party files with respect to a purchase
32-4 money security interest before or within 20 days after the debtor
32-5 receives possession of the collateral, he takes priority over the
32-6 rights of a transferee in bulk or of a lien creditor which arise
32-7 between the time the security interest attaches and the time of
32-8 filing.]
32-9 [(c) A "lien creditor" means a creditor who has acquired a
32-10 lien on the property involved by attachment, levy or the like and
32-11 includes an assignee for benefit of creditors from the time of
32-12 assignment, and a trustee in bankruptcy from the date of the filing
32-13 of the petition or a receiver in equity from the time of
32-14 appointment.]
32-15 [(d) A person who becomes a lien creditor while a security
32-16 interest is perfected takes subject to the security interest only
32-17 to the extent that it secures advances made before he becomes a
32-18 lien creditor or within 45 days thereafter or made without
32-19 knowledge of the lien or pursuant to a commitment entered into
32-20 without knowledge of the lien.]
32-21 Sec. 9.309 [9.302]. SECURITY INTEREST PERFECTED UPON
32-22 ATTACHMENT. The following [WHEN FILING IS REQUIRED TO PERFECT
32-23 SECURITY INTEREST; SECURITY INTERESTS TO WHICH FILING PROVISIONS OF
32-24 THIS ARTICLE DO NOT APPLY. (a) A financing statement must be
32-25 filed to perfect all] security interests are perfected when they
32-26 attach [except the following]:
32-27 (1) [a security interest in collateral in possession
32-28 of the secured party under Section 9.305;]
32-29 [(2) a security interest temporarily perfected in
32-30 instruments, certificated securities, or documents without delivery
32-31 under Section 9.304 or in proceeds for a 10 day period under
32-32 Section 9.306;]
32-33 [(3) a security interest created by an assignment of a
32-34 beneficial interest in a trust or a decedent's estate;]
32-35 [(4)] a purchase money security interest in consumer
32-36 goods, except as otherwise provided in Section 9.311(b) with
32-37 respect to consumer goods that are subject to a statute or treaty
32-38 described in Section 9.311(a)[; but notation on a certificate of
32-39 title is required for goods covered by a statute referred to in
32-40 Subsection (c)(2); and fixture filing is required for priority over
32-41 conflicting interests in fixtures to the extent provided in Section
32-42 9.313];
32-43 (2) [(5)] an assignment of accounts or payment
32-44 intangibles that [which] does not by itself [alone] or in
32-45 conjunction with other assignments to the same assignee transfer a
32-46 significant part of the assignor's outstanding accounts or payment
32-47 intangibles [of the assignor];
32-48 (3) a sale of a payment intangible;
32-49 (4) a sale of a promissory note;
32-50 (5) a security interest created by the assignment of a
32-51 health-care-insurance receivable to the provider of the health care
32-52 goods or services;
32-53 (6) a security interest arising under Section 2.401,
32-54 2.505, 2.711(c), or 2A.508(e), until the debtor obtains possession
32-55 of the collateral;
32-56 (7) a security interest of a collecting bank arising
32-57 under [(]Section 4.210[), a security interest arising under the
32-58 Chapter on Sales (see Section 9.113), or a security interest
32-59 covered in Subsection (c) of this Section];
32-60 (8) a security interest of an issuer or nominated
32-61 person arising under Section 5.118;
32-62 (9) a security interest arising in the delivery of a
32-63 financial asset under Section 9.206(c);
32-64 (10) a security interest in investment property
32-65 created by a broker or securities intermediary;
32-66 (11) a security interest in a commodity contract or a
32-67 commodity account created by a commodity intermediary;
32-68 (12) [(7)] an assignment for the benefit of all the
32-69 creditors of the transferor[,] and subsequent transfers by the
33-1 assignee thereunder; and
33-2 (13) a security interest created by an assignment of a
33-3 beneficial interest in a decedent's estate [(8) a security interest
33-4 in oil or gas production or their proceeds under Section 9.319 of
33-5 this code; or]
33-6 [(9) a security interest in investment property that
33-7 is perfected without filing under Section 9.115 or 9.116].
33-8 Sec. 9.310. WHEN FILING REQUIRED TO PERFECT SECURITY
33-9 INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL
33-10 LIENS TO WHICH FILING PROVISIONS DO NOT APPLY. (a) Except as
33-11 otherwise provided in Subsection (b) and Section 9.312(b), a
33-12 financing statement must be filed to perfect all security interests
33-13 and agricultural liens.
33-14 (b) The filing of a financing statement is not necessary to
33-15 perfect a security interest:
33-16 (1) that is perfected under Section 9.308(d), (e),
33-17 (f), or (g);
33-18 (2) that is perfected under Section 9.309 when it
33-19 attaches;
33-20 (3) in property subject to a statute, regulation, or
33-21 treaty described in Section 9.311(a);
33-22 (4) in goods in possession of a bailee that is
33-23 perfected under Section 9.312(d)(1) or (2);
33-24 (5) in certificated securities, documents, goods, or
33-25 instruments which is perfected without filing or possession under
33-26 Section 9.312(e), (f), or (g);
33-27 (6) in collateral in the secured party's possession
33-28 under Section 9.313;
33-29 (7) in a certificated security that is perfected by
33-30 delivery of the security certificate to the secured party under
33-31 Section 9.313;
33-32 (8) in deposit accounts, electronic chattel paper,
33-33 investment property, or letter-of-credit rights that is perfected
33-34 by control under Section 9.314;
33-35 (9) in proceeds that is perfected under Section 9.315;
33-36 (10) that is perfected under Section 9.316; or
33-37 (11) in oil or gas production or their proceeds under
33-38 Section 9.343.
33-39 (c) [(b)] If a secured party assigns a perfected security
33-40 interest or agricultural lien, a [no] filing under this Chapter is
33-41 not required [in order] to continue the perfected status of the
33-42 security interest against creditors of and transferees from the
33-43 original debtor.
33-44 Sec. 9.311. PERFECTION OF SECURITY INTERESTS IN PROPERTY
33-45 SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES.
33-46 (a) Except as otherwise provided in Subsection (d), the [(c) The]
33-47 filing of a financing statement [otherwise required by this
33-48 Chapter] is not necessary or effective to perfect a security
33-49 interest in property subject to:
33-50 (1) a statute, regulation, or treaty of the United
33-51 States whose requirements for a security interest's obtaining
33-52 priority over the rights of a lien creditor with respect to the
33-53 property preempt Section 9.310(a); [which provides for a national
33-54 or international registration or a national or international
33-55 certificate of title or which specifies a place of filing different
33-56 from that specified in this Chapter for filing of the security
33-57 interest; or]
33-58 (2) the following statutes of this state: Chapter
33-59 501, Transportation Code, relating to the certificates of title for
33-60 motor vehicles; Subchapter B-1, Chapter 31, Parks and Wildlife
33-61 Code, [as amended,] relating to the certificates of title for
33-62 vessels [motorboat] and outboard motors; the Texas Manufactured
33-63 Housing Standards Act[, as amended] (Article 5221f, Vernon's Texas
33-64 Civil Statutes), relating to the documents of title for
33-65 manufactured homes; [but during any period in which collateral is
33-66 inventory held for sale by a person who is in the business of
33-67 selling goods of that kind, the filing provisions of this Chapter
33-68 (Subchapter D) apply to a security interest in that collateral
33-69 created by him as debtor;] or Subchapter A, Chapter 35, [Title 4,]
34-1 relating to utility security instruments; or
34-2 (3) a certificate of title statute of another
34-3 jurisdiction that provides for [under the law of which indication
34-4 of] a security interest to be indicated on the certificate [is
34-5 required] as a condition or result of the security interest's
34-6 obtaining priority over the rights of a lien creditor with respect
34-7 to the property [of perfection (Subsection (b) of Section 9.103)].
34-8 (b) [(d)] Compliance with the requirements of a statute,
34-9 regulation, or treaty described in Subsection (a) for obtaining
34-10 priority over the rights of a lien creditor [(c)] is equivalent to
34-11 the filing of a financing statement under this Chapter. Except as
34-12 otherwise provided in Subsection (d) and Sections 9.313 and
34-13 9.316(d) and (e) for goods covered by a certificate of title, [and]
34-14 a security interest in property subject to a [the] statute,
34-15 regulation, or treaty described in Subsection (a) may [can] be
34-16 perfected only by compliance with those requirements, and a
34-17 security interest so perfected remains perfected notwithstanding a
34-18 change in the use or transfer of possession of the collateral
34-19 [therewith except as provided in Section 9.103 on multiple state
34-20 transactions].
34-21 (c) Except as otherwise provided in Subsection (d) and
34-22 Sections 9.316(d) and (e), duration [Duration] and renewal of
34-23 perfection of a security interest perfected by compliance with the
34-24 requirements prescribed by a statute, regulation, or treaty
34-25 described in Subsection (a) are governed by [the provisions of]
34-26 the statute, regulation, or treaty. In[; in] other respects, the
34-27 security interest is subject to this Chapter.
34-28 (d) During any period in which collateral is inventory held
34-29 for sale or lease by a person or leased by that person as lessor
34-30 and that person is in the business of selling or leasing goods of
34-31 that kind, this section does not apply to a security interest in
34-32 that collateral created by that person as debtor.
34-33 [Sec. 9.303. WHEN SECURITY INTEREST IS PERFECTED; CONTINUITY
34-34 OF PERFECTION. (a) A security interest is perfected when it has
34-35 attached and when all of the applicable steps required for
34-36 perfection have been taken. Such steps are specified in Sections
34-37 9.115, 9.302, 9.304, 9.305 and 9.306. If such steps are taken
34-38 before the security interest attaches, it is perfected at the time
34-39 when it attaches.]
34-40 [(b) If a security interest is originally perfected in any
34-41 way permitted under this chapter and is subsequently perfected in
34-42 some other way under this chapter, without an intermediate period
34-43 when it was unperfected, the security interest shall be deemed to
34-44 be perfected continuously for the purposes of this chapter.]
34-45 Sec. 9.312 [9.304]. PERFECTION OF SECURITY INTERESTS
34-46 [INTEREST] IN CHATTEL PAPER, DEPOSIT ACCOUNTS [INSTRUMENTS],
34-47 DOCUMENTS, AND GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT
34-48 PROPERTY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY
34-49 PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER
34-50 OF POSSESSION. (a) A security interest in chattel paper, [or]
34-51 negotiable documents, instruments, or investment property may be
34-52 perfected by filing.
34-53 (b) Except as otherwise provided in Sections 9.315(c) and
34-54 (d) for proceeds:
34-55 (1) a security interest in a deposit account may be
34-56 perfected only by control under Section 9.314;
34-57 (2) and except as otherwise provided in Section
34-58 9.308(d), a security interest in a letter-of-credit right may be
34-59 perfected only by control under Section 9.314; and
34-60 (3) a [A] security interest in money may [or
34-61 instruments (other than instruments which constitute part of
34-62 chattel paper) can] be perfected only by the secured party's taking
34-63 possession under Section 9.313[, except as provided in Subsections
34-64 (d) and (e) of this section and Subsections (b) and (c) of Section
34-65 9.306 on proceeds].
34-66 (c) While goods are in the possession of a bailee that has
34-67 issued a negotiable document covering the goods:
34-68 (1) a security interest in the goods may be perfected
34-69 by perfecting a security interest in the document; and
35-1 (2) a security interest perfected in the document has
35-2 priority over any security interest that becomes perfected in the
35-3 goods by another method during that time.
35-4 (d) While goods are in the possession of a bailee that has
35-5 issued a nonnegotiable document covering the goods, a security
35-6 interest in the goods may be perfected by:
35-7 (1) issuance of a document in the name of the secured
35-8 party;
35-9 (2) the bailee's receipt of notification of the
35-10 secured party's interest; or
35-11 (3) filing as to the goods. [Possession of a
35-12 nonnegotiable certificate of deposit in which the secured party is
35-13 the issuer of the document is established when the issuer places a
35-14 restriction on withdrawals from the account on its records that
35-15 evidences the document. Possession established by the restriction
35-16 of withdrawals from an account evidenced by a nonnegotiable
35-17 certificate of deposit takes priority over any other possession
35-18 established under this chapter of which the secured party does not
35-19 have prior knowledge.]
35-20 [(b) During the period that goods are in the possession of
35-21 the issuer of a negotiable document therefor, a security interest
35-22 in the goods is perfected by perfecting a security interest in the
35-23 document, and any security interest in the goods otherwise
35-24 perfected during such period is subject thereto.]
35-25 [(c) A security interest in goods in the possession of a
35-26 bailee other than one who has issued a negotiable document therefor
35-27 is perfected by issuance of a document in the name of the secured
35-28 party or by the bailee's receipt of notification of the secured
35-29 party's interest or by filing as to the goods.]
35-30 (e) [(d)] A security interest in [instruments,] certificated
35-31 securities, [or] negotiable documents, or instruments is perfected
35-32 without filing or the taking of possession for a period of 20 [21]
35-33 days from the time it attaches to the extent that it arises for new
35-34 value given under an authenticated [a written] security agreement.
35-35 (f) [(e)] A perfected security interest in a negotiable
35-36 document or goods in possession of a bailee, other than one that
35-37 has issued a negotiable document for the goods, remains perfected
35-38 for 20 [a period of 21] days without filing if the [where a]
35-39 secured party [having a perfected security interest in an
35-40 instrument, a certificated security, a negotiable document, or
35-41 goods in possession of a bailee other than one who has issued a
35-42 negotiable document therefor:]
35-43 [(1)] makes available to the debtor the goods or
35-44 documents representing the goods for the purpose of:
35-45 (1) ultimate sale or exchange; or
35-46 (2) [for the purpose of] loading, unloading, storing,
35-47 shipping, transshipping, manufacturing, processing, or otherwise
35-48 dealing with them in a manner preliminary to their sale or
35-49 exchange[, but priority between conflicting security interests in
35-50 the goods is subject to Subsection (c) of Section 9.312; or]
35-51 [(2) delivers the instrument or certificated security
35-52 to the debtor for the purpose of ultimate sale or exchange or of
35-53 presentation, collection, renewal or registration of transfer].
35-54 (g) A perfected security interest in a certificated security
35-55 or instrument remains perfected for 20 days without filing if the
35-56 secured party delivers the security certificate or instrument to
35-57 the debtor for the purpose of:
35-58 (1) ultimate sale or exchange; or
35-59 (2) presentation, collection, enforcement, renewal, or
35-60 registration of transfer.
35-61 (h) [(f)] After the 20-day [21 day] period specified in
35-62 Subsection (e), (f), or (g) expires, [Subsections (d) and (e)]
35-63 perfection depends upon compliance with [applicable provisions of]
35-64 this chapter.
35-65 Sec. 9.313 [9.305]. WHEN POSSESSION BY OR DELIVERY TO
35-66 SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING.
35-67 (a) Except as otherwise provided in Subsection (b), a secured
35-68 party may perfect a [A] security interest in negotiable documents,
35-69 goods, instruments, money, or tangible chattel paper by [letters of
36-1 credit and advices of credit (Subsection (b)(1) of Section 5.116),
36-2 goods, instruments, money, negotiable documents or chattel paper
36-3 may be perfected by the secured party's] taking possession of the
36-4 collateral. A secured party may perfect a security interest in
36-5 certificated securities by taking delivery of the certificated
36-6 securities under Section 8.301.
36-7 (b) With respect to goods covered by a certificate of title
36-8 issued by this State, a secured party may perfect a security
36-9 interest in the goods by taking possession of the goods only in the
36-10 circumstances described in Section 9.316(d).
36-11 (c) With respect to collateral other than certificated
36-12 securities and goods covered by a document, a secured party takes
36-13 possession of collateral in the possession of a person other than
36-14 the debtor, the secured party, or a lessee of the collateral from
36-15 the debtor in the ordinary course of the debtor's business when:
36-16 (1) the person in possession authenticates a record
36-17 acknowledging that it holds possession of the collateral for the
36-18 secured party's benefit; or
36-19 (2) the person takes possession of the collateral
36-20 after having authenticated a record acknowledging that it will hold
36-21 possession of collateral for the secured party's benefit.
36-22 (d) If perfection of a security interest depends upon
36-23 possession of the collateral by a secured party, perfection occurs
36-24 no earlier than the time the secured party takes possession and
36-25 continues only while the secured party retains possession.
36-26 (e) A security interest in a certificated security in
36-27 registered form is perfected by delivery when delivery of the
36-28 certificated security occurs under Section 8.301 and remains
36-29 perfected by delivery until the debtor obtains possession of the
36-30 security certificate.
36-31 (f) A person in possession of collateral is not required to
36-32 acknowledge that it holds possession for a secured party's benefit.
36-33 (g) If a person acknowledges that it holds possession for
36-34 the secured party's benefit:
36-35 (1) the acknowledgment is effective under Subsection
36-36 (c) or Section 8.301(a), even if the acknowledgment violates the
36-37 rights of a debtor; and
36-38 (2) unless the person otherwise agrees or law other
36-39 than this chapter otherwise provides, the person does not owe any
36-40 duty to the secured party and is not required to confirm the
36-41 acknowledgment to another person.
36-42 (h) A secured party having possession of collateral does not
36-43 relinquish possession by delivering the collateral to a person
36-44 other than the debtor or a lessee of the collateral from the debtor
36-45 in the ordinary course of the debtor's business if the person was
36-46 instructed before the delivery or is instructed contemporaneously
36-47 with the delivery:
36-48 (1) to hold possession of the collateral for the
36-49 secured party's benefit; or
36-50 (2) to redeliver the collateral to the secured party.
36-51 (i) A secured party does not relinquish possession, even if
36-52 a delivery under Subsection (h) violates the rights of a debtor. A
36-53 person to which collateral is delivered under Subsection (h) does
36-54 not owe any duty to the secured party and is not required to
36-55 confirm the delivery to another person unless the person otherwise
36-56 agrees or law other than this chapter otherwise provides.
36-57 Sec. 9.314. PERFECTION BY CONTROL. (a) A security interest
36-58 in investment property, deposit accounts, letter-of-credit rights,
36-59 or electronic chattel paper may be perfected by control of the
36-60 collateral under Section 9.104, 9.105, 9.106, or 9.107.
36-61 (b) A security interest in deposit accounts, electronic
36-62 chattel paper, or letter-of-credit rights is perfected by control
36-63 under Section 9.104, 9.105, or 9.107 when the secured party obtains
36-64 control and remains perfected by control only while the secured
36-65 party retains control.
36-66 (c) A security interest in investment property is perfected
36-67 by control under Section 9.106 from the time the secured party
36-68 obtains control and remains perfected by control until:
36-69 (1) the secured party does not have control; and
37-1 (2) one of the following occurs:
37-2 (A) if the collateral is a certificated
37-3 security, the debtor has or acquires possession of the security
37-4 certificate;
37-5 (B) if the collateral is an uncertificated
37-6 security, the issuer has registered or registers the debtor as the
37-7 registered owner; or
37-8 (C) if the collateral is a security entitlement,
37-9 the debtor is or becomes the entitlement holder. [If such
37-10 collateral other than goods covered by a negotiable document is
37-11 held by a bailee, the secured party is deemed to have possession
37-12 from the time the bailee receives notification of the secured
37-13 party's interest. A security interest is perfected by possession
37-14 from the time possession is taken without relation back and
37-15 continues only so long as possession is retained, unless otherwise
37-16 specified in this chapter. The security interest may be otherwise
37-17 perfected as provided in this chapter before or after the period of
37-18 possession by the secured party.]
37-19 Sec. 9.315 [9.306]. ["PROCEEDS";] SECURED PARTY'S RIGHTS ON
37-20 DISPOSITION OF COLLATERAL AND IN PROCEEDS. (a) ["Proceeds"
37-21 includes whatever is received upon the sale, exchange, collection
37-22 or other disposition of collateral or proceeds. Insurance payable
37-23 by reason of loss or damage to the collateral is proceeds, except
37-24 to the extent that it is payable to a person other than a party to
37-25 the security agreement. Any payments or distributions made with
37-26 respect to investment property collateral are proceeds. Money,
37-27 checks, deposit accounts and the like are "cash proceeds". All
37-28 other proceeds are "non-cash proceeds".]
37-29 [(b)] Except as [where this chapter] otherwise provided in
37-30 this chapter and Section 2.403(b):
37-31 (1) [provides,] a security interest or agricultural
37-32 lien continues in collateral notwithstanding sale, lease, license,
37-33 exchange, or other disposition thereof unless [the disposition was
37-34 authorized by] the secured party authorized the disposition free of
37-35 the security interest or agricultural lien; and
37-36 (2) a security interest attaches to [in the security
37-37 agreement or otherwise, and also continues in] any identifiable
37-38 proceeds of collateral [including collections received by the
37-39 debtor].
37-40 (b) Proceeds that are commingled with other property are
37-41 identifiable proceeds:
37-42 (1) if the proceeds are goods, to the extent provided
37-43 by Section 9.336; and
37-44 (2) if the proceeds are not goods, to the extent that
37-45 the secured party identifies the proceeds by a method of tracing,
37-46 including application of equitable principles, that is permitted
37-47 under law other than this chapter with respect to commingled
37-48 property of the type involved.
37-49 (c) A [The] security interest in proceeds is a
37-50 [continuously] perfected security interest if the interest in the
37-51 original collateral was perfected.
37-52 (d) A [but it ceases to be a] perfected security interest in
37-53 proceeds [and] becomes unperfected on the 21st day [ten days] after
37-54 the security interest attaches to receipt of the proceeds [by the
37-55 debtor] unless:
37-56 (1) the following conditions are satisfied:
37-57 (A) a filed financing statement covers the
37-58 original collateral;
37-59 (B) [and] the proceeds are collateral in which a
37-60 security interest may be perfected by filing in the office in which
37-61 [or offices where] the financing statement has been filed; and[,
37-62 if]
37-63 (C) the proceeds are not acquired with cash
37-64 proceeds[, the description of collateral in the financing statement
37-65 indicates the types of property constituting the proceeds];
37-66 (2) [a filed financing statement covers the original
37-67 collateral and] the proceeds are identifiable cash proceeds; or
37-68 (3) [the original collateral was investment property
37-69 and the proceeds are identifiable cash proceeds; or]
38-1 [(4)] the security interest in the proceeds is
38-2 perfected other than under Subsection (c) when the security
38-3 interest attaches to the proceeds or within 20 days thereafter
38-4 [before the expiration of the ten day period. Except as provided
38-5 in this section, a security interest in proceeds can be perfected
38-6 only by the methods or under the circumstances permitted in this
38-7 chapter for original collateral of the same type].
38-8 (e) If a filed financing statement covers the original
38-9 collateral, a security interest in proceeds that remains perfected
38-10 under Subsection (d)(1) becomes unperfected at the later of:
38-11 (1) when the effectiveness of the filed financing
38-12 statement lapses under Section 9.515 or is terminated under Section
38-13 9.513; or
38-14 (2) the 21st day after the security interest attaches
38-15 to the proceeds.
38-16 [(d) In the event of insolvency proceedings instituted by or
38-17 against a debtor, a secured party with a perfected security
38-18 interest in proceeds has a perfected security interest only in the
38-19 following proceeds:]
38-20 [(1) in identifiable non-cash proceeds and in separate
38-21 deposit accounts containing only proceeds;]
38-22 [(2) in identifiable cash proceeds in the form of
38-23 money which is neither commingled with other money nor deposited in
38-24 a deposit account prior to the insolvency proceedings;]
38-25 [(3) in identifiable cash proceeds in the form of
38-26 checks and the like which are not deposited in a deposit account
38-27 prior to the insolvency proceedings;]
38-28 [(4) in all cash and deposit accounts of the debtor in
38-29 which proceeds have been commingled with other funds, but the
38-30 perfected security interest under this Subdivision (4) is]
38-31 [(A) subject to any right of set-off; and]
38-32 [(B) limited to an amount not greater than the
38-33 amount of any cash proceeds received by the debtor within ten days
38-34 before the institution of the insolvency proceedings less the sum
38-35 of (I) the payments to the secured party on account of cash
38-36 proceeds received by the debtor during such period and (II) the
38-37 cash proceeds received by the debtor during such period to which
38-38 the secured party is entitled under Subdivisions (1) through (3) of
38-39 this Subsection (d); and]
38-40 [(5) in all cash and deposit accounts of the debtor in
38-41 which proceeds have been commingled with other funds, if the
38-42 perfected security interest under this Subdivision (5) is provided
38-43 by Section 9.319 of this code.]
38-44 [(e) If a sale of goods results in an account or chattel
38-45 paper which is transferred by the seller to a secured party, and if
38-46 the goods are returned to or are repossessed by the seller or the
38-47 secured party, the following rules determine priorities:]
38-48 [(1) If the goods were collateral at the time of sale
38-49 for an indebtedness of the seller which is still unpaid, the
38-50 original security interest attaches again to the goods and
38-51 continues as a perfected security interest if it was perfected at
38-52 the time when the goods were sold. If the security interest was
38-53 originally perfected by a filing which is still effective, nothing
38-54 further is required to continue the perfected status; in any other
38-55 case, the secured party must take possession of the returned or
38-56 repossessed goods or must file.]
38-57 [(2) An unpaid transferee of the chattel paper has a
38-58 security interest in the goods against the transferor. Such
38-59 security interest is prior to a security interest asserted under
38-60 Subdivision (1) to the extent that the transferee of the chattel
38-61 paper was entitled to priority under Section 9.308.]
38-62 [(3) An unpaid transferee of the account has a
38-63 security interest in the goods against the transferor. Such
38-64 security interest is subordinate to a security interest asserted
38-65 under Subdivision (1).]
38-66 [(4) A security interest of an unpaid transferee
38-67 asserted under Subdivision (2) or (3) must be perfected for
38-68 protection against creditors of the transferor and purchasers of
38-69 the returned or repossessed goods.]
39-1 Sec. 9.316. CONTINUED PERFECTION OF SECURITY INTEREST
39-2 FOLLOWING CHANGE IN GOVERNING LAW. (a) A security interest
39-3 perfected pursuant to the law of the jurisdiction designated in
39-4 Section 9.301(1) or 9.305(c) remains perfected until the earliest
39-5 of:
39-6 (1) the time perfection would have ceased under the
39-7 law of that jurisdiction;
39-8 (2) the expiration of four months after a change of
39-9 the debtor's location to another jurisdiction; or
39-10 (3) the expiration of one year after a transfer of
39-11 collateral to a person that thereby becomes a debtor and is located
39-12 in another jurisdiction.
39-13 (b) If a security interest described in Subsection (a)
39-14 becomes perfected under the law of the other jurisdiction before
39-15 the earliest time or event described in that subsection, it remains
39-16 perfected thereafter. If the security interest does not become
39-17 perfected under the law of the other jurisdiction before the
39-18 earliest time or event, it becomes unperfected and is deemed never
39-19 to have been perfected as against a purchaser of the collateral for
39-20 value.
39-21 (c) A possessory security interest in collateral, other than
39-22 goods covered by a certificate of title and as-extracted collateral
39-23 consisting of goods, remains continuously perfected if:
39-24 (1) the collateral is located in one jurisdiction and
39-25 subject to a security interest perfected under the law of that
39-26 jurisdiction;
39-27 (2) thereafter the collateral is brought into another
39-28 jurisdiction; and
39-29 (3) upon entry into the other jurisdiction, the
39-30 security interest is perfected under the law of the other
39-31 jurisdiction.
39-32 (d) Except as otherwise provided in Subsection (e), a
39-33 security interest in goods covered by a certificate of title that
39-34 is perfected by any method under the law of another jurisdiction
39-35 when the goods become covered by a certificate of title from this
39-36 State remains perfected until the security interest would have
39-37 become unperfected under the law of the other jurisdiction had the
39-38 goods not become so covered.
39-39 (e) A security interest described in Subsection (d) becomes
39-40 unperfected as against a purchaser of the goods for value and is
39-41 deemed never to have been perfected as against a purchaser of the
39-42 goods for value if the applicable requirements for perfection under
39-43 Section 9.311(b) or 9.313 are not satisfied before the earlier of:
39-44 (1) the time the security interest would have become
39-45 unperfected under the law of the other jurisdiction had the goods
39-46 not become covered by a certificate of title from this State; or
39-47 (2) the expiration of four months after the goods had
39-48 become so covered.
39-49 (f) A security interest in deposit accounts,
39-50 letter-of-credit rights, or investment property that is perfected
39-51 under the law of the bank's jurisdiction, the issuer's
39-52 jurisdiction, a nominated person's jurisdiction, the securities
39-53 intermediary's jurisdiction, or the commodity intermediary's
39-54 jurisdiction, as applicable, remains perfected until the earlier
39-55 of:
39-56 (1) the time the security interest would have become
39-57 unperfected under the law of that jurisdiction; or
39-58 (2) the expiration of four months after a change of
39-59 the applicable jurisdiction to another jurisdiction.
39-60 (g) If a security interest described in Subsection (f)
39-61 becomes perfected under the law of the other jurisdiction before
39-62 the earlier of the time or the end of the period described in that
39-63 subsection, it remains perfected thereafter. If the security
39-64 interest does not become perfected under the law of the other
39-65 jurisdiction before the earlier of that time or the end of that
39-66 period, it becomes unperfected and is deemed never to have been
39-67 perfected as against a purchaser of the collateral for value.
39-68 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
39-69 OF UNPERFECTED SECURITY INTEREST OR AGRICULTURAL LIEN. (a) An
40-1 unperfected security interest or agricultural lien is subordinate
40-2 to the rights of:
40-3 (1) a person entitled to priority under Section 9.322;
40-4 and
40-5 (2) except as otherwise provided in Subsection (e), a
40-6 person that becomes a lien creditor before the earlier of the time
40-7 the security interest or agricultural lien is perfected or a
40-8 financing statement covering the collateral is filed.
40-9 (b) Except as otherwise provided in Subsection (e), a buyer,
40-10 other than a secured party, of tangible chattel paper, documents,
40-11 goods, instruments, or a security certificate takes free of a
40-12 security interest or agricultural lien if the buyer gives value and
40-13 receives delivery of the collateral without knowledge of the
40-14 security interest or agricultural lien and before it is perfected.
40-15 (c) Except as otherwise provided in Subsection (e), a lessee
40-16 of goods takes free of a security interest or agricultural lien if
40-17 the lessee gives value and receives delivery of the collateral
40-18 without knowledge of the security interest or agricultural lien and
40-19 before it is perfected.
40-20 (d) A licensee of a general intangible or a buyer, other
40-21 than a secured party, of accounts, electronic chattel paper,
40-22 general intangibles, or investment property other than a
40-23 certificated security takes free of a security interest if the
40-24 licensee or buyer gives value without knowledge of the security
40-25 interest and before it is perfected.
40-26 (e) Except as otherwise provided in Sections 9.320 and
40-27 9.321, if a person files a financing statement with respect to a
40-28 purchase-money security interest before or within 20 days after the
40-29 debtor receives delivery of the collateral, the security interest
40-30 takes priority over the rights of a buyer, lessee, or lien creditor
40-31 that arise between the time the security interest attaches and the
40-32 time of filing.
40-33 Sec. 9.318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS
40-34 SOLD; RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH
40-35 RESPECT TO CREDITORS AND PURCHASERS. (a) A debtor that has sold
40-36 an account, chattel paper, payment intangible, or promissory note
40-37 does not retain a legal or equitable interest in the collateral
40-38 sold.
40-39 (b) For purposes of determining the rights of creditors of,
40-40 and purchasers for value of an account or chattel paper from, a
40-41 debtor that has sold an account or chattel paper, while the buyer's
40-42 security interest is unperfected, the debtor is deemed to have
40-43 rights and title to the account or chattel paper identical to those
40-44 the debtor sold.
40-45 Sec. 9.319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO
40-46 CREDITORS AND PURCHASERS. (a) Except as otherwise provided in
40-47 Subsection (b), for purposes of determining the rights of creditors
40-48 of, and purchasers for value of goods from, a consignee, while the
40-49 goods are in the possession of the consignee, the consignee is
40-50 deemed to have rights and title to the goods identical to those the
40-51 consignor had or had power to transfer.
40-52 (b) For purposes of determining the rights of a creditor of
40-53 a consignee, law other than this chapter determines the rights and
40-54 title of a consignee while goods are in the consignee's possession
40-55 if, under this subchapter, a perfected security interest held by
40-56 the consignor would have priority over the rights of the creditor.
40-57 Sec. 9.320 [9.307]. [PROTECTION OF] BUYERS OF GOODS.
40-58 (a) Except as otherwise provided by Subsection (e) [(d) of this
40-59 section], a buyer in ordinary course of business, [(Subdivision (9)
40-60 of Section 1.201)] other than a person buying farm products from a
40-61 person engaged in farming operations, takes free of a security
40-62 interest created by the buyer's [his] seller, even if [though] the
40-63 security interest is perfected and [even though] the buyer knows of
40-64 its existence.
40-65 (b) Except as otherwise provided in Subsection (e) [In the
40-66 case of consumer goods], a buyer of goods from a person who used or
40-67 bought the goods for use primarily for personal, family, or
40-68 household purposes takes free of a security interest, even if
40-69 [though] perfected, if the buyer [he] buys:
41-1 (1) without knowledge of the security interest;
41-2 (2)[,] for value;
41-3 (3) primarily for the buyer's [and for his own]
41-4 personal, family, or household purposes; and
41-5 (4) before the filing of [unless prior to the purchase
41-6 the secured party has filed] a financing statement covering the
41-7 [such] goods.
41-8 (c) To the extent that it affects the priority of a security
41-9 interest over a buyer of goods under Subsection (b), the period of
41-10 effectiveness of a filing made in the jurisdiction in which the
41-11 seller is located is governed by Sections 9.316(a) and (b). [A
41-12 buyer other than a buyer in ordinary course of business (Subsection
41-13 (a) of this section) takes free of a security interest to the
41-14 extent that it secures future advances made after the secured party
41-15 acquires knowledge of the purchase, or more than 45 days after the
41-16 purchase, whichever first occurs, unless made pursuant to a
41-17 commitment entered into without knowledge of the purchase and
41-18 before the expiration of the 45 day period.]
41-19 (d) A buyer in ordinary course of business buying oil, gas,
41-20 or other minerals at the wellhead or minehead or after extraction
41-21 takes free of an interest arising out of an encumbrance.
41-22 (e) Subsections (a) and (b) do not affect a security
41-23 interest in goods in the possession of the secured party under
41-24 Section 9.313. [A secured party, including a secured party under a
41-25 security interest covered by Section 9.312(b) of this code, may not
41-26 enforce a security interest in farm products against a person who
41-27 has purchased the farm products from a person engaged in farming
41-28 operations unless the secured party gives notice of the security
41-29 interest to the buyer by certified mail, return receipt requested,
41-30 not later than the 90th day after the date of purchase. The notice
41-31 must state the terms of the security interest and the amount
41-32 claimed to be owed to the secured party.]
41-33 Sec. 9.321 [9.308]. LICENSEE OF GENERAL INTANGIBLE AND
41-34 LESSEE OF GOODS IN ORDINARY COURSE OF BUSINESS. (a) In this
41-35 section, "licensee in ordinary course of business" means a person
41-36 that becomes a licensee of a general intangible in good faith,
41-37 without knowledge that the license violates the rights of another
41-38 person in the general intangible, and in the ordinary course from a
41-39 person in the business of licensing general intangibles of that
41-40 kind. A person becomes a licensee in the ordinary course if the
41-41 license to the person comports with the usual or customary
41-42 practices in the kind of business in which the licensor is engaged
41-43 or with the licensor's own usual or customary practices.
41-44 (b) A licensee in ordinary course of business takes its
41-45 rights under a nonexclusive license free of a security interest in
41-46 the general intangible created by the licensor, even if the
41-47 security interest is perfected and the licensee knows of its
41-48 existence.
41-49 (c) A lessee in ordinary course of business takes its
41-50 leasehold interest free of a security interest in the goods created
41-51 by the lessor, even if the security interest is perfected and the
41-52 lessee knows of its existence. [PURCHASE OF CHATTEL PAPER AND
41-53 INSTRUMENTS. A purchaser of chattel paper or an instrument who
41-54 gives new value and takes possession of it in the ordinary course
41-55 of his business has priority over a security interest in the
41-56 chattel paper or instrument]
41-57 [(1) which is perfected under Section 9.304
41-58 (permissive filing and temporary perfection) or under Section 9.306
41-59 (perfection as to proceeds) if he acts without knowledge that the
41-60 specific paper or instrument is subject to a security interest; or]
41-61 [(2) which is claimed merely as proceeds of inventory
41-62 subject to a security interest (Section 9.306) even though he knows
41-63 that the specific paper or instrument is subject to the security
41-64 interest.]
41-65 [Sec. 9.309. PROTECTION OF PURCHASERS OF INSTRUMENTS,
41-66 DOCUMENTS, AND SECURITIES. Nothing in this chapter limits the
41-67 rights of a holder in due course of a negotiable instrument
41-68 (Section 3.302) or a holder to whom a negotiable document of title
41-69 has been duly negotiated (Section 7.501) or a protected purchaser
42-1 of a security (Section 8.303) and such holders or purchasers take
42-2 priority over an earlier security interest even though perfected.
42-3 Filing under this chapter does not constitute notice of the
42-4 security interest to such holders or purchasers.]
42-5 [Sec. 9.310. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
42-6 OF LAW. When a person in the ordinary course of his business
42-7 furnishes services or materials with respect to goods subject to a
42-8 security interest, a lien upon goods in the possession of such
42-9 person given by statute or rule of law for such materials or
42-10 services takes priority over a perfected security interest unless
42-11 the lien is statutory and the statute expressly provides otherwise.]
42-12 [Sec. 9.311. ALIENABILITY OF DEBTOR'S RIGHTS: JUDICIAL
42-13 PROCESS. The debtor's rights in collateral may be voluntarily or
42-14 involuntarily transferred (by way of sale, creation of a security
42-15 interest, attachment, levy, garnishment or other judicial process)
42-16 notwithstanding a provision in the security agreement prohibiting
42-17 any transfer or making the transfer constitute a default.]
42-18 Sec. 9.322 [9.312]. PRIORITIES AMONG CONFLICTING SECURITY
42-19 INTERESTS IN AND AGRICULTURAL LIENS ON [THE] SAME COLLATERAL.
42-20 (a) Except as otherwise provided in this section, priority among
42-21 conflicting security interests and agricultural liens in the same
42-22 collateral is determined according to the following rules:
42-23 (1) Conflicting perfected security interests and
42-24 agricultural liens rank according to priority in time of filing or
42-25 perfection. Priority dates from the earlier of the time a filing
42-26 covering the collateral is first made or the security interest or
42-27 agricultural lien is first perfected, if there is no period
42-28 thereafter when there is neither filing nor perfection.
42-29 (2) A perfected security interest or agricultural lien
42-30 has priority over a conflicting unperfected security interest or
42-31 agricultural lien.
42-32 (3) The first security interest or agricultural lien
42-33 to attach or become effective has priority if conflicting security
42-34 interests and agricultural liens are unperfected.
42-35 (b) For the purposes of Subsection (a)(1):
42-36 (1) the time of filing or perfection as to a security
42-37 interest in collateral is also the time of filing or perfection as
42-38 to a security interest in proceeds; and
42-39 (2) the time of filing or perfection as to a security
42-40 interest in collateral supported by a supporting obligation is also
42-41 the time of filing or perfection as to a security interest in the
42-42 supporting obligation.
42-43 (c) Except as otherwise provided in Subsection (f), a
42-44 security interest in collateral that qualifies for priority over a
42-45 conflicting security interest under Section 9.327, 9.328, 9.329,
42-46 9.330, or 9.331 also has priority over a conflicting security
42-47 interest in:
42-48 (1) any supporting obligation for the collateral; and
42-49 (2) proceeds of the collateral if:
42-50 (A) the security interest in proceeds is
42-51 perfected;
42-52 (B) the proceeds are cash proceeds or of the
42-53 same type as the collateral; and
42-54 (C) in the case of proceeds that are proceeds of
42-55 proceeds, all intervening proceeds are cash proceeds, proceeds of
42-56 the same type as the collateral, or an account relating to the
42-57 collateral.
42-58 (d) Subject to Subsection (e) and except as otherwise
42-59 provided in Subsection (f), if a security interest in chattel
42-60 paper, deposit accounts, negotiable documents, instruments,
42-61 investment property, or letter-of-credit rights is perfected by a
42-62 method other than filing, conflicting perfected security interests
42-63 in proceeds of the collateral rank according to priority in time of
42-64 filing.
42-65 (e) Subsection (d) applies only if the proceeds of the
42-66 collateral are not cash proceeds, chattel paper, negotiable
42-67 documents, instruments, investment property, or letter-of-credit
42-68 rights.
42-69 (f) Subsections (a)-(e) are subject to:
43-1 (1) Subsection (g) and the other provisions of this
43-2 subchapter;
43-3 (2) Section 4.210 with respect to a security interest
43-4 of a collecting bank;
43-5 (3) Section 5.118 with respect to a security interest
43-6 of an issuer or nominated person; and
43-7 (4) Section 9.110 with respect to a security interest
43-8 arising under Chapter 2 or 2A.
43-9 (g) A perfected agricultural lien on collateral has priority
43-10 over a conflicting security interest in or agricultural lien on the
43-11 same collateral if the statute creating the agricultural lien so
43-12 provides.
43-13 Sec. 9.323. FUTURE ADVANCES. (a) Except as otherwise
43-14 provided in Subsection (c), for purposes of determining the
43-15 priority of a perfected security interest under Section
43-16 9.322(a)(1), perfection of the security interest dates from the
43-17 time an advance is made to the extent that the security interest
43-18 secures an advance that:
43-19 (1) is made while the security interest is perfected
43-20 only:
43-21 (A) under Section 9.309 when it attaches; or
43-22 (B) temporarily under Section 9.312(e), (f), or
43-23 (g); and
43-24 (2) is not made pursuant to a commitment entered into
43-25 before or while the security interest is perfected by a method
43-26 other than under Section 9.309 or 9.312(e), (f), or (g).
43-27 (b) Except as otherwise provided in Subsection (c), a
43-28 security interest is subordinate to the rights of a person that
43-29 becomes a lien creditor while the security interest is perfected
43-30 only to the extent that it secures advances made more than 45 days
43-31 after the person becomes a lien creditor unless the advance is
43-32 made:
43-33 (1) without knowledge of the lien; or
43-34 (2) pursuant to a commitment entered into without
43-35 knowledge of the lien.
43-36 (c) Subsections (a) and (b) do not apply to a security
43-37 interest held by a secured party that is a buyer of accounts,
43-38 chattel paper, payment intangibles, or promissory notes or a
43-39 consignor.
43-40 (d) Except as otherwise provided in Subsection (e), a buyer
43-41 of goods other than a buyer in ordinary course of business takes
43-42 free of a security interest to the extent that it secures advances
43-43 made after the earlier of:
43-44 (1) the time the secured party acquires knowledge of
43-45 the buyer's purchase; or
43-46 (2) 45 days after the purchase.
43-47 (e) Subsection (d) does not apply if the advance is made
43-48 pursuant to a commitment entered into without knowledge of the
43-49 buyer's purchase and before the expiration of the 45-day period.
43-50 (f) Except as otherwise provided in Subsection (g), a lessee
43-51 of goods, other than a lessee in ordinary course of business, takes
43-52 the leasehold interest free of a security interest to the extent
43-53 that it secures advances made after the earlier of:
43-54 (1) the time the secured party acquires knowledge of
43-55 the lease; or
43-56 (2) 45 days after the lease contract becomes
43-57 enforceable.
43-58 (g) Subsection (f) does not apply if the advance is made
43-59 pursuant to a commitment entered into without knowledge of the
43-60 lease and before the expiration of the 45-day period.
43-61 Sec. 9.324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS.
43-62 (a) Except as otherwise provided in Subsection (g), a perfected
43-63 purchase-money security interest in goods other than inventory or
43-64 livestock has priority over a conflicting security interest in the
43-65 same goods, and, except as otherwise provided in Section 9.327, a
43-66 perfected security interest in its identifiable proceeds also has
43-67 priority, if the purchase-money security interest is perfected when
43-68 the debtor receives possession of the collateral or within 20 days
43-69 thereafter.
44-1 (b) Subject to Subsection (c) and except as otherwise
44-2 provided in Subsection (g), a [The rules of priority stated in
44-3 other sections of this subchapter and in the following sections
44-4 shall govern when applicable: Section 4.210 with respect to the
44-5 security interests of collecting banks in items being collected,
44-6 accompanying documents and proceeds; Section 9.103 on security
44-7 interests related to other jurisdictions; Section 9.114 on
44-8 consignments; Section 9.115 on security interests in investment
44-9 property.]
44-10 [(b) A perfected security interest in crops for new value
44-11 given to enable the debtor to produce the crops during the
44-12 production season and given not more than three months before the
44-13 crops become growing crops by planting or otherwise takes priority
44-14 over an earlier perfected security interest to the extent that such
44-15 earlier interest secures obligations due more than six months
44-16 before the crops become growing crops by planting or otherwise,
44-17 even though the person giving new value had knowledge of the
44-18 earlier security interest.]
44-19 [(c) A] perfected purchase-money [purchase money] security
44-20 interest in inventory has priority over a conflicting security
44-21 interest in the same inventory, has priority over a conflicting
44-22 security interest in chattel paper or an instrument constituting
44-23 proceeds of the inventory and in proceeds of the chattel paper, if
44-24 so provided in Section 9.330, and, except as otherwise provided in
44-25 Section 9.327, [and] also has priority in identifiable cash
44-26 proceeds of the inventory to the extent the identifiable cash
44-27 proceeds are received on or before the delivery of the inventory to
44-28 a buyer, if:
44-29 (1) the purchase-money [purchase money] security
44-30 interest is perfected when [at the time] the debtor receives
44-31 possession of the inventory; [and]
44-32 (2) except where excused by Section 9.343 [9.319] (oil
44-33 and gas production), the purchase-money [purchase money] secured
44-34 party sends an authenticated [gives] notification [in writing] to
44-35 the holder of the conflicting security interest [if the holder had
44-36 filed a financing statement covering the same types of inventory
44-37 (i) before the date of the filing made by the purchase money
44-38 secured party, or (ii) before the beginning of the 21 day period
44-39 where the purchase money security interest is temporarily perfected
44-40 without filing or possession (Subsection (e) of Section 9.304)];
44-41 [and]
44-42 (3) the holder of the conflicting security interest
44-43 receives any required notification within five years before the
44-44 debtor receives possession of the inventory; and
44-45 (4) the notification states that the person sending
44-46 [giving] the notification [notice] has or expects to acquire a
44-47 purchase-money [purchase money] security interest in inventory of
44-48 the debtor and describes the[, describing such] inventory [by item
44-49 or type].
44-50 (c) Subsections (b)(2) through (4) apply only if the holder
44-51 of the conflicting security interest had filed a financing
44-52 statement covering the same types of inventory:
44-53 (1) if the purchase-money security interest is
44-54 perfected by filing, before the date of the filing; or
44-55 (2) if the purchase-money security interest is
44-56 temporarily perfected without filing or possession under Section
44-57 9.312(f), before the beginning of the 20-day period under that
44-58 subsection.
44-59 (d) Subject to Subsection (e) and except as otherwise
44-60 provided in Subsection (g), a perfected purchase-money security
44-61 interest in livestock that are farm products has priority over a
44-62 conflicting security interest in the same livestock, and, except as
44-63 otherwise provided in Section 9.327, a perfected security interest
44-64 in their identifiable proceeds and identifiable products in their
44-65 unmanufactured states also has priority, if:
44-66 (1) the purchase-money security interest is perfected
44-67 when the debtor receives possession of the livestock;
44-68 (2) the purchase-money secured party sends an
44-69 authenticated notification to the holder of the conflicting
45-1 security interest;
45-2 (3) the holder of the conflicting security interest
45-3 receives the notification within six months before the debtor
45-4 receives possession of the livestock; and
45-5 (4) the notification states that the person sending
45-6 the notification has or expects to acquire a purchase-money
45-7 security interest in livestock of the debtor and describes the
45-8 livestock. [A purchase money security interest in collateral other
45-9 than inventory has priority over a conflicting security interest in
45-10 the same collateral or its proceeds if the purchase money security
45-11 interest is perfected at the time the debtor receives possession of
45-12 the collateral or within 20 days thereafter.]
45-13 (e) Subsections (d)(2) through (4) apply only if the holder
45-14 of the conflicting security interest had filed a financing
45-15 statement covering the same types of livestock:
45-16 (1) if the purchase-money security interest is
45-17 perfected by filing, before the date of the filing; or
45-18 (2) if the purchase-money security interest is
45-19 temporarily perfected without filing or possession under Section
45-20 9.312(f), before the beginning of the 20-day period under that
45-21 subsection. [In all cases not governed by other rules stated in
45-22 this section (including cases of purchase money security interests
45-23 which do not qualify for the special priorities set forth in
45-24 Subsections (c) and (d) of this section), priority between
45-25 conflicting security interests in the same collateral shall be
45-26 determined according to the following rules:]
45-27 [(1) Conflicting security interests rank according to
45-28 priority in time of filing or perfection. Priority dates from the
45-29 time a filing is first made covering the collateral or the time the
45-30 security interest is first perfected, whichever is earlier,
45-31 provided that there is no period thereafter when there is neither
45-32 filing nor perfection.]
45-33 [(2) So long as conflicting security interests are
45-34 unperfected, the first to attach has priority.]
45-35 (f) Except as otherwise provided in Subsection (g), a
45-36 perfected purchase-money security interest in software has priority
45-37 over a conflicting security interest in the same collateral, and,
45-38 except as otherwise provided in Section 9.327, a perfected security
45-39 interest in its identifiable proceeds also has priority, to the
45-40 extent that the purchase-money security interest in the goods in
45-41 which the software was acquired for use has priority in the goods
45-42 and proceeds of the goods under this section. [For the purposes of
45-43 Subsection (e) a date of filing or perfection as to collateral is
45-44 also a date of filing or perfection as to proceeds.]
45-45 (g) If more than one security interest qualifies for
45-46 priority in the same collateral under Subsection (a), (b), (d), or
45-47 (f):
45-48 (1) a security interest securing an obligation
45-49 incurred as all or part of the price of the collateral has priority
45-50 over a security interest securing an obligation incurred for value
45-51 given to enable the debtor to acquire rights in or the use of
45-52 collateral; and
45-53 (2) in all other cases, Section 9.322(a) applies to
45-54 the qualifying security interests [future advances are made while a
45-55 security interest is perfected by filing, the taking of possession,
45-56 or under Section 9.115 or 9.116 on investment property, the
45-57 security interest has the same priority for the purposes of
45-58 Subsection (e) or Section 9.115(e) with respect to the future
45-59 advances as it does with respect to the first advance. If a
45-60 commitment is made before or while the security interest is so
45-61 perfected, the security interest has the same priority with respect
45-62 to advances made pursuant thereto. In other cases a perfected
45-63 security interest has priority from the date the advance is made].
45-64 Sec. 9.325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED
45-65 COLLATERAL. (a) Except as otherwise provided in Subsection (b), a
45-66 security interest created by a debtor is subordinate to a security
45-67 interest in the same collateral created by another person if:
45-68 (1) the debtor acquired the collateral subject to the
45-69 security interest created by the other person;
46-1 (2) the security interest created by the other person
46-2 was perfected when the debtor acquired the collateral; and
46-3 (3) there is no period thereafter when the security
46-4 interest is unperfected.
46-5 (b) Subsection (a) subordinates a security interest only if
46-6 the security interest:
46-7 (1) otherwise would have priority solely under Section
46-8 9.322(a) or 9.324; or
46-9 (2) arose solely under Section 2.711(c) or 2A.508(e).
46-10 Sec. 9.326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW
46-11 DEBTOR. (a) Subject to Subsection (b), a security interest
46-12 created by a new debtor that is perfected by a filed financing
46-13 statement that is effective solely under Section 9.508 in
46-14 collateral in which a new debtor has or acquires rights is
46-15 subordinate to a security interest in the same collateral that is
46-16 perfected other than by a filed financing statement that is
46-17 effective solely under Section 9.508.
46-18 (b) The other provisions of this subchapter determine the
46-19 priority among conflicting security interests in the same
46-20 collateral perfected by filed financing statements that are
46-21 effective solely under Section 9.508. However, if the security
46-22 agreements to which a new debtor became bound as debtor were not
46-23 entered into by the same original debtor, the conflicting security
46-24 interests rank according to priority in time of the new debtor's
46-25 having become bound.
46-26 Sec. 9.327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT
46-27 ACCOUNT. The following rules govern priority among conflicting
46-28 security interests in the same deposit account:
46-29 (1) A security interest held by a secured party having
46-30 control of the deposit account under Section 9.104 has priority
46-31 over a conflicting security interest held by a secured party that
46-32 does not have control.
46-33 (2) Except as otherwise provided in Subdivisions (3)
46-34 and (4), security interests perfected by control under Section
46-35 9.314 rank according to priority in time of obtaining control.
46-36 (3) Except as otherwise provided in Subdivision (4), a
46-37 security interest held by the bank with which the deposit account
46-38 is maintained has priority over a conflicting security interest
46-39 held by another secured party.
46-40 (4) A security interest perfected by control under
46-41 Section 9.104(a)(3) has priority over a security interest held by
46-42 the bank with which the deposit account is maintained.
46-43 Sec. 9.328. PRIORITY OF SECURITY INTERESTS IN INVESTMENT
46-44 PROPERTY. The following rules govern priority among conflicting
46-45 security interests in the same investment property:
46-46 (1) A security interest held by a secured party having
46-47 control of investment property under Section 9.106 has priority
46-48 over a security interest held by a secured party that does not have
46-49 control of the investment property.
46-50 (2) Except as otherwise provided in Subdivisions (3)
46-51 and (4), conflicting security interests held by secured parties
46-52 each of which has control under Section 9.106 rank according to
46-53 priority in time of:
46-54 (A) if the collateral is a security, obtaining
46-55 control;
46-56 (B) if the collateral is a security entitlement
46-57 carried in a securities account and:
46-58 (i) if the secured party obtained control
46-59 under Section 8.106(d)(1), the secured party's becoming the person
46-60 for which the securities account is maintained;
46-61 (ii) if the secured party obtained control
46-62 under Section 8.106(d)(2), the securities intermediary's agreement
46-63 to comply with the secured party's entitlement orders with respect
46-64 to security entitlements carried or to be carried in the securities
46-65 account; or
46-66 (iii) if the secured party obtained
46-67 control through another person under Section 8.106(d)(3), the time
46-68 on which priority would be based under this subdivision if the
46-69 other person were the secured party; or
47-1 (C) if the collateral is a commodity contract
47-2 carried with a commodity intermediary, the satisfaction of the
47-3 requirement for control specified in Section 9.106(b)(2) with
47-4 respect to commodity contracts carried or to be carried with the
47-5 commodity intermediary.
47-6 (3) A security interest held by a securities
47-7 intermediary in a security entitlement or a securities account
47-8 maintained with the securities intermediary has priority over a
47-9 conflicting security interest held by another secured party.
47-10 (4) A security interest held by a commodity
47-11 intermediary in a commodity contract or a commodity account
47-12 maintained with the commodity intermediary has priority over a
47-13 conflicting security interest held by another secured party.
47-14 (5) A security interest in a certificated security in
47-15 registered form that is perfected by taking delivery under Section
47-16 9.313(a) and not by control under Section 9.314 has priority over a
47-17 conflicting security interest perfected by a method other than
47-18 control.
47-19 (6) Conflicting security interests created by a
47-20 broker, securities intermediary, or commodity intermediary that are
47-21 perfected without control under Section 9.106 rank equally.
47-22 (7) In all other cases, priority among conflicting
47-23 security interests in investment property is governed by Sections
47-24 9.322 and 9.323.
47-25 Sec. 9.329. PRIORITY OF SECURITY INTERESTS IN
47-26 LETTER-OF-CREDIT RIGHT. The following rules govern priority among
47-27 conflicting security interests in the same letter-of-credit right:
47-28 (1) A security interest held by a secured party having
47-29 control of the letter-of-credit right under Section 9.107 has
47-30 priority to the extent of its control over a conflicting security
47-31 interest held by a secured party that does not have control.
47-32 (2) Security interests perfected by control under
47-33 Section 9.314 rank according to priority in time of obtaining
47-34 control.
47-35 Sec. 9.330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR
47-36 INSTRUMENT. (a) A purchaser of chattel paper has priority over a
47-37 security interest in the chattel paper that is claimed merely as
47-38 proceeds of inventory subject to a security interest if:
47-39 (1) in good faith and in the ordinary course of the
47-40 purchaser's business, the purchaser gives new value and takes
47-41 possession of the chattel paper or obtains control of the chattel
47-42 paper under Section 9.105; and
47-43 (2) the chattel paper does not indicate that it has
47-44 been assigned to an identified assignee other than the purchaser.
47-45 (b) A purchaser of chattel paper has priority over a
47-46 security interest in the chattel paper that is claimed other than
47-47 merely as proceeds of inventory subject to a security interest if
47-48 the purchaser gives new value and takes possession of the chattel
47-49 paper or obtains control of the chattel paper under Section 9.105
47-50 in good faith, in the ordinary course of the purchaser's business,
47-51 and without knowledge that the purchase violates the rights of the
47-52 secured party.
47-53 (c) Except as otherwise provided in Section 9.327, a
47-54 purchaser having priority in chattel paper under Subsection (a) or
47-55 (b) also has priority in proceeds of the chattel paper to the
47-56 extent that:
47-57 (1) Section 9.322 provides for priority in the
47-58 proceeds; or
47-59 (2) the proceeds consist of the specific goods covered
47-60 by the chattel paper or cash proceeds of the specific goods, even
47-61 if the purchaser's security interest in the proceeds is
47-62 unperfected.
47-63 (d) Except as otherwise provided in Section 9.331(a), a
47-64 purchaser of an instrument has priority over a security interest in
47-65 the instrument perfected by a method other than possession if the
47-66 purchaser gives value and takes possession of the instrument in
47-67 good faith and without knowledge that the purchase violates the
47-68 rights of the secured party.
47-69 (e) For purposes of Subsections (a) and (b), the holder of a
48-1 purchase-money security interest in inventory gives new value for
48-2 chattel paper constituting proceeds of the inventory.
48-3 (f) For purposes of Subsections (b) and (d), if chattel
48-4 paper or an instrument indicates that it has been assigned to an
48-5 identified secured party other than the purchaser, a purchaser of
48-6 the chattel paper or instrument has knowledge that the purchase
48-7 violates the rights of the secured party.
48-8 Sec. 9.331. PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS,
48-9 DOCUMENTS, AND SECURITIES UNDER OTHER CHAPTERS; PRIORITY OF
48-10 INTERESTS IN FINANCIAL ASSETS AND SECURITY ENTITLEMENTS UNDER
48-11 CHAPTER 8. (a) This chapter does not limit the rights of a holder
48-12 in due course of a negotiable instrument, a holder to which a
48-13 negotiable document of title has been duly negotiated, or a
48-14 protected purchaser of a security. These holders or purchasers
48-15 take priority over an earlier security interest, even if perfected,
48-16 to the extent provided in Chapters 3, 7, and 8.
48-17 (b) This chapter does not limit the rights of or impose
48-18 liability on a person to the extent that the person is protected
48-19 against the assertion of an adverse claim under Chapter 8.
48-20 (c) Filing under this chapter does not constitute notice of
48-21 a claim or defense to the holders, or purchasers, or persons
48-22 described in Subsections (a) and (b).
48-23 Sec. 9.332. TRANSFER OF MONEY; TRANSFER OF FUNDS FROM
48-24 DEPOSIT ACCOUNT. (a) A transferee of money takes the money free
48-25 of a security interest unless the transferee acts in collusion with
48-26 the debtor in violating the rights of the secured party.
48-27 (b) A transferee of funds from a deposit account takes the
48-28 funds free of a security interest in the deposit account unless the
48-29 transferee acts in collusion with the debtor in violating the
48-30 rights of the secured party.
48-31 Sec. 9.333. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION
48-32 OF LAW. (a) In this section, "possessory lien" means an interest,
48-33 other than a security interest or an agricultural lien:
48-34 (1) that secures payment or performance of an
48-35 obligation for services or materials furnished with respect to
48-36 goods by a person in the ordinary course of the person's business;
48-37 (2) that is created by statute or rule of law in favor
48-38 of the person; and
48-39 (3) whose effectiveness depends on the person's
48-40 possession of the goods.
48-41 (b) A possessory lien on goods has priority over a security
48-42 interest in the goods unless the lien is created by a statute that
48-43 expressly provides otherwise.
48-44 Sec. 9.334 [9.313]. PRIORITY OF SECURITY INTERESTS IN
48-45 FIXTURES AND CROPS. (a) [In this section and in the provisions of
48-46 Subchapter D of this chapter referring to fixture filing, unless
48-47 the context otherwise requires]
48-48 [(1) goods are "fixtures" when they become so related
48-49 to particular real estate that an interest in them arises under the
48-50 real estate law of the state in which the real estate is situated;]
48-51 [(2) a "fixture filing" is the filing in the office
48-52 where a mortgage on the real estate would be filed or recorded of a
48-53 financing statement covering goods which are or are to become
48-54 fixtures and conforming to the requirements of Subsection (e) of
48-55 Section 9.402;]
48-56 [(3) a mortgage is a "construction mortgage" to the
48-57 extent that it secures an obligation incurred for the construction
48-58 of an improvement on land including the acquisition cost of the
48-59 land, if the recorded writing so indicates.]
48-60 [(b)] A security interest under this chapter may be created
48-61 in goods that [which] are fixtures or may continue in goods that
48-62 [which] become fixtures. A[, but no] security interest does not
48-63 exist [exists] under this chapter in ordinary building materials
48-64 incorporated into an improvement on land.
48-65 (b) [(c)] This chapter does not prevent creation of an
48-66 encumbrance upon fixtures under [pursuant to] real property
48-67 [estate] law.
48-68 (c) In cases not governed by Subsections (d)-(h), a security
48-69 interest in fixtures is subordinate to a conflicting interest of an
49-1 encumbrancer or owner of the related real property other than the
49-2 debtor.
49-3 (d) Except as otherwise provided in Subsection (h), a [A]
49-4 perfected security interest in fixtures has priority over the
49-5 conflicting interest of an encumbrancer or owner of the real
49-6 property if the debtor has an interest of record in or is in
49-7 possession of the real property and: [estate where]
49-8 (1) the security interest is a purchase-money
49-9 [purchase money] security interest;
49-10 (2)[,] the interest of the encumbrancer or owner
49-11 arises before the goods become fixtures; and
49-12 (3)[,] the security interest is perfected by a fixture
49-13 filing before the goods become fixtures or within 20 [ten] days
49-14 thereafter.
49-15 (e) A perfected security interest in fixtures has priority
49-16 over a conflicting interest of an encumbrancer or owner of the real
49-17 property if:
49-18 (1) the debtor has an interest of record in the real
49-19 property or is in possession of the real property and[, and the
49-20 debtor has an interest of record in the real estate or is in
49-21 possession of the real estate; or]
49-22 [(2)] the security interest:
49-23 (A) is perfected by a fixture filing before the
49-24 interest of the encumbrancer or owner is of record; and
49-25 (B)[, the security interest] has priority over
49-26 any conflicting interest of a predecessor in title of the
49-27 encumbrancer or owner;
49-28 (2) before the goods become fixtures, the security
49-29 interest is perfected by any method permitted by this chapter and[,
49-30 and the debtor has an interest of record in the real estate or is
49-31 in possession of the real estate; or]
49-32 [(3)] the fixtures are readily removable:
49-33 (A) factory or office machines;
49-34 (B) equipment that is not primarily used or
49-35 leased for use in the operation of the real property; or
49-36 (C) [readily removable] replacements of domestic
49-37 appliances that [which] are consumer goods;
49-38 (3)[, and before the goods become fixtures the security
49-39 interest is perfected by any method permitted by this chapter; or]
49-40 [(4)] the conflicting interest is a lien on the real
49-41 property [estate] obtained by legal or equitable proceedings after
49-42 the security interest was perfected by any method permitted by this
49-43 chapter; or
49-44 (4) the security interest is:
49-45 (A) created in a manufactured home in a
49-46 manufactured-home transaction; and
49-47 (B) perfected pursuant to a statute described in
49-48 Section 9.311(a)(2).
49-49 (f) [(e)] A security interest in fixtures, whether or not
49-50 perfected, has priority over the conflicting interest of an
49-51 encumbrancer or owner of the real property if: [estate where]
49-52 (1) the encumbrancer or owner has, in an authenticated
49-53 record, consented [in writing] to the security interest or [has]
49-54 disclaimed an interest in the goods as fixtures; or
49-55 (2) the debtor has a right to remove the goods as
49-56 against the encumbrancer or owner.
49-57 (g) The [If the debtor's right terminates, the] priority of
49-58 the security interest under Subsection (f) continues for a
49-59 reasonable time if the debtor's right to remove the goods as
49-60 against the encumbrancer or owner terminates.
49-61 (h) A mortgage is a construction mortgage to the extent that
49-62 it secures an obligation incurred for the construction of an
49-63 improvement on land, including the acquisition cost of the land, if
49-64 a recorded record of the mortgage so indicates. Except as
49-65 [(f) Notwithstanding Subdivision (1) of Subsection (d) but]
49-66 otherwise provided in [subject to] Subsections [(d) and] (e) and
49-67 (f), a security interest in fixtures is subordinate to a
49-68 construction mortgage if a record of the mortgage is recorded
49-69 before the goods become fixtures [if the goods become fixtures]
50-1 before the completion of the construction. A [To the extent that
50-2 it is given to refinance a construction mortgage, a] mortgage has
50-3 this priority to the same extent as a [the] construction mortgage
50-4 to the extent that it is given to refinance a construction
50-5 mortgage.
50-6 (i) A perfected security interest in crops growing on real
50-7 property has priority over a conflicting interest of an
50-8 encumbrancer or owner of the real property if the debtor has an
50-9 interest of record in or is in possession of the real property.
50-10 [(g) In cases not within the preceding subsections, a
50-11 security interest in fixtures is subordinate to the conflicting
50-12 interest of an encumbrancer or owner of the related real estate who
50-13 is not the debtor.]
50-14 [(h) When the secured party has priority over all owners and
50-15 encumbrancers of the real estate, he may, on default, subject to
50-16 the provisions of Subchapter E, remove his collateral from the real
50-17 estate but he must reimburse any encumbrancer or owner of the real
50-18 estate who is not the debtor and who has not otherwise agreed for
50-19 the cost of repair of any physical injury, but not for any
50-20 diminution in value of the real estate caused by the absence of the
50-21 goods removed or by any necessity of replacing them. A person
50-22 entitled to reimbursement may refuse permission to remove until the
50-23 secured party gives adequate security for the performance of this
50-24 obligation.]
50-25 Sec. 9.335 [9.314]. ACCESSIONS. (a) A security interest
50-26 may be created in an accession and continues in collateral that
50-27 becomes an accession [in goods which attaches before they are
50-28 installed in or affixed to other goods takes priority as to the
50-29 goods installed or affixed (called in this section "accessions")
50-30 over the claims of all persons to the whole except as stated in
50-31 Subsection (c) and subject to Section 9.315(a)].
50-32 (b) If a security interest is perfected when the collateral
50-33 becomes an accession, the security interest remains perfected in
50-34 the collateral. [A security interest which attaches to goods after
50-35 they become part of a whole is valid against all persons
50-36 subsequently acquiring interests in the whole except as stated in
50-37 Subsection (c) but is invalid against any person with an interest
50-38 in the whole at the time the security interest attaches to the
50-39 goods who has not in writing consented to the security interest or
50-40 disclaimed an interest in the goods as part of the whole.]
50-41 (c) Except as otherwise provided in Subsection (d), the
50-42 other provisions of this subchapter determine the priority of a
50-43 security interest in an accession. [The security interests
50-44 described in Subsections (a) and (b) do not take priority over]
50-45 [(1) a subsequent purchaser for value of any interest
50-46 in the whole; or]
50-47 [(2) a creditor with a lien on the whole subsequently
50-48 obtained by judicial proceedings; or]
50-49 [(3) a creditor with a prior perfected security
50-50 interest in the whole to the extent that he makes subsequent
50-51 advances if the subsequent purchase is made, the lien by judicial
50-52 proceedings obtained or the subsequent advance under the prior
50-53 perfected security interest is made or contracted for without
50-54 knowledge of the security interest and before it is perfected. A
50-55 purchaser of the whole at a foreclosure sale other than the holder
50-56 of a perfected security interest purchasing at his own foreclosure
50-57 sale is a subsequent purchaser within this section.]
50-58 (d) A security interest in an accession is subordinate to a
50-59 security interest in the whole that is perfected by compliance with
50-60 the requirements of a certificate-of-title statute under Section
50-61 9.311(b).
50-62 (e) After [When under Subsections (a) or (b) and (c) a
50-63 secured party has an interest in accessions which has priority over
50-64 the claims of all persons who have interests in the whole, he may
50-65 on] default, subject to [the provisions of] Subchapter F, a secured
50-66 party may [E] remove an accession from other goods if the security
50-67 interest in the accession has priority over the claims of every
50-68 person having an interest in the whole.
50-69 (f) A secured party that removes an accession from other
51-1 goods under Subsection (e) shall promptly [his collateral from the
51-2 whole but he must] reimburse any holder of a security interest or
51-3 other lien on, [encumbrancer] or owner of, the whole or the other
51-4 goods, other than [who is not] the debtor, [and who has not
51-5 otherwise agreed] for the cost of repair of any physical injury to
51-6 the whole or the other goods. The secured party need [but] not
51-7 reimburse the holder or owner for any diminution in value of the
51-8 whole or the other goods caused by the absence of the accession
51-9 [goods] removed or by any necessity for replacing it [them]. A
51-10 person entitled to reimbursement may refuse permission to remove
51-11 until the secured party gives adequate assurance [security] for the
51-12 performance of the [this] obligation to reimburse.
51-13 Sec. 9.336 [9.315]. [PRIORITY WHEN GOODS ARE] COMMINGLED
51-14 GOODS [OR PROCESSED]. (a) In this section, "commingled goods"
51-15 means goods that are physically united with other goods in such a
51-16 manner that their identity is lost in a product or mass.
51-17 (b) A security interest does not exist in commingled goods
51-18 as such. However, a security interest may attach to a product or
51-19 mass that results when goods become commingled goods.
51-20 (c) If collateral becomes commingled goods, a security
51-21 interest attaches to the product or mass.
51-22 (d) If a security interest in collateral is [goods was]
51-23 perfected before the collateral becomes commingled [and
51-24 subsequently the] goods [or a part thereof have become part of a
51-25 product or mass], the security interest that attaches to the
51-26 product or mass under Subsection (c) is perfected [continues in the
51-27 product or mass if]
51-28 [(1) the goods are so manufactured, processed,
51-29 assembled or commingled that their identity is lost in the product
51-30 or mass; or]
51-31 [(2) a financing statement covering the original goods
51-32 also covers the product into which the goods have been
51-33 manufactured, processed or assembled.]
51-34 [In a case to which Subdivision (2) applies, no separate
51-35 security interest in that part of the original goods which has been
51-36 manufactured, processed or assembled into the product may be
51-37 claimed under Section 9.314].
51-38 (e) Except as otherwise provided in Subsection (f), the
51-39 other provisions of this subchapter determine the priority of a
51-40 security interest that attaches to the product or mass under
51-41 Subsection (c).
51-42 (f) If [(b) When under Subsection (a)] more than one
51-43 security interest attaches to the product or mass under Subsection
51-44 (c), the following rules determine priority:
51-45 (1) A security interest that is perfected under
51-46 Subsection (d) has priority over a security interest that is
51-47 unperfected at the time the collateral becomes commingled goods.
51-48 (2) If more than one security interest is perfected
51-49 under Subsection (d), the security interests[, they] rank equally
51-50 in proportion to value of the collateral at the time it became
51-51 commingled goods [according to the ratio that the cost of the goods
51-52 to which each interest originally attached bears to the cost of the
51-53 total product or mass].
51-54 Sec. 9.337. PRIORITY OF SECURITY INTERESTS IN GOODS COVERED
51-55 BY CERTIFICATE OF TITLE. If, while a security interest in goods is
51-56 perfected by any method under the law of another jurisdiction, this
51-57 State issues a certificate of title that does not show that the
51-58 goods are subject to the security interest or contain a statement
51-59 that they may be subject to security interests not shown on the
51-60 certificate:
51-61 (1) a buyer of the goods, other than a person in the
51-62 business of selling goods of that kind, takes free of the security
51-63 interest if the buyer gives value and receives delivery of the
51-64 goods after issuance of the certificate and without knowledge of
51-65 the security interest; and
51-66 (2) the security interest is subordinate to a
51-67 conflicting security interest in the goods that attaches, and is
51-68 perfected under Section 9.311(b), after issuance of the certificate
51-69 and without the conflicting secured party's knowledge of the
52-1 security interest.
52-2 Sec. 9.338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL
52-3 LIEN PERFECTED BY FILED FINANCING STATEMENT PROVIDING CERTAIN
52-4 INCORRECT INFORMATION. If a security interest or agricultural lien
52-5 is perfected by a filed financing statement providing information
52-6 described in Section 9.516(b)(5) that is incorrect at the time the
52-7 financing statement is filed:
52-8 (1) the security interest or agricultural lien is
52-9 subordinate to a conflicting perfected security interest in the
52-10 collateral to the extent that the holder of the conflicting
52-11 security interest gives value in reasonable reliance upon the
52-12 incorrect information; and
52-13 (2) a purchaser, other than a secured party, of the
52-14 collateral takes free of the security interest or agricultural lien
52-15 to the extent that, in reasonable reliance upon the incorrect
52-16 information, the purchaser gives value and, in the case of chattel
52-17 paper, documents, goods, instruments, or a security certificate,
52-18 receives delivery of the collateral.
52-19 Sec. 9.339 [9.316]. PRIORITY SUBJECT TO SUBORDINATION. This
52-20 [Nothing in this] chapter does not preclude [prevents]
52-21 subordination by agreement by a [any] person entitled to priority.
52-22 Sec. 9.340. EFFECTIVENESS OF RIGHT OF RECOUPMENT OR SET-OFF
52-23 AGAINST DEPOSIT ACCOUNT. (a) Except as otherwise provided in
52-24 Subsection (c), a bank with which a deposit account is maintained
52-25 may exercise any right of recoupment or set-off against a secured
52-26 party that holds a security interest in the deposit account.
52-27 (b) Except as otherwise provided in Subsection (c), the
52-28 application of this chapter to a security interest in a deposit
52-29 account does not affect a right of recoupment or set-off of the
52-30 secured party as to a deposit account maintained with the secured
52-31 party.
52-32 (c) The exercise by a bank of a set-off against a deposit
52-33 account is ineffective against a secured party that holds a
52-34 security interest in the deposit account that is perfected by
52-35 control under Section 9.104(a)(3), if the set-off is based on a
52-36 claim against the debtor.
52-37 Sec. 9.341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT
52-38 ACCOUNT. Except as otherwise provided in Section 9.340(c), and
52-39 unless the bank otherwise agrees in an authenticated record, a
52-40 bank's rights and duties with respect to a deposit account
52-41 maintained with the bank are not terminated, suspended, or modified
52-42 by:
52-43 (1) the creation, attachment, or perfection of a
52-44 security interest in the deposit account;
52-45 (2) the bank's knowledge of the security interest; or
52-46 (3) the bank's receipt of instructions from the
52-47 secured party.
52-48 Sec. 9.342. BANK'S RIGHT TO REFUSE TO ENTER INTO OR DISCLOSE
52-49 EXISTENCE OF CONTROL AGREEMENT. This chapter does not require a
52-50 bank to enter into an agreement of the kind described in Section
52-51 9.104(a)(2), even if its customer so requests or directs. A bank
52-52 that has entered into such an agreement is not required to confirm
52-53 the existence of the agreement to another person unless requested
52-54 to do so by its customer.
52-55 Sec. 9.343. OIL AND GAS INTERESTS: SECURITY INTEREST
52-56 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
52-57 provides a security interest in favor of interest owners, as
52-58 secured parties, to secure the obligations of the first purchaser
52-59 of oil and gas production, as debtor, to pay the purchase price.
52-60 An authenticated record giving the interest owner a right under
52-61 real property law operates as a security agreement created under
52-62 this chapter. The act of the first purchaser in signing an
52-63 agreement to purchase oil or gas production, in issuing a division
52-64 order, or in making any other voluntary communication to the
52-65 interest owner or any governmental agency recognizing the interest
52-66 owner's right operates as an authentication of a security agreement
52-67 in accordance with Section 9.203(b) for purposes of this chapter.
52-68 (b) The security interest provided by this section is
52-69 perfected automatically without the filing of a financing
53-1 statement. If the interest of the secured party is evidenced by a
53-2 deed, mineral deed, reservation in either, oil or gas lease,
53-3 assignment, or any other such record recorded in the real property
53-4 records of a county clerk, that record is effective as a filed
53-5 financing statement for purposes of this chapter, but no fee is
53-6 required except a fee that is otherwise required by the county
53-7 clerk, and there is no requirement of refiling every five years to
53-8 maintain effectiveness of the filing.
53-9 (c) The security interest exists in oil and gas production,
53-10 and also in the identifiable proceeds of that production owned by,
53-11 received by, or due to the first purchaser:
53-12 (1) for an unlimited time if:
53-13 (A) the proceeds are oil or gas production,
53-14 inventory of raw, refined, or manufactured oil or gas production,
53-15 or rights to or products of any of those, although the sale of
53-16 those proceeds by a first purchaser to a buyer in the ordinary
53-17 course of business as provided in Subsection (e) cuts off the
53-18 security interest in those proceeds;
53-19 (B) the proceeds are accounts, chattel paper,
53-20 instruments, documents, or payment intangibles; or
53-21 (C) the proceeds are cash proceeds, as defined
53-22 in Section 9.102; and
53-23 (2) for the length of time provided in Section 9.315
53-24 for all other proceeds.
53-25 (d) This section creates a lien that secures the payment of
53-26 all taxes that are or should be withheld or paid by the first
53-27 purchaser and a lien that secures the rights of any person who
53-28 would be entitled to a security interest under Subsection (a)
53-29 except for lack of any adoption of a security agreement by the
53-30 first purchaser or a lack of possession or record required by
53-31 Section 9.203 for the security interest to be enforceable.
53-32 (e) The security interests and liens created by this section
53-33 have priority over any purchaser who is not a buyer in the ordinary
53-34 course of the first purchaser's business, but are cut off by the
53-35 sale to a buyer from the first purchaser who is in the ordinary
53-36 course of the first purchaser's business under Section 9.320(a).
53-37 But in either case, whether or not the buyer from the first
53-38 purchaser is in ordinary course, a security interest will continue
53-39 in the proceeds of the sale by the first purchaser as provided in
53-40 Subsection (c).
53-41 (f) The security interests and all liens created by this
53-42 section have the following priorities over other Chapter 9 security
53-43 interests:
53-44 (1) A security interest created by this section is
53-45 treated as a purchase-money security interest for purposes of
53-46 determining its relative priority under Section 9.324 over other
53-47 security interests not provided for by this section. A holder of a
53-48 security interest created under this section is not required to
53-49 give the written notice every five years as provided in Section
53-50 9.324(b)(3) to have purchase-money priority over a security
53-51 interest with a prior financing statement covering inventory.
53-52 (2) A statutory lien is subordinate to all other
53-53 perfected Chapter 9 security interests and has priority over
53-54 unperfected Chapter 9 security interests and the lien creditors,
53-55 buyers, and transferees mentioned in Section 9.317.
53-56 (g) The security interests and liens created by this section
53-57 have the following priorities among themselves:
53-58 (1) If a record effective as a filed financing
53-59 statement under Subsection (b) exists, the security interests
53-60 perfected by that record have priority over a security interest
53-61 automatically perfected without filing under Subsection (b). If
53-62 several security interests perfected by records exist, they have
53-63 the same priority among themselves as established by real property
53-64 law for interests in oil and gas in place. If real property law
53-65 establishes no priority among them, they share priority pro rata.
53-66 (2) A security interest perfected automatically
53-67 without filing under Subsection (b) has priority over a lien
53-68 created under Subsection (d).
53-69 (3) A nontax lien under Subsection (d) has priority
54-1 over a lien created under that subsection that secures the payment
54-2 of taxes.
54-3 (h) The priorities for statutory liens mentioned in Section
54-4 9.333 do not apply to any security interest or statutory lien
54-5 created by this section. But if a pipeline common carrier has a
54-6 statutory or tariff lien that is effective and enforceable against
54-7 a trustee in bankruptcy and not invalidated by the Federal Tax Lien
54-8 Act, that lien has priority over the security interests and
54-9 statutory liens created by this section.
54-10 (i) If oil or gas production in which there are security
54-11 interests or statutory liens created by this section is commingled
54-12 with inventory or other production, the rules of Section 9.336
54-13 apply.
54-14 (j) A security interest or statutory lien created by this
54-15 section remains effective against the debtor and perfected against
54-16 the debtor's creditors even if assigned, regardless of whether the
54-17 assignment is perfected against the assignor's creditors. If a
54-18 deed, mineral deed, assignment of oil and gas lease, or other such
54-19 record evidencing the assignment is filed in the real property
54-20 records of the county, it will have the same effect as filing an
54-21 amended financing statement under Section 9.514.
54-22 (k) This section does not impair an operator's right to
54-23 setoff or withhold funds from other interest owners as security for
54-24 or in satisfaction of any debt or security interest. In case of a
54-25 dispute between an operator and another interest owner, a good
54-26 faith tender of funds by anyone to the person who the operator and
54-27 other interest owner agree on, to a person who otherwise shows
54-28 himself or herself to be the one entitled to the funds, or to a
54-29 court of competent jurisdiction in the event of litigation or
54-30 bankruptcy operates as a tender of the funds to both.
54-31 (l) A first purchaser who acts in good faith may terminate
54-32 an interest owner's security interest or statutory lien under this
54-33 section by paying, or by making and keeping open a tender of, the
54-34 amount the first purchaser believes to be due to the interest
54-35 owner:
54-36 (1) if the interest owner's rights are to oil or gas
54-37 production or its proceeds, either to the operator alone, in which
54-38 event the operator is considered the first purchaser, or to some
54-39 combination of the interest owner and the operator, as the first
54-40 purchaser chooses;
54-41 (2) whatever the nature of the production to which the
54-42 interest owner has rights, to the person that the interest owner
54-43 agreed to or acquiesced in; or
54-44 (3) to a court of competent jurisdiction in the event
54-45 of litigation or bankruptcy.
54-46 (m) A person who buys from a first purchaser can ensure that
54-47 the person buys free and clear of an interest owner's security
54-48 interest or statutory lien under this section:
54-49 (1) by buying in the ordinary course of the first
54-50 purchaser's business from the first purchaser under Section
54-51 9.320(a);
54-52 (2) by obtaining the interest owner's consent to the
54-53 sale under Section 9.315(a)(1);
54-54 (3) by ensuring that the first purchaser has paid the
54-55 interest owner or, provided that gas production is involved, or the
54-56 interest owner has so agreed or acquiesced, by ensuring that the
54-57 first purchaser has paid the interest owner's operator; or
54-58 (4) by ensuring that the person or the first purchaser
54-59 or some other person has withheld funds sufficient to pay amounts
54-60 in dispute and has maintained a tender of those funds to whoever
54-61 shows himself or herself to be the person entitled.
54-62 (n) If a tender under Section (m)(4) that is valid
54-63 thereafter fails, the security interest and liens governed by this
54-64 section remain effective.
54-65 (o) In addition to the usual remedy of sequestration
54-66 available to secured parties, and the remedies given in Subchapter
54-67 F, the holders of security interests and liens created by this
54-68 section have available to them, to the extent constitutionally
54-69 permitted, the remedies of replevin, attachment, and garnishment to
55-1 assist them in realizing upon their rights.
55-2 (p) The rights of any person claiming under a security
55-3 interest or lien created by this section are governed by the other
55-4 provisions of this chapter except to the extent that this section
55-5 necessarily displaces those provisions. This section does not
55-6 invalidate or otherwise affect the interests of any person in any
55-7 real property before severance of any oil or gas production.
55-8 (q) The security interest created under Subsections (a) and
55-9 (b) do not apply to proceeds of gas production that have been
55-10 withheld, in cash or account form, by a purchaser under Section
55-11 201.204(c), Tax Code.
55-12 (r) In this section:
55-13 (1) "Oil and gas production" means any oil, natural
55-14 gas, condensate of either, natural gas liquids, other gaseous,
55-15 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
55-16 substance produced as a by-product or adjunct to their production,
55-17 or any combination of these, which is severed, extracted, or
55-18 produced from the ground, the seabed, or other submerged lands
55-19 within the jurisdiction of this state. Any such substance,
55-20 including recoverable or recovered natural gas liquids, that is
55-21 transported to or in a natural gas pipeline or natural gas
55-22 gathering system, or otherwise transported or sold for use as
55-23 natural gas, or is transported or sold for the extraction of helium
55-24 or natural gas liquids is "gas production." Any such substance
55-25 that is transported or sold to persons and for purposes not
55-26 included in the foregoing natural gas definition is "oil
55-27 production."
55-28 (2) "Interest owner" means a person owning an entire
55-29 or fractional interest of any kind or nature in oil or gas
55-30 production at the time of severance, or a person who has an
55-31 express, implied, or constructive right to receive a monetary
55-32 payment determined by the value of oil or gas production or by the
55-33 amount of production.
55-34 (3) "First purchaser" means the first person that
55-35 purchases oil or gas production from an operator or interest owner
55-36 after the production is severed, or an operator that receives
55-37 production proceeds from a third-party purchaser who acts in good
55-38 faith under a division order or other agreement authenticated by
55-39 the operator under which the operator collects proceeds of
55-40 production on behalf of other interest owners. To the extent the
55-41 operator receives proceeds attributable to the interest of other
55-42 interest owners from a third-party purchaser who acts in good faith
55-43 under a division order or other agreement authenticated by such
55-44 operator, the operator is considered to be the first purchaser of
55-45 the production for all purposes under this section, notwithstanding
55-46 the characterization of other persons as first purchasers under
55-47 other laws or regulations. To the extent the operator has not
55-48 received from the third-party purchaser proceeds attributable to
55-49 the operator's interest and the interest of other interest owners,
55-50 the operator is not considered the first purchaser for the purposes
55-51 of this section and is entitled to all rights and benefits under
55-52 this section. Nothing in this section impairs or affects any
55-53 rights otherwise held by a royalty owner to take its share of oil
55-54 in kind or receive payment directly from a third-party purchaser
55-55 for the royalty owner's share of oil production with or without a
55-56 previously made agreement.
55-57 (4) "Operator" means a person engaged in the business
55-58 of severing oil or gas production from the ground, whether for the
55-59 person alone, only for other persons, or for the person and others.
55-60 [Sec. 9.317. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
55-61 DEBTOR. The mere existence of a security interest or authority
55-62 given to the debtor to dispose of or use collateral does not impose
55-63 contract or tort liability upon the secured party for the debtor's
55-64 acts or omissions.]
55-65 [Sec. 9.318. DEFENSES AGAINST ASSIGNEE; MODIFICATION OF
55-66 CONTRACT AFTER NOTIFICATION OF ASSIGNMENT; TERM PROHIBITING
55-67 ASSIGNMENT INEFFECTIVE; IDENTIFICATION AND PROOF OF ASSIGNMENT.
55-68 (a) Unless an account debtor has made an enforceable agreement not
55-69 to assert defenses or claims arising out of a sale as provided in
56-1 Section 9.206 the rights of an assignee are subject to]
56-2 [(1) all the terms of the contract between the account
56-3 debtor and assignor and any defense or claim arising therefrom; and]
56-4 [(2) any other defense or claim of the account debtor
56-5 against the assignor which accrues before the account debtor
56-6 receives notification of the assignment.]
56-7 [(b) So far as the right to payment or a part thereof under
56-8 an assigned contract has not been fully earned by performance, and
56-9 notwithstanding notification of the assignment, any modification of
56-10 or substitution for the contract made in good faith and in
56-11 accordance with reasonable commercial standards is effective
56-12 against an assignee unless the account debtor has otherwise agreed
56-13 but the assignee acquires corresponding rights under the modified
56-14 or substituted contract. The assignment may provide that such
56-15 modification or substitution is a breach by the assignor.]
56-16 [(c) The account debtor is authorized to pay the assignor
56-17 until the account debtor receives notification that the amount due
56-18 or to become due has been assigned and that payment is to be made
56-19 to the assignee. A notification which does not reasonably identify
56-20 the rights assigned is ineffective. If requested by the account
56-21 debtor, the assignee must seasonably furnish reasonable proof that
56-22 the assignment has been made and unless he does so the account
56-23 debtor may pay the assignor.]
56-24 [(d) A term in any contract between an account debtor and an
56-25 assignor is ineffective if it prohibits assignment of an account or
56-26 prohibits creation of a security interest in a general intangible
56-27 for money due or to become due or requires the account debtor's
56-28 consent to such assignment or security interest.]
56-29 [Sec. 9.319. OIL AND GAS INTERESTS: SECURITY INTEREST
56-30 PERFECTED WITHOUT FILING; STATUTORY LIEN. (a) This section
56-31 provides a security interest in favor of interest owners (as
56-32 secured parties) to secure the obligations of the first purchaser
56-33 of oil and gas production (as debtor) to pay the purchase price. A
56-34 signed writing giving the interest owner a right under real estate
56-35 law operates as a security agreement created under this chapter.
56-36 The act of the first purchaser in signing an agreement to purchase
56-37 oil or gas production, in issuing a division order, or in making
56-38 any other voluntary communication to the interest owner or any
56-39 governmental agency recognizing the interest owner's right operates
56-40 as an authentication and adoption of the security agreement in
56-41 accordance with Section 1.201(39) of this code for purposes of this
56-42 chapter.]
56-43 [(b) The security interest provided by this section is
56-44 perfected automatically without the filing of a financing
56-45 statement. If the interest of the secured party is evidenced by a
56-46 deed, mineral deed, reservation in either, oil or gas lease,
56-47 assignment, or any other such writing recorded in the real estate
56-48 records of a county clerk, that writing is effective as a filed
56-49 financing statement for purposes of Sections 9.302, 9.304, 9.306,
56-50 9.312, 9.401, 9.402, and 9.403 of this code, but no fee is required
56-51 except that otherwise required by the county clerk, and there is no
56-52 requirement of refiling every five years to maintain effectiveness
56-53 of the filing.]
56-54 [(c) The security interest exists in oil and gas production,
56-55 and also in the following proceeds of such production owned by,
56-56 received by, or due to the first purchaser:]
56-57 [(1) for an unlimited time if:]
56-58 [(A) the proceeds are oil or gas production,
56-59 inventory of raw, refined, or manufactured oil or gas production,
56-60 or rights to or products of any of these, although the sale of such
56-61 proceeds by a first purchaser to a buyer in the ordinary course of
56-62 business as provided in Subsection (e) will cut off the security
56-63 interest in those proceeds;]
56-64 [(B) the proceeds are accounts, chattel paper,
56-65 instruments, and documents; or]
56-66 [(C) the proceeds are "cash proceeds" as defined
56-67 in Section 9.306 of this code; and]
56-68 [(2) for the length of time provided by Section 9.306
56-69 of this code as to all other proceeds.]
57-1 [(d) This section creates a lien that secures the payment of
57-2 all taxes that are or should be withheld or paid by the first
57-3 purchaser, and a lien that secures the rights of any person who
57-4 would be entitled to a security interest under Subsection (a) of
57-5 this section except for lack of any adoption of a security
57-6 agreement by the first purchaser or a lack of possession or writing
57-7 required by Section 9.203 of this code for the security interest to
57-8 be enforceable.]
57-9 [(e) The security interests and liens created by this
57-10 section have priority over the bona fide purchasers described in
57-11 Section 9.301 of this code (transferees in bulk and other buyers
57-12 not in the ordinary course), but are cut off by the sale to a buyer
57-13 from the first purchaser who is in the ordinary course of the first
57-14 purchaser's business under Section 9.307(a) of this code. But in
57-15 either case, whether or not the buyer from the first purchaser is
57-16 in ordinary course a security interest will continue in the
57-17 proceeds of the sale by the first purchaser as provided in
57-18 Subsection (c).]
57-19 [(f) The security interests and all liens created by this
57-20 section will have the following priorities over other Chapter 9
57-21 security interests:]
57-22 [(1) security interests created by this section shall
57-23 be treated as purchase money security interests for purposes of
57-24 determining their relative priority under Section 9.312 of this
57-25 code over other security interests not provided for by this
57-26 section; holders of these security interests are not required to
57-27 give the written notice every five years as provided by Section
57-28 9.312(c) to enjoy purchase money priority over security interests
57-29 with a prior financing statement covering inventory; and]
57-30 [(2) statutory liens are subordinate to all other
57-31 perfected Chapter 9 security interests, and have priority over
57-32 unperfected Chapter 9 security interests and the lien creditors,
57-33 buyers, and transferees mentioned in Section 9.301 of this code.]
57-34 [(g) The security interests and liens created by this
57-35 section have the following priorities among themselves:]
57-36 [(1) if a writing effective as a financing statement
57-37 under Subsection (b) of this section exists, the security interests
57-38 perfected by that writing have priority over a security interest
57-39 automatically perfected without filing under Subsection (b) of this
57-40 section. If several security interests perfected by writings
57-41 exist, they have the same priority among themselves as established
57-42 by real estate law for interests in oil and gas in place. If real
57-43 estate law establishes no priority among them, they share priority
57-44 pro rata;]
57-45 [(2) a security interest perfected automatically
57-46 without filing under Subsection (b) of this section has priority
57-47 over a lien created under Subsection (d) of this section; and]
57-48 [(3) a nontax lien under Subsection (d) of this
57-49 section has priority over a lien created under that subsection that
57-50 secures the payment of taxes.]
57-51 [(h) The priorities for statutory liens mentioned in Section
57-52 9.310 of this code do not apply to any security interest or
57-53 statutory lien created by this section. But if any pipeline common
57-54 carrier has a statutory or tariff lien which is effective and
57-55 enforceable against a trustee in bankruptcy and not invalidated by
57-56 the Federal Tax Lien Act, it will have priority over the security
57-57 interests and statutory liens created by this section.]
57-58 [(i) If oil or gas production in which there are security
57-59 interests or statutory liens created by this section is commingled
57-60 with inventory or other production, the rules of Section 9.315 of
57-61 this code apply.]
57-62 [(j) A security interest or statutory lien created by this
57-63 section remains effective against the debtor and perfected against
57-64 his creditors even if assigned, regardless of whether the
57-65 assignment is perfected against the assignor's creditors. If a
57-66 deed, mineral deed, assignment of oil and gas lease, or other such
57-67 writing evidencing the assignment is filed in the real estate
57-68 records of the county, it will have the same effect as filing an
57-69 amended financing statement under Section 9.405 of this code.]
58-1 [(k) This section does not impair an operator's right to
58-2 setoff or withhold funds from other interest owners as security for
58-3 or in satisfaction of any debt or security interest. In case of a
58-4 dispute between an operator and another interest owner, a good
58-5 faith tender by anyone of funds to the person they shall agree on
58-6 or who may otherwise show himself to be the one entitled to the
58-7 funds or to a court of competent jurisdiction in the event of
58-8 litigation or bankruptcy, shall operate as a tender of the funds to
58-9 both.]
58-10 [(l) A first purchaser who acts in good faith may terminate
58-11 an interest owner's security interest or statutory lien under this
58-12 section by paying, or by making and keeping open a tender of the
58-13 amount the first purchaser believes to be due to the interest
58-14 owner:]
58-15 [(1) if the interest owner's rights are to oil or gas
58-16 production or its proceeds, either to the operator alone, in which
58-17 case the operator shall be considered the first purchaser, or to
58-18 some combination of the interest owner and the operator, as the
58-19 first purchaser chooses; or]
58-20 [(2) whatever the nature of the production to which
58-21 the interest owner has rights, to the person that the interest
58-22 owner agreed to or acquiesced in; or]
58-23 [(3) to a court of competent jurisdiction in the event
58-24 of litigation or bankruptcy.]
58-25 [(m) A person who buys from a first purchaser can assure
58-26 that he buys free and clear of an interest owner's security
58-27 interest or statutory lien under this section:]
58-28 [(1) by buying in the ordinary course of the first
58-29 purchaser's business from the first purchaser under Section
58-30 9.307(a) of this code; or]
58-31 [(2) by obtaining the interest owner's consent to the
58-32 sale under Section 9.306(b) of this code; or]
58-33 [(3) by insuring that the first purchaser has paid the
58-34 interest owner, or else, provided that gas production is involved,
58-35 or the interest owner has so agreed or acquiesced, by insuring that
58-36 the first purchaser has paid the interest owner's operator; or]
58-37 [(4) by insuring that he or the first purchaser or
58-38 some other person has withheld funds sufficient to pay amounts in
58-39 dispute and has maintained a tender of such funds to whoever may
58-40 show himself to be the person entitled. If a tender which is valid
58-41 thereafter fails, the security interest and liens governed by this
58-42 section remain effective.]
58-43 [(n) In addition to the usual remedy of sequestration
58-44 available to secured parties, and the remedies given in Subchapter
58-45 E of this chapter, the holders of security interests and liens
58-46 created by this section have available to them, to the extent
58-47 constitutionally permitted, the remedies of replevin, attachment,
58-48 and garnishment to assist them in realizing upon their rights.]
58-49 [(o) The rights of any person claiming under a security
58-50 interest or lien created by this section are governed by the other
58-51 provisions of this chapter except to the extent that this section
58-52 necessarily displaces those provisions. This section does not
58-53 invalidate or otherwise affect the interests of any person in any
58-54 real property prior to severance of any oil or gas production.]
58-55 [(p) The security interest created under Sections 9.319(a)
58-56 and (b) shall not apply to proceeds of gas production which have
58-57 been withheld, in cash or account form, by a purchaser under the
58-58 provisions of Section 201.204(c), Tax Code.]
58-59 [(q) In this section:]
58-60 [(1) "Oil and gas production" means any oil, natural
58-61 gas, condensate of either, natural gas liquids, other gaseous,
58-62 liquid, or dissolved hydrocarbons, sulfur, or helium, or other
58-63 substance produced as a by-product or adjunct to their production,
58-64 or any combination of these, which is severed, extracted, or
58-65 produced from the ground, the seabed, or other submerged lands
58-66 within the jurisdiction of the State of Texas. Any such substance,
58-67 including recoverable or recovered natural gas liquids, which is
58-68 transported to or in a natural gas pipeline or natural gas
58-69 gathering system, or otherwise transported or sold for use as
59-1 natural gas, or is transported or sold for the extraction of helium
59-2 or natural gas liquids is "gas production". Any such substance
59-3 which is transported or sold to persons and for purposes not
59-4 included in the foregoing natural gas definition is oil production.]
59-5 [(2) "Interest owner" means a person owning an entire
59-6 or fractional interest of any kind or nature in oil or gas
59-7 production at the time of severance, or a person who has an
59-8 express, implied, or constructive right to receive a monetary
59-9 payment determined by the value of oil or gas production or by the
59-10 amount of production.]
59-11 [(3) "First purchaser" means the first person that
59-12 purchases oil or gas production from an operator or interest owner
59-13 after the production is severed, or an operator that receives
59-14 production proceeds from a third-party purchaser who acts in good
59-15 faith under a division order or other agreement signed by the
59-16 operator under which the operator collects proceeds of production
59-17 on behalf of other interest owners. To the extent the operator
59-18 receives proceeds attributable to the interest of other interest
59-19 owners from a third-party purchaser who acts in good faith under a
59-20 division order or other agreement signed by such operator, the
59-21 operator shall be considered to be the first purchaser of the
59-22 production for all purposes under this section, notwithstanding the
59-23 characterization of other persons as first purchasers under other
59-24 laws or regulations. To the extent the operator has not received
59-25 from the third-party purchaser proceeds attributable to his
59-26 interest and the interest of other interest owners, the operator is
59-27 not considered the first purchaser for the purposes of this
59-28 section, and is entitled to all rights and benefits under this
59-29 section. Nothing herein shall impair or affect any rights
59-30 otherwise held by a royalty owner to take its share of oil in kind
59-31 or receive payment directly from a third-party purchaser for such
59-32 royalty owner's share of oil production with or without a
59-33 previously made agreement.]
59-34 [(4) An "operator" is a person engaged in the business
59-35 of severing oil or gas production from the ground, whether for
59-36 himself alone, for other persons alone, or for himself and others.]
59-37 SUBCHAPTER D. RIGHTS OF THIRD PARTIES
59-38 Sec. 9.401. ALIENABILITY OF DEBTOR'S RIGHTS. (a) Except as
59-39 otherwise provided in Subsection (b) and Sections 9.406, 9.407,
59-40 9.408, and 9.409, whether a debtor's rights in collateral may be
59-41 voluntarily or involuntarily transferred is governed by law other
59-42 than this chapter.
59-43 (b) An agreement between the debtor and secured party that
59-44 prohibits a transfer of the debtor's rights in collateral or makes
59-45 the transfer a default does not prevent the transfer from taking
59-46 effect.
59-47 Sec. 9.402. SECURED PARTY NOT OBLIGATED ON CONTRACT OF
59-48 DEBTOR OR IN TORT. The existence of a security interest,
59-49 agricultural lien, or authority given to a debtor to dispose of or
59-50 use collateral, without more, does not subject a secured party to
59-51 liability in contract or tort for the debtor's acts or omissions.
59-52 Sec. 9.403. AGREEMENT NOT TO ASSERT DEFENSES AGAINST
59-53 ASSIGNEE. (a) In this section, "value" has the meaning provided
59-54 in Section 3.303(a).
59-55 (b) Except as otherwise provided in this section, an
59-56 agreement between an account debtor and an assignor not to assert
59-57 against an assignee any claim or defense that the account debtor
59-58 may have against the assignor is enforceable by an assignee that
59-59 takes an assignment:
59-60 (1) for value;
59-61 (2) in good faith;
59-62 (3) without notice of a claim of a property or
59-63 possessory right to the property assigned; and
59-64 (4) without notice of a defense or claim in recoupment
59-65 of the type that may be asserted against a person entitled to
59-66 enforce a negotiable instrument under Section 3.305(a).
59-67 (c) Subsection (b) does not apply to defenses of a type that
59-68 may be asserted against a holder in due course of a negotiable
59-69 instrument under Section 3.305(b).
60-1 (d) In a consumer transaction, if a record evidences the
60-2 account debtor's obligation, law other than this chapter requires
60-3 that the record include a statement to the effect that the rights
60-4 of an assignee are subject to claims or defenses that the account
60-5 debtor could assert against the original obligee, and the record
60-6 does not include such a statement:
60-7 (1) the record has the same effect as if the record
60-8 included such a statement; and
60-9 (2) the account debtor may assert against an assignee
60-10 those claims and defenses that would have been available if the
60-11 record included such a statement.
60-12 (e) This section is subject to law other than this chapter
60-13 that establishes a different rule for an account debtor who is an
60-14 individual and who incurred the obligation primarily for personal,
60-15 family, or household purposes.
60-16 (f) Except as otherwise provided in Subsection (d), this
60-17 section does not displace law other than this chapter that gives
60-18 effect to an agreement by an account debtor not to assert a claim
60-19 or defense against an assignee.
60-20 Sec. 9.404. RIGHTS ACQUIRED BY ASSIGNEE; CLAIMS AND DEFENSES
60-21 AGAINST ASSIGNEE. (a) Unless an account debtor has made an
60-22 enforceable agreement not to assert defenses or claims, and subject
60-23 to Subsections (b)-(e), the rights of an assignee are subject to:
60-24 (1) all terms of the agreement between the account
60-25 debtor and assignor and any defense or claim in recoupment arising
60-26 from the transaction that gave rise to the contract; and
60-27 (2) any other defense or claim of the account debtor
60-28 against the assignor that accrues before the account debtor
60-29 receives a notification of the assignment authenticated by the
60-30 assignor or the assignee.
60-31 (b) Subject to Subsection (c) and except as otherwise
60-32 provided in Subsection (d), the claim of an account debtor against
60-33 an assignor may be asserted against an assignee under Subsection
60-34 (a) only to reduce the amount the account debtor owes.
60-35 (c) This section is subject to law other than this chapter
60-36 that establishes a different rule for an account debtor who is an
60-37 individual and who incurred the obligation primarily for personal,
60-38 family, or household purposes.
60-39 (d) In a consumer transaction, if a record evidences the
60-40 account debtor's obligation, law other than this chapter requires
60-41 that the record include a statement to the effect that the account
60-42 debtor's recovery against an assignee with respect to claims and
60-43 defenses against the assignor may not exceed amounts paid by the
60-44 account debtor under the record, and the record does not include
60-45 such a statement, the extent to which a claim of an account debtor
60-46 against the assignor may be asserted against an assignee is
60-47 determined as if the record included such a statement.
60-48 (e) This section does not apply to an assignment of a
60-49 health-care-insurance receivable.
60-50 Sec. 9.405. MODIFICATION OF ASSIGNED CONTRACT. (a) A
60-51 modification of or substitution for an assigned contract is
60-52 effective against an assignee if made in good faith. The assignee
60-53 acquires corresponding rights under the modified or substituted
60-54 contract. The assignment may provide that the modification or
60-55 substitution is a breach of contract by the assignor. This
60-56 subsection is subject to Subsections (b)-(d).
60-57 (b) Subsection (a) applies to the extent that:
60-58 (1) the right to payment or a part thereof under an
60-59 assigned contract has not been fully earned by performance; or
60-60 (2) the right to payment or a part thereof has been
60-61 fully earned by performance and the account debtor has not received
60-62 notification of the assignment under Section 9.406(a).
60-63 (c) This section is subject to law other than this chapter
60-64 that establishes a different rule for an account debtor who is an
60-65 individual and who incurred the obligation primarily for personal,
60-66 family, or household purposes.
60-67 (d) This section does not apply to an assignment of a
60-68 health-care-insurance receivable.
60-69 Sec. 9.406. DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION OF
61-1 ASSIGNMENT; IDENTIFICATION AND PROOF OF ASSIGNMENT; RESTRICTIONS ON
61-2 ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES, AND
61-3 PROMISSORY NOTES INEFFECTIVE. (a) Subject to Subsections (b)-(i),
61-4 an account debtor on an account, chattel paper, or a payment
61-5 intangible may discharge its obligation by paying the assignor
61-6 until, but not after, the account debtor receives a notification,
61-7 authenticated by the assignor or the assignee, that the amount due
61-8 or to become due has been assigned and that payment is to be made
61-9 to the assignee. After receipt of the notification, the account
61-10 debtor may discharge its obligation by paying the assignee and may
61-11 not discharge the obligation by paying the assignor.
61-12 (b) Subject to Subsection (h), notification is ineffective
61-13 under Subsection (a):
61-14 (1) if it does not reasonably identify the rights
61-15 assigned;
61-16 (2) to the extent that an agreement between an account
61-17 debtor and a seller of a payment intangible limits the account
61-18 debtor's duty to pay a person other than the seller and the
61-19 limitation is effective under law other than this chapter; or
61-20 (3) at the option of an account debtor, if the
61-21 notification notifies the account debtor to make less than the full
61-22 amount of any installment or other periodic payment to the
61-23 assignee, even if:
61-24 (A) only a portion of the account, chattel
61-25 paper, or general intangible has been assigned to that assignee;
61-26 (B) a portion has been assigned to another
61-27 assignee; or
61-28 (C) the account debtor knows that the assignment
61-29 to that assignee is limited.
61-30 (c) Subject to Subsection (h), if requested by the account
61-31 debtor, an assignee shall seasonably furnish reasonable proof that
61-32 the assignment has been made. Unless the assignee complies, the
61-33 account debtor may discharge its obligation by paying the assignor,
61-34 even if the account debtor has received a notification under
61-35 Subsection (a).
61-36 (d) Except as otherwise provided in Subsection (e) and
61-37 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
61-38 an agreement between an account debtor and an assignor or in a
61-39 promissory note is ineffective to the extent that it:
61-40 (1) prohibits, restricts, or requires the consent of
61-41 the account debtor or person obligated on the promissory note to
61-42 the assignment or transfer of, or the creation, attachment,
61-43 perfection, or enforcement of a security interest in, the account,
61-44 chattel paper, payment intangible, or promissory note; or
61-45 (2) provides that the creation, attachment,
61-46 perfection, or enforcement of the security interest may give rise
61-47 to a default, breach, right of recoupment, claim, defense,
61-48 termination, right of termination, or remedy under the account,
61-49 chattel paper, payment intangible, or promissory note.
61-50 (e) Subsection (d) does not apply to the sale of a payment
61-51 intangible or promissory note.
61-52 (f) Except as otherwise provided in Sections 2A.303 and
61-53 9.407, and subject to Subsections (h) and (i), a rule of law,
61-54 statute, or regulation that prohibits, restricts, or requires the
61-55 consent of a government, governmental body or official, or account
61-56 debtor to the assignment or transfer of, or creation of a security
61-57 interest in, an account or chattel paper is ineffective to the
61-58 extent that the rule of law, statute, or regulation:
61-59 (1) prohibits, restricts, or requires the consent of
61-60 the government, governmental body or official, or account debtor to
61-61 the assignment or transfer of, or the creation, attachment,
61-62 perfection, or enforcement of a security interest in, the account
61-63 or chattel paper; or
61-64 (2) provides that the creation, attachment,
61-65 perfection, or enforcement of the security interest may give rise
61-66 to a default, breach, right of recoupment, claim, defense,
61-67 termination, right of termination, or remedy under the account or
61-68 chattel paper.
61-69 (g) Subject to Subsection (h), an account debtor may not
62-1 waive or vary its option under Subsection (b)(3).
62-2 (h) This section is subject to law other than this chapter
62-3 that establishes a different rule for an account debtor who is an
62-4 individual and who incurred the obligation primarily for personal,
62-5 family, or household purposes.
62-6 (i) This section does not apply to an assignment of a
62-7 health-care-insurance receivable.
62-8 Sec. 9.407. RESTRICTIONS ON CREATION OR ENFORCEMENT OF
62-9 SECURITY INTEREST IN LEASEHOLD INTEREST OR IN LESSOR'S RESIDUAL
62-10 INTEREST. (a) Except as otherwise provided in Subsection (b), a
62-11 term in a lease agreement is ineffective to the extent that it:
62-12 (1) prohibits, restricts, or requires the consent of a
62-13 party to the lease to the creation, attachment, perfection, or
62-14 enforcement of a security interest in an interest of a party under
62-15 the lease contract or in the lessor's residual interest in the
62-16 goods; or
62-17 (2) provides that the creation, attachment,
62-18 perfection, or enforcement of the security interest may give rise
62-19 to a default, breach, right of recoupment, claim, defense,
62-20 termination, right of termination, or remedy under the lease.
62-21 (b) Except as otherwise provided in Section 2A.303(g), a
62-22 term described in Subsection (a)(2) is effective to the extent that
62-23 there is:
62-24 (1) a transfer by the lessee of the lessee's right of
62-25 possession or use of the goods in violation of the term; or
62-26 (2) a delegation of a material performance of either
62-27 party to the lease contract in violation of the term.
62-28 (c) The creation, attachment, perfection, or enforcement of
62-29 a security interest in the lessor's interest under the lease
62-30 contract or the lessor's residual interest in the goods is not a
62-31 transfer that materially impairs the lessee's prospect of obtaining
62-32 return performance or materially changes the duty of or materially
62-33 increases the burden or risk imposed on the lessee within the
62-34 purview of Section 2A.303(d) unless, and then only to the extent
62-35 that, enforcement actually results in a delegation of material
62-36 performance of the lessor.
62-37 Sec. 9.408. RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES,
62-38 HEALTH-CARE-INSURANCE RECEIVABLES, AND CERTAIN GENERAL INTANGIBLES
62-39 INEFFECTIVE. (a) Except as otherwise provided in Subsection (b),
62-40 a term in a promissory note or in an agreement between an account
62-41 debtor and a debtor that relates to a health-care-insurance
62-42 receivable or a general intangible, including a contract, permit,
62-43 license, or franchise, and which term prohibits, restricts, or
62-44 requires the consent of the person obligated on the promissory note
62-45 or the account debtor to, the assignment or transfer of, or
62-46 creation, attachment, or perfection of a security interest in, the
62-47 promissory note, health-care-insurance receivable, or general
62-48 intangible, is ineffective to the extent that the term:
62-49 (1) would impair the creation, attachment, or
62-50 perfection of a security interest; or
62-51 (2) provides that the creation, attachment, or
62-52 perfection of the security interest may give rise to a default,
62-53 breach, right of recoupment, claim, defense, termination, right of
62-54 termination, or remedy under the promissory note,
62-55 health-care-insurance receivable, or general intangible.
62-56 (b) Subsection (a) applies to a security interest in a
62-57 payment intangible or promissory note only if the security interest
62-58 arises out of a sale of the payment intangible or promissory note.
62-59 (c) A rule of law, statute, or regulation that prohibits,
62-60 restricts, or requires the consent of a government, governmental
62-61 body or official, person obligated on a promissory note, or account
62-62 debtor to the assignment or transfer of, or creation of a security
62-63 interest in, a promissory note, health-care-insurance receivable,
62-64 or general intangible, including a contract, permit, license, or
62-65 franchise between an account debtor and a debtor, is ineffective to
62-66 the extent that the rule of law, statute, or regulation:
62-67 (1) would impair the creation, attachment, or
62-68 perfection of a security interest; or
62-69 (2) provides that the creation, attachment, or
63-1 perfection of the security interest may give rise to a default,
63-2 breach, right of recoupment, claim, defense, termination, right of
63-3 termination, or remedy under the promissory note,
63-4 health-care-insurance receivable, or general intangible.
63-5 (d) To the extent that a term in a promissory note or in an
63-6 agreement between an account debtor and a debtor that relates to a
63-7 health-care-insurance receivable or general intangible or a rule of
63-8 law, statute, or regulation described in Subsection (c) would be
63-9 effective under law other than this chapter but is ineffective
63-10 under Subsection (a) or (c), the creation, attachment, or
63-11 perfection of a security interest in the promissory note,
63-12 health-care-insurance receivable, or general intangible:
63-13 (1) is not enforceable against the person obligated on
63-14 the promissory note or the account debtor;
63-15 (2) does not impose a duty or obligation on the person
63-16 obligated on the promissory note or the account debtor;
63-17 (3) does not require the person obligated on the
63-18 promissory note or the account debtor to recognize the security
63-19 interest, pay or render performance to the secured party, or accept
63-20 payment or performance from the secured party;
63-21 (4) does not entitle the secured party to use or
63-22 assign the debtor's rights under the promissory note,
63-23 health-care-insurance receivable, or general intangible, including
63-24 any related information or materials furnished to the debtor in the
63-25 transaction giving rise to the promissory note,
63-26 health-care-insurance receivable, or general intangible;
63-27 (5) does not entitle the secured party to use, assign,
63-28 possess, or have access to any trade secrets or confidential
63-29 information of the person obligated on the promissory note or the
63-30 account debtor; and
63-31 (6) does not entitle the secured party to enforce the
63-32 security interest in the promissory note, health-care-insurance
63-33 receivable, or general intangible.
63-34 Sec. 9.409. RESTRICTIONS ON ASSIGNMENT OF LETTER-OF-CREDIT
63-35 RIGHTS INEFFECTIVE. (a) A term in a letter of credit or a rule of
63-36 law, statute, regulation, custom, or practice applicable to the
63-37 letter of credit that prohibits, restricts, or requires the consent
63-38 of an applicant, issuer, or nominated person to a beneficiary's
63-39 assignment of or creation of a security interest in a
63-40 letter-of-credit right is ineffective to the extent that the term
63-41 or rule of law, statute, regulation, custom, or practice:
63-42 (1) would impair the creation, attachment, or
63-43 perfection of a security interest in the letter-of-credit right; or
63-44 (2) provides that the creation, attachment, or
63-45 perfection of the security interest may give rise to a default,
63-46 breach, right of recoupment, claim, defense, termination, right of
63-47 termination, or remedy under the letter-of-credit right.
63-48 (b) To the extent that a term in a letter of credit is
63-49 ineffective under Subsection (a) but would be effective under law
63-50 other than this chapter or a custom or practice applicable to the
63-51 letter of credit, to the transfer of a right to draw or otherwise
63-52 demand performance under the letter of credit, or to the assignment
63-53 of a right to proceeds of the letter of credit, the creation,
63-54 attachment, or perfection of a security interest in the
63-55 letter-of-credit right:
63-56 (1) is not enforceable against the applicant, issuer,
63-57 nominated person, or transferee beneficiary;
63-58 (2) imposes no duties or obligations on the applicant,
63-59 issuer, nominated person, or transferee beneficiary; and
63-60 (3) does not require the applicant, issuer, nominated
63-61 person, or transferee beneficiary to recognize the security
63-62 interest, pay or render performance to the secured party, or accept
63-63 payment or other performance from the secured party.
63-64 SUBCHAPTER E. FILING
63-65 Sec. 9.501 [9.401]. [PLACE OF] FILING OFFICE[; ERRONEOUS
63-66 FILING; REMOVAL OF COLLATERAL]. (a) Except as otherwise provided
63-67 in Subsection (b), if the local law of this State governs
63-68 perfection of a security interest or agricultural lien, the office
63-69 in which to file a financing statement to perfect the security
64-1 interest or agricultural lien is:
64-2 (1) the office designated for the filing or recording
64-3 of a record of a mortgage on the related real property, if [The
64-4 proper place to file in order to perfect a security interest is as
64-5 follows]:
64-6 (A) [(1) when the collateral is consumer goods,
64-7 then in the office of the County Clerk in the county of the
64-8 debtor's residence or if the debtor is not a resident of this state
64-9 then in the office of the County Clerk in the county where the
64-10 goods are kept;]
64-11 [(2) when] the collateral is as-extracted collateral
64-12 or timber to be cut; or
64-13 (B) [is minerals or the like (including oil and
64-14 gas) or accounts subject to Subsection (e) of Section 9.103, or
64-15 when] the financing statement is filed as a fixture filing
64-16 [(Section 9.313)] and the collateral is goods that [which] are or
64-17 are to become fixtures; or
64-18 (2)[, then in the office of the County Clerk in the
64-19 county where a mortgage on the real estate would be filed or
64-20 recorded;]
64-21 [(3) in all other cases, in] the office of the
64-22 Secretary of State, in all other cases, including a case in which
64-23 the collateral is goods that are or are to become fixtures and the
64-24 financing statement is not filed as a fixture filing.
64-25 (b) The office in which to file a financing statement to
64-26 perfect a security interest in collateral, including fixtures, of a
64-27 transmitting utility is the office of the Secretary of State. The
64-28 financing statement also constitutes a fixture filing as to the
64-29 collateral indicated in the financing statement that is or is to
64-30 become fixtures. [A filing which is made in good faith in an
64-31 improper place or not in all of the places required by this section
64-32 is nevertheless effective with regard to any collateral as to which
64-33 the filing complied with the requirements of this chapter and is
64-34 also effective with regard to collateral covered by the financing
64-35 statement against any person who has knowledge of the contents of
64-36 such financing statement].
64-37 [(c) A filing which is made in the proper county continues
64-38 effective for four months after a change to another county of the
64-39 debtor's residence or place of business or the location of the
64-40 collateral, whichever controlled the original filing. It becomes
64-41 ineffective thereafter unless a copy of the financing statement
64-42 signed by the secured party is filed in the new county within said
64-43 period. The security interest may also be perfected in the new
64-44 county after the expiration of the four-month period; in such case
64-45 perfection dates from the time of perfection in the new county. A
64-46 change in the use of the collateral does not impair the
64-47 effectiveness of the original filing.]
64-48 [(d) The rules stated in Section 9.103 determine whether
64-49 filing is necessary in this state.]
64-50 [(e) For the purposes of this section, the residence of an
64-51 organization is its place of business if it has one or its chief
64-52 executive office if it has more than one place of business.]
64-53 [(f) A continuation statement filed to continue a security
64-54 interest perfected before September 1, 1985, in collateral that is
64-55 equipment used in farming operations, farm products, or accounts or
64-56 general intangibles arising from or relating to the sale of farm
64-57 products by a farmer must be filed in the office of the Secretary
64-58 of State, and must contain the information contained in the
64-59 original financing statement, in addition to the information
64-60 required for a continuation statement under Section 9.403 of this
64-61 code. The priority of such a security interest is not affected by
64-62 the fact that a continuation statement filed according to this
64-63 subsection is filed at a different place than the original
64-64 financing statement.]
64-65 Sec. 9.502 [9.402]. CONTENTS [FORMAL REQUISITES] OF
64-66 FINANCING STATEMENT; RECORD OF [AMENDMENTS;] MORTGAGE AS FINANCING
64-67 STATEMENT; TIME OF FILING FINANCING STATEMENT. (a) Subject to
64-68 Subsection (b), a [A] financing statement is sufficient only if it:
64-69 (1) provides [gives] the name [names] of the debtor;
65-1 (2) provides the name of [and] the secured party or a
65-2 representative of the secured party; and
65-3 (3) indicates the collateral covered by the financing
65-4 statement[, is signed by the debtor, gives an address of the
65-5 secured party from which information concerning the security
65-6 interest may be obtained, gives a mailing address of the debtor and
65-7 contains a statement indicating the types, or describing the items,
65-8 of collateral. A financing statement may be filed before a
65-9 security agreement is made or a security interest otherwise
65-10 attaches. When the financing statement covers crops growing or to
65-11 be grown, the statement must also contain a description of the real
65-12 estate concerned. When the financing statement covers timber to be
65-13 cut or covers minerals or the like (including oil and gas) or
65-14 accounts subject to Subsection (e) of Section 9.103, or when the
65-15 financing statement is filed as a fixture filing (Section 9.313)
65-16 and the collateral is goods which are or are to become fixtures,
65-17 the statement must also comply with Subsection (e). A security
65-18 agreement is sufficient as a financing statement if it contains the
65-19 above information and is signed by the debtor. A carbon,
65-20 photographic or other reproduction of a security agreement or a
65-21 financing statement is sufficient as a financing statement.]
65-22 [(b) A financing statement which otherwise complies with
65-23 Subsection (a) is sufficient when it is signed by the secured party
65-24 instead of the debtor if it is filed to perfect a security interest
65-25 in]
65-26 [(1) collateral already subject to a security interest
65-27 in another jurisdiction when it is brought into this state, or when
65-28 the debtor's location is changed to this state. Such a financing
65-29 statement must state that the collateral was brought into this
65-30 state or that the debtor's location was changed to this state under
65-31 such circumstances; or]
65-32 [(2) proceeds under Section 9.306 if the security
65-33 interest in the original collateral was perfected. Such a
65-34 financing statement must describe the original collateral; or]
65-35 [(3) collateral as to which the filing has lapsed; or]
65-36 [(4) collateral acquired after a change of name,
65-37 identity or corporate structure of the debtor (Subsection (g)).]
65-38 [(c) A form substantially as follows is sufficient to comply
65-39 with Subsection (a):]
65-40 [Name of debtor (or assignor) _________________________]
65-41 [Address ______________________________________________]
65-42 [Name of secured party (or assignee) __________________]
65-43 [Address ______________________________________________]
65-44 [1. This financing statement covers the
65-45 following types (or items) of property:]
65-46 [(Describe) _____________________________________]
65-47 [2. (If collateral is crops) The above described
65-48 crops are growing or are to be grown on:]
65-49 [(Describe Real Estate) _________________________
65-50 _______________________________________________________]
65-51 [3. (If applicable) The above goods are or are
65-52 to become fixtures on (or where appropriate substitute
65-53 either "The above timber is standing on __________" or
65-54 "The above minerals or the like (including oil and gas)
65-55 or accounts will be financed at the wellhead or
65-56 minehead of the well or mine located on __________")]
65-57 [(Describe Real Estate) ______________ and this
65-58 financing statement is to be filed for record in the
65-59 real estate records. (If the debtor does not have an
65-60 interest of record) The name of a record owner of the
65-61 real estate concerned is ______________]
65-62 [4. (If products of collateral are claimed)
65-63 Products of the Collateral are also covered.
65-64 (use _________________________________________________
65-65 whichever _____________________________________________
65-66 Signature of Debtor (or Assignor)
65-67 is ____________________________________________________
65-68 applicable) Signature of Secured Party (or Assignee)]
65-69 [(d) A financing statement may be amended by filing a
66-1 writing signed by both the debtor and the secured party, provided,
66-2 however, that an amendment to a financing statement which changes
66-3 only the name of the secured party or the required address of
66-4 either the secured party or the debtor is sufficient when it is
66-5 signed by the secured party instead of the debtor. An amendment
66-6 does not extend the period of effectiveness of a financing
66-7 statement. If any amendment adds collateral, it is effective as to
66-8 the added collateral only from the filing date of the amendment.
66-9 In this chapter, unless the context otherwise requires, the term
66-10 "financing statement" means the original financing statement and
66-11 any amendments].
66-12 (b) Except as otherwise provided in Section 9.501(b), to be
66-13 sufficient, a [(e) A] financing statement that covers as-extracted
66-14 collateral or [covering] timber to be cut, or that is [covering
66-15 minerals or the like (including oil and gas) or accounts subject to
66-16 Subsection (e) of Section 9.103, or a financing statement] filed as
66-17 a fixture filing and covers goods that are or are to become
66-18 fixtures, must satisfy Subsection (a) and also:
66-19 (1) indicate [(Section 9.313), must show] that it
66-20 covers this type of collateral;
66-21 (2) indicate[, must recite] that it is to be filed for
66-22 record in the real property [estate] records;
66-23 (3) provide[, and the financing statement must
66-24 contain] a description of the real property to which the collateral
66-25 is related [estate] sufficient [if it were contained in a mortgage
66-26 of the real estate] to give constructive notice of a [the] mortgage
66-27 under the law of this state if the description were contained in a
66-28 record of the mortgage of the real property; and
66-29 (4) if[. If] the debtor does not have an interest of
66-30 record in the real property, provide [estate, the financing
66-31 statement must show] the name of a record owner.
66-32 (c) A record of a [(f) A] mortgage is effective, from the
66-33 date of recording, as a financing statement filed as a fixture
66-34 filing or as a financing statement covering as-extracted collateral
66-35 or timber to be cut only [or covering minerals or the like
66-36 (including oil and gas) or accounts subject to Subsection (e) of
66-37 Section 9.103, from the date of its filing for record] if:
66-38 (1) the record indicates the goods or accounts that it
66-39 covers; [other collateral are described in the mortgage by item or
66-40 type,]
66-41 (2) [in the case of a fixture filing,] the goods are
66-42 or are to become fixtures related to the real property [estate]
66-43 described in the record or the collateral is related to the real
66-44 property described in the record and is as-extracted collateral or
66-45 [mortgage, (3) in the case of] timber to be cut;
66-46 (3)[, the timber is standing on the real estate
66-47 described in the mortgage, (4) in the case of minerals or the like
66-48 (including oil and gas) or accounts subject to Subsection (e) of
66-49 Section 9.103, the minerals or the like (including oil and gas) or
66-50 the accounts are to be financed at the wellhead or minehead of the
66-51 well or mine located on the real estate described in the mortgage,
66-52 (5)] the record satisfies [mortgage complies with] the requirements
66-53 for a financing statement in this section other than an indication
66-54 [a recital] that it is to be filed in the real property [estate]
66-55 records;[,] and
66-56 (4) [(6)] the record [mortgage] is duly recorded
66-57 [filed for record. No fee with reference to the financing
66-58 statement is required other than the regular recording and
66-59 satisfaction fees with respect to the mortgage].
66-60 (d) A financing statement may be filed before a security
66-61 agreement is made or a security interest otherwise attaches.
66-62 Sec. 9.503. NAME OF DEBTOR AND SECURED PARTY. (a) [(g)] A
66-63 financing statement sufficiently provides [shows] the name of the
66-64 debtor:
66-65 (1) if the debtor is a registered organization, only
66-66 if the financing statement provides the [if it gives the
66-67 individual, partnership or corporate] name of the debtor indicated
66-68 on the public record of the debtor's jurisdiction of organization
66-69 that shows the debtor to have been organized;
67-1 (2) if the debtor is a decedent's estate, only if the
67-2 financing statement provides the name of the decedent and indicates
67-3 that the debtor is an estate;
67-4 (3) if the debtor is a trust or a trustee acting with
67-5 respect to property held in trust, only if the financing statement:
67-6 (A) provides the name specified for the trust in
67-7 its organic documents or, if no name is specified, provides the
67-8 name of the settlor and additional information sufficient to
67-9 distinguish the debtor from other trusts having one or more of the
67-10 same settlors; and
67-11 (B) indicates, in the debtor's name or
67-12 otherwise, that the debtor is a trust or is a trustee acting with
67-13 respect to property held in trust; and
67-14 (4) in other cases:
67-15 (A) if the debtor has a name, only if the
67-16 financing statement provides the individual or organizational name
67-17 of the debtor; and
67-18 (B) if the debtor does not have a name, only if
67-19 the financing statement provides the names of the partners,
67-20 members, associates, or other persons comprising the debtor[,
67-21 whether or not it adds other trade names or the names of partners.
67-22 Filing under a trade name or assumed name alone shall not be
67-23 sufficient to perfect a security interest unless the trade name or
67-24 assumed name is so similar to the debtor's legal name that the
67-25 trade name or assumed name filing would be discovered in a search
67-26 of the filing officer's records pursuant to Subsection (b) of
67-27 Section 9.407, conducted in response to a request using the legal
67-28 name of the debtor. Where the debtor so changes his name or in the
67-29 case of an organization its name, identity or corporate structure
67-30 that a filed financing statement becomes seriously misleading, the
67-31 filing is not effective to perfect a security interest in
67-32 collateral acquired by the debtor more than four months after the
67-33 change, unless a new appropriate financing statement is filed
67-34 before the expiration of that time. A filed financing statement
67-35 remains effective with respect to collateral transferred by the
67-36 debtor even though the secured party knows of or consents to the
67-37 transfer].
67-38 (b) A financing statement that provides the name of the
67-39 debtor in accordance with Subsection (a) is not rendered
67-40 ineffective by the absence of:
67-41 (1) a trade name or other name of the debtor; or
67-42 (2) unless required under Subsection (a)(4)(B), names
67-43 of partners, members, associates, or other persons comprising the
67-44 debtor.
67-45 (c) A financing statement that provides only the debtor's
67-46 trade name does not sufficiently provide the name of the debtor.
67-47 (d) Failure to indicate the representative capacity of a
67-48 secured party or representative of a secured party does not affect
67-49 the sufficiency of a financing statement.
67-50 (e) A financing statement may provide the name of more than
67-51 one debtor and the name of more than one secured party.
67-52 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
67-53 sufficiently indicates the collateral that it covers only if the
67-54 financing statement provides:
67-55 (1) a description of the collateral pursuant to
67-56 Section 9.108; or
67-57 (2) an indication that the financing statement covers
67-58 all assets or all personal property.
67-59 Sec. 9.505. FILING AND COMPLIANCE WITH OTHER STATUTES AND
67-60 TREATIES FOR CONSIGNMENTS, LEASES, OTHER BAILMENTS, AND OTHER
67-61 TRANSACTIONS. (a) A consignor, lessor, or other bailor of goods,
67-62 a licensor, or a buyer of a payment intangible or promissory note
67-63 may file a financing statement, or may comply with a statute or
67-64 treaty described in Section 9.311(a), using the terms "consignor,"
67-65 "consignee," "lessor," "lessee," "bailor," "bailee," "licensor,"
67-66 "licensee," "owner," "registered owner," "buyer," or "seller," or
67-67 words of similar import, instead of the terms "secured party" and
67-68 "debtor."
67-69 (b) This subchapter applies to the filing of a financing
68-1 statement under Subsection (a) and, as appropriate, to compliance
68-2 that is equivalent to filing a financing statement under Section
68-3 9.311(b), but the filing or compliance is not of itself a factor in
68-4 determining whether the collateral secures an obligation. If it is
68-5 determined for another reason that the collateral secures an
68-6 obligation, a security interest held by the consignor, lessor,
68-7 bailor, licensor, owner, or buyer that attaches to the collateral
68-8 is perfected by the filing or compliance.
68-9 Sec. 9.506. EFFECT OF ERRORS OR OMISSIONS. (a) [(h)] A
68-10 financing statement substantially satisfying [complying with] the
68-11 requirements of this subchapter [section] is effective, even if
68-12 [though] it has [contains] minor errors or omissions, unless the
68-13 errors or omissions make the financing statement [which are not]
68-14 seriously misleading.
68-15 (b) Except as otherwise provided in Subsection (c), a
68-16 financing statement that fails sufficiently to provide the name of
68-17 the debtor in accordance with Section 9.503(a) is seriously
68-18 misleading.
68-19 (c) If a search of the records of the filing office under
68-20 the debtor's correct name, using the filing office's standard
68-21 search logic, if any, would disclose a financing statement that
68-22 fails sufficiently to provide the name of the debtor in accordance
68-23 with Section 9.503(a), the name provided does not make the
68-24 financing statement seriously misleading.
68-25 (d) For purposes of Section 9.508(b), the "debtor's correct
68-26 name" in Subsection (c) means the correct name of the new debtor.
68-27 Sec. 9.507 [9.403]. [WHAT CONSTITUTES FILING; DURATION OF
68-28 FILING;] EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING
68-29 STATEMENT [LAPSED FILING; DUTIES OF FILING OFFICER]. (a) A
68-30 [Presentation for filing of a financing statement or other
68-31 statement and tender of the filing fee or acceptance of the
68-32 financing statement or other statement by the filing officer
68-33 constitutes filing under this chapter].
68-34 [(b) Except as provided in Subsection (f) a] filed financing
68-35 statement remains [is] effective with respect to collateral that is
68-36 sold, exchanged, leased, licensed, or otherwise disposed of and in
68-37 which a security interest or agricultural lien continues, even if
68-38 the secured party knows of or consents to the disposition [for a
68-39 period of five years from the date of filing. The effectiveness of
68-40 a filed financing statement lapses on the expiration of the five
68-41 year period unless a continuation statement is filed prior to the
68-42 lapse. If a security interest perfected by filing exists at the
68-43 time insolvency proceedings are commenced by or against the debtor,
68-44 the security interest remains perfected until termination of the
68-45 insolvency proceedings and thereafter for a period of sixty days or
68-46 until expiration of the five year period, whichever occurs later.
68-47 Upon lapse the security interest becomes unperfected, unless it is
68-48 perfected without filing. If the security interest becomes
68-49 unperfected upon lapse, it is deemed to have been unperfected as
68-50 against a person who became a purchaser or lien creditor before
68-51 lapse].
68-52 (b) Except as otherwise provided in Subsection (c) and
68-53 Section 9.508, a financing statement is not rendered ineffective
68-54 if, after the financing statement is filed, the information
68-55 provided in the financing statement becomes seriously misleading
68-56 under Section 9.506.
68-57 (c) If a debtor so changes its name that a filed financing
68-58 statement becomes seriously misleading under Section 9.506:
68-59 (1) the financing statement is effective to perfect a
68-60 security interest in collateral acquired by the debtor before, or
68-61 within four months after, the change; and
68-62 (2) the financing statement is not effective to
68-63 perfect a security interest in collateral acquired by the debtor
68-64 more than four months after the change, unless an amendment to the
68-65 financing statement that renders the financing statement not
68-66 seriously misleading is filed within four months after the change.
68-67 [A continuation statement may be filed by the secured party within
68-68 six months prior to the expiration of the five year period
68-69 specified in Subsection (b). Any such continuation statement must
69-1 be signed by the secured party, identify the original statement by
69-2 file number and state that the original statement is still
69-3 effective. A continuation statement signed by a person other than
69-4 the secured party of record must be accompanied by a separate
69-5 written statement of assignment signed by the secured party of
69-6 record and complying with Subsection (b) of Section 9.405,
69-7 including payment of the required fee. Upon timely filing of the
69-8 continuation statement, the effectiveness of the original statement
69-9 is continued for five years after the last date to which the filing
69-10 was effective whereupon it lapses in the same manner as provided in
69-11 Subsection (b) unless another continuation statement is filed prior
69-12 to such lapse. Succeeding continuation statements may be filed in
69-13 the same manner to continue the effectiveness of the original
69-14 statement. Unless a statute on disposition of public records
69-15 provides otherwise, the filing officer may remove a lapsed
69-16 statement from the files and destroy it immediately if he has
69-17 retained a microfilm or other photographic record, or in other
69-18 cases after one year after the lapse. The filing officer shall so
69-19 arrange matters by physical annexation of financing statements to
69-20 continuation statements or other related filings, or by other
69-21 means, that if he physically destroys the financing statements of a
69-22 period more than five years past, those which have been continued
69-23 by a continuation statement or which are still effective under
69-24 Subsection (f) shall be retained.]
69-25 [(d) Except as provided in Subsection (g) a filing officer
69-26 shall mark each financing statement with a file number and with the
69-27 date and hour of filing and shall hold the financing statement or a
69-28 microfilm or other photographic copy thereof for public inspection.
69-29 In addition the filing officer shall index the financing statements
69-30 according to the name of the debtor and shall note in the index the
69-31 file number and the address of the debtor given in the financing
69-32 statement. The filing officer shall mark each continuation
69-33 statement with the date and hour of filing and shall note it in the
69-34 index of the original financing statement.]
69-35 [(e) The uniform fee for filing and indexing and for
69-36 stamping a copy furnished by the secured party to show the date and
69-37 place of filing for an original financing statement, for an
69-38 amendment, or for a continuation statement shall be $10 if the
69-39 statement is in the standard form prescribed by the Secretary of
69-40 State and otherwise shall be $25, plus in each case, if the
69-41 financing statement sets forth the name of more than one debtor, a
69-42 fee of $5 for the indexing of each additional debtor name, and if
69-43 the financing statement is subject to Subsection (e) of Section
69-44 9.402, an amount equal to the fee prescribed by law for recording
69-45 and indexing in the real property records of the county clerk.]
69-46 [(f) A mortgage which is effective as a filing under
69-47 Subsection (f) of Section 9.402 remains effective as such a filing
69-48 as to the types of collateral enumerated in Subsection (f) of
69-49 Section 9.402 until the mortgage is released or satisfied of record
69-50 or its effectiveness otherwise terminates as to the real estate.]
69-51 [(g) When a financing statement covers timber to be cut or
69-52 covers minerals or the like (including oil and gas) or accounts
69-53 subject to Subsection (e) of Section 9.103, or is filed as a
69-54 fixture filing, it shall be filed for record and recorded, and the
69-55 filing officer shall index it under the names of the debtor and any
69-56 owner of record shown on the financing statement in the same
69-57 fashion as if they were the mortgagors in a mortgage of the real
69-58 estate described, and, to the extent that the law of this state
69-59 provides for indexing of mortgages under the name of the mortgagee,
69-60 under the name of the secured party as if he were the mortgagee
69-61 thereunder, or where indexing is by description in the same fashion
69-62 as if the financing statement were a mortgage of the real estate
69-63 described.]
69-64 [(h) The filing and other fees paid to the Secretary of
69-65 State under this chapter shall be deposited in the general revenue
69-66 fund of the state treasury.]
69-67 Sec. 9.508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW
69-68 DEBTOR BECOMES BOUND BY SECURITY AGREEMENT. (a) Except as
69-69 otherwise provided in this section, a filed financing statement
70-1 naming an original debtor is effective to perfect a security
70-2 interest in collateral in which a new debtor has or acquires rights
70-3 to the extent that the financing statement would have been
70-4 effective had the original debtor acquired rights in the
70-5 collateral.
70-6 (b) If the difference between the name of the original
70-7 debtor and that of the new debtor causes a filed financing
70-8 statement that is effective under Subsection (a) to be seriously
70-9 misleading under Section 9.506:
70-10 (1) the financing statement is effective to perfect a
70-11 security interest in collateral acquired by the new debtor before,
70-12 and within four months after, the new debtor becomes bound under
70-13 Section 9.203(d); and
70-14 (2) the financing statement is not effective to
70-15 perfect a security interest in collateral acquired by the new
70-16 debtor more than four months after the new debtor becomes bound
70-17 under Section 9.203(d) unless an initial financing statement
70-18 providing the name of the new debtor is filed before the expiration
70-19 of that time.
70-20 (c) This section does not apply to collateral as to which a
70-21 filed financing statement remains effective against the new debtor
70-22 under Section 9.507(a).
70-23 Sec. 9.509. PERSONS ENTITLED TO FILE A RECORD. (a) A
70-24 person may file an initial financing statement, amendment that adds
70-25 collateral covered by a financing statement, or amendment that adds
70-26 a debtor to a financing statement only if:
70-27 (1) the debtor authorizes the filing in an
70-28 authenticated record; or
70-29 (2) the person holds an agricultural lien that has
70-30 become effective at the time of filing and the financing statement
70-31 covers only collateral in which the person holds an agricultural
70-32 lien.
70-33 (b) By authenticating or becoming bound as debtor by a
70-34 security agreement, a debtor or new debtor authorizes the filing of
70-35 an initial financing statement, and an amendment, covering:
70-36 (1) the collateral described in the security
70-37 agreement; and
70-38 (2) property that becomes collateral under Section
70-39 9.315(a)(2), whether or not the security agreement expressly covers
70-40 proceeds.
70-41 (c) By acquiring collateral in which a security interest or
70-42 agricultural lien continues under Section 9.315(a)(1), a debtor
70-43 authorizes the filing of an initial financing statement, and an
70-44 amendment, covering the collateral and property that becomes
70-45 collateral under Section 9.315(a)(2).
70-46 (d) A person may file an amendment other than an amendment
70-47 that adds collateral covered by a financing statement or an
70-48 amendment that adds a debtor to a financing statement only if:
70-49 (1) the secured party of record authorizes the filing;
70-50 or
70-51 (2) the amendment is a termination statement for a
70-52 financing statement as to which the secured party of record has
70-53 failed to file or send a termination statement as required by
70-54 Section 9.513(a) or (c), the debtor authorizes the filing, and the
70-55 termination statement indicates that the debtor authorized it to be
70-56 filed.
70-57 (e) If there is more than one secured party of record for a
70-58 financing statement, each secured party of record may authorize the
70-59 filing of an amendment under Subsection (d).
70-60 Sec. 9.510. EFFECTIVENESS OF FILED RECORD. (a) A filed
70-61 record is effective only to the extent that it was filed by a
70-62 person that may file it under Section 9.509.
70-63 (b) A record authorized by one secured party of record does
70-64 not affect the financing statement with respect to another secured
70-65 party of record.
70-66 (c) A continuation statement that is not filed within the
70-67 six-month period prescribed by Section 9.515(d) is ineffective.
70-68 Sec. 9.511. SECURED PARTY OF RECORD. (a) A secured party
70-69 of record with respect to a financing statement is a person whose
71-1 name is provided as the name of the secured party or a
71-2 representative of the secured party in an initial financing
71-3 statement that has been filed. If an initial financing statement
71-4 is filed under Section 9.514(a), the assignee named in the initial
71-5 financing statement is the secured party of record with respect to
71-6 the financing statement.
71-7 (b) If an amendment of a financing statement that provides
71-8 the name of a person as a secured party or a representative of a
71-9 secured party is filed, the person named in the amendment is a
71-10 secured party of record. If an amendment is filed under Section
71-11 9.514(b), the assignee named in the amendment is a secured party of
71-12 record.
71-13 (c) A person remains a secured party of record until the
71-14 filing of an amendment of the financing statement that deletes the
71-15 person.
71-16 Sec. 9.512. AMENDMENT OF FINANCING STATEMENT. (a) Subject
71-17 to Section 9.509, a person may add or delete collateral covered by,
71-18 continue or terminate the effectiveness of, or, subject to
71-19 Subsection (e), otherwise amend the information provided in a
71-20 financing statement by filing an amendment that:
71-21 (1) identifies, by its file number, the initial
71-22 financing statement to which the amendment relates; and
71-23 (2) if the amendment relates to an initial financing
71-24 statement filed or recorded in a filing office described in Section
71-25 9.501(a)(1), provides the information specified in Section
71-26 9.502(b).
71-27 (b) Except as otherwise provided in Section 9.515, the
71-28 filing of an amendment does not extend the period of effectiveness
71-29 of the financing statement.
71-30 (c) A financing statement that is amended by an amendment
71-31 that adds collateral is effective as to the added collateral only
71-32 from the date of the filing of the amendment.
71-33 (d) A financing statement that is amended by an amendment
71-34 that adds a debtor is effective as to the added debtor only from
71-35 the date of the filing of the amendment.
71-36 (e) An amendment is ineffective to the extent it:
71-37 (1) purports to delete all debtors and fails to
71-38 provide the name of a debtor to be covered by the financing
71-39 statement; or
71-40 (2) purports to delete all secured parties of record
71-41 and fails to provide the name of a new secured party of record.
71-42 (f) A secured party may change the name or mailing address
71-43 of the secured party in more than one financing statement by filing
71-44 a master amendment setting forth the name of the secured party and
71-45 file number of each financing statement and the new name or mailing
71-46 address of the secured party. The secured party must also provide
71-47 filing information in computer-readable form prescribed by the
71-48 Secretary of State.
71-49 Sec. 9.513 [9.404]. TERMINATION STATEMENT. (a) A secured
71-50 party shall cause the secured party of record for a financing
71-51 statement to file a termination statement for the financing
71-52 statement if the financing statement covers consumer goods and:
71-53 (1) there is no obligation secured by the collateral
71-54 covered by the financing statement and no commitment to make an
71-55 advance, incur an obligation, or otherwise give value; or
71-56 (2) the debtor did not authorize the filing of the
71-57 initial financing statement.
71-58 (b) To comply with Subsection (a), a secured party shall
71-59 cause the secured party of record to file the termination
71-60 statement:
71-61 (1) [If a financing statement covering consumer goods
71-62 is filed on or after January 1, 1974, then] within one month [or
71-63 within ten days following written demand by the debtor] after there
71-64 is no [outstanding secured] obligation secured by the collateral
71-65 covered by the financing statement and no commitment to make
71-66 advances, incur an obligation, [obligations] or otherwise give
71-67 value; or
71-68 (2) if earlier, within 20 days after the secured party
71-69 receives an authenticated demand from a debtor[, the secured party
72-1 must file with each filing officer with whom the financing
72-2 statement was filed, a termination statement to the effect that he
72-3 no longer claims a security interest under the financing statement,
72-4 which shall be identified by file number].
72-5 (c) In [other] cases not governed by Subsection (a), within
72-6 20 days after a secured party receives an authenticated demand from
72-7 a debtor [whenever there is no outstanding secured obligation and
72-8 no commitment to make advances, incur obligations or otherwise give
72-9 value], the secured party shall cause the secured party of record
72-10 for a financing statement to [must on written demand by the debtor]
72-11 send the debtor[, for each filing officer with whom the financing
72-12 statement was filed,] a termination statement for the financing
72-13 statement or file the termination statement in the filing office
72-14 if:
72-15 (1) except in the case of a financing statement
72-16 covering accounts or chattel paper that has been sold or goods that
72-17 are the subject of a consignment, there is no obligation secured by
72-18 the collateral covered by the financing statement and no commitment
72-19 to make an advance, incur an obligation, or otherwise give value;
72-20 (2) the financing statement covers accounts or chattel
72-21 paper that has been sold but as to which the account debtor or
72-22 other person obligated has discharged its obligation;
72-23 (3) the financing statement covers goods that were the
72-24 subject of a consignment to the debtor but are not in the debtor's
72-25 possession; or
72-26 (4) the debtor did not authorize the filing of the
72-27 initial financing statement.
72-28 (d) Except as otherwise provided in Section 9.510, upon the
72-29 filing of a termination statement with the filing office, the
72-30 financing statement to which the termination statement relates
72-31 ceases to be effective [to the effect that he no longer claims a
72-32 security interest under the financing statement, which shall be
72-33 identified by file number. A termination statement signed by a
72-34 person other than the secured party of record must be accompanied
72-35 by a separate written statement of assignment signed by the secured
72-36 party of record and complying with Subsection (b) of Section 9.405,
72-37 including payment of the required fee. If the affected secured
72-38 party fails to file such a termination statement as required by
72-39 this subsection, or to send such a termination statement within ten
72-40 days after proper demand therefor he shall be liable to the debtor
72-41 for $100, and in addition for any loss caused to the debtor by such
72-42 failure].
72-43 [(b) On presentation to the filing officer of such a
72-44 termination statement he must note it in the index. If he has
72-45 received the termination statement in duplicate, he shall return
72-46 one copy of the termination statement to the secured party stamped
72-47 to show the time of receipt thereof. If the filing officer has a
72-48 microfilm or other photographic record of the financing statement,
72-49 and of any related continuation statement, statement of assignment
72-50 and statement of release, he may remove the originals from the
72-51 files at any time after receipt of the termination statement, or if
72-52 he has no such record, he may remove them from the files at any
72-53 time after one year after receipt of the termination statement.]
72-54 [(c) If the termination statement is in the standard form
72-55 prescribed by the Secretary of State, the uniform fee for filing
72-56 and indexing the termination statement shall be $10, and otherwise
72-57 shall be $25, plus, in each case where the original financing
72-58 statement was filed pursuant to Subsection (e) of Section 9.402, an
72-59 amount equal to the fee prescribed by law for recording and
72-60 indexing in the real property records of the county clerk].
72-61 Sec. 9.514 [9.405]. ASSIGNMENT OF POWERS OF SECURED PARTY OF
72-62 RECORD [SECURITY INTEREST: DUTIES OF FILING OFFICER; FEES].
72-63 (a) Except as otherwise provided in Subsection (c), an initial [A]
72-64 financing statement may reflect [disclose] an assignment of all of
72-65 the secured party's power to authorize an amendment to the
72-66 financing statement by providing [a security interest in the
72-67 collateral described in the financing statement by indication in
72-68 the financing statement of] the name and mailing address of the
72-69 assignee as the name and address of the secured party [or by an
73-1 assignment itself or a copy thereof on the face or back of the
73-2 financing statement. On presentation to the filing officer of such
73-3 a financing statement the filing officer shall mark the same as
73-4 provided in Section 9.403].
73-5 (b) Except as otherwise provided in Subsection (c), a [A]
73-6 secured party of record may assign of record all or a part of its
73-7 power to authorize an amendment to [his rights under] a financing
73-8 statement by [the] filing in the filing office an amendment of the
73-9 financing statement that:
73-10 (1) identifies, by its file number, the initial
73-11 financing statement to which it relates;
73-12 (2) provides the name of the assignor; and
73-13 (3) provides [place where the original financing
73-14 statement was filed of a separate written statement of assignment
73-15 signed by the secured party of record and setting forth the name of
73-16 the secured party of record and the debtor, the file number and the
73-17 date of filing of the financing statement and] the name and mailing
73-18 address of the assignee [and containing a description of the
73-19 collateral assigned. A copy of the assignment is sufficient as a
73-20 separate statement if it complies with the preceding sentence. On
73-21 presentation to the filing officer of such a separate statement,
73-22 the filing officer shall mark such separate statement with the date
73-23 and hour of the filing. He shall note the assignment on the index
73-24 of the financing statement, or in the case of a fixture filing, or
73-25 a filing covering timber to be cut, or covering minerals or the
73-26 like (including oil and gas) or accounts subject to Subsection (e)
73-27 of Section 9.103, he shall index the assignment under the name of
73-28 the assignor as grantor and, to the extent that the law of this
73-29 state provides for indexing the assignment of a mortgage under the
73-30 name of the assignee, he shall index the assignment of the
73-31 financing statement under the name of the assignee. The uniform
73-32 fee for filing, indexing and furnishing filing data about such a
73-33 separate statement of assignment shall be $10 if the statement is
73-34 in the standard form prescribed by the Secretary of State and
73-35 otherwise shall be $25. Notwithstanding the provisions of this
73-36 subsection, an assignment of record of a security interest in a
73-37 fixture contained in a mortgage effective as a fixture filing
73-38 (Subsection (f) of Section 9.402) may be made only by an assignment
73-39 of the mortgage in the manner provided by the law of this state
73-40 other than this code].
73-41 (c) An assignment of record of a security interest in a
73-42 fixture covered by a record of a mortgage that is effective as a
73-43 financing statement filed as a fixture filing under Section
73-44 9.502(c) may be made only by an assignment of record of the
73-45 mortgage in the manner provided by law of this State other than
73-46 this chapter. [After the disclosure of filing of an assignment
73-47 under this section, the assignee is the secured party of record.]
73-48 (d) A secured party of record may assign of record all of
73-49 the secured party's rights under more than one financing statement
73-50 filed with the Secretary of State by filing a master assignment
73-51 setting forth the name of the secured party of record and file
73-52 number of each financing statement and the name and mailing address
73-53 of the assignee. The secured party must also provide filing
73-54 information in computer-readable form prescribed by the Secretary
73-55 of State [The uniform fee for filing, indexing, and furnishing
73-56 filing data for a financing statement so indicating an assignment
73-57 shall be $10 if the statement is in the standard form prescribed by
73-58 the Secretary of State and otherwise shall be $25, plus, in each
73-59 case where the original financing statement was filed pursuant to
73-60 Subsection (e) of Section 9.402, an amount equal to the fee
73-61 prescribed by law for recording and indexing in the real property
73-62 records of the county clerk].
73-63 Sec. 9.515. DURATION AND EFFECTIVENESS OF FINANCING
73-64 STATEMENT; EFFECT OF LAPSED FINANCING STATEMENT. (a) Except as
73-65 otherwise provided in Subsections (b)-(g), a filed financing
73-66 statement is effective for a period of five years after the date of
73-67 filing.
73-68 (b) Except as otherwise provided in Subsections (e), (f),
73-69 and (g), an initial financing statement filed in connection with a
74-1 public-finance transaction or manufactured-home transaction is
74-2 effective for a period of 30 years after the date of filing if it
74-3 indicates that it is filed in connection with a public-finance
74-4 transaction or manufactured-home transaction.
74-5 (c) The effectiveness of a filed financing statement lapses
74-6 on the expiration of the period of its effectiveness unless before
74-7 the lapse a continuation statement is filed pursuant to Subsection
74-8 (d). Upon lapse, a financing statement ceases to be effective and
74-9 any security interest or agricultural lien that was perfected by
74-10 the financing statement becomes unperfected, unless the security
74-11 interest is perfected otherwise. If the security interest or
74-12 agricultural lien becomes unperfected upon lapse, it is deemed
74-13 never to have been perfected as against a purchaser of the
74-14 collateral for value.
74-15 (d) A continuation statement may be filed only within six
74-16 months before the expiration of the five-year period specified in
74-17 Subsection (a) or the 30-year period specified in Subsection (b),
74-18 whichever is applicable.
74-19 (e) Except as otherwise provided in Section 9.510, upon
74-20 timely filing of a continuation statement, the effectiveness of the
74-21 initial financing statement continues for a period of five years
74-22 commencing on the day on which the financing statement would have
74-23 become ineffective in the absence of the filing. Upon the
74-24 expiration of the five-year period, the financing statement lapses
74-25 in the same manner as provided in Subsection (c), unless, before
74-26 the lapse, another continuation statement is filed pursuant to
74-27 Subsection (d). Succeeding continuation statements may be filed in
74-28 the same manner to continue the effectiveness of the initial
74-29 financing statement.
74-30 (f) If a debtor is a transmitting utility and a filed
74-31 financing statement so indicates, the financing statement is
74-32 effective until a termination statement is filed.
74-33 (g) A record of a mortgage that is effective as a financing
74-34 statement filed as a fixture filing under Section 9.502(c) remains
74-35 effective as a financing statement filed as a fixture filing until
74-36 the mortgage is released or satisfied of record or its
74-37 effectiveness otherwise terminates as to the real property.
74-38 Sec. 9.516. WHAT CONSTITUTES FILING; EFFECTIVENESS OF
74-39 FILING. (a) Except as otherwise provided in Subsection (b),
74-40 communication of a record to a filing office and tender of the
74-41 filing fee or acceptance of the record by the filing office
74-42 constitutes filing.
74-43 (b) Filing does not occur with respect to a record that a
74-44 filing office refuses to accept because:
74-45 (1) the record is not communicated by a method or
74-46 medium of communication authorized by the filing office;
74-47 (2) an amount equal to or greater than the applicable
74-48 filing fee is not tendered;
74-49 (3) the filing office is unable to index the record
74-50 because:
74-51 (A) in the case of an initial financing
74-52 statement, the record does not provide a name for the debtor;
74-53 (B) in the case of an amendment or correction
74-54 statement, the record:
74-55 (i) does not identify the initial
74-56 financing statement as required by Section 9.512 or 9.518, as
74-57 applicable; or
74-58 (ii) identifies an initial financing
74-59 statement whose effectiveness has lapsed under Section 9.515;
74-60 (C) in the case of an initial financing
74-61 statement that provides the name of a debtor identified as an
74-62 individual or an amendment that provides a name of a debtor
74-63 identified as an individual that was not previously provided in the
74-64 financing statement to which the record relates, the record does
74-65 not identify the debtor's last name; or
74-66 (D) in the case of a record filed or recorded in
74-67 the filing office described in Section 9.501(a)(1), the record does
74-68 not provide a sufficient description of the real property to which
74-69 it relates;
75-1 (4) in the case of an initial financing statement or
75-2 an amendment that adds a secured party of record, the record does
75-3 not provide a name and mailing address for the secured party of
75-4 record;
75-5 (5) in the case of an initial financing statement or
75-6 an amendment that provides a name of a debtor that was not
75-7 previously provided in the financing statement to which the
75-8 amendment relates, the record does not:
75-9 (A) provide a mailing address for the debtor;
75-10 (B) indicate whether the debtor is an individual
75-11 or an organization; or
75-12 (C) if the financing statement indicates that
75-13 the debtor is an organization, provide:
75-14 (i) a type of organization for the debtor;
75-15 (ii) a jurisdiction of organization for
75-16 the debtor; or
75-17 (iii) an organizational identification
75-18 number for the debtor or indicate that the debtor has none;
75-19 (6) in the case of an assignment reflected in an
75-20 initial financing statement under Section 9.514(a) or an amendment
75-21 filed under Section 9.514(b), the record does not provide a name
75-22 and mailing address for the assignee; or
75-23 (7) in the case of a continuation statement, the
75-24 record is not filed within the six-month period prescribed by
75-25 Section 9.515(d).
75-26 (c) For purposes of Subsection (b):
75-27 (1) a record does not provide information if the
75-28 filing office is unable to read or decipher the information; and
75-29 (2) a record that does not indicate that it is an
75-30 amendment or identify an initial financing statement to which it
75-31 relates, as required by Section 9.512, 9.514, or 9.518, is an
75-32 initial financing statement.
75-33 (d) A record that is communicated to the filing office with
75-34 tender of the filing fee, but that the filing office refuses to
75-35 accept for a reason other than one set forth in Subsection (b), is
75-36 effective as a filed record except as against a purchaser of the
75-37 collateral that gives value in reasonable reliance upon the absence
75-38 of the record from the files.
75-39 Sec. 9.517. EFFECT OF INDEXING ERRORS. The failure of the
75-40 filing office to index a record correctly does not affect the
75-41 effectiveness of the filed record.
75-42 Sec. 9.518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED
75-43 RECORD. (a) A person may file in the filing office a correction
75-44 statement with respect to a record indexed there under the person's
75-45 name if the person believes that the record is inaccurate or was
75-46 wrongfully filed.
75-47 (b) A correction statement must:
75-48 (1) identify the record to which it relates by the
75-49 file number assigned to the initial financing statement to which
75-50 the record relates;
75-51 (2) indicate that it is a correction statement; and
75-52 (3) provide the basis for the person's belief that the
75-53 record is inaccurate and indicate the manner in which the person
75-54 believes the record should be amended to cure any inaccuracy or
75-55 provide the basis for the person's belief that the record was
75-56 wrongfully filed.
75-57 (c) The filing of a correction statement does not affect the
75-58 effectiveness of an initial financing statement or other filed
75-59 record.
75-60 Sec. 9.5185. FRAUDULENT FILING. (a) A person may not
75-61 intentionally or knowingly present for filing or cause to be
75-62 presented for filing a financing statement that the person knows:
75-63 (1) is forged;
75-64 (2) contains a material false statement; or
75-65 (3) is groundless.
75-66 (b) A person who violates Subsection (a) is liable to the
75-67 owner of property covered by the financing statement for:
75-68 (1) the greater of $5,000 or the owner's actual
75-69 damages;
76-1 (2) court costs; and
76-2 (3) reasonable attorney's fees.
76-3 (c) A person who violates Subsection (a) also may be
76-4 prosecuted under Section 37.101, Penal Code.
76-5 (d) An owner of property covered by a fraudulent financing
76-6 statement described in Subsection (a) also may file suit in a court
76-7 of suitable jurisdiction requesting specific relief, including, but
76-8 not limited to, release of the fraudulent financing statement. A
76-9 successful plaintiff is entitled to reasonable attorney's fees and
76-10 costs of court assessed against the person who filed the fraudulent
76-11 financing statement. If the person who filed the fraudulent
76-12 financing statement cannot be located or is a fictitious person,
76-13 the owner of the property may serve the known or unknown defendant
76-14 through publication in a newspaper of general circulation in the
76-15 county in which the suit is brought.
76-16 Sec. 9.519. NUMBERING, MAINTAINING, AND INDEXING RECORDS;
76-17 COMMUNICATING INFORMATION PROVIDED IN RECORDS. (a) For each
76-18 record filed in a filing office, the filing office shall:
76-19 (1) assign a unique number to the filed record;
76-20 (2) create a record that bears the number assigned to
76-21 the filed record and the date and time of filing;
76-22 (3) maintain the filed record for public inspection;
76-23 and
76-24 (4) index the filed record in accordance with
76-25 Subsections (c), (d), and (e).
76-26 (b) Except as provided in Subsection (i), a file number
76-27 assigned after January 1, 2002, must include a digit that:
76-28 (1) is mathematically derived from or related to the
76-29 other digits of the file number; and
76-30 (2) aids the filing office in determining whether a
76-31 number communicated as the file number includes a single-digit or
76-32 transpositional error.
76-33 (c) Except as otherwise provided in Subsections (d) and (e),
76-34 the filing office shall:
76-35 (1) index an initial financing statement according to
76-36 the name of the debtor and index all filed records relating to the
76-37 initial financing statement in a manner that associates with one
76-38 another an initial financing statement and all filed records
76-39 relating to the initial financing statement; and
76-40 (2) index a record that provides a name of a debtor
76-41 that was not previously provided in the financing statement to
76-42 which the record relates also according to the name that was not
76-43 previously provided.
76-44 (d) If a financing statement is filed as a fixture filing or
76-45 covers as-extracted collateral or timber to be cut, it must be
76-46 filed for record and the filing office shall index it:
76-47 (1) under the names of the debtor and of each owner of
76-48 record shown on the financing statement as if they were the
76-49 mortgagors under a mortgage of the real property described; and
76-50 (2) to the extent that the law of this State provides
76-51 for indexing of records of mortgages under the name of the
76-52 mortgagee, under the name of the secured party as if the secured
76-53 party were the mortgagee thereunder, or, if indexing is by
76-54 description, as if the financing statement were a record of a
76-55 mortgage of the real property described.
76-56 (e) If a financing statement is filed as a fixture filing or
76-57 covers as-extracted collateral or timber to be cut, the filing
76-58 office shall index an assignment filed under Section 9.514(a) or an
76-59 amendment filed under Section 9.514(b):
76-60 (1) under the name of the assignor as grantor; and
76-61 (2) to the extent that the law of this State provides
76-62 for indexing a record of the assignment of a mortgage under the
76-63 name of the assignee, under the name of the assignee.
76-64 (f) The filing office shall maintain a capability:
76-65 (1) to retrieve a record by the name of the debtor and
76-66 by the file number assigned to the initial financing statement to
76-67 which the record relates; and
76-68 (2) to associate and retrieve with one another an
76-69 initial financing statement and each filed record relating to the
77-1 initial financing statement.
77-2 (g) The filing office may not remove a debtor's name from
77-3 the index until one year after the effectiveness of a financing
77-4 statement naming the debtor lapses under Section 9.515 with respect
77-5 to all secured parties of record.
77-6 (h) Except as provided in Subsection (i), the filing office
77-7 shall perform the acts required by Subsections (a)-(e) at the time
77-8 and in the manner prescribed by filing-office rule, but not later
77-9 than two business days after the filing office receives the record
77-10 in question.
77-11 (i) Subsections (b) and (h) do not apply to a filing office
77-12 described in Section 9.501(a)(1).
77-13 Sec. 9.520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD. (a) A
77-14 filing office shall refuse to accept a record for filing for a
77-15 reason set forth in Section 9.516(b) and may refuse to accept a
77-16 record for filing only for a reason set forth in Section 9.516(b).
77-17 (b) If a filing office refuses to accept a record for
77-18 filing, it shall communicate to the person that presented the
77-19 record the fact of and reason for the refusal and the date and time
77-20 the record would have been filed had the filing office accepted it.
77-21 The communication must be made at the time and in the manner
77-22 prescribed by filing-office rule, but in the case of a filing
77-23 office described in Section 9.501(a)(2), in no event more than two
77-24 business days after the filing office receives the record.
77-25 (c) A filed financing statement satisfying Sections 9.502(a)
77-26 and (b) is effective, even if the filing office is required to
77-27 refuse to accept it for filing under Subsection (a). However,
77-28 Section 9.338 applies to a filed financing statement providing
77-29 information described in Section 9.516(b)(5) that is incorrect at
77-30 the time the financing statement is filed.
77-31 (d) If a record communicated to a filing office provides
77-32 information that relates to more than one debtor, this subchapter
77-33 applies as to each debtor separately.
77-34 Sec. 9.521. UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND
77-35 AMENDMENT. (a) A filing office that accepts written records may
77-36 not refuse to accept a written initial financing statement in the
77-37 following form and format except for a reason set forth in Section
77-38 9.516(b):
77-39 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
77-40 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT AND
77-41 FORM FOR THE UCC FINANCING STATEMENT ADDENDUM, RESPECTIVELY. THE
77-42 CONTENTS OF THESE PAGES CANNOT BE VIEWED ON-LINE DUE TO WORD
77-43 PROCESSOR LIMITATIONS WITH GRAPHIC FILES. PLEASE CONTACT SENATE
77-44 DOCUMENT DISTRIBUTION FOR A HARD COPY."
77-45 "SEE NOTATION ON PAGE 78." (b) A filing office that
77-46 accepts written records may not refuse to accept a written record
77-47 in the following form and format except for a reason set forth in
77-48 Section 9.516(b):
77-49 "THE PRINTED VERSION OF THIS PAGE AND THE FOLLOWING PAGE CONTAIN A
77-50 COPY OF THE STANDARDIZED FORM FOR THE UCC FINANCING STATEMENT
77-51 AMENDMENT AND FORM FOR THE UCC FINANCING STATEMENT AMENDMENT
77-52 ADDENDUM, RESPECTIVELY. THE CONTENTS OF THESE PAGES CANNOT BE
77-53 VIEWED ON-LINE DUE TO WORD PROCESSOR LIMITATIONS WITH GRAPHIC
77-54 FILES. PLEASE CONTACT SENATE DOCUMENT DISTRIBUTION FOR A HARD
77-55 COPY."
77-56 "SEE NOTATION ON PAGE 80."
77-57 Sec. 9.522. MAINTENANCE AND DESTRUCTION OF RECORDS.
77-58 (a) The filing office shall maintain a record of the information
77-59 provided in a filed financing statement for at least one year after
77-60 the effectiveness of the financing statement has lapsed under
77-61 Section 9.515 with respect to all secured parties of record. The
77-62 record must be retrievable by using the name of the debtor and by
77-63 using the file number assigned to the initial financing statement
77-64 to which the record relates.
77-65 (b) Except to the extent that a statute governing
77-66 disposition of public records provides otherwise, the filing office
77-67 immediately may destroy any written record evidencing a financing
77-68 statement. However, if the filing office destroys a written
77-69 record, it shall maintain another record of the financing statement
78-1 that complies with Subsection (a).
78-2 Sec. 9.523. INFORMATION FROM FILING OFFICE; SALE OR LICENSE
78-3 OF RECORDS. (a) If a person that files a written record requests
78-4 an acknowledgment of the filing, the filing office shall send to
78-5 the person an image of the record showing the number assigned to
78-6 the record pursuant to Section 9.519(a)(1) and the date and time of
78-7 the filing of the record. However, if the person furnishes a copy
78-8 of the record to the filing office, the filing office may instead:
78-9 (1) note upon the copy the number assigned to the
78-10 record pursuant to Section 9.519(a)(1) and the date and time of the
78-11 filing of the record; and
78-12 (2) send the copy to the person.
78-13 (b) If a person files a record other than a written record,
78-14 the filing office shall communicate to the person an acknowledgment
78-15 that provides:
78-16 (1) the information in the record;
78-17 (2) the number assigned to the record pursuant to
78-18 Section 9.519(a)(1); and
78-19 (3) the date and time of the filing of the record.
78-20 (c) The filing office shall communicate or otherwise make
78-21 available in a record the following information to any person that
78-22 requests it:
78-23 (1) whether there is on file on a date and time
78-24 specified by the filing office, but not a date earlier than three
78-25 business days before the filing office receives the request, any
78-26 financing statement that:
78-27 (A) designates a particular debtor or, if the
78-28 request so states, designates a particular debtor at the address
78-29 specified in the request;
78-30 (B) has not lapsed under Section 9.515 with
78-31 respect to all secured parties of record; and
78-32 (C) if the request so states, has lapsed under
78-33 Section 9.515 and a record of which is maintained by the filing
78-34 office under Section 9.522(a);
78-35 (2) the date and time of filing of each financing
78-36 statement; and
78-37 (3) the information provided in each financing
78-38 statement.
78-39 (d) In complying with its duty under Subsection (c), the
78-40 filing office may communicate information in any medium. However,
78-41 if requested, the filing office shall communicate information by
78-42 issuing its written certificate.
78-43 (e) The filing office shall perform the acts required by
78-44 Subsections (a)-(d) at the time and in the manner prescribed by
78-45 filing-office rule, but not later than two business days after the
78-46 filing office receives the request.
78-47 (f) At least weekly, the Secretary of State shall offer to
78-48 sell or license to the public on a nonexclusive basis, in bulk,
78-49 copies of all records filed with the Secretary under this
78-50 subchapter, in every medium from time to time available to the
78-51 Secretary.
78-52 Sec. 9.524. DELAY BY FILING OFFICE. Delay by the filing
78-53 office beyond a time limit prescribed by this subchapter is excused
78-54 if:
78-55 (1) the delay is caused by interruption of
78-56 communication or computer facilities, war, emergency conditions,
78-57 failure of equipment, or other circumstances beyond control of the
78-58 filing office; and
78-59 (2) the filing office exercises reasonable diligence
78-60 under the circumstances.
78-61 Sec. 9.525. FEES. (a) Except as otherwise provided in
78-62 Subsections (e) and (f), the fee for filing and indexing a record
78-63 under this subchapter, other than an initial financing statement of
78-64 the kind described in Section 9.502(c), is:
78-65 (1) $15 if the record is communicated in writing and
78-66 consists of one or two pages;
78-67 (2) $30 if the record is communicated in writing and
78-68 consists of more than two pages; and
78-69 (3) $5 if the record is communicated by another medium
79-1 authorized by filing-office rule.
79-2 (b) Except as otherwise provided in Subsection (e), the fee
79-3 for filing and indexing an initial financing statement of the kind
79-4 described in Section 9.502(c) is:
79-5 (1) $60 if the financing statement indicates that it
79-6 is filed in connection with a public-finance transaction; and
79-7 (2) $60 if the financing statement indicates that it
79-8 is filed in connection with a manufactured-home transaction.
79-9 (c) The number of names required to be indexed does not
79-10 affect the amount of the fee in Subsections (a) and (b).
79-11 (d) The fee for responding to a request for information from
79-12 the filing office, including for communicating whether there is on
79-13 file any financing statement naming a particular debtor, is:
79-14 (1) $15 if the request is communicated in writing; and
79-15 (2) an amount established by the filing office if the
79-16 request is communicated by another medium authorized by
79-17 filing-office rule.
79-18 (e) This section does not require a fee with respect to a
79-19 record of a mortgage that is effective as a financing statement
79-20 filed as a fixture filing or as a financing statement covering
79-21 as-extracted collateral or timber to be cut under Section 9.502(c).
79-22 However, the recording and satisfaction fees that otherwise would
79-23 be applicable to the record of the mortgage apply.
79-24 (f) The filing fee for filing, indexing, and furnishing
79-25 filing data about a statement of master amendment under Section
79-26 9.512(f) or master assignment under Section 9.514(d) is $500 plus
79-27 50 cents for each financing statement covered by the master
79-28 statement in excess of 50.
79-29 Sec. 9.526. FILING-OFFICE RULES. (a) The Secretary of
79-30 State shall adopt and publish rules to implement this chapter. The
79-31 filing-office rules must be consistent with this chapter.
79-32 (b) To keep the filing-office rules and practices of the
79-33 filing office in harmony with the rules and practices of filing
79-34 offices in other jurisdictions that enact substantially this
79-35 subchapter, and to keep the technology used by the filing office
79-36 compatible with the technology used by filing offices in other
79-37 jurisdictions that enact substantially this subchapter, the
79-38 Secretary of State, so far as is consistent with the purposes,
79-39 policies, and provisions of this chapter, in adopting, amending,
79-40 and repealing filing-office rules, shall:
79-41 (1) consult with filing offices in other jurisdictions
79-42 that enact substantially this subchapter;
79-43 (2) consult the most recent version of the Model Rules
79-44 promulgated by the International Association of Corporate
79-45 Administrators or any successor organization; and
79-46 (3) take into consideration the rules and practices
79-47 of, and the technology used by, filing offices in other
79-48 jurisdictions that enact substantially this subchapter.
79-49 Sec. 9.527. DUTY TO REPORT. The Secretary of State shall
79-50 report before January 1 of each odd-numbered year to the
79-51 Legislature on the operation of the filing office. The report must
79-52 contain a statement of the extent to which:
79-53 (1) the filing-office rules are not in harmony with
79-54 the rules of filing offices in other jurisdictions that enact
79-55 substantially this subchapter and the reasons for these variations;
79-56 and
79-57 (2) the filing-office rules are not in harmony with
79-58 the most recent version of the Model Rules promulgated by the
79-59 International Association of Corporate Administrators, or any
79-60 successor organization, and the reasons for these variations.
79-61 [Sec. 9.406. RELEASE OF COLLATERAL; DUTIES OF FILING
79-62 OFFICER; FEES. A secured party of record may by his signed
79-63 statement release all or a part of any collateral described in a
79-64 filed financing statement. The statement of release is sufficient
79-65 if it contains a description of the collateral being released, the
79-66 name and address of the debtor, the name and address of the secured
79-67 party, and the file number of the financing statement. A statement
79-68 of release signed by a person other than the secured party of
79-69 record must be accompanied by a separate written statement of
80-1 assignment signed by the secured party of record and complying with
80-2 Subsection (b) of Section 9.405, including payment of the required
80-3 fee. Upon presentation of such a statement of release to the
80-4 filing officer he shall mark the statement with the hour and date
80-5 of filing and shall note the same upon the margin of the index of
80-6 the filing of the financing statement. The uniform fee for filing
80-7 and noting such a statement of release shall be $10 if the
80-8 statement is in the standard form prescribed by the Secretary of
80-9 State and otherwise shall be $25, plus, in each case where the
80-10 original financing statement was filed pursuant to Subsection (e)
80-11 of Section 9.402, an amount equal to the fee prescribed by law for
80-12 recording and indexing in the real property records of the county
80-13 clerk.]
80-14 [Sec. 9.407. INFORMATION FROM FILING OFFICER. (a) If the
80-15 person filing any financing statement, termination statement,
80-16 statement of assignment, or statement of release, furnishes the
80-17 filing officer a copy thereof, the filing officer shall upon
80-18 request note upon the copy the file number and date and hour of the
80-19 filing of the original and deliver or send the copy to such person.]
80-20 [(b) Upon request of any person, the filing officer shall
80-21 issue his certificate showing whether there is on file on the date
80-22 and hour stated therein, any presently effective financing
80-23 statement naming a particular debtor and any statement of
80-24 assignment thereof and if there is, giving the date and hour of
80-25 filing of each such statement and the names and addresses of each
80-26 secured party therein. The filing officer of a county is required
80-27 only to provide information about financing statements and
80-28 statements of assignment on file in the financing statement records
80-29 of the county and is not required to provide information from the
80-30 real estate records of the county. The uniform fee for such a
80-31 certificate shall be $10 if the request for the certificate is in
80-32 the standard form prescribed by the Secretary of State and
80-33 otherwise shall be $25. If a certificate issued by the filing
80-34 officer of a county contains listings for more than 10 statements,
80-35 the filing officer shall add 50 cents to the uniform fee for each
80-36 statement in excess of 10. Upon request the filing officer shall
80-37 furnish a copy of any filed financing statement or statement of
80-38 assignment for a uniform fee of $1.50 per page, but not less than
80-39 $5 per request concerning a debtor.]
80-40 [Sec. 9.408. FINANCING STATEMENTS COVERING CONSIGNED OR
80-41 LEASED GOODS. A consignor or lessor of goods may file a financing
80-42 statement using the terms "consignor," "consignee," "lessor,"
80-43 "lessee" or the like instead of the terms specified in Section
80-44 9.402. The provisions of this subchapter shall apply as
80-45 appropriate to such a financing statement but its filing shall not
80-46 of itself be a factor in determining whether or not the consignment
80-47 or lease is intended as security (Section 1.201(37)). However, if
80-48 it is determined for other reasons that the consignment or lease is
80-49 so intended, a security interest of the consignor or lessor which
80-50 attaches to the consigned or leased goods is perfected by such
80-51 filing.]
80-52 [Sec. 9.409. PRESCRIBED FORMS. (a) The Secretary of State
80-53 may prescribe the forms to be used in making any filing or in
80-54 requesting any information of the filing officer under this
80-55 chapter. Where the Secretary of State has prescribed the form and
80-56 a person fails to use this form or attaches additional pages to the
80-57 prescribed form, the filing or request for information is in
80-58 nonstandard form.]
80-59 [(b) The filing and other fees paid to the Secretary of
80-60 State under this chapter shall be deposited in the General Revenue
80-61 Fund of the State Treasury.]
80-62 [Sec. 9.410. MASTER ASSIGNMENT AND AMENDMENT. (a) A
80-63 secured party may assign all of the secured party's rights under
80-64 more than one financing statement filed with the secretary of state
80-65 by filing a written statement of master assignment signed by the
80-66 secured party of record in each financing statement and setting
80-67 forth the name of the secured party of record and file number of
80-68 each financing statement and the name and address of the assignee.
80-69 The secured party must also provide filing information in
81-1 computer-readable form prescribed by the secretary of state.]
81-2 [(b) A secured party may change the name or mailing address
81-3 of the secured party in more than one financing statement by filing
81-4 a written statement of master amendment signed by the secured party
81-5 of record in each financing statement and setting forth the name of
81-6 the secured party of record and file number of each financing
81-7 statement and the new name or mailing address of the secured party.
81-8 The secured party must also provide filing information in
81-9 computer-readable form prescribed by the secretary of state.]
81-10 [(c) The filing fee for filing, indexing, and furnishing
81-11 filing data about a statement of master assignment or master
81-12 amendment is $500 plus 50 cents for each financing statement
81-13 covered by the master statement in excess of 50.]
81-14 [Sec. 9.411. RULES. The secretary of state may adopt rules
81-15 necessary to administer this subchapter.]
81-16 [Sec. 9.412. FRAUDULENT FILING. (a) A person may not
81-17 intentionally or knowingly present for filing or cause to be
81-18 presented for filing a financing statement if the person knows that
81-19 the financing statement:]
81-20 [(1) is forged;]
81-21 [(2) contains a material false statement; or]
81-22 [(3) is groundless.]
81-23 [(b) A person who violates Subsection (a) is liable to the
81-24 owner of property covered by the financing statement for:]
81-25 [(1) the greater of $5,000 or the owner's actual
81-26 damages;]
81-27 [(2) court costs; and]
81-28 [(3) reasonable attorney's fees.]
81-29 [(d) An owner of property covered by a fraudulent financing
81-30 statement described in Subsection (a) shall have the following
81-31 additional remedies:]
81-32 [(1) An owner may file suit in a court of suitable
81-33 jurisdiction, requesting specific relief including, but not limited
81-34 to, release of such fraudulent financing statement. A successful
81-35 plaintiff shall be entitled to reasonable attorney's fees and costs
81-36 of court to be assessed against the person who filed the fraudulent
81-37 financing statement. In the event the person who filed the
81-38 fraudulent financing statement cannot be located or is a fictitious
81-39 person, then the owner of the property may serve the known or
81-40 unknown defendant through publication in a newspaper of general
81-41 circulation in the county wherein the suit is brought.]
81-42 SUBCHAPTER F [E]. DEFAULT
81-43 Sec. 9.601 [9.501]. RIGHTS AFTER DEFAULT; JUDICIAL
81-44 ENFORCEMENT; CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT
81-45 INTANGIBLES, OR PROMISSORY NOTES [PROCEDURE WHEN SECURITY AGREEMENT
81-46 COVERS BOTH REAL AND PERSONAL PROPERTY]. (a) After [When a debtor
81-47 is in] default [under a security agreement], a secured party has
81-48 the rights [and remedies] provided in this subchapter and, except
81-49 as otherwise provided in Section 9.602, [as limited by Subsection
81-50 (c)] those provided by agreement of the parties. A secured party:
81-51 (1) [in the security agreement. He] may reduce a
81-52 [his] claim to judgment, foreclose, or otherwise enforce the claim,
81-53 security interest, or agricultural lien by any available judicial
81-54 procedure; and
81-55 (2) if[. If] the collateral is documents, [the
81-56 secured party] may proceed either as to the documents or as to the
81-57 goods they cover [covered thereby].
81-58 (b) A secured party in possession of collateral or control
81-59 of collateral under Section 9.104, 9.105, 9.106, or 9.107 has the
81-60 rights[, remedies] and duties provided in Section 9.207.
81-61 (c) The rights under Subsections (a) and (b) [and remedies
81-62 referred to in this subsection] are cumulative and may be exercised
81-63 simultaneously.
81-64 (d) Except as otherwise provided in Subsection (g) and
81-65 Section 9.605, after [(b) After] default, a [the] debtor and an
81-66 obligor have [has] the rights [and remedies] provided in this
81-67 subchapter and by agreement of the parties[, those provided in the
81-68 security agreement and those provided in Section 9.207].
81-69 [(c) To the extent that they give rights to the debtor and
82-1 impose duties on the secured party, the rules stated in the
82-2 subsections referred to below may not be waived or varied except as
82-3 provided with respect to compulsory disposition of collateral
82-4 (Subsection (c) of Section 9.504 and Section 9.505) and with
82-5 respect to redemption of collateral (Section 9.506) but the parties
82-6 may by agreement determine the standards by which the fulfillment
82-7 of these rights and duties is to be measured if such standards are
82-8 not manifestly unreasonable:]
82-9 [(1) Subsection (b) of Section 9.502 and Subsection
82-10 (b) of Section 9.504 insofar as they require accounting for surplus
82-11 proceeds of collateral;]
82-12 [(2) Subsection (c) of Section 9.504 and Subsection
82-13 (a) of Section 9.505 which deal with disposition of collateral;]
82-14 [(3) Subsection (b) of Section 9.505 which deals with
82-15 acceptance of collateral as discharge of obligation;]
82-16 [(4) Section 9.506 which deals with redemption of
82-17 collateral; and]
82-18 [(5) Subsection (a) of Section 9.507 which deals with
82-19 the secured party's liability for failure to comply with this
82-20 subchapter.]
82-21 [(d) If the security agreement covers both real and personal
82-22 property, the secured party may proceed under this subchapter as to
82-23 the personal property or he may proceed as to both the real and the
82-24 personal property in accordance with his rights and remedies in
82-25 respect of the real property in which case the provisions of this
82-26 subchapter do not apply.]
82-27 (e) If [When] a secured party has reduced its [his] claim to
82-28 judgment, the lien of any levy that [which] may be made upon the
82-29 [his] collateral by virtue of an [any] execution based upon the
82-30 judgment relates [shall relate] back to the earliest of:
82-31 (1) the date of perfection of the security interest or
82-32 agricultural lien in the [such] collateral;
82-33 (2) the date of filing a financing statement covering
82-34 the collateral; or
82-35 (3) any date specified in a statute under which the
82-36 agricultural lien was created.
82-37 (f) A [judicial] sale[,] pursuant to an [such] execution[,]
82-38 is a foreclosure of the security interest or agricultural lien by
82-39 judicial procedure within the meaning of this section. A[, and
82-40 the] secured party may purchase at the sale and thereafter hold the
82-41 collateral free of any other requirements of this chapter.
82-42 (g) Except as otherwise provided in Section 9.607(c), this
82-43 subchapter imposes no duties upon a secured party that is a
82-44 consignor or is a buyer of accounts, chattel paper, payment
82-45 intangibles, or promissory notes.
82-46 Sec. 9.602. WAIVER AND VARIANCE OF RIGHTS AND DUTIES.
82-47 Except as otherwise provided in Section 9.624, to the extent that
82-48 they give rights to a debtor or obligor and impose duties on a
82-49 secured party, the debtor or obligor may not waive or vary the
82-50 rules stated in the following listed sections:
82-51 (1) Section 9.207(b)(4)(C), which deals with use and
82-52 operation of the collateral by the secured party;
82-53 (2) Section 9.210, which deals with requests for an
82-54 accounting and requests concerning a list of collateral and
82-55 statement of account;
82-56 (3) Section 9.607(c), which deals with collection and
82-57 enforcement of collateral;
82-58 (4) Sections 9.608(a) and 9.615(c) to the extent that
82-59 they deal with application or payment of noncash proceeds of
82-60 collection, enforcement, or disposition;
82-61 (5) Sections 9.608(a) and 9.615(d) to the extent that
82-62 they require accounting for or payment of surplus proceeds of
82-63 collateral;
82-64 (6) Section 9.609 to the extent that it imposes upon a
82-65 secured party that takes possession of collateral without judicial
82-66 process the duty to do so without breach of the peace;
82-67 (7) Sections 9.610(b), 9.611, 9.613, and 9.614, which
82-68 deal with disposition of collateral;
82-69 (8) Section 9.615(f), which deals with calculation of
83-1 a deficiency or surplus when a disposition is made to the secured
83-2 party, a person related to the secured party, or a secondary
83-3 obligor;
83-4 (9) Section 9.616, which deals with explanation of the
83-5 calculation of a surplus or deficiency;
83-6 (10) Sections 9.620, 9.621, and 9.622, which deal with
83-7 acceptance of collateral in satisfaction of obligation;
83-8 (11) Section 9.623, which deals with redemption of
83-9 collateral;
83-10 (12) Section 9.624, which deals with permissible
83-11 waivers; and
83-12 (13) Sections 9.625 and 9.626, which deal with the
83-13 secured party's liability for failure to comply with this chapter.
83-14 Sec 9.603. AGREEMENT ON STANDARDS CONCERNING RIGHTS AND
83-15 DUTIES. (a) The parties may determine by agreement the standards
83-16 measuring the fulfillment of the rights of a debtor or obligor and
83-17 the duties of a secured party under a rule stated in Section 9.602
83-18 if the standards are not manifestly unreasonable.
83-19 (b) Subsection (a) does not apply to the duty under Section
83-20 9.609 to refrain from breaching the peace.
83-21 Sec. 9.604. PROCEDURE IF SECURITY AGREEMENT COVERS REAL
83-22 PROPERTY OR FIXTURES. (a) If a security agreement covers both
83-23 personal and real property, a secured party may proceed:
83-24 (1) under this subchapter as to the personal property
83-25 without prejudicing any rights with respect to the real property;
83-26 or
83-27 (2) as to both the personal property and the real
83-28 property in accordance with the rights with respect to the real
83-29 property, in which case the other provisions of this subchapter do
83-30 not apply.
83-31 (b) Subject to Subsection (c), if a security agreement
83-32 covers goods that are or become fixtures, a secured party may
83-33 proceed:
83-34 (1) under this subchapter; or
83-35 (2) in accordance with the rights with respect to real
83-36 property, in which case the other provisions of this subchapter do
83-37 not apply.
83-38 (c) Subject to the other provisions of this subchapter, if a
83-39 secured party holding a security interest in fixtures has priority
83-40 over all owners and encumbrancers of the real property, the secured
83-41 party, after default, may remove the collateral from the real
83-42 property.
83-43 (d) A secured party that removes collateral shall promptly
83-44 reimburse any encumbrancer or owner of the real property, other
83-45 than the debtor, for the cost of repair of any physical injury
83-46 caused by the removal. The secured party need not reimburse the
83-47 encumbrancer or owner for any diminution in value of the real
83-48 property caused by the absence of the goods removed or by any
83-49 necessity of replacing them. A person entitled to reimbursement
83-50 may refuse permission to remove until the secured party gives
83-51 adequate assurance for the performance of the obligation to
83-52 reimburse.
83-53 Sec. 9.605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. A secured
83-54 party does not owe a duty based on its status as secured party:
83-55 (1) to a person that is a debtor or obligor, unless
83-56 the secured party knows:
83-57 (A) that the person is a debtor or obligor;
83-58 (B) the identity of the person; and
83-59 (C) how to communicate with the person; or
83-60 (2) to a secured party or lienholder that has filed a
83-61 financing statement against a person, unless the secured party
83-62 knows:
83-63 (A) that the person is a debtor; and
83-64 (B) the identity of the person.
83-65 Sec. 9.606. TIME OF DEFAULT FOR AGRICULTURAL LIEN. For
83-66 purposes of this subchapter, a default occurs in connection with an
83-67 agricultural lien at the time the secured party becomes entitled to
83-68 enforce the lien in accordance with the statute under which it was
83-69 created.
84-1 Sec. 9.607 [9.502]. COLLECTION AND ENFORCEMENT BY [RIGHTS
84-2 OF] SECURED PARTY. (a) If [When] so agreed, and in any event
84-3 after [on] default, a [the] secured party:
84-4 (1) may [is entitled to] notify an account debtor or
84-5 other person obligated on collateral [the obligor on an instrument]
84-6 to make payment or otherwise render performance to or for the
84-7 benefit of the secured party;
84-8 (2) may take any proceeds to which the secured party
84-9 is entitled under Section 9.315;
84-10 (3) may enforce the obligations of an account debtor
84-11 or other person obligated on collateral and exercise the rights of
84-12 the debtor with respect to the obligation of the account debtor or
84-13 other person obligated on collateral to make payment or otherwise
84-14 render performance to the debtor, and with respect to any property
84-15 that secures the obligations of the account debtor or other person
84-16 obligated on the collateral;
84-17 (4) if it holds a security interest in a deposit
84-18 account perfected by control under Section 9.104(a)(1), may apply
84-19 the balance of the deposit account to the obligation secured by the
84-20 deposit account; and
84-21 (5) if it holds a security interest in a deposit
84-22 account perfected by control under Section 9.104(a)(2) or (3), may
84-23 instruct the bank to pay the balance of the deposit account to or
84-24 for the benefit of the secured party [to him whether or not the
84-25 assignor was theretofore making collections on the collateral, and
84-26 also to take control of any proceeds to which he is entitled under
84-27 Section 9.306].
84-28 (b) If necessary to enable a secured party to exercise under
84-29 Subsection (a)(3) the right of a debtor to enforce a mortgage
84-30 nonjudicially, the secured party may record in the office in which
84-31 a record of the mortgage is recorded:
84-32 (1) a copy of the security agreement that creates or
84-33 provides for a security interest in the obligation secured by the
84-34 mortgage; and
84-35 (2) the secured party's sworn affidavit in recordable
84-36 form stating that:
84-37 (A) a default has occurred; and
84-38 (B) the secured party is entitled to enforce the
84-39 mortgage nonjudicially.
84-40 (c) [(b)] A secured party shall [who by agreement is
84-41 entitled to charge back uncollected collateral or otherwise to full
84-42 or limited recourse against the debtor and who undertakes to
84-43 collect from the account debtors or obligors must] proceed in a
84-44 commercially reasonable manner if the secured party:
84-45 (1) undertakes to collect from or enforce an
84-46 obligation of an account debtor or other person obligated on
84-47 collateral; and
84-48 (2) is entitled to charge back uncollected collateral
84-49 or otherwise to full or limited recourse against the debtor or a
84-50 secondary obligor.
84-51 (d) A secured party [and] may deduct from the collections
84-52 made pursuant to Subsection (c) [his] reasonable expenses of
84-53 collection and enforcement, including reasonable attorney's fees
84-54 and legal expenses incurred by the secured party [realization from
84-55 the collections].
84-56 (e) This section does not determine whether an account
84-57 debtor, bank, or other person obligated on collateral owes a duty
84-58 to a secured party.
84-59 Sec. 9.608. APPLICATION OF PROCEEDS OF COLLECTION OR
84-60 ENFORCEMENT; LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS.
84-61 (a) If a security interest or agricultural lien secures payment or
84-62 performance of an obligation, the following rules apply:
84-63 (1) A secured party shall apply or pay over for
84-64 application the cash proceeds of collection or enforcement under
84-65 this section in the following order to:
84-66 (A) the reasonable expenses of collection and
84-67 enforcement and, to the extent provided for by agreement and not
84-68 prohibited by law, reasonable attorney's fees and legal expenses
84-69 incurred by the secured party;
85-1 (B) the satisfaction of obligations secured by
85-2 the security interest or agricultural lien under which the
85-3 collection or enforcement is made; and
85-4 (C) the satisfaction of obligations secured by
85-5 any subordinate security interest in or other lien on the
85-6 collateral subject to the security interest or agricultural lien
85-7 under which the collection or enforcement is made if the secured
85-8 party receives an authenticated demand for proceeds before
85-9 distribution of the proceeds is completed.
85-10 (2) If requested by a secured party, a holder of a
85-11 subordinate security interest or other lien shall furnish
85-12 reasonable proof of the interest or lien within a reasonable time.
85-13 Unless the holder complies, the secured party need not comply with
85-14 the holder's demand under Subdivision (1)(C).
85-15 (3) A secured party need not apply or pay over for
85-16 application noncash proceeds of collection and enforcement under
85-17 this section unless the failure to do so would be commercially
85-18 unreasonable. A secured party that applies or pays over for
85-19 application noncash proceeds shall do so in a commercially
85-20 reasonable manner.
85-21 (4) A secured party shall account to and pay a debtor
85-22 for any surplus, and the obligor is liable for any deficiency.
85-23 (b) If the underlying transaction is a sale of accounts,
85-24 chattel paper, payment intangibles, or promissory notes, the debtor
85-25 is not entitled to any surplus, and the obligor is not liable for
85-26 any deficiency. [If the security agreement secures an
85-27 indebtedness, the secured party must account to the debtor for any
85-28 surplus, and unless otherwise agreed, the debtor is liable for any
85-29 deficiency. But, if the underlying transaction was a sale of
85-30 accounts or chattel paper, the debtor is entitled to any surplus or
85-31 is liable for any deficiency only if the security agreement so
85-32 provides.]
85-33 Sec. 9.609 [9.503]. SECURED PARTY'S RIGHT TO TAKE POSSESSION
85-34 AFTER DEFAULT. (a) After default, [Unless otherwise agreed] a
85-35 secured party:
85-36 (1) may [has on default the right to] take possession
85-37 of the collateral; and
85-38 (2) without[. In taking possession a secured party
85-39 may proceed without judicial process if this can be done without
85-40 breach of the peace or may proceed by action. If the security
85-41 agreement so provides the secured party may require the debtor to
85-42 assemble the collateral and make it available to the secured party
85-43 at a place to be designated by the secured party which is
85-44 reasonably convenient to both parties. Without] removal, [a
85-45 secured party] may render equipment unusable[,] and [may] dispose
85-46 of collateral on the debtor's premises under Section 9.610 [9.504].
85-47 (b) A secured party may proceed under Subsection (a):
85-48 (1) pursuant to judicial process; or
85-49 (2) without judicial process, if it proceeds without
85-50 breach of the peace.
85-51 (c) If so agreed, and in any event after default, a secured
85-52 party may require the debtor to assemble the collateral and make it
85-53 available to the secured party at a place to be designated by the
85-54 secured party that is reasonably convenient to both parties.
85-55 Sec. 9.610 [9.504]. DISPOSITION [SECURED PARTY'S RIGHT TO
85-56 DISPOSE] OF COLLATERAL AFTER DEFAULT[; EFFECT OF DISPOSITION].
85-57 (a) After default, a [A] secured party [after default] may sell,
85-58 lease, license, or otherwise dispose of any or all of the
85-59 collateral in its present [then] condition or following any
85-60 commercially reasonable preparation or processing.
85-61 (b) Every aspect of a disposition of collateral, including
85-62 the method, manner, time, place, and other terms, must be
85-63 commercially reasonable. If commercially reasonable, a secured
85-64 party may dispose [Any sale of goods is subject to the chapter on
85-65 Sales (Chapter 2). The proceeds of disposition shall be applied in
85-66 the order following to]
85-67 [(1) the reasonable expenses of retaking, holding,
85-68 preparing for sale or lease, selling, leasing and the like and, to
85-69 the extent provided for in the agreement and not prohibited by law,
86-1 the reasonable attorneys' fees and legal expenses incurred by the
86-2 secured party;]
86-3 [(2) the satisfaction of indebtedness secured by the
86-4 security interest under which the disposition is made;]
86-5 [(3) the satisfaction of indebtedness secured by any
86-6 subordinate security interest in the collateral if written
86-7 notification of demand therefor is received before distribution of
86-8 the proceeds is completed. If requested by the secured party, the
86-9 holder of a subordinate security interest must seasonably furnish
86-10 reasonable proof of his interest, and unless he does so, the
86-11 secured party need not comply with his demand.]
86-12 [(b) If the security interest secures an indebtedness, the
86-13 secured party must account to the debtor for any surplus, and,
86-14 unless otherwise agreed, the debtor is liable for any deficiency.
86-15 But if the underlying transaction was a sale of accounts or chattel
86-16 paper, the debtor is entitled to any surplus or is liable for any
86-17 deficiency only if the security agreement so provides.]
86-18 [(c) Disposition] of [the] collateral [may be] by public or
86-19 private proceedings, [and may be made] by [way of] one or more
86-20 contracts,[. Sale or other disposition may be] as a unit or in
86-21 parcels, and at any time and place and on any terms [but every
86-22 aspect of the disposition including the method, manner, time, place
86-23 and terms must be commercially reasonable. Unless collateral is
86-24 perishable or threatens to decline speedily in value or is of a
86-25 type customarily sold on a recognized market, reasonable
86-26 notification of the time and place of any public sale or reasonable
86-27 notification of the time after which any private sale or other
86-28 intended disposition is to be made shall be sent by the secured
86-29 party to the debtor, if he has not signed after default a statement
86-30 renouncing or modifying his right to notification of sale. In the
86-31 case of consumer goods no other notification need be sent. In
86-32 other cases notification shall be sent to any other secured party
86-33 who has a security interest in the same collateral and who has duly
86-34 filed in the office of the Secretary of State or of the county
86-35 clerk in the proper county in this state a financing statement
86-36 indexed in the name of the debtor or from whom the secured party
86-37 has received (before sending his notification to the debtor or
86-38 before the debtor's renunciation of his rights) written notice of a
86-39 claim of an interest in the collateral. The secured party may buy
86-40 at any public sale and if the collateral is of a type customarily
86-41 sold in a recognized market or is of a type which is the subject of
86-42 widely distributed standard price quotations he may buy at private
86-43 sale].
86-44 (c) A secured party may purchase collateral:
86-45 (1) at a public disposition; or
86-46 (2) at a private disposition only if the collateral is
86-47 of a kind that is customarily sold on a recognized market or the
86-48 subject of widely distributed standard price quotations.
86-49 (d) A contract for sale, lease, license, or other
86-50 disposition includes the warranties relating to title, possession,
86-51 quiet enjoyment, and the like that by operation of law accompany a
86-52 voluntary disposition of property of the kind subject to the
86-53 contract.
86-54 (e) A secured party may disclaim or modify warranties under
86-55 Subsection (d):
86-56 (1) in a manner that would be effective to disclaim or
86-57 modify the warranties in a voluntary disposition of property of the
86-58 kind subject to the contract of disposition; or
86-59 (2) by communicating to the purchaser a record
86-60 evidencing the contract for disposition and including an express
86-61 disclaimer or modification of the warranties.
86-62 (f) A record is sufficient to disclaim warranties under
86-63 Subsection (e) if it indicates "There is no warranty relating to
86-64 title, possession, quiet enjoyment, or the like in this
86-65 disposition" or uses words of similar import.
86-66 Sec. 9.611. NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.
86-67 (a) In this section, "notification date" means the earlier of the
86-68 date on which:
86-69 (1) a secured party sends to the debtor and any
87-1 secondary obligor an authenticated notification of disposition; or
87-2 (2) the debtor and any secondary obligor waive the
87-3 right to notification.
87-4 (b) Except as otherwise provided in Subsection (d), a
87-5 secured party that disposes of collateral under Section 9.610 shall
87-6 send to the persons specified in Subsection (c) a reasonable
87-7 authenticated notification of disposition.
87-8 (c) To comply with Subsection (b), the secured party shall
87-9 send an authenticated notification of disposition to:
87-10 (1) the debtor;
87-11 (2) any secondary obligor; and
87-12 (3) if the collateral is other than consumer goods:
87-13 (A) any other person from which the secured
87-14 party has received, before the notification date, an authenticated
87-15 notification of a claim of an interest in the collateral;
87-16 (B) any other secured party or lienholder that,
87-17 10 days before the notification date, held a security interest in
87-18 or other lien on the collateral perfected by the filing of a
87-19 financing statement that:
87-20 (i) identified the collateral;
87-21 (ii) was indexed under the debtor's name
87-22 as of that date; and
87-23 (iii) was filed in the office in which to
87-24 file a financing statement against the debtor covering the
87-25 collateral as of that date; and
87-26 (C) any other secured party that, 10 days before
87-27 the notification date, held a security interest in the collateral
87-28 perfected by compliance with a statute, regulation, or treaty
87-29 described in Section 9.311(a).
87-30 (d) Subsection (b) does not apply if the collateral is
87-31 perishable or threatens to decline speedily in value or is of a
87-32 type customarily sold on a recognized market.
87-33 (e) A secured party complies with the requirement for
87-34 notification prescribed by Subsection (c)(3)(B) if:
87-35 (1) not later than 20 days or earlier than 30 days
87-36 before the notification date, the secured party requests, in a
87-37 commercially reasonable manner, information concerning financing
87-38 statements indexed under the debtor's name in the office indicated
87-39 in Subsection (c)(3)(B); and
87-40 (2) before the notification date, the secured party:
87-41 (A) did not receive a response to the request
87-42 for information; or
87-43 (B) received a response to the request for
87-44 information and sent an authenticated notification of disposition
87-45 to each secured party or other lienholder named in that response
87-46 whose financing statement covered the collateral.
87-47 Sec. 9.612. TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF
87-48 COLLATERAL. (a) Except as otherwise provided in Subsection (b),
87-49 whether a notification is sent within a reasonable time is a
87-50 question of fact.
87-51 (b) In a transaction other than a consumer transaction, a
87-52 notification of disposition sent after default and 10 days or more
87-53 before the earliest time of disposition set forth in the
87-54 notification is sent within a reasonable time before the
87-55 disposition.
87-56 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
87-57 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
87-58 transaction, the following rules apply:
87-59 (1) The contents of a notification of disposition are
87-60 sufficient if the notification:
87-61 (A) describes the debtor and the secured party;
87-62 (B) describes the collateral that is the subject
87-63 of the intended disposition;
87-64 (C) states the method of intended disposition;
87-65 (D) states that the debtor is entitled to an
87-66 accounting of the unpaid indebtedness and states the charge, if
87-67 any, for an accounting; and
87-68 (E) states the time and place of a public sale
87-69 or the time after which any other disposition is to be made.
88-1 (2) Whether the contents of a notification that lacks
88-2 any of the information specified in Subdivision (1) are
88-3 nevertheless sufficient is a question of fact.
88-4 (3) The contents of a notification providing
88-5 substantially the information specified in Subdivision (1) are
88-6 sufficient, even if the notification includes:
88-7 (A) information not specified by that
88-8 subdivision; or
88-9 (B) minor errors that are not seriously
88-10 misleading.
88-11 (4) A particular phrasing of the notification is not
88-12 required.
88-13 (5) The following form of notification and the form
88-14 appearing in Section 9.614(3), when completed, each provide
88-15 sufficient information:
88-16 NOTIFICATION OF DISPOSITION OF COLLATERAL
88-17 To: ____________ (Name of
88-18 debtor, obligor, or other person to which the
88-19 notification is sent
88-20 From: ____________ (Name, address, and telephone
88-21 number of secured party
88-22 Name of Debtor(s): ____________ (Include only if
88-23 debtor(s) are not an addressee
88-24 (For a public disposition:
88-25 We will sell (or lease or license, as applicable)
88-26 the (describe collateral) (to the highest qualified
88-27 bidder) in public as follows:
88-28 Day and Date: _______________________
88-29 Time: _______________________
88-30 Place: _______________________
88-31 (For a private disposition:
88-32 We will sell (or lease or license, as applicable)
88-33 the __________________ (describe collateral) privately
88-34 sometime after _____________ (day and date).
88-35 You are entitled to an accounting of the unpaid
88-36 indebtedness secured by the property that we intend to
88-37 sell (or lease or license, as applicable) (for a charge
88-38 of $______). You may request an accounting by calling
88-39 us at _________ (telephone number).
88-40 Sec. 9.614. CONTENTS AND FORM OF NOTIFICATION BEFORE
88-41 DISPOSITION OF COLLATERAL: CONSUMER-GOODS TRANSACTION. In a
88-42 consumer-goods transaction, the following rules apply:
88-43 (1) A notification of disposition must provide the
88-44 following information:
88-45 (A) the information specified in Section
88-46 9.613(1);
88-47 (B) a description of any liability for a
88-48 deficiency of the person to which the notification is sent;
88-49 (C) a telephone number from which the amount
88-50 that must be paid to the secured party to redeem the collateral
88-51 under Section 9.623 is available; and
88-52 (D) a telephone number or mailing address from
88-53 which additional information concerning the disposition and the
88-54 obligation secured is available.
88-55 (2) A particular phrasing of the notification is not
88-56 required.
88-57 (3) The following form of notification, when
88-58 completed, provides sufficient information:
88-59 _________________ (Name and address of secured party
88-60 __________ (Date
88-61 NOTICE OF OUR PLAN TO SELL PROPERTY
88-62 _______ (Name and address of any obligor who is also a
88-63 debtor
88-64 Subject: _________ (Identification of Transaction
88-65 We have your ___________ (describe collateral), because
88-66 you broke promises in our agreement.
88-67 (For a public disposition:
88-68 We will sell ___________ (describe collateral) at
88-69 public sale. A sale could include a lease or license.
89-1 The sale will be held as follows:
89-2 Date: __________________________
89-3 Time: __________________________
89-4 Place: __________________________
89-5 You may attend the sale and bring bidders if you want.
89-6 (For a private disposition:
89-7 We will sell __________ (describe collateral) at
89-8 private sale sometime after ______ (date). A sale
89-9 could include a lease or license.
89-10 The money that we get from the sale (after paying our
89-11 costs) will reduce the amount you owe. If we get less
89-12 money than you owe, you _______ (will or will not, as
89-13 applicable) still owe us the difference. If we get
89-14 more money than you owe, you will get the extra money,
89-15 unless we must pay it to someone else.
89-16 You can get the property back at any time before we
89-17 sell it by paying us the full amount you owe (not just
89-18 the past due payments), including our expenses. To
89-19 learn the exact amount you must pay, call us at
89-20 ______ (telephone number).
89-21 If you want us to explain to you in writing how
89-22 we have figured the amount that you owe us, you may
89-23 call us at ________ (telephone number) (or write us
89-24 at ______ (secured party's address) ______) and request
89-25 a written explanation. (We will charge you $______ for
89-26 the explanation if we sent you another written
89-27 explanation of the amount you owe us within the last
89-28 six months.
89-29 If you need more information about the sale call us
89-30 at _______ (telephone number) (or write us at _______
89-31 (secured party's address) _____).
89-32 We are sending this notice to the following other
89-33 people who have an interest in ______ (describe
89-34 collateral) or who owe money under your agreement:
89-35 _______ (Names of all other debtors and obligors, if
89-36 any
89-37 (4) A notification in the form of Subdivision (3) is
89-38 sufficient, even if additional information appears at the end of
89-39 the form.
89-40 (5) A notification in the form of Subdivision (3) is
89-41 sufficient, even if it includes errors in information not required
89-42 by Subdivision (1), unless the error is misleading with respect to
89-43 rights arising under this chapter.
89-44 (6) If a notification under this section is not in the
89-45 form of Subdivision (3), law other than this chapter determines the
89-46 effect of including information not required by Subdivision (1).
89-47 Sec. 9.615. APPLICATION OF PROCEEDS OF DISPOSITION;
89-48 LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS. (a) A secured
89-49 party shall apply or pay over for application the cash proceeds of
89-50 disposition in the following order to:
89-51 (1) the reasonable expenses of retaking, holding,
89-52 preparing for disposition, processing, and disposing and, to the
89-53 extent provided for by agreement and not prohibited by law,
89-54 reasonable attorney's fees and legal expenses incurred by the
89-55 secured party;
89-56 (2) the satisfaction of obligations secured by the
89-57 security interest or agricultural lien under which the disposition
89-58 is made;
89-59 (3) the satisfaction of obligations secured by any
89-60 subordinate security interest in or other subordinate lien on the
89-61 collateral if:
89-62 (A) the secured party receives from the holder
89-63 of the subordinate security interest or other lien an authenticated
89-64 demand for proceeds before distribution of the proceeds is
89-65 completed; and
89-66 (B) in a case in which a consignor has an
89-67 interest in the collateral, the subordinate security interest or
89-68 other lien is senior to the interest of the consignor; and
89-69 (4) a secured party that is a consignor of the
90-1 collateral if the secured party receives from the consignor an
90-2 authenticated demand for proceeds before distribution of the
90-3 proceeds is completed.
90-4 (b) If requested by a secured party, a holder of a
90-5 subordinate security interest or other lien shall furnish
90-6 reasonable proof of the interest or lien within a reasonable time.
90-7 Unless the holder does so, the secured party need not comply with
90-8 the holder's demand under Subsection (a)(3).
90-9 (c) A secured party need not apply or pay over for
90-10 application noncash proceeds of disposition under this section
90-11 unless the failure to do so would be commercially unreasonable. A
90-12 secured party that applies or pays over for application noncash
90-13 proceeds shall do so in a commercially reasonable manner.
90-14 (d) If the security interest under which a disposition is
90-15 made secures payment or performance of an obligation, after making
90-16 the payments and applications required by Subsection (a) and
90-17 permitted by Subsection (c):
90-18 (1) unless Subsection (a)(4) requires the secured
90-19 party to apply or pay over cash proceeds to a consignor, the
90-20 secured party shall account to and pay a debtor for any surplus;
90-21 and
90-22 (2) the obligor is liable for any deficiency.
90-23 (e) If the underlying transaction is a sale of accounts,
90-24 chattel paper, payment intangibles, or promissory notes:
90-25 (1) the debtor is not entitled to any surplus; and
90-26 (2) the obligor is not liable for any deficiency.
90-27 (f) The surplus or deficiency following a disposition is
90-28 calculated based on the amount of proceeds that would have been
90-29 realized in a disposition complying with this subchapter to a
90-30 transferee other than the secured party, a person related to the
90-31 secured party, or a secondary obligor if:
90-32 (1) the transferee in the disposition is the secured
90-33 party, a person related to the secured party, or a secondary
90-34 obligor; and
90-35 (2) the amount of proceeds of the disposition is
90-36 significantly below the range of proceeds that a complying
90-37 disposition to a person other than the secured party, a person
90-38 related to the secured party, or a secondary obligor would have
90-39 brought.
90-40 (g) A secured party that receives cash proceeds of a
90-41 disposition in good faith and without knowledge that the receipt
90-42 violates the rights of the holder of a security interest or other
90-43 lien that is not subordinate to the security interest or
90-44 agricultural lien under which the disposition is made:
90-45 (1) takes the cash proceeds free of the security
90-46 interest or other lien;
90-47 (2) is not obligated to apply the proceeds of the
90-48 disposition to the satisfaction of obligations secured by the
90-49 security interest or other lien; and
90-50 (3) is not obligated to account to or pay the holder
90-51 of the security interest or other lien for any surplus.
90-52 Sec. 9.616. EXPLANATION OF CALCULATION OF SURPLUS OR
90-53 DEFICIENCY. (a) In this section:
90-54 (1) "Explanation" means a writing that:
90-55 (A) states the amount of the surplus or
90-56 deficiency;
90-57 (B) provides an explanation in accordance with
90-58 Subsection (c) of how the secured party calculated the surplus or
90-59 deficiency;
90-60 (C) states, if applicable, that future debits,
90-61 credits, charges, including additional credit service charges or
90-62 interest, rebates, and expenses may affect the amount of the
90-63 surplus or deficiency; and
90-64 (D) provides a telephone number or mailing
90-65 address from which additional information concerning the
90-66 transaction is available.
90-67 (2) "Request" means a record:
90-68 (A) authenticated by a debtor or consumer
90-69 obligor;
91-1 (B) requesting that the recipient provide an
91-2 explanation; and
91-3 (C) sent after disposition of the collateral
91-4 under Section 9.610.
91-5 (b) In a consumer-goods transaction in which the debtor is
91-6 entitled to a surplus or a consumer obligor is liable for a
91-7 deficiency under Section 9.615, the secured party shall:
91-8 (1) send an explanation to the debtor or consumer
91-9 obligor, as applicable, after the disposition and:
91-10 (A) before or when the secured party accounts to
91-11 the debtor and pays any surplus or first makes written demand on
91-12 the consumer obligor after the disposition for payment of the
91-13 deficiency; and
91-14 (B) within 14 days after receipt of a request;
91-15 or
91-16 (2) in the case of a consumer obligor who is liable
91-17 for a deficiency, within 14 days after receipt of a request, send
91-18 to the consumer obligor a record waiving the secured party's right
91-19 to a deficiency.
91-20 (c) To comply with Subsection (a)(1)(B), a writing must
91-21 provide the following information in the following order:
91-22 (1) the aggregate amount of obligations secured by the
91-23 security interest under which the disposition was made and, if the
91-24 amount reflects a rebate of unearned interest or credit service
91-25 charge, an indication of that fact, calculated as of a specified
91-26 date:
91-27 (A) if the secured party takes or receives
91-28 possession of the collateral after default, not more than 35 days
91-29 before the secured party takes or receives possession; or
91-30 (B) if the secured party takes or receives
91-31 possession of the collateral before default or does not take
91-32 possession of the collateral, not more than 35 days before the
91-33 disposition;
91-34 (2) the amount of proceeds of the disposition;
91-35 (3) the aggregate amount of the obligations after
91-36 deducting the amount of proceeds;
91-37 (4) the amount, in the aggregate or by type, and types
91-38 of expenses, including expenses of retaking, holding, preparing for
91-39 disposition, processing, and disposing of the collateral, and
91-40 attorney's fees secured by the collateral which are known to the
91-41 secured party and relate to the current disposition;
91-42 (5) the amount, in the aggregate or by type, and types
91-43 of credits, including rebates of interest or credit service
91-44 charges, to which the obligor is known to be entitled and which are
91-45 not reflected in the amount in Subdivision (1); and
91-46 (6) the amount of the surplus or deficiency.
91-47 (d) A particular phrasing of the explanation is not
91-48 required. An explanation complying substantially with the
91-49 requirements of Subsection (a) is sufficient, even if it includes
91-50 minor errors that are not seriously misleading.
91-51 (e) A debtor or consumer obligor is entitled without charge
91-52 to one response to a request under this section during any
91-53 six-month period in which the secured party did not send to the
91-54 debtor or consumer obligor an explanation pursuant to Subsection
91-55 (b)(1). The secured party may require payment of a charge not
91-56 exceeding $25 for each additional response.
91-57 Sec. 9.617. RIGHTS OF TRANSFEREE OF COLLATERAL. (a) A
91-58 secured party's disposition of collateral [(d) When collateral is
91-59 disposed of by a secured party] after default:
91-60 (1)[, the disposition] transfers to a transferee
91-61 [purchaser] for value all of the debtor's rights in the collateral;
91-62 (2) [therein,] discharges the security interest under
91-63 which the disposition [it] is made; and
91-64 (3) discharges any subordinate security interest or
91-65 other subordinate lien [subordinate thereto].
91-66 (b) A transferee that acts in good faith [The purchaser]
91-67 takes free of the [all such] rights and interests described in
91-68 Subsection (a), even if [though] the secured party fails to comply
91-69 with [the requirements of] this chapter [subchapter] or the
92-1 requirements of any judicial proceeding [proceedings]
92-2 [(1) in the case of a public sale, if the purchaser
92-3 has no knowledge of any defects in the sale and if he does not buy
92-4 in collusion with the secured party, other bidders or the person
92-5 conducting the sale; or]
92-6 [(2) in any other case, if the purchaser acts in good
92-7 faith.]
92-8 [(e) A person who is liable to a secured party under a
92-9 guaranty, indorsement, repurchase agreement or the like and who
92-10 receives a transfer of collateral from the secured party or is
92-11 subrogated to his rights has thereafter the rights and duties of
92-12 the secured party. Such a transfer of collateral is not a sale or
92-13 disposition of the collateral under this chapter].
92-14 (c) If a transferee does not take free of the rights and
92-15 interests described in Subsection (a), the transferee takes the
92-16 collateral subject to:
92-17 (1) the debtor's rights in the collateral;
92-18 (2) the security interest or agricultural lien under
92-19 which the disposition is made; and
92-20 (3) any other security interest or other lien.
92-21 Sec. 9.618. RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS.
92-22 (a) A secondary obligor acquires the rights and becomes obligated
92-23 to perform the duties of the secured party after the secondary
92-24 obligor:
92-25 (1) receives an assignment of a secured obligation
92-26 from the secured party;
92-27 (2) receives a transfer of collateral from the secured
92-28 party and agrees to accept the rights and assume the duties of the
92-29 secured party; or
92-30 (3) is subrogated to the rights of a secured party
92-31 with respect to collateral.
92-32 (b) An assignment, transfer, or subrogation described in
92-33 Subsection (a):
92-34 (1) is not a disposition of collateral under Section
92-35 9.610; and
92-36 (2) relieves the secured party of further duties under
92-37 this chapter.
92-38 Sec. 9.619. TRANSFER OF RECORD OR LEGAL TITLE. (a) In this
92-39 section, "transfer statement" means a record authenticated by a
92-40 secured party stating:
92-41 (1) that the debtor has defaulted in connection with
92-42 an obligation secured by specified collateral;
92-43 (2) that the secured party has exercised its
92-44 post-default remedies with respect to the collateral;
92-45 (3) that, by reason of the exercise, a transferee has
92-46 acquired the rights of the debtor in the collateral; and
92-47 (4) the name and mailing address of the secured party,
92-48 debtor, and transferee.
92-49 (b) A transfer statement entitles the transferee to the
92-50 transfer of record of all rights of the debtor in the collateral
92-51 specified in the statement in any official filing, recording,
92-52 registration, or certificate-of-title system covering the
92-53 collateral. If a transfer statement is presented with the
92-54 applicable fee and request form to the official or office
92-55 responsible for maintaining the system, the official or office
92-56 shall:
92-57 (1) accept the transfer statement;
92-58 (2) promptly amend its records to reflect the
92-59 transfer; and
92-60 (3) if applicable, issue a new appropriate certificate
92-61 of title in the name of the transferee.
92-62 (c) A transfer of the record or legal title to collateral to
92-63 a secured party under Subsection (b) or otherwise is not of itself
92-64 a disposition of collateral under this chapter and does not of
92-65 itself relieve the secured party of its duties under this chapter.
92-66 Sec. 9.620 [9.505]. [COMPULSORY DISPOSITION OF COLLATERAL;]
92-67 ACCEPTANCE OF [THE] COLLATERAL IN FULL OR PARTIAL SATISFACTION [AS
92-68 DISCHARGE] OF OBLIGATION; COMPULSORY DISPOSITION OF COLLATERAL.
92-69 (a) Except as otherwise provided in Subsection (g), a secured
93-1 party may accept collateral in full or partial satisfaction of the
93-2 obligation it secures only if:
93-3 (1) the debtor consents to the acceptance under
93-4 Subsection (c);
93-5 (2) the secured party does not receive, within the
93-6 time set forth in Subsection (d), a notification of objection to
93-7 the proposal authenticated by:
93-8 (A) a person to which the secured party was
93-9 required to send a proposal under Section 9.621; or
93-10 (B) any other person, other than the debtor,
93-11 holding an interest in the collateral subordinate to the security
93-12 interest that is the subject of the proposal;
93-13 (3) if the collateral is consumer goods, the
93-14 collateral is not in the possession of the debtor when the debtor
93-15 consents to the acceptance; and
93-16 (4) Subsection (e) does not require the secured party
93-17 to dispose of the collateral or the debtor waives the requirement
93-18 pursuant to Section 9.624.
93-19 (b) A purported or apparent acceptance of collateral under
93-20 this section is ineffective unless:
93-21 (1) the secured party consents to the acceptance in an
93-22 authenticated record or sends a proposal to the debtor; and
93-23 (2) the conditions of Subsection (a) are met.
93-24 (c) For purposes of this section:
93-25 (1) a debtor consents to an acceptance of collateral
93-26 in partial satisfaction of the obligation it secures only if the
93-27 debtor agrees to the terms of the acceptance in a record
93-28 authenticated after default; and
93-29 (2) a debtor consents to an acceptance of collateral
93-30 in full satisfaction of the obligation it secures only if the
93-31 debtor agrees to the terms of the acceptance in a record
93-32 authenticated after default or the secured party:
93-33 (A) sends to the debtor after default a proposal
93-34 that is unconditional or subject only to a condition that
93-35 collateral not in the possession of the secured party be preserved
93-36 or maintained;
93-37 (B) in the proposal, proposes to accept
93-38 collateral in full satisfaction of the obligation it secures; and
93-39 (C) does not receive a notification of objection
93-40 authenticated by the debtor within 20 days after the proposal is
93-41 sent.
93-42 (d) To be effective under Subsection (a)(2), a notification
93-43 of objection must be received by the secured party:
93-44 (1) in the case of a person to which the proposal was
93-45 sent pursuant to Section 9.621, within 20 days after notification
93-46 was sent to that person; and
93-47 (2) in other cases:
93-48 (A) within 20 days after the last notification
93-49 was sent pursuant to Section 9.621; or
93-50 (B) if a notification was not sent, before the
93-51 debtor consents to the acceptance under Subsection (c).
93-52 (e) A secured party that has taken possession of collateral
93-53 shall dispose of the collateral pursuant to Section 9.610 within
93-54 the time specified in Subsection (f) if:
93-55 (1) 60 percent [If the debtor has paid sixty per cent]
93-56 of the cash price has been paid in the case of a purchase-money
93-57 [purchase money] security interest in consumer goods; or
93-58 (2) 60 percent of the principal amount of the
93-59 obligation secured has been paid in the case of a
93-60 non-purchase-money [sixty per cent of the loan in the case of
93-61 another] security interest in consumer goods[, and has not signed
93-62 after default a statement renouncing or modifying his rights under
93-63 this subchapter a secured party who has taken possession of
93-64 collateral must dispose of it under Section 9.504 and if he fails
93-65 to do so within ninety days after he takes possession the debtor at
93-66 his option may recover in conversion or under Section 9.507(a) on
93-67 secured party's liability].
93-68 (f) To comply with Subsection (e), the secured party shall
93-69 dispose of the collateral:
94-1 (1) within 90 days after taking possession; or
94-2 (2) within any longer period to which the debtor and
94-3 all secondary obligors have agreed in an agreement to that effect
94-4 entered into and authenticated after default.
94-5 (g) In a consumer transaction, a secured party may not
94-6 accept collateral in partial satisfaction of the obligation it
94-7 secures.
94-8 Sec. 9.621. NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL.
94-9 (a) A secured party that desires to accept [(b) In any other case
94-10 involving consumer goods or any other collateral a secured party in
94-11 possession may, after default, propose to retain the] collateral in
94-12 full or partial satisfaction of the obligation it secures shall
94-13 send its proposal to:
94-14 (1) any person from which the secured party has
94-15 received, before the debtor consented to the acceptance, an
94-16 authenticated notification of a claim of an interest in the
94-17 collateral;
94-18 (2) any other secured party or lienholder that, 10
94-19 days before the debtor consented to the acceptance, held a security
94-20 interest in or other lien on the collateral perfected by the filing
94-21 of a financing statement that:
94-22 (A) identified the collateral;
94-23 (B) was indexed under the debtor's name as of
94-24 that date; and
94-25 (C) was filed in the office or offices in which
94-26 to file a financing statement against the debtor covering the
94-27 collateral as of that date; and
94-28 (3) any other secured party that, 10 days before the
94-29 debtor consented to the acceptance, held a security interest in the
94-30 collateral perfected by compliance with a statute, regulation, or
94-31 treaty described in Section 9.311(a).
94-32 (b) A secured party that desires to accept collateral in
94-33 partial satisfaction of the obligation it secures shall send its
94-34 proposal to any secondary obligor in addition to the persons
94-35 described in Subsection (a).
94-36 Sec. 9.622. EFFECT OF ACCEPTANCE OF COLLATERAL. (a) A
94-37 secured party's acceptance of collateral in full or partial
94-38 satisfaction of the obligation it secures:
94-39 (1) discharges the obligation to the extent consented
94-40 to by the debtor;
94-41 (2) transfers to the secured party all of a debtor's
94-42 rights in the collateral;
94-43 (3) discharges the security interest or agricultural
94-44 lien that is the subject of the debtor's consent and any
94-45 subordinate security interest or other subordinate lien; and
94-46 (4) terminates any other subordinate interest.
94-47 (b) A subordinate interest is discharged or terminated under
94-48 Subsection (a), even if the secured party fails to comply with this
94-49 chapter. [Written notice of such proposal shall be sent to the
94-50 debtor if he has not signed after default a statement renouncing or
94-51 modifying his rights under this subsection. In the case of
94-52 consumer goods no other notice need be given. In other cases
94-53 notice shall be given to any other secured party who has a security
94-54 interest in the same collateral and who has duly filed in the
94-55 office of the Secretary of State or the County Clerk in the proper
94-56 county in this state a financing statement indexed in the name of
94-57 the debtor or from whom the secured party has received (before
94-58 sending his notice to the debtor or before the debtor's
94-59 renunciation of his rights) written notice of a claim of an
94-60 interest in the collateral. If the secured party receives
94-61 objection in writing from a person entitled to receive notification
94-62 within twenty-one days after the notice was sent, the secured party
94-63 must dispose of the collateral under Section 9.504. In the absence
94-64 of such written objection the secured party may retain the
94-65 collateral in satisfaction of the debtor's obligation.]
94-66 Sec. 9.623 [9.506]. [DEBTOR'S RIGHT] RIGHT TO REDEEM
94-67 COLLATERAL. (a) A [At any time before the secured party has
94-68 disposed of collateral or entered into a contract for its
94-69 disposition under Section 9.504 or before the obligation has been
95-1 discharged under Section 9.505(b) the] debtor, any secondary
95-2 obligor, or any other secured party or lienholder may [unless
95-3 otherwise agreed in writing after default] redeem [the] collateral.
95-4 (b) To redeem collateral, a person shall tender:
95-5 (1) [by tendering] fulfillment of all obligations
95-6 secured by the collateral; and
95-7 (2) [as well as] the reasonable expenses and
95-8 [reasonably incurred by the secured party in retaking, holding and
95-9 preparing the collateral for disposition, in arranging for the
95-10 sale, and to the extent provided in the agreement and not
95-11 prohibited by law, his reasonable] attorneys' fees described in
95-12 Section 9.615(a)(1) [and legal expenses].
95-13 (c) A redemption may occur at any time before a secured
95-14 party:
95-15 (1) has collected collateral under Section 9.607;
95-16 (2) has disposed of collateral or entered into a
95-17 contract for its disposition under Section 9.610; or
95-18 (3) has accepted collateral in full or partial
95-19 satisfaction of the obligation it secures under Section 9.622.
95-20 Sec. 9.624. WAIVER. (a) A debtor or secondary obligor may
95-21 waive the right to notification of disposition of collateral under
95-22 Section 9.611 only by an agreement to that effect entered into and
95-23 authenticated after default.
95-24 (b) A debtor may waive the right to require disposition of
95-25 collateral under Section 9.620(e) only by an agreement to that
95-26 effect entered into and authenticated after default.
95-27 (c) Except in a consumer-goods transaction, a debtor or
95-28 secondary obligor may waive the right to redeem collateral under
95-29 Section 9.623 only by an agreement to that effect entered into and
95-30 authenticated after default.
95-31 Sec. 9.625 [9.507]. REMEDIES FOR SECURED PARTY'S [LIABILITY
95-32 FOR] FAILURE TO COMPLY WITH CHAPTER [THIS SUBCHAPTER]. (a) If it
95-33 is established that a [the] secured party is not proceeding in
95-34 accordance with [the provisions of] this chapter, a court may order
95-35 or restrain collection, enforcement, or disposition of collateral
95-36 [subchapter disposition may be ordered or restrained] on
95-37 appropriate terms and conditions.
95-38 (b) Subject to Subsections (c), (d), and (f), a person is
95-39 liable for damages in the amount of [If the disposition has
95-40 occurred the debtor or any person entitled to notification or whose
95-41 security interest has been made known to the secured party prior to
95-42 the disposition has a right to recover from the secured party] any
95-43 loss caused by a failure to comply with [the provisions of] this
95-44 chapter [subchapter]. Loss caused by a failure to comply with a
95-45 request under Section 9.210 may include loss resulting from the
95-46 debtor's inability to obtain, or increased costs of, alternative
95-47 financing.
95-48 (c) Except as otherwise provided in Section 9.628:
95-49 (1) a person that, at the time of the failure, was a
95-50 debtor, was an obligor, or held a security interest in or other
95-51 lien on the collateral may recover damages under Subsection (b) for
95-52 its loss; and
95-53 (2) if [If] the collateral is consumer goods, a person
95-54 that was a [the] debtor or a secondary obligor at the time a
95-55 secured party failed to comply with this subchapter may [has a
95-56 right to] recover for that failure in any event an amount not less
95-57 than the credit service charge plus 10 percent [ten per cent] of
95-58 the principal amount of the obligation [debt] or the time price
95-59 differential plus 10 percent [ten per cent] of the cash price.
95-60 (d) A debtor whose deficiency is eliminated under Section
95-61 9.626 may recover damages for the loss of any surplus. However, a
95-62 debtor or secondary obligor whose deficiency is eliminated or
95-63 reduced under Section 9.626 may not otherwise recover under
95-64 Subsection (b) for noncompliance with the provisions of this
95-65 subchapter relating to collection, enforcement, disposition, or
95-66 acceptance.
95-67 (e) In addition to any damages recoverable under Subsection
95-68 (b), the debtor, consumer obligor, or person named as a debtor in a
95-69 filed record, as applicable, may recover $500 in each case from a
96-1 person that:
96-2 (1) fails to comply with Section 9.208;
96-3 (2) fails to comply with Section 9.209;
96-4 (3) files a record that the person is not entitled to
96-5 file under Section 9.509(a);
96-6 (4) fails to cause the secured party of record to file
96-7 or send a termination statement as required by Section 9.513(a) or
96-8 (c);
96-9 (5) fails to comply with Section 9.616(b)(1) and whose
96-10 failure is part of a pattern, or consistent with a practice, of
96-11 noncompliance; or
96-12 (6) fails to comply with Section 9.616(b)(2).
96-13 (f) A debtor or consumer obligor may recover damages under
96-14 Subsection (b) and, in addition, $500 in each case from a person
96-15 that, without reasonable cause, fails to comply with a request
96-16 under Section 9.210. A recipient of a request under Section 9.210
96-17 that never claimed an interest in the collateral or obligations
96-18 that are the subject of a request under that section has a
96-19 reasonable excuse for failure to comply with the request within the
96-20 meaning of this subsection.
96-21 (g) If a secured party fails to comply with a request
96-22 regarding a list of collateral or a statement of account under
96-23 Section 9.210, the secured party may claim a security interest only
96-24 as shown in the statement included in the request as against a
96-25 person that is reasonably misled by the failure.
96-26 Sec. 9.626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN
96-27 ISSUE. (a) In an action arising from a transaction, other than a
96-28 consumer transaction, in which the amount of a deficiency or
96-29 surplus is in issue, the following rules apply:
96-30 (1) A secured party need not prove compliance with the
96-31 provisions of this subchapter relating to collection, enforcement,
96-32 disposition, or acceptance unless the debtor or a secondary obligor
96-33 places the secured party's compliance in issue.
96-34 (2) If the secured party's compliance is placed in
96-35 issue, the secured party has the burden of establishing that the
96-36 collection, enforcement, disposition, or acceptance was conducted
96-37 in accordance with this subchapter.
96-38 (3) Except as otherwise provided in Section 9.628, if
96-39 a secured party fails to prove that the collection, enforcement,
96-40 disposition, or acceptance was conducted in accordance with the
96-41 provisions of this subchapter relating to collection, enforcement,
96-42 disposition, or acceptance, the liability of a debtor or a
96-43 secondary obligor for a deficiency is limited to an amount by which
96-44 the sum of the secured obligation, expenses, and attorney's fees
96-45 exceeds the greater of:
96-46 (A) the proceeds of the collection, enforcement,
96-47 disposition, or acceptance; or
96-48 (B) the amount of proceeds that would have been
96-49 realized had the noncomplying secured party proceeded in accordance
96-50 with the provisions of this subchapter relating to collection,
96-51 enforcement, disposition, or acceptance.
96-52 (4) For purposes of Subdivision (3)(B), the amount of
96-53 proceeds that would have been realized is equal to the sum of the
96-54 secured obligation, expenses, and attorney's fees unless the
96-55 secured party proves that the amount is less than that sum.
96-56 (5) If a deficiency or surplus is calculated under
96-57 Section 9.615(f), the debtor or obligor has the burden of
96-58 establishing that the amount of proceeds of the disposition is
96-59 significantly below the range of prices that a complying
96-60 disposition to a person other than the secured party, a person
96-61 related to the secured party, or a secondary obligor would have
96-62 brought.
96-63 (b) The limitation of the rules in Subsection (a) to
96-64 transactions other than consumer transactions is intended to leave
96-65 to the court the determination of the proper rules in consumer
96-66 transactions. The court may not infer from that limitation the
96-67 nature of the proper rule in consumer transactions and may continue
96-68 to apply established approaches.
96-69 Sec. 9.627. DETERMINATION OF WHETHER CONDUCT WAS
97-1 COMMERCIALLY REASONABLE. (a) [(b)] The fact that a greater amount
97-2 [better price] could have been obtained by a collection,
97-3 enforcement, disposition, or acceptance [sale] at a different time
97-4 or in a different method from that selected by the secured party is
97-5 not of itself sufficient to preclude the secured party from
97-6 establishing [establish] that the collection, enforcement,
97-7 disposition, or acceptance [sale] was [not] made in a commercially
97-8 reasonable manner.
97-9 (b) A disposition of collateral is made in a commercially
97-10 reasonable manner if the disposition is made:
97-11 (1) [If the secured party either sells the collateral]
97-12 in the usual manner on [in] any recognized market;
97-13 (2) [therefor or if he sells] at the price current in
97-14 any recognized [such] market at the time of the disposition; [his
97-15 sale] or
97-16 (3) [if he has] otherwise [sold] in conformity with
97-17 reasonable commercial practices among dealers in the type of
97-18 property that was the subject of the disposition.
97-19 (c) A collection, enforcement, disposition, or acceptance is
97-20 commercially reasonable if it [sold he has sold in a commercially
97-21 reasonable manner. The principles stated in the two preceding
97-22 sentences with respect to sales also apply as may be appropriate to
97-23 other types of disposition. A disposition which] has been
97-24 approved:
97-25 (1) in a [any] judicial proceeding;
97-26 (2) [or] by a [any] bona fide creditors' committee;
97-27 (3) by a [or] representative of creditors; or
97-28 (4) by an assignee for the benefit of creditors.
97-29 (d) Approval under Subsection (c) need not be obtained, and
97-30 lack of approval does not mean that the collection, enforcement,
97-31 disposition, or acceptance [shall conclusively be deemed to be
97-32 commercially reasonable, but this sentence does not indicate that
97-33 any such approval must be obtained in any case nor does it indicate
97-34 that any disposition not so approved] is not commercially
97-35 reasonable.
97-36 Sec. 9.628. NONLIABILITY AND LIMITATION ON LIABILITY OF
97-37 SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR. (a) Unless a
97-38 secured party knows that a person is a debtor or obligor, knows the
97-39 identity of the person, and knows how to communicate with the
97-40 person:
97-41 (1) the secured party is not liable to the person, or
97-42 to a secured party or lienholder that has filed a financing
97-43 statement against the person, for failure to comply with this
97-44 chapter; and
97-45 (2) the secured party's failure to comply with this
97-46 chapter does not affect the liability of the person for a
97-47 deficiency.
97-48 (b) A secured party is not liable because of its status as
97-49 secured party:
97-50 (1) to a person that is a debtor or obligor, unless
97-51 the secured party knows:
97-52 (A) that the person is a debtor or obligor;
97-53 (B) the identity of the person; and
97-54 (C) how to communicate with the person; or
97-55 (2) to a secured party or lienholder that has filed a
97-56 financing statement against a person, unless the secured party
97-57 knows:
97-58 (A) that the person is a debtor; and
97-59 (B) the identity of the person.
97-60 (c) A secured party is not liable to any person, and a
97-61 person's liability for a deficiency is not affected, because of any
97-62 act or omission arising out of the secured party's reasonable
97-63 belief that a transaction is not a consumer-goods transaction or a
97-64 consumer transaction or that goods are not consumer goods, if the
97-65 secured party's belief is based on its reasonable reliance on:
97-66 (1) a debtor's representation concerning the purpose
97-67 for which collateral was to be used, acquired, or held; or
97-68 (2) an obligor's representation concerning the purpose
97-69 for which a secured obligation was incurred.
98-1 (d) A secured party is not liable to any person under
98-2 Section 9.625(c)(2) for its failure to comply with Section 9.616.
98-3 (e) A secured party is not liable under Section 9.625(c)(2)
98-4 more than once with respect to any one secured obligation.
98-5 ARTICLE 2. CONFORMING AMENDMENTS
98-6 SECTION 2.01. Section 128.015(a), Agriculture Code, is
98-7 amended to read as follows:
98-8 (a) The notice of claim of lien must be filed on a form that
98-9 satisfies the requirements of a financing statement under Sections
98-10 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
98-11 (1) the lien claimant may be identified either as a
98-12 lien claimant or as a secured party;
98-13 (2) the form must be signed by the lien claimant and
98-14 is not required to be signed by the lien debtor; and
98-15 (3) in the space for the description of the
98-16 collateral, the information specified in Sections 128.013(3), (4),
98-17 (5), and (7) must be entered.
98-18 SECTION 2.02. Section 128.016, Agriculture Code, is amended
98-19 to read as follows:
98-20 Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
98-21 STATE; FEE. (a) The notice of claim of lien shall be filed and
98-22 marked in the office of the secretary of state in the same manner
98-23 as a financing statement is filed and marked under Section 9.519
98-24 [9.403], Business & Commerce Code.
98-25 (b) The uniform fee for filing and indexing and for stamping
98-26 a copy furnished by the secured party is the same as the fee
98-27 assessed under Section 9.525 [9.403], Business & Commerce Code.
98-28 SECTION 2.03. Section 128.018, Agriculture Code, is amended
98-29 to read as follows:
98-30 Sec. 128.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
98-31 The secretary of state shall recognize a notice of claim of lien
98-32 under this subchapter as a financing statement under Subchapter E,
98-33 Chapter 9 [Section 9.402], Business & Commerce Code.
98-34 SECTION 2.04. Section 128.038(e), Agriculture Code, is
98-35 amended to read as follows:
98-36 (e) The uniform filing fee for filing and indexing the
98-37 termination statement is the same as the fee assessed under Section
98-38 9.525 [9.404(c)], Business & Commerce Code.
98-39 SECTION 2.05. Section 128.039(b), Agriculture Code, is
98-40 amended to read as follows:
98-41 (b) The lienholder shall file a statement of assignment with
98-42 the secretary of state as provided by Section 9.514 [9.405],
98-43 Business & Commerce Code.
98-44 SECTION 2.06. Section 188.015(a), Agriculture Code, is
98-45 amended to read as follows:
98-46 (a) The notice of claim of lien must be filed on a form that
98-47 satisfies the requirements of a financing statement under Sections
98-48 9.502-9.504 [Section 9.402], Business & Commerce Code, except that:
98-49 (1) the lien claimant may be identified either as a
98-50 lien claimant or as a secured party;
98-51 (2) the form must be signed by the lien claimant and
98-52 is not required to be signed by the lien debtor; and
98-53 (3) in the space for the description of the
98-54 collateral, the information specified in Sections 188.013(3), (4),
98-55 (5), and (7) must be entered.
98-56 SECTION 2.07. Section 188.016, Agriculture Code, is amended
98-57 to read as follows:
98-58 Sec. 188.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
98-59 STATE; FEE. (a) The notice of claim of lien shall be filed and
98-60 marked in the office of the secretary of state in the same manner
98-61 as a financing statement is filed and marked under Section 9.519
98-62 [9.403], Business & Commerce Code.
98-63 (b) The uniform fee for filing and indexing and for stamping
98-64 a copy furnished by the secured party is the same as the fee
98-65 assessed under Section 9.525 [9.403], Business & Commerce Code.
98-66 SECTION 2.08. Section 188.018, Agriculture Code, is amended
98-67 to read as follows:
98-68 Sec. 188.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
98-69 The secretary of state shall recognize a notice of claim of lien
99-1 under this subchapter as a financing statement under Subchapter E,
99-2 Chapter 9 [Section 9.402], Business & Commerce Code.
99-3 SECTION 2.09. Section 188.038(e), Agriculture Code, is
99-4 amended to read as follows:
99-5 (e) The uniform filing fee for filing and indexing the
99-6 termination statement is the same as the fee assessed under Section
99-7 9.525 [9.404(c)], Business & Commerce Code.
99-8 SECTION 2.10. Section 188.039(b), Agriculture Code, is
99-9 amended to read as follows:
99-10 (b) The lienholder shall file a statement of assignment with
99-11 the secretary of state as provided by Section 9.514 [9.405],
99-12 Business & Commerce Code.
99-13 SECTION 2.11. Section 1.105(b), Business & Commerce Code, is
99-14 amended to read as follows:
99-15 (b) Where one of the following provisions of this title
99-16 specifies the applicable law, that provision governs and a contrary
99-17 agreement is effective only to the extent permitted by the law
99-18 (including the conflict of laws rules) so specified:
99-19 Rights of creditors against sold goods. Section 2.402.
99-20 Applicability of the chapter on Leases. Sections 2A.105 and
99-21 2A.106.
99-22 Applicability of the chapter on Bank Deposits and
99-23 Collections. Section 4.102.
99-24 Governing law in the chapter on Funds Transfers. Section
99-25 4A.507.
99-26 Applicability of the chapter on Investment Securities.
99-27 Section 8.110.
99-28 Law governing perfection, the effect of perfection or
99-29 nonperfection, and the priority of security interests. Sections
99-30 9.301-9.307. [Perfection provisions of the chapter on Secured
99-31 Transactions. Section 9.103.]
99-32 SECTION 2.12. Sections 1.201(9) and (32), Business &
99-33 Commerce Code, are amended to read as follows:
99-34 (9) "Buyer in ordinary course of business" means a
99-35 person that buys goods [who] in good faith, [and] without knowledge
99-36 that the sale violates [to him is in violation of] the [ownership]
99-37 rights [or security interest] of another person [a third party] in
99-38 the goods, and [buys] in the ordinary course from a person, other
99-39 than a pawnbroker, in the business of selling goods of that kind
99-40 [but does not include a pawnbroker]. A person buys goods in the
99-41 ordinary course if the sale to the person comports with the usual
99-42 or customary practices in the kind of business in which the seller
99-43 is engaged or with the seller's own usual or customary practices.
99-44 A person that sells oil, gas, or other minerals at the wellhead or
99-45 minehead is a person [All persons who sell minerals or the like
99-46 (including oil and gas) at wellhead or minehead shall be deemed to
99-47 be persons] in the business of selling goods of that kind. A buyer
99-48 in ordinary course of business ["Buying"] may buy [be] for cash,
99-49 [or] by exchange of other property, or on secured or unsecured
99-50 credit, and may acquire [includes receiving] goods or documents of
99-51 title under a pre-existing contract for sale [but does not include
99-52 a transfer in bulk or as security for or in total or partial
99-53 satisfaction of a money debt]. Only a buyer that takes possession
99-54 of the goods or has a right to recover the goods from the seller
99-55 under Chapter 2 may be a buyer in ordinary course of business. A
99-56 person that acquires goods in a transfer in bulk or as security for
99-57 or in total or partial satisfaction of a money debt is not a buyer
99-58 in ordinary course of business.
99-59 (32) "Purchase" includes taking by sale, discount,
99-60 negotiation, mortgage, pledge, lien, security interest, issue or
99-61 reissue, gift or any other voluntary transaction creating an
99-62 interest in property.
99-63 SECTION 2.13. Section 1.201(37)(A), Business & Commerce
99-64 Code, is amended to read as follows:
99-65 (A) "Security interest" means an interest in
99-66 personal property or fixtures that [which] secures payment or
99-67 performance of an obligation. [The retention or reservation of
99-68 title by a seller of goods notwithstanding shipment or delivery to
99-69 the buyer (Section 2.401) is limited in effect to a reservation of
100-1 a "security interest."] The term also includes any interest of a
100-2 consignor and a buyer of accounts, [or] chattel paper, a payment
100-3 intangible, or a promissory note in a transaction that [which] is
100-4 subject to Chapter 9. The special property interest of a buyer of
100-5 goods on identification of such goods to a contract for sale under
100-6 Section 2.401 is not a "security interest", but a buyer may also
100-7 acquire a "security interest" by complying with Chapter 9. Except
100-8 as otherwise provided in Section 2.505, the right of a seller or
100-9 lessor of goods under Chapter 2 or 2A to retain or acquire
100-10 possession of the goods is not a "security interest", but a seller
100-11 or lessor may also acquire a "security interest" by complying with
100-12 Chapter 9. The retention or reservation of title by a seller of
100-13 goods notwithstanding shipment or delivery to the buyer (Section
100-14 2.401) is limited in effect to a reservation of a "security
100-15 interest". [Unless a consignment is intended as security,
100-16 reservation of title thereunder is not a "security interest" but a
100-17 consignment in any event is subject to the provisions on
100-18 consignment sales (Section 2.326).]
100-19 SECTION 2.14. Section 2.103(c), Business & Commerce Code, is
100-20 amended to read as follows:
100-21 (c) The following definitions in other chapters apply to
100-22 this chapter:
100-23 "Check".
100-24 Section 3.104.
100-25 "Consignee".
100-26 Section 7.102.
100-27 "Consignor".
100-28 Section 7.102.
100-29 "Consumer goods".
100-30 Section 9.102 [9.109].
100-31 "Dishonor".
100-32 Section 3.502
100-33 [3.507].
100-34 "Draft".
100-35 Section 3.104.
100-36 SECTION 2.15. Sections 2.210(c)-(e), Business & Commerce
100-37 Code, are amended to read as follows:
100-38 (c) The creation, attachment, perfection, or enforcement of
100-39 a security interest in the seller's interest under a contract is
100-40 not a transfer that materially changes the duty of or increases
100-41 materially the burden or risk imposed on the buyer or impairs
100-42 materially the buyer's chance of obtaining return performance
100-43 within the purview of Subsection (b) unless, and then only to the
100-44 extent that, enforcement actually results in a delegation of
100-45 material performance of the seller. Even in that event, the
100-46 creation, attachment, perfection, and enforcement of the security
100-47 interest remain effective, but (i) the seller is liable to the
100-48 buyer for damages caused by the delegation to the extent that the
100-49 damages could not reasonably be prevented by the buyer, and (ii) a
100-50 court having jurisdiction may grant other appropriate relief,
100-51 including cancellation of the contract for sale or an injunction
100-52 against enforcement of the security interest or consummation of the
100-53 enforcement.
100-54 (d) Unless the circumstances indicate the contrary a
100-55 prohibition of assignment of "the contract" is to be construed as
100-56 barring only the delegation to the assignee of the assignor's
100-57 performance.
100-58 (e) [(d)] An assignment of "the contract" or of "all my
100-59 rights under the contract" or an assignment in similar general
100-60 terms is an assignment of rights and unless the language or the
100-61 circumstances (as in an assignment for security) indicate the
100-62 contrary, it is a delegation of performance of the duties of the
100-63 assignor and its acceptance by the assignee constitutes a promise
100-64 by him to perform those duties. This promise is enforceable by
100-65 either the assignor or the other party to the original contract.
100-66 (f) [(e)] The other party may treat any assignment which
100-67 delegates performance as creating reasonable grounds for insecurity
100-68 and may without prejudice to his rights against the assignor demand
100-69 assurances from the assignee (Section 2.609).
101-1 SECTION 2.16. Section 2.326, Business & Commerce Code, is
101-2 amended to read as follows:
101-3 Sec. 2.326. SALE ON APPROVAL AND SALE OR RETURN;
101-4 [CONSIGNMENT SALES AND] RIGHTS OF CREDITORS. (a) Unless otherwise
101-5 agreed, if delivered goods may be returned by the buyer even though
101-6 they conform to the contract, the transaction is
101-7 (1) a "sale on approval" if the goods are delivered
101-8 primarily for use, and
101-9 (2) a "sale or return" if the goods are delivered
101-10 primarily for resale.
101-11 (b) Goods [Except as provided in Subsection (c), goods] held
101-12 on approval are not subject to the claims of the buyer's creditors
101-13 until acceptance; goods held on sale or return are subject to such
101-14 claims while in the buyer's possession.
101-15 (c) [Where goods are delivered to a person for sale and such
101-16 person maintains a place of business at which he deals in goods of
101-17 the kind involved, under a name other than the name of the person
101-18 making delivery, then with respect to claims of creditors of the
101-19 person conducting the business the goods are deemed to be on sale
101-20 or return. The provisions of this subsection are applicable even
101-21 though an agreement purports to reserve title to the person making
101-22 delivery until payment or resale or uses such words as "on
101-23 consignment" or "on memorandum". However, this subsection is not
101-24 applicable if the person making delivery]
101-25 [(1) complies with an applicable law providing for a
101-26 consignor's interest or the like to be evidenced by a sign, or]
101-27 [(2) establishes that the person conducting the
101-28 business is generally known by his creditors to be substantially
101-29 engaged in selling the goods of others, or]
101-30 [(3) complies with the filing provisions of the
101-31 chapter on Secured Transactions (Chapter 9), or]
101-32 [(4) is delivering a work of art subject to the
101-33 Artists' Consignment Act.]
101-34 [(d)] Any "or return" term of a contract for sale is to be
101-35 treated as a separate contract for sale within the statute of
101-36 frauds section of this chapter (Section 2.201) and as contradicting
101-37 the sale aspect of the contract within the provisions of this
101-38 chapter on parol or extrinsic evidence (Section 2.202).
101-39 SECTION 2.17. Section 2.502, Business & Commerce Code, is
101-40 amended to read as follows:
101-41 Sec. 2.502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION,
101-42 FAILURE TO DELIVER, OR INSOLVENCY. (a) Subject to Subsections
101-43 [Subsection] (b) and (c) and even though the goods have not been
101-44 shipped a buyer who has paid a part or all of the price of goods in
101-45 which he has a special property under the provisions of the
101-46 immediately preceding section may on making and keeping good a
101-47 tender of any unpaid portion of their price recover them from the
101-48 seller if:
101-49 (1) in the case of goods bought for personal, family,
101-50 or household purposes, the seller repudiates or fails to deliver as
101-51 required by the contract; or
101-52 (2) in all cases, the seller becomes insolvent within
101-53 ten days after receipt of the first installment on their price.
101-54 (b) The buyer's right to recover the goods under Subsection
101-55 (a)(1) vests upon acquisition of a special property, even if the
101-56 seller had not then repudiated or failed to deliver.
101-57 (c) If the identification creating his special property has
101-58 been made by the buyer he acquires the right to recover the goods
101-59 only if they conform to the contract for sale.
101-60 SECTION 2.18. Section 2.716(c), Business & Commerce Code, is
101-61 amended to read as follows:
101-62 (c) The buyer has a right of replevin for goods identified
101-63 to the contract if after reasonable effort he is unable to effect
101-64 cover for such goods or the circumstances reasonably indicate that
101-65 such effort will be unavailing or if the goods have been shipped
101-66 under reservation and satisfaction of the security interest in them
101-67 has been made or tendered. In the case of goods bought for
101-68 personal, family, or household purposes, the buyer's right of
101-69 replevin vests upon acquisition of a special property, even if the
102-1 seller had not then repudiated or failed to deliver.
102-2 SECTION 2.19. Section 2A.103(c), Business & Commerce Code,
102-3 is amended to read as follows:
102-4 (c) The following definitions in other chapters apply to
102-5 this chapter:
102-6 "Account". Section 9.102(a)(2) [9.106].
102-7 "Between merchants". Section 2.104(c).
102-8 "Buyer". Section 2.103(a)(1).
102-9 "Chattel paper". Section 9.102(a)(11) [9.105(a)(2)].
102-10 "Consumer goods". Section 9.102(a)(23) [9.109(1)].
102-11 "Document". Section 9.102(a)(30) [9.105(a)(6)].
102-12 "Entrusting". Section 2.403(c).
102-13 "General intangible". Section 9.102(a)(42).
102-14 ["General intangibles".] [Section 9.106.]
102-15 "Good faith". Section 2.103(a)(2).
102-16 "Instrument". Section 9.102(a)(47) [9.105(a)(9)].
102-17 "Merchant". Section 2.104(a).
102-18 "Mortgage". Section 9.102(a)(55) [9.105(a)(10)].
102-19 "Pursuant to commitment". Section 9.102(a)(69) [9.105(a)(11)].
102-20 "Receipt". Section 2.103(a)(3).
102-21 "Sale". Section 2.106(a).
102-22 "Sale on approval". Section 2.326.
102-23 "Sale or return". Section 2.326.
102-24 "Seller". Section 2.103(a)(4).
102-25 SECTION 2.20. Section 2A.303, Business & Commerce Code, is
102-26 amended to read as follows:
102-27 Sec. 2A.303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE
102-28 CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION OF
102-29 PERFORMANCE; TRANSFER OF RIGHTS. (a) As used in this section,
102-30 "creation of a security interest" includes the sale of a lease
102-31 contract that is subject to Chapter 9 of this code, Secured
102-32 Transactions, by reason of Section 9.109(a)(3) [9.102(a)(2)].
102-33 (b) Except as provided in Section 9.407(c) [Subsections (c)
102-34 and (d)], a provision in a lease agreement which (1) prohibits the
102-35 voluntary or involuntary transfer, including a transfer by sale,
102-36 sublease, creation or enforcement of a security interest, or
102-37 attachment, levy, or other judicial process, of an interest of a
102-38 party under the lease contract or of the lessor's residual interest
102-39 in the goods, or (2) makes such a transfer an event of default,
102-40 gives rise to the rights and remedies provided in Subsection (d)
102-41 [(e) of this section], but a transfer that is prohibited or is an
102-42 event of default under the lease agreement is otherwise effective.
102-43 (c) [A provision in a lease agreement which (1) prohibits
102-44 the creation or enforcement of a security interest in an interest
102-45 of a party under the lease contract or in the lessor's residual
102-46 interest in the goods, or (2) makes such a transfer an event of
102-47 default, is not enforceable unless, and then only to the extent
102-48 that, there is an actual transfer by the lessee of the lessee's
102-49 right of possession or use of the goods in violation of the
102-50 provision or an actual delegation of a material performance of
102-51 either party to the lease contract in violation of the provision.
102-52 Neither the granting nor the enforcement of a security interest in
102-53 (1) the lessor's interest in the lease contract or (2) the lessor's
102-54 residual interest in the goods is a transfer that materially
102-55 impairs the prospect of obtaining return performance by, materially
102-56 changes the duty of, or materially increases the burden of risk
102-57 imposed on, the lessee within the purview of Subsection (e) unless,
102-58 and then only to the extent that, there is an actual delegation of
102-59 a material performance of the lessor.]
102-60 [(d)] A provision in a lease agreement which (1) prohibits a
102-61 transfer of a right to damages for default with respect to the
102-62 whole lease contract or of a right to payment arising out of the
102-63 transferor's due performance of the transferor's entire obligation,
102-64 or (2) makes such a transfer an event of default, is not
102-65 enforceable, and such a transfer is not a transfer that materially
102-66 impairs the prospect of obtaining return performance by, materially
102-67 changes the duty of, or materially increases the burden or risk
102-68 imposed on, the other party to the lease contract within the
102-69 purview of Subsection (d) [(e)].
103-1 (d) [(e)] Subject to Section 9.407(c) [Subsections (c) and
103-2 (d)]:
103-3 (1) if a transfer is made which is made an event of
103-4 default under a lease agreement, the party to the lease contract
103-5 not making the transfer, unless that party waives the default or
103-6 otherwise agrees, has the rights and remedies described in Section
103-7 2A.501(b); and
103-8 (2) if Subdivision (1) is not applicable and if a
103-9 transfer is made that (A) is prohibited under a lease agreement or
103-10 (B) materially impairs the prospect of obtaining return performance
103-11 by, materially changes the duty of, or materially increases the
103-12 burden of risk imposed on, the other party to the lease contract,
103-13 unless the party not making the transfer agrees at any time to the
103-14 transfer in the lease contract or otherwise, then, except as
103-15 limited by contract, (i) the transferor is liable to the party not
103-16 making the transfer for damages caused by the transfer to the
103-17 extent that the damages could not reasonably be prevented by the
103-18 party not making the transfer and (ii) a court having jurisdiction
103-19 may grant other appropriate relief, including cancellation of the
103-20 lease contract or an injunction against the transfer.
103-21 (e) [(f)] A transfer of "the lease" or of "all my rights
103-22 under the lease," or a transfer in similar general terms, is a
103-23 transfer of rights and, unless the language or the circumstances,
103-24 as in a transfer for security, indicate the contrary, the transfer
103-25 is a delegation of duties by the transferor to the transferee.
103-26 Acceptance by the transferee constitutes a promise by the
103-27 transferee to perform those duties. This promise is enforceable by
103-28 either the transferor or the other party to the lease contract.
103-29 (f) [(g)] Unless otherwise agreed by the lessor and the
103-30 lessee, a delegation of performance does not relieve the transferor
103-31 as against the other party of any duty to perform or of any
103-32 liability for default.
103-33 (g) [(h)] In a consumer lease, to prohibit the transfer of
103-34 an interest of a party under the lease contract or to make a
103-35 transfer an event of default, the language must be specific, by a
103-36 writing, and conspicuous.
103-37 SECTION 2.21. Sections 2A.307(b)-(d), Business & Commerce
103-38 Code, are amended to read as follows:
103-39 (b) Except as otherwise provided in Subsection [Subsections]
103-40 (c) [and (d)] and Sections 2A.306 and 2A.308, a creditor of a
103-41 lessor takes subject to the lease contract unless[:]
103-42 [(1)] the creditor holds a lien that attached to the
103-43 goods before the lease contract became enforceable[;]
103-44 [(2) the creditor holds a security interest in the
103-45 goods and the lessee did not give value and receive delivery of the
103-46 goods without knowledge of the security interest; or]
103-47 [(3) the creditor holds a security interest in the
103-48 goods which was perfected (Section 9.303) before the lease contract
103-49 became enforceable].
103-50 (c) Except as otherwise provided in Sections 9.317, 9.321,
103-51 and 9.323, a lessee takes a leasehold interest subject to a
103-52 security interest held by a creditor of the lessor. [A lessee in
103-53 the ordinary course of business takes the leasehold interest free
103-54 of a security interest in the goods created by the lessor even
103-55 though the security interest is perfected (Section 9.303) and the
103-56 lessee knows of its existence.]
103-57 [(d) A lessee other than a lessee in the ordinary course of
103-58 business takes the leasehold interest free of a security interest
103-59 to the extent that it secures future advances made after the
103-60 secured party acquires knowledge of the lease or more than 45 days
103-61 after the lease contract becomes enforceable, whichever first
103-62 occurs, unless the future advances are made pursuant to a
103-63 commitment entered into without knowledge of the lease and before
103-64 the expiration of the 45-day period.]
103-65 SECTION 2.22. Section 2A.309(a), Business & Commerce Code,
103-66 is amended to read as follows:
103-67 (a) In this section:
103-68 (1) goods are "fixtures" when they become so related
103-69 to particular real estate that an interest in them arises under
104-1 real estate law;
104-2 (2) a "fixture filing" is the filing, in the office
104-3 where a record of a mortgage on the real estate would be filed or
104-4 recorded, of a financing statement covering goods that are or are
104-5 to become fixtures and conforming to the requirements of Sections
104-6 9.502(a) and (b) [Section 9.402(e)];
104-7 (3) a lease is a "purchase money lease" unless the
104-8 lessee has possession or use of the goods or the right to
104-9 possession or use of the goods before the lease agreement is
104-10 enforceable;
104-11 (4) a mortgage is a "construction mortgage" to the
104-12 extent it secures an obligation incurred for the construction of an
104-13 improvement on land including the acquisition cost of the land, if
104-14 the recorded writing so indicates; and
104-15 (5) "encumbrance" includes real estate mortgages and
104-16 other liens on real estate and all other rights in real estate that
104-17 are not ownership interests.
104-18 SECTION 2.23. Section 4.210(c), Business & Commerce Code, is
104-19 amended to read as follows:
104-20 (c) Receipt by a collecting bank of a final settlement for
104-21 an item is a realization on its security interest in the item,
104-22 accompanying documents, and proceeds. So long as the bank does not
104-23 receive final settlement for the item or give up possession of the
104-24 item or accompanying documents for purposes other than collection,
104-25 the security interest continues to that extent and is subject to
104-26 Chapter 9, but:
104-27 (1) no security agreement is necessary to make the
104-28 security interest enforceable (Section 9.203(b)(3)(A)
104-29 [9.203(a)(1)]);
104-30 (2) no filing is required to perfect the security
104-31 interest; and
104-32 (3) the security interest has priority over
104-33 conflicting perfected security interests in the item, accompanying
104-34 documents, or proceeds.
104-35 SECTION 2.24. Chapter 5, Business & Commerce Code, is
104-36 amended by adding Section 5.118 to read as follows:
104-37 Sec. 5.118. SECURITY INTEREST OF ISSUER OR NOMINATED PERSON.
104-38 (a) An issuer or nominated person has a security interest in a
104-39 document presented under a letter of credit to the extent that the
104-40 issuer or nominated person honors or gives value for the
104-41 presentation.
104-42 (b) So long as and to the extent that an issuer or nominated
104-43 person has not been reimbursed or has not otherwise recovered the
104-44 value given with respect to a security interest in a document under
104-45 Subsection (a), the security interest continues and is subject to
104-46 Chapter 9, but:
104-47 (1) a security agreement is not necessary to make the
104-48 security interest enforceable under Section 9.203(b)(3);
104-49 (2) if the document is presented in a medium other
104-50 than a written or other tangible medium, the security interest is
104-51 perfected; and
104-52 (3) if the document is presented in a written or other
104-53 tangible medium and is not a certificated security, chattel paper,
104-54 a document of title, an instrument, or a letter of credit, the
104-55 security interest is perfected and has priority over a conflicting
104-56 security interest in the document so long as the debtor does not
104-57 have possession of the document.
104-58 SECTION 2.25. Section 7.503(a), Business & Commerce Code, is
104-59 amended to read as follows:
104-60 (a) A document of title confers no right in goods against a
104-61 person who before issuance of the document had a legal interest or
104-62 a perfected security interest in them and who neither
104-63 (1) delivered or entrusted them or any document of
104-64 title covering them to the bailor or his nominee with actual or
104-65 apparent authority to ship, store or sell or with power to obtain
104-66 delivery under this chapter (Section 7.403) or with power of
104-67 disposition under this title (Sections 2.403 and 9.320 [9.307]) or
104-68 other statute or rule of law; nor
104-69 (2) acquiesced in the procurement by the bailor or his
105-1 nominee of any document of title.
105-2 SECTION 2.26. Section 8.103(f), Business & Commerce Code, is
105-3 amended to read as follows:
105-4 (f) A commodity contract, as defined in Section 9.102(a)(15)
105-5 [9.115], is not a security or a financial asset.
105-6 SECTION 2.27. Sections 8.106(d) and (f), Business & Commerce
105-7 Code, are amended to read as follows:
105-8 (d) A purchaser has control of a security entitlement if:
105-9 (1) the purchaser becomes the entitlement holder; [or]
105-10 (2) the securities intermediary has agreed that it
105-11 will comply with entitlement orders originated by the purchaser
105-12 without further consent by the entitlement holder; or
105-13 (3) another person has control of the security
105-14 entitlement on behalf of the purchaser or, having previously
105-15 acquired control of the security entitlement, acknowledges that it
105-16 has control on behalf of the purchaser.
105-17 (f) A purchaser who has satisfied the requirements of
105-18 Subsection (c) [(c)(2)] or (d) [(d)(2)] has control, even if the
105-19 registered owner in the case of Subsection (c) [(c)(2)] or the
105-20 entitlement holder in the case of Subsection (d) [(d)(2)] retains
105-21 the right to make substitutions for the uncertificated security or
105-22 security entitlement, to originate instructions or entitlement
105-23 orders to the issuer or securities intermediary, or otherwise to
105-24 deal with the uncertificated security or security entitlement.
105-25 SECTION 2.28. Section 8.110(e), Business & Commerce Code, is
105-26 amended to read as follows:
105-27 (e) The following rules determine a securities
105-28 intermediary's jurisdiction for purposes of this section:
105-29 (1) If an agreement between the securities
105-30 intermediary and its entitlement holder governing the securities
105-31 account expressly provides that a particular jurisdiction is the
105-32 securities intermediary's jurisdiction for purposes of this
105-33 subchapter, this chapter, or this title [specifies that it is
105-34 governed by the law of a particular jurisdiction], that
105-35 jurisdiction is the securities intermediary's jurisdiction.
105-36 (2) If Subdivision (1) does not apply and an agreement
105-37 between the securities intermediary and its entitlement holder
105-38 governing the securities account expressly provides that the
105-39 agreement is governed by the law of a particular jurisdiction, that
105-40 jurisdiction is the securities intermediary's jurisdiction.
105-41 (3) If neither Subdivision (1) nor Subdivision (2)
105-42 applies and an agreement between the securities intermediary and
105-43 its entitlement holder governing the securities account [does not
105-44 specify the governing law as provided in Subdivision (1), but]
105-45 expressly provides [specifies] that the securities account is
105-46 maintained at an office in a particular jurisdiction, that
105-47 jurisdiction is the securities intermediary's jurisdiction.
105-48 (4) [(3)] If none of the preceding subdivisions
105-49 applies [an agreement between the securities intermediary and its
105-50 entitlement holder does not specify a jurisdiction as provided in
105-51 Subdivision (1) or (2)], the securities intermediary's jurisdiction
105-52 is the jurisdiction in which [is located] the office identified in
105-53 an account statement as the office serving the entitlement holder's
105-54 account is located.
105-55 (5) [(4)] If none of the preceding subdivisions
105-56 applies [an agreement between the securities intermediary and its
105-57 entitlement holder does not specify a jurisdiction as provided in
105-58 Subdivision (1) or (2) and an account statement does not identify
105-59 an office serving the entitlement holder's account as provided in
105-60 Subdivision (3)], the securities intermediary's jurisdiction is the
105-61 jurisdiction in which [is located] the chief executive office of
105-62 the securities intermediary is located.
105-63 SECTION 2.29. Section 8.301(a), Business & Commerce Code, is
105-64 amended to read as follows:
105-65 (a) Delivery of a certificated security to a purchaser
105-66 occurs when:
105-67 (1) the purchaser acquires possession of the security
105-68 certificate;
105-69 (2) another person, other than a securities
106-1 intermediary, either acquires possession of the security
106-2 certificate on behalf of the purchaser or, having previously
106-3 acquired possession of the certificate, acknowledges that it holds
106-4 for the purchaser; or
106-5 (3) a securities intermediary acting on behalf of the
106-6 purchaser acquires possession of the security certificate, only if
106-7 the certificate is in registered form and is (i) registered in the
106-8 name of the purchaser, (ii) payable to the order of the purchaser,
106-9 or (iii) [has been] specially indorsed to the purchaser by an
106-10 effective indorsement and has not been indorsed to the securities
106-11 intermediary or in blank.
106-12 SECTION 2.30. Section 8.302(a), Business & Commerce Code, is
106-13 amended to read as follows:
106-14 (a) Except as otherwise provided in Subsections (b) and (c),
106-15 a purchaser [on delivery] of a certificated or uncertificated
106-16 security [to a purchaser, the purchaser] acquires all rights in the
106-17 security that the transferor had or had power to transfer.
106-18 SECTION 2.31. Sections 8.510(a) and (c), Business & Commerce
106-19 Code, are amended to read as follows:
106-20 (a) In a case not covered by the priority rules in Chapter 9
106-21 or the rules stated in Subsection (c), an [An] action based on an
106-22 adverse claim to a financial asset or security entitlement, whether
106-23 framed in conversion, replevin, constructive trust, equitable lien,
106-24 or other theory, may not be asserted against a person who purchases
106-25 a security entitlement, or an interest therein, from an entitlement
106-26 holder if the purchaser gives value, does not have notice of the
106-27 adverse claim, and obtains control.
106-28 (c) In a case not covered by the priority rules in Chapter
106-29 9, a purchaser for value of a security entitlement, or an interest
106-30 therein, who obtains control has priority over a purchaser of a
106-31 security entitlement, or an interest therein, who does not obtain
106-32 control. Except as otherwise provided in Subsection (d),
106-33 purchasers [Purchasers] who have control rank according to priority
106-34 in time of:
106-35 (1) the purchaser's becoming the person for whom the
106-36 securities account, in which the security entitlement is carried,
106-37 is maintained, if the purchaser obtained control under Section
106-38 8.106(d)(1);
106-39 (2) the securities intermediary's agreement to comply
106-40 with the purchaser's entitlement orders with respect to security
106-41 entitlements carried or to be carried in the securities account in
106-42 which the security entitlement is carried, if the purchaser
106-43 obtained control under Section 8.106(d)(2); or
106-44 (3) if the purchaser obtained control through another
106-45 person under Section 8.106(d)(3), the time on which priority would
106-46 be based under this subsection if the other person were the secured
106-47 party.
106-48 (d) A [equally, except that a] securities intermediary as
106-49 purchaser has priority over a conflicting purchaser who has control
106-50 unless otherwise agreed on by the securities intermediary.
106-51 SECTION 2.32. Section 221.032, Health and Safety Code, is
106-52 amended to read as follows:
106-53 Sec. 221.032. PERFECTION OF SECURITY INTEREST. A security
106-54 interest granted by a corporation may be perfected in the manner
106-55 and with the effect provided by Chapter 9, Business & Commerce
106-56 Code[, notwithstanding Section 9.104 of that chapter].
106-57 SECTION 2.33. Section 31.053(d), Parks and Wildlife Code, is
106-58 amended to read as follows:
106-59 (d) Notwithstanding the provisions of Subsection (a) of this
106-60 section, a buyer of a new vessel or a new outboard motor in the
106-61 ordinary course of business as provided in Section 9.320(a)
106-62 [9.307(a)], Business & Commerce Code, takes the interest free of
106-63 security interests as provided in that section. A buyer of a
106-64 vessel or outboard motor that is not new shall be governed by
106-65 Subsection (a) of this section.
106-66 SECTION 2.34. Section 14.004(a), Property Code, is amended
106-67 to read as follows:
106-68 (a) If a notice of federal lien, a refiling of a notice of
106-69 federal lien, or a notice of revocation of any certificate
107-1 described in Subsection (b) is presented to a filing officer who
107-2 is:
107-3 (1) the secretary of state, he shall cause the notice
107-4 to be marked, held or placed on microtext, and indexed in
107-5 accordance with the provisions of Section 9.519, Business &
107-6 Commerce [9.403(d) of the Uniform Commercial] Code, as if the
107-7 notice were a financing statement within the meaning of that code;
107-8 or
107-9 (2) any other officer described in Section 14.002, he
107-10 shall endorse thereon his identification and the date and time of
107-11 receipt and forthwith file it alphabetically in the real property
107-12 records and if requested by the party submitting the document, in
107-13 the personal property files or enter it in an alphabetical index
107-14 for real or personal property, as appropriate, showing the name and
107-15 address of the person named in the notice, the date and time of
107-16 receipt, the title and address of the official or entity certifying
107-17 the lien, and the total amount appearing on the notice of lien.
107-18 SECTION 2.35. Section 24.0062(j), Property Code, is amended
107-19 to read as follows:
107-20 (j) Any sale of property that is subject to a lien under
107-21 this section shall be conducted in accordance with Section
107-22 [Sections] 7.210 and Subchapters D and F, Chapter 9, [9.301-9.318,
107-23 and 9.501-9.507 of the] Business & Commerce Code.
107-24 SECTION 2.36. Section 42.002(b), Property Code, is amended
107-25 to read as follows:
107-26 (b) Personal property, unless precluded from being
107-27 encumbered by other law, may be encumbered by a security interest
107-28 under Subchapter B, Chapter 9 [Section 9.203], Business & Commerce
107-29 Code, or Subchapter F, Chapter 501, Transportation Code, or by a
107-30 lien fixed by other law, and the security interest or lien may not
107-31 be avoided on the ground that the property is exempt under this
107-32 chapter.
107-33 SECTION 2.37. Sections 61.001(2) and (3), Property Code, are
107-34 amended to read as follows:
107-35 (2) "Mortgagee" means a secured party, as defined by
107-36 Section 9.102 [9.105], Business & Commerce Code, holding a lien on
107-37 a motor vehicle that has been perfected pursuant to Subchapter F,
107-38 Chapter 501, Transportation Code.
107-39 (3) "Mortgagor" means a debtor, as defined by Section
107-40 9.102 [9.105], Business & Commerce Code, giving a lien or agreeing
107-41 that a lien may be retained on a motor vehicle.
107-42 SECTION 2.38. Section 70.001(b), Property Code, is amended
107-43 to read as follows:
107-44 (b) If a worker relinquishes possession of a motor vehicle,
107-45 motorboat, vessel, or outboard motor in return for a check or money
107-46 order on which payment is stopped, has been dishonored because of
107-47 insufficient funds, no funds or because the drawer or maker of the
107-48 order has no account or the account upon which it was drawn has
107-49 been closed, the lien provided by this section continues to exist
107-50 and the worker is entitled to possession of the vehicle, motorboat,
107-51 vessel, or outboard motor until the amount due is paid, unless the
107-52 vehicle, motorboat, vessel, or outboard motor is possessed by a
107-53 person who became a bona fide purchaser of the vehicle after a stop
107-54 payment order was made. A person entitled to possession of
107-55 property under this subsection is entitled to take possession
107-56 thereof in accordance with the provisions of Section 9.609 [9.503],
107-57 Business & Commerce Code.
107-58 SECTION 2.39. Section 70.003(d)(1), Property Code, is
107-59 amended to read as follows:
107-60 (1) A cotton ginner to whom a cotton crop has been
107-61 delivered for processing or who, under an agreement, is to be paid
107-62 for harvesting a cotton crop has a lien on the cotton processed or
107-63 harvested for the amount of the charges for the processing or
107-64 harvesting. The lienholder is entitled to retain possession of the
107-65 cotton until the amount of the charge due under an agreement is
107-66 paid or, if an amount is not specified by agreement, the reasonable
107-67 and usual compensation is paid. If the cotton owner's address is
107-68 known and the amount of the charge is not paid before the 31st day
107-69 after the date the cotton ginner's work is completed or the date
108-1 payment is due under a written agreement, whichever is later, the
108-2 lienholder shall request the owner to pay the unpaid charge due and
108-3 shall notify the owner and any other person having a lien on the
108-4 cotton which is properly recorded under applicable law with the
108-5 secretary of state of the fact that unless payment is made not
108-6 later than the 15th day after the date the notice is received, the
108-7 lienholder is entitled to sell the cotton under any procedure
108-8 authorized by Section 9.610 [9.504], Business & Commerce Code. If
108-9 the cotton owner's address is not known and the amount of the
108-10 charge is not paid before the 61st day after the date the cotton
108-11 ginner's work is completed or the date payment is due under a
108-12 written agreement, whichever is later, the lienholder is entitled
108-13 to sell the cotton without notice at a commercially reasonable
108-14 sale. The proceeds of a sale under this subsection shall be
108-15 applied first to charges due under this subsection, and any
108-16 remainder shall be paid in appropriate proportion to:
108-17 (A) any other person having a lien on the cotton
108-18 which is properly recorded under applicable law with the secretary
108-19 of state; and
108-20 (B) the cotton owner.
108-21 SECTION 2.40. Section 70.005(c), Property Code, is amended
108-22 to read as follows:
108-23 (c) A person holding a lien under Section 70.003(a) on an
108-24 animal fed in confinement for slaughter may enforce that lien in
108-25 any manner authorized by Sections 9.610-9.619 [Section 9.504],
108-26 Business & Commerce Code.
108-27 SECTION 2.41. Section 70.302(b), Property Code, is amended
108-28 to read as follows:
108-29 (b) Except as provided by Subsection (c), if the holder of a
108-30 lien under this subchapter relinquishes possession of the aircraft
108-31 before the amount due is paid, the person may retake possession of
108-32 the aircraft as provided by Section 9.609 [9.503], Business &
108-33 Commerce Code.
108-34 SECTION 2.42. Section 501.002(9), Transportation Code, is
108-35 amended to read as follows:
108-36 (9) "Lien" means:
108-37 (A) a lien provided for by the constitution or
108-38 statute in a motor vehicle; or
108-39 (B) a security interest, as defined by Section
108-40 1.201, Business & Commerce Code, in a motor vehicle, other than an
108-41 absolute title, created by any written security agreement, as
108-42 defined by Section 9.102 [9.105], Business & Commerce Code,
108-43 including a lease, conditional sales contract, deed of trust,
108-44 chattel mortgage, trust receipt, or reservation of title.
108-45 SECTION 2.43. Section 4.053, Public Facility Corporation
108-46 Act (Article 717s, Revised Statutes), is amended to read as
108-47 follows:
108-48 Sec. 4.053. PERFECTION OF SECURITY INTEREST. A security
108-49 interest granted by a corporation as security for its bonds or a
108-50 credit agreement pledged as security for the obligations of the
108-51 corporation on the bonds or any credit agreement issued or entered
108-52 into in connection with the bonds is perfected until payment of the
108-53 bonds and the credit agreement, with the effect specified in
108-54 Chapter 9, Business & Commerce Code, when the bonds are registered
108-55 by the comptroller of public accounts and the proceedings
108-56 authorizing the bonds are filed with the comptroller, without any
108-57 further filing, notwithstanding Section 9.109(d) [9.104], Business
108-58 & Commerce Code.
108-59 SECTION 2.44. Sections 19(a)(1), (5), (10), and (12), Texas
108-60 Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
108-61 Civil Statutes), are amended to read as follows:
108-62 (1) "Debtor" has the same meaning as given it by
108-63 Section 9.102 [9.105(a)(4)], Business & Commerce Code.
108-64 (5) "Inventory" has the meaning given it by Section
108-65 9.102 [9.109(4)], Business & Commerce Code, as amended.
108-66 (10) "Secured party" has the meaning given it by
108-67 Section 9.102 [9.105(a)(13)], Business & Commerce Code.
108-68 (12) "Security agreement" has the meaning given it by
108-69 Section 9.102 [9.105(a)(12)], Business & Commerce Code.
109-1 SECTION 2.45. Section 19(n), Texas Manufactured Housing
109-2 Standards Act (Article 5221f, Vernon's Texas Civil Statutes), is
109-3 amended to read as follows:
109-4 (n) Notwithstanding any other provisions of this section,
109-5 the filing of a security agreement by a secured party perfecting a
109-6 lien in the inventory of a retailer may not prevent a buyer in the
109-7 ordinary course of business as defined by Sections 1.201(9) and
109-8 9.320(a), [9.307(a) of the] Business & Commerce Code, from
109-9 acquiring good title free and clear of such interest, and the
109-10 department may not consider such security interest as a lien for
109-11 the purpose of title issuance.
109-12 ARTICLE 3. EFFECTIVE DATE; TRANSITION; EMERGENCY
109-13 SECTION 3.01. EFFECTIVE DATE. This Act takes effect July 1,
109-14 2001.
109-15 SECTION 3.02. SAVING CLAUSE. (a) Except as otherwise
109-16 provided in this article, this Act applies to a transaction or lien
109-17 within its scope, even if the transaction or lien was entered into
109-18 or created before this Act takes effect.
109-19 (b) Except as otherwise provided in Subsection (c) of this
109-20 section and Sections 3.03-3.08 of this article:
109-21 (1) transactions and liens that were not governed by
109-22 Chapter 9, Business & Commerce Code, as it existed immediately
109-23 before the effective date of this Act, were validly entered into or
109-24 created before the effective date of this Act, and would be subject
109-25 to Chapter 9, Business & Commerce Code, as amended by this Act, if
109-26 they had been entered into or created on or after the effective
109-27 date of this Act, and the rights, duties, and interests flowing
109-28 from those transactions and liens remain valid on and after the
109-29 effective date of this Act; and
109-30 (2) the transactions and liens may be terminated,
109-31 completed, consummated, and enforced as required or permitted by
109-32 Chapter 9, Business & Commerce Code, as amended by this Act, or by
109-33 the law that otherwise would apply if this Act had not taken
109-34 effect.
109-35 (c) This Act does not affect an action, case, or proceeding
109-36 commenced before the effective date of this Act.
109-37 SECTION 3.03. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE
109-38 DATE. (a) A security interest that is enforceable immediately
109-39 before the effective date of this Act and would have priority over
109-40 the rights of a person that becomes a lien creditor at that time is
109-41 a perfected security interest under Chapter 9, Business & Commerce
109-42 Code, as amended by this Act, if, on the effective date of this
109-43 Act, the applicable requirements for enforceability and perfection
109-44 under Chapter 9, Business & Commerce Code, as amended by this Act,
109-45 are satisfied without further action.
109-46 (b) Except as otherwise provided in Section 3.05 of this
109-47 article, if, immediately before this Act takes effect, a security
109-48 interest is enforceable and would have priority over the rights of
109-49 a person that becomes a lien creditor at that time, but the
109-50 applicable requirements for enforceability or perfection under
109-51 Chapter 9, Business & Commerce Code, as amended by this Act, are
109-52 not satisfied when this Act takes effect, the security interest:
109-53 (1) is a perfected security interest until July 1,
109-54 2002;
109-55 (2) remains enforceable after June 30, 2002, only if
109-56 the security interest becomes enforceable under Section 9.203,
109-57 Business & Commerce Code, as amended by this Act, before July 1,
109-58 2002; and
109-59 (3) remains perfected after June 30, 2002, only if the
109-60 applicable requirements for perfection under Chapter 9, Business &
109-61 Commerce Code, as amended by this Act, are satisfied before July 1,
109-62 2002.
109-63 SECTION 3.04. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE
109-64 DATE. A security interest that is enforceable immediately before
109-65 this Act takes effect but that would be subordinate to the rights
109-66 of a person that becomes a lien creditor at that time:
109-67 (1) remains an enforceable security interest until
109-68 July 1, 2002;
109-69 (2) remains enforceable after June 30, 2002, if the
110-1 security interest becomes enforceable under Section 9.203, Business
110-2 & Commerce Code, as amended by this Act, before July 1, 2002; and
110-3 (3) becomes perfected:
110-4 (A) without further action, when this Act takes
110-5 effect, if the applicable requirements for perfection under Chapter
110-6 9, Business & Commerce Code, as amended by this Act, are satisfied
110-7 before or at that time; or
110-8 (B) when the applicable requirements for
110-9 perfection are satisfied if the requirements are satisfied after
110-10 this Act takes effect.
110-11 SECTION 3.05. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE
110-12 DATE. (a) If action, other than the filing of a financing
110-13 statement, is taken before this Act takes effect and the action
110-14 would have resulted in priority of a security interest over the
110-15 rights of a person that becomes a lien creditor had the security
110-16 interest become enforceable before this Act takes effect, the
110-17 action is effective to perfect a security interest that attaches
110-18 under Chapter 9, Business & Commerce Code, as amended by this Act,
110-19 within one year after the effective date of this Act. An attached
110-20 security interest becomes unperfected on July 1, 2002, unless the
110-21 security interest becomes a perfected security interest under
110-22 Chapter 9, Business & Commerce Code, as amended by this Act, before
110-23 that date.
110-24 (b) The filing of a financing statement before the effective
110-25 date of this Act is effective to perfect a security interest to the
110-26 extent the filing would satisfy the applicable requirements for
110-27 perfection under Chapter 9, Business & Commerce Code, as amended by
110-28 this Act.
110-29 (c) This Act does not render ineffective an effective
110-30 financing statement that, before the effective date of this Act, is
110-31 filed and satisfies the applicable requirements for perfection
110-32 under the law of the jurisdiction governing perfection as provided
110-33 in Section 9.103, Business & Commerce Code, as it existed
110-34 immediately before the effective date of this Act. However, except
110-35 as otherwise provided in Subsections (d) and (e) of this section
110-36 and Section 3.06 of this article, the financing statement ceases to
110-37 be effective at the earlier of:
110-38 (1) the time the financing statement would have ceased
110-39 to be effective under the law of the jurisdiction in which it is
110-40 filed; or
110-41 (2) June 30, 2006.
110-42 (d) The filing of a continuation statement after this Act
110-43 takes effect does not continue the effectiveness of the financing
110-44 statement filed before this Act takes effect. However, upon the
110-45 timely filing of a continuation statement after this Act takes
110-46 effect and in accordance with the law of the jurisdiction governing
110-47 perfection as provided in Subchapter C, Chapter 9, Business &
110-48 Commerce Code, as amended by this Act, the effectiveness of a
110-49 financing statement filed in the same office in that jurisdiction
110-50 before this Act takes effect continues for the period provided by
110-51 the law of that jurisdiction.
110-52 (e) Subsection (c)(2) of this section applies to a financing
110-53 statement that, before this Act takes effect, is filed against a
110-54 transmitting utility and satisfies the applicable requirements for
110-55 perfection under the law of the jurisdiction governing perfection
110-56 as provided in Section 9.103, as it existed immediately before the
110-57 effective date of this Act, only to the extent that Subchapter C,
110-58 Chapter 9, Business & Commerce Code, as amended by this Act,
110-59 provides that the law of a jurisdiction other than jurisdiction in
110-60 which the financing statement is filed governs perfection of a
110-61 security interest in collateral covered by the financing statement.
110-62 (f) A financing statement that includes a financing
110-63 statement filed before this Act takes effect and a continuation
110-64 statement filed after this Act takes effect is effective only to
110-65 the extent that it satisfies the requirements of Subchapter E,
110-66 Chapter 9, Business & Commerce Code, as amended by this Act, for an
110-67 initial financing statement.
110-68 SECTION 3.06. WHEN INITIAL FINANCING STATEMENT SUFFICES TO
110-69 CONTINUE EFFECTIVENESS OF FINANCING STATEMENT. (a) The filing of
111-1 an initial financing statement in the office specified in Section
111-2 9.501, Business & Commerce Code, as amended by this Act, continues
111-3 the effectiveness of a financing statement filed before this Act
111-4 takes effect if:
111-5 (1) the filing of an initial financing statement in
111-6 that office would be effective to perfect a security interest under
111-7 Chapter 9, Business & Commerce Code, as amended by this Act;
111-8 (2) the pre-effective-date financing statement was
111-9 filed in an office in another state or another office in this
111-10 state; and
111-11 (3) the initial financing statement satisfies
111-12 Subsection (c) of this section.
111-13 (b) The filing of an initial financing statement under
111-14 Subsection (a) of this section continues the effectiveness of the
111-15 pre-effective-date financing statement:
111-16 (1) if the initial financing statement is filed before
111-17 this Act takes effect, for the period provided in Section 9.403,
111-18 Business & Commerce Code, as it existed immediately before the
111-19 effective date of this Act, with respect to a financing statement;
111-20 and
111-21 (2) if the initial financing statement is filed after
111-22 this Act takes effect, for the period provided in Section 9.515,
111-23 Business & Commerce Code, as amended by this Act, with respect to
111-24 an initial financing statement.
111-25 (c) To be effective for purposes of Subsection (a) of this
111-26 section, an initial financing statement must:
111-27 (1) satisfy the requirements of Subchapter E, Chapter
111-28 9, Business & Commerce Code, as amended by this Act, for an initial
111-29 financing statement;
111-30 (2) identify the pre-effective-date financing
111-31 statement by indicating the office in which the financing statement
111-32 was filed and providing the dates of filing and file numbers, if
111-33 any, of the financing statement and of the most recent continuation
111-34 statement filed with respect to the financing statement; and
111-35 (3) indicate that the pre-effective-date financing
111-36 statement remains effective.
111-37 SECTION 3.07. PERSONS ENTITLED TO FILE INITIAL FINANCING
111-38 STATEMENT OR CONTINUATION STATEMENT. A person may file an initial
111-39 financing statement or a continuation statement under this article
111-40 if:
111-41 (1) the secured party of record authorizes the filing;
111-42 and
111-43 (2) the filing is necessary under this article:
111-44 (A) to continue the effectiveness of a financing
111-45 statement filed before this Act takes effect; or
111-46 (B) to perfect or continue the perfection of a
111-47 security interest.
111-48 SECTION 3.08. PRIORITY. (a) This Act determines the
111-49 priority of conflicting claims to collateral. However, if the
111-50 relative priorities of the claims were established before this Act
111-51 takes effect, Chapter 9, Business & Commerce Code, as it existed
111-52 before the effective date of this Act, determines priority.
111-53 (b) For purposes of Section 9.322(a), Business & Commerce
111-54 Code, as amended by this Act, the priority of a security interest
111-55 that becomes enforceable under Section 9.203, Business & Commerce
111-56 Code, as amended by this Act, dates from the time this Act takes
111-57 effect if the security interest is perfected under Chapter 9,
111-58 Business & Commerce Code, as amended by this Act, by the filing of
111-59 a financing statement before this Act takes effect that would not
111-60 have been effective to perfect the security interest under Chapter
111-61 9, Business & Commerce Code, as it existed immediately before the
111-62 effective date of this Act. This subsection does not apply to
111-63 conflicting security interests each of which is perfected by the
111-64 filing of such a financing statement.
111-65 SECTION 3.09. REPORT TO LEGISLATURE. The secretary of state
111-66 is required to file the initial report under Section 9.527,
111-67 Business & Commerce Code, as added by this Act, before January 1,
111-68 2003.
111-69 SECTION 3.10. EMERGENCY. The importance of this legislation
112-1 and the crowded condition of the calendars in both houses create an
112-2 emergency and an imperative public necessity that the
112-3 constitutional rule requiring bills to be read on three several
112-4 days in each house be suspended, and this rule is hereby suspended.
112-5 * * * * *