By: Carona S.B. No. 433
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the uniform law on secured transactions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subdivisions (11), (61), and (65), Subsection
1-5 (a), Section 9.102, Business & Commerce Code, as effective July 1,
1-6 2001, are amended to read as follows:
1-7 (11) "Chattel paper" means a record or records that
1-8 evidence both a monetary obligation and a security interest in
1-9 specific goods, a security interest in specific goods and software
1-10 used in the goods, a security interest in specific goods and
1-11 license of software used in the goods, [or] a lease of specific
1-12 goods, or a lease of specific goods and license of software used in
1-13 the goods. In this subdivision, "monetary obligation" means a
1-14 monetary obligation secured by the goods or owed under a lease of
1-15 the goods and includes a monetary obligation with respect to
1-16 software used in the goods. The term does not include (i) charters
1-17 or other contracts involving the use or hire of a vessel or (ii)
1-18 records that evidence a right to payment arising out of the use of
1-19 a credit or charge card or information contained on or for use with
1-20 the card. If a transaction is evidenced [both] by records that
1-21 include [a security agreement or lease and by] an instrument or
1-22 series of instruments, the group of records taken together
1-23 constitutes chattel paper.
1-24 (61) "Original debtor," except as used in Section
1-25 9.310(c), means a person that, as debtor, entered into a security
2-1 agreement to which a new debtor has become bound under Section
2-2 9.203(d).
2-3 (65) "Proceeds," except as used in Section 9.609(b),
2-4 means the following property:
2-5 (A) whatever is acquired upon the sale, lease,
2-6 license, exchange, or other disposition of collateral;
2-7 (B) whatever is collected on, or distributed on
2-8 account of, collateral;
2-9 (C) rights arising out of collateral;
2-10 (D) to the extent of the value of collateral,
2-11 claims arising out of the loss, nonconformity, or interference with
2-12 the use of, defects or infringement of rights in, or damage to the
2-13 collateral; or
2-14 (E) to the extent of the value of collateral and
2-15 to the extent payable to the debtor or the secured party, insurance
2-16 payable by reason of the loss or nonconformity of, defects or
2-17 infringement of rights in, or damage to the collateral.
2-18 SECTION 2. Subsection (a), Section 9.104, Business &
2-19 Commerce Code, as effective July 1, 2001, is amended to read as
2-20 follows:
2-21 (a) A secured party has control of a deposit account if:
2-22 (1) the secured party is the bank with which the
2-23 deposit account is maintained;
2-24 (2) the debtor, secured party, and bank have agreed in
2-25 an authenticated record that the bank will comply with instructions
2-26 originated by the secured party directing disposition of the funds
3-1 in the deposit account without further consent by the debtor; or
3-2 (3) the secured party becomes the bank's customer with
3-3 respect to the deposit account.
3-4 SECTION 3. Subsection (d), Section 9.210, Business &
3-5 Commerce Code, as effective July 1, 2001, is amended to read as
3-6 follows:
3-7 (d) A person that receives a request regarding a list of
3-8 collateral, claims no interest in the collateral when it receives
3-9 the request, and claimed an interest in the collateral at an
3-10 earlier time shall comply with the request within 14 days after
3-11 receipt by sending to the debtor an authenticated record:
3-12 (1) disclaiming any interest in the collateral; and
3-13 (2) if known to the recipient, providing the name and
3-14 mailing address of any assignee of or successor to the recipient's
3-15 [security] interest in the collateral.
3-16 SECTION 4. Subsection (d), Section 9.311, Business &
3-17 Commerce Code, as effective July 1, 2001, is amended to read as
3-18 follows:
3-19 (d) During any period in which collateral subject to a
3-20 statute specified in Subsection (a)(2) is inventory held for sale
3-21 or lease by a person or leased by that person as lessor and that
3-22 person is in the business of selling [or leasing] goods of that
3-23 kind, this section does not apply to a security interest in that
3-24 collateral created by that person [as debtor].
3-25 SECTION 5. The heading to Section 9.317, Business & Commerce
3-26 Code, as effective July 1, 2001, is amended to read as follows:
4-1 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
4-2 OF [UNPERFECTED] SECURITY INTEREST OR AGRICULTURAL LIEN.
4-3 SECTION 6. Subsection (a), Section 9.317, Business &
4-4 Commerce Code, as effective July 1, 2001, is amended to read as
4-5 follows:
4-6 (a) A [An unperfected] security interest or agricultural
4-7 lien is subordinate to the rights of:
4-8 (1) a person entitled to priority under Section 9.322;
4-9 and
4-10 (2) except as otherwise provided in Subsection (e), a
4-11 person that becomes a lien creditor before the earlier of the time:
4-12 (A) the security interest or agricultural lien
4-13 is perfected; or
4-14 (B) one of the conditions specified in Section
4-15 9.203(b)(3) is met and a financing statement covering the
4-16 collateral is filed.
4-17 SECTION 7. Subsection (b), Section 9.323, Business &
4-18 Commerce Code, as effective July 1, 2001, is amended to read as
4-19 follows:
4-20 (b) Except as otherwise provided in Subsection (c), a
4-21 security interest is subordinate to the rights of a person that
4-22 becomes a lien creditor [while the security interest is perfected
4-23 only] to the extent that the security interest [it] secures an
4-24 advance [advances] made more than 45 days after the person becomes
4-25 a lien creditor unless the advance is made:
4-26 (1) without knowledge of the lien; or
5-1 (2) pursuant to a commitment entered into without
5-2 knowledge of the lien.
5-3 SECTION 8. Subsection (b), Section 9.331, Business &
5-4 Commerce Code, as effective July 1, 2001, is amended to read as
5-5 follows:
5-6 (b) This chapter does not limit the rights of or impose
5-7 liability on a person to the extent that the person is protected
5-8 against the assertion of a [an adverse] claim under Chapter 8.
5-9 SECTION 9. Subsection (g), Section 9.334, Business &
5-10 Commerce Code, as effective July 1, 2001, is amended to read as
5-11 follows:
5-12 (g) The priority of the security interest under Subsection
5-13 (f)(2) [(f)] continues for a reasonable time if the debtor's right
5-14 to remove the goods as against the encumbrancer or owner
5-15 terminates.
5-16 SECTION 10. Subsection (f), Section 9.336, Business &
5-17 Commerce Code, as effective July 1, 2001, is amended to read as
5-18 follows:
5-19 (f) If more than one security interest attaches to the
5-20 product or mass under Subsection (c), the following rules determine
5-21 priority:
5-22 (1) A security interest that is perfected under
5-23 Subsection (d) has priority over a security interest that is
5-24 unperfected at the time the collateral becomes commingled goods.
5-25 (2) If more than one security interest is perfected
5-26 under Subsection (d), the security interests rank equally in
6-1 proportion to the value of the collateral at the time it became
6-2 commingled goods.
6-3 SECTION 11. Subsections (b), (d), and (f), Section 9.406,
6-4 Business & Commerce Code, as effective July 1, 2001, are amended to
6-5 read as follows:
6-6 (b) Subject to Subsection (h), notification is ineffective
6-7 under Subsection (a):
6-8 (1) if it does not reasonably identify the rights
6-9 assigned;
6-10 (2) to the extent that an agreement between an account
6-11 debtor and a seller of a payment intangible limits the account
6-12 debtor's duty to pay a person other than the seller and the
6-13 limitation is effective under law other than this chapter; or
6-14 (3) at the option of an account debtor, if the
6-15 notification notifies the account debtor to make less than the full
6-16 amount of any installment or other periodic payment to the
6-17 assignee, even if:
6-18 (A) only a portion of the account, chattel
6-19 paper, or payment [general] intangible has been assigned to that
6-20 assignee;
6-21 (B) a portion has been assigned to another
6-22 assignee; or
6-23 (C) the account debtor knows that the assignment
6-24 to that assignee is limited.
6-25 (d) Except as otherwise provided in Subsection (e) and
6-26 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
7-1 an agreement between an account debtor and an assignor or in a
7-2 promissory note is ineffective to the extent that it:
7-3 (1) prohibits, restricts, or requires the consent of
7-4 the account debtor or person obligated on the promissory note to
7-5 the assignment or transfer of, or the creation, attachment,
7-6 perfection, or enforcement of a security interest in, the account,
7-7 chattel paper, payment intangible, or promissory note; or
7-8 (2) provides that the assignment or transfer or the
7-9 creation, attachment, perfection, or enforcement of the security
7-10 interest may give rise to a default, breach, right of recoupment,
7-11 claim, defense, termination, right of termination, or remedy under
7-12 the account, chattel paper, payment intangible, or promissory note.
7-13 (f) Except as otherwise provided in Sections 2A.303 and
7-14 9.407, and subject to Subsections (h) and (i), a rule of law,
7-15 statute, or regulation that prohibits, restricts, or requires the
7-16 consent of a government, governmental body or official, or account
7-17 debtor to the assignment or transfer of, or creation of a security
7-18 interest in, an account or chattel paper is ineffective to the
7-19 extent that the rule of law, statute, or regulation:
7-20 (1) prohibits, restricts, or requires the consent of
7-21 the government, governmental body or official, or account debtor to
7-22 the assignment or transfer of, or the creation, attachment,
7-23 perfection, or enforcement of a security interest in, the account
7-24 or chattel paper; or
7-25 (2) provides that the assignment or transfer or the
7-26 creation, attachment, perfection, or enforcement of the security
8-1 interest may give rise to a default, breach, right of recoupment,
8-2 claim, defense, termination, right of termination, or remedy under
8-3 the account or chattel paper.
8-4 SECTION 12. Subsection (a), Section 9.407, Business &
8-5 Commerce Code, as effective July 1, 2001, is amended to read as
8-6 follows:
8-7 (a) Except as otherwise provided in Subsection (b), a term
8-8 in a lease agreement is ineffective to the extent that it:
8-9 (1) prohibits, restricts, or requires the consent of a
8-10 party to the lease to the assignment or transfer of, or the
8-11 creation, attachment, perfection, or enforcement of a security
8-12 interest in, an interest of a party under the lease contract or in
8-13 the lessor's residual interest in the goods; or
8-14 (2) provides that the assignment or transfer or the
8-15 creation, attachment, perfection, or enforcement of the security
8-16 interest may give rise to a default, breach, right of recoupment,
8-17 claim, defense, termination, right of termination, or remedy under
8-18 the lease.
8-19 SECTION 13. Subsections (a) and (c), Section 9.408, Business
8-20 & Commerce Code, as effective July 1, 2001, are amended to read as
8-21 follows:
8-22 (a) Except as otherwise provided in Subsection (b), a term
8-23 in a promissory note or in an agreement between an account debtor
8-24 and a debtor that relates to a health-care-insurance receivable or
8-25 a general intangible, including a contract, permit, license, or
8-26 franchise, and which term prohibits, restricts, or requires the
9-1 consent of the person obligated on the promissory note or the
9-2 account debtor to, the assignment or transfer of, or creation,
9-3 attachment, or perfection of a security interest in, the promissory
9-4 note, health-care-insurance receivable, or general intangible, is
9-5 ineffective to the extent that the term:
9-6 (1) would impair the creation, attachment, or
9-7 perfection of a security interest; or
9-8 (2) provides that the assignment or transfer or the
9-9 creation, attachment, or perfection of the security interest may
9-10 give rise to a default, breach, right of recoupment, claim,
9-11 defense, termination, right of termination, or remedy under the
9-12 promissory note, health-care-insurance receivable, or general
9-13 intangible.
9-14 (c) A rule of law, statute, or regulation that prohibits,
9-15 restricts, or requires the consent of a government, governmental
9-16 body or official, person obligated on a promissory note, or account
9-17 debtor to the assignment or transfer of, or creation of a security
9-18 interest in, a promissory note, health-care-insurance receivable,
9-19 or general intangible, including a contract, permit, license, or
9-20 franchise between an account debtor and a debtor, is ineffective to
9-21 the extent that the rule of law, statute, or regulation:
9-22 (1) would impair the creation, attachment, or
9-23 perfection of a security interest; or
9-24 (2) provides that the assignment or transfer or the
9-25 creation, attachment, or perfection of the security interest may
9-26 give rise to a default, breach, right of recoupment, claim,
10-1 defense, termination, right of termination, or remedy under the
10-2 promissory note, health-care-insurance receivable, or general
10-3 intangible.
10-4 SECTION 14. Subsection (a), Section 9.409, Business &
10-5 Commerce Code, as effective July 1, 2001, is amended to read as
10-6 follows:
10-7 (a) A term in a letter of credit or a rule of law, statute,
10-8 regulation, custom, or practice applicable to the letter of credit
10-9 that prohibits, restricts, or requires the consent of an applicant,
10-10 issuer, or nominated person to a beneficiary's assignment of or
10-11 creation of a security interest in a letter-of-credit right is
10-12 ineffective to the extent that the term or rule of law, statute,
10-13 regulation, custom, or practice:
10-14 (1) would impair the creation, attachment, or
10-15 perfection of a security interest in the letter-of-credit right; or
10-16 (2) provides that the assignment or the creation,
10-17 attachment, or perfection of the security interest may give rise to
10-18 a default, breach, right of recoupment, claim, defense,
10-19 termination, right of termination, or remedy under the
10-20 letter-of-credit right.
10-21 SECTION 15. Section 9.504, Business & Commerce Code, as
10-22 effective July 1, 2001, is amended to read as follows:
10-23 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
10-24 sufficiently indicates the collateral that it covers [only] if the
10-25 financing statement provides:
10-26 (1) a description of the collateral pursuant to
11-1 Section 9.108; or
11-2 (2) an indication that the financing statement covers
11-3 all assets or all personal property.
11-4 SECTION 16. Subsection (a), Section 9.509, Business &
11-5 Commerce Code, as effective July 1, 2001, is amended to read as
11-6 follows:
11-7 (a) A person may file an initial financing statement,
11-8 amendment that adds collateral covered by a financing statement, or
11-9 amendment that adds a debtor to a financing statement only if:
11-10 (1) the debtor authorizes the filing in an
11-11 authenticated record or pursuant to Subsection (b) or (c); or
11-12 (2) the person holds an agricultural lien that has
11-13 become effective at the time of filing and the financing statement
11-14 covers only collateral in which the person holds an agricultural
11-15 lien.
11-16 SECTION 17. Subsection (d), Section 9.513, Business &
11-17 Commerce Code, as effective July 1, 2001, is amended to read as
11-18 follows:
11-19 (d) Except as otherwise provided in Section 9.510, upon the
11-20 filing of a termination statement with the filing office, the
11-21 financing statement to which the termination statement relates
11-22 ceases to be effective. Except as otherwise provided in Section
11-23 9.510, for purposes of Sections 9.519(g), 9.522(a), and 9.523(c),
11-24 the filing with the filing office of a termination statement
11-25 relating to a financing statement that indicates that the debtor is
11-26 a transmitting utility also causes the effectiveness of the
12-1 financing statement to lapse.
12-2 SECTION 18. Subsections (a) and (b), Section 9.525, Business
12-3 & Commerce Code, as effective July 1, 2001, are amended to read as
12-4 follows:
12-5 (a) Except as otherwise provided in Subsections (e) and (f),
12-6 the fee for filing and indexing a record under this subchapter,
12-7 other than an initial financing statement of the kind described in
12-8 Subsection (b) [Section 9.502(c)], is:
12-9 (1) $15 if the record is communicated in writing and
12-10 consists of one or two pages;
12-11 (2) $30 if the record is communicated in writing and
12-12 consists of more than two pages; and
12-13 (3) $5 if the record is communicated by another medium
12-14 authorized by filing-office rule.
12-15 (b) Except as otherwise provided in Subsection (e), the fee
12-16 for filing and indexing an initial financing statement of the
12-17 following kinds [kind described in Section 9.502(c)] is:
12-18 (1) $60 if the financing statement indicates that it
12-19 is filed in connection with a public-finance transaction; and
12-20 (2) $60 if the financing statement indicates that it
12-21 is filed in connection with a manufactured-home transaction.
12-22 SECTION 19. Subsection (a), Section 9.608, Business &
12-23 Commerce Code, as effective July 1, 2001, is amended to read as
12-24 follows:
12-25 (a) If a security interest or agricultural lien secures
12-26 payment or performance of an obligation, the following rules apply:
13-1 (1) A secured party shall apply or pay over for
13-2 application the cash proceeds of collection or enforcement under
13-3 Section 9.607 [this section] in the following order to:
13-4 (A) the reasonable expenses of collection and
13-5 enforcement and, to the extent provided for by agreement and not
13-6 prohibited by law, reasonable attorney's fees and legal expenses
13-7 incurred by the secured party;
13-8 (B) the satisfaction of obligations secured by
13-9 the security interest or agricultural lien under which the
13-10 collection or enforcement is made; and
13-11 (C) the satisfaction of obligations secured by
13-12 any subordinate security interest in or other lien on the
13-13 collateral subject to the security interest or agricultural lien
13-14 under which the collection or enforcement is made if the secured
13-15 party receives an authenticated demand for proceeds before
13-16 distribution of the proceeds is completed.
13-17 (2) If requested by a secured party, a holder of a
13-18 subordinate security interest or other lien shall furnish
13-19 reasonable proof of the interest or lien within a reasonable time.
13-20 Unless the holder complies, the secured party need not comply with
13-21 the holder's demand under Subdivision (1)(C).
13-22 (3) A secured party need not apply or pay over for
13-23 application noncash proceeds of collection and enforcement under
13-24 Section 9.607 [this section] unless the failure to do so would be
13-25 commercially unreasonable. A secured party that applies or pays
13-26 over for application noncash proceeds shall do so in a commercially
14-1 reasonable manner.
14-2 (4) A secured party shall account to and pay a debtor
14-3 for any surplus, and the obligor is liable for any deficiency.
14-4 SECTION 20. Section 9.613, Business & Commerce Code, as
14-5 effective July 1, 2001, is amended to read as follows:
14-6 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
14-7 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
14-8 transaction, the following rules apply:
14-9 (1) The contents of a notification of disposition are
14-10 sufficient if the notification:
14-11 (A) describes the debtor and the secured party;
14-12 (B) describes the collateral that is the subject
14-13 of the intended disposition;
14-14 (C) states the method of intended disposition;
14-15 (D) states that the debtor is entitled to an
14-16 accounting of the unpaid indebtedness and states the charge, if
14-17 any, for an accounting; and
14-18 (E) states the time and place of a public
14-19 disposition [sale] or the time after which any other disposition is
14-20 to be made.
14-21 (2) Whether the contents of a notification that lacks
14-22 any of the information specified in Subdivision (1) are
14-23 nevertheless sufficient is a question of fact.
14-24 (3) The contents of a notification providing
14-25 substantially the information specified in Subdivision (1) are
14-26 sufficient, even if the notification includes:
15-1 (A) information not specified by that
15-2 subdivision; or
15-3 (B) minor errors that are not seriously
15-4 misleading.
15-5 (4) A particular phrasing of the notification is not
15-6 required.
15-7 (5) The following form of notification and the form
15-8 appearing in Section 9.614(3), when completed, each provide
15-9 sufficient information:
15-10 NOTIFICATION OF DISPOSITION OF COLLATERAL
15-11 To: _________________________________ (Name of
15-12 debtor, obligor, or other person to which the
15-13 notification is sent)
15-14 From: __________ (Name, address, and telephone
15-15 number of secured party)
15-16 Name of Debtor(s): __________ (Include only if
15-17 debtor(s) are not an addressee)
15-18 (For a public disposition:)
15-19 We will sell (or lease or license, as applicable)
15-20 the (describe collateral) (to the highest qualified
15-21 bidder) in public as follows:
15-22 Day and Date:__________________________________
15-23 Time:__________________________________________
15-24 Place:_________________________________________
15-25 (For a private disposition:)
16-1 We will sell (or lease or license, as applicable)
16-2 the ___________________ (describe collateral) privately
16-3 sometime after _____________ (day and date).
16-4 You are entitled to an accounting of the unpaid
16-5 indebtedness secured by the property that we intend to
16-6 sell (or lease or license, as applicable) (for a charge
16-7 of $______). You may request an accounting by calling
16-8 us at _________ (telephone number).
16-9 SECTION 21. Subsections (a) and (c), Section 9.615, Business
16-10 & Commerce Code, as effective July 1, 2001, are amended to read as
16-11 follows:
16-12 (a) A secured party shall apply or pay over for application
16-13 the cash proceeds of disposition under Section 9.610 in the
16-14 following order to:
16-15 (1) the reasonable expenses of retaking, holding,
16-16 preparing for disposition, processing, and disposing and, to the
16-17 extent provided for by agreement and not prohibited by law,
16-18 reasonable attorney's fees and legal expenses incurred by the
16-19 secured party;
16-20 (2) the satisfaction of obligations secured by the
16-21 security interest or agricultural lien under which the disposition
16-22 is made;
16-23 (3) the satisfaction of obligations secured by any
16-24 subordinate security interest in or other subordinate lien on the
16-25 collateral if:
16-26 (A) the secured party receives from the holder
17-1 of the subordinate security interest or other lien an authenticated
17-2 demand for proceeds before distribution of the proceeds is
17-3 completed; and
17-4 (B) in a case in which a consignor has an
17-5 interest in the collateral, the subordinate security interest or
17-6 other lien is senior to the interest of the consignor; and
17-7 (4) a secured party that is a consignor of the
17-8 collateral if the secured party receives from the consignor an
17-9 authenticated demand for proceeds before distribution of the
17-10 proceeds is completed.
17-11 (c) A secured party need not apply or pay over for
17-12 application noncash proceeds of disposition under Section 9.610
17-13 [this section] unless the failure to do so would be commercially
17-14 unreasonable. A secured party that applies or pays over for
17-15 application noncash proceeds shall do so in a commercially
17-16 reasonable manner.
17-17 SECTION 22. Subsections (b) and (g), Section 9.625, Business
17-18 & Commerce Code, as effective July 1, 2001, are amended to read as
17-19 follows:
17-20 (b) Subject to Subsections (c), (d), and (f), a person is
17-21 liable for damages in the amount of any loss caused by a failure to
17-22 comply with this chapter. Loss caused by a failure to comply [with
17-23 a request under Section 9.210] may include loss resulting from the
17-24 debtor's inability to obtain, or increased costs of, alternative
17-25 financing.
17-26 (g) If a secured party fails to comply with a request
18-1 regarding a list of collateral or a statement of account under
18-2 Section 9.210, the secured party may claim a security interest only
18-3 as shown in the list or statement included in the request as
18-4 against a person that is reasonably misled by the failure.
18-5 SECTION 23. (a) Sections 3.02 through 3.08, Chapter 414,
18-6 Acts of the 76th Legislature, Regular Session, 1999, are reenacted
18-7 as Subchapter G, Chapter 9, Business & Commerce Code, and amended
18-8 to read as follows:
18-9 SUBCHAPTER G. TRANSITION PROVISIONS
18-10 Sec. 9.701. EFFECTIVE DATE OF REVISIONS. (a) In this
18-11 subchapter, "revision" means the revision of this chapter enacted
18-12 by the 76th Legislature, Regular Session, 1999.
18-13 (b) The revision takes effect July 1, 2001.
18-14 Sec. 9.702. [SECTION 3.02.] SAVING CLAUSE. (a) Except as
18-15 otherwise provided in this subchapter [article], this chapter, as
18-16 revised, [Act] applies to a transaction or lien within its scope,
18-17 even if the transaction or lien was entered into or created before
18-18 the revision [this Act] takes effect.
18-19 (b) Except as otherwise provided in Subsection (c) [of this
18-20 section] and Sections 9.703-9.709 [3.03-3.08 of this article]:
18-21 (1) transactions and liens that were not governed by
18-22 this chapter [Chapter 9, Business & Commerce Code], as it existed
18-23 immediately before the effective date of the revision [this Act],
18-24 were validly entered into or created before the effective date of
18-25 the revision [this Act], and would be subject to this chapter
18-26 [Chapter 9, Business & Commerce Code], as revised [amended by this
19-1 Act], if they had been entered into or created on or after the
19-2 effective date of the revision [this Act], and the rights, duties,
19-3 and interests flowing from those transactions and liens remain
19-4 valid on and after the effective date of the revision [this Act];
19-5 and
19-6 (2) the transactions and liens may be terminated,
19-7 completed, consummated, and enforced as required or permitted by
19-8 this chapter [Chapter 9, Business & Commerce Code], as revised
19-9 [amended by this Act], or by the law that otherwise would apply if
19-10 the revision [this Act] had not taken effect.
19-11 (c) The revision [This Act] does not affect an action, case,
19-12 or proceeding commenced before the effective date of the revision
19-13 [this Act].
19-14 Sec. 9.703. [SECTION 3.03.] SECURITY INTEREST PERFECTED
19-15 BEFORE EFFECTIVE DATE. (a) A security interest that is
19-16 enforceable immediately before the effective date of the revision
19-17 [this Act] and would have priority over the rights of a person that
19-18 becomes a lien creditor at that time is a perfected security
19-19 interest under this chapter [Chapter 9, Business & Commerce Code],
19-20 as revised [amended by this Act], if, on the effective date of the
19-21 revision [this Act], the applicable requirements for enforceability
19-22 and perfection under this chapter [Chapter 9, Business & Commerce
19-23 Code], as revised [amended by this Act], are satisfied without
19-24 further action.
19-25 (b) Except as otherwise provided in Section 9.705 [3.05 of
19-26 this article], if, immediately before the revision [this Act] takes
20-1 effect, a security interest is enforceable and would have priority
20-2 over the rights of a person that becomes a lien creditor at that
20-3 time, but the applicable requirements for enforceability or
20-4 perfection under this chapter [Chapter 9, Business & Commerce
20-5 Code], as revised [amended by this Act], are not satisfied when the
20-6 revision [this Act] takes effect, the security interest:
20-7 (1) is a perfected security interest until July 1,
20-8 2002;
20-9 (2) remains enforceable after June 30, 2002, only if
20-10 the security interest becomes enforceable under Section 9.203,
20-11 [Business & Commerce Code,] as revised [amended by this Act],
20-12 before July 1, 2002; and
20-13 (3) remains perfected after June 30, 2002, only if the
20-14 applicable requirements for perfection under this chapter [Chapter
20-15 9, Business & Commerce Code], as revised [amended by this Act], are
20-16 satisfied before July 1, 2002.
20-17 Sec. 9.704. [SECTION 3.04.] SECURITY INTEREST UNPERFECTED
20-18 BEFORE EFFECTIVE DATE. A security interest that is enforceable
20-19 immediately before the revision [this Act] takes effect but that
20-20 would be subordinate to the rights of a person that becomes a lien
20-21 creditor at that time:
20-22 (1) remains an enforceable security interest until
20-23 July 1, 2002;
20-24 (2) remains enforceable after June 30, 2002, if the
20-25 security interest becomes enforceable under Section 9.203,
20-26 [Business & Commerce Code,] as revised [amended by this Act],
21-1 before July 1, 2002; and
21-2 (3) becomes perfected:
21-3 (A) without further action, when the revision
21-4 [this Act] takes effect, if the applicable requirements for
21-5 perfection under this chapter [Chapter 9, Business & Commerce
21-6 Code], as revised [amended by this Act], are satisfied before or at
21-7 that time; or
21-8 (B) when the applicable requirements for
21-9 perfection are satisfied if the requirements are satisfied after
21-10 the revision [this Act] takes effect.
21-11 Sec. 9.705. [SECTION 3.05.] EFFECTIVENESS OF ACTION TAKEN
21-12 BEFORE EFFECTIVE DATE. (a) If action, other than the filing of a
21-13 financing statement, is taken before the revision [this Act] takes
21-14 effect and the action would have resulted in priority of a security
21-15 interest over the rights of a person that becomes a lien creditor
21-16 had the security interest become enforceable before the revision
21-17 [this Act] takes effect, the action is effective to perfect a
21-18 security interest that attaches under this chapter [Chapter 9,
21-19 Business & Commerce Code], as revised [amended by this Act], within
21-20 one year after the effective date of the revision [this Act]. An
21-21 attached security interest becomes unperfected on July 1, 2002,
21-22 unless the security interest becomes a perfected security interest
21-23 under this chapter [Chapter 9, Business & Commerce Code], as
21-24 revised [amended by this Act], before that date.
21-25 (b) The filing of a financing statement before the effective
21-26 date of the revision [this Act] is effective to perfect a security
22-1 interest to the extent the filing would satisfy the applicable
22-2 requirements for perfection under this chapter [Chapter 9, Business
22-3 & Commerce Code], as revised [amended by this Act].
22-4 (c) The revision [This Act] does not render ineffective an
22-5 effective financing statement that, before the effective date of
22-6 the revision [this Act], is filed and satisfies the applicable
22-7 requirements for perfection under the law of the jurisdiction
22-8 governing perfection as provided in Section 9.103, [Business &
22-9 Commerce Code,] as it existed immediately before the effective date
22-10 of the revision [this Act]. However, except as otherwise provided
22-11 in Subsections (d) and (e) [of this section] and Section 9.706
22-12 [3.06 of this article], the financing statement ceases to be
22-13 effective at the earlier of:
22-14 (1) the time the financing statement would have ceased
22-15 to be effective under the law of the jurisdiction in which it is
22-16 filed; or
22-17 (2) June 30, 2006.
22-18 (d) The filing of a continuation statement after the
22-19 revision [this Act] takes effect does not continue the
22-20 effectiveness of the financing statement filed before the revision
22-21 [this Act] takes effect. However, upon the timely filing of a
22-22 continuation statement after the revision [this Act] takes effect
22-23 and in accordance with the law of the jurisdiction governing
22-24 perfection as provided in Subchapter C, [Chapter 9, Business &
22-25 Commerce Code,] as revised [amended by this Act], the effectiveness
22-26 of a financing statement filed in the same office in that
23-1 jurisdiction before the revision [this Act] takes effect continues
23-2 for the period provided by the law of that jurisdiction.
23-3 (e) Subsection (c)(2) [of this section] applies to a
23-4 financing statement that, before the revision [this Act] takes
23-5 effect, is filed against a transmitting utility and satisfies the
23-6 applicable requirements for perfection under the law of the
23-7 jurisdiction governing perfection as provided in Section 9.103, as
23-8 it existed immediately before the effective date of the revision
23-9 [this Act], only to the extent that Subchapter C, [Chapter 9,
23-10 Business & Commerce Code,] as revised [amended by this Act],
23-11 provides that the law of a jurisdiction other than the jurisdiction
23-12 in which the financing statement is filed governs perfection of a
23-13 security interest in collateral covered by the financing statement.
23-14 (f) A financing statement that includes a financing
23-15 statement filed before the revision [this Act] takes effect and a
23-16 continuation statement filed after the revision [this Act] takes
23-17 effect is effective only to the extent that it satisfies the
23-18 requirements of Subchapter E, [Chapter 9, Business & Commerce
23-19 Code,] as revised [amended by this Act], for an initial financing
23-20 statement.
23-21 Sec. 9.706. [SECTION 3.06.] WHEN INITIAL FINANCING
23-22 STATEMENT SUFFICES TO CONTINUE EFFECTIVENESS OF FINANCING
23-23 STATEMENT. (a) The filing of an initial financing statement in
23-24 the office specified in Section 9.501, [Business & Commerce Code,]
23-25 as revised [amended by this Act], continues the effectiveness of a
23-26 financing statement filed before the revision [this Act] takes
24-1 effect if:
24-2 (1) the filing of an initial financing statement in
24-3 that office would be effective to perfect a security interest under
24-4 this chapter [Chapter 9, Business & Commerce Code], as revised
24-5 [amended by this Act];
24-6 (2) the pre-effective-date financing statement was
24-7 filed in an office in another state or another office in this
24-8 state; and
24-9 (3) the initial financing statement satisfies
24-10 Subsection (c) [of this section].
24-11 (b) The filing of an initial financing statement under
24-12 Subsection (a) [of this section] continues the effectiveness of the
24-13 pre-effective-date financing statement:
24-14 (1) if the initial financing statement is filed before
24-15 the revision [this Act] takes effect, for the period provided in
24-16 Section 9.403, [Business & Commerce Code,] as it existed
24-17 immediately before the effective date of the revision [this Act],
24-18 with respect to a financing statement; and
24-19 (2) if the initial financing statement is filed after
24-20 the revision [this Act] takes effect, for the period provided in
24-21 Section 9.515, [Business & Commerce Code,] as revised [amended by
24-22 this Act], with respect to an initial financing statement.
24-23 (c) To be effective for purposes of Subsection (a) [of this
24-24 section], an initial financing statement must:
24-25 (1) satisfy the requirements of Subchapter E, [Chapter
24-26 9, Business & Commerce Code,] as revised [amended by this Act], for
25-1 an initial financing statement;
25-2 (2) identify the pre-effective-date financing
25-3 statement by indicating the office in which the financing statement
25-4 was filed and providing the dates of filing and file numbers, if
25-5 any, of the financing statement and of the most recent continuation
25-6 statement filed with respect to the financing statement; and
25-7 (3) indicate that the pre-effective-date financing
25-8 statement remains effective.
25-9 Sec. 9.707. AMENDMENT OF PRE-EFFECTIVE-DATE FINANCING
25-10 STATEMENT. (a) In this section, "pre-effective-date financing
25-11 statement" means a financing statement filed before the revision
25-12 takes effect.
25-13 (b) After the revision takes effect, a person may add or
25-14 delete collateral covered by, continue or terminate the
25-15 effectiveness of, or otherwise amend the information provided in a
25-16 pre-effective-date financing statement only in accordance with the
25-17 law of the jurisdiction governing perfection as provided in
25-18 Subchapter C. However, the effectiveness of a pre-effective-date
25-19 financing statement also may be terminated in accordance with the
25-20 law of the jurisdiction in which the financing statement is filed.
25-21 (c) Except as otherwise provided in Subsection (d), if the
25-22 law of this state governs perfection of a security interest, the
25-23 information in a pre-effective-date financing statement may be
25-24 amended after the revision takes effect only if:
25-25 (1) the pre-effective-date financing statement and an
25-26 amendment are filed in the office specified in Section 9.501;
26-1 (2) an amendment is filed in the office specified in
26-2 Section 9.501 concurrently with, or after the filing in that office
26-3 of, an initial financing statement that satisfies Section 9.706(c);
26-4 or
26-5 (3) an initial financing statement that provides the
26-6 information as amended and satisfies Section 9.706(c) is filed in
26-7 the office specified in Section 9.501.
26-8 (d) If the law of this state governs perfection of a
26-9 security interest, the effectiveness of a pre-effective-date
26-10 financing statement may be continued only under Sections 9.705(d)
26-11 and (f) or Section 9.706.
26-12 (e) Whether or not the law of this state governs perfection
26-13 of a security interest, the effectiveness of a pre-effective-date
26-14 financing statement filed in this state may be terminated after the
26-15 revision takes effect by filing a termination statement in the
26-16 office in which the pre-effective-date financing statement is
26-17 filed, unless an initial financing statement that satisfies Section
26-18 9.706(c) has been filed in the office specified by the law of the
26-19 jurisdiction governing perfection as provided in Subchapter C as
26-20 the office in which to file a financing statement.
26-21 Sec. 9.708. [SECTION 3.07.] PERSONS ENTITLED TO FILE
26-22 INITIAL FINANCING STATEMENT OR CONTINUATION STATEMENT. A person
26-23 may file an initial financing statement or a continuation statement
26-24 under this subchapter [article] if:
26-25 (1) the secured party of record authorizes the filing;
26-26 and
27-1 (2) the filing is necessary under this subchapter
27-2 [article]:
27-3 (A) to continue the effectiveness of a financing
27-4 statement filed before the revision [this Act] takes effect; or
27-5 (B) to perfect or continue the perfection of a
27-6 security interest.
27-7 Sec. 9.709. [SECTION 3.08.] PRIORITY. (a) This chapter,
27-8 as revised, [Act] determines the priority of conflicting claims to
27-9 collateral. However, if the relative priorities of the claims were
27-10 established before the revision [this Act] takes effect, this
27-11 chapter [Chapter 9, Business & Commerce Code], as it existed before
27-12 the effective date of the revision [this Act], determines priority.
27-13 (b) For purposes of Section 9.322(a), [Business & Commerce
27-14 Code,] as revised [amended by this Act], the priority of a security
27-15 interest that becomes enforceable under Section 9.203, [Business &
27-16 Commerce Code,] as revised [amended by this Act], dates from the
27-17 time the revision [this Act] takes effect if the security interest
27-18 is perfected under this chapter [Chapter 9, Business & Commerce
27-19 Code], as revised [amended by this Act], by the filing of a
27-20 financing statement before the revision [this Act] takes effect
27-21 that would not have been effective to perfect the security interest
27-22 under this chapter [Chapter 9, Business & Commerce Code], as it
27-23 existed immediately before the effective date of the revision [this
27-24 Act]. This subsection does not apply to conflicting security
27-25 interests each of which is perfected by the filing of such a
27-26 financing statement.
28-1 (b) Section 3.01, Chapter 414, Acts of the 76th Legislature,
28-2 Regular Session, 1999, is repealed.
28-3 SECTION 24. Subsection (b), Section 1.105, Business &
28-4 Commerce Code, as effective July 1, 2001, is amended to read as
28-5 follows:
28-6 (b) Where one of the following provisions of this title
28-7 specifies the applicable law, that provision governs and a contrary
28-8 agreement is effective only to the extent permitted by the law
28-9 (including the conflict of laws rules) so specified:
28-10 Rights of creditors against sold goods. Section 2.402.
28-11 Applicability of the chapter on Leases. Sections
28-12 2A.105 and 2A.106.
28-13 Applicability of the chapter on Bank Deposits and
28-14 Collections. Section 4.102.
28-15 Governing law in the chapter on Funds Transfers.
28-16 Section 4A.507.
28-17 Letters of Credit. Section 5.116.
28-18 Applicability of the chapter on Investment Securities.
28-19 Section 8.110.
28-20 Law governing perfection, the effect of perfection or
28-21 nonperfection, and the priority of security interests and
28-22 agricultural liens. Sections 9.301-9.307.
28-23 SECTION 25. Nothing in Chapter 9, Business & Commerce Code,
28-24 as effective July 1, 2001, preempts or otherwise affects any
28-25 limitation or prohibition provided by another law of this state
28-26 against assignment of a claim or right to receive:
29-1 (1) compensation for injuries or sickness as described
29-2 in 26 U.S.C. Section 104(a)(1) or (2), as amended; or
29-3 (2) benefits under a special needs trust as described
29-4 in 42 U.S.C. Section 1396p(d)(4), as amended.
29-5 SECTION 26. This Act takes effect immediately if it receives
29-6 a vote of two-thirds of all the members elected to each house, as
29-7 provided by Section 39, Article III, Texas Constitution. If this
29-8 Act does not receive the vote necessary for immediate effect, this
29-9 Act takes effect September 1, 2001.