By Carona S.B. No. 433
77R5079 LJR-F
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. Sections 9.102(a)(11), (61), and (65), Business &
1-5 Commerce Code, as effective July 1, 2001, are amended to read as
1-6 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
2-1 9.310(c), means a person that, as debtor, entered into a security
2-2 agreement to which a new debtor has become bound under Section
2-3 9.203(d).
2-4 (65) "Proceeds," except as used in Section 9.609(b),
2-5 means the following property:
2-6 (A) whatever is acquired upon the sale, lease,
2-7 license, exchange, or other disposition of collateral;
2-8 (B) whatever is collected on, or distributed on
2-9 account of, collateral;
2-10 (C) rights arising out of collateral;
2-11 (D) to the extent of the value of collateral,
2-12 claims arising out of the loss, nonconformity, or interference with
2-13 the use of, defects or infringement of rights in, or damage to the
2-14 collateral; or
2-15 (E) to the extent of the value of collateral and
2-16 to the extent payable to the debtor or the secured party, insurance
2-17 payable by reason of the loss or nonconformity of, defects or
2-18 infringement of rights in, or damage to the collateral.
2-19 SECTION 2. Section 9.104(a), Business & Commerce Code, as
2-20 effective July 1, 2001, is amended to read as 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
2-27 in the deposit account without further consent by the debtor; or
3-1 (3) the secured party becomes the bank's customer with
3-2 respect to the deposit account.
3-3 SECTION 3. Section 9.210(d), Business & Commerce Code, as
3-4 effective July 1, 2001, is amended to read as follows:
3-5 (d) A person that receives a request regarding a list of
3-6 collateral, claims no interest in the collateral when it receives
3-7 the request, and claimed an interest in the collateral at an
3-8 earlier time shall comply with the request within 14 days after
3-9 receipt by sending to the debtor an authenticated record:
3-10 (1) disclaiming any interest in the collateral; and
3-11 (2) if known to the recipient, providing the name and
3-12 mailing address of any assignee of or successor to the recipient's
3-13 [security] interest in the collateral.
3-14 SECTION 4. Section 9.311(d), Business & Commerce Code, as
3-15 effective July 1, 2001, is amended to read as follows:
3-16 (d) During any period in which collateral subject to a
3-17 statute specified in Subsection (a)(2) is inventory held for sale
3-18 or lease by a person or leased by that person as lessor and that
3-19 person is in the business of selling [or leasing] goods of that
3-20 kind, this section does not apply to a security interest in that
3-21 collateral created by that person [as debtor].
3-22 SECTION 5. The heading to Section 9.317, Business & Commerce
3-23 Code, as effective July 1, 2001, is amended to read as follows:
3-24 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
3-25 OF [UNPERFECTED] SECURITY INTEREST OR AGRICULTURAL LIEN.
3-26 SECTION 6. Section 9.317(a), Business & Commerce Code, as
3-27 effective July 1, 2001, is amended to read as follows:
4-1 (a) A [An unperfected] security interest or agricultural
4-2 lien is subordinate to the rights of:
4-3 (1) a person entitled to priority under Section 9.322;
4-4 and
4-5 (2) except as otherwise provided in Subsection (e), a
4-6 person that becomes a lien creditor before the earlier of the time:
4-7 (A) the security interest or agricultural lien
4-8 is perfected; or
4-9 (B) one of the conditions specified in Section
4-10 9.203(b)(3) is met and a financing statement covering the
4-11 collateral is filed.
4-12 SECTION 7. Section 9.323(b), Business & Commerce Code, as
4-13 effective July 1, 2001, is amended to read as follows:
4-14 (b) Except as otherwise provided in Subsection (c), a
4-15 security interest is subordinate to the rights of a person that
4-16 becomes a lien creditor [while the security interest is perfected
4-17 only] to the extent that the security interest [it] secures an
4-18 advance [advances] made more than 45 days after the person becomes
4-19 a lien creditor unless the advance is made:
4-20 (1) without knowledge of the lien; or
4-21 (2) pursuant to a commitment entered into without
4-22 knowledge of the lien.
4-23 SECTION 8. Section 9.331(b), Business & Commerce Code, as
4-24 effective July 1, 2001, is amended to read as follows:
4-25 (b) This chapter does not limit the rights of or impose
4-26 liability on a person to the extent that the person is protected
4-27 against the assertion of a [an adverse] claim under Chapter 8.
5-1 SECTION 9. Section 9.334(g), Business & Commerce Code, as
5-2 effective July 1, 2001, is amended to read as follows:
5-3 (g) The priority of the security interest under Subsection
5-4 (f)(2) [(f)] continues for a reasonable time if the debtor's right
5-5 to remove the goods as against the encumbrancer or owner
5-6 terminates.
5-7 SECTION 10. Section 9.336(f), Business & Commerce Code, as
5-8 effective July 1, 2001, is amended to read as follows:
5-9 (f) If more than one security interest attaches to the
5-10 product or mass under Subsection (c), the following rules determine
5-11 priority:
5-12 (1) A security interest that is perfected under
5-13 Subsection (d) has priority over a security interest that is
5-14 unperfected at the time the collateral becomes commingled goods.
5-15 (2) If more than one security interest is perfected
5-16 under Subsection (d), the security interests rank equally in
5-17 proportion to the value of the collateral at the time it became
5-18 commingled goods.
5-19 SECTION 11. Sections 9.406(b), (d), and (f), Business &
5-20 Commerce Code, as effective July 1, 2001, are amended to read as
5-21 follows:
5-22 (b) Subject to Subsection (h), notification is ineffective
5-23 under Subsection (a):
5-24 (1) if it does not reasonably identify the rights
5-25 assigned;
5-26 (2) to the extent that an agreement between an account
5-27 debtor and a seller of a payment intangible limits the account
6-1 debtor's duty to pay a person other than the seller and the
6-2 limitation is effective under law other than this chapter; or
6-3 (3) at the option of an account debtor, if the
6-4 notification notifies the account debtor to make less than the full
6-5 amount of any installment or other periodic payment to the
6-6 assignee, even if:
6-7 (A) only a portion of the account, chattel
6-8 paper, or payment [general intangible] has been assigned to that
6-9 assignee;
6-10 (B) a portion has been assigned to another
6-11 assignee; or
6-12 (C) the account debtor knows that the assignment
6-13 to that assignee is limited.
6-14 (d) Except as otherwise provided in Subsection (e) and
6-15 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
6-16 an agreement between an account debtor and an assignor or in a
6-17 promissory note is ineffective to the extent that it:
6-18 (1) prohibits, restricts, or requires the consent of
6-19 the account debtor or person obligated on the promissory note to
6-20 the assignment or transfer of, or the creation, attachment,
6-21 perfection, or enforcement of a security interest in, the account,
6-22 chattel paper, payment intangible, or promissory note; or
6-23 (2) provides that the assignment or transfer or the
6-24 creation, attachment, perfection, or enforcement of the security
6-25 interest may give rise to a default, breach, right of recoupment,
6-26 claim, defense, termination, right of termination, or remedy under
6-27 the account, chattel paper, payment intangible, or promissory note.
7-1 (f) Except as otherwise provided in Sections 2A.303 and
7-2 9.407, and subject to Subsections (h) and (i), a rule of law,
7-3 statute, or regulation that prohibits, restricts, or requires the
7-4 consent of a government, governmental body or official, or account
7-5 debtor to the assignment or transfer of, or creation of a security
7-6 interest in, an account or chattel paper is ineffective to the
7-7 extent that the rule of law, statute, or regulation:
7-8 (1) prohibits, restricts, or requires the consent of
7-9 the government, governmental body or official, or account debtor to
7-10 the assignment or transfer of, or the creation, attachment,
7-11 perfection, or enforcement of a security interest in, the account
7-12 or chattel paper; or
7-13 (2) provides that the assignment or transfer or the
7-14 creation, attachment, perfection, or enforcement of the security
7-15 interest may give rise to a default, breach, right of recoupment,
7-16 claim, defense, termination, right of termination, or remedy under
7-17 the account or chattel paper.
7-18 SECTION 12. Section 9.407(a), Business & Commerce Code, as
7-19 effective July 1, 2001, is amended to read as follows:
7-20 (a) Except as otherwise provided in Subsection (b), a term
7-21 in a lease agreement is ineffective to the extent that it:
7-22 (1) prohibits, restricts, or requires the consent of a
7-23 party to the lease to the assignment or transfer of, or the
7-24 creation, attachment, perfection, or enforcement of a security
7-25 interest in, an interest of a party under the lease contract or in
7-26 the lessor's residual interest in the goods; or
7-27 (2) provides that the assignment or transfer or the
8-1 creation, attachment, perfection, or enforcement of the security
8-2 interest may give rise to a default, breach, right of recoupment,
8-3 claim, defense, termination, right of termination, or remedy under
8-4 the lease.
8-5 SECTION 13. Sections 9.408(a) and (c), Business & Commerce
8-6 Code, as effective July 1, 2001, are amended to read as follows:
8-7 (a) Except as otherwise provided in Subsection (b), a term
8-8 in a promissory note or in an agreement between an account debtor
8-9 and a debtor that relates to a health-care-insurance receivable or
8-10 a general intangible, including a contract, permit, license, or
8-11 franchise, and which term prohibits, restricts, or requires the
8-12 consent of the person obligated on the promissory note or the
8-13 account debtor to, the assignment or transfer of, or creation,
8-14 attachment, or perfection of a security interest in, the promissory
8-15 note, health-care-insurance receivable, or general intangible, is
8-16 ineffective to the extent that the term:
8-17 (1) would impair the creation, attachment, or
8-18 perfection of a security interest; or
8-19 (2) provides that the assignment or transfer or the
8-20 creation, attachment, or perfection of the security interest may
8-21 give rise to a default, breach, right of recoupment, claim,
8-22 defense, termination, right of termination, or remedy under the
8-23 promissory note, health-care-insurance receivable, or general
8-24 intangible.
8-25 (c) A rule of law, statute, or regulation that prohibits,
8-26 restricts, or requires the consent of a government, governmental
8-27 body or official, person obligated on a promissory note, or account
9-1 debtor to the assignment or transfer of, or creation of a security
9-2 interest in, a promissory note, health-care-insurance receivable,
9-3 or general intangible, including a contract, permit, license, or
9-4 franchise between an account debtor and a debtor, is ineffective to
9-5 the extent that the rule of law, statute, or regulation:
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 SECTION 14. Section 9.409(a), Business & Commerce Code, as
9-15 effective July 1, 2001, is amended to read as follows:
9-16 (a) A term in a letter of credit or a rule of law, statute,
9-17 regulation, custom, or practice applicable to the letter of credit
9-18 that prohibits, restricts, or requires the consent of an applicant,
9-19 issuer, or nominated person to a beneficiary's assignment of or
9-20 creation of a security interest in a letter-of-credit right is
9-21 ineffective to the extent that the term or rule of law, statute,
9-22 regulation, custom, or practice:
9-23 (1) would impair the creation, attachment, or
9-24 perfection of a security interest in the letter-of-credit right; or
9-25 (2) provides that the assignment or the creation,
9-26 attachment, or perfection of the security interest may give rise to
9-27 a default, breach, right of recoupment, claim, defense,
10-1 termination, right of termination, or remedy under the
10-2 letter-of-credit right.
10-3 SECTION 15. Section 9.504, Business & Commerce Code, as
10-4 effective July 1, 2001, is amended to read as follows:
10-5 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
10-6 sufficiently indicates the collateral that it covers [only] if the
10-7 financing statement provides:
10-8 (1) a description of the collateral pursuant to
10-9 Section 9.108; or
10-10 (2) an indication that the financing statement covers
10-11 all assets or all personal property.
10-12 SECTION 16. Section 9.509(a), Business & Commerce Code, as
10-13 effective July 1, 2001, is amended to read as follows:
10-14 (a) A person may file an initial financing statement,
10-15 amendment that adds collateral covered by a financing statement, or
10-16 amendment that adds a debtor to a financing statement only if:
10-17 (1) the debtor authorizes the filing in an
10-18 authenticated record or pursuant to Subsection (b) or (c); or
10-19 (2) the person holds an agricultural lien that has
10-20 become effective at the time of filing and the financing statement
10-21 covers only collateral in which the person holds an agricultural
10-22 lien.
10-23 SECTION 17. Section 9.513(d), Business & Commerce Code, as
10-24 effective July 1, 2001, is amended to read as follows:
10-25 (d) Except as otherwise provided in Section 9.510, upon the
10-26 filing of a termination statement with the filing office, the
10-27 financing statement to which the termination statement relates
11-1 ceases to be effective. Except as otherwise provided in Section
11-2 9.510, for purposes of Sections 9.519(g), 9.522(a), and 9.523(c),
11-3 the filing with the filing office of a termination statement
11-4 relating to a financing statement that indicates that the debtor is
11-5 a transmitting utility also causes the effectiveness of the
11-6 financing statement to lapse.
11-7 SECTION 18. Sections 9.525(a) and (b), Business & Commerce
11-8 Code, as effective July 1, 2001, are amended to read as follows:
11-9 (a) Except as otherwise provided in Subsections (e) and (f),
11-10 the fee for filing and indexing a record under this subchapter,
11-11 other than an initial financing statement of the kind described in
11-12 Subsection (b) [Section 9.502(c)], is:
11-13 (1) $15 if the record is communicated in writing and
11-14 consists of one or two pages;
11-15 (2) $30 if the record is communicated in writing and
11-16 consists of more than two pages; and
11-17 (3) $5 if the record is communicated by another medium
11-18 authorized by filing-office rule.
11-19 (b) Except as otherwise provided in Subsection (e), the fee
11-20 for filing and indexing an initial financing statement of the
11-21 following kinds [kind described in Section 9.502(c)] is:
11-22 (1) $60 if the financing statement indicates that it
11-23 is filed in connection with a public-finance transaction; and
11-24 (2) $60 if the financing statement indicates that it
11-25 is filed in connection with a manufactured-home transaction.
11-26 SECTION 19. Section 9.608(a), Business & Commerce Code, as
11-27 effective July 1, 2001, is amended to read as follows:
12-1 (a) If a security interest or agricultural lien secures
12-2 payment or performance of an obligation, the following rules apply:
12-3 (1) A secured party shall apply or pay over for
12-4 application the cash proceeds of collection or enforcement under
12-5 Section 9.607 [this section] in the following order to:
12-6 (A) the reasonable expenses of collection and
12-7 enforcement and, to the extent provided for by agreement and not
12-8 prohibited by law, reasonable attorney's fees and legal expenses
12-9 incurred by the secured party;
12-10 (B) the satisfaction of obligations secured by
12-11 the security interest or agricultural lien under which the
12-12 collection or enforcement is made; and
12-13 (C) the satisfaction of obligations secured by
12-14 any subordinate security interest in or other lien on the
12-15 collateral subject to the security interest or agricultural lien
12-16 under which the collection or enforcement is made if the secured
12-17 party receives an authenticated demand for proceeds before
12-18 distribution of the proceeds is completed.
12-19 (2) If requested by a secured party, a holder of a
12-20 subordinate security interest or other lien shall furnish
12-21 reasonable proof of the interest or lien within a reasonable time.
12-22 Unless the holder complies, the secured party need not comply with
12-23 the holder's demand under Subdivision (1)(C).
12-24 (3) A secured party need not apply or pay over for
12-25 application noncash proceeds of collection and enforcement under
12-26 Section 9.607 [this section] unless the failure to do so would be
12-27 commercially unreasonable. A secured party that applies or pays
13-1 over for application noncash proceeds shall do so in a commercially
13-2 reasonable manner.
13-3 (4) A secured party shall account to and pay a debtor
13-4 for any surplus, and the obligor is liable for any deficiency.
13-5 SECTION 20. Section 9.613, Business & Commerce Code, as
13-6 effective July 1, 2001, is amended to read as follows:
13-7 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
13-8 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
13-9 transaction, the following rules apply:
13-10 (1) The contents of a notification of disposition are
13-11 sufficient if the notification:
13-12 (A) describes the debtor and the secured party;
13-13 (B) describes the collateral that is the subject
13-14 of the intended disposition;
13-15 (C) states the method of intended disposition;
13-16 (D) states that the debtor is entitled to an
13-17 accounting of the unpaid indebtedness and states the charge, if
13-18 any, for an accounting; and
13-19 (E) states the time and place of a public
13-20 disposition [sale] or the time after which any other disposition is
13-21 to be made.
13-22 (2) Whether the contents of a notification that lacks
13-23 any of the information specified in Subdivision (1) are
13-24 nevertheless sufficient is a question of fact.
13-25 (3) The contents of a notification providing
13-26 substantially the information specified in Subdivision (1) are
13-27 sufficient, even if the notification includes:
14-1 (A) information not specified by that
14-2 subdivision; or
14-3 (B) minor errors that are not seriously
14-4 misleading.
14-5 (4) A particular phrasing of the notification is not
14-6 required.
14-7 (5) The following form of notification and the form
14-8 appearing in Section 9.614(3), when completed, each provide
14-9 sufficient information:
14-10 NOTIFICATION OF DISPOSITION OF COLLATERAL
14-11 To: __________ (Name of debtor, obligor, or other person to
14-12 which the notification is sent)
14-13 From: __________ (Name, address, and telephone number of
14-14 secured party)
14-15 Name of Debtor(s): __________ (Include only if debtor(s) are
14-16 not an addressee)
14-17 (For a public disposition:)
14-18 We will sell (or lease or license, as applicable) the
14-19 (describe collateral) (to the highest qualified bidder) in public
14-20 as follows:
14-21 Day and Date:___
14-22 Time:___
14-23 Place:___
14-24 (For a private disposition:)
14-25 We will sell (or lease or license, as applicable) the
14-26 __________ (describe collateral) privately sometime after
14-27 __________ (day and date).
15-1 You are entitled to an accounting of the unpaid indebtedness
15-2 secured by the property that we intend to sell (or lease or
15-3 license, as applicable) (for a charge of $___). You may request an
15-4 accounting by calling us at __________ (telephone number).
15-5 SECTION 21. Sections 9.615(a) and (c), Business & Commerce
15-6 Code, as effective July 1, 2001, are amended to read as follows:
15-7 (a) A secured party shall apply or pay over for application
15-8 the cash proceeds of disposition under Section 9.610 in the
15-9 following order to:
15-10 (1) the reasonable expenses of retaking, holding,
15-11 preparing for disposition, processing, and disposing and, to the
15-12 extent provided for by agreement and not prohibited by law,
15-13 reasonable attorney's fees and legal expenses incurred by the
15-14 secured party;
15-15 (2) the satisfaction of obligations secured by the
15-16 security interest or agricultural lien under which the disposition
15-17 is made;
15-18 (3) the satisfaction of obligations secured by any
15-19 subordinate security interest in or other subordinate lien on the
15-20 collateral if:
15-21 (A) the secured party receives from the holder
15-22 of the subordinate security interest or other lien an authenticated
15-23 demand for proceeds before distribution of the proceeds is
15-24 completed; and
15-25 (B) in a case in which a consignor has an
15-26 interest in the collateral, the subordinate security interest or
15-27 other lien is senior to the interest of the consignor; and
16-1 (4) a secured party that is a consignor of the
16-2 collateral if the secured party receives from the consignor an
16-3 authenticated demand for proceeds before distribution of the
16-4 proceeds is completed.
16-5 (c) A secured party need not apply or pay over for
16-6 application noncash proceeds of disposition under Section 9.610
16-7 [this section] unless the failure to do so would be commercially
16-8 unreasonable. A secured party that applies or pays over for
16-9 application noncash proceeds shall do so in a commercially
16-10 reasonable manner.
16-11 SECTION 22. Sections 9.625(b) and (g), Business & Commerce
16-12 Code, as effective July 1, 2001, are amended to read as follows:
16-13 (b) Subject to Subsections (c), (d), and (f), a person is
16-14 liable for damages in the amount of any loss caused by a failure to
16-15 comply with this chapter. Loss caused by a failure to comply [with
16-16 a request under Section 9.210] may include loss resulting from the
16-17 debtor's inability to obtain, or increased costs of, alternative
16-18 financing.
16-19 (g) If a secured party fails to comply with a request
16-20 regarding a list of collateral or a statement of account under
16-21 Section 9.210, the secured party may claim a security interest only
16-22 as shown in the list or statement included in the request as
16-23 against a person that is reasonably misled by the failure.
16-24 SECTION 23. (a) Sections 3.02-3.08, Chapter 414, Acts of
16-25 the 76th Legislature, Regular Session, 1999, are reenacted as
16-26 Subchapter G, Chapter 9, Business & Commerce Code, and amended to
16-27 read as follows:
17-1 SUBCHAPTER G. TRANSITION PROVISIONS
17-2 Sec. 9.701. EFFECTIVE DATE OF REVISIONS. (a) In this
17-3 subchapter, "revision" means the revision of this chapter enacted
17-4 by the 76th Legislature, Regular Session, 1999.
17-5 (b) The revision takes effect July 1, 2001.
17-6 Sec. 9.702. [SECTION 3.02.] SAVING CLAUSE. (a) Except as
17-7 otherwise provided in this subchapter [article], this chapter, as
17-8 revised, [Act] applies to a transaction or lien within its scope,
17-9 even if the transaction or lien was entered into or created before
17-10 the revision [this Act] takes effect.
17-11 (b) Except as otherwise provided in Subsection (c) [of this
17-12 section] and Sections 9.703-9.709 [3.03-3.08 of this article]:
17-13 (1) transactions and liens that were not governed by
17-14 this chapter [Chapter 9, Business & Commerce Code], as it existed
17-15 immediately before the effective date of the revision [this Act],
17-16 were validly entered into or created before the effective date of
17-17 the revision [this Act], and would be subject to this chapter
17-18 [Chapter 9, Business & Commerce Code], as revised [amended by this
17-19 Act], if they had been entered into or created on or after the
17-20 effective date of the revision [this Act], and the rights, duties,
17-21 and interests flowing from those transactions and liens remain
17-22 valid on and after the effective date of the revision [this Act];
17-23 and
17-24 (2) the transactions and liens may be terminated,
17-25 completed, consummated, and enforced as required or permitted by
17-26 this chapter [Chapter 9, Business & Commerce Code], as revised
17-27 [amended by this Act], or by the law that otherwise would apply if
18-1 the revision [this Act] had not taken effect.
18-2 (c) The revision [This Act] does not affect an action, case,
18-3 or proceeding commenced before the effective date of the revision
18-4 [this Act].
18-5 Sec. 9.703. [SECTION 3.03.] SECURITY INTEREST PERFECTED
18-6 BEFORE EFFECTIVE DATE. (a) A security interest that is
18-7 enforceable immediately before the effective date of the revision
18-8 [this Act] and would have priority over the rights of a person that
18-9 becomes a lien creditor at that time is a perfected security
18-10 interest under this chapter [Chapter 9, Business & Commerce Code],
18-11 as revised [amended by this Act], if, on the effective date of the
18-12 revision [this Act], the applicable requirements for enforceability
18-13 and perfection under this chapter [Chapter 9, Business & Commerce
18-14 Code], as revised [amended by this Act], are satisfied without
18-15 further action.
18-16 (b) Except as otherwise provided in Section 9.705 [3.05 of
18-17 this article], if, immediately before the revision [this Act] takes
18-18 effect, a security interest is enforceable and would have priority
18-19 over the rights of a person that becomes a lien creditor at that
18-20 time, but the applicable requirements for enforceability or
18-21 perfection under this chapter [Chapter 9, Business & Commerce
18-22 Code], as revised [amended by this Act], are not satisfied when the
18-23 revision [this Act] takes effect, the security interest:
18-24 (1) is a perfected security interest until July 1,
18-25 2002;
18-26 (2) remains enforceable after June 30, 2002, only if
18-27 the security interest becomes enforceable under Section 9.203,
19-1 [Business & Commerce Code,] as revised [amended by this Act],
19-2 before July 1, 2002; and
19-3 (3) remains perfected after June 30, 2002, only if the
19-4 applicable requirements for perfection under this chapter [Chapter
19-5 9, Business & Commerce Code], as revised [amended by this Act], are
19-6 satisfied before July 1, 2002.
19-7 Sec. 9.704. [SECTION 3.04.] SECURITY INTEREST UNPERFECTED
19-8 BEFORE EFFECTIVE DATE. A security interest that is enforceable
19-9 immediately before the revision [this Act] takes effect but that
19-10 would be subordinate to the rights of a person that becomes a lien
19-11 creditor at that time:
19-12 (1) remains an enforceable security interest until
19-13 July 1, 2002;
19-14 (2) remains enforceable after June 30, 2002, if the
19-15 security interest becomes enforceable under Section 9.203,
19-16 [Business & Commerce Code,] as revised [amended by this Act],
19-17 before July 1, 2002; and
19-18 (3) becomes perfected:
19-19 (A) without further action, when the revision
19-20 [this Act] takes effect, if the applicable requirements for
19-21 perfection under this chapter [Chapter 9, Business & Commerce
19-22 Code], as revised [amended by this Act], are satisfied before or at
19-23 that time; or
19-24 (B) when the applicable requirements for
19-25 perfection are satisfied if the requirements are satisfied after
19-26 the revision [this Act] takes effect.
19-27 Sec. 9.705. [SECTION 3.05.] EFFECTIVENESS OF ACTION TAKEN
20-1 BEFORE EFFECTIVE DATE. (a) If action, other than the filing of a
20-2 financing statement, is taken before the revision [this Act] takes
20-3 effect and the action would have resulted in priority of a security
20-4 interest over the rights of a person that becomes a lien creditor
20-5 had the security interest become enforceable before the revision
20-6 [this Act] takes effect, the action is effective to perfect a
20-7 security interest that attaches under this chapter [Chapter 9,
20-8 Business & Commerce Code], as revised [amended by this Act], within
20-9 one year after the effective date of the revision [this Act]. An
20-10 attached security interest becomes unperfected on July 1, 2002,
20-11 unless the security interest becomes a perfected security interest
20-12 under this chapter [Chapter 9, Business & Commerce Code], as
20-13 revised [amended by this Act], before that date.
20-14 (b) The filing of a financing statement before the effective
20-15 date of the revision [this Act] is effective to perfect a security
20-16 interest to the extent the filing would satisfy the applicable
20-17 requirements for perfection under this chapter [Chapter 9, Business
20-18 & Commerce Code], as revised [amended by this Act].
20-19 (c) The revision [This Act] does not render ineffective an
20-20 effective financing statement that, before the effective date of
20-21 the revision [this Act], is filed and satisfies the applicable
20-22 requirements for perfection under the law of the jurisdiction
20-23 governing perfection as provided in Section 9.103, [Business &
20-24 Commerce Code,] as it existed immediately before the effective date
20-25 of the revision [this Act]. However, except as otherwise provided
20-26 in Subsections (d) and (e) [of this section] and Section 9.706
20-27 [3.06 of this article], the financing statement ceases to be
21-1 effective at the earlier of:
21-2 (1) the time the financing statement would have ceased
21-3 to be effective under the law of the jurisdiction in which it is
21-4 filed; or
21-5 (2) June 30, 2006.
21-6 (d) The filing of a continuation statement after the
21-7 revision [this Act] takes effect does not continue the
21-8 effectiveness of the financing statement filed before the revision
21-9 [this Act] takes effect. However, upon the timely filing of a
21-10 continuation statement after the revision [this Act] takes effect
21-11 and in accordance with the law of the jurisdiction governing
21-12 perfection as provided in Subchapter C, [Chapter 9, Business &
21-13 Commerce Code,] as revised [amended by this Act], the effectiveness
21-14 of a financing statement filed in the same office in that
21-15 jurisdiction before the revision [this Act] takes effect continues
21-16 for the period provided by the law of that jurisdiction.
21-17 (e) Subsection (c)(2) [of this section] applies to a
21-18 financing statement that, before the revision [this Act] takes
21-19 effect, is filed against a transmitting utility and satisfies the
21-20 applicable requirements for perfection under the law of the
21-21 jurisdiction governing perfection as provided in Section 9.103, as
21-22 it existed immediately before the effective date of the revision
21-23 [this Act], only to the extent that Subchapter C, [Chapter 9,
21-24 Business & Commerce Code,] as revised [amended by this Act],
21-25 provides that the law of a jurisdiction other than the jurisdiction
21-26 in which the financing statement is filed governs perfection of a
21-27 security interest in collateral covered by the financing statement.
22-1 (f) A financing statement that includes a financing
22-2 statement filed before the revision [this Act] takes effect and a
22-3 continuation statement filed after the revision [this Act] takes
22-4 effect is effective only to the extent that it satisfies the
22-5 requirements of Subchapter E, [Chapter 9, Business & Commerce
22-6 Code,] as revised [amended by this Act], for an initial financing
22-7 statement.
22-8 Sec. 9.706. [SECTION 3.06.] WHEN INITIAL FINANCING
22-9 STATEMENT SUFFICES TO CONTINUE EFFECTIVENESS OF FINANCING
22-10 STATEMENT. (a) The filing of an initial financing statement in
22-11 the office specified in Section 9.501, [Business & Commerce Code,]
22-12 as revised [amended by this Act], continues the effectiveness of a
22-13 financing statement filed before the revision [this Act] takes
22-14 effect if:
22-15 (1) the filing of an initial financing statement in
22-16 that office would be effective to perfect a security interest under
22-17 this chapter [Chapter 9, Business & Commerce Code], as revised
22-18 [amended by this Act];
22-19 (2) the pre-effective-date financing statement was
22-20 filed in an office in another state or another office in this
22-21 state; and
22-22 (3) the initial financing statement satisfies
22-23 Subsection (c) [of this section].
22-24 (b) The filing of an initial financing statement under
22-25 Subsection (a) [of this section] continues the effectiveness of the
22-26 pre-effective-date financing statement:
22-27 (1) if the initial financing statement is filed before
23-1 the revision [this Act] takes effect, for the period provided in
23-2 Section 9.403, [Business & Commerce Code,] as it existed
23-3 immediately before the effective date of the revision [this Act],
23-4 with respect to a financing statement; and
23-5 (2) if the initial financing statement is filed after
23-6 the revision [this Act] takes effect, for the period provided in
23-7 Section 9.515, [Business & Commerce Code,] as revised [amended by
23-8 this Act], with respect to an initial financing statement.
23-9 (c) To be effective for purposes of Subsection (a) [of this
23-10 section], an initial financing statement must:
23-11 (1) satisfy the requirements of Subchapter E, [Chapter
23-12 9, Business & Commerce Code,] as revised [amended by this Act], for
23-13 an initial financing statement;
23-14 (2) identify the pre-effective-date financing
23-15 statement by indicating the office in which the financing statement
23-16 was filed and providing the dates of filing and file numbers, if
23-17 any, of the financing statement and of the most recent continuation
23-18 statement filed with respect to the financing statement; and
23-19 (3) indicate that the pre-effective-date financing
23-20 statement remains effective.
23-21 Sec. 9.707. AMENDMENT OF PRE-EFFECTIVE-DATE FINANCING
23-22 STATEMENT. (a) In this section, "pre-effective-date financing
23-23 statement" means a financing statement filed before the revision
23-24 takes effect.
23-25 (b) After the revision takes effect, a person may add or
23-26 delete collateral covered by, continue or terminate the
23-27 effectiveness of, or otherwise amend the information provided in a
24-1 pre-effective-date financing statement only in accordance with the
24-2 law of the jurisdiction governing perfection as provided in
24-3 Subchapter C. However, the effectiveness of a pre-effective-date
24-4 financing statement also may be terminated in accordance with the
24-5 law of the jurisdiction in which the financing statement is filed.
24-6 (c) Except as otherwise provided in Subsection (d), if the
24-7 law of this state governs perfection of a security interest, the
24-8 information in a pre-effective-date financing statement may be
24-9 amended after the revision takes effect only if:
24-10 (1) the pre-effective-date financing statement and an
24-11 amendment are filed in the office specified in Section 9.501;
24-12 (2) an amendment is filed in the office specified in
24-13 Section 9.501 concurrently with, or after the filing in that office
24-14 of, an initial financing statement that satisfies Section 9.706(c);
24-15 or
24-16 (3) an initial financing statement that provides the
24-17 information as amended and satisfies Section 9.706(c) is filed in
24-18 the office specified in Section 9.501.
24-19 (d) If the law of this state governs perfection of a
24-20 security interest, the effectiveness of a pre-effective-date
24-21 financing statement may be continued only under Sections 9.705(d)
24-22 and (f) or Section 9.706.
24-23 (e) Whether or not the law of this state governs perfection
24-24 of a security interest, the effectiveness of a pre-effective-date
24-25 financing statement filed in this state may be terminated after the
24-26 revision takes effect by filing a termination statement in the
24-27 office in which the pre-effective-date financing statement is
25-1 filed, unless an initial financing statement that satisfies Section
25-2 9.706(c) has been filed in the office specified by the law of the
25-3 jurisdiction governing perfection as provided in Subchapter C as
25-4 the office in which to file a financing statement.
25-5 Sec. 9.708. [SECTION 3.07.] PERSONS ENTITLED TO FILE
25-6 INITIAL FINANCING STATEMENT OR CONTINUATION STATEMENT. A person
25-7 may file an initial financing statement or a continuation statement
25-8 under this subchapter [article] if:
25-9 (1) the secured party of record authorizes the filing;
25-10 and
25-11 (2) the filing is necessary under this subchapter
25-12 [article]:
25-13 (A) to continue the effectiveness of a financing
25-14 statement filed before the revision [this Act] takes effect; or
25-15 (B) to perfect or continue the perfection of a
25-16 security interest.
25-17 Sec. 9.709. [SECTION 3.08.] PRIORITY. (a) This chapter,
25-18 as revised, [Act] determines the priority of conflicting claims to
25-19 collateral. However, if the relative priorities of the claims were
25-20 established before the revision [this Act] takes effect, this
25-21 chapter [Chapter 9, Business & Commerce Code], as it existed before
25-22 the effective date of the revision [this Act], determines priority.
25-23 (b) For purposes of Section 9.322(a), [Business & Commerce
25-24 Code,] as revised [amended by this Act], the priority of a security
25-25 interest that becomes enforceable under Section 9.203, [Business &
25-26 Commerce Code,] as revised [amended by this Act], dates from the
25-27 time the revision [this Act] takes effect if the security interest
26-1 is perfected under this chapter [Chapter 9, Business & Commerce
26-2 Code], as revised [amended by this Act], by the filing of a
26-3 financing statement before the revision [this Act] takes effect
26-4 that would not have been effective to perfect the security interest
26-5 under this chapter [Chapter 9, Business & Commerce Code], as it
26-6 existed immediately before the effective date of the revision [this
26-7 Act]. This subsection does not apply to conflicting security
26-8 interests each of which is perfected by the filing of such a
26-9 financing statement.
26-10 (b) Section 3.01, Chapter 414, Acts of the 76th Legislature,
26-11 Regular Session, 1999, is repealed.
26-12 SECTION 24. Section 1.105(b), Business & Commerce Code, as
26-13 effective July 1, 2001, is amended to read as follows:
26-14 (b) Where one of the following provisions of this title
26-15 specifies the applicable law, that provision governs and a contrary
26-16 agreement is effective only to the extent permitted by the law
26-17 (including the conflict of laws rules) so specified:
26-18 Rights of creditors against sold goods. Section 2.402.
26-19 Applicability of the chapter on Leases. Sections
26-20 2A.105 and 2A.106.
26-21 Applicability of the chapter on Bank Deposits and
26-22 Collections. Section 4.102.
26-23 Governing law in the chapter on Funds Transfers.
26-24 Section 4A.507.
26-25 Letters of Credit. Section 5.116.
26-26 Applicability of the chapter on Investment Securities.
26-27 Section 8.110.
27-1 Law governing perfection, the effect of perfection or
27-2 nonperfection, and the priority of security interests and
27-3 agricultural liens. Sections 9.301-9.307.
27-4 SECTION 25. This Act takes effect immediately if it
27-5 receives a vote of two-thirds of all the members elected to each
27-6 house, as provided by Section 39, Article III, Texas Constitution.
27-7 If this Act does not receive the vote necessary for immediate
27-8 effect, this Act takes effect September 1, 2001.