1-1 By: Carona S.B. No. 433
1-2 (In the Senate - Filed January 29, 2001; January 30, 2001,
1-3 read first time and referred to Committee on Business and Commerce;
1-4 February 26, 2001, reported favorably, as amended, by the following
1-5 vote: Yeas 7, Nays 0; February 26, 2001, sent to printer.)
1-6 COMMITTEE AMENDMENT NO. 1 By: Carona
1-7 Amend S.B. No. 433, in SECTION 11 of the bill, in Paragraph
1-8 (A), Subdivision (3), Subsection (b), Section 9.406, Business &
1-9 Commerce Code (page 3, line 42, introduced version), by striking
1-10 "[general intangible]" and substituting "[general] intangible".
1-11 COMMITTEE AMENDMENT NO. 2 By: Carona
1-12 Amend S.B. No. 433 as follows:
1-13 (1) Add a new SECTION 25 to the bill to read as follows:
1-14 SECTION 25. Nothing in Chapter 9, Business & Commerce Code,
1-15 as effective July 1, 2001, preempts or otherwise affects any
1-16 limitation or prohibition provided by another law of this state
1-17 against assignment of a claim or right to receive:
1-18 (1) compensation for injuries or sickness as described
1-19 in 26 U.S.C. Section 104(a)(1) or (2), as amended; or
1-20 (2) benefits under a special needs trust as described
1-21 in 42 U.S.C. Section 1396p(d)(4), as amended.
1-22 (2) Renumber the subsequent sections of the bill
1-23 appropriately.
1-24 A BILL TO BE ENTITLED
1-25 AN ACT
1-26 relating to the uniform law on secured transactions.
1-27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-28 SECTION 1. Subdivisions (11), (61), and (65), Subsection
1-29 (a), Section 9.102, Business & Commerce Code, as effective July 1,
1-30 2001, are amended to read as follows:
1-31 (11) "Chattel paper" means a record or records that
1-32 evidence both a monetary obligation and a security interest in
1-33 specific goods, a security interest in specific goods and software
1-34 used in the goods, a security interest in specific goods and
1-35 license of software used in the goods, [or] a lease of specific
1-36 goods, or a lease of specific goods and license of software used in
1-37 the goods. In this subdivision, "monetary obligation" means a
1-38 monetary obligation secured by the goods or owed under a lease of
1-39 the goods and includes a monetary obligation with respect to
1-40 software used in the goods. The term does not include (i) charters
1-41 or other contracts involving the use or hire of a vessel or (ii)
1-42 records that evidence a right to payment arising out of the use of
1-43 a credit or charge card or information contained on or for use with
1-44 the card. If a transaction is evidenced [both] by records that
1-45 include [a security agreement or lease and by] an instrument or
1-46 series of instruments, the group of records taken together
1-47 constitutes chattel paper.
1-48 (61) "Original debtor," except as used in Section
1-49 9.310(c), means a person that, as debtor, entered into a security
1-50 agreement to which a new debtor has become bound under Section
1-51 9.203(d).
1-52 (65) "Proceeds," except as used in Section 9.609(b),
1-53 means the following property:
1-54 (A) whatever is acquired upon the sale, lease,
1-55 license, exchange, or other disposition of collateral;
1-56 (B) whatever is collected on, or distributed on
1-57 account of, collateral;
1-58 (C) rights arising out of collateral;
1-59 (D) to the extent of the value of collateral,
1-60 claims arising out of the loss, nonconformity, or interference with
1-61 the use of, defects or infringement of rights in, or damage to the
2-1 collateral; or
2-2 (E) to the extent of the value of collateral and
2-3 to the extent payable to the debtor or the secured party, insurance
2-4 payable by reason of the loss or nonconformity of, defects or
2-5 infringement of rights in, or damage to the collateral.
2-6 SECTION 2. Subsection (a), Section 9.104, Business &
2-7 Commerce Code, as effective July 1, 2001, is amended to read as
2-8 follows:
2-9 (a) A secured party has control of a deposit account if:
2-10 (1) the secured party is the bank with which the
2-11 deposit account is maintained;
2-12 (2) the debtor, secured party, and bank have agreed in
2-13 an authenticated record that the bank will comply with instructions
2-14 originated by the secured party directing disposition of the funds
2-15 in the deposit account without further consent by the debtor; or
2-16 (3) the secured party becomes the bank's customer with
2-17 respect to the deposit account.
2-18 SECTION 3. Subsection (d), Section 9.210, Business &
2-19 Commerce Code, as effective July 1, 2001, is amended to read as
2-20 follows:
2-21 (d) A person that receives a request regarding a list of
2-22 collateral, claims no interest in the collateral when it receives
2-23 the request, and claimed an interest in the collateral at an
2-24 earlier time shall comply with the request within 14 days after
2-25 receipt by sending to the debtor an authenticated record:
2-26 (1) disclaiming any interest in the collateral; and
2-27 (2) if known to the recipient, providing the name and
2-28 mailing address of any assignee of or successor to the recipient's
2-29 [security] interest in the collateral.
2-30 SECTION 4. Subsection (d), Section 9.311, Business &
2-31 Commerce Code, as effective July 1, 2001, is amended to read as
2-32 follows:
2-33 (d) During any period in which collateral subject to a
2-34 statute specified in Subsection (a)(2) is inventory held for sale
2-35 or lease by a person or leased by that person as lessor and that
2-36 person is in the business of selling [or leasing] goods of that
2-37 kind, this section does not apply to a security interest in that
2-38 collateral created by that person [as debtor].
2-39 SECTION 5. The heading to Section 9.317, Business & Commerce
2-40 Code, as effective July 1, 2001, is amended to read as follows:
2-41 Sec. 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
2-42 OF [UNPERFECTED] SECURITY INTEREST OR AGRICULTURAL LIEN.
2-43 SECTION 6. Subsection (a), Section 9.317, Business &
2-44 Commerce Code, as effective July 1, 2001, is amended to read as
2-45 follows:
2-46 (a) A [An unperfected] security interest or agricultural
2-47 lien is subordinate to the rights of:
2-48 (1) a person entitled to priority under Section 9.322;
2-49 and
2-50 (2) except as otherwise provided in Subsection (e), a
2-51 person that becomes a lien creditor before the earlier of the time:
2-52 (A) the security interest or agricultural lien
2-53 is perfected; or
2-54 (B) one of the conditions specified in Section
2-55 9.203(b)(3) is met and a financing statement covering the
2-56 collateral is filed.
2-57 SECTION 7. Subsection (b), Section 9.323, Business &
2-58 Commerce Code, as effective July 1, 2001, is amended to read as
2-59 follows:
2-60 (b) Except as otherwise provided in Subsection (c), a
2-61 security interest is subordinate to the rights of a person that
2-62 becomes a lien creditor [while the security interest is perfected
2-63 only] to the extent that the security interest [it] secures an
2-64 advance [advances] made more than 45 days after the person becomes
2-65 a lien creditor unless the advance is made:
2-66 (1) without knowledge of the lien; or
2-67 (2) pursuant to a commitment entered into without
2-68 knowledge of the lien.
2-69 SECTION 8. Subsection (b), Section 9.331, Business &
3-1 Commerce Code, as effective July 1, 2001, is amended to read as
3-2 follows:
3-3 (b) This chapter does not limit the rights of or impose
3-4 liability on a person to the extent that the person is protected
3-5 against the assertion of a [an adverse] claim under Chapter 8.
3-6 SECTION 9. Subsection (g), Section 9.334, Business &
3-7 Commerce Code, as effective July 1, 2001, is amended to read as
3-8 follows:
3-9 (g) The priority of the security interest under Subsection
3-10 (f)(2) [(f)] continues for a reasonable time if the debtor's right
3-11 to remove the goods as against the encumbrancer or owner
3-12 terminates.
3-13 SECTION 10. Subsection (f), Section 9.336, Business &
3-14 Commerce Code, as effective July 1, 2001, is amended to read as
3-15 follows:
3-16 (f) If more than one security interest attaches to the
3-17 product or mass under Subsection (c), the following rules determine
3-18 priority:
3-19 (1) A security interest that is perfected under
3-20 Subsection (d) has priority over a security interest that is
3-21 unperfected at the time the collateral becomes commingled goods.
3-22 (2) If more than one security interest is perfected
3-23 under Subsection (d), the security interests rank equally in
3-24 proportion to the value of the collateral at the time it became
3-25 commingled goods.
3-26 SECTION 11. Subsections (b), (d), and (f), Section 9.406,
3-27 Business & Commerce Code, as effective July 1, 2001, are amended to
3-28 read as follows:
3-29 (b) Subject to Subsection (h), notification is ineffective
3-30 under Subsection (a):
3-31 (1) if it does not reasonably identify the rights
3-32 assigned;
3-33 (2) to the extent that an agreement between an account
3-34 debtor and a seller of a payment intangible limits the account
3-35 debtor's duty to pay a person other than the seller and the
3-36 limitation is effective under law other than this chapter; or
3-37 (3) at the option of an account debtor, if the
3-38 notification notifies the account debtor to make less than the full
3-39 amount of any installment or other periodic payment to the
3-40 assignee, even if:
3-41 (A) only a portion of the account, chattel
3-42 paper, or payment [general intangible] has been assigned to that
3-43 assignee;
3-44 (B) a portion has been assigned to another
3-45 assignee; or
3-46 (C) the account debtor knows that the assignment
3-47 to that assignee is limited.
3-48 (d) Except as otherwise provided in Subsection (e) and
3-49 Sections 2A.303 and 9.407, and subject to Subsection (h), a term in
3-50 an agreement between an account debtor and an assignor or in a
3-51 promissory note is ineffective to the extent that it:
3-52 (1) prohibits, restricts, or requires the consent of
3-53 the account debtor or person obligated on the promissory note to
3-54 the assignment or transfer of, or the creation, attachment,
3-55 perfection, or enforcement of a security interest in, the account,
3-56 chattel paper, payment intangible, or promissory note; or
3-57 (2) provides that the assignment or transfer or the
3-58 creation, attachment, perfection, or enforcement of the security
3-59 interest may give rise to a default, breach, right of recoupment,
3-60 claim, defense, termination, right of termination, or remedy under
3-61 the account, chattel paper, payment intangible, or promissory note.
3-62 (f) Except as otherwise provided in Sections 2A.303 and
3-63 9.407, and subject to Subsections (h) and (i), a rule of law,
3-64 statute, or regulation that prohibits, restricts, or requires the
3-65 consent of a government, governmental body or official, or account
3-66 debtor to the assignment or transfer of, or creation of a security
3-67 interest in, an account or chattel paper is ineffective to the
3-68 extent that the rule of law, statute, or regulation:
3-69 (1) prohibits, restricts, or requires the consent of
4-1 the government, governmental body or official, or account debtor to
4-2 the assignment or transfer of, or the creation, attachment,
4-3 perfection, or enforcement of a security interest in, the account
4-4 or chattel paper; or
4-5 (2) provides that the assignment or transfer or the
4-6 creation, attachment, perfection, or enforcement of the security
4-7 interest may give rise to a default, breach, right of recoupment,
4-8 claim, defense, termination, right of termination, or remedy under
4-9 the account or chattel paper.
4-10 SECTION 12. Subsection (a), Section 9.407, Business &
4-11 Commerce Code, as effective July 1, 2001, is amended to read as
4-12 follows:
4-13 (a) Except as otherwise provided in Subsection (b), a term
4-14 in a lease agreement is ineffective to the extent that it:
4-15 (1) prohibits, restricts, or requires the consent of a
4-16 party to the lease to the assignment or transfer of, or the
4-17 creation, attachment, perfection, or enforcement of a security
4-18 interest in, an interest of a party under the lease contract or in
4-19 the lessor's residual interest in the goods; or
4-20 (2) provides that the assignment or transfer or the
4-21 creation, attachment, perfection, or enforcement of the security
4-22 interest may give rise to a default, breach, right of recoupment,
4-23 claim, defense, termination, right of termination, or remedy under
4-24 the lease.
4-25 SECTION 13. Subsections (a) and (c), Section 9.408, Business
4-26 & Commerce Code, as effective July 1, 2001, are amended to read as
4-27 follows:
4-28 (a) Except as otherwise provided in Subsection (b), a term
4-29 in a promissory note or in an agreement between an account debtor
4-30 and a debtor that relates to a health-care-insurance receivable or
4-31 a general intangible, including a contract, permit, license, or
4-32 franchise, and which term prohibits, restricts, or requires the
4-33 consent of the person obligated on the promissory note or the
4-34 account debtor to, the assignment or transfer of, or creation,
4-35 attachment, or perfection of a security interest in, the promissory
4-36 note, health-care-insurance receivable, or general intangible, is
4-37 ineffective to the extent that the term:
4-38 (1) would impair the creation, attachment, or
4-39 perfection of a security interest; or
4-40 (2) provides that the assignment or transfer or the
4-41 creation, attachment, or perfection of the security interest may
4-42 give rise to a default, breach, right of recoupment, claim,
4-43 defense, termination, right of termination, or remedy under the
4-44 promissory note, health-care-insurance receivable, or general
4-45 intangible.
4-46 (c) A rule of law, statute, or regulation that prohibits,
4-47 restricts, or requires the consent of a government, governmental
4-48 body or official, person obligated on a promissory note, or account
4-49 debtor to the assignment or transfer of, or creation of a security
4-50 interest in, a promissory note, health-care-insurance receivable,
4-51 or general intangible, including a contract, permit, license, or
4-52 franchise between an account debtor and a debtor, is ineffective to
4-53 the extent that the rule of law, statute, or regulation:
4-54 (1) would impair the creation, attachment, or
4-55 perfection of a security interest; or
4-56 (2) provides that the assignment or transfer or the
4-57 creation, attachment, or perfection of the security interest may
4-58 give rise to a default, breach, right of recoupment, claim,
4-59 defense, termination, right of termination, or remedy under the
4-60 promissory note, health-care-insurance receivable, or general
4-61 intangible.
4-62 SECTION 14. Subsection (a), Section 9.409, Business &
4-63 Commerce Code, as effective July 1, 2001, is amended to read as
4-64 follows:
4-65 (a) A term in a letter of credit or a rule of law, statute,
4-66 regulation, custom, or practice applicable to the letter of credit
4-67 that prohibits, restricts, or requires the consent of an applicant,
4-68 issuer, or nominated person to a beneficiary's assignment of or
4-69 creation of a security interest in a letter-of-credit right is
5-1 ineffective to the extent that the term or rule of law, statute,
5-2 regulation, custom, or practice:
5-3 (1) would impair the creation, attachment, or
5-4 perfection of a security interest in the letter-of-credit right; or
5-5 (2) provides that the assignment or the creation,
5-6 attachment, or perfection of the security interest may give rise to
5-7 a default, breach, right of recoupment, claim, defense,
5-8 termination, right of termination, or remedy under the
5-9 letter-of-credit right.
5-10 SECTION 15. Section 9.504, Business & Commerce Code, as
5-11 effective July 1, 2001, is amended to read as follows:
5-12 Sec. 9.504. INDICATION OF COLLATERAL. A financing statement
5-13 sufficiently indicates the collateral that it covers [only] if the
5-14 financing statement provides:
5-15 (1) a description of the collateral pursuant to
5-16 Section 9.108; or
5-17 (2) an indication that the financing statement covers
5-18 all assets or all personal property.
5-19 SECTION 16. Subsection (a), Section 9.509, Business &
5-20 Commerce Code, as effective July 1, 2001, is amended to read as
5-21 follows:
5-22 (a) A person may file an initial financing statement,
5-23 amendment that adds collateral covered by a financing statement, or
5-24 amendment that adds a debtor to a financing statement only if:
5-25 (1) the debtor authorizes the filing in an
5-26 authenticated record or pursuant to Subsection (b) or (c); or
5-27 (2) the person holds an agricultural lien that has
5-28 become effective at the time of filing and the financing statement
5-29 covers only collateral in which the person holds an agricultural
5-30 lien.
5-31 SECTION 17. Subsection (d), Section 9.513, Business &
5-32 Commerce Code, as effective July 1, 2001, is amended to read as
5-33 follows:
5-34 (d) Except as otherwise provided in Section 9.510, upon the
5-35 filing of a termination statement with the filing office, the
5-36 financing statement to which the termination statement relates
5-37 ceases to be effective. Except as otherwise provided in Section
5-38 9.510, for purposes of Sections 9.519(g), 9.522(a), and 9.523(c),
5-39 the filing with the filing office of a termination statement
5-40 relating to a financing statement that indicates that the debtor is
5-41 a transmitting utility also causes the effectiveness of the
5-42 financing statement to lapse.
5-43 SECTION 18. Subsections (a) and (b), Section 9.525, Business
5-44 & Commerce Code, as effective July 1, 2001, are amended to read as
5-45 follows:
5-46 (a) Except as otherwise provided in Subsections (e) and (f),
5-47 the fee for filing and indexing a record under this subchapter,
5-48 other than an initial financing statement of the kind described in
5-49 Subsection (b) [Section 9.502(c)], is:
5-50 (1) $15 if the record is communicated in writing and
5-51 consists of one or two pages;
5-52 (2) $30 if the record is communicated in writing and
5-53 consists of more than two pages; and
5-54 (3) $5 if the record is communicated by another medium
5-55 authorized by filing-office rule.
5-56 (b) Except as otherwise provided in Subsection (e), the fee
5-57 for filing and indexing an initial financing statement of the
5-58 following kinds [kind described in Section 9.502(c)] is:
5-59 (1) $60 if the financing statement indicates that it
5-60 is filed in connection with a public-finance transaction; and
5-61 (2) $60 if the financing statement indicates that it
5-62 is filed in connection with a manufactured-home transaction.
5-63 SECTION 19. Subsection (a), Section 9.608, Business &
5-64 Commerce Code, as effective July 1, 2001, is amended to read as
5-65 follows:
5-66 (a) If a security interest or agricultural lien secures
5-67 payment or performance of an obligation, the following rules apply:
5-68 (1) A secured party shall apply or pay over for
5-69 application the cash proceeds of collection or enforcement under
6-1 Section 9.607 [this section] in the following order to:
6-2 (A) the reasonable expenses of collection and
6-3 enforcement and, to the extent provided for by agreement and not
6-4 prohibited by law, reasonable attorney's fees and legal expenses
6-5 incurred by the secured party;
6-6 (B) the satisfaction of obligations secured by
6-7 the security interest or agricultural lien under which the
6-8 collection or enforcement is made; and
6-9 (C) the satisfaction of obligations secured by
6-10 any subordinate security interest in or other lien on the
6-11 collateral subject to the security interest or agricultural lien
6-12 under which the collection or enforcement is made if the secured
6-13 party receives an authenticated demand for proceeds before
6-14 distribution of the proceeds is completed.
6-15 (2) If requested by a secured party, a holder of a
6-16 subordinate security interest or other lien shall furnish
6-17 reasonable proof of the interest or lien within a reasonable time.
6-18 Unless the holder complies, the secured party need not comply with
6-19 the holder's demand under Subdivision (1)(C).
6-20 (3) A secured party need not apply or pay over for
6-21 application noncash proceeds of collection and enforcement under
6-22 Section 9.607 [this section] unless the failure to do so would be
6-23 commercially unreasonable. A secured party that applies or pays
6-24 over for application noncash proceeds shall do so in a commercially
6-25 reasonable manner.
6-26 (4) A secured party shall account to and pay a debtor
6-27 for any surplus, and the obligor is liable for any deficiency.
6-28 SECTION 20. Section 9.613, Business & Commerce Code, as
6-29 effective July 1, 2001, is amended to read as follows:
6-30 Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
6-31 DISPOSITION OF COLLATERAL: GENERAL. Except in a consumer-goods
6-32 transaction, the following rules apply:
6-33 (1) The contents of a notification of disposition are
6-34 sufficient if the notification:
6-35 (A) describes the debtor and the secured party;
6-36 (B) describes the collateral that is the subject
6-37 of the intended disposition;
6-38 (C) states the method of intended disposition;
6-39 (D) states that the debtor is entitled to an
6-40 accounting of the unpaid indebtedness and states the charge, if
6-41 any, for an accounting; and
6-42 (E) states the time and place of a public
6-43 disposition [sale] or the time after which any other disposition is
6-44 to be made.
6-45 (2) Whether the contents of a notification that lacks
6-46 any of the information specified in Subdivision (1) are
6-47 nevertheless sufficient is a question of fact.
6-48 (3) The contents of a notification providing
6-49 substantially the information specified in Subdivision (1) are
6-50 sufficient, even if the notification includes:
6-51 (A) information not specified by that
6-52 subdivision; or
6-53 (B) minor errors that are not seriously
6-54 misleading.
6-55 (4) A particular phrasing of the notification is not
6-56 required.
6-57 (5) The following form of notification and the form
6-58 appearing in Section 9.614(3), when completed, each provide
6-59 sufficient information:
6-60 NOTIFICATION OF DISPOSITION OF COLLATERAL
6-61 To: _________________________________ (Name of
6-62 debtor, obligor, or other person to which the
6-63 notification is sent)
6-64 From: __________ (Name, address, and telephone
6-65 number of secured party)
6-66 Name of Debtor(s): __________ (Include only if
6-67 debtor(s) are not an addressee)
6-68 (For a public disposition:)
7-1 We will sell (or lease or license, as applicable)
7-2 the (describe collateral) (to the highest qualified
7-3 bidder) in public as follows:
7-4 Day and Date:__________________________________
7-5 Time:__________________________________________
7-6 Place:_________________________________________
7-7 (For a private disposition:)
7-8 We will sell (or lease or license, as applicable)
7-9 the ___________________ (describe collateral) privately
7-10 sometime after _____________ (day and date).
7-11 You are entitled to an accounting of the unpaid
7-12 indebtedness secured by the property that we intend to
7-13 sell (or lease or license, as applicable) (for a charge
7-14 of $______). You may request an accounting by calling
7-15 us at _________ (telephone number).
7-16 SECTION 21. Subsections (a) and (c), Section 9.615, Business
7-17 & Commerce Code, as effective July 1, 2001, are amended to read as
7-18 follows:
7-19 (a) A secured party shall apply or pay over for application
7-20 the cash proceeds of disposition under Section 9.610 in the
7-21 following order to:
7-22 (1) the reasonable expenses of retaking, holding,
7-23 preparing for disposition, processing, and disposing and, to the
7-24 extent provided for by agreement and not prohibited by law,
7-25 reasonable attorney's fees and legal expenses incurred by the
7-26 secured party;
7-27 (2) the satisfaction of obligations secured by the
7-28 security interest or agricultural lien under which the disposition
7-29 is made;
7-30 (3) the satisfaction of obligations secured by any
7-31 subordinate security interest in or other subordinate lien on the
7-32 collateral if:
7-33 (A) the secured party receives from the holder
7-34 of the subordinate security interest or other lien an authenticated
7-35 demand for proceeds before distribution of the proceeds is
7-36 completed; and
7-37 (B) in a case in which a consignor has an
7-38 interest in the collateral, the subordinate security interest or
7-39 other lien is senior to the interest of the consignor; and
7-40 (4) a secured party that is a consignor of the
7-41 collateral if the secured party receives from the consignor an
7-42 authenticated demand for proceeds before distribution of the
7-43 proceeds is completed.
7-44 (c) A secured party need not apply or pay over for
7-45 application noncash proceeds of disposition under Section 9.610
7-46 [this section] unless the failure to do so would be commercially
7-47 unreasonable. A secured party that applies or pays over for
7-48 application noncash proceeds shall do so in a commercially
7-49 reasonable manner.
7-50 SECTION 22. Subsections (b) and (g), Section 9.625, Business
7-51 & Commerce Code, as effective July 1, 2001, are amended to read as
7-52 follows:
7-53 (b) Subject to Subsections (c), (d), and (f), a person is
7-54 liable for damages in the amount of any loss caused by a failure to
7-55 comply with this chapter. Loss caused by a failure to comply [with
7-56 a request under Section 9.210] may include loss resulting from the
7-57 debtor's inability to obtain, or increased costs of, alternative
7-58 financing.
7-59 (g) If a secured party fails to comply with a request
7-60 regarding a list of collateral or a statement of account under
7-61 Section 9.210, the secured party may claim a security interest only
7-62 as shown in the list or statement included in the request as
7-63 against a person that is reasonably misled by the failure.
7-64 SECTION 23. (a) Sections 3.02 through 3.08, Chapter 414,
7-65 Acts of the 76th Legislature, Regular Session, 1999, are reenacted
7-66 as Subchapter G, Chapter 9, Business & Commerce Code, and amended
7-67 to read as follows:
7-68 SUBCHAPTER G. TRANSITION PROVISIONS
7-69 Sec. 9.701. EFFECTIVE DATE OF REVISIONS. (a) In this
8-1 subchapter, "revision" means the revision of this chapter enacted
8-2 by the 76th Legislature, Regular Session, 1999.
8-3 (b) The revision takes effect July 1, 2001.
8-4 Sec. 9.702. [SECTION 3.02.] SAVING CLAUSE. (a) Except as
8-5 otherwise provided in this subchapter [article], this chapter, as
8-6 revised, [Act] applies to a transaction or lien within its scope,
8-7 even if the transaction or lien was entered into or created before
8-8 the revision [this Act] takes effect.
8-9 (b) Except as otherwise provided in Subsection (c) [of this
8-10 section] and Sections 9.703-9.709 [3.03-3.08 of this article]:
8-11 (1) transactions and liens that were not governed by
8-12 this chapter [Chapter 9, Business & Commerce Code], as it existed
8-13 immediately before the effective date of the revision [this Act],
8-14 were validly entered into or created before the effective date of
8-15 the revision [this Act], and would be subject to this chapter
8-16 [Chapter 9, Business & Commerce Code], as revised [amended by this
8-17 Act], if they had been entered into or created on or after the
8-18 effective date of the revision [this Act], and the rights, duties,
8-19 and interests flowing from those transactions and liens remain
8-20 valid on and after the effective date of the revision [this Act];
8-21 and
8-22 (2) the transactions and liens may be terminated,
8-23 completed, consummated, and enforced as required or permitted by
8-24 this chapter [Chapter 9, Business & Commerce Code], as revised
8-25 [amended by this Act], or by the law that otherwise would apply if
8-26 the revision [this Act] had not taken effect.
8-27 (c) The revision [This Act] does not affect an action, case,
8-28 or proceeding commenced before the effective date of the revision
8-29 [this Act].
8-30 Sec. 9.703. [SECTION 3.03.] SECURITY INTEREST PERFECTED
8-31 BEFORE EFFECTIVE DATE. (a) A security interest that is
8-32 enforceable immediately before the effective date of the revision
8-33 [this Act] and would have priority over the rights of a person that
8-34 becomes a lien creditor at that time is a perfected security
8-35 interest under this chapter [Chapter 9, Business & Commerce Code],
8-36 as revised [amended by this Act], if, on the effective date of the
8-37 revision [this Act], the applicable requirements for enforceability
8-38 and perfection under this chapter [Chapter 9, Business & Commerce
8-39 Code], as revised [amended by this Act], are satisfied without
8-40 further action.
8-41 (b) Except as otherwise provided in Section 9.705 [3.05 of
8-42 this article], if, immediately before the revision [this Act] takes
8-43 effect, a security interest is enforceable and would have priority
8-44 over the rights of a person that becomes a lien creditor at that
8-45 time, but the applicable requirements for enforceability or
8-46 perfection under this chapter [Chapter 9, Business & Commerce
8-47 Code], as revised [amended by this Act], are not satisfied when the
8-48 revision [this Act] takes effect, the security interest:
8-49 (1) is a perfected security interest until July 1,
8-50 2002;
8-51 (2) remains enforceable after June 30, 2002, only if
8-52 the security interest becomes enforceable under Section 9.203,
8-53 [Business & Commerce Code,] as revised [amended by this Act],
8-54 before July 1, 2002; and
8-55 (3) remains perfected after June 30, 2002, only if the
8-56 applicable requirements for perfection under this chapter [Chapter
8-57 9, Business & Commerce Code], as revised [amended by this Act], are
8-58 satisfied before July 1, 2002.
8-59 Sec. 9.704. [SECTION 3.04.] SECURITY INTEREST UNPERFECTED
8-60 BEFORE EFFECTIVE DATE. A security interest that is enforceable
8-61 immediately before the revision [this Act] takes effect but that
8-62 would be subordinate to the rights of a person that becomes a lien
8-63 creditor at that time:
8-64 (1) remains an enforceable security interest until
8-65 July 1, 2002;
8-66 (2) remains enforceable after June 30, 2002, if the
8-67 security interest becomes enforceable under Section 9.203,
8-68 [Business & Commerce Code,] as revised [amended by this Act],
8-69 before July 1, 2002; and
9-1 (3) becomes perfected:
9-2 (A) without further action, when the revision
9-3 [this Act] takes effect, if the applicable requirements for
9-4 perfection under this chapter [Chapter 9, Business & Commerce
9-5 Code], as revised [amended by this Act], are satisfied before or at
9-6 that time; or
9-7 (B) when the applicable requirements for
9-8 perfection are satisfied if the requirements are satisfied after
9-9 the revision [this Act] takes effect.
9-10 Sec. 9.705. [SECTION 3.05.] EFFECTIVENESS OF ACTION TAKEN
9-11 BEFORE EFFECTIVE DATE. (a) If action, other than the filing of a
9-12 financing statement, is taken before the revision [this Act] takes
9-13 effect and the action would have resulted in priority of a security
9-14 interest over the rights of a person that becomes a lien creditor
9-15 had the security interest become enforceable before the revision
9-16 [this Act] takes effect, the action is effective to perfect a
9-17 security interest that attaches under this chapter [Chapter 9,
9-18 Business & Commerce Code], as revised [amended by this Act], within
9-19 one year after the effective date of the revision [this Act]. An
9-20 attached security interest becomes unperfected on July 1, 2002,
9-21 unless the security interest becomes a perfected security interest
9-22 under this chapter [Chapter 9, Business & Commerce Code], as
9-23 revised [amended by this Act], before that date.
9-24 (b) The filing of a financing statement before the effective
9-25 date of the revision [this Act] is effective to perfect a security
9-26 interest to the extent the filing would satisfy the applicable
9-27 requirements for perfection under this chapter [Chapter 9, Business
9-28 & Commerce Code], as revised [amended by this Act].
9-29 (c) The revision [This Act] does not render ineffective an
9-30 effective financing statement that, before the effective date of
9-31 the revision [this Act], is filed and satisfies the applicable
9-32 requirements for perfection under the law of the jurisdiction
9-33 governing perfection as provided in Section 9.103, [Business &
9-34 Commerce Code,] as it existed immediately before the effective date
9-35 of the revision [this Act]. However, except as otherwise provided
9-36 in Subsections (d) and (e) [of this section] and Section 9.706
9-37 [3.06 of this article], the financing statement ceases to be
9-38 effective at the earlier of:
9-39 (1) the time the financing statement would have ceased
9-40 to be effective under the law of the jurisdiction in which it is
9-41 filed; or
9-42 (2) June 30, 2006.
9-43 (d) The filing of a continuation statement after the
9-44 revision [this Act] takes effect does not continue the
9-45 effectiveness of the financing statement filed before the revision
9-46 [this Act] takes effect. However, upon the timely filing of a
9-47 continuation statement after the revision [this Act] takes effect
9-48 and in accordance with the law of the jurisdiction governing
9-49 perfection as provided in Subchapter C, [Chapter 9, Business &
9-50 Commerce Code,] as revised [amended by this Act], the effectiveness
9-51 of a financing statement filed in the same office in that
9-52 jurisdiction before the revision [this Act] takes effect continues
9-53 for the period provided by the law of that jurisdiction.
9-54 (e) Subsection (c)(2) [of this section] applies to a
9-55 financing statement that, before the revision [this Act] takes
9-56 effect, is filed against a transmitting utility and satisfies the
9-57 applicable requirements for perfection under the law of the
9-58 jurisdiction governing perfection as provided in Section 9.103, as
9-59 it existed immediately before the effective date of the revision
9-60 [this Act], only to the extent that Subchapter C, [Chapter 9,
9-61 Business & Commerce Code,] as revised [amended by this Act],
9-62 provides that the law of a jurisdiction other than the jurisdiction
9-63 in which the financing statement is filed governs perfection of a
9-64 security interest in collateral covered by the financing statement.
9-65 (f) A financing statement that includes a financing
9-66 statement filed before the revision [this Act] takes effect and a
9-67 continuation statement filed after the revision [this Act] takes
9-68 effect is effective only to the extent that it satisfies the
9-69 requirements of Subchapter E, [Chapter 9, Business & Commerce
10-1 Code,] as revised [amended by this Act], for an initial financing
10-2 statement.
10-3 Sec. 9.706. [SECTION 3.06.] WHEN INITIAL FINANCING
10-4 STATEMENT SUFFICES TO CONTINUE EFFECTIVENESS OF FINANCING
10-5 STATEMENT. (a) The filing of an initial financing statement in
10-6 the office specified in Section 9.501, [Business & Commerce Code,]
10-7 as revised [amended by this Act], continues the effectiveness of a
10-8 financing statement filed before the revision [this Act] takes
10-9 effect if:
10-10 (1) the filing of an initial financing statement in
10-11 that office would be effective to perfect a security interest under
10-12 this chapter [Chapter 9, Business & Commerce Code], as revised
10-13 [amended by this Act];
10-14 (2) the pre-effective-date financing statement was
10-15 filed in an office in another state or another office in this
10-16 state; and
10-17 (3) the initial financing statement satisfies
10-18 Subsection (c) [of this section].
10-19 (b) The filing of an initial financing statement under
10-20 Subsection (a) [of this section] continues the effectiveness of the
10-21 pre-effective-date financing statement:
10-22 (1) if the initial financing statement is filed before
10-23 the revision [this Act] takes effect, for the period provided in
10-24 Section 9.403, [Business & Commerce Code,] as it existed
10-25 immediately before the effective date of the revision [this Act],
10-26 with respect to a financing statement; and
10-27 (2) if the initial financing statement is filed after
10-28 the revision [this Act] takes effect, for the period provided in
10-29 Section 9.515, [Business & Commerce Code,] as revised [amended by
10-30 this Act], with respect to an initial financing statement.
10-31 (c) To be effective for purposes of Subsection (a) [of this
10-32 section], an initial financing statement must:
10-33 (1) satisfy the requirements of Subchapter E, [Chapter
10-34 9, Business & Commerce Code,] as revised [amended by this Act], for
10-35 an initial financing statement;
10-36 (2) identify the pre-effective-date financing
10-37 statement by indicating the office in which the financing statement
10-38 was filed and providing the dates of filing and file numbers, if
10-39 any, of the financing statement and of the most recent continuation
10-40 statement filed with respect to the financing statement; and
10-41 (3) indicate that the pre-effective-date financing
10-42 statement remains effective.
10-43 Sec. 9.707. AMENDMENT OF PRE-EFFECTIVE-DATE FINANCING
10-44 STATEMENT. (a) In this section, "pre-effective-date financing
10-45 statement" means a financing statement filed before the revision
10-46 takes effect.
10-47 (b) After the revision takes effect, a person may add or
10-48 delete collateral covered by, continue or terminate the
10-49 effectiveness of, or otherwise amend the information provided in a
10-50 pre-effective-date financing statement only in accordance with the
10-51 law of the jurisdiction governing perfection as provided in
10-52 Subchapter C. However, the effectiveness of a pre-effective-date
10-53 financing statement also may be terminated in accordance with the
10-54 law of the jurisdiction in which the financing statement is filed.
10-55 (c) Except as otherwise provided in Subsection (d), if the
10-56 law of this state governs perfection of a security interest, the
10-57 information in a pre-effective-date financing statement may be
10-58 amended after the revision takes effect only if:
10-59 (1) the pre-effective-date financing statement and an
10-60 amendment are filed in the office specified in Section 9.501;
10-61 (2) an amendment is filed in the office specified in
10-62 Section 9.501 concurrently with, or after the filing in that office
10-63 of, an initial financing statement that satisfies Section 9.706(c);
10-64 or
10-65 (3) an initial financing statement that provides the
10-66 information as amended and satisfies Section 9.706(c) is filed in
10-67 the office specified in Section 9.501.
10-68 (d) If the law of this state governs perfection of a
10-69 security interest, the effectiveness of a pre-effective-date
11-1 financing statement may be continued only under Sections 9.705(d)
11-2 and (f) or Section 9.706.
11-3 (e) Whether or not the law of this state governs perfection
11-4 of a security interest, the effectiveness of a pre-effective-date
11-5 financing statement filed in this state may be terminated after the
11-6 revision takes effect by filing a termination statement in the
11-7 office in which the pre-effective-date financing statement is
11-8 filed, unless an initial financing statement that satisfies Section
11-9 9.706(c) has been filed in the office specified by the law of the
11-10 jurisdiction governing perfection as provided in Subchapter C as
11-11 the office in which to file a financing statement.
11-12 Sec. 9.708. [SECTION 3.07.] PERSONS ENTITLED TO FILE
11-13 INITIAL FINANCING STATEMENT OR CONTINUATION STATEMENT. A person
11-14 may file an initial financing statement or a continuation statement
11-15 under this subchapter [article] if:
11-16 (1) the secured party of record authorizes the filing;
11-17 and
11-18 (2) the filing is necessary under this subchapter
11-19 [article]:
11-20 (A) to continue the effectiveness of a financing
11-21 statement filed before the revision [this Act] takes effect; or
11-22 (B) to perfect or continue the perfection of a
11-23 security interest.
11-24 Sec. 9.709. [SECTION 3.08.] PRIORITY. (a) This chapter,
11-25 as revised, [Act] determines the priority of conflicting claims to
11-26 collateral. However, if the relative priorities of the claims were
11-27 established before the revision [this Act] takes effect, this
11-28 chapter [Chapter 9, Business & Commerce Code], as it existed before
11-29 the effective date of the revision [this Act], determines priority.
11-30 (b) For purposes of Section 9.322(a), [Business & Commerce
11-31 Code,] as revised [amended by this Act], the priority of a security
11-32 interest that becomes enforceable under Section 9.203, [Business &
11-33 Commerce Code,] as revised [amended by this Act], dates from the
11-34 time the revision [this Act] takes effect if the security interest
11-35 is perfected under this chapter [Chapter 9, Business & Commerce
11-36 Code], as revised [amended by this Act], by the filing of a
11-37 financing statement before the revision [this Act] takes effect
11-38 that would not have been effective to perfect the security interest
11-39 under this chapter [Chapter 9, Business & Commerce Code], as it
11-40 existed immediately before the effective date of the revision [this
11-41 Act]. This subsection does not apply to conflicting security
11-42 interests each of which is perfected by the filing of such a
11-43 financing statement.
11-44 (b) Section 3.01, Chapter 414, Acts of the 76th Legislature,
11-45 Regular Session, 1999, is repealed.
11-46 SECTION 24. Subsection (b), Section 1.105, Business &
11-47 Commerce Code, as effective July 1, 2001, is amended to read as
11-48 follows:
11-49 (b) Where one of the following provisions of this title
11-50 specifies the applicable law, that provision governs and a contrary
11-51 agreement is effective only to the extent permitted by the law
11-52 (including the conflict of laws rules) so specified:
11-53 Rights of creditors against sold goods. Section 2.402.
11-54 Applicability of the chapter on Leases. Sections
11-55 2A.105 and 2A.106.
11-56 Applicability of the chapter on Bank Deposits and
11-57 Collections. Section 4.102.
11-58 Governing law in the chapter on Funds Transfers.
11-59 Section 4A.507.
11-60 Letters of Credit. Section 5.116.
11-61 Applicability of the chapter on Investment Securities.
11-62 Section 8.110.
11-63 Law governing perfection, the effect of perfection or
11-64 nonperfection, and the priority of security interests and
11-65 agricultural liens. Sections 9.301-9.307.
11-66 SECTION 25. This Act takes effect immediately if it receives
11-67 a vote of two-thirds of all the members elected to each house, as
11-68 provided by Section 39, Article III, Texas Constitution. If this
11-69 Act does not receive the vote necessary for immediate effect, this
12-1 Act takes effect September 1, 2001.
12-2 * * * * *