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A BILL TO BE ENTITLED
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AN ACT
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relating to the development of a central filing system by the |
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secretary of state for the filing of financing statements for |
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certain security interests; authorizing fees; providing civil |
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penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 9.302, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF |
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AGRICULTURAL LIENS. (a) Subject to Chapter 607, while [While] farm |
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products are located in a jurisdiction, the local law of that |
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jurisdiction governs perfection, the effect of perfection or |
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nonperfection, and the priority of an agricultural lien on the farm |
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products. |
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(b) Notwithstanding any law to the contrary, to the extent |
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of any conflict between this chapter and Chapter 607, Chapter 607 |
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controls. |
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SECTION 2. Section 9.501, Business & Commerce Code, is |
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amended by amending Subsection (a) and adding Subsection (c) to |
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read as follows: |
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(a) Except as otherwise provided in Subsection (b) or (c), |
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if the local law of this state governs perfection of a security |
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interest [or agricultural lien], the office in which to file a |
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financing statement to perfect the security interest [or
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agricultural lien] is: |
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(1) the office designated for the filing or recording |
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of a record of a mortgage on the related real property, if: |
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(A) the collateral is as-extracted collateral or |
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timber to be cut; or |
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(B) the financing statement is filed as a fixture |
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filing and the collateral is goods that are or are to become |
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fixtures; or |
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(2) the office of the Secretary of State, in all other |
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cases, including a case in which the collateral is goods that are or |
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are to become fixtures and the financing statement is not filed as a |
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fixture filing. |
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(c) Notwithstanding any other law to the contrary, the |
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office in which to file a financing statement to perfect an |
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agricultural lien is the office of the Secretary of State as |
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provided by Chapter 607. |
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SECTION 3. Title 12, Business & Commerce Code, is amended by |
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adding Chapter 607 to read as follows: |
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CHAPTER 607. CENTRAL FILING SYSTEM AND NOTICE REQUIREMENTS FOR |
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FARM PRODUCTS |
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Sec. 607.001. DEFINITIONS. In this chapter: |
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(1) "Buyer" means a person who, in the ordinary course |
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of business, buys farm products from another person who is engaged |
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in farming operations and who is in the business of selling farm |
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products. |
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(2) "Central filing system" means a statewide system |
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that is developed by the secretary of state and certified by the |
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secretary of the United States Department of Agriculture to be used |
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for the filing of an effective financing statement. |
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(3) "Commission merchant" means a person engaged in |
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the business of receiving a farm product for the purpose of selling |
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the farm product on commission or on behalf of another person. |
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(4) "Debtor" has the meaning assigned by Section |
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9.102. |
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(5) "Effective financing statement" means a financing |
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statement, as defined by Section 9.102, that covers a farm product |
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and that is filed in compliance with this chapter. |
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(6) "Farm products" has the meaning assigned by |
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Section 9.102. |
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(7) "Selling agent" means a person, other than a |
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commission merchant, who is engaged in the business of negotiating |
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the sale or purchase of a farm product on behalf of a person engaged |
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in farming operations. |
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(8) "Writing" or "written" means information that is |
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inscribed on a tangible medium or that is stored in an electronic or |
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other medium and is retrievable in perceivable form. |
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Sec. 607.002. RULES. The secretary of state shall adopt |
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rules as necessary to implement this chapter. |
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Sec. 607.003. FORMS; NOTICE. (a) The secretary of state |
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shall develop and maintain standard forms for an effective |
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financing statement, a statement of continuation, a statement of |
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partial release, a statement of amendment, a statement of |
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assignment, and a statement of termination that are consistent with |
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this chapter. |
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(b) Except as otherwise provided by this chapter, receipt of |
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a written notice required by this chapter is presumed if the notice |
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is sent by first class mail, postage prepaid. |
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Sec. 607.004. EFFECTIVE FINANCING STATEMENT. (a) An |
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effective financing statement must: |
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(1) be signed by the secured party and filed by the |
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secured party with the office of the secretary of state in the |
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central filing system under Section 607.007; |
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(2) be signed by the debtor; and |
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(3) provide the following information: |
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(A) the name and address of the secured party; |
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(B) the name and address of the debtor; |
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(C) one of the following: |
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(i) the social security number of the |
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debtor; |
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(ii) if the debtor is not an individual, the |
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taxpayer identification number of the debtor; or |
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(iii) another unique identifier |
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established by rule of the secretary of state; |
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(D) the farm product covered by the effective |
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financing statement; |
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(E) each county in this state where the farm |
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product is produced or will be produced, or a blanket code |
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established by the secretary of state that covers all counties in |
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this state; |
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(F) a description of the farm product that is |
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subject to a security interest only if a description is needed to |
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distinguish that farm product from other farm products owned by the |
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same person but not subject to the security interest; and |
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(G) the crop year, unless for the duration of the |
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effective financing statement every crop of the farm product that |
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is subject to the security interest is to be subject to the |
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interest. |
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(b) A secured party may use one effective financing |
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statement to reflect multiple farm products or farm products in |
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multiple counties. |
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(c) An effective financing statement must be amended to |
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reflect material changes. An amendment to an effective financing |
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statement must be: |
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(1) in writing; |
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(2) signed by the secured party and the debtor; and |
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(3) filed not later than the 90th day after the |
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original filing date. |
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(d) An effective financing statement remains in effect for a |
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period of five years from the date of filing and may be extended for |
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an additional five-year period by filing or refiling a statement of |
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continuation at least 180 days before the expiration date of the |
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initial effective period. |
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(e) The secretary of state shall remove an effective |
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financing statement from the central filing system when the |
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statement expires or when a statement of termination is received |
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from a secured party, whichever occurs first. |
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(f) The secretary of state may collect a fee for each |
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effective financing statement filed under this chapter. An |
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effective financing statement is not filed until the fee authorized |
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by this section is paid as provided by Section 607.007(l). |
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(g) An effective financing statement is considered |
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satisfactory if it substantially complies with the requirements of |
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this section even if the statement contains minor errors that are |
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not seriously misleading as determined by the secretary of state. |
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Sec. 607.005. PROTECTION OF BUYERS, COMMISSION MERCHANTS, |
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AND SELLING AGENTS. A buyer, a commission merchant, or a selling |
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agent who, in the ordinary course of business, purchases a farm |
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product from a person engaged in farming operations takes the farm |
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product subject to a security interest in the farm product if: |
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(1) either: |
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(A) the buyer, commission merchant, or selling |
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agent fails to register with the secretary of state as prescribed by |
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rule before purchasing the farm product and the secured party has |
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filed an effective financing statement in the central filing system |
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that covers the farm product being purchased; or |
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(B) the buyer, commission merchant, or selling |
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agent: |
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(i) receives from the secretary of state |
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written notice under Section 607.007(e) or (i); and |
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(ii) does not secure, by performing any |
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payment obligation or other method, a waiver or release from the |
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secured party of the security interest specified in an effective |
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financing statement; or |
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(2) the secured party or the seller of the farm product |
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provides written notice of the security interest to the buyer, |
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commission merchant, or selling agent. |
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Sec. 607.006. IMMUNITY FROM LIABILITY. A buyer, commission |
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merchant, or selling agent who, in the ordinary course of business, |
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purchases farm products from or sells farm products for a person |
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engaged in farming operations may not be liable for errors or |
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inaccuracies generated by the central filing system if the buyer, |
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commission merchant, or selling agent has otherwise complied with |
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this chapter. |
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Sec. 607.007. CENTRAL FILING SYSTEM. (a) The secretary of |
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state shall develop and implement a central filing system, and |
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shall obtain the necessary certification for the system from the |
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United States Department of Agriculture. |
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(b) The secretary of state may adopt rules for the |
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implementation and operation of the central filing system. |
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(c) The Department of Information Resources shall assist |
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the secretary of state in developing and implementing the central |
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filing system. |
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(d) The secretary of state shall use the central filing |
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system to: |
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(1) record the date and hour of the filing of each |
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effective financing statement; |
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(2) compile all effective financing statements into a |
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master list that: |
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(A) is organized by farm product; |
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(B) is arranged within each farm product: |
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(i) as appropriate: |
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(a) in alphabetical order by last name |
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of the debtor or, if the debtor is not an individual, the first word |
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in the name of the debtor; |
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(b) in numerical order by social |
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security number of the debtor or, if the debtor is not an |
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individual, the tax identification number of the debtor; or |
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(c) according to a unique identifier |
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established by rule of the secretary of state; |
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(ii) geographically by county in which the |
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farm product was produced; and |
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(iii) by crop year; |
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(C) includes the information described by |
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Section 607.004(a)(3); |
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(D) is available in part in print or electronic |
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format; and |
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(E) can be organized by other additional sorting |
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methods; and |
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(3) maintain records of all buyers of farm products, |
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commission merchants, selling agents, and others who register with |
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the secretary of state, using a form that requires: |
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(A) the name and address of each registrant; |
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(B) information on the farm product or products |
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that the registrant is requesting; |
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(C) the name of each county in this state where |
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the farm product is produced or will be produced, or a blanket code |
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indicating the product is produced or will be produced in all |
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counties of this state; and |
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(D) an authorized signature. |
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(e) On or before the last business day of each month, the |
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secretary of state shall provide to a registrant a copy of those |
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portions of the master list that include information requested by |
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the registrant. The copy shall be presumed to have been received by |
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the third business day of the following month. |
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(f) A registrant is considered registered only for those |
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portions of the master list for which the registrant registers. |
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(g) A registrant is subject only to security interests shown |
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on the portions of the master list that the registrant receives as a |
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consequence of registration with the secretary of state. If a |
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particular security interest is shown on the master list but was |
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included after the last regular distribution of portions of the |
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master list to registrants, a registrant may not be subject to that |
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security interest. |
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(h) The registration with the secretary of state of a buyer, |
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commission merchant, selling agent, or other registrant expires one |
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year after the effective date of the registration. |
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(i) On request, the secretary of state shall provide, not |
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later than 24 hours after the time of the request, verbal |
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confirmation of the existence or nonexistence of any effective |
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financing statement on file. Not later than the close of the |
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business day following the date on which the request was received, |
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the secretary of state shall provide to a requestor written |
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confirmation of the existence of an effective financing statement. |
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(j) The state or a political subdivision of the state is not |
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liable if a loss or claim results from a confirmation of the |
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existence or nonexistence of an effective financing statement on |
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file with the secretary of state made in good faith by an employee |
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of the secretary of state under this section. |
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(k) A filing with the secretary of state under this section |
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is in addition to other filing requirements under this chapter. |
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(l) An effective financing statement is not considered |
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filed under this section until all authorized fees are paid to the |
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secretary of state. |
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(m) The secured party shall file a termination statement not |
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later than the 20th day after the date there are no outstanding |
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secured obligations or commitments to make advances, incur |
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obligations, or otherwise give value. The secured party may not be |
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required to file a termination statement if the debtor makes a |
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written request addressed to the secured party that a termination |
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not be filed. The request must be signed by the debtor or an |
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authorized representative of the debtor and may be made at any time |
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before the expiration date of the effective financing statement. |
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If the affected secured party does not file a termination statement |
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as required by this subsection, the secured party is liable to this |
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state for a civil penalty of $500 and to the debtor for any loss |
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caused to the debtor by the secured party's failure to terminate the |
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effective financing statement. |
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(n) The attorney general may enforce Subsection (m) on |
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behalf of the secretary of state and may take appropriate actions to |
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collect any penalties owed under Subsection (m). |
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Sec. 607.008. WRITTEN NOTICE AFFECTING FARM PRODUCTS; |
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DISCLOSURE REQUIREMENTS; PENALTY. (a) A secured party or a seller |
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of farm products may provide to a buyer, a commission merchant, or a |
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selling agent, not earlier than one year before the sale of the farm |
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products, a written notice of a security interest organized |
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according to farm products that: |
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(1) is an original or reproduced copy thereof; |
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(2) includes: |
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(A) the name and address of the secured party; |
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(B) the name and address of the debtor; |
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(C) one of the following: |
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(i) the social security number of the |
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debtor; |
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(ii) if the debtor is not an individual, the |
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taxpayer identification number of the debtor; or |
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(iii) another unique identifier |
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established by rule of the secretary of state; and |
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(D) a description of the farm product that is |
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subject to the security interest created by the debtor, including |
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the amount of the product where applicable, crop year, county, and a |
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reasonable description of the property; and |
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(3) states any payment obligations imposed on the |
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buyer, commission merchant, or selling agent by the secured party |
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as conditions for waiver or release of the security interest. |
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(b) A written notice under Subsection (a) must be amended to |
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reflect material changes. An amendment to a written notice must be: |
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(1) in writing; |
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(2) signed; and |
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(3) provided not later than the 10th day after the |
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original notice date. |
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(c) A written notice remains in effect until the earlier of |
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the expiration period of the effective filing statement or the date |
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of a transmission of notice signed by the secured party that the |
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effective filing statement has lapsed. |
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(d) For purposes of this section, "receipt" of a written |
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notice to a buyer, a commission merchant, or a selling agent occurs |
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within a reasonable time after the secured party or the seller of |
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the farm product sends the notice if the notice is sent in a manner |
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consistent with Section 1.201(b)(36). If a written notice is |
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transmitted electronically, the notice is presumed to be received |
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immediately on transmission. If the written notice is deposited in |
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the mail, the notice is presumed to be received on the third |
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business day after the date on which the notice was deposited. |
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(e) A secured party who intends to provide written notice of |
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the existence of a security interest in a farm product as provided |
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by this section shall require the person engaged in farming |
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operations to execute a security agreement that includes a |
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provision requiring the person to provide to the secured party a |
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list of the buyers, commission merchants, and selling agents to or |
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through whom the person may sell the farm product. If the person |
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engaged in farming operations sells the farm product collateral to |
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a buyer or through a commission merchant or selling agent not |
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included on the list, the person engaged in farming operations is |
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subject to Subsection (f), unless the person: |
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(1) has notified the secured party in writing of the |
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identity of the buyer, commission merchant, or selling agent at |
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least seven days before the date of the sale; or |
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(2) has accounted to the secured party for the |
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proceeds of the sale not later than the 20th day after the date of |
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the sale. |
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(f) A person who violates this section is liable to this |
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state for a civil penalty in an amount that is the greater of: |
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(1) $5,000; or |
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(2) 15 percent of the value or benefit received for the |
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farm product described in the security agreement. |
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SECTION 4. As soon as practicable after the effective date |
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of this Act, the office of the secretary of state shall adopt rules |
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and forms necessary to implement Chapter 607, Business & Commerce |
|
|
Code, as added by this Act. |
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SECTION 5. This Act takes effect September 1, 2019. |