2010 Amendments to UCC Article 9 Enacted in Seven States, Others Enacted Next Year

Nccusl.org:

(June 15, 2011) -

Uniform Law Commission
111 N. Wabash Ave., Suite 1010, Chicago, IL 60602
312-450-6600, www.uniformlaws.org

Contact: Michael Kerr, ULC Legislative Director, michael.kerr@uniformlaws.org
Katie Robinson, ULC Communications Officer, katie.robinson@uniformlaws.org

For Immediate Release:

Seven states have enacted the 2010 Amendments to Article 9 of the UCC

June 15, 2011 – Seven states – Indiana, Minnesota, Nebraska, Nevada, North Dakota, Texas, and Washington – are the first states to adopt important amendments to the Uniform Commercial Code (UCC) Article 9. The 2010 Amendments are designed to go into effect simultaneously on July 1, 2013; many more states are expected to enact the amendments next year.

UCC Article 9 governs secured transactions in personal property (the granting of credit secured by personal property). Hundreds of millions of dollars of commercial and consumer credit are granted every year in secured transactions under UCC Article 9. The UCC9 rules apply, for example, when a manufacturer finances the acquisition of machinery, a retailer finances inventory, or a consumer finances home furnishings.

UCC9 provides rules that govern any transaction, other than a finance lease, that involves the granting of credit coupled with a creditor's interest in a debtor's personal property. If the debtor defaults, the creditor may possess and sell the property to satisfy the debt. The creditor's interest is called a security interest. Perfection of the creditor's security interest establishes the creditor's priority over other creditors. UCC9 specifies who has the first rights in the collateral when two or more competing creditors have legally enforceable interests in the collateral.

UCC9 was substantially revised in 1998 and adopted in all states. The 2010 Amendments to UCC9 modify the existing statute to respond to filing issues and address other matters that have arisen in practice following a decade of experience with the 1998 version of UCC9.

Of most importance, the 2010 Amendments provide greater guidance as to the name of an individual debtor to be provided on a financing statement. The amendments offer two alternatives to each state:

• Alternative A provides that, if the debtor holds a driver’s license issued by the state where the financing statement is filed, the debtor’s name as it appears on the financing statement is the name required to be used on the financing statement. If the debtor does not have such a driver’s license, either the debtor’s actual name or the debtor’s surname and first personal name may be used on the financing statement.
• Alternative B provides that the debtor’s driver’s license name, the debtor’s actual name or the debtor’s surname and first personal name may be used on the financing statement.

Here is the Permanent Editorial Board draft report on the UCC rules applicable of the assignment of mortgage notes:

June 17, 2011 PEB Report on Mortgage Notes-Circulation Draft