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Enrolled Version - Final Version House Bill 4251 History

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ENROLLED

H. B. 4251

 

(By Delegates Doyle, Rodighiero, Ferro,

 Frazier, Reynolds and Storch)

[Passed March 8, 2012; in effect ninety days from passage.]

 

 

 

AN ACT to repeal §46-11-101, §46-11-102, §46-11-103, §46-11-104, §46-11-105, §46-11-106, §46-11-107 and §46-11-108 of the Code of West Virginia, 1931, as amended; to amend and reenact §46-2A-103 of said code; to amend and reenact §46-9-102, §46-9-105, §46-9-307, §46-9-311, §46-9-316, §46-9-317, §46-9-326, §46-9-406, §46-9-408, §46-9-502, §46-9-503, §46-9-507, §46-9-515, §46-9-516, §46-9-518, §46-9-607 and §46-9-625; and to amend said code by adding thereto nine new sections, designated §46-9-801, §46-9-802, §46-9-803, §46-9-804, §46-9-805, §46-9-806, §46-9-807, §46-9-808 and §46-9-809, all relating generally to amendments to the uniform commercial code; amending and adding definitions; amending what constitutes control of electronic chattle paper; providing for effect on filed financing statements of change in governing law; amending priority of security interests created by new debtor; amending effectiveness of terms restricting assignment; improving the system for filing financing statements; providing greater protection for existing secured party having a security interest in after-acquired property upon relocation of debtor; reforming the correction statement process; technical changes; and providing transitional rules regarding perfection of security interests, effectiveness of financing statements, persons entitled to file financing statements and priority of financing statements.

Be it enacted by the Legislature of West Virginia:

    That §46-11-101, §46-11-102, §46-11-103, §46-11-104, §46-11-105, §46-11-106, §46-11-107 and §46-11-108 of the Code of West Virginia, 1931, as amended, be repealed; that §46-2A-103 of said code be amended and reenacted; that §46-9-102, §46-9-105, §46-9-307, §46-9-311, §46-9-316, §46-9-317, §46-9-326, §46-9-406, §46-9-408, §46-9-502, §46-9-503, §46-9-507, §46-9-515, §46-9-516, §46-9-518, §46-9-607 and §46-9-625 of said code be amended and reenacted; and that said code be amended by adding thereto nine new sections, designated §46-9-801, §46-9-802, §46-9-803, §46-9-804, §46-9-805, §46-9-806, §46-9-807, §46-9-808 and §46-9-809, all to read as follows:

ARTICLE 2A. LEASES.

Part 1. General Provisions.

§46-2A–103. Definitions and index of definitions.

    (1) In this article unless the context otherwise requires:

    (a) "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting contract for sale, but does not include, a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

    (b) "Cancellation" occurs when either party puts an end to the lease contract for default by the other party.

    (c) "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.

    (d) "Conforming" goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.

    (e) "Consumer lease" shall have the same meaning as that ascribed to it in section one hundred two, article one, chapter forty-six-a of this code.

    (f) "Fault" means wrongful act, omission, breach or default.

    (g) "Finance lease" means a lease with respect to which:

    (i) The lessor does not select, manufacture or supply the goods;

    (ii) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and

    (iii) One of the following occurs:

    (A) The lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;

    (B) The lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;

    (C) The lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or

    (D) If the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing: (a) Of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person; (b) that the lessee is entitled under this article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.

    (h) "Goods" means all things that are movable at the time of identification to the lease contract, or are fixtures (section 2A-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.

    (i) "Installment lease contract" means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent.

    (j) "Lease" means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.

    (k) "Lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this article. Unless the context clearly indicates otherwise, the term includes a sublease agreement.

    (l) "Lease contract" means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.

    (m) "Leasehold interest" means the interest of the lessor or the lessee under a lease contract.

    (n) "Lessee" means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.

    (o) "Lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

    (p) "Lessor" means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.

    (q) "Lessor’s residual interest" means the lessor’s interest in the goods after expiration, termination or cancellation of the lease contract.

    (r) "Lien" means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.

    (s) "Lot" means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.

    (t) "Merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease.

    (u) "Present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

    (v) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift or any other voluntary transaction creating an interest in goods.

    (w) "Sublease" means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.

    (x) "Supplier" means a person from whom a lessor buys or leases goods to be leased under a finance lease.

    (y) "Supply contract" means a contract under which a lessor buys or leases goods to be leased.

    (z) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

    (2) Other definitions applying to this article and the sections in which they appear are:

    "Accessions". Section 2A-310(1).

    "Construction mortgage". Section 2A-309(1)(d).

    "Encumbrance". Section 2A-309(1)(e).

    "Fixtures". Section 2A-309(1)(a).

    "Fixture filing". Section 2A-309(1)(b).

    "Purchase money lease". Section 2A-309(1)(c).

    (3) The following definitions in other articles apply to this article:

    “Account”. Section 9–102(a)(2).

    “Between merchants”. Section 2–104(3).

    “Buyer”. Section 2–103(1)(a).

    “Chattel paper”. Section 9–102(a)(11).

    “Consumer goods”. Section 9–102(a)(23).

    “Document”. Section 9–102(a)(30).

    “Entrusting”. Section 2–403(3).

    “General intangible”. Section 9–102(a)(42).

    “Instrument”. Section 9–102(a)(47).

    “Merchant”. Section 2–104(1).

    “Mortgage”. Section 9–102(a)(55).

    “Pursuant to commitment”. 9-102(a)(69).

    “Receipt”. Section 2–103(1)(c).

    “Sale”. Section 2–106(1).

    “Sale on approval”. Section 2–326.

    “Sale or return”. Section 2–326.

    “Seller”. Section 2–103(1)(d).

    (4) In addition, article one contains general definitions and principles of construction and interpretation applicable throughout this article.

ARTICLE 9. SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL PAPER.

§46-9-102. Definitions and index of definitions.

    (a) Article 9 definitions. -- In this article:

    (1) "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

    (2) "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance: (i) For property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of; (ii) for services rendered or to be rendered; (iii) for a policy of insurance issued or to be issued; (iv) for a secondary obligation incurred or to be incurred; (v) for energy provided or to be provided; (vi) for the use or hire of a vessel under a charter or other contract; (vii) arising out of the use of a credit or charge card or information contained on or for use with the card; or (viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state or person licensed or authorized to operate the game by a state or governmental unit of a state. The term includes health-care-insurance receivables. The term does not include: (i) Rights to payment evidenced by chattel paper or an instrument; (ii) commercial tort claims; (iii) deposit accounts; (iv) investment property; (v) letter-of-credit rights or letters of credit; or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.

    (3) "Account debtor" means a person obligated on an account, chattel paper or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper.

    (4) "Accounting", except as used in "accounting for", means a record:

    (A) Authenticated by a secured party;

    (B) Indicating the aggregate unpaid secured obligations as of a date not more than thirty-five days earlier or thirty-five days later than the date of the record; and

    (C) Identifying the components of the obligations in reasonable detail.

    (5) "Agricultural lien" means an interest, in farm products:

    (A) Which secures payment or performance of an obligation for:

    (i) Goods or services furnished in connection with a debtor’s farming operation; or

    (ii) Rent on real property leased by a debtor in connection with its farming operation;

    (B) Which is created by statute in favor of a person that:

    (i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor’s farming operation; or

    (ii) Leased real property to a debtor in connection with the debtor’s farming operation; and

    (C) Whose effectiveness does not depend on the person’s possession of the personal property.

    (6) "As-extracted collateral" means:

    (A) Oil, gas or other minerals that are subject to a security interest that:

    (i) Is created by a debtor having an interest in the minerals before extraction; and

    (ii) Attaches to the minerals as extracted; or

    (B) Accounts arising out of the sale at the wellhead or minehead of oil, gas or other minerals in which the debtor had an interest before extraction.

    (7) "Authenticate" means:

    (A) To sign; or

    (B), To attach to or logically associate with the record an electronic sound, symbol or process, with present intent to adopt or accept a record.

    (8) "Bank" means an organization that is engaged in the business of banking. The term includes savings banks, savings and loan associations, credit unions and trust companies.

    (9) "Cash proceeds" means proceeds that are money, checks, deposit accounts or the like.

    (10) "Certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral. The term includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral.

    (11) "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include: (i) Charters or other contracts involving the use or hire of a vessel; or (ii) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper.

    (12) "Collateral" means the property subject to a security interest or agricultural lien. The term includes:

    (A) Proceeds to which a security interest attaches;

    (B) Accounts, chattel paper, payment intangibles and promissory notes that have been sold; and

    (C) Goods that are the subject of a consignment.

    (13) "Commercial tort claim" means a claim arising in tort with respect to which:

    (A) The claimant is an organization; or

    (B) The claimant is an individual and the claim:

    (i) Arose in the course of the claimant’s business or profession; and

    (ii) Does not include damages arising out of personal injury to or the death of an individual.

    (14) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

    (15) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or another contract if the contract or option is:

    (A) Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or

    (B) Traded on a foreign commodity board of trade, exchange or market and is carried on the books of a commodity intermediary for a commodity customer.

    (16) "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books.

    (17) "Commodity intermediary" means a person that:

    (A) Is registered as a futures commission merchant under federal commodities law; or

    (B) In the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law.

    (18) "Communicate" means:

    (A) To send a written or other tangible record;

    (B) To transmit a record by any means agreed upon by the persons sending and receiving the record; or

    (C) In the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule.

    (19) "Consignee" means a merchant to which goods are delivered in a consignment.

    (20) "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:

    (A) The merchant:

    (i) Deals in goods of that kind under a name other than the name of the person making delivery;

    (ii) Is not an auctioneer; and

    (iii) Is not generally known by its creditors to be substantially engaged in selling the goods of others;

    (B) With respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;

    (C) The goods are not consumer goods immediately before delivery; and

    (D) The transaction does not create a security interest that secures an obligation.

    (21) "Consignor" means a person that delivers goods to a consignee in a consignment.

    (22) "Consumer debtor" means a debtor in a consumer transaction.

    (23) "Consumer goods" means goods that are used or bought for use primarily for personal, family or household purposes.

    (24) "Consumer-goods transaction" means a consumer transaction in which:

    (A) An individual incurs an obligation primarily for personal, family or household purposes; and

    (B) A security interest in consumer goods secures the obligation.

    (25) "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family or household purposes.

    (26) "Consumer transaction" means a transaction in which: (i) An individual incurs an obligation primarily for personal, family or household purposes; (ii) a security interest secures the obligation; and (iii) the collateral is held or acquired primarily for personal, family or household purposes. The term includes consumer-goods transactions.

    (27) "Continuation statement" means an amendment of a financing statement which:

    (A) Identifies, by its file number, the initial financing statement to which it relates; and

    (B) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement.

    (28) "Debtor" means:

    (A) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;

    (B) A seller of accounts, chattel paper, payment intangibles or promissory notes; or

    (C) A consignee.

    (29) "Deposit account" means a demand, time, savings, passbook or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.

    (30) "Document" means a document of title or a receipt of the type described in section 7-201(b).

    (31) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.

    (32) "Encumbrance" means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property.

    (33) "Equipment" means goods other than inventory, farm products or consumer goods.

    (34) "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are:

    (A) Crops grown, growing or to be grown, including:

    (i) Crops produced on trees, vines and bushes; and

    (ii) Aquatic goods produced in aquacultural operations;

    (B) Livestock, born or unborn, including aquatic goods produced in aquacultural operations;

    (C) Supplies used or produced in a farming operation; or

    (D) Products of crops or livestock in their unmanufactured states.

    (35) "Farming operation" means raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operation.

    (36) "File number" means the number assigned to an initial financing statement pursuant to section 9-519(a).

    (37) "Filing office" means an office designated in section 9-501 as the place to file a financing statement.

    (38) "Filing-office rule" means a rule adopted pursuant to section 9-526.

    (39) "Financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement.

    (40) "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying section 9-502(a) and (b). The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.

    (41) "Fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law.

    (42) "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money and oil, gas or other minerals before extraction. The term includes payment intangibles and software.

    (43) [reserved].

    (44) "Goods" means all things that are movable when a security interest attaches. The term includes: (i) Fixtures; (ii) standing timber that is to be cut and removed under a conveyance or contract for sale; (iii) the unborn young of animals; (iv) crops grown, growing or to be grown, even if the crops are produced on trees, vines or bushes; and (v) manufactured homes. The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if: (i) The program is associated with the goods in such a manner that it customarily is considered part of the goods; or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money or oil, gas, or other minerals before extraction.

    (45) "Governmental unit" means a subdivision, agency, department, county, parish, municipality or other unit of the government of the United States, a state or a foreign country. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States.

    (46) "Health-care-insurance receivable" means an interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health-care goods or services provided.

    (47) "Instrument" means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include: (i) Investment property; (ii) letters of credit; or (iii) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.

    (48) "Inventory" means goods, other than farm products, which:

    (A) Are leased by a person as lessor;

    (B) Are held by a person for sale or lease or to be furnished under a contract of service;

    (C) Are furnished by a person under a contract of service; or

    (D) Consist of raw materials, work in process or materials used or consumed in a business.

    (49) "Investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract or commodity account.

    (50) "Jurisdiction of organization", with respect to a registered organization, means the jurisdiction under whose law the organization is formed or organized.

    (51) "Letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. The term does not include the right of a beneficiary to demand payment or performance under a letter of credit.

    (52) "Lien creditor" means:

    (A) A creditor that has acquired a lien on the property involved by attachment, levy or the like;

    (B) An assignee for benefit of creditors from the time of assignment;

    (C) A trustee in bankruptcy from the date of the filing of the petition; or

    (D) A receiver in equity from the time of appointment.

    (53) "Manufactured home" means a structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States secretary of housing and urban development and complies with the standards established under Title 42 of the United States Code.

    (54) "Manufactured-home transaction" means a secured transaction:

    (A) That creates a purchase-money security interest in a manufactured home, other than a manufactured home held as inventory; or

    (B) In which a manufactured home, other than a manufactured home held as inventory, is the primary collateral.

    (55) "Mortgage" means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation.

    (56) "New debtor" means a person that becomes bound as debtor under section 9-203(d) by a security agreement previously entered into by another person.

    (57) "New value" means: (i) Money; (ii) money’s worth in property, services or new credit; or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation.

    (58) "Noncash proceeds" means proceeds other than cash proceeds.

    (59) "Obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral: (i) Owes payment or other performance of the obligation; (ii) has provided property other than the collateral to secure payment or other performance of the obligation; or (iii) is otherwise accountable, in whole or in part, for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit.

    (60) "Original debtor" except as used in section 9-310(c), means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under section 9-203(d).

    (61) "Payment intangible" means a general intangible under which the account debtor’s principal obligation is a monetary obligation.

    (62) "Person related to", with respect to an individual, means:

    (A) The spouse of the individual;

    (B) A brother, brother-in-law, sister or sister-in-law of the individual;

    (C) An ancestor or lineal descendant of the individual or the individual’s spouse; or

    (D) Any other relative, by blood or marriage, of the individual or the individual’s spouse who shares the same home with the individual.

    (63) "Person related to", with respect to an organization, means:

    (A) A person directly or indirectly controlling, controlled by or under common control with the organization;

    (B) An officer or director of, or a person performing similar functions with respect to, the organization;

    (C) An officer or director of, or a person performing similar functions with respect to, a person described in subparagraph (A);

    (D) The spouse of an individual described in subparagraph (A), (B) or (C); or

    (E) An individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C) or (D) and

shares the same home with the individual.

    (64) "Proceeds", except as used in section 9-609(b), means the following property:

    (A) Whatever is acquired upon the sale, lease, license, exchange or other disposition of collateral;

    (B) Whatever is collected on, or distributed on account of, collateral;

    (C) Rights arising out of collateral;

    (D) To the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or

    (E) To the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral.

    (65) "Production-money crops" means crops that secure a production-money obligation incurred with respect to the production of those crops.

    (66) "Production-money obligation" means an obligation of an obligor incurred for new value given to enable the debtor to produce crops if the value is in fact used for the production of the crops.

    (67) "Production of crops" includes tilling and otherwise preparing land for growing, planting, cultivating, fertilizing, irrigating, harvesting and gathering crops and protecting them from damage or disease.

    (68) "Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

    (69) "Proposal" means a record authenticated by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to sections 9-620, 9-621 and 9-622.

    (70) "Public-finance transaction" means a secured transaction in connection with which:

    (A) Debt securities are issued;

    (B) All or a portion of the securities issued have an initial stated maturity of at least twenty years; and

    (C) The debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state.

    (71) “Public organic record” means a record that is available to the public for inspection and is:

    (A) A record consisting of the record initially filed with or issued by a state or the United States to form or organize an organization and any record filed with or issued by the state or the United States which amends or restates the initial record;

    (B) An organic record of a business trust consisting of the record initially filed with a state and any record filed with the state which amends or restates the initial record, if a statute of the state governing business trusts requires that the record be filed with the state; or

    (C) A record consisting of legislation enacted by the Legislature of a state or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the state or the United States which amends or restates the name of the organization.

    (72) "Pursuant to commitment", with respect to an advance made or other value given by a secured party, means pursuant to the secured party’s obligation, whether or not a subsequent event of default or other event not within the secured party’s control has relieved or may relieve the secured party from its obligation.

    (73) "Record", except as used in "for record", "of record", "record or legal title" and "record owner", means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

    (74) "Registered organization" means an organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the state or the United States. The term includes a business trust that is formed or organized under the law of a single state if a statute of the state governing business trusts requires that the business trust’s organic record be filed with the state.

    (75) "Secondary obligor" means an obligor to the extent that:

    (A) The obligor’s obligation is secondary; or

    (B) The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor or property of either.

    (76) "Secured party" means:

    (A) A person in whose favor a security interest is created or provided under a security agreement, whether or not any obligation to be secured is outstanding;

    (B) A person that holds an agricultural lien;

    (C) A consignor;

    (D) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;

    (E) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or

    (F) A person that holds a security interest arising under section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210 or 5-118.

    (77) "Security agreement" means an agreement that creates or provides for a security interest.

    (78) "Send," in connection with a record or notification, means:

    (A) To deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or

    (B) To cause the record or notification to be received within the time that it would have been received if properly sent under paragraph (A).

    (79) "Software" means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods.

    (80) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States.

    (81) "Supporting obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument or investment property.

    (82) "Tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium.

    (83) "Termination statement" means an amendment of a financing statement which:

    (A) Identifies, by its file number, the initial financing statement to which it relates; and

    (B) Indicates either that it is a termination statement or that the identified financing statement is no longer effective.

    (84) "Transmitting utility" means a person primarily engaged in the business of:

    (A) Operating a railroad, subway, street railway or trolley bus;

    (B) Transmitting communications electrically, electromagnetically or by light;

    (C) Transmitting goods by pipeline or sewer; or

    (D) Transmitting or producing and transmitting electricity, steam, gas or water.

    (b) Definitions in other articles. “Control” as provided in section 7-106 and the following definitions in other articles apply to this article:

    "Applicant"                               Section 5-102.

    "Beneficiary"                             Section 5-102.

    "Broker"                                  Section 8-102.

    "Certificated security"                   Section 8-102.

    "Check"                                   Section 3-104.

    "Clearing corporation"                    Section 8-102.

    "Contract for sale"                       Section 2-106.

    "Customer"                                Section 4-104.

    "Entitlement holder"                      Section 8-102.

    "Financial asset"                         Section 8-102.

    "Holder in due course"                    Section 3-302.

    "Issuer" (with respect to a letter of

    credit or letter-of-credit right)         Section 5-102.

    "Issuer" (with respect to a security)     Section 8-201.

    "Issuer" (with respect to a document of title) Section 7-102.  "Lease"                                  Section 2A-103.

    "Lease agreement"                         Section 2A-103.

    "Lease contract"                          Section 2A-103.

    "Leasehold interest"                      Section 2A-103.

    "Lessee"                                  Section 2A-103.

    "Lessee in ordinary course of business"   Section 2A-103.

    "Lessor"                                  Section 2A-103.

    "Lessor’s residual interest"              Section 2A-103.

    "Letter of credit"                        Section 5-102.

    "Merchant"                                Section 2-104.

    "Negotiable instrument"                   Section 3-104.

    "Nominated person"                        Section 5-102.

    "Note"                                    Section 3-104.

    "Proceeds of a letter of credit"          Section 5-114.

    "Prove"                                   Section 3-103.

    "Sale"                                    Section 2-106.

    "Securities account"                      Section 8-501.

    "Securities intermediary"                 Section 8-102.

    "Security"                                Section 8-102.

    "Security certificate"                    Section 8-102.

    "Security entitlement"                    Section 8-102.

    "Uncertificated security"                 Section 8-102.

    (c) Article 1 definitions and principles. Article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

§46-9-105. Control of electronic chattel paper.

    (a) General rule: control of electronic chattel paper. A secured party has control of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned.

    (b) Specific facts giving control: a system satisfies subsection (a) of this section if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

    (1) A single authoritative copy of the record or records exists which is unique, identifiable and, except as otherwise provided in subdivisions (4), (5) and (6) of this section, unalterable;

    (2) The authoritative copy identifies the secured party as the assignee of the record or records;

    (3) The authoritative copy is communicated to and maintained by the secured party or its designated custodian;

    (4) Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the secured party;

    (5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

    (6) Any amendment of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

§46-9-307. Location of debtor.

    (a) "Place of business." -- In this section, "place of business" means a place where a debtor conducts its affairs.

    (b) Debtor’s location: general rules. -- Except as otherwise provided in this section, the following rules determine a debtor’s location:

    (1) A debtor who is an individual is located at the individual’s principal residence.

    (2) A debtor that is an organization and has only one place of business is located at its place of business.

    (3) A debtor that is an organization and has more than one place of business is located at its chief executive office.

    (c) Limitation of applicability of subsection (b). -- Subsection (b) of this section applies only if a debtor’s residence, place of business or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording or registration system as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral. If subsection (b) does not apply, the debtor is located in the District of Columbia.

    (d) Continuation of location: cessation of existence, etc.-- A person that ceases to exist, have a residence or have a place of business continues to be located in the jurisdiction specified by subsections (b) and (c) of this section.

    (e) Location of registered organization organized under state law. -- A registered organization that is organized under the law of a state is located in that state.

    (f) Location of registered organization organized under federal law; bank branches and agencies. -- Except as otherwise provided in subsection (i) of this section, a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located:

    (1) In the state that the law of the United States designates, if the law designates a state of location;

    (2) In the state that the registered organization, branch or agency designates, if the law of the United States authorizes the registered organization, branch, or agency to designate its state of location, including by designating its main office, home office or other comparable office; or

    (3) In the District of Columbia, if neither subdivision(1) nor subdivision(2) of this subsection applies.

    (g) Continuation of location: changed in status of registered organization. -- A registered organization continues to be located in the jurisdiction specified by subsection (e) or (f) notwithstanding:

    (1) The suspension, revocation, forfeiture or lapse of the registered organization’s status as such in its jurisdiction of organization; or

    (2) The dissolution, winding up or cancellation of the existence of the registered organization.

    (h) Location of United States. -- The United States is located in the District of Columbia.

    (i) Location of foreign bank branch or agency if licensed in only one state. -- A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed, if all branches and agencies of the bank are licensed in only one state.

    (j) Location of foreign air carrier. -- A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.

    (k) Section applies only to this part. -- This section applies only for purposes of this part.

§46-9-311. Perfection of security interests in property subject to certain statutes, regulations and treaties.

    (a) Security interest subject to other law. -- Except as otherwise provided in subsection (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

    (1) A statute, regulation or treaty of the United States whose requirements for a security interest’s obtaining priority over the rights of a lien creditor with respect to the property preempt section 9-310(a);

    (2) The following statute of this state: Chapter seventeen-a of this code: Provided, That during any period in which collateral is inventory: (i) Held for sale by a person who is in the business of selling goods of that kind; or (ii) held for lease by a vehicle rental agency or similar person engaged solely in the business of leasing vehicles, the filing provision of this article apply to a security interest in that collateral created by such person as a debtor or obligor, as appropriate; or

    (3) A statute of another jurisdiction which provides for a security interest to be indicated on a certificate of title as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the property.

    (b) Compliance with other law. -- Compliance with the requirements of a statute, regulation or treaty described in subsection (a) of this section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article. Except as otherwise provided in subsection (d) of this section and sections 9-313 and 9-316(d) and (e) for goods covered by a certificate of title, a security interest in property subject to a statute, regulation or treaty described in subsection (a) may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.

    (c) Duration and renewal of perfection. -- Except as otherwise provided in subsection (d) of this section and section 9-316(d) and (e), duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation or treaty described in subsection (a) are governed by the statute, regulation or treaty. In other respects, the security interest is subject to this article.

    (d) Inapplicability to certain inventory. -- During any period in which collateral subject to a statute specified in subsection (a)(2) of this section is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person.

§46-9-316. Effect of change in governing law.

    (a) General rule: effect on perfection of change in governing law. -- A security interest perfected pursuant to the law of the jurisdiction designated in section 9-301(1) or 9-305(c) remains perfected until the earliest of:

    (1) The time perfection would have ceased under the law of that jurisdiction;

    (2) The expiration of four months after a change of the debtor’s location to another jurisdiction; or

    (3) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

    (b) Security interest perfected or unperfected under law of new jurisdiction. -- If a security interest described in subsection (a) of this section becomes perfected under the law of the other jurisdiction before the earliest time or event described in said subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

    (c) Possessory security interest in collateral moved to new jurisdiction. -- A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

    (1) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

    (2) Thereafter the collateral is brought into another jurisdiction; and

    (3) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.

    (d) Goods covered by certificate of title from this state.-- Except as otherwise provided in subsection (e) of this section, a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

    (e) When subsection (d) security interest becomes unperfected against purchasers. -- A security interest described in subsection (d) of this section becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under section 9-311(b) or 9-313 are not satisfied before the earlier of:

    (1) The time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

    (2) The expiration of four months after the goods had become so covered.

    (f) Change in jurisdiction of bank, issuer, nominated person, securities intermediary or commodity intermediary.-- A security interest in deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities intermediary’s jurisdiction or the commodity intermediary’s jurisdiction, as applicable, remains perfected until the earlier of:

    (1) The time the security interest would have become unperfected under the law of that jurisdiction; or

    (2) The expiration of four months after a change of the applicable jurisdiction to another jurisdiction.

    (g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction. -- If a security interest described in subsection (f) of this section becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

    (h) Effect on filed financing statement of change in governing law.-- The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:

    (1) A financing statement filed before the change pursuant to the law of the jurisdiction designated in section 9-301(1) or 9-305(c) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location.

    (2) If a security interest perfected by a financing statement that is effective under paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in section 9-301(1) or 9-305(c) or the expiration of the four-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

    (A) Effect of change in governing law on financing statement filed against original debtor. If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) and the new debtor is located in another jurisdiction, the following rules apply:

    (i) The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d), if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor.

    (ii) A security interest perfected by the financing statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

§46-9-317. Interests that take priority over or take free of security interest or agricultural lien.

     (a) Conflicting security interests and rights of lien creditors. -- A security interest or agricultural lien is subordinate to the rights of:

    (1) A person entitled to priority under section 9-322; and

    (2) Except as otherwise provided in subsection (e) of this section, a person that becomes a lien creditor before the earlier of the time: (A) The security interest or agricultural lien is perfected; or (B) one of the conditions specified in section 9-203(b)(3) is met and a financing statement covering the collateral is filed.

    (b) Buyers that receive delivery. -- Except as otherwise provided in subsection (e) of this section, a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

    (c) Lessees that receive delivery. -- Except as otherwise provided in subsection (e) of this section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

    (d) Licensees and buyers of certain collateral. -- A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

    (e) Purchase-money security interest. -- Except as otherwise provided in sections 9-320 and 9-321, if a person files a financing statement with respect to a purchase-money security interest before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee or lien creditor which arise between the time the security interest attaches and the time of filing.

§46-9-326. Priority of security interests created by new debtor.

    (a) Subordination of security interest created by new debtor.-- Subject to subsection (b) of this section, a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of Section 9-316(i)(1) or 9-508 is subordinate to a security interest in the same collateral which is perfected other than by such a filed financing statement .

    (b) Priority under other provisions; multiple original debtors. -- The other provisions of this part determine the priority among conflicting security interests in the same collateral perfected by filed financing described in subsection (a) of this section. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.

PART 4. RIGHTS OF THIRD PARTIES.

§46-9-406. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles and promissory notes ineffective.

    (a) Discharge of account debtor; effect of notification.-- Subject to subsections (b) through (i), an account debtor on an account, chattel paper or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.

    (b) When notification ineffective. -- Subject to subsection (h) of this section, notification is ineffective under subsection (a) of this section:

    (1) If it does not reasonably identify the rights assigned;

    (2) To the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor’s duty to pay a person other than the seller and the limitation is effective under law other than this article; or

    (3) At the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:

    (A) Only a portion of the account, chattel paper or payment intangible has been assigned to that assignee;

    (B) A portion has been assigned to another assignee; or

    (C) The account debtor knows that the assignment to that assignee is limited.

    (c) Proof of assignment. Subject to subsection (h) of this section, if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection (a) of this section.

    (d) Term restricting assignment generally ineffective. -- Except as otherwise provided in subsection (e) of this section and sections 2A-303 and 9-407, and subject to subsection (h) of this section, a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

    (1) Prohibits, restricts or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, the account, chattel paper, payment intangible or promissory note; or

    (2) Provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the account, chattel paper, payment intangible or promissory note.

    (e) Inapplicability of subsection (d) to certain sales.-- Subsection (d) of this section does not apply to the sale of a payment intangible or promissory note other than a sale pursuant to a disposition under section 9-610 or an acceptance of collateral under section 9-620.

    (f) Legal restrictions on assignment generally ineffective.-- Except as otherwise provided in sections 2A-303 and 9-407 and subject to subsections (h) and (i) of this section, a rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute or regulation:

    (1) Prohibits, restricts or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in the account or chattel paper; or

    (2) Provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the account or chattel paper.

    (g) Subsection (b)(3) not waivable. -- Subject to subsection (h) of this section, an account debtor may not waive or vary its option under subsection (b)(3) of this section.

    (h) Rule for individual under other law. -- This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

    (i) Inapplicability. -- This section does not apply to an assignment of a health-care-insurance receivable. Subsection (f) does not apply to an assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, a right the transfer of which is prohibited or restricted by any of the following statutes to the extent that the statute is inconsistent with subsection (f): Chapter twenty-three, article four, section eighteen, Chapter forty-six-a, article six-h, and a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. §1396p(d)(4).

    (j) Section prevails over specified inconsistent law. -- This section prevails over any inconsistent provision of an existing or future statute, rule or regulation of this state unless the provision is contained in a statute of this state, refers expressly to this section and states that the provision prevails over this section.

§46-9-408. Restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective.

    (a) Term restricting assignment generally ineffective.-- Except as otherwise provided in subsection (b) of this section, a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license or franchise, and which term prohibits, restricts or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of or creation, attachment or perfection of a security interest in, the promissory note, health-care-insurance receivable or general intangible, is ineffective to the extent that the term:

    (1) Would impair the creation, attachment or perfection of a security interest; or

    (2) Provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.

    (b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) of this section applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note other than a sale pursuant to a disposition under section 9-610 or an acceptance of collateral under section 9-620.

    (c) Legal restrictions on assignment generally ineffective.-- A rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable or general intangible, including a contract, permit, license or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute or regulation:

    (1) Would impair the creation, attachment or perfection of a security interest; or

    (2) Provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.

    (d) Limitation on ineffectiveness under subsections (a) and (c). -- To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute or regulation described in subsection (c) of this section would be effective under law other than this article but is ineffective under subsection (a) or (c) of this section, the creation, attachment or perfection of a security interest in the promissory note, health-care-insurance receivable or general intangible:

    (1) Is not enforceable against the person obligated on the promissory note or the account debtor;

    (2) Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;

    (3) Does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;

    (4) Does not entitle the secured party to use or assign the debtor’s rights under the promissory note, health-care-insurance receivable or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable or general intangible;

    (5) Does not entitle the secured party to use, assign, possess or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and

    (6) Does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable or general intangible.

    (e) Section prevails over specified inconsistent law. -- This section prevails over any inconsistent provisions of an existing or future statute, rule or regulation of this state unless the provision is contained in a statute of this state, refers expressly to this section and states that the provision prevails over this section.

    (f) Inapplicability. -- Subsection (c) of this section does not apply to an assignment or transfer of or the creation, attachment, perfection, or enforcement of a security interest in, a right the transfer of which is prohibited or restricted by any of the following statutes, to the extent that the statute is inconsistent with said subsection: Chapter twenty-three, article four, section eighteen; chapter forty-six-a, article six-h; and a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. §1396(d)(4).

§46-9-502. Contents of financing statement; record of mortgage as financing statement; time of filing financing statement.

    (a) Sufficiency of financing statement. -- Subject to subsection (b), a financing statement is sufficient only if it:

    (1) Provides the name of the debtor;

    (2) Provides the name of the secured party or a representative of the secured party; and

    (3) Indicates the collateral covered by the financing statement.

    (b) Real-property-related financing statements. -- Except as otherwise provided in section 9-501(b), to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) of this section and also:

    (1) Indicate that it covers this type of collateral;

    (2) Indicate that it is to be filed for record in the real property records;

    (3) Provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in a record of the mortgage of the real property; and

    (4) If the debtor does not have an interest of record in the real property, provide the name of a record owner.

    (c) Record of mortgage as financing statement. -- A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

    (1) The record indicates the goods or accounts that it covers;

    (2) The goods are or are to become fixtures relate to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

    (3) The record satisfies the requirements for a financing statement in this section: Provided, That

    (A) The record need not indicate that it is to be filed in the real property records; and

    (B) The record sufficiently provides the name of a debtor who is an individual if it provides the individual name of the debtor or the surname and first personal name of the debtor, even if the debtor is an individual to whom section 9-503(a)(4) applies; and

    (4) The record is duly recorded.

    (d) Filing before security agreement or attachment. -- A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

§46-9-503. Name of debtor and secured party.

    (a) Sufficiency of debtor’s name. -- A financing statement sufficiently provides the name of the debtor:

    (1) Except as otherwise provided in paragraph (3) of this section, if the debtor is a registered organization or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization’s name on the public organic record most recently filed with or issued or enacted by the debtor’s jurisdiction of organization which purports to state, amend or restate the registered organization’s name;

    (2) Subject to subsection (f) of this section, if the collateral is being administered by the personal representative of a decedent, only if the financing statement provides, as the name of the debtor, the name of the decedent and indicates that collateral is being administered by a personal representative;

    (3) If the         collateral is held in a trust that is not a registered organization, only if the financing statement:

    (A) Provides, as the name of the debtor:

    (i) If the organic record of the trust specifies a name for the trust, the name specified; or

    (ii) If the organic record of the trust does not specify a name for the trust, the name of the settlor or testator; and

    (B) In a separate part of the financing statement:

    (i) If the name is provided in accordance with subparagraph (A)(i), indicates that the collateral is held in a trust; or

    (ii) If the name is provided in accordance with subparagraph (A)(ii), provides additional information sufficient to distinguish the trust from other trusts having one or more of the same settlors or the same testator and indicates that the collateral is held in a trust, unless the additional information so indicates;

    (4) Subject to subsection (g), if the debtor is an individual to whom this state has issued a driver’s license that has not expired, only if the financing statement provides the name of the individual which is indicated on the driver’s license;

    (5) If the debtor is an individual to whom subdivision (4) does not apply, only if the financing statement provides the individual name of the debtor or the surname and first personal name of the debtor; and

    (6) In other cases:

    (A) If the debtor has a name, only if the financing statement provides the organizational name of the debtor; and

    (B) If the debtor does not have a name, only if it provides the names of the partners, members, associates or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor.

    (b) Additional debtor-related information. -- A financing statement that provides the name of the debtor in accordance with subsection (a) of this section is not rendered ineffective by the absence of:

    (1) A trade name or other name of the debtor; or

    (2) Unless required under subsection (a)(6)(B) of this section, names of partners, members, associates or other persons comprising the debtor.

    (c) Debtor’s trade name insufficient. -- A financing statement that provides only the debtor’s trade name does not sufficiently provide the name of the debtor.

    (d) Representative capacity.-- Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

    (e) Multiple debtors and secured parties. -- A financing statement may provide the name of more than one debtor and the name of more than one secured party.

    (f) Name of decedent. -- The name of the decedent indicated on the order appointing the personal representative of the decedent issued by the court having jurisdiction over the collateral is sufficient as the “name of the decedent” under subdivision (a)(2) of this section.

    (g) Multiple driver’s licenses. -- If this state has issued to an individual more than one driver’s license of a kind described in subdivision (a)(4) of this section, the one that was issued most recently is the one to which subdivision (a)(4) refers.

    (h) Definition. -- In this section, the “name of the settlor or testator” means:

    (1) If the settlor is a registered organization, the name that is stated to be the settlor’s name on the public organic record most recently filed with or issued or enacted by the settlor’s jurisdiction of organization which purports to state, amend, or restate the settlor’s name; or

    (2) In other cases, the name of the settlor or testator indicated in the trust’s organic record.

§46-9-507. Effect of certain events on effectiveness of financing statement.

    (a) Disposition. -- A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

    (b) Information becoming seriously misleading. -- Except as otherwise provided in subsection (c) of this section and section 9-508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under section 9-506.

    (c) Change in debtor's name. -- If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under section 9-503(a) so that the financing statement becomes seriously misleading under section 9-506:

    (1) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and

    (2) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the financing statement became seriously misleading.

§46-9-515. Duration and effectiveness of financing statement; effect of lapsed financing statement.

    (a) Five-year effectiveness. -- Except as otherwise provided in subsections (b), (e), (f) and (g) of this section, a filed financing statement is effective for a period of five years after the date of filing.

    (b) Public-finance or manufactured-home transaction. -- Except as otherwise provided in subsections (e), (f) and (g) of this section, an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of forty years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

    (c) Lapse and continuation of financing statement. -- The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d) of this section. Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

    (d) When continuation statement may be filed. -- A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) of this section or the thirty-year period specified in subsection (b) of this section, whichever is applicable.

    (e) Effect of filing continuation statement. -- Except as otherwise provided in section 9-510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c) of this section, unless, before the lapse, another continuation statement is filed pursuant to subsection (d) of this section. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

    (f) Transmitting utility financing statement. -- If a debtor is a transmitting utility and a filed initial financing statement so indicates, the financing statement is effective until a termination statement is filed.

    (g) Record of mortgage as financing statement. -- A record of a mortgage that is effective as a financing statement filed as a fixture filing under section 9-502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

§46-9-516. What constitutes filing; effectiveness of filing.

    (a) What constitutes filing. -- Except as otherwise provided in subsection (b) of this section, communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

    (b) Refusal to accept record; filing does not occur. -- Filing does not occur with respect to a record that a filing office refuses to accept because:

    (1) The record is not communicated by a method or medium of communication authorized by the filing office;

    (2) An amount equal to or greater than the applicable filing fee is not tendered;

    (3) The filing office is unable to index the record because:

    (A) In the case of an initial financing statement, the record does not provide a name for the debtor;

    (B) In the case of an amendment or information statement, the record:

    (i) Does not identify the initial financing statement as required by section 9-512 or 9-518, as applicable; or

    (ii) Identifies an initial financing statement whose effectiveness has lapsed under section 9-515;

    (C) In the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor’s surname; or

    (D) In the case of a record filed or recorded in the filing office described in section 9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates;

    (4) In the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

    (5) In the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

    (A) Provide a mailing address for the debtor;

    (B) Indicate whether the name provided as the name of the debtor is the name of an individual or an organization;     

    (6) In the case of an assignment reflected in an initial financing statement under section 9-514(a) or an amendment filed under section 9-514(b), the record does not provide a name and mailing address for the assignee; or

    (7) In the case of a continuation statement, the record is not filed within the six-month period prescribed by section 9-515(d).

    (c) Rules applicable to subsection (b). -- For purposes of subsection (b):

    (1) A record does not provide information if the filing office is unable to read or decipher the information; and

    (2) A record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by section 9-512, 9-514 or 9-518, is an initial financing statement.

    (d) Refusal to accept record; record effective as filed record. -- A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b) of this section, is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

    (e) Administrative review. --If the Secretary of State determines that a financing statement which identities a public official or employee as a debtor is fraudulent or that an individual debtor and an individual secured party would appear to be the same individual on the financing statement or that the individual debtor claims to be a transmitting utility, without supporting documents, the Secretary may commence administrative proceedings to remove the statement from its records in accordance with the provisions of article five, chapter twenty-nine-a of this code.

    (1) Upon the commencement of proceedings pursuant to this subsection, the Secretary of State shall identify the financing statement in its records as subject to administrative review and publish a notice in the West Virginia Register regarding the proceedings.

    (2) A financing statement may be found to be fraudulent only if, based upon clear and convincing evidence, no good faith basis exists upon which to conclude that the secured party was authorized to file the statement and the statement was submitted for the purpose of harassment or intimidation or fraudulent intent of the alleged debtor.

    (3) If upon the completion of administrative review, it is determined that the filing of a financing statement was fraudulent, the filing party shall be assessed all costs incurred by the Secretary in reaching a final determination, including reimbursement for all costs of the hearing. The filing party may also be subject to a civil penalty not exceeding $500 per fraudulent filing. If upon completion of administrative review or any subsequent appeal of a decision of the Secretary of State, it is determined that a filing subject to appeal is not fraudulent, the secretary or court may award the prevailing party reasonable costs and expenses, including attorney fees.

    (4) The Secretary of State shall annually submit a report to the Legislature regarding actions taken against fraudulent filings pursuant to this section which identifies the number and characteristics of such proceedings, identifies any creditors found to have made fraudulent filings, describes proceedings initiated by the secretary in which it is ultimately determined that fraudulent filings did not occur, describes the number and type of complaints received by the secretary in which it is alleged that fraudulent filings have occurred, and describes the actions taken by the secretary to investigate complaints concerning allegedly fraudulent filings and the results of the investigations.

    (5) A decision by the secretary to remove a financing statement determined to have been fraudulently filed subject to appeal de novo to the circuit court of Kanawha County. Pending the outcome of an appeal, the financing statement may not be removed from the records of the Secretary, but shall be identified in the records as having been adjudicated to be fraudulent, subject to a pending appeal by the putative creditor.

    (6) A financing statement filed by a regulated financial institution is not subject to the provisions of this section. For the purposes of this section, a regulated financial institution is a bank, bank and trust company, trust company, savings bank, savings association, building and loan association, credit union, consumer finance company, insurance company, investment company, mortgage lender or broker, securities broker, dealer or underwriter, or other institution chartered, licensed, registered or otherwise authorized under federal law, the law of this state or any other state, to engage in secured lending.

§46-9-518. Claim concerning inaccurate or wrongfully filed record.

    (a) Statement with respect to record indexed under person’s name. -- A person may file in the filing office an information statement with respect to a record indexed there under the person’s name if the person believes that the record is inaccurate or was wrongfully filed.

    (b) Contents of statement under subsection (a). -- An information statement under subsection (a) of this section must:

    (1) Identify the record to which it relates by:

    (A) The file number assigned to the initial financing statement to which the record relates; and

    (B) If the information statement relates to a record filed or recorded in a filing office described in section 9-501(a)(1), the date and time that the initial financing statement was filed or recorded and the information specified in section 9-502(b);

    (2) Indicate that it is an information statement; and

    (3) Provide the basis for the person’s belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person’s belief that the record was wrongfully filed.

    (c) Statement by secured party of record. -- A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so under section 9-509(d).

    (d) Contents of statement under subsection (c). -- An information statement under subsection (c) of this section must:

    (1) Identify the record to which it relates by:

    (A) The file number assigned to the initial financing statement to which the record relates; and

    (B) If the information statement relates to a record filed or recorded in a filing office described in section 9-501(a)(1), the date and time that the initial financing statement was filed or recorded and the information specified in section 9-502(b);

    (2) Indicate that it is an information statement; and

    (3) Provide the basis for the person’s belief that the person that filed the record was not entitled to do so under Section 9-509(d).

    (e) Record not affected by information statement.-- The filing of a an information statement does not affect the effectiveness of an initial financing statement or other filed record.

§46-9-607. Collection and enforcement by secured party.

    (a) Collection and enforcement generally. -- If so agreed, and in any event after default, a secured party:

    (1) May notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;

    (2) May take any proceeds to which the secured party is entitled under section 9-315;

    (3) May enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;

    (4) If it holds a security interest in a deposit account perfected by control under section 9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the deposit account; and

    (5) If it holds a security interest in a deposit account perfected by control under section 9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

    (b) Nonjudicial enforcement of mortgage. -- If necessary to enable a secured party to exercise under subsection (a)(3) of this section the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

    (1) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

    (2) The secured party’s sworn affidavit in recordable form stating that:

    (A) A default has occurred with respect to the obligation secured by the mortgage; and

    (B) The secured party is entitled to enforce the mortgage nonjudicially.

    (c) Commercially reasonable collection and enforcement. -- A secured party shall proceed in a commercially reasonable manner if the secured party:

    (1) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

    (2) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

    (d) Expenses of collection and enforcement. -- A secured party may deduct from the collections made pursuant to subsection (c) of this section reasonable expenses of collection and enforcement, including reasonable attorney’s fees and legal expenses incurred by the secured party.

    (e) Duties to secured party not affected. -- This section does not determine whether an account debtor, bank or other person obligated on collateral owes a duty to a secured party.

SUBPART 2. NONCOMPLIANCE WITH ARTICLE.

§46-9-625. Remedies for secured party’s failure to comply with article.

    (a) Judicial orders concerning noncompliance.-- If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

    (b) Damages for noncompliance. -- Subject to subsections (c), (d) and (f) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with this article. Loss caused by a failure to comply may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.

    (c) Persons entitled to recover damages; statutory damages if collateral is consumer goods. -- Except as otherwise provided in section 9-628:

    (1) A person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subsection (b) of this section for its loss; and

    (2) If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus ten percent of the principal amount of the obligation or the time-price differential plus ten percent of the cash price.

    (d) Recovery when deficiency eliminated or reduced. -- A debtor whose deficiency is eliminated under section 9-626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under section 9-626 may not otherwise recover under subsection (b) of this section for noncompliance with the provisions of this part relating to collection, enforcement, disposition or acceptance.

    (e) Statutory damages: noncompliance with specified provisions. -- In addition to any damages recoverable under subsection (b) of this section, the debtor, consumer obligor or person named as a debtor in a filed record, as applicable, may recover $500 in each case from a person that:

    (1) Fails to comply with section 9-208;

    (2) Fails to comply with section 9-209;

    (3) Files a record that the person is not entitled to file under section 9-509(a);

    (4) Fails to cause the secured party of record to file or send a termination statement as required by section 9-513(a) or (c);

    (5) Fails to comply with section 9-616(b)(1) and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or

    (6) Fails to comply with section 9-616(b)(2).

    (f) Statutory damages: noncompliance with section 9-210. -- A debtor or consumer obligor may recover damages under subsection (b) of this section and, in addition, $500 in each case from a person that, without reasonable cause, fails to comply with a request under section 9-210. A recipient of a request under section 9-210 which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.

    (g) Limitation of security interest: noncompliance with section 9-210. -- If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 9-210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

PART 8. TRANSITION PROVISIONS FOR 2012 AMENDMENTS.

§46-9-801. Effective date.

    The amendments to this article enacted by the Legislature during the 2012 Regular Legislative Session take effect on July 1, 2013.

§46-9-802. Savings clause.

    (a) Preeffective-date transactions or liens. -- Except as otherwise provided in this part, this article applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before the amendments to this article during the 2012 Regular Legislative Session take effect as provided in section 9-801.

    (b) Preeffective-date proceedings. -- This article does not affect an action, case, or proceeding commenced before the amendments to this article during the 2012 Regular Legislative Session take effect as provided in section 9-801.

§46-9-803. Security interest perfected before effective date.

    (a) Continuing perfection: perfection requirements satisfied.-- A security interest that is a perfected security interest immediately before the amendments to this article take effect is a perfected security interest under this article if, when this article takes effect, the applicable requirements for attachment and perfection under this article as amended by the Legislature during the 2012 Regular Legislative Session are satisfied without further action.

    (b) Continuing perfection: perfection requirements not satisfied. -- Except as otherwise provided in section 9-805, if, immediately before amendments to this article take effect, a security interest is a perfected security interest, but the applicable requirements for perfection under this article as amended by the Legislature during the 2012 Regular Legislative Session are not satisfied when the amendments to this article take effect, the security interest remains perfected thereafter only if the applicable requirements for perfection under this article as amended by the Legislature during the 2012 Regular Legislative Session are satisfied within one year after the amendments take effect.

§46-9-804. Security interest unperfected before effective date.

    A security interest that is an unperfected security interest immediately before the amendments to this article during the 2012 Regular Legislative Session take effect becomes a perfected security interest:

    (1) Without further action, when the amendments to this article during the 2012 Regular Legislative Session take effect if the applicable requirements for perfection under this article as amended during the 2012 Regular Legislative Session are satisfied before or at that time; or

    (2) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.

§46-9-805. Effectiveness of action taken before effective date.

    (a) Preeffective-date filing effective. -- The filing of a financing statement before the amendments to this article during the 2012 Regular Legislative Session take effect is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this article as amended during the 2012 Regular Legislative Session.

    (b) When preeffective-date filing becomes ineffective. -- This article does not render ineffective an effective financing statement that, before the amendments to this article during the 2011 Regular Legislative Session take effect, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this article as it existed before its amendment during the 2012 Regular Legislative Session. However, except as otherwise provided in subsections (c) and (d) and Section 9-806, the financing statement ceases to be effective:

    (1) If the financing statement is filed in this state, at the time the financing statement would have ceased to be effective had the amendments to this article during the 2012 Regular Legislative Session not taken effect; or

    (2) If the financing statement is filed in another jurisdiction, at the earlier of:

    (A) The time the financing statement would have ceased to be effective under the law of that jurisdiction; or

    (B) June 30, 2018.

    (c) Continuation statement. -- The filing of a continuation statement after the amendments to this article during the 2012 Regular Legislative Session take effect does not continue the effectiveness of a financing statement filed before those amendments to the article take effect. However, upon the timely filing of a continuation statement after the amendments to this article during the 2012 Regular Legislative session take effect and in accordance with the law of the jurisdiction governing perfection as provided in this article as amended during the 2012 Regular Legislative Session, the effectiveness of a financing statement filed in the same office in that jurisdiction before the amendments to this article during the 2012 Regular Legislative Session takes effect continues for the period provided by the law of that jurisdiction.

    (d) Application of subsection (b)(2)(B) to transmitting utility financing statement. -- Subsection (b)(2)(B) applies to a financing statement that, before the amendments to this article during the 2012 Regular Legislative Session take effect, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in this article as it existed before amendment, only to the extent that this article as amended by during the 2012 Regular Legislative Session provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

    (e) Application of Part 5. -- A financing statement that includes a financing statement filed before this [Act] takes effect and a continuation statement filed after the amendments to this article during the 2012 Regular Legislative Session take effect is effective only to the extent that it satisfies the requirements of Part 5 as amended during the 2012 Regular Legislative Session for an initial financing statement. A financing statement that indicates that the debtor is a decedent’s estate indicates that the collateral is being administered by a personal representative within the meaning of section 9-503(a)(2) as amended during the 2012 Regular Legislative Session . A financing statement that indicates that the debtor is a trust or is a trustee acting with respect to property held in trust indicates that the collateral is held in a trust within the meaning of section 9-503(a)(3) as amended during the 2012 Regular Legislative Session.

§46-9-806. When initial financing statement suffices to continue effectiveness of financing statement.

    (a) Initial financing statement in lieu of continuation statement. -- The filing of an initial financing statement in the office specified in section 9-501 continues the effectiveness of a financing statement filed before the amendments to this article during the 2012 Regular Legislative Session take effect if:

    (1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this article as amended during the 2012 Regular Legislative Session;

    (2) The preeffective-date financing statement was filed in an office in another state; and

    (3) The initial financing statement satisfies subsection (c).

    (b) Period of continued effectiveness. -- The filing of an initial financing statement under subsection (a) continues the effectiveness of the preeffective-date financing statement:

    (1) If the initial financing statement is filed before the amendments to this article during the 2012 Regular Legislative Session take effect, for the period provided in section 9-515 as it existed prior to the 2012 amendments, with respect to an initial financing statement; and

    (2) If the initial financing statement is filed after the amendments to this article during the 2012 Regular Legislative Session take effect, for the period provided in section 9-515 as amended by the Legislature during the 2012 Regular Legislative Session, with respect to an initial financing statement.

    (c) Requirements for initial financing statement under subsection (a). -- To be effective for purposes of subsection (a), an initial financing statement must:

    (1) Satisfy the requirements of Part 5 as amended by the Legislature during the 2012 Regular Legislative Session for an initial financing statement;

    (2) Identify the preeffective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

    (3) Indicate that the preeffective-date financing statement remains effective.

§46-9-807. Amendment of preeffective-date financing statement.

    (a) “Preeffective-date financing statement”. -- In this section, “preeffective-date financing statement” means a financing statement filed before the amendments to this article during the 2011 Regular Legislative Session take effect.

    (b) Applicable law. -- After the amendments to this article during the 2012 Regular Legislative Session take effect, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a preeffective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in this article as amended during the 2012 Regular Legislative Session. However, the effectiveness of a preeffective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

    (c) Method of amending: general rule. -- Except as otherwise provided in subsection (d), if the law of this state governs perfection of a security interest, the information in a preeffective-date financing statement may be amended after the amendments to this article during the 2012 Regular Legislative Session take effect only if:

    (1) The preeffective-date financing statement and an amendment are filed in the office specified in section 9-501;

    (2) An amendment is filed in the office specified in section 9-501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies section 9-806(c); or

    (3) An initial financing statement that provides the information as amended and satisfies section 9-806(c) is filed in the office specified in section 9-501.

    (d) Method of amending: continuation. -- If the law of this state governs perfection of a security interest, the effectiveness of a preeffective-date financing statement may be continued only under section 9-805(c) and (e) or 9-806.

    (e) Method of amending: additional termination rule. -- Whether or not the law of this state governs perfection of a security interest, the effectiveness of a preeffective-date financing statement filed in this state may be terminated after the amendments to this article during the 2012 Regular Legislative Session take effect by filing a termination statement in the office in which the preeffective-date financing statement is filed, unless an initial financing statement that satisfies section 9-806(c) has been filed in the office specified by the law of the jurisdiction governing perfection as provided in this article as amended during the 2012 Regular Legislative Session as the office in which to file a financing statement.

§46-9-808. Person entitled to file initial financing statement or continuation statement.

    A person may file an initial financing statement or a continuation statement under this part if:

    (1) The secured party of record authorizes the filing; and

    (2) The filing is necessary under this part:

    (A) To continue the effectiveness of a financing statement filed before the amendments to this article during the 2012 Regular Legislative Session take effect; or

    (B) To perfect or continue the perfection of a security interest.

§46-9-809. Priority.

    This article determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before the amendments to this article during the 2012 Regular Legislative Session take effect, this article, as it existed before the 2012 amendments determines priority.




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