Senate Study Bill 1177 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ZAUN) A BILL FOR An Act relating to commercial transactions, including control 1 and transmission of electronic records and digital assets. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1411XC (12) 90 da/jh
S.F. _____ DIVISION I 1 UNIFORM COMMERCIAL CODE 2 PART A 3 CONTROLLABLE ELECTRONIC RECORDS 4 Section 1. Section 554.14101, Code 2023, is amended to read 5 as follows: 6 554.14101 Short title. 7 This Article may be cited as the Uniform Commercial Code 8 Controllable Electronic Records. 9 Sec. 2. Section 554.14102, Code 2023, is amended to read as 10 follows: 11 554.14102 Definitions. 12 1. Article 14 definitions. Article 14 definitions. In this 13 Article : 14 a. Controllable electronic record means a record stored 15 in an electronic medium that can be subjected to control under 16 section 554.14105 . The term does not include a controllable 17 account, a controllable payment intangible, a deposit account, 18 electronic chattel paper, an electronic copy of a record 19 evidencing chattel paper, an electronic document of title, 20 electronic money, investment property, or a transferable 21 record. 22 b. Qualifying purchaser means a purchaser of a 23 controllable electronic record or an interest in the a 24 controllable electronic record that obtains control of the 25 controllable electronic record for value, in good faith, 26 and without notice of a claim of a property right in the 27 controllable electronic record. 28 c. Transferable record means has the meaning provided for 29 that term in : 30 (1) Transferable record , as defined in the federal Section 31 201(a)(1) of the Electronic Signatures in Global and National 32 Commerce Act, 15 U.S.C. 7021(a)(1), as amended . ; or 33 (2) Transferable record as defined in the uniform 34 electronic transactions Uniform Electronic Transactions Act, 35 -1- LSB 1411XC (12) 90 da/jh 1/ 57
S.F. _____ section 554D.118, subsection 1 . 1 d. Value has the meaning provided in section 554.3303, 2 subsection 1 , as if references in that subsection to an 3 instrument were references to a controllable account, 4 controllable electronic record, or controllable payment 5 intangible . 6 2. Definitions in Article 9 . Definitions in Article 9 . The 7 definitions in Article 9 of account debtor , authenticate , 8 controllable account , controllable payment intangible , 9 chattel paper , deposit account , electronic chattel paper , 10 electronic money , and investment property apply to this 11 Article . 12 3. Article 1 definitions and principles. Article 1 contains 13 general definitions and principles of construction and 14 interpretation applicable throughout this Article. 15 Sec. 3. Section 554.14103, Code 2023, is amended to read as 16 follows: 17 554.14103 Scope Relation to Article 9 and consumer laws . 18 1. Article 9 governs in case of conflict. If there is 19 conflict between this Article and Article 9 , Article 9 governs. 20 2. Applicable consumer law and other laws. A transaction 21 subject to this Article is subject to: 22 a. any applicable rule of law that establishes a different 23 rule for consumers, including as provided in chapter 537 and 24 any other consumer protection statute or regulation of this 25 state; and 26 b. any other statute or regulation of this state that 27 regulates the rates, charges, agreements, and practices for 28 loans, credit sales, or other extensions of credit or credit 29 transactions, including as provided in chapter 535 . 30 Sec. 4. Section 554.14104, Code 2023, is amended to read as 31 follows: 32 554.14104 Rights in controllable account, controllable 33 electronic record, and controllable payment intangible. 34 1. Applicability of section to controllable account and 35 -2- LSB 1411XC (12) 90 da/jh 2/ 57
S.F. _____ controllable payment intangible. This section applies to the 1 acquisition and purchase of rights in a controllable account 2 or controllable payment intangible, including the rights and 3 benefits under subsections 3, 4, 5, 7, and 8 of a purchaser 4 and a qualifying purchaser , and under subsections 3, 4, and 6 , 5 and in the same manner this section applies to a controllable 6 electronic record. 7 2. Control of controllable account and controllable payment 8 intangible. To determine whether a purchaser of a controllable 9 account or a controllable payment intangible is a qualifying 10 purchaser, the purchaser obtains control of the account or 11 payment intangible if it obtains control of the controllable 12 electronic record that evidences the account or payment 13 intangible. 14 2. 3. Applicability of other law to acquisition of 15 rights. Except as provided in this section , law other than 16 this Article determines whether a person acquires a right in 17 a controllable electronic record and the right the person 18 acquires. 19 3. 4. Shelter principle and purchase of limited interest. A 20 purchaser of a controllable electronic record acquires 21 all rights in the controllable electronic record that the 22 transferor had or had power to transfer, except that a 23 purchaser of a limited interest in a controllable electronic 24 record acquires rights only to the extent of the interest 25 purchased. 26 4. 5. Rights of qualifying purchaser. A qualifying 27 purchaser acquires its rights in the controllable electronic 28 record free of a claim of a property right in the controllable 29 electronic record. 30 5. 6. Limitation of rights of qualifying purchaser in 31 other property. Except as provided in subsections 1 and 4 32 5 for a controllable accounts account and a controllable 33 payment intangibles intangible or law other than this Article , 34 a qualifying purchaser takes a right to payment, right to 35 -3- LSB 1411XC (12) 90 da/jh 3/ 57
S.F. _____ performance, or other interest in property evidenced by the 1 controllable electronic record subject to a claim of a property 2 right in the right to payment, right to performance, or other 3 interest in property. 4 6. 7. No-action protection for qualifying purchaser. An 5 action shall not be asserted against a qualifying purchaser 6 based on both a purchase by the qualifying purchaser of a 7 controllable electronic record and a claim of a property 8 right in another controllable electronic record, whether the 9 action is framed in conversion, replevin, constructive trust, 10 equitable lien, or other theory. 11 7. 8. Filing not notice. Filing of a financing statement 12 under Article 9 is not notice of a claim of a property right in 13 a controllable electronic record. 14 Sec. 5. Section 554.14105, Code 2023, is amended to read as 15 follows: 16 554.14105 Control of controllable electronic record. 17 1. General rule : control of controllable electronic 18 record. A person has control of a controllable electronic 19 record if the electronic record, a record attached to or 20 logically associated with the electronic record, or a system in 21 which the electronic record is recorded : 22 a. the electronic record, a record attached to or logically 23 associated with the electronic record, or a system in which the 24 electronic record is recorded gives the person: 25 (1) the power to avail itself of substantially all the 26 benefit from the electronic record; and 27 (2) exclusive power, subject to subsection 2 , to: 28 (a) prevent others from availing themselves of 29 substantially all the benefit from the electronic record; and 30 (b) transfer control of the electronic record to another 31 person or cause another person to obtain control of another 32 controllable electronic record as a result of the transfer of 33 the electronic record; and 34 b. the electronic record, a record attached to or logically 35 -4- LSB 1411XC (12) 90 da/jh 4/ 57
S.F. _____ associated with the electronic record, or a system in which 1 the electronic record is recorded enables the person readily 2 to identify itself in any way, including by name, identifying 3 number, cryptographic key, office, or account number, as having 4 the powers specified in paragraph a . 5 2. Control through another person. A person has control of 6 a controllable electronic record if another person, other than 7 the transferor of an interest in the electronic record: 8 a. has control of the electronic record and acknowledges 9 that it has control on behalf of the person, or 10 b. obtains control of the electronic record after having 11 acknowledged that it will obtain control of the electronic 12 record on behalf of the person. 13 3. 2. Meaning of exclusive. A power specified in Subject 14 to subsection 1 3 , paragraph a , subparagraph (2), a power is 15 exclusive , under subsection 1, paragraph a , subparagraph (2), 16 subparagraph divisions (a) and (b) even if: 17 a. the controllable electronic record , a record attached 18 to or logically associated with the electronic record, or a 19 system in which the electronic record is recorded limits the 20 use of the electronic record or has a protocol programmed to 21 cause a change, including a transfer or loss of control or a 22 modification of benefits afforded by the electronic record; or 23 b. the person has agreed to share the power is shared with 24 another person. 25 3. When power not shared with another person. A power of a 26 person is not shared with another person under subsection 2, 27 paragraph b and the persons power is not exclusive if: 28 a. the person can exercise the power only if the power also 29 is exercised by the other person; and 30 b. the other person: 31 (1) can exercise the power without exercise of the power by 32 the person; or 33 (2) is the transferor to the person of an interest in the 34 controllable electronic record or a controllable account or 35 -5- LSB 1411XC (12) 90 da/jh 5/ 57
S.F. _____ controllable payment intangible evidenced by the controllable 1 electronic record. 2 4. Presumption of exclusivity of certain powers. If a 3 person has the powers specified in subsection 1, paragraph a , 4 subparagraph (2), subparagraph divisions (a) and (b) the powers 5 are presumed to be exclusive. 6 5. Control through another person. A person has control of 7 a controllable electronic record if another person, other than 8 the transferor to the person of an interest in the controllable 9 electronic record or a controllable account or controllable 10 payment intangible evidenced by the controllable electronic 11 record: 12 a. has control of the electronic record and acknowledges 13 that it has control on behalf of the person; or 14 b. obtains control of the electronic record after having 15 acknowledged that it will obtain control of the electronic 16 record on behalf of the person. 17 6. No requirement to acknowledge. A person that has control 18 under this section is not required to acknowledge that it has 19 control on behalf of another person. 20 7. No duties or confirmation. If a person acknowledges that 21 it has or will obtain control on behalf of another person, 22 unless the person otherwise agrees or law other than this 23 Article or Article 9 otherwise provides, the person does not 24 owe any duty to the other person and is not required to confirm 25 the acknowledgment to any other person. 26 Sec. 6. Section 554.14106, Code 2023, is amended to read as 27 follows: 28 554.14106 Discharge of account debtor on controllable account 29 or controllable payment intangible. 30 1. Discharge of account debtor. An account debtor on a 31 controllable account or controllable payment intangible may 32 discharge its obligation by paying: 33 a. the person having control of the controllable electronic 34 record that evidences the controllable account or controllable 35 -6- LSB 1411XC (12) 90 da/jh 6/ 57
S.F. _____ payment intangible; or 1 b. except as provided in subsection 2 , a person that 2 formerly had control of the controllable electronic record. 3 2. Effect Content and effect of notification. Subject to 4 subsection 4 , an the account debtor shall not discharge its 5 obligation by paying a person that formerly had control of the 6 controllable electronic record if the account debtor receives a 7 notification that: 8 a. is authenticated signed by a person that formerly had 9 control or the person to which control was transferred; 10 b. reasonably identifies the controllable account or 11 controllable payment intangible; 12 c. notifies the account debtor that control of the 13 controllable electronic record that evidences the controllable 14 account or controllable payment intangible was transferred; 15 d. identifies the transferee, in any reasonable way, 16 including by name, identifying number, cryptographic key, 17 office, or account number; and 18 e. provides a commercially reasonable method by which the 19 account debtor is to pay the transferee. 20 3. Discharge following effective notification. After 21 receipt of a notification that complies with subsection 2 , the 22 account debtor may discharge its obligation only by paying in 23 accordance with the notification and shall not discharge the 24 obligation by paying a person that formerly had control. 25 4. When notification ineffective. Notification Subject to 26 subsection 8, notification is ineffective under subsection 2 : 27 a. unless, before the notification is sent, an the account 28 debtor and the person that, at that time, had control of the 29 controllable electronic record that evidences the controllable 30 account or controllable payment intangible agree in an 31 authenticated a signed record to a commercially reasonable 32 method by which a person must furnish reasonable proof that 33 control has been transferred; 34 b. to the extent an agreement between an the account debtor 35 -7- LSB 1411XC (12) 90 da/jh 7/ 57
S.F. _____ and seller of a payment intangible limits the account debtors 1 duty to pay a person other than the seller and the limitation 2 is effective under law other than this Article ; or 3 c. at the option of an the account debtor, if the 4 notification notifies the account debtor to: 5 (1) divide a payment; 6 (2) make less than the full amount of any an installment or 7 other periodic payment; or 8 (3) pay any part of a payment by more than one method or to 9 more than one person. 10 5. Proof of transfer of control. If Subject to subsection 11 8, if requested by the account debtor, the person giving the 12 notification under subsection 2 seasonably shall furnish 13 reasonable proof, using the agreed method in the agreement 14 referred to in subsection 4, paragraph a , that control of the 15 controllable electronic record has been transferred. Unless 16 the person complies with the request, the account debtor may 17 discharge its obligation by paying a person that formerly had 18 control, even if the account debtor has received a notification 19 under subsection 2 . 20 6. What constitutes reasonable proof. A person furnishes 21 reasonable proof under subsection 5 that control has been 22 transferred if the person demonstrates, using the agreed method 23 in the agreement referred to in subsection 4, paragraph a , 24 that the transferee has the power to: 25 a. avail itself of substantially all the benefit from the 26 controllable electronic record; 27 b. prevent others from availing themselves of substantially 28 all the benefit from the controllable electronic record; and 29 c. transfer the powers mentioned specified in paragraphs a 30 and b to another person. 31 7. Rights not waivable. An Subject to subsection 8, 32 an account debtor shall not waive or vary its rights under 33 subsection 4 , paragraph a , and subsection 5 or its option 34 under subsection 4 , paragraph c . 35 -8- LSB 1411XC (12) 90 da/jh 8/ 57
S.F. _____ 8. Rule for individual under other law. This section is 1 subject to law other than this Article which establishes a 2 different rule for an account debtor who is an individual and 3 who incurred the obligation primarily for personal, family, or 4 household purposes. 5 Sec. 7. Section 554.14107, Code 2023, is amended by striking 6 the section and inserting in lieu thereof the following: 7 554.14107 Governing law. 8 1. Governing law: general rule. Except as provided in 9 subsection 2, the local law of a controllable electronic 10 records jurisdiction governs a matter covered by this Article. 11 2. Governing law: section 554.14106. For a controllable 12 electronic record that evidences a controllable account 13 or controllable payment intangible, the local law of the 14 controllable electronic records jurisdiction governs a matter 15 covered by section 554.14106 unless an effective agreement 16 determines that the local law of another jurisdiction governs. 17 3. Controllable electronic records jurisdiction. The 18 following rules determine a controllable electronic records 19 jurisdiction under this section: 20 a. if the controllable electronic record, or a record 21 attached to or logically associated with the controllable 22 electronic record and readily available for review, expressly 23 provides that a particular jurisdiction is the controllable 24 electronic records jurisdiction for purposes of this section, 25 Article, or chapter, that jurisdiction is the controllable 26 electronic records jurisdiction. 27 b. if paragraph a does not apply and the rules of the 28 system in which the controllable electronic record is recorded 29 are readily available for review and expressly provide that a 30 particular jurisdiction is the controllable electronic records 31 jurisdiction for purposes of this section, Article, or chapter, 32 that jurisdiction is the controllable electronic records 33 jurisdiction. 34 c. if paragraphs a and b do not apply and the 35 -9- LSB 1411XC (12) 90 da/jh 9/ 57
S.F. _____ controllable electronic record, or a record attached to or 1 logically associated with the controllable electronic record 2 and readily available for review, expressly provides that the 3 controllable electronic record is governed by the law of a 4 particular jurisdiction, that jurisdiction is the controllable 5 electronic records jurisdiction. 6 d. if paragraphs a , b , and c do not apply and the 7 rules of the system in which the controllable electronic 8 record is recorded are readily available for review and 9 expressly provide that the controllable electronic record or 10 the system is governed by the law of a particular jurisdiction, 11 that jurisdiction is the controllable electronic records 12 jurisdiction. 13 e. if paragraphs a through d do not apply, the 14 controllable electronic records jurisdiction is the District 15 of Columbia. 16 4. Applicability of Article 12. If subsection 3, paragraph 17 e , applies and Article 12 is not in effect in the District of 18 Columbia without material modification, the governing law for 19 a matter covered by this Article is the law of the District of 20 Columbia as though Article 12 were in effect in the District of 21 Columbia without material modification. In this subsection, 22 Article 12 means Article 12 of Uniform Commercial Code 23 Amendments (2022) approved by the uniform law commission at its 24 annual meeting in July 2022. 25 5. Relation of matter or transaction to controllable 26 electronic records jurisdiction not necessary. To the 27 extent subsections 1 and 2 provide that the local law of the 28 controllable electronic records jurisdiction governs a matter 29 covered by this Article, that law governs even if the matter 30 or a transaction to which the matter relates does not bear any 31 relation to the controllable electronic records jurisdiction. 32 6. Rights of purchasers determined at time of purchase. The 33 rights acquired under section 554.14104 by a purchaser or 34 qualifying purchaser are governed by the law applicable under 35 -10- LSB 1411XC (12) 90 da/jh 10/ 57
S.F. _____ this section at the time of purchase. 1 Sec. 8. Section 554.14108, Code 2023, is amended to read as 2 follows: 3 554.14108 Applicability. 4 1. This Article applies to any transaction involving a 5 controllable electronic record that arises on or after July 1, 6 2022. This Article does not apply to any transaction involving 7 a controllable electronic record that arises before July 1, 8 2022, even if the transaction would be subject to this Article 9 if the transaction had arisen on or after July 1, 2022. This 10 Article does not apply to a right of action with regard to any 11 transaction involving a controllable electronic record that has 12 accrued before July 1, 2022. 13 2. This section is repealed on July 1, 2025. 14 Sec. 9. Section 554.14109, Code 2023, is amended to read as 15 follows: 16 554.14109 Savings clause. 17 1. Any transaction involving a controllable electronic 18 record that arose before July 1, 2022, and the rights, 19 obligations, and interests flowing from that transaction are 20 governed by any statute or other rule amended or repealed by 21 this Article as if such amendment or repeal had not occurred 22 and may be terminated, completed, consummated, or enforced 23 under that statute or other rule. 24 2. This section is repealed on July 1, 2025. 25 PART B 26 RELATED ARTICLES 27 GENERAL 28 Sec. 10. Section 554.1201, subsection 2, paragraphs o, y, 29 ak, and al, Code 2023, are amended to read as follows: 30 o. Delivery , with respect to an electronic document 31 of title , means voluntary transfer of control and , with 32 respect to an instrument, a tangible document of title, or an 33 authoritative tangible copy of a record evidencing chattel 34 paper, means voluntary transfer of possession. 35 -11- LSB 1411XC (12) 90 da/jh 11/ 57
S.F. _____ y. Money means a medium of exchange that : is currently 1 authorized or adopted by a domestic or foreign government. The 2 term includes a monetary unit of account established by an 3 intergovernmental organization, or pursuant to an agreement 4 between two or more countries. The term does not include an 5 electronic record that is a medium of exchange recorded and 6 transferable in a system that existed and operated for the 7 medium of exchange before the medium of exchange was authorized 8 or adopted by the government. 9 (1) is currently authorized or adopted by a domestic or 10 foreign government, by an intergovernmental organization, or 11 pursuant to an agreement between two or more governments; and 12 (2) was initially issued, created, or distributed by 13 a domestic or foreign government, by an intergovernmental 14 organization, or pursuant to an agreement between two or more 15 governments. 16 ak. Send in connection with a writing, record , or notice 17 notification means: 18 (1) to deposit in the mail , or deliver for transmission , 19 or transmit by any other usual means of communication , with 20 postage or cost of transmission provided for , and properly 21 addressed and, in the case of an instrument, to an address 22 specified thereon or otherwise agreed, or if there be none to 23 any address reasonable under the circumstances; or 24 (2) in any other way to cause to be received any the record 25 or notice notification to be received within the time it would 26 have arrived been received if properly sent under subparagraph 27 (1) . 28 al. (1) Signed includes using any symbol executed 29 or adopted Sign means with present intention intent to 30 authenticate or adopt or accept a writing. record that: 31 (a) executes or adopts a tangible symbol; or 32 (b) attaches to or logically associates with the record an 33 electronic symbol, sound, or process. 34 (2) Signed , signing , and signature have corresponding 35 -12- LSB 1411XC (12) 90 da/jh 12/ 57
S.F. _____ meanings. 1 Sec. 11. Section 554.1301, subsection 3, paragraph g, Code 2 2023, is amended to read as follows: 3 g. Sections 554.13105 and 554.13106 . ; 4 Sec. 12. Section 554.1301, subsection 3, Code 2023, is 5 amended by adding the following new paragraph: 6 NEW PARAGRAPH . h. Section 554.14107. 7 Sec. 13. Section 554.1306, Code 2023, is amended to read as 8 follows: 9 554.1306 Waiver or renunciation of claim or right after 10 breach. 11 A claim or right arising out of an alleged breach may 12 be discharged in whole or in part without consideration by 13 agreement of the aggrieved party in an authenticated a signed 14 record. 15 PART C 16 RELATED ARTICLES 17 SECURED TRANSACTIONS 18 Sec. 14. Section 554.9102, subsection 1, paragraphs b, c, 19 d, ab, ac, as, ax, bf, and br, Code 2023, are amended to read 20 as follows: 21 b. Account , except as used in account for , account 22 statement , account to , commodity account in paragraph n , 23 customers account , deposit account in paragraph ae , on 24 account of , and paragraph ae statement of account , means 25 a right to payment of a monetary obligation, whether or not 26 earned by performance, (i) for property that has been or is 27 to be sold, leased, licensed, assigned, or otherwise disposed 28 of; (ii) for services rendered or to be rendered; (iii) for 29 a policy of insurance issued or to be issued; (iv) for a 30 secondary obligation incurred or to be incurred; (v) for energy 31 provided or to be provided; (vi) for the use or hire of a vessel 32 under a charter or other contract; (vii) arising out of the use 33 of a credit or charge card or information contained on or for 34 use with the card; or (viii) as winnings in a lottery or other 35 -13- LSB 1411XC (12) 90 da/jh 13/ 57
S.F. _____ game of chance operated or sponsored by a state, governmental 1 unit of a state, or person licensed or authorized to operate 2 the game by a state or governmental unit of a state. The 3 term includes controllable accounts and health care insurance 4 receivables. The term does not include (i) chattel paper, (ii) 5 commercial tort claims, (iii) deposit accounts, (iv) investment 6 property, (v) letter-of-credit rights or letters of credit, 7 (vi) rights to payment for money or funds advanced or sold, 8 other than rights arising out of the use of a credit or charge 9 card or information contained on or for use with the card, or 10 (vii) rights to payment evidenced by an instrument. 11 c. Account debtor means a person obligated on an account, 12 chattel paper, or general intangible. The term does not 13 include persons obligated to pay a negotiable instrument, even 14 if the negotiable instrument constitutes part of evidences 15 chattel paper. 16 d. Accounting , except as used in accounting for , means a 17 record: 18 (1) authenticated signed by a secured party; 19 (2) indicating the aggregate unpaid secured obligations as 20 of a date not more than thirty-five days earlier or thirty-five 21 days later than the date of the record; and 22 (3) identifying the components of the obligations in 23 reasonable detail. 24 ab. Controllable account means an account evidenced by a 25 controllable electronic record that provides that the account 26 debtor undertakes to pay the person that has control under 27 section 554.14105 has control of the controllable electronic 28 record. 29 ac. Controllable payment intangible means a payment 30 intangible evidenced by a controllable electronic record that 31 provides that the account debtor undertakes to pay the person 32 that has control under section 554.14105 has control of the 33 controllable electronic record. 34 as. General intangible means any personal property, 35 -14- LSB 1411XC (12) 90 da/jh 14/ 57
S.F. _____ including things in action, other than accounts, chattel paper, 1 commercial tort claims, deposit accounts, documents, goods, 2 instruments, investment property, letter-of-credit rights, 3 letters of credit, money, and oil, gas, or other minerals 4 before extraction. The term includes controllable electronic 5 records, payment intangibles , and software. 6 ax. Instrument means a negotiable instrument or any 7 other writing that evidences a right to the payment of a 8 monetary obligation, is not itself a security agreement or 9 lease, and is of a type that in ordinary course of business 10 is transferred by delivery with any necessary indorsement or 11 assignment. The term does not include (i) investment property, 12 (ii) letters of credit, or (iii) writings that evidence a right 13 to payment arising out of the use of a credit or charge card 14 or information contained on or for use with the card , or (iv) 15 writings that evidence chattel paper . 16 bf. Money has the meaning provided in section 554.1201, 17 subsection 2 , paragraph y , but does not include (i) a deposit 18 account or (ii) money in an electronic form that cannot be 19 subjected to control under section 554.9105A . 20 br. Proposal means a record authenticated signed by a 21 secured party which includes the terms on which the secured 22 party is willing to accept collateral in full or partial 23 satisfaction of the obligation it secures pursuant to sections 24 554.9620 , 554.9621 , and 554.9622 . 25 Sec. 15. Section 554.9102, subsection 1, Code 2023, is 26 amended by adding the following new paragraphs: 27 NEW PARAGRAPH . 0g. Assignee , except as used in assignee 28 for benefit of creditors , means a person (i) in whose favor 29 a security interest that secures an obligation is created or 30 provided for under a security agreement, whether or not the 31 obligation is outstanding or (ii) to which an account, chattel 32 paper, payment intangible, or promissory note has been sold. 33 The term includes a person to which a security interest has 34 been transferred by a secured party. 35 -15- LSB 1411XC (12) 90 da/jh 15/ 57
S.F. _____ NEW PARAGRAPH . 00g. Assignor means a person that (i) 1 under a security agreement creates or provides for a security 2 interest that secures an obligation or (ii) sells an account, 3 chattel paper, payment intangible, or promissory note. The 4 term includes a secured party that has transferred a security 5 interest to another person. 6 Sec. 16. Section 554.9102, subsection 1, paragraphs g, ag, 7 ca, and ce, Code 2023, are amended by striking the paragraphs. 8 Sec. 17. Section 554.9102, subsection 1, paragraph k, Code 9 2023, is amended by striking the paragraph and inserting in 10 lieu thereof the following: 11 k. (1) Chattel paper means: 12 (a) a right to payment of a monetary obligation secured by 13 specific goods, if the right to payment and security agreement 14 are evidenced by a record; or 15 (b) a right to payment of a monetary obligation owed by a 16 lessee under a lease agreement with respect to specific goods 17 and a monetary obligation owed by the lessee in connection with 18 the transaction giving rise to the lease, if: 19 (i) the right to payment and lease agreement are evidenced 20 by a record; and 21 (ii) the predominant purpose of the transaction giving rise 22 to the lease was to give the lessee the right to possession and 23 use of the goods. 24 (2) Chattel paper does not include a right to payment 25 arising out of a charter or other contract involving the use or 26 hire of a vessel or a right to payment arising out of the use of 27 a credit or charge card or information contained on or for use 28 with the card. 29 Sec. 18. Section 554.9102, subsection 2, Code 2023, is 30 amended by adding the following new paragraph: 31 NEW PARAGRAPH . 0ae. Protected purchaser ... Section 32 554.8303. 33 Sec. 19. Section 554.9104, subsection 1, Code 2023, is 34 amended to read as follows: 35 -16- LSB 1411XC (12) 90 da/jh 16/ 57
S.F. _____ 1. Requirements for control. A secured party has control 1 of a deposit account if: 2 a. the secured party is the bank with which the deposit 3 account is maintained; 4 b. the debtor, secured party, and bank have agreed in 5 an authenticated a signed record that the bank will comply 6 with instructions originated by the secured party directing 7 disposition of the funds in the deposit account without further 8 consent by the debtor; or 9 c. the secured party becomes the banks customer with 10 respect to the deposit account . ; or 11 d. another person, other than the debtor: 12 (1) has control of the deposit account and acknowledges that 13 it has control on behalf of the secured party; or 14 (2) obtains control of the deposit account after having 15 acknowledged that it will obtain control of the deposit account 16 on behalf of the secured party. 17 DIVISION II 18 UNIFORM COMMERCIAL CODE 19 PART A 20 SECURED TRANSACTIONS 21 Sec. 20. Section 554.9105, Code 2023, is amended by striking 22 the section and inserting in lieu thereof the following: 23 554.9105 Control of electronic copy of record evidencing 24 chattel paper. 25 1. General rule: control of electronic copy of record 26 evidencing chattel paper. A purchaser has control of an 27 authoritative electronic copy of a record evidencing chattel 28 paper if a system employed for evidencing the assignment 29 of interests in the chattel paper reliably establishes the 30 purchaser as the person to which the authoritative electronic 31 copy was assigned. 32 2. Single authoritative copy. A system satisfies subsection 33 1 if the record or records evidencing the chattel paper are 34 created, stored, and assigned in a manner that: 35 -17- LSB 1411XC (12) 90 da/jh 17/ 57
S.F. _____ a. a single authoritative copy of the record or records 1 exists which is unique, identifiable, and, except as otherwise 2 provided in paragraphs d , e , and f , unalterable; 3 b. the authoritative copy identifies the purchaser as the 4 assignee of the record or records; 5 c. the authoritative copy is communicated to and maintained 6 by the purchaser or its designated custodian; 7 d. copies or amendments that add or change an identified 8 assignee of the authoritative copy can be made only with the 9 consent of the purchaser; 10 e. each copy of the authoritative copy and any copy of 11 a copy is readily identifiable as a copy that is not the 12 authoritative copy; and 13 f. any amendment of the authoritative copy is readily 14 identifiable as authorized or unauthorized. 15 3. One or more authoritative copies. A system satisfies 16 subsection 1, and a purchaser has control of an authoritative 17 electronic copy of a record evidencing chattel paper, if the 18 electronic copy, a record attached to or logically associated 19 with the electronic copy, or a system in which the electronic 20 copy is recorded: 21 a. enables the purchaser readily to identify each electronic 22 copy as either an authoritative copy or a nonauthoritative 23 copy; 24 b. enables the purchaser readily to identify itself in any 25 way, including by name, identifying number, cryptographic key, 26 office, or account number, as the assignee of the authoritative 27 electronic copy; and 28 c. gives the purchaser exclusive power, subject to 29 subsection 4, to: 30 (1) prevent others from adding or changing an identified 31 assignee of the authoritative electronic copy; and 32 (2) transfer control of the authoritative electronic copy. 33 4. Meaning of exclusive. Subject to subsection 5, a power 34 is exclusive under subsection 3, paragraph c , subparagraphs 35 -18- LSB 1411XC (12) 90 da/jh 18/ 57
S.F. _____ (1) and (2), even if: 1 a. the authoritative electronic copy, a record attached 2 to or logically associated with the authoritative electronic 3 copy, or a system in which the authoritative electronic copy is 4 recorded limits the use of the authoritative electronic copy 5 or has a protocol programmed to cause a change, including a 6 transfer or loss of control; or 7 b. the power is shared with another person. 8 5. When power not shared with another person. A power of a 9 purchaser is not shared with another person under subsection 4, 10 paragraph b , and the purchasers power is not exclusive if: 11 a. the purchaser can exercise the power only if the power 12 also is exercised by the other person; and 13 b. the other person: 14 (1) can exercise the power without exercise of the power by 15 the purchaser; or 16 (2) is the transferor to the purchaser of an interest in the 17 chattel paper. 18 6. Presumption of exclusivity of certain powers. If a 19 purchaser has the powers specified in subsection 3, paragraph 20 c , subparagraphs (1) and (2), the powers are presumed to be 21 exclusive. 22 7. Obtaining control through another person. A purchaser 23 has control of an authoritative electronic copy of a record 24 evidencing chattel paper if another person, other than the 25 transferor to the purchaser of an interest in the chattel 26 paper: 27 a. has control of the authoritative electronic copy and 28 acknowledges that it has control on behalf of the purchaser; or 29 b. obtains control of the authoritative electronic copy 30 after having acknowledged that it will obtain control of the 31 electronic copy on behalf of the purchaser. 32 Sec. 21. Section 554.9105A, Code 2023, is amended to read 33 as follows: 34 554.9105A Control of electronic money. 35 -19- LSB 1411XC (12) 90 da/jh 19/ 57
S.F. _____ 1. General rule : control of electronic money. A person 1 has control of electronic money if: 2 a. the electronic money , a record attached to or logically 3 associated with the electronic money, or a system in which the 4 electronic money is recorded gives the person: 5 (1) the power to avail itself of substantially all the 6 benefit from the electronic money; and 7 (2) exclusive power, subject to subsection 2 , to: 8 (a) prevent others from availing themselves of 9 substantially all the benefit from the electronic money; and 10 (b) transfer control of the electronic money to another 11 person or cause another person to obtain control of other 12 electronic money as a result of the transfer of the electronic 13 money; and 14 b. the electronic money, a record attached to or logically 15 associated with the electronic money, or a system in which 16 the electronic money is recorded enables the person readily 17 to identify itself in any way, including by name, identifying 18 number, cryptographic key, office, or account number, as having 19 the powers under paragraph a . 20 2. Meaning of exclusive. Subject to subsection 3, a power 21 is exclusive under subsection 1, paragraph a , subparagraph 22 (2), subparagraph divisions (a) and (b) even if: 23 a. the electronic money, a record attached to or logically 24 associated with the electronic money, or a system in which the 25 electronic money is recorded limits the use of the electronic 26 money or has a protocol programmed to cause a change, including 27 a transfer or loss of control; or 28 b. the power is shared with another person. 29 3. When power not shared with another person. A power of a 30 person is not shared with another person under subsection 2, 31 paragraph b and the persons power is not exclusive if: 32 a. the person can exercise the power only if the power also 33 is exercised by the other person; and 34 b. the other person: 35 -20- LSB 1411XC (12) 90 da/jh 20/ 57
S.F. _____ (1) can exercise the power without exercise of the power by 1 the person; or 2 (2) is the transferor to the person of an interest in the 3 electronic money. 4 4. Presumption of exclusivity of certain powers. If a 5 person has the powers specified in subsection 1, paragraph a , 6 subparagraph (2), subparagraph divisions (a) and (b) the powers 7 are presumed to be exclusive. 8 2. 5. Control through another person. A person has 9 control of electronic money if another person, other than the 10 transferor of an interest in the electronic money: 11 a. has control of the electronic money and acknowledges that 12 it has control on behalf of the person, or 13 b. obtains control of the electronic money after having 14 acknowledged that it will obtain control of the electronic 15 money on behalf of the person. 16 3. Meaning of exclusive. A power is exclusive under 17 subsection 1 , paragraph a , subparagraph (2), even if: 18 a. the electronic money or a system in which the electronic 19 money is recorded limits the use of the electronic money or has 20 a protocol programmed to transfer control; or 21 b. the person has agreed to share the power with another 22 person. 23 Sec. 22. NEW SECTION . 554.9107B No requirement to 24 acknowledge or confirm; no duties. 25 1. No requirement to acknowledge. A person that has control 26 under section 554.9104, 554.9105, or 554.9105A is not required 27 to acknowledge that it has control on behalf of another person. 28 2. No duties or confirmation. If a person acknowledges 29 that it has or will obtain control on behalf of another 30 person, unless the person otherwise agrees or law other than 31 this Article otherwise provides, the person does not owe any 32 duty to the other person and is not required to confirm the 33 acknowledgment to any other person. 34 Sec. 23. Section 554.9203, subsection 2, Code 2023, is 35 -21- LSB 1411XC (12) 90 da/jh 21/ 57
S.F. _____ amended to read as follows: 1 2. Enforceability. Except as otherwise provided in 2 subsections 3 through 10 9 , a security interest is enforceable 3 against the debtor and third parties with respect to the 4 collateral only if: 5 a. value has been given; 6 b. the debtor has rights in the collateral or the power to 7 transfer rights in the collateral to a secured party; and 8 c. one of the following conditions is met: 9 (1) the debtor has authenticated signed a security 10 agreement that provides a description of the collateral and, if 11 the security interest covers timber to be cut, a description 12 of the land concerned; 13 (2) the collateral is not a certificated security and is 14 in the possession of the secured party under section 554.9313 15 pursuant to the debtors security agreement; 16 (3) the collateral is a certificated security in registered 17 form and the security certificate has been delivered to the 18 secured party under section 554.8301 pursuant to the debtors 19 security agreement; or 20 (4) the collateral is controllable accounts, controllable 21 electronic records, controllable payment intangibles, deposit 22 accounts, electronic chattel paper, electronic documents, 23 electronic money, investment property, or letter-of-credit 24 rights, and the secured party has control under section 25 554.7106 , 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or 26 554.9107A pursuant to the debtors security agreement . ; or 27 (5) the collateral is chattel paper and the secured party 28 has possession and control under section 554.9314A pursuant to 29 the debtors security agreement. 30 Sec. 24. Section 554.9203, subsection 10, Code 2023, is 31 amended by striking the subsection. 32 Sec. 25. Section 554.9208, subsection 2, Code 2023, is 33 amended to read as follows: 34 2. Duties of secured party after receiving demand from 35 -22- LSB 1411XC (12) 90 da/jh 22/ 57
S.F. _____ debtor. Within ten days after receiving an authenticated a 1 signed demand by the debtor: 2 a. a secured party having control of a deposit account 3 under section 554.9104, subsection 1 , paragraph b , shall 4 send to the bank with which the deposit account is maintained 5 an authenticated statement a signed record that releases the 6 bank from any further obligation to comply with instructions 7 originated by the secured party; 8 b. a secured party having control of a deposit account under 9 section 554.9104, subsection 1 , paragraph c , shall: 10 (1) pay the debtor the balance on deposit in the deposit 11 account; or 12 (2) transfer the balance on deposit into a deposit account 13 in the debtors name; 14 c. a secured party, other than a buyer, having control of 15 electronic chattel paper under section 554.9105 shall: of an 16 authoritative electronic copy of a record evidencing chattel 17 paper shall transfer control of the electronic copy to the 18 debtor or a person designated by the debtor; 19 (1) communicate the authoritative copy of the electronic 20 chattel paper to the debtor or its designated custodian; 21 (2) if the debtor designates a custodian that is the 22 designated custodian with which the authoritative copy of 23 the electronic chattel paper is maintained for the secured 24 party, communicate to the custodian an authenticated record 25 releasing the designated custodian from any further obligation 26 to comply with instructions originated by the secured party 27 and instructing the custodian to comply with instructions 28 originated by the debtor; and 29 (3) take appropriate action to enable the debtor or its 30 designated custodian to make copies of or revisions to the 31 authoritative copy which add or change an identified assignee 32 of the authoritative copy without the consent of the secured 33 party; 34 d. a secured party having control of investment property 35 -23- LSB 1411XC (12) 90 da/jh 23/ 57
S.F. _____ under section 554.8106, subsection 4 , paragraph b , or 1 section 554.9106, subsection 2 , shall send to the securities 2 intermediary or commodity intermediary with which the 3 security entitlement or commodity contract is maintained an 4 authenticated a signed record that releases the securities 5 intermediary or commodity intermediary from any further 6 obligation to comply with entitlement orders or directions 7 originated by the secured party; 8 e. a secured party having control of a letter-of-credit 9 right under section 554.9107 shall send to each person having 10 an unfulfilled obligation to pay or deliver proceeds of the 11 letter of credit to the secured party an authenticated a signed 12 release from any further obligation to pay or deliver proceeds 13 of the letter of credit to the secured party; 14 f. a secured party having control under section 554.7106 15 of an authoritative electronic copy of an electronic document 16 shall : transfer control of the electronic copy to the debtor or 17 a person designated by the debtor; 18 (1) give control of the electronic document to the debtor or 19 its designated custodian; 20 (2) if the debtor designates a custodian that is the 21 designated custodian with which the authoritative copy of 22 the electronic document is maintained for the secured party, 23 communicate to the custodian an authenticated record releasing 24 the designated custodian from any further obligation to 25 comply with instructions originated by the secured party 26 and instructing the custodian to comply with instructions 27 originated by the debtor; and 28 (3) take appropriate action to enable the debtor or its 29 designated custodian to make copies of or revisions to the 30 authoritative copy which add or change an identified assignee 31 of the authoritative copy without the consent of the secured 32 party; and 33 g. a secured party having control under section 554.9105A of 34 electronic money shall transfer control of the electronic money 35 -24- LSB 1411XC (12) 90 da/jh 24/ 57
S.F. _____ to the debtor or a person designated by the debtor; and 1 h. a secured party having control under section 554.14105 2 of a controllable electronic record , other than a buyer of 3 a controllable account or controllable payment intangible 4 evidenced by the controllable electronic record, shall transfer 5 control of the controllable electronic record to the debtor or 6 a person designated by the debtor. 7 Sec. 26. Section 554.9209, subsection 2, Code 2023, is 8 amended to read as follows: 9 2. Duties of secured party after receiving demand from 10 debtor. Within ten days after receiving an authenticated a 11 signed demand by the debtor, a secured party shall send to 12 an account debtor under section 554.9406, subsection 1 or 13 554.14106, subsection 2, that has received notification of 14 an assignment to the secured party as assignee under section 15 554.9406, subsection 1 , an authenticated a signed record that 16 releases the account debtor from any further obligation to the 17 secured party. 18 Sec. 27. Section 554.9210, subsections 1, 2, 3, 4, and 5, 19 Code 2023, are amended to read as follows: 20 1. Definitions. In this section : 21 a. Request means a record of a type described in paragraph 22 b , c , or d . 23 b. Request for an accounting means a record authenticated 24 signed by a debtor requesting that the recipient provide an 25 accounting of the unpaid obligations secured by collateral and 26 reasonably identifying the transaction or relationship that is 27 the subject of the request. 28 c. Request regarding a list of collateral means a record 29 authenticated signed by a debtor requesting that the recipient 30 approve or correct a list of what the debtor believes to be the 31 collateral securing an obligation and reasonably identifying 32 the transaction or relationship that is the subject of the 33 request. 34 d. Request regarding a statement of account means a record 35 -25- LSB 1411XC (12) 90 da/jh 25/ 57
S.F. _____ authenticated signed by a debtor requesting that the recipient 1 approve or correct a statement indicating what the debtor 2 believes to be the aggregate amount of unpaid obligations 3 secured by collateral as of a specified date and reasonably 4 identifying the transaction or relationship that is the subject 5 of the request. 6 2. Duty to respond to requests. Subject to subsections 3, 7 4, 5, and 6 , a secured party, other than a buyer of accounts, 8 chattel paper, payment intangibles, or promissory notes or a 9 consignor, shall comply with a request within fourteen days 10 after receipt: 11 a. in the case of a request for an accounting, by 12 authenticating signing and sending to the debtor an accounting; 13 and 14 b. in the case of a request regarding a list of 15 collateral or a request regarding a statement of account, by 16 authenticating signing and sending to the debtor an approval 17 or correction. 18 3. Request regarding list of collateral statement 19 concerning type of collateral. A secured party that claims a 20 security interest in all of a particular type of collateral 21 owned by the debtor may comply with a request regarding a 22 list of collateral by sending to the debtor an authenticated 23 a signed record including a statement to that effect within 24 fourteen days after receipt. 25 4. Request regarding list of collateral no interest 26 claimed. A person that receives a request regarding a list 27 of collateral, claims no interest in the collateral when 28 it receives the request, and claimed an interest in the 29 collateral at an earlier time shall comply with the request 30 within fourteen days after receipt by sending to the debtor an 31 authenticated a signed record: 32 a. disclaiming any interest in the collateral; and 33 b. if known to the recipient, providing the name and mailing 34 address of any assignee of or successor to the recipients 35 -26- LSB 1411XC (12) 90 da/jh 26/ 57
S.F. _____ interest in the collateral. 1 5. Request for accounting or regarding statement of account 2 no interest in obligation claimed. A person that receives a 3 request for an accounting or a request regarding a statement of 4 account, claims no interest in the obligations when it receives 5 the request, and claimed an interest in the obligations at an 6 earlier time shall comply with the request within fourteen 7 days after receipt by sending to the debtor an authenticated a 8 signed record: 9 a. disclaiming any interest in the obligations; and 10 b. if known to the recipient, providing the name and mailing 11 address of any assignee of or successor to the recipients 12 interest in the obligations. 13 Sec. 28. Section 554.9301, unnumbered paragraph 1, Code 14 2023, is amended to read as follows: 15 Except as otherwise provided in sections 554.9303 , 554.9304 , 16 554.9305 , and 554.9306 through 554.9306B , the following 17 rules determine the law governing perfection, the effect of 18 perfection or nonperfection, and the priority of a security 19 interest in collateral: 20 Sec. 29. Section 554.9301, subsection 3, unnumbered 21 paragraph 1, Code 2023, is amended to read as follows: 22 Except as otherwise provided in subsection 4 , while tangible 23 negotiable tangible documents, goods, instruments, or tangible 24 money , or tangible chattel paper is located in a jurisdiction, 25 the local law of that jurisdiction governs: 26 Sec. 30. Section 554.9305, subsection 1, Code 2023, is 27 amended by adding the following new paragraph: 28 NEW PARAGRAPH . e. Paragraphs b , c , and d apply 29 even if the transaction does not bear any relation to the 30 jurisdiction. 31 Sec. 31. Section 554.9306A, Code 2023, is amended by 32 striking the section and inserting in lieu thereof the 33 following: 34 554.9306A Law governing perfection and priority of security 35 -27- LSB 1411XC (12) 90 da/jh 27/ 57
S.F. _____ interests in chattel paper. 1 1. Chattel paper evidenced by authoritative electronic 2 copy. Except as provided in subsection 4, if chattel paper 3 is evidenced only by an authoritative electronic copy of the 4 chattel paper or is evidenced by an authoritative electronic 5 copy and an authoritative tangible copy, the local law of the 6 chattel papers jurisdiction governs perfection, the effect of 7 perfection or nonperfection, and the priority of a security 8 interest in the chattel paper, even if the transaction does not 9 bear any relation to the chattel papers jurisdiction. 10 2. Chattel papers jurisdiction. The following rules 11 determine the chattel papers jurisdiction under this section: 12 a. If the authoritative electronic copy of the record 13 evidencing chattel paper, or a record attached to or logically 14 associated with the electronic copy and readily available for 15 review, expressly provides that a particular jurisdiction is 16 the chattel papers jurisdiction for purposes of this section, 17 this part, this Article, or this chapter, that jurisdiction is 18 the chattel papers jurisdiction. 19 b. If paragraph a does not apply and the rules of the 20 system in which the authoritative electronic copy is recorded 21 are readily available for review and expressly provide that a 22 particular jurisdiction is the chattel papers jurisdiction 23 for purposes of this section, this part, this Article, or this 24 chapter that jurisdiction is the chattel papers jurisdiction. 25 c. If paragraphs a and b do not apply and the 26 authoritative electronic copy, or a record attached to or 27 logically associated with the electronic copy and readily 28 available for review, expressly provides that the chattel paper 29 is governed by the law of a particular jurisdiction, that 30 jurisdiction is the chattel papers jurisdiction. 31 d. If paragraphs a , b , and c do not apply and the 32 rules of the system in which the authoritative electronic copy 33 is recorded are readily available for review and expressly 34 provide that the chattel paper or the system is governed by 35 -28- LSB 1411XC (12) 90 da/jh 28/ 57
S.F. _____ the law of a particular jurisdiction, that jurisdiction is the 1 chattel papers jurisdiction. 2 e. If paragraphs a through d do not apply, the chattel 3 papers jurisdiction is the jurisdiction in which the debtor 4 is located. 5 3. Chattel paper evidenced by authoritative tangible 6 copy. If an authoritative tangible copy of a record evidences 7 chattel paper and the chattel paper is not evidenced by an 8 authoritative electronic copy, while the authoritative tangible 9 copy of the record evidencing chattel paper is located in a 10 jurisdiction, the local law of that jurisdiction governs: 11 a. perfection of a security interest in the chattel paper by 12 possession under section 554.9314A; and 13 b. the effect of perfection or nonperfection and the 14 priority of a security interest in the chattel paper. 15 4. When perfection governed by law of jurisdiction where 16 debtor located. The local law of the jurisdiction in which the 17 debtor is located governs perfection of a security interest in 18 chattel paper by filing. 19 Sec. 32. NEW SECTION . 554.9306B Law governing perfection 20 and priority of security interests in controllable accounts, 21 controllable electronic records, and controllable payment 22 intangibles. 23 1. Governing law: general rules. Except as provided in 24 subsection 2, the local law of the controllable electronic 25 records jurisdiction specified in section 554.14107, 26 subsections 3 and 4 governs perfection, the effect of 27 perfection or nonperfection, and the priority of a security 28 interest in a controllable electronic record and a security 29 interest in a controllable account or controllable payment 30 intangible evidenced by the controllable electronic record. 31 2. When perfection governed by law of jurisdiction where 32 debtor located. The local law of the jurisdiction in which the 33 debtor is located governs: 34 a. perfection of a security interest in a controllable 35 -29- LSB 1411XC (12) 90 da/jh 29/ 57
S.F. _____ account, controllable electronic record, or controllable 1 payment intangible by filing; and 2 b. automatic perfection of a security interest in a 3 controllable payment intangible created by a sale of the 4 controllable payment intangible. 5 Sec. 33. Section 554.9308, subsection 8, Code 2023, is 6 amended by striking the subsection. 7 Sec. 34. Section 554.9310, subsection 2, paragraph h, Code 8 2023, is amended to read as follows: 9 h. in controllable accounts, controllable electronic 10 records, controllable payment intangibles, deposit accounts, 11 electronic chattel paper, electronic documents, investment 12 property, or letter-of-credit rights which is are perfected by 13 control under section 554.9314 ; 14 Sec. 35. Section 554.9310, subsection 2, Code 2023, is 15 amended by adding the following new paragraph: 16 NEW PARAGRAPH . 0i. in chattel paper which is perfected by 17 possession and control under section 554.9314A; 18 Sec. 36. Section 554.9312, Code 2023, is amended to read as 19 follows: 20 554.9312 Perfection of security interests in chattel 21 paper, controllable accounts, controllable electronic records, 22 controllable payment intangibles, chattel paper, deposit 23 accounts, negotiable documents, goods covered by documents, 24 instruments, investment property, letter-of-credit rights, and 25 money perfection by permissive filing temporary perfection 26 without filing or transfer of possession. 27 1. Perfection by filing permitted. A security interest in 28 chattel paper, controllable accounts, controllable electronic 29 records, controllable payment intangibles, chattel paper, 30 negotiable documents, instruments, or investment property , or 31 negotiable documents may be perfected by filing. 32 2. Control or possession of certain collateral. Except as 33 otherwise provided in section 554.9315, subsections 3 and 4 , 34 for proceeds: 35 -30- LSB 1411XC (12) 90 da/jh 30/ 57
S.F. _____ a. a security interest in a deposit account may be perfected 1 only by control under section 554.9314 ; 2 b. and except as otherwise provided in section 554.9308, 3 subsection 4 , a security interest in a letter-of-credit right 4 may be perfected only by control under section 554.9314 ; 5 c. a security interest in tangible money may be perfected 6 only by the secured partys taking possession under section 7 554.9313 ; and 8 d. a security interest in electronic money may be perfected 9 only by control under section 554.9314 . 10 3. Goods covered by negotiable document. While goods are 11 in the possession of a bailee that has issued a negotiable 12 document covering the goods: 13 a. a security interest in the goods may be perfected by 14 perfecting a security interest in the document; and 15 b. a security interest perfected in the document has 16 priority over any security interest that becomes perfected in 17 the goods by another method during that time. 18 4. Goods covered by nonnegotiable document. While goods are 19 in the possession of a bailee that has issued a nonnegotiable 20 document covering the goods, a security interest in the goods 21 may be perfected by: 22 a. issuance of a document in the name of the secured party; 23 b. the bailees receipt of notification of the secured 24 partys interest; or 25 c. filing as to the goods. 26 5. Temporary perfection new value. A security 27 interest in certificated securities, negotiable documents, 28 or instruments is perfected without filing or the taking of 29 possession or control for a period of twenty days from the time 30 it attaches to the extent that it arises for new value given 31 under an authenticated a signed security agreement. 32 6. Temporary perfection goods or documents made available 33 to debtor. A perfected security interest in a negotiable 34 document or goods in possession of a bailee, other than one 35 -31- LSB 1411XC (12) 90 da/jh 31/ 57
S.F. _____ that has issued a negotiable document for the goods, remains 1 perfected for twenty days without filing if the secured 2 party makes available to the debtor the goods or documents 3 representing the goods for the purpose of: 4 a. ultimate sale or exchange; or 5 b. loading, unloading, storing, shipping, transshipping, 6 manufacturing, processing, or otherwise dealing with them in a 7 manner preliminary to their sale or exchange. 8 7. Temporary perfection delivery of security certificate 9 or instrument to debtor. A perfected security interest in 10 a certificated security or instrument remains perfected for 11 twenty days without filing if the secured party delivers the 12 security certificate or instrument to the debtor for the 13 purpose of: 14 a. ultimate sale or exchange; or 15 b. presentation, collection, enforcement, renewal, or 16 registration of transfer. 17 8. Expiration of temporary perfection. After the twenty-day 18 period specified in subsection 5, 6, or 7 expires, perfection 19 depends upon compliance with this Article . 20 Sec. 37. Section 554.9313, subsections 1, 3, and 4, Code 21 2023, are amended to read as follows: 22 1. Perfection by possession or delivery. Except as otherwise 23 provided in subsection 2 , a secured party may perfect a 24 security interest in tangible negotiable documents, goods, 25 instruments, negotiable tangible documents, or tangible 26 money , or tangible chattel paper by taking possession of the 27 collateral. A secured party may perfect a security interest in 28 certificated securities by taking delivery of the certificated 29 securities under section 554.8301 . 30 3. Collateral in possession of person other than 31 debtor. With respect to collateral other than certificated 32 securities and goods covered by a document, a secured party 33 takes possession of collateral in the possession of a person 34 other than the debtor, the secured party, or a lessee of 35 -32- LSB 1411XC (12) 90 da/jh 32/ 57
S.F. _____ the collateral from the debtor in the ordinary course of the 1 debtors business, when: 2 a. the person in possession authenticates signs a record 3 acknowledging that it holds possession of the collateral for 4 the secured partys benefit; or 5 b. the person takes possession of the collateral after 6 having authenticated signed a record acknowledging that it 7 will hold possession of the collateral for the secured partys 8 benefit. 9 4. Time of perfection by possession continuation of 10 perfection. If perfection of a security interest depends upon 11 possession of the collateral by a secured party, perfection 12 occurs no not earlier than the time the secured party takes 13 possession and continues only while the secured party retains 14 possession. 15 Sec. 38. Section 554.9314, subsections 1, 2, and 3, Code 16 2023, are amended to read as follows: 17 1. Perfection by control. A security interest in 18 controllable accounts, controllable electronic records, 19 controllable payment intangibles, deposit accounts, electronic 20 chattel paper, electronic documents, electronic money, 21 investment property, or letter-of-credit rights may be 22 perfected by control of the collateral under section 554.7106 , 23 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or 24 554.9107A . 25 2. Specified collateral time of perfection by control 26 continuation of perfection. A security interest in controllable 27 accounts, controllable electronic records, controllable payment 28 intangibles, deposit accounts, electronic chattel paper, 29 electronic documents, electronic money, or letter-of-credit 30 rights is perfected by control under section 554.7106 , 31 554.9104 , 554.9105 , 554.9105A , 554.9107 , or 554.9107A when 32 not earlier than the time the secured party obtains control 33 and remains perfected by control only while the secured party 34 retains control. 35 -33- LSB 1411XC (12) 90 da/jh 33/ 57
S.F. _____ 3. Investment property time of perfection by control 1 continuation of perfection. A security interest in investment 2 property is perfected by control under section 554.9106 from 3 not earlier than the time the secured party obtains control and 4 remains perfected by control until: 5 a. the secured party does not have control; and 6 b. one of the following occurs: 7 (1) if the collateral is a certificated security, the debtor 8 has or acquires possession of the security certificate; 9 (2) if the collateral is an uncertificated security, the 10 issuer has registered or registers the debtor as the registered 11 owner; or 12 (3) if the collateral is a security entitlement, the debtor 13 is or becomes the entitlement holder. 14 Sec. 39. NEW SECTION . 554.9314A Perfection by possession 15 and control of chattel paper. 16 1. Perfection by possession and control. A secured party 17 may perfect a security interest in chattel paper by taking 18 possession of each authoritative tangible copy of the record 19 evidencing the chattel paper and obtaining control of each 20 authoritative electronic copy of the electronic record 21 evidencing the chattel paper. 22 2. Time of perfection; continuation of perfection. A 23 security interest is perfected under subsection 1 not earlier 24 than the time the secured party takes possession and obtains 25 control and remains perfected under subsection 1 only while the 26 secured party retains possession and control. 27 3. Application of section 554.9313 to perfection by 28 possession of chattel paper. Section 554.9313, subsections 29 3 and 6 through 9, apply to perfection by possession of an 30 authoritative tangible copy of a record evidencing chattel 31 paper. 32 Sec. 40. Section 554.9316, subsections 1 and 6, Code 2023, 33 are amended to read as follows: 34 1. General rule effect on perfection of change in 35 -34- LSB 1411XC (12) 90 da/jh 34/ 57
S.F. _____ governing law. A security interest perfected pursuant to 1 the law of the jurisdiction designated in section 554.9301, 2 subsection 1 , or section 554.9305, subsection 3 , section 3 554.9306A, subsection 4, or section 554.9306B, subsection 2, 4 remains perfected until the earliest of: 5 a. the time perfection would have ceased under the law of 6 that jurisdiction; 7 b. the expiration of four months after a change of the 8 debtors location to another jurisdiction; or 9 c. the expiration of one year after a transfer of collateral 10 to a person that thereby becomes a debtor and is located in 11 another jurisdiction. 12 6. Change in jurisdiction of chattel paper, controllable 13 electronic record, bank, issuer, nominated person, securities 14 intermediary, or commodity intermediary. A security interest in 15 chattel paper, controllable accounts, controllable electronic 16 records, controllable payment intangibles, deposit accounts, 17 letter-of-credit rights, or investment property which is 18 perfected under the law of the chattel papers jurisdiction, 19 the controllable electronic records jurisdiction, the banks 20 jurisdiction, the issuers jurisdiction, a nominated persons 21 jurisdiction, the securities intermediarys jurisdiction, or 22 the commodity intermediarys jurisdiction, as applicable, 23 remains perfected until the earlier of: 24 a. the time the security interest would have become 25 unperfected under the law of that jurisdiction; or 26 b. the expiration of four months after a change of the 27 applicable jurisdiction to another jurisdiction. 28 Sec. 41. Section 554.9317, subsections 2 and 4, Code 2023, 29 are amended to read as follows: 30 2. Buyers that receive delivery. Except as otherwise 31 provided in subsection 5 , a buyer, other than a secured 32 party, of tangible chattel paper, tangible documents, goods, 33 instruments, tangible documents, or a certificated security 34 certificate takes free of a security interest or agricultural 35 -35- LSB 1411XC (12) 90 da/jh 35/ 57
S.F. _____ lien if the buyer gives value and receives delivery of the 1 collateral without knowledge of the security interest or 2 agricultural lien and before it is perfected. 3 4. Licensees and buyers of certain collateral. A Subject to 4 subsections 6 through 9, a licensee of a general intangible or 5 a buyer, other than a secured party, of collateral other than 6 tangible chattel paper, tangible documents, electronic money, 7 goods, instruments, tangible documents, or a certificated 8 security takes free of a security interest if the licensee or 9 buyer gives value without knowledge of the security interest 10 and before it is perfected. 11 Sec. 42. Section 554.9317, Code 2023, is amended by adding 12 the following new subsections: 13 NEW SUBSECTION . 6. Buyers of chattel paper. A buyer, other 14 than a secured party, of chattel paper takes free of a security 15 interest if, without knowledge of the security interest and 16 before it is perfected, the buyer gives value and: 17 a. receives delivery of each authoritative tangible copy of 18 the record evidencing the chattel paper; and 19 b. if each authoritative electronic copy of the record 20 evidencing the chattel paper can be subjected to control 21 under section 554.9105, obtains control of each authoritative 22 electronic copy. 23 NEW SUBSECTION . 7. Buyers of electronic documents. A buyer 24 of an electronic document takes free of a security interest 25 if, without knowledge of the security interest and before it 26 is perfected, the buyer gives value and, if each authoritative 27 electronic copy of the document can be subjected to control 28 under section 554.7106, obtains control of each authoritative 29 electronic copy. 30 NEW SUBSECTION . 8. Buyers of controllable electronic 31 records. A buyer of a controllable electronic record takes free 32 of a security interest if, without knowledge of the security 33 interest and before it is perfected, the buyer gives value and 34 obtains control of the controllable electronic record. 35 -36- LSB 1411XC (12) 90 da/jh 36/ 57
S.F. _____ NEW SUBSECTION . 9. Buyers of controllable accounts and 1 controllable payment intangibles. A buyer, other than a secured 2 party, of a controllable account or a controllable payment 3 intangible takes free of a security interest if, without 4 knowledge of the security interest and before it is perfected, 5 the buyer gives value and obtains control of the controllable 6 account or controllable payment intangible. 7 Sec. 43. Section 554.9324, subsection 2, paragraph b, Code 8 2023, is amended to read as follows: 9 b. the purchase-money secured party sends an authenticated 10 signed notification to the holder of the conflicting security 11 interest; 12 Sec. 44. Section 554.9324, subsection 4, paragraph b, Code 13 2023, is amended to read as follows: 14 b. the purchase-money secured party sends an authenticated 15 a signed notification to the holder of the conflicting security 16 interest; 17 Sec. 45. Section 554.9330, subsections 1, 2, and 6, Code 18 2023, are amended to read as follows: 19 1. Purchasers priority security interest claimed merely 20 as proceeds. A purchaser of chattel paper has priority over a 21 security interest in the chattel paper which is claimed merely 22 as proceeds of inventory subject to a security interest if: 23 a. in good faith and in the ordinary course of the 24 purchasers business, the purchaser gives new value , and takes 25 possession of each authoritative tangible copy of the record 26 evidencing the chattel paper or , and obtains control of under 27 section 554.9105 of each authoritative electronic copy of the 28 record evidencing the chattel paper under section 554.9105 ; and 29 b. the chattel paper does authoritative copies of the 30 record evidencing the chattel paper do not indicate that it the 31 chattel paper has been assigned to an identified assignee other 32 than the purchaser. 33 2. Purchasers priority other security interests. A 34 purchaser of chattel paper has priority over a security 35 -37- LSB 1411XC (12) 90 da/jh 37/ 57
S.F. _____ interest in the chattel paper which is claimed other than 1 merely as proceeds of inventory subject to a security interest 2 if the purchaser gives new value , and takes possession of 3 each authoritative tangible copy of the record evidencing the 4 chattel paper or , and obtains control of under section 554.9105 5 of each authoritative electronic copy of the record evidencing 6 the chattel paper under section 554.9105 in good faith, in 7 the ordinary course of the purchasers business, and without 8 knowledge that the purchase violates the rights of the secured 9 party. 10 6. Indication of assignment gives knowledge. For purposes of 11 subsections 2 and 4 , if the authoritative copies of the record 12 evidencing chattel paper or an instrument indicates indicate 13 that it the chattel paper or instrument has been assigned to an 14 identified secured party other than the purchaser, a purchaser 15 of the chattel paper or instrument has knowledge that the 16 purchase violates the rights of the secured party. 17 Sec. 46. Section 554.9331, Code 2023, is amended to read as 18 follows: 19 554.9331 Priority of rights of purchasers of controllable 20 accounts, controllable electronic records, controllable payment 21 intangibles, documents, instruments, and securities under 22 other Articles priority of interests in financial assets 23 and security entitlements and protections protection against 24 assertions assertion of claims under Articles 8 and 14. 25 1. Rights under Articles 3, 7, 8, and 14 not limited. This 26 Article does not limit the rights of a holder in due course of a 27 negotiable instrument, a holder to which a negotiable document 28 of title has been duly negotiated, a protected purchaser of a 29 security, or a qualifying purchaser of a controllable account, 30 controllable electronic record, or controllable payment 31 intangible. These holders or purchasers take priority over an 32 earlier security interest, even if perfected, to the extent 33 provided in Articles 3 , 7 , 8 , and 14 . 34 2. Protection under Articles 8 and 14. This Article does 35 -38- LSB 1411XC (12) 90 da/jh 38/ 57
S.F. _____ not limit the rights of or impose liability on a person to the 1 extent that the person is protected against the assertion of 2 a claim under Article 8 or 14 . 3 3. Filing not notice. Filing under this Article does 4 not constitute notice of a claim or defense to the holders, 5 purchasers, or persons described in subsections 1 and 2 . 6 Sec. 47. Section 554.9332, Code 2023, is amended to read as 7 follows: 8 554.9332 Transfer of money transfer of funds from deposit 9 account. 10 1. Transferee of tangible money. A transferee of tangible 11 money takes the money free of a security interest in the money 12 if the transferee when receiving delivery receives possession 13 of the money does not act without acting in collusion with the 14 debtor in violating the rights of the secured party. 15 2. Transferee of electronic money. A transferee of 16 electronic money takes the money free of a security interest 17 in the money if the transferee when obtaining control of the 18 money does not act in collusion with the debtor in violating 19 the rights of the secured party. 20 3. 2. Transferee of funds from deposit account. A 21 transferee of funds from a deposit account takes the funds free 22 of a security interest in the deposit account if the transferee 23 when receiving receives the funds does not act without acting 24 in collusion with the debtor in violating the rights of the 25 secured party. 26 3. Transferee of electronic money. A transferee of 27 electronic money takes the money free of a security interest 28 if the transferee obtains control of the money without acting 29 in collusion with the debtor in violating the rights of the 30 secured party. 31 Sec. 48. Section 554.9334, subsection 6, paragraph a, Code 32 2023, is amended to read as follows: 33 a. the encumbrancer or owner has, in an authenticated a 34 signed record, consented to the security interest or disclaimed 35 -39- LSB 1411XC (12) 90 da/jh 39/ 57
S.F. _____ an interest in the goods as fixtures; or 1 Sec. 49. Section 554.9341, unnumbered paragraph 1, Code 2 2023, is amended to read as follows: 3 Except as otherwise provided in section 554.9340, subsection 4 3 , and unless the bank otherwise agrees in an authenticated a 5 signed record, a banks rights and duties with respect to a 6 deposit account maintained with the bank are not terminated, 7 suspended, or modified by: 8 Sec. 50. Section 554.9404, subsection 1, paragraph b, Code 9 2023, is amended to read as follows: 10 b. any other defense or claim of the account debtor against 11 the assignor which accrues before the account debtor receives 12 a notification of the assignment authenticated signed by the 13 assignor or the assignee. 14 Sec. 51. Section 554.9406, subsections 1, 4, 7, and 11, Code 15 2023, are amended to read as follows: 16 1. Discharge of account debtor effect of 17 notification. Subject to subsections 2 through 9 and 18 11 , an account debtor on an account, chattel paper, or a 19 payment intangible may discharge its obligation by paying the 20 assignor until, but not after, the account debtor receives 21 a notification, authenticated signed by the assignor or 22 the assignee, that the amount due or to become due has been 23 assigned and that payment is to be made to the assignee. After 24 receipt of the notification, the account debtor may discharge 25 its obligation by paying the assignee and may not discharge the 26 obligation by paying the assignor. 27 4. Term restricting assignment generally ineffective. In 28 this subsection, promissory note includes a negotiable 29 instrument that evidences chattel paper. Except as otherwise 30 provided in subsection subsections 5 and 11 and sections 31 554.9407 and 554.13303 , and subject to subsection 8 , a term in 32 an agreement between an account debtor and an assignor or in a 33 promissory note is ineffective to the extent that it: 34 a. prohibits, restricts, or requires the consent of the 35 -40- LSB 1411XC (12) 90 da/jh 40/ 57
S.F. _____ account debtor or person obligated on the promissory note to 1 the assignment or transfer of, or the creation, attachment, 2 perfection, or enforcement of a security interest in, the 3 account, chattel paper, payment intangible, or promissory note; 4 or 5 b. provides that the assignment or transfer or the creation, 6 attachment, perfection, or enforcement of the security interest 7 may give rise to a default, breach, right of recoupment, claim, 8 defense, termination, right of termination, or remedy under the 9 account, chattel paper, payment intangible, or promissory note. 10 7. Subsection 2 , paragraph c, not waivable. Subject to 11 subsection subsections 8 and 11 , an account debtor may shall 12 not waive or vary its option under subsection 2 , paragraph c . 13 11. Inapplicability of certain subsections. Subsections 1 14 through , 2, 3 , and 7 do not apply to a controllable account or 15 controllable payment intangible. 16 Sec. 52. Section 554.9509, subsections 1 and 2, Code 2023, 17 are amended to read as follows: 18 1. Person entitled to file record. A person may file an 19 initial financing statement, amendment that adds collateral 20 covered by a financing statement, or amendment that adds a 21 debtor to a financing statement only if: 22 a. the debtor authorizes the filing in an authenticated a 23 signed record or pursuant to subsection 2 or 3 ; or 24 b. the person holds an agricultural lien that has 25 become effective at the time of filing and the financing 26 statement covers only collateral in which the person holds an 27 agricultural lien. 28 2. Security agreement as authorization. By authenticating 29 signing or becoming bound as debtor by a security agreement, 30 a debtor or new debtor authorizes the filing of an initial 31 financing statement, and an amendment, covering: 32 a. the collateral described in the security agreement; and 33 b. property that becomes collateral under section 554.9315, 34 subsection 1 , paragraph b , whether or not the security 35 -41- LSB 1411XC (12) 90 da/jh 41/ 57
S.F. _____ agreement expressly covers proceeds. 1 Sec. 53. Section 554.9513, subsections 2 and 3, Code 2023, 2 are amended to read as follows: 3 2. Time for compliance with subsection 1 . To comply with 4 subsection 1 , a secured party shall cause the secured party of 5 record to file the termination statement: 6 a. within one month after there is no obligation secured 7 by the collateral covered by the financing statement and 8 no commitment to make an advance, incur an obligation, or 9 otherwise give value; or 10 b. if earlier, within twenty days after the secured party 11 receives an authenticated a signed demand from a debtor. 12 3. Other collateral. In cases not governed by subsection 13 1 , within twenty days after a secured party receives an 14 authenticated a signed demand from a debtor, the secured 15 party shall cause the secured party of record for a financing 16 statement to send to the debtor a termination statement for the 17 financing statement or file the termination statement in the 18 filing office if: 19 a. except in the case of a financing statement covering 20 accounts or chattel paper that has been sold or goods that 21 are the subject of a consignment, there is no obligation 22 secured by the collateral covered by the financing statement 23 and no commitment to make an advance, incur an obligation, or 24 otherwise give value; 25 b. the financing statement covers accounts or chattel paper 26 that has been sold but as to which the account debtor or other 27 person obligated has discharged its obligation; 28 c. the financing statement covers goods that were the 29 subject of a consignment to the debtor but are not in the 30 debtors possession; or 31 d. the debtor did not authorize the filing of the initial 32 financing statement. 33 Sec. 54. Section 554.9605, Code 2023, is amended to read as 34 follows: 35 -42- LSB 1411XC (12) 90 da/jh 42/ 57
S.F. _____ 554.9605 Unknown debtor or secondary obligor. 1 1. Duties to unknown persons general rule In general: no 2 duty owed by a secured party . Except as provided in subsection 3 2 , a secured party does not owe a duty based on its status as 4 secured party: 5 a. to a person that is a debtor or obligor, unless the 6 secured party knows: 7 (1) that the person is a debtor or obligor; 8 (2) the identity of the person; and 9 (3) how to communicate with the person; or 10 b. to a secured party or lienholder that has filed a 11 financing statement against a person, unless the secured party 12 knows: 13 (1) that the person is a debtor; and 14 (2) the identity of the person. 15 2. When secured party owes duty to debtor notwithstanding 16 subsection 1 Exception: secured party owes a duty to debtor 17 or obligor . A secured party owes a duty based on its status 18 as a secured party to a person that is a debtor if, at the 19 time the secured party obtains control of collateral that is 20 a controllable account, controllable electronic record, or 21 controllable payment intangible, or at the time the security 22 interest attaches to the collateral, whichever is later: 23 a. the person is a debtor or obligor; and 24 b. the secured party has knowledge knows that the nature 25 of the collateral or a system in which the collateral is 26 recorded would prevent the secured party from acquiring the 27 knowledge specified information in subsection 1 , paragraph a , 28 subparagraph (1), (2), or (3) relating to the person is not 29 provided by the collateral, a record attached to or logically 30 associated with the collateral, or the system in which the 31 collateral is recorded . 32 Sec. 55. Section 554.9608, subsection 1, paragraph a, 33 subparagraph (3), Code 2023, is amended to read as follows: 34 (3) the satisfaction of obligations secured by any 35 -43- LSB 1411XC (12) 90 da/jh 43/ 57
S.F. _____ subordinate security interest in or other lien on the 1 collateral subject to the security interest or agricultural 2 lien under which the collection or enforcement is made if the 3 secured party receives an authenticated a signed demand for 4 proceeds before distribution of the proceeds is completed. 5 Sec. 56. Section 554.9611, subsection 1, paragraph a, Code 6 2023, is amended to read as follows: 7 a. a secured party sends to the debtor and any secondary 8 obligor an authenticated a signed notification of disposition; 9 or 10 Sec. 57. Section 554.9611, subsections 2 and 3, Code 2023, 11 are amended to read as follows: 12 2. Notification of disposition required. Except as otherwise 13 provided in subsection 4 , a secured party that disposes of 14 collateral under section 554.9610 shall send to the persons 15 specified in subsection 3 a reasonable authenticated signed 16 notification of disposition. 17 3. Persons to be notified. To comply with subsection 2 , the 18 secured party shall send an authenticated a signed notification 19 of disposition to: 20 a. the debtor; 21 b. any secondary obligor; and 22 c. if the collateral is other than consumer goods: 23 (1) any other person from which the secured party has 24 received, before the notification date, an authenticated 25 a signed notification of a claim of an interest in the 26 collateral; 27 (2) any other secured party or lienholder that, ten days 28 before the notification date, held a security interest in or 29 other lien on the collateral perfected by the filing of a 30 financing statement that: 31 (a) identified the collateral; 32 (b) was indexed under the debtors name as of that date; and 33 (c) was filed in the office in which to file a financing 34 statement against the debtor covering the collateral as of that 35 -44- LSB 1411XC (12) 90 da/jh 44/ 57
S.F. _____ date; and 1 (3) any other secured party that, ten days before the 2 notification date, held a security interest in the collateral 3 perfected by compliance with a statute, regulation, or treaty 4 described in section 554.9311, subsection 1 . 5 Sec. 58. Section 554.9611, subsection 5, paragraph b, 6 subparagraph (2), Code 2023, is amended to read as follows: 7 (2) received a response to the request for information and 8 sent an authenticated a signed notification of disposition to 9 each secured party or other lienholder named in that response 10 whose financing statement covered the collateral. 11 Sec. 59. Section 554.9615, subsection 1, paragraph c, 12 subparagraph (1), Code 2023, is amended to read as follows: 13 (1) the secured party receives from the holder of the 14 subordinate security interest or other lien an authenticated a 15 signed demand for proceeds before distribution of the proceeds 16 is completed; and 17 Sec. 60. Section 554.9615, subsection 1, paragraph d, Code 18 2023, is amended to read as follows: 19 d. a secured party that is a consignor of the collateral if 20 the secured party receives from the consignor an authenticated 21 a signed demand for proceeds before distribution of the 22 proceeds is completed. 23 Sec. 61. Section 554.9616, subsection 1, paragraph b, 24 subparagraph (1), Code 2023, is amended to read as follows: 25 (1) authenticated signed by a debtor or consumer obligor; 26 Sec. 62. Section 554.9619, subsection 1, unnumbered 27 paragraph 1, Code 2023, is amended to read as follows: 28 In this section , transfer statement means a record 29 authenticated signed by a secured party stating: 30 Sec. 63. Section 554.9620, subsection 1, paragraph b, 31 unnumbered paragraph 1, Code 2023, is amended to read as 32 follows: 33 the secured party does not receive, within the time set forth 34 in subsection 4 , a notification of objection to the proposal 35 -45- LSB 1411XC (12) 90 da/jh 45/ 57
S.F. _____ authenticated signed by: 1 Sec. 64. Section 554.9620, subsection 2, paragraph a, Code 2 2023, is amended to read as follows: 3 a. the secured party consents to the acceptance in an 4 authenticated a signed record or sends a proposal to the 5 debtor; and 6 Sec. 65. Section 554.9620, subsection 3, Code 2023, is 7 amended to read as follows: 8 3. Debtors consent. For purposes of this section : 9 a. a debtor consents to an acceptance of collateral in 10 partial satisfaction of the obligation it secures only if 11 the debtor agrees to the terms of the acceptance in a record 12 authenticated signed after default; and 13 b. a debtor consents to an acceptance of collateral in full 14 satisfaction of the obligation it secures only if the debtor 15 agrees to the terms of the acceptance in a record authenticated 16 signed after default or the secured party: 17 (1) sends to the debtor after default a proposal that is 18 unconditional or subject only to a condition that collateral 19 not in the possession of the secured party be preserved or 20 maintained; 21 (2) in the proposal, proposes to accept collateral in full 22 satisfaction of the obligation it secures; and 23 (3) does not receive a notification of objection 24 authenticated signed by the debtor within twenty days after the 25 proposal is sent. 26 Sec. 66. Section 554.9620, subsection 6, paragraph b, Code 27 2023, is amended to read as follows: 28 b. within any longer period to which the debtor and all 29 secondary obligors have agreed in an agreement to that effect 30 entered into and authenticated signed after default. 31 Sec. 67. Section 554.9621, subsection 1, paragraph a, Code 32 2023, is amended to read as follows: 33 a. any person from which the secured party has received, 34 before the debtor consented to the acceptance, an authenticated 35 -46- LSB 1411XC (12) 90 da/jh 46/ 57
S.F. _____ a signed notification of a claim of an interest in the 1 collateral; 2 Sec. 68. Section 554.9624, Code 2023, is amended to read as 3 follows: 4 554.9624 Waiver. 5 1. Waiver of disposition notification. A debtor or secondary 6 obligor may waive the right to notification of disposition of 7 collateral under section 554.9611 only by an agreement to that 8 effect entered into and authenticated signed after default. 9 2. Waiver of mandatory disposition. A debtor may waive 10 the right to require disposition of collateral under section 11 554.9620, subsection 5 , only by an agreement to that effect 12 entered into and authenticated signed after default. 13 3. Waiver of redemption right. Except in a consumer-goods 14 transaction, a debtor or secondary obligor may waive the 15 right to redeem collateral under section 554.9623 only by an 16 agreement to that effect entered into and authenticated signed 17 after default. 18 Sec. 69. Section 554.9628, subsection 1, unnumbered 19 paragraph 1, Code 2023, is amended to read as follows: 20 Unless Subject to subsection 6, unless a secured party knows 21 that a person is a debtor or obligor, knows the identity of the 22 person, and knows how to communicate with the person: 23 Sec. 70. Section 554.9628, subsection 6, Code 2023, is 24 amended by striking the subsection and inserting in lieu 25 thereof the following: 26 6. Exception: limitation of liability under subsections 27 1 and 2 does not apply. Subsections 1 and 2 do not apply to 28 limit the liability of a secured party to a person if, at the 29 time the secured party obtains control of collateral that is 30 a controllable account, controllable electronic record, or 31 controllable payment intangible or at the time the security 32 interest attaches to the collateral, whichever is later: 33 a. the person is a debtor or obligor; and 34 b. the secured party knows that the information in 35 -47- LSB 1411XC (12) 90 da/jh 47/ 57
S.F. _____ subsection 2, paragraph a , subparagraph (1), (2), or (3), 1 relating to the person is not provided by the collateral, a 2 record attached to or logically associated with the collateral, 3 or the system in which the collateral is recorded. 4 PART B 5 TRANSITIONAL PROVISIONS 6 Sec. 71. NEW SECTION . 554.15101 Short title. 7 This Article may be cited as the Transitional Provisions for 8 Uniform Commercial Code Amendments (2022). 9 Sec. 72. NEW SECTION . 554.15102 Definitions. 10 1. Article 15 definitions. In this Article: 11 a. Article 14 means Article 14 of this chapter. 12 b. Article 14 property means a controllable account, 13 controllable electronic record, or controllable payment 14 intangible. 15 2. Definitions in other Articles. The following definitions 16 in other Articles of this chapter apply to this Article: 17 a. Controllable account ... Section 554.9102. 18 b. Controllable electronic record ... Section 554.14102. 19 c. Controllable payment intangible ... Section 554.9102. 20 d. Electronic money ... Section 554.9102. 21 e. Financing statement ... Section 554.9102. 22 3. Article 1 definitions and principles. Article 1 contains 23 general definitions and principles of construction and 24 interpretation applicable throughout this Article. 25 Sec. 73. NEW SECTION . 554.15201 Saving clause. 26 Except as provided in part 3, a transaction validly entered 27 into before the effective date of this Act and the rights, 28 duties, and interests flowing from the transaction remain valid 29 thereafter and may be terminated, completed, consummated, 30 or enforced as required or permitted by law other than this 31 chapter or, if applicable, this chapter, as though this Act had 32 not taken effect. 33 Sec. 74. NEW SECTION . 554.15301 Saving clause. 34 1. Pre-effective-date transaction, lien, or interest. Except 35 -48- LSB 1411XC (12) 90 da/jh 48/ 57
S.F. _____ as provided in this part, Article 9, as amended by this Act, 1 and Article 14, as amended by this Act, apply to a transaction, 2 lien, or other interest in property, even if the transaction, 3 lien, or interest was entered into, created, or acquired before 4 the effective date of this Act. 5 2. Continuing validity. Except as provided in subsection 3 6 and sections 554.15302 through 554.15306: 7 a. a transaction, lien, or interest in property that 8 was validly entered into, created, or transferred before 9 the effective date of this Act and was not governed by this 10 chapter, but would be subject to Article 9 as amended by this 11 Act or Article 14, as amended by this Act, if it had been 12 entered into, created, or transferred on or after the effective 13 date of this Act, including the rights, duties, and interests 14 flowing from the transaction, lien, or interest, remains valid 15 on and after the effective date of this Act; and 16 b. the transaction, lien, or interest may be terminated, 17 completed, consummated, and enforced as required or permitted 18 by this Act or by the law that would apply if this Act had not 19 taken effect. 20 3. Pre-effective-date proceeding. This Act does not affect 21 an action, case, or proceeding commenced before the effective 22 date of this Act. 23 Sec. 75. NEW SECTION . 554.15302 Security interest perfected 24 before effective date. 25 1. Continuing perfection: perfection requirements 26 satisfied. A security interest that is enforceable and 27 perfected immediately before the effective date of this Act 28 is a perfected security interest under this Act if, on the 29 effective date of this Act, the requirements for enforceability 30 and perfection under this Act are satisfied without further 31 action. 32 2. Continuing perfection: enforceability or perfection 33 requirements not satisfied. If a security interest is 34 enforceable and perfected immediately before the effective 35 -49- LSB 1411XC (12) 90 da/jh 49/ 57
S.F. _____ date of this Act, but the requirements for enforceability or 1 perfection under this Act are not satisfied on the effective 2 date of this Act, the security interest: 3 a. is a perfected security interest until the earlier of 4 the time perfection would have ceased under the law in effect 5 immediately before the effective date of this Act or July 1, 6 2025; 7 b. remains enforceable thereafter only if the security 8 interest satisfies the requirements for enforceability under 9 section 554.9203, as amended by this Act, before July 1, 2025; 10 and 11 c. remains perfected thereafter only if the requirements 12 for perfection under this Act are satisfied before the time 13 specified in paragraph a . 14 Sec. 76. NEW SECTION . 554.15303 Security interest 15 unperfected before effective date. 16 A security interest that is enforceable immediately before 17 the effective date of this Act but is unperfected at that time: 18 1. remains an enforceable security interest until July 1, 19 2025; 20 2. remains enforceable thereafter if the security interest 21 becomes enforceable under section 554.9203, as amended by this 22 Act, on the effective date of this Act or before July 1, 2025; 23 and 24 3. becomes perfected: 25 a. without further action, on the effective date of this Act 26 if the requirements for perfection under this Act are satisfied 27 before or at that time; or 28 b. when the requirements for perfection are satisfied if the 29 requirements are satisfied after that time. 30 Sec. 77. NEW SECTION . 554.15304 Effectiveness of actions 31 taken before effective date. 32 1. Pre-effective-date action; attachment and perfection 33 before July 1, 2025. If action, other than the filing of a 34 financing statement, is taken before the effective date of this 35 -50- LSB 1411XC (12) 90 da/jh 50/ 57
S.F. _____ Act and this action would have resulted in perfection of the 1 security interest had the security interest become enforceable 2 before the effective date of this Act, this action is effective 3 to perfect a security interest that attaches under this Act 4 before July 1, 2025. An attached security interest becomes 5 unperfected on July 1, 2025, unless the security interest 6 becomes a perfected security interest under this Act before 7 July 1, 2025. 8 2. Pre-effective-date filing. The filing of a financing 9 statement before the effective date of this Act is effective 10 to perfect a security interest on the effective date of this 11 Act to the extent the filing would satisfy the requirements for 12 perfection under this Act. 13 3. Pre-effective-date enforceability action. The taking of 14 an action before the effective date of this Act is sufficient 15 for the enforceability of a security interest on the effective 16 date of this Act if this action would satisfy the requirements 17 for enforceability under this Act. 18 Sec. 78. NEW SECTION . 554.15305 Priority. 19 1. Determination of priority. Subject to subsections 2 and 20 3, this Act determines the priority of conflicting claims to 21 collateral. 22 2. Established priorities. Subject to subsection 3, if the 23 priorities of claims to collateral were established before the 24 effective date of this Act, Article 9, as in effect before the 25 effective date of this Act, determines priority. 26 3. Determination of certain priorities on July 1, 2025. On 27 July 1, 2025, to the extent the priorities determined by 28 Article 9, as amended by this Act, modify the priorities 29 established before the effective date of this Act, the 30 priorities of claims to Article 14 property and electronic 31 money established before the effective date of this Act cease 32 to apply. 33 Sec. 79. NEW SECTION . 554.15306 Priority of claims when 34 priority rules of Article 9 do not apply. 35 -51- LSB 1411XC (12) 90 da/jh 51/ 57
S.F. _____ 1. Determination of priority. Subject to subsections 2 and 1 3, Article 14 determines the priority of conflicting claims to 2 Article 14 property when the priority rules of Article 9, as 3 amended by this Act, do not apply. 4 2. Established priorities. Subject to subsection 3, when 5 the priority rules of Article 9, as amended by this Act, do not 6 apply and the priorities of claims to Article 14 property were 7 established before the effective date of this Act, law other 8 than Article 14 determines priority. 9 3. Determination of certain priorities on July 1, 2025. When 10 the priority rules of Article 9, as amended by this Act, do 11 not apply, to the extent the priorities determined by this Act 12 modify the priorities established before the effective date 13 of this Act, the priorities of claims to Article 14 property 14 established before the effective date of this Act cease to 15 apply on July 1, 2025. 16 Sec. 80. DIRECTIONS TO THE CODE EDITOR ARTICLE 15 17 PARTS. The Code editor is directed to divide the provisions of 18 chapter 554, Article 15, as enacted in this division of this 19 Act, into parts as follows: 20 1. Part 1, including sections 554.15101 and 554.15102. 21 2. Part 2, including section 554.15201. 22 3. Part 3, including sections 554.15301, 554.15302, 23 554.15303, 554.15304, 554.15305, and 554.15306. 24 DIVISION III 25 DIGITAL ASSETS 26 Sec. 81. Section 554E.1, Code 2023, is amended by striking 27 the section and inserting in lieu thereof the following: 28 554E.1 Definitions. 29 As used in this chapter, unless the context otherwise 30 requires: 31 1. Contract means the same as defined in section 554D.103. 32 2. Digital asset means any electronic record that 33 represents, evidences, or comprises economic value or economic, 34 proprietary, or access rights, is maintained or stored in or 35 -52- LSB 1411XC (12) 90 da/jh 52/ 57
S.F. _____ as an electronic ledger or other record of transactions, or 1 is used as a medium of exchange, unit of account, method of 2 payment, or store of value. 3 3. Distributed ledger technology means an electronic 4 ledger or other record of transactions or other data to which 5 all of the following apply: 6 a. The electronic ledger is uniformly ordered. 7 b. The electronic ledger is redundantly maintained or 8 processed by more than one computer or machine to guarantee the 9 consistency or nonrepudiation of the recorded transactions or 10 other data. 11 4. Electronic means the same as defined in section 12 554D.103. 13 5. Electronic record means the same as defined in section 14 554D.103. 15 6. Electronic services system means the county land record 16 information system, or electronic services system, created 17 under the agreement entered into under chapter 28E between the 18 counties and the Iowa county recorders association as required 19 by 2005 Iowa Acts, ch. 179, 101, as amended by 2021 Iowa Acts, 20 ch. 126, 2. 21 7. Record means the same as defined in section 554D.103. 22 8. Smart contract means an electronic record that is an 23 event-driven program or computerized transaction protocol that 24 runs on a distributed, decentralized, shared, and replicated 25 ledger that executes the term of a contract, including taking 26 custody over and instructing the transfer of assets. 27 9. Transaction means a sale, trade, exchange, transfer, 28 payment, or conversion of a digital asset or any other property 29 or any other action or set of actions occurring between two or 30 more persons relating to the conduct of business, commercial, 31 or governmental affairs. 32 Sec. 82. Section 554E.2, Code 2023, is amended to read as 33 follows: 34 554E.2 Classification of digital assets. 35 -53- LSB 1411XC (12) 90 da/jh 53/ 57
S.F. _____ Digital assets are intangible personal property. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanations substance by the members of the general assembly. 4 GENERAL. This bill amends Code chapter 554, Iowas version 5 of the uniform commercial code (UCC), governing certain 6 commercial transactions involving forms of personal electronic 7 property that do not derive value from physical attributes 8 (sometimes referred to as form of intangible personal 9 property). In 2022, the general assembly enacted two bills 10 dealing with these types of transactions: (1) new Article 14 11 of the UCC (Code chapter 554) and referred to as the Uniform 12 Commercial Code Controllable Electronic Records (2022 Iowa 13 Acts, chapter 1117) and (2) new Code chapter 554E referring to 14 smart contracts, distributed ledger technology, and digital 15 assets (2022 Iowa Acts, chapter 1116). 16 CONTROLLABLE ELECTRONIC RECORDS BACKGROUND. The 2022 Act 17 creating new Article 14 of the UCC, in part included amendments 18 to Article 1 providing general provisions applicable throughout 19 the UCC, and amendments to Article 9 governing secured 20 transactions, as prepared by a committee appointed jointly by 21 the uniform law commission and the American law institute. 22 The Act provided for forms of electronic property sometimes 23 referred to as digital assets including non-fiat currency 24 and blockchain based non-fungible tokens, commonly referred 25 to as NFTs, and transactions involving sale to a purchaser 26 (qualified purchaser) and associated payment obligations 27 (a controllable payment intangible) by an account debtor. 28 Note, the UCC does not use the term intangible property 29 but personal property which includes general intangibles, 30 including controllable electronic records. Iowas new Article 31 14 is connected to Article 9, which allows a creditor to 32 obtain a security interest attached to a debtors personal 33 property as collateral and to obtain priority when enforcing 34 that security interest over other creditors having a security 35 -54- LSB 1411XC (12) 90 da/jh 54/ 57
S.F. _____ interest in that same collateral. Under Code section 554.9102, 1 the term account means having a present and future right 2 to a payment based on the transfer of services or property 3 including by sale or lease, and includes accounts receivable, 4 but excludes an item represented by a negotiable instrument 5 or chattel paper. The term payment intangible (under the 6 catchall term general intangible) means a debtors principal 7 obligation is the payment of money and includes a controllable 8 payment intangible. An account debtor is a person who owes 9 an obligation on an account, chattel paper, or intangible 10 property. Chattel paper is a debt obligation supported with a 11 security interest in tangible property and includes electronic 12 chattel paper evidenced by an electronic record. An electronic 13 record cannot include electronic money operating as a medium of 14 exchange before being authorized or adopted by a governmental 15 entity. Like a controllable electronic record, electronic 16 money is perfected by rules of control rather than rules of 17 possession traditionally governing forms of tangible personal 18 property. 19 CONTROLLABLE ELECTRONIC RECORDS BILLS PROVISIONS. The 20 bill eliminates several terms, including electronic chattel 21 paper and substitutes the term used to complete a document 22 from authenticate to sign. The bill provides for rights 23 in controllable accounts, controllable electronic records, 24 and controllable payment intangibles (amended Code section 25 554.14104), the control of controllable electronic records 26 (amended Code section 554.14105), and what state law controls 27 in cases of jurisdictional questions (amended Code section 28 554.14107). The bill defines a number of terms used throughout 29 the UCC, including money. The bill amends a number of 30 Article 9 provisions, including the control of an electronic 31 copy of a record evidencing chattel paper (amended Code section 32 554.9105); the control of electronic money (amended Code 33 section 554.9105A); that no duty exists to confirm control on 34 behalf of another person (new Code section 554.9107B); the 35 -55- LSB 1411XC (12) 90 da/jh 55/ 57
S.F. _____ duty of a secured party to transfer control of electronic 1 document of title to a debtor (amended Code section 554.9208); 2 the law governing the perfection and priority of a security 3 interest in chattel paper (amended Code section 554.9306A) and 4 in controllable accounts, controllable electronic records, 5 and controllable payment intangibles (new Code section 6 554.9306B); the perfection of chattel paper, including an 7 electronic copy of a record evidencing chattel paper (new Code 8 section 554.9314A); the right of a buyer of chattel paper, 9 electronic document, a controllable electronic record, and 10 a controllable account or controllable payment intangible 11 to take clear of a security interest prior to perfection 12 (amended Code section 554.9317); and the liability of a secured 13 party obtaining control of collateral that is a controllable 14 account, controllable electronic record, or controllable 15 payment intangible (amended Code section 554.9628). The bill 16 also includes a number of transitional provisions, including 17 a saving clause (new Code sections 554.15201 and 554.15301), 18 the enforceability of a security interest that is perfected 19 or unperfected before the bills effective date (new Code 20 sections 554.15302 and 554.15303), the effectiveness of actions 21 taken before the bills effective date (new Code section 22 554.15304), and rules of priority (new Code sections 554.15305 23 and 554.15306). 24 REGULATION OF DIGITAL ASSETS BACKGROUND. The 2022 Act 25 regulating transactions involving distributed ledger technology 26 and smart contracts is connected to Article 14. In both 27 cases, the medium of exchange is a digital asset. Distributed 28 ledger technology allows different computers to validate 29 transactions and update records and a smart contract is a type 30 of electronic record that executes the term of a contract, 31 including the transfer of assets. A digital asset is a form 32 of an electronic record that represents or is used as a medium 33 of exchange, unit of account, method of payment, or store of 34 value. However, the term expressly excludes certain personal 35 -56- LSB 1411XC (12) 90 da/jh 56/ 57
S.F. _____ property recognized under the UCC, including a deposit account, 1 electronic record evidencing chattel paper, electronic chattel 2 paper, controllable account, controllable payment intangible, 3 money, electronic document of title, investment property, or a 4 transferable record (Code section 554E.1). A contract cannot 5 be denied legal effect or enforceability solely because it 6 is effectuated by distributed ledger technology or a smart 7 contract (Code section 554E.3). In addition, the 2022 Act 8 provides that a real estate conveyance can be recorded by a 9 county if the evidence of conveyance complies with the general 10 requirements of Code chapter 558 and is in a format conforming 11 with standards established by the electronic services system 12 allowing counties and the Iowa county recorders association 13 to enter into an agreement under Code chapter 28E for the 14 implementation of the county land record information system 15 (Code section 554E.4). 16 REGULATION OF DIGITAL ASSETS BILLS PROVISIONS. The 17 bill amends the definition of digital asset by eliminating 18 exceptions recognized by the UCC including electronic records 19 evidencing chattel paper. The bill provides that a digital 20 asset is classified simply as personal property rather than 21 intangible personal property. Finally, the bill defines 22 electronic services system by citing its source in the Iowa 23 Acts. 24 -57- LSB 1411XC (12) 90 da/jh 57/ 57