North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S117 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	S 1
4		-	SENATE BILL 117
	3	+	S D
	4	+	SENATE BILL DRS35028-MUz-3A
	5	+
5	6
6	7
7	8		Short Title: GSC Uniform Comm. Code/Emerging Technologies. (Public)
8	9		Sponsors: Senators Galey, B. Newton, and Britt (Primary Sponsors).
9		-	Referred to: ~~Rules and Operations of the Senate~~
10		-	~~February 21, 2025~~
11		-	~~S117 -v-1~~
	10	+	Referred to:
	11	+
	12	+	DRS35028 -MUz-3A
12	13		A BILL TO BE ENTITLED 1
13	14		AN ACT TO UPDATE THE UNIFORM COMMERCIAL CODE TO GOVERN 2
14	15		TRANSACTIONS INVOLVING CERTAIN EMERGING TECHNOLOGIES , AS 3
15	16		RECOMMENDED BY THE GENERAL STATUTES COMMISSION. 4
16	17		The General Assembly of North Carolina enacts: 5
17	18		6
18	19		PART I. CONTROLLABLE ELECTRONIC RECORDS 7
19	20		SECTION 1. Chapter 25 of the General Statutes is amended by adding a new Article 8
20	21		to read: 9
21	22		"Article 12. 10
22	23		"Controllable Electronic Records. 11
23	24		"§ 25-12-101. Title. 12
24	25		This Article may be cited as Uniform Commercial Code – Controllable Electronic Records. 13
25	26		"§ 25-12-102. Definitions. 14
26	27		(a) Article 12 Definitions. – In this Article, the following definitions apply: 15
27	28		(1) Account debtor. – Defined in G.S. 25-9-102. 16
28	29		(2) Chattel paper. – Defined in G.S. 25-9-102. 17
29	30		(3) Controllable account. – Defined in G.S. 25-9-102. 18
30	31		(4) Controllable electronic record. – A record stored in an electronic medium that 19
31	32		can be subjected to control under G.S. 25-12-105. The term does not include 20
32	33		a controllable account, a controllable payment intangible, a deposit account, 21
33	34		an electronic copy of a record evidencing chattel paper, an electronic 22
34	35		document of title, electronic money, investment property, or a transferable 23
35	36		record. 24
36	37		(5) Controllable payment intangible. – Defined in G.S. 25-9-102. 25
37	38		(6) Deposit account. – Defined in G.S. 25-9-102. 26
38	39		(7) Electronic money. – Defined in G.S. 25-9-102. 27
39	40		(8) Investment property. – Defined in G.S. 25-9-102. 28
40	41		(9) Qualifying purchaser. – A purchaser of a controllable electronic record or an 29
41	42		interest in a controllable electronic record that obtains control of the 30
42	43		controllable electronic record for value, in good faith, and without notice of a 31
43	44		claim of a property right in the controllable electronic record. 32
44	45		(10) Transferable record. – Has the meaning provided for that term in either of the 33
45	46		following: 34
46	47		a. Section 201(a)(1) of the Electronic Signatures in Global and National 35
47		-	Commerce Act, 15 U.S.C. § 7021(a)(1). 36 General Assembly Of North Carolina Session 2025
48		-	Page 2 Senate Bill 117-First Edition
	48	+	Commerce Act, 15 U.S.C. § 7021(a)(1). 36
	49	+	FILED SENATE
	50	+	Feb 18, 2025
	51	+	S.B. 117
	52	+	PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	53	+	Page 2 DRS35028-MUz-3A
49	54		b. G.S. 66-326(a). 1
50	55		(11) Value. – Has the meaning provided in G.S. 25-3-303(a), as if references in 2
51	56		that subsection to an "instrument" were references to a controllable account, 3
52	57		controllable electronic record, or controllable payment intangible. 4
53	58		(b) Article 1 Definitions and Principles. – Article 1 of this Chapter contains general 5
54	59		definitions and principles of construction and interpretation applicable throughout this Article. 6
55	60		"§ 25-12-103. Relation to Article 9 and consumer laws. 7
56	61		(a) Article 9 Governs in Case of Conflict. – If there is conflict between this Article and 8
57	62		Article 9 of this Chapter, Article 9 of this Chapter governs. 9
58	63		(b) Applicable Consumer Law and Other Laws. – A transaction subject to this Article is 10
59	64		subject to any applicable rule of law that establishes a different rule for consumers, to any other 11
60	65		statute or rule of this State that regulates the rates, charges, agreements, and practices for loans, 12
61	66		credit sales, or other extensions of credit, and to any consumer-protection statute or rule of this 13
62	67		State, including Chapter 24 of the General Statutes, the Retail Installment Sales Act (Chapter 14
63	68		25A of the General Statutes), the North Carolina Consumer Finance Act (Article 15 of Chapter 15
64	69		53 of the General Statutes), and the Pawnbrokers and Currency Converters Modernization Act 16
65	70		(Part 1 of Article 45 of Chapter 66 of the General Statutes). 17
66	71		"§ 25-12-104. Rights in controllable account, controllable electronic record, and 18
67	72		controllable payment intangible. 19
68	73		(a) Applicability of Section to Controllable Account and Controllable Payment 20
69	74		Intangible. – This section applies to the acquisition and purchase of rights in a controllable 21
70	75		account or controllable payment intangible, including the rights and benefits under subsections 22
71	76		(c), (d), (e), (g), and (h) of this section of a purchaser and qualifying purchaser, in the same 23
72	77		manner this section applies to a controllable electronic record. 24
73	78		(b) Control of Controllable Account and Controllable Payment Intangible. – To 25
74	79		determine whether a purchaser of a controllable account or a controllable payment intangible is 26
75	80		a qualifying purchaser, the purchaser obtains control of the account or payment intangible if it 27
76	81		obtains control of the controllable electronic record that evidences the account or payment 28
77	82		intangible. 29
78	83		(c) Applicability of Other Law to Acquisition of Rights. – Except as provided in this 30
79	84		section, law other than this Article determines whether a person acquires a right in a controllable 31
80	85		electronic record and the right the person acquires. 32
81	86		(d) Shelter Principle and Purchase of Limited Interest. – A purchaser of a controllable 33
82	87		electronic record acquires all rights in the controllable electronic record that the transferor had or 34
83	88		had power to transfer, except that a purchaser of a limited interest in a controllable electronic 35
84	89		record acquires rights only to the extent of the interest purchased. 36
85	90		(e) Rights of Qualifying Purchaser. – A qualifying purchaser acquires its rights in the 37
86	91		controllable electronic record free of a claim of a property right in the controllable electronic 38
87	92		record. 39
88	93		(f) Limitation of Rights of Qualifying Purchaser in Other Property. – Except as provided 40
89	94		in subsections (a) and (e) of this section for a controllable account and a controllable payment 41
90	95		intangible or law other than this Article, a qualifying purchaser takes a right to payment, right to 42
91	96		performance, or other interest in property evidenced by the controllable electronic record subject 43
92	97		to a claim of a property right in the right to payment, right to performance, or other interest in 44
93	98		property. 45
94	99		(g) No-Action Protection for Qualifying Purchaser. – An action shall not be asserted 46
95	100		against a qualifying purchaser based on both a purchase by the qualifying purchaser of a 47
96	101		controllable electronic record and a claim of a property right in another controllable electronic 48
97	102		record, whether the action is framed in conversion, replevin, constructive trust, equitable lien, or 49
98	103		other theory. 50 General Assembly Of North Carolina Session 2025
99		-	~~Senate Bill 117-First Edition~~ Page 3
	104	+	DRS35028-MUz-3A Page 3
100	105		(h) Filing Not Notice. – Filing of a financing statement under Article 9 of this Chapter is 1
101	106		not notice of a claim of a property right in a controllable electronic record. 2
102	107		"§ 25-12-105. Control of controllable electronic record. 3
103	108		(a) General Rule for Control of Controllable Electronic Record. – A person has control 4
104	109		of a controllable electronic record if the electronic record, a record attached to or logically 5
105	110		associated with the electronic record, or a system in which the electronic record is recorded does 6
106	111		both of the following: 7
107	112		(1) Gives the person both of the following: 8
108	113		a. Power to avail itself of substantially all the benefit from the electronic 9
109	114		record. 10
110	115		b. Exclusive power, subject to subsection (b) of this section, to do both 11
111	116		of the following: 12
112	117		1. Prevent others from availing themselves of substantially all the 13
113	118		benefit from the electronic record. 14
114	119		2. Transfer control of the electronic record to another person or 15
115	120		cause another person to obtain control of another controllable 16
116	121		electronic record as a result of the transfer of the electronic 17
117	122		record. 18
118	123		(2) Enables the person readily to identify itself in any way, including by name, 19
119	124		identifying number, cryptographic key, office, or account number, as having 20
120	125		the powers specified in subdivision (1) of this subsection. 21
121	126		(b) Meaning of Exclusive. – Subject to subsection (c) of this section, a power is exclusive 22
122	127		under sub-subdivision (a)(1)b. of this section even if either of the following applies: 23
123	128		(1) The controllable electronic record, a record attached to or logically associated 24
124	129		with the electronic record, or a system in which the electronic record is 25
125	130		recorded limits the use of the electronic record or has a protocol programmed 26
126	131		to cause a change, including a transfer or loss of control or a modification of 27
127	132		benefits afforded by the electronic record. 28
128	133		(2) The power is shared with another person. 29
129	134		(c) When Power Not Shared with Another Person. – A power of a person is not shared 30
130	135		with another person under subdivision (b)(2) of this section and the person's power is not 31
131	136		exclusive if both of the following apply: 32
132	137		(1) The person can exercise the power only if the power also is exercised by the 33
133	138		other person. 34
134	139		(2) Either of the following applies: 35
135	140		a. The other person can exercise the power without exercise of the power 36
136	141		by the person. 37
137	142		b. The other person is the transferor to the person of an interest in the 38
138	143		controllable electronic record or a controllable account or controllable 39
139	144		payment intangible evidenced by the controllable electronic record. 40
140	145		(d) Presumption of Exclusivity of Certain Powers. – If a person has the powers specified 41
141	146		in sub-subdivision (a)(1)b. of this section, the powers are presumed to be exclusive. 42
142	147		(e) Control Through Another Person. – A person has control of a controllable electronic 43
143	148		record if either of the following applies to another person, other than the transferor to the person 44
144	149		of an interest in the controllable electronic record or a controllable account or controllable 45
145	150		payment intangible evidenced by the controllable electronic record: 46
146	151		(1) The other person has control of the electronic record and acknowledges that it 47
147	152		has control on behalf of the person. 48
148	153		(2) The other person obtains control of the electronic record after having 49
149	154		acknowledged that it will obtain control of the electronic record on behalf of 50
150	155		the person. 51 General Assembly Of North Carolina Session 2025
151		-	Page 4 ~~Senate Bill 117-First Edition~~
	156	+	Page 4 DRS35028-MUz-3A
152	157		(f) No Requirement to Acknowledge. – A person that has control under this section is 1
153	158		not required to acknowledge that it has control on behalf of another person. 2
154	159		(g) No Duties or Confirmation. – If a person acknowledges that it has or will obtain 3
155	160		control on behalf of another person, unless the person otherwise agrees or law other than this 4
156	161		Article or Article 9 of this Chapter otherwise provides, the person does not owe any duty to the 5
157	162		other person and is not required to confirm the acknowledgment to any other person. 6
158	163		"§ 25-12-106. Discharge of account debtor on controllable account or controllable payment 7
159	164		intangible. 8
160	165		(a) Discharge of Account Debtor. – An account debtor on a controllable account or 9
161	166		controllable payment intangible may discharge its obligation by paying either of the following 10
162	167		persons: 11
163	168		(1) The person having control of the controllable electronic record that evidences 12
164	169		the controllable account or controllable payment intangible. 13
165	170		(2) Except as provided in subsection (b) of this section, a person that formerly had 14
166	171		control of the controllable electronic record. 15
167	172		(b) Content and Effect of Notification. – Subject to subsection (d) of this section, the 16
168	173		account debtor shall not discharge its obligation by paying a person that formerly had control of 17
169	174		the controllable electronic record if the account debtor receives a notification that satisfies all of 18
170	175		the following requirements: 19
171	176		(1) The notification is signed by a person that formerly had control or the person 20
172	177		to which control was transferred. 21
173	178		(2) The notification reasonably identifies the controllable account or controllable 22
174	179		payment intangible. 23
175	180		(3) The notification notifies the account debtor that control of the controllable 24
176	181		electronic record that evidences the controllable account or controllable 25
177	182		payment intangible was transferred. 26
178	183		(4) The notification identifies the transferee, in any reasonable way, including by 27
179	184		name, identifying number, cryptographic key, office, or account number. 28
180	185		(5) The notification provides a commercially reasonable method by which the 29
181	186		account debtor is to pay the transferee. 30
182	187		(c) Discharge Following Effective Notification. – After receipt of a notification that 31
183	188		complies with subsection (b) of this section, the account debtor may discharge its obligation by 32
184	189		paying in accordance with the notification and shall not discharge the obligation by paying a 33
185	190		person that formerly had control. 34
186	191		(d) When Notification Ineffective. – Subject to subsection (h) of this section, all of the 35
187	192		following apply to a notification under subsection (b) of this section: 36
188	193		(1) The notification is ineffective unless, before the notification is sent, the 37
189	194		account debtor and the person that, at that time, had control of the controllable 38
190	195		electronic record that evidences the controllable account or controllable 39
191	196		payment intangible agree in a signed record to a commercially reasonable 40
192	197		method by which a person may furnish reasonable proof that control has been 41
193	198		transferred. 42
194	199		(2) The notification is ineffective to the extent an agreement between the account 43
195	200		debtor and seller of a payment intangible limits the account debtor's duty to 44
196	201		pay a person other than the seller and the limitation is effective under law 45
197	202		other than this Article. 46
198	203		(3) The notification is ineffective at the option of the account debtor, if the 47
199	204		notification notifies the account debtor to do any of the following: 48
200	205		a. Divide a payment. 49
201	206		b. Make less than the full amount of an installment or other periodic 50
202	207		payment. 51 General Assembly Of North Carolina Session 2025
203		-	~~Senate Bill 117-First Edition~~ Page 5
	208	+	DRS35028-MUz-3A Page 5
204	209		c. Pay any part of a payment by more than one method or to more than 1
205	210		one person. 2
206	211		(e) Proof of Transfer of Control. – Subject to subsection (h) of this section, if requested 3
207	212		by the account debtor, the person giving the notification under subsection (b) of this section 4
208	213		seasonably shall furnish reasonable proof, using the method in the agreement referred to in 5
209	214		subdivision (d)(1) of this section, that control of the controllable electronic record has been 6
210	215		transferred. Unless the person complies with the request, the account debtor may discharge its 7
211	216		obligation by paying a person that formerly had control, even if the account debtor has received 8
212	217		a notification under subsection (b) of this section. 9
213	218		(f) What Constitutes Reasonable Proof. – A person furnishes reasonable proof under 10
214	219		subsection (e) of this section that control has been transferred if the person demonstrates, using 11
215	220		the method in the agreement referred to in subdivision (d)(1) of this section, that the transferee 12
216	221		has the power to do all of the following: 13
217	222		(1) Avail itself of substantially all the benefit from the controllable electronic 14
218	223		record. 15
219	224		(2) Prevent others from availing themselves of substantially all the benefit from 16
220	225		the controllable electronic record. 17
221	226		(3) Transfer the powers specified in subdivisions (1) and (2) of this subsection to 18
222	227		another person. 19
223	228		(g) Rights Not Waivable. – Subject to subsection (h) of this section, an account debtor 20
224	229		shall not waive or vary its rights under subdivision (d)(1) and subsection (e) of this section or its 21
225	230		option under subdivision (d)(3) of this section. 22
226	231		(h) Rule for Individual Under Other Law. – This section is subject to law other than this 23
227	232		Article that establishes a different rule for an account debtor who is an individual and who 24
228	233		incurred the obligation primarily for personal, family, or household purposes. 25
229	234		"§ 25-12-107. Governing law. 26
230	235		(a) General Rule for Governing Law. – Except as provided in subsection (b) of this 27
231	236		section, the local law of a controllable electronic record's jurisdiction governs a matter covered 28
232	237		by this Article. 29
233	238		(b) Governing Law for G.S. 25-12-106. – For a controllable electronic record that 30
234	239		evidences a controllable account or controllable payment intangible, the local law of the 31
235	240		controllable electronic record's jurisdiction governs a matter covered by G.S. 25-12-106 unless 32
236	241		an effective agreement determines that the local law of another jurisdiction governs. 33
237	242		(c) Controllable Electronic Record's Jurisdiction. – The following rules determine a 34
238	243		controllable electronic record's jurisdiction under this section: 35
239	244		(1) If the controllable electronic record, or a record attached to or logically 36
240	245		associated with the controllable electronic record and readily available for 37
241	246		review, expressly provides that a particular jurisdiction is the controllable 38
242	247		electronic record's jurisdiction for purposes of this Article or Chapter, that 39
243	248		jurisdiction is the controllable electronic record's jurisdiction. 40
244	249		(2) If subdivision (1) of this subsection does not apply and the rules of the system 41
245	250		in which the controllable electronic record is recorded are readily available for 42
246	251		review and expressly provide that a particular jurisdiction is the controllable 43
247	252		electronic record's jurisdiction for purposes of this Article or Chapter, that 44
248	253		jurisdiction is the controllable electronic record's jurisdiction. 45
249	254		(3) If subdivisions (1) and (2) of this subsection do not apply and the controllable 46
250	255		electronic record, or a record attached to or logically associated with the 47
251	256		controllable electronic record and readily available for review, expressly 48
252	257		provides that the controllable electronic record is governed by the law of a 49
253	258		particular jurisdiction, that jurisdiction is the controllable electronic record's 50
254	259		jurisdiction. 51 General Assembly Of North Carolina Session 2025
255		-	Page 6 ~~Senate Bill 117-First Edition~~
	260	+	Page 6 DRS35028-MUz-3A
256	261		(4) If subdivisions (1), (2), and (3) of this subsection do not apply and the rules 1
257	262		of the system in which the controllable electronic record is recorded are 2
258	263		readily available for review and expressly provide that the controllable 3
259	264		electronic record or the system is governed by the law of a particular 4
260	265		jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction. 5
261	266		(5) If subdivisions (1) through (4) of this subsection do not apply, the controllable 6
262	267		electronic record's jurisdiction is the District of Columbia. 7
263	268		(d) Applicability of Article 12. – If subdivision (c)(5) of this section applies and Article 8
264	269		12 is not in effect in the District of Columbia without material modification, the governing law 9
265	270		for a matter covered by this Article is the law of the District of Columbia as though Article 12 10
266	271		were in effect in the District of Columbia without material modification. In this subsection, 11
267	272		"Article 12" means Article 12 of Uniform Commercial Code Amendments (2022). 12
268	273		(e) Relation of Matter or Transaction to Controllable Electronic Record's Jurisdiction Not 13
269	274		Necessary. – To the extent subsections (a) and (b) of this section provide that the local law of the 14
270	275		controllable electronic record's jurisdiction governs a matter covered by this Article, that law 15
271	276		governs even if the matter or a transaction to which the matter relates does not bear any relation 16
272	277		to the controllable electronic record's jurisdiction. 17
273	278		(f) Rights of Purchasers Determined at Time of Purchase. – The rights acquired under 18
274	279		G.S. 25-12-104 by a purchaser or qualifying purchaser are governed by the law applicable under 19
275	280		this section at the time of purchase." 20
276	281		21
277	282		PART II. CONFORMING CHANGES AND OTHER AMENDMENTS TO ARTICLE 9 22
278	283		(SECURED TRANSACTIONS) OF THE UCC 23
279	284		SECTION 2. G.S. 25-9-102 reads as rewritten: 24
280	285		"§ 25-9-102. Definitions and index of definitions. 25
281	286		(a) Article 9 definitions. – Definitions. – In this Article:Article, the following definitions 26
282	287		apply: 27
283	288		(1) "Accession" means goods Accession. – Goods that are physically united with 28
284	289		other goods in such a manner that in which the identity of the original goods 29
285	290		is not lost. 30
286	291		(2) "Account", except as used in "account for", means a Account. – Except as 31
287	292		used in "account for," "account statement," "account to," "commodity 32
288	293		account," "customer's account," "deposit account," "on account of," and 33
289	294		"statement of account," means a right to payment of a monetary obligation, 34
290	295		whether or not earned by performance, (i) for property that has been or is to 35
291	296		be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services 36
292	297		rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, 37
293	298		(iv) for a secondary obligation incurred or to be incurred, (v) for energy 38
294	299		provided or to be provided, (vi) for the use or hire of a vessel under a charter 39
295	300		or other contract, (vii) arising out of the use of a credit or charge card or 40
296	301		information contained on or for use with the card, or (viii) as winnings in a 41
297	302		lottery or other game of chance operated or sponsored by a state, governmental 42
298	303		unit of a state, or person licensed or authorized to operate the game by a state 43
299	304		or governmental unit of a state. The term includes controllable accounts and 44
300	305		health-care-insurance receivables. The term does not include (i) rights to 45
301	306		payment evidenced by chattel paper or an instrument, chattel paper, (ii) 46
302	307		commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) 47
303	308		letter-of-credit rights or letters of credit, or (vi) rights to payment for money 48
304	309		or funds advanced or sold, other than rights arising out of the use of a credit 49
305	310		or charge card or information contained on or for use with the card.card, or 50
306	311		(vii) rights to payment evidenced by an instrument. 51 General Assembly Of North Carolina Session 2025
307		-	~~Senate Bill 117-First Edition~~ Page 7
	312	+	DRS35028-MUz-3A Page 7
308	313		(3) "Account debtor" means a Account debtor. – A person obligated on an 1
309	314		account, chattel paper, or general intangible. The term does not include 2
310	315		persons obligated to pay a negotiable instrument, even if the negotiable 3
311	316		instrument constitutes part of evidences chattel paper. 4
312	317		(4) "Accounting", except as used in "accounting for", means a record: 5
313	318		Accounting. – Except as used in "accounting for," means a record that meets 6
314	319		all of the following requirements: 7
315	320		a. Authenticated Signed by a secured party;party. 8
316	321		b. Indicating the aggregate unpaid secured obligations as of a date not 9
317	322		more than 35 days earlier or 35 days later than the date of the record; 10
318	323		andrecord. 11
319	324		c. Identifying the components of the obligations in reasonable detail. 12
320	325		(5) "Agricultural lien" means an Agricultural lien. – An interest, other than a 13
321	326		security interest, in farm products:products that satisfies all of the following 14
322	327		requirements: 15
323	328		a. Which The interest secures payment or performance of an obligation 16
324	329		for:for either of the following: 17
325	330		1. Goods or services furnished in connection with a debtor's 18
326	331		farming operation; oroperation. 19
327	332		2. Rent on real property leased by a debtor in connection with its 20
328	333		the debtor's farming operation;operation. 21
329	334		b. Which The interest is created by statute in favor of a person that:that 22
330	335		did either of the following: 23
331	336		1. In the ordinary course of its business business, furnished goods 24
332	337		or services to a debtor in connection with a the debtor's farming 25
333	338		operation; oroperation. 26
334	339		2. Leased real property to a debtor in connection with the debtor's 27
335	340		farming operation; andoperation. 28
336	341		c. Whose The interest's effectiveness does not depend on the person's 29
337	342		interest holder's possession of the personal property. 30
338	343		(5a) Applicant. – Defined in G.S. 25-5-102. 31
339	344		(6) "As-extracted collateral" means:As-extracted collateral. – Either of the 32
340	345		following: 33
341	346		a. Oil, gas, or other minerals that are subject to a security interest that:that 34
342	347		satisfies both of the following: 35
343	348		1. Is The security interest is created by a debtor having an interest 36
344	349		in the minerals before extraction; andextraction. 37
345	350		2. Attaches The security interest attaches to the minerals as 38
346	351		extracted; orextracted. 39
347	352		b. Accounts arising out of the sale at the wellhead or minehead of oil, 40
348	353		gas, or other minerals in which the debtor had an interest before 41
349	354		extraction. 42
350	355		(6a) Assignee. – Except as used in "assignee for benefit of creditors," means a 43
351	356		person (i) in whose favor a security interest that secures an obligation is 44
352	357		created or provided for under a security agreement, whether or not the 45
353	358		obligation is outstanding or (ii) to which an account, chattel paper, payment 46
354	359		intangible, or promissory note has been sold. The term includes a person to 47
355	360		which a security interest has been transferred by a secured party. 48
356	361		(6b) Assignor. – A person that (i) under a security agreement creates or provides 49
357	362		for a security interest that secures an obligation or (ii) sells an account, chattel 50 General Assembly Of North Carolina Session 2025
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359	364		paper, payment intangible, or promissory note. The term includes a secured 1
360	365		party that has transferred a security interest to another person. 2
361	366		(7) "Authenticate" means: 3
362	367		a. To sign; or 4
363	368		b. With present intent to adopt or accept a record, to attach to or logically 5
364	369		associate with the record an electronic sound, symbol, or process. 6
365	370		(8) "Bank" means an Bank. – An organization that is engaged in the business of 7
366	371		banking. The term includes savings banks, savings and loan associations, 8
367	372		credit unions, and trust companies. 9
368	373		(8a) Beneficiary. – Defined in G.S. 25-5-102. 10
369	374		(8b) Broker. – Defined in G.S. 25-8-102. 11
370	375		(9) "Cash proceeds" means proceeds Cash proceeds. – Proceeds that are money, 12
371	376		checks, deposit accounts, or the like. 13
372	377		(10) "Certificate of title" means a Certificate of title. – A certificate of title with 14
373	378		respect to which a statute provides for the security interest in question to be 15
374	379		indicated on the certificate as a condition or result of the security interest's 16
375	380		obtaining priority over the rights of a lien creditor with respect to the 17
376	381		collateral. The term includes another record maintained as an alternative to a 18
377	382		certificate of title by the governmental unit that issues certificates of title if a 19
378	383		statute permits the security interest in question to be indicated on the record 20
379	384		as a condition or result of the security interest's obtaining priority over the 21
380	385		rights of a lien creditor with respect to the collateral. 22
381	386		(10a) Certificated security. – Defined in G.S. 25-8-102. 23
382	387		(11) "Chattel paper" means a record or records that evidence both a monetary 24
383	388		obligation and a security interest in specific goods, a security interest in 25
384	389		specific goods and software used in the goods, a security interest in specific 26
385	390		goods and license of software used in the goods, a lease of specific goods, or 27
386	391		a lease of specific goods and license of software used in the goods. In this 28
387	392		subdivision, "monetary obligation" means a monetary obligation secured by 29
388	393		the goods or owed under a lease of the goods and includes a monetary 30
389	394		obligation with respect to software used in the goods. The term does not 31
390	395		include (i) charters or other contracts involving the use or hire of a vessel or 32
391	396		(ii) records that evidence a right to payment arising out of the use of a credit 33
392	397		or charge card or information contained on or for use with the card. If a 34
393	398		transaction is evidenced by records that include an instrument or series of 35
394	399		instruments, the group of records taken together constitutes chattel 36
395	400		paper.Chattel paper. – Either of the following: 37
396	401		a. A right to payment of a monetary obligation secured by specific goods, 38
397	402		if the right to payment and security agreement are evidenced by a 39
398	403		record. 40
399	404		b. A right to payment of a monetary obligation owed by a lessee under a 41
400	405		lease agreement with respect to specific goods and a monetary 42
401	406		obligation owed by the lessee in connection with the transaction giving 43
402	407		rise to the lease, if both of the following apply: 44
403	408		1. The right to payment and lease agreement are evidenced by a 45
404	409		record. 46
405	410		2. The predominant purpose of the transaction giving rise to the 47
406	411		lease was to give the lessee the right to possession and use of 48
407	412		the goods. 49
408	413		The term does not include a right to payment arising out of a charter or other 50
409	414		contract involving the use or hire of a vessel or a right to payment arising out 51 General Assembly Of North Carolina Session 2025
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411	416		of the use of a credit or charge card or information contained on or for use 1
412	417		with the card. 2
413	418		(11a) Check. – Defined in G.S. 25-3-104. 3
414	419		(11b) Clearing corporation. – Defined in G.S. 25-8-102. 4
415	420		(12) "Collateral" means the Collateral. – The property subject to a security interest 5
416	421		or agricultural lien. The term includes:includes all of the following: 6
417	422		a. Proceeds to which a security interest attaches;attaches. 7
418	423		b. Accounts, chattel paper, payment intangibles, and promissory notes 8
419	424		that have been sold; andsold. 9
420	425		c. Goods that are the subject of a consignment. 10
421	426		(13) "Commercial tort claim" means a Commercial tort claim. – A claim arising in 11
422	427		tort with respect to which:if either of the following applies: 12
423	428		a. The claimant is an organization; ororganization. 13
424	429		b. The claimant is an individual and the claim:both of the following 14
425	430		apply: 15
426	431		1. Arose The claim arose in the course of the claimant's business 16
427	432		or profession; andprofession. 17
428	433		2. Does The claim does not include damages arising out of 18
429	434		personal injury to or the death of an individual. 19
430	435		(14) "Commodity account" means an Commodity account. – An account 20
431	436		maintained by a commodity intermediary in which a commodity contract is 21
432	437		carried for a commodity customer. 22
433	438		(15) "Commodity contract" means a Commodity contract. – A commodity futures 23
434	439		contract, an option on a commodity futures contract, a commodity option, or 24
435	440		another contract if the contract or option is:either of the following applies: 25
436	441		a. Traded The contract or option is traded on or subject to the rules of a 26
437	442		board of trade that has been designated as a contract market for such a 27
438	443		contract the contract or option pursuant to federal commodities laws; 28
439	444		orlaw. 29
440	445		b. Traded The contract or option is traded on a foreign commodity board 30
441	446		of trade, exchange, or market, and is carried on the books of a 31
442	447		commodity intermediary for a commodity customer. 32
443	448		(16) "Commodity customer" means a Commodity customer. – A person for which 33
444	449		a commodity intermediary carries a commodity contract on its books. 34
445	450		(17) "Commodity intermediary" means a Commodity intermediary. – A person 35
446	451		that:that satisfies either of the following: 36
447	452		a. Is registered as a futures commission merchant under federal 37
448	453		commodities law; orlaw. 38
449	454		b. In the ordinary course of its business business, provides clearance or 39
450	455		settlement services for a board of trade that has been designated as a 40
451	456		contract market pursuant to federal commodities law. 41
452	457		(18) "Communicate" means:Communicate. – Any of the following: 42
453	458		a. To send a written or other tangible record;record. 43
454	459		b. To transmit a record by any means agreed upon by the persons sending 44
455	460		and receiving the record; orrecord. 45
456	461		c. In the case of transmission of a record to or by a filing office, to 46
457	462		transmit a record by any means prescribed by filing-office rule. 47
458	463		(19) "Consignee" means a Consignee. – A merchant to which goods are delivered 48
459	464		in a consignment. 49 General Assembly Of North Carolina Session 2025
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461	466		(20) "Consignment" means a Consignment. – A transaction, regardless of its form, 1
462	467		in which a person delivers goods to a merchant for the purpose of sale and:and 2
463	468		all of the following apply: 3
464	469		a. The merchant:All of the following apply to the merchant: 4
465	470		1. Deals The merchant deals in goods of that kind under a name 5
466	471		other than the name of the person making delivery;delivery. 6
467	472		2. Is The merchant is not an auctioneer; andauctioneer. 7
468	473		3. Is The merchant is not generally known by its creditors to be 8
469	474		substantially engaged in selling the goods of others;others. 9
470	475		b. With respect to each delivery, the aggregate value of the goods is one 10
471	476		thousand dollars ($1,000) or more at the time of delivery;delivery. 11
472	477		c. The goods are not consumer goods immediately before delivery;and 12
473	478		delivery. 13
474	479		d. The transaction does not create a security interest that secures an 14
475	480		obligation. 15
476	481		(21) "Consignor" means a Consignor. – A person that delivers goods to a consignee 16
477	482		in a consignment. 17
478	483		(22) "Consumer debtor" means a Consumer debtor. – A debtor in a consumer 18
479	484		transaction. 19
480	485		(23) "Consumer goods" means goods Consumer goods. – Goods that are used or 20
481	486		bought for use primarily for personal, family, or household purposes. 21
482	487		(24) "Consumer-goods transaction" means a Consumer-goods transaction. – A 22
483	488		consumer transaction in which:which both of the following apply: 23
484	489		a. An individual incurs an obligation primarily for personal, family, or 24
485	490		household purposes; andpurposes. 25
486	491		b. A security interest in consumer goods secures the obligation. 26
487	492		(25) "Consumer obligor" means an Consumer obligor. – An obligor who is an 27
488	493		individual and who incurred the obligation as part of a transaction entered into 28
489	494		primarily for personal, family, or household purposes. 29
490	495		(26) "Consumer transaction" means a Consumer transaction. – A transaction in 30
491	496		which (i) an individual incurs an obligation primarily for personal, family, or 31
492	497		household purposes, (ii) a security interest secures the obligation, and (iii) the 32
493	498		collateral is held or acquired primarily for personal, family, or household 33
494	499		purposes. The term includes consumer-goods transactions. 34
495	500		(27) "Continuation statement" means an Continuation statement. – An amendment 35
496	501		of a financing statement which:that does both of the following: 36
497	502		a. Identifies, by its file number, the initial financing statement to which 37
498	503		it relates; andrelates. 38
499	504		b. Indicates that it is a continuation statement for, or that it is filed to 39
500	505		continue the effectiveness of, the identified financing statement. 40
501	506		(27a) Contract for sale. – Defined in G.S. 25-2-106. 41
502	507		(27b) Control. – Defined in G.S. 25-7-106. 42
503	508		(27c) Controllable account. – An account evidenced by a controllable electronic 43
504	509		record that provides that the account debtor undertakes to pay the person that 44
505	510		has control under G.S. 25-12-105 of the controllable electronic record. 45
506	511		(27d) Controllable electronic record. – Defined in G.S. 25-12-102. 46
507	512		(27e) Controllable payment intangible. – A payment intangible evidenced by a 47
508	513		controllable electronic record that provides that the account debtor undertakes 48
509	514		to pay the person that has control under G.S. 25-12-105 of the controllable 49
510	515		electronic record. 50
511	516		(27f) Customer. – Defined in G.S. 25-4-104. 51 General Assembly Of North Carolina Session 2025
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513	518		(28) "Debtor" means:Debtor. – Any of the following: 1
514	519		a. A person having an interest, other than a security interest or other lien, 2
515	520		in the collateral, whether or not the person is an obligor;obligor. 3
516	521		b. A seller of accounts, chattel paper, payment intangibles, or promissory 4
517	522		notes; ornotes. 5
518	523		c. A consignee. 6
519	524		(29) "Deposit account" means a Deposit account. – A demand, time, savings, 7
520	525		passbook, or similar account maintained with a bank. The term does not 8
521	526		include investment property or accounts evidenced by an instrument. 9
522	527		(30) "Document" means a Document. – A document of title or a receipt of the type 10
523	528		described in G.S. 25-7-201(b). 11
524	529		(31) "Electronic chattel paper" means chattel paper evidenced by a record or 12
525	530		records consisting of information stored in an electronic medium. 13
526	531		(31a) Electronic money. – Money in an electronic form. 14
527	532		(32) "Encumbrance" means a Encumbrance. – A right, other than an ownership 15
528	533		interest, in real property. The term includes mortgages and other liens on real 16
529	534		property. 17
530	535		(32a) Entitlement holder. – Defined in G.S. 25-8-102. 18
531	536		(33) "Equipment" means goods Equipment. – Goods other than inventory, farm 19
532	537		products, or consumer goods. 20
533	538		(34) "Farm products" means goods, Farm products. – Any of the following goods, 21
534	539		other than standing timber, with respect to which the debtor is engaged in a 22
535	540		farming operation and which are:operation: 23
536	541		a. Crops grown, growing, or to be grown, including:including both of the 24
537	542		following: 25
538	543		1. Crops produced on trees, vines, and bushes; andbushes. 26
539	544		2. Aquatic goods produced in aquacultural operations;operations. 27
540	545		b. Livestock, born or unborn, including aquatic goods produced in 28
541	546		aquacultural operations;operations. 29
542	547		c. Supplies used or produced in a farming operation; oroperation. 30
543	548		d. Products of crops or livestock in their unmanufactured states. 31
544	549		(35) "Farming operation" means raising, Farming operation. – Raising, cultivating, 32
545	550		propagating, fattening, grazing, or any other farming, livestock, or 33
546	551		aquacultural operation. 34
547	552		(36) "File number" means the File number. – The number assigned to an initial 35
548	553		financing statement pursuant to G.S. 25-9-519(a). 36
549	554		(37) "Filing office" means an Filing office. – An office designated in G.S. 25-9-501 37
550	555		as the place to file a financing statement. 38
551	556		(38) "Filing-office rule" means a Filing-office rule. – A rule adopted pursuant to 39
552	557		G.S. 25-9-526. 40
553	558		(38a) Financial asset. – Defined in G.S. 25-8-102. 41
554	559		(39) "Financing statement" means a Financing statement. – A record or records 42
555	560		composed of an initial financing statement and any filed record relating to the 43
556	561		initial financing statement. 44
557	562		(40) "Fixture filing" means the Fixture filing. – The filing of a financing statement 45
558	563		covering goods that are or are to become fixtures and satisfying 46
559	564		G.S. 25-9-502(a) and (b). The term includes the filing of a financing statement 47
560	565		covering goods of a transmitting utility which that are or are to become 48
561	566		fixtures. 49
562	567		(41) "Fixtures" means goods Fixtures. – Goods that have become so related to 50
563	568		particular real property that an interest in them arises under real property law. 51 General Assembly Of North Carolina Session 2025
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565	570		(42) "General intangible" means any General intangible. – Any personal property, 1
566	571		including things in action, other than accounts, chattel paper, commercial tort 2
567	572		claims, deposit accounts, documents, goods, instruments, investment 3
568	573		property, letter-of-credit rights, letters of credit, money, and oil, gas, or other 4
569	574		minerals before extraction. The term includes controllable electronic records, 5
570	575		payment intangibles intangibles, and software. 6
571	576		(43) Repealed by Session Laws 2006-112, s. 21, effective October 1, 2006. 7
572	577		(44) "Goods" means all Goods. – All things that are movable when a security 8
573	578		interest attaches. The term includes (i) fixtures, (ii) standing timber that is to 9
574	579		be cut and removed under a conveyance or contract for sale, (iii) the unborn 10
575	580		young of animals, (iv) crops grown, growing, or to be grown, even if the crops 11
576	581		are produced on trees, vines, or bushes, and (v) manufactured homes. The term 12
577	582		also includes a computer program embedded in goods and any supporting 13
578	583		information provided in connection with a transaction relating to the program 14
579	584		if (i) the program is associated with the goods in such a manner that it 15
580	585		customarily is considered part of the goods, or (ii) by becoming the owner of 16
581	586		the goods, a person acquires a right to use the program in connection with the 17
582	587		goods. The term does not include a computer program embedded in goods that 18
583	588		consist solely of the medium in which the program is embedded. The term 19
584	589		also does not include accounts, chattel paper, commercial tort claims, deposit 20
585	590		accounts, documents, general intangibles, instruments, investment property, 21
586	591		letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals 22
587	592		before extraction. 23
588	593		(45) "Governmental unit" means a Governmental unit. – A subdivision, agency, 24
589	594		department, county, parish, municipality, or other unit of the government of 25
590	595		the United States, a state, or a foreign country. The term includes an 26
591	596		organization having a separate corporate existence if the organization (i) is 27
592	597		eligible to issue debt on which interest is exempt from income taxation under 28
593	598		the laws of the United States, States or (ii) was created to facilitate the issuance 29
594	599		of notes, bonds, other evidences of indebtedness indebtedness, or payment 30
595	600		obligations for borrowed money by, or in conjunction with, installment or 31
596	601		lease purchase financings for, for this State or any county, municipality, or 32
597	602		other agency or political subdivision thereof as evidenced by the documents 33
598	603		creating the organization. 34
599	604		(46) "Health-care-insurance receivable" means an Health-care-insurance 35
600	605		receivable. – An interest in or claim under a policy of insurance which that is 36
601	606		a right to payment of a monetary obligation for health-care goods or services 37
602	607		provided. 38
603	608		(46a) Holder in due course. – Defined in G.S. 25-3-302. 39
604	609		(47) "Instrument" means a Instrument. – A negotiable instrument or any other 40
605	610		writing that evidences a right to the payment of a monetary obligation, is not 41
606	611		itself a security agreement or lease, and is of a type that in the ordinary course 42
607	612		of business is transferred by delivery with any necessary indorsement or 43
608	613		assignment. The term does not include (i) investment property, (ii) letters of 44
609	614		credit, or (iii) writings that evidence a right to payment arising out of the use 45
610	615		of a credit or charge card or information contained on or for use with the card. 46
611	616		card, or (iv) writings that evidence chattel paper. 47
612	617		(48) "Inventory" means goods, Inventory. – Goods, other than farm products, 48
613	618		which:that satisfy any of the following descriptions: 49
614	619		a. Are leased by a person as lessor;lessor. 50 General Assembly Of North Carolina Session 2025
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616	621		b. Are held by a person for sale or lease or to be furnished under a 1
617	622		contract of service;service. 2
618	623		c. Are furnished by a person under a contract of service; orservice. 3
619	624		d. Consist of raw materials, work in process, or materials used or 4
620	625		consumed in a business. 5
621	626		(49) "Investment property" means a Investment property. – A security, whether 6
622	627		certificated or uncertificated, security entitlement, securities account, 7
623	628		commodity contract, or commodity account. 8
624	629		(49a) Issuer. – Defined as follows: 9
625	630		a. With respect to a letter of credit or letter-of-credit right, defined in 10
626	631		G.S. 25-5-102. 11
627	632		b. With respect to a security, defined in G.S. 25-8-201. 12
628	633		c. With respect to documents of title, defined in G.S. 25-7-102. 13
629	634		(50) "Jurisdiction of organization", with respect to a registered organization, means 14
630	635		the Jurisdiction of organization. – With respect to a registered organization, 15
631	636		the jurisdiction under whose law the organization is formed or organized. 16
632	637		(50a) Lease. – Defined in G.S. 25-2A-103. 17
633	638		(50b) Lease agreement. – Defined in G.S. 25-2A-103. 18
634	639		(50c) Lease contract. – Defined in G.S. 25-2A-103. 19
635	640		(50d) Leasehold interest. – Defined in G.S. 25-2A-103. 20
636	641		(50e) Lessee. – Defined in G.S. 25-2A-103. 21
637	642		(50f) Lessee in ordinary course of business. – Defined in G.S. 25-2A-103. 22
638	643		(50g) Lessor. – Defined in G.S. 25-2A-103. 23
639	644		(50h) Lessor's residual interest. – Defined in G.S. 25-2A-103. 24
640	645		(50i) Letter of credit. – Defined in G.S. 25-5-102. 25
641	646		(51) "Letter-of-credit right" means a Letter-of-credit right. – A right to payment or 26
642	647		performance under a letter of credit, whether or not the beneficiary has 27
643	648		demanded or is at the time entitled to demand payment or performance. The 28
644	649		term does not include the right of a beneficiary to demand payment or 29
645	650		performance under a letter of credit. 30
646	651		(52) "Lien creditor" means:Lien creditor. – Any of the following: 31
647	652		a. A creditor that has acquired a lien on the property involved by 32
648	653		attachment, levy, or the like;like. 33
649	654		b. An assignee for benefit of creditors from the time of 34
650	655		assignment;assignment. 35
651	656		c. A trustee in bankruptcy from the date of the filing of the petition; 36
652	657		orpetition. 37
653	658		d. A receiver in equity from the time of appointment. 38
654	659		(53) "Manufactured home" means a Manufactured home. – A structure, 39
655	660		transportable in one or more sections, which, sections that satisfies all of the 40
656	661		following requirements: 41
657	662		a. in In the traveling mode, is eight body feet or more in width or 40 body 42
658	663		feet or more in length, or, when erected on site, is 320 or more square 43
659	664		feet, and whichfeet. 44
660	665		b. is Is built on a permanent chassis and designed to be used as a dwelling 45
661	666		with or without a permanent foundation when connected to the 46
662	667		required utilities, andutilities. 47
663	668		c. includes the Includes plumbing, heating, air-conditioning, and 48
664	669		electrical systems contained therein.systems. 49
665	670		The term includes any structure that meets all of the requirements of this 50
666	671		subdivision except the size requirements and with respect to which the 51 General Assembly Of North Carolina Session 2025
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668	673		manufacturer voluntarily files a certification required by the United States 1
669	674		Secretary of Housing and Urban Development and complies with the 2
670	675		standards established under Title 42 of the United States Code. 3
671	676		(54) "Manufactured-home transaction" means a secured transaction: 4
672	677		Manufactured-home transaction. – A secured transaction if either of the 5
673	678		following applies: 6
674	679		a. That The transaction creates a purchase-money security interest in a 7
675	680		manufactured home, other than a manufactured home held as 8
676	681		inventory; orinventory. 9
677	682		b. In which a manufactured home, other than a manufactured home held 10
678	683		as inventory, is the primary collateral. 11
679	684		(54a) Merchant. – Defined in G.S. 25-2-104. 12
680	685		(54b) Money. – Defined in G.S. 25-1-201(b) but does not include (i) a deposit 13
681	686		account or (ii) money in an electronic form that cannot be subjected to control 14
682	687		under G.S. 25-9-105.1. 15
683	688		(55) "Mortgage" means a Mortgage. – A consensual interest in real property, 16
684	689		including fixtures, which that secures payment or performance of an 17
685	690		obligation. 18
686	691		(55a) Negotiable instrument. – Defined in G.S. 25-3-104. 19
687	692		(56) "New debtor" means a New debtor. – A person that becomes bound as debtor 20
688	693		under G.S. 25-9-203(d) by a security agreement previously entered into by 21
689	694		another person. 22
690	695		(57) "New value" meansNew value. – Any of the following: 23
691	696		a. (i) money, Money. 24
692	697		b. (ii) money's Money's worth in property, services, or new credit, 25
693	698		orcredit. 26
694	699		c. (iii) release Release by a transferee of an interest in property 27
695	700		previously transferred to the transferee. 28
696	701		The term does not include an obligation substituted for another obligation. 29
697	702		(57a) Nominated person. – Defined in G.S. 25-5-102. 30
698	703		(58) "Noncash proceeds" means proceeds Noncash proceeds. – Proceeds other than 31
699	704		cash proceeds. 32
700	705		(58a) Note. – Defined in G.S. 25-3-104. 33
701	706		(59) "Obligor" means a Obligor. – A person that, with respect to an obligation 34
702	707		secured by a security interest in or an agricultural lien on the collateral, (i) 35
703	708		owes payment or other performance of the obligation, (ii) has provided 36
704	709		property other than the collateral to secure payment or other performance of 37
705	710		the obligation, or (iii) is otherwise accountable in whole or in part for payment 38
706	711		or other performance of the obligation. The term does not include issuers or 39
707	712		nominated persons under a letter of credit. 40
708	713		(60) "Original debtor", except as used in G.S. 25-9-310(c), means a Original 41
709	714		debtor, except as used in G.S. 25-9-310(c). – A person that, as debtor, entered 42
710	715		into a security agreement to which a new debtor has become bound under 43
711	716		G.S. 25-9-203(d). 44
712	717		(61) "Payment intangible" means a Payment intangible. – A general intangible 45
713	718		under which the account debtor's principal obligation is a monetary obligation. 46
714	719		The term includes a controllable payment intangible. 47
715	720		(62) "Person related to", with respect to an individual, means:Person related to. – 48
716	721		Defined as follows: 49
717	722		a. With respect to an individual, any of the following: 50
718	723		a.1. The spouse of the individual;individual. 51 General Assembly Of North Carolina Session 2025
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720	725		b.2. A brother, brother-in-law, sister, or sister-in-law of the 1
721	726		individual;individual. 2
722	727		c.3. An ancestor or lineal descendant of the individual or the 3
723	728		individual's spouse; orspouse. 4
724	729		d.4. Any other relative, by blood or marriage, of the individual or 5
725	730		the individual's spouse who shares the same home with the 6
726	731		individual. 7
727	732		(63) "Person related to", with respect to an organization, means: 8
728	733		b. With respect to an organization, any of the following: 9
729	734		a.1. A person directly or indirectly controlling, controlled by, or 10
730	735		under common control with the organization;organization. 11
731	736		b.2. An officer or director of, or a person performing similar 12
732	737		functions with respect to, the organization;organization. 13
733	738		c.3. An officer or director of, or a person performing similar 14
734	739		functions with respect to, a person described in 15
735	740		sub-subdivision a. of this subdivision;sub-sub-subdivision 1. 16
736	741		of this sub-subdivision. 17
737	742		d.4. The spouse of an individual described in sub-subdivision a., b., 18
738	743		or c. of this subdivision; orsub-sub-subdivision 1., 2., or 3., of 19
739	744		this sub-subdivision. 20
740	745		e.5. An individual who is related by blood or marriage to an 21
741	746		individual described in sub-subdivision a., b., c., or d. of this 22
742	747		subdivision sub-sub-subdivision 1., 2., 3., or 4. of this 23
743	748		sub-subdivision and shares the same home with the individual. 24
744	749		(64) "Proceeds", except as used in G.S. 25-9-609(b), means the Proceeds. – Except 25
745	750		as used in G.S. 25-9-609(b), means any of the following property: 26
746	751		a. Whatever is acquired upon the sale, lease, license, exchange, or other 27
747	752		disposition of collateral;collateral. 28
748	753		b. Whatever is collected on, or distributed on account of, 29
749	754		collateral;collateral. 30
750	755		c. Rights arising out of collateral;collateral. 31
751	756		d. To the extent of the value of collateral, claims arising out of the loss, 32
752	757		nonconformity, or interference with the use of, defects or infringement 33
753	758		of rights in, or damage to, thecollateral; orcollateral. 34
754	759		e. To the extent of the value of collateral and to the extent payable to the 35
755	760		debtor or the secured party, insurance payable by reason of the loss or 36
756	761		nonconformity of, defects or infringement of rights in, or damage to, 37
757	762		the collateral. 38
758	763		(64a) Proceeds of a letter of credit. – Defined in G.S. 25-5-114. 39
759	764		(65) "Production-money crops" means crops Production-money crops. – Crops that 40
760	765		secure a production-money obligation incurred with respect to the production 41
761	766		of those crops. 42
762	767		(66) "Production-money obligation" means an Production-money obligation. – An 43
763	768		obligation of an obligor incurred for new value given to enable the debtor to 44
764	769		produce crops if the value is in fact used for the production of the crops. 45
765	770		(67) "Production of crops" includes Production of crops. – Includes tilling and 46
766	771		otherwise preparing land for growing, planting, cultivating, fertilizing, 47
767	772		irrigating, harvesting, gathering, and curing crops, crops and protecting them 48
768	773		from damage or disease. 49
769	774		(68) "Promissory note" means an Promissory note. – An instrument that evidences 50
770	775		a promise to pay a monetary obligation, does not evidence an order to pay, 51 General Assembly Of North Carolina Session 2025
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772	777		and does not contain an acknowledgment by a bank that the bank has received 1
773	778		for deposit a sum of money or funds. 2
774	779		(69) "Proposal" means a Proposal. – A record authenticated signed by a secured 3
775	780		party which that includes the terms on which the secured party is willing to 4
776	781		accept collateral in full or partial satisfaction of the obligation it secures 5
777	782		pursuant to G.S. 25-9-620, 25-9-621, and 25-9-622. 6
778	783		(69a) Protected purchaser. – Defined in G.S. 25-8-303. 7
779	784		(69b) Prove. – Defined in G.S. 25-3-103. 8
780	785		(70) "Public-finance transaction" means a Public-finance transaction. – A secured 9
781	786		transaction in connection with which:to which all of the following apply: 10
782	787		a. Debt securities are issued;issued. 11
783	788		b. All or a portion of the securities issued have an initial stated maturity 12
784	789		of at least 20 years; andyears. 13
785	790		c. The debtor, obligor, secured party, account debtor or other person 14
786	791		obligated on collateral, assignor or assignee of a secured obligation, or 15
787	792		assignor or assignee of a security interest is a state or a governmental 16
788	793		unit of a state. 17
789	794		(70a) "Public organic record" means a Public organic record. – A record that is 18
790	795		available to the public for inspection and is:is any of the following: 19
791	796		a. A record consisting of the record initially filed with or issued by a state 20
792	797		or the United States to form or organize an organization and any record 21
793	798		filed with or issued by the state or the United States which that amends 22
794	799		or restates the initial record;record. 23
795	800		b. An organic record of a business trust consisting of the record initially 24
796	801		filed with a state and any record filed with the state which that amends 25
797	802		or restates the initial record, if a statute of the state governing business 26
798	803		trusts requires that the record be filed with the state; orstate. 27
799	804		c. A record consisting of legislation enacted by the legislature of a state 28
800	805		or the Congress of the United States which that forms or organizes an 29
801	806		organization, any record amending the legislation, and any record filed 30
802	807		with or issued by the state or the United States which that amends or 31
803	808		restates the name of the organization. 32
804	809		(71) "Pursuant to commitment", with Pursuant to commitment. – With respect to 33
805	810		an advance made or other value given by a secured party, means pursuant to 34
806	811		the secured party's obligation, whether or not a subsequent event of default or 35
807	812		other event not within the secured party's control has relieved or may relieve 36
808	813		the secured party from its obligation. 37
809	814		(71a) Qualifying purchaser. – Defined in G.S. 25-12-102. 38
810	815		(72) "Record", except as used in "for record", "of record", "record or legal title", 39
811	816		and "record owner", Record. – Except as used in "for record," "of record," 40
812	817		"record or legal title," and "record owner," means information that is inscribed 41
813	818		on a tangible medium or that is stored in an electronic or other medium and is 42
814	819		retrievable in perceivable form. 43
815	820		(73) "Registered organization" means an Registered organization. – An 44
816	821		organization formed or organized solely under the law of a single state or the 45
817	822		United States by the filing of a public organic record with, the issuance of a 46
818	823		public organic record by, or the enactment of legislation by the state or the 47
819	824		United States. The term includes a business trust that is formed or organized 48
820	825		under the law of a single state if a statute of the state governing business trusts 49
821	826		requires that the business trust's organic record be filed with the state. 50
822	827		(73a) Sale. – Defined in G.S. 25-2-106. 51 General Assembly Of North Carolina Session 2025
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824	829		(74) "Secondary obligor" means an Secondary obligor. – An obligor to the extent 1
825	830		that:that either of the following applies: 2
826	831		a. The obligor's obligation is secondary; orsecondary. 3
827	832		b. The obligor has a right of recourse with respect to an obligation 4
828	833		secured by collateral against the debtor, another obligor, or property 5
829	834		of either. 6
830	835		(75) "Secured party" means:Secured party. – Any of the following: 7
831	836		a. A person in whose favor a security interest is created or provided for 8
832	837		under a security agreement, whether or not any obligation to be 9
833	838		secured is outstanding;outstanding. 10
834	839		b. A person that holds an agricultural lien;lien. 11
835	840		c. A consignor;consignor. 12
836	841		d. A person to which accounts, chattel paper, payment intangibles, or 13
837	842		promissory notes have been sold;sold. 14
838	843		e. A trustee, indenture trustee, agent, collateral agent, or other 15
839	844		representative in whose favor a security interest or agricultural lien is 16
840	845		created or provided for; orfor. 17
841	846		f. A person that holds a security interest arising under G.S. 25-2-401, 18
842	847		25-2-505, 25-2-711(3), 25-2A-508(5), 25-4-208, or 25-5-118. 19
843	848		(75a) Securities account. – Defined in G.S. 25-8-501. 20
844	849		(75b) Securities intermediary. – Defined in G.S. 25-8-102. 21
845	850		(75c) Security. – Defined in G.S. 25-8-102. 22
846	851		(76) "Security agreement" means an Security agreement. – An agreement that 23
847	852		creates or provides for a security interest. 24
848	853		(76a) Security certificate. – Defined in G.S. 25-8-102. 25
849	854		(76b) Security entitlement. – Defined in G.S. 25-8-102. 26
850	855		(77) "Send", in connection with a record or notification, means: 27
851	856		a. To deposit in the mail, deliver for transmission, or transmit by any 28
852	857		other usual means of communication, with postage or cost of 29
853	858		transmission provided for, addressed to any address reasonable under 30
854	859		the circumstances; or 31
855	860		b. To cause the record or notification to be received within the time that 32
856	861		it would have been received if properly sent under sub-subdivision a. 33
857	862		of this subdivision. 34
858	863		(78) "Software" means a Software. – A computer program and any supporting 35
859	864		information provided in connection with a transaction relating to the program. 36
860	865		The term does not include a computer program that is included in the 37
861	866		definition of goods. 38
862	867		(79) "State" means a State. – A state of the United States, the District of Columbia, 39
863	868		Puerto Rico, the United States Virgin Islands, or any territory or insular 40
864	869		possession subject to the jurisdiction of the United States. 41
865	870		(80) "Supporting obligation" means a Supporting obligation. – A letter-of-credit 42
866	871		right or secondary obligation that supports the payment or performance of an 43
867	872		account, chattel paper, a document, a general intangible, an instrument, or 44
868	873		investment property. 45
869	874		(81) "Tangible chattel paper" means chattel paper evidenced by a record or records 46
870	875		consisting of information that is inscribed on a tangible medium. 47
871	876		(81a) Tangible money. – Money in a tangible form. 48
872	877		(82) "Termination statement" means an Termination statement. – An amendment 49
873	878		of a financing statement which:that does both of the following: 50 General Assembly Of North Carolina Session 2025
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875	880		a. Identifies, by its file number, the initial financing statement to which 1
876	881		it relates; andrelates. 2
877	882		b. Indicates either that it is a termination statement or that the identified 3
878	883		financing statement is no longer effective. 4
879	884		(83) "Transmitting utility" means a Transmitting utility. – A person primarily 5
880	885		engaged in the business of:of any of the following: 6
881	886		a. Operating a railroad, subway, street railway, or trolley bus;bus. 7
882	887		b. Transmitting communications electrically, electromagnetically, or by 8
883	888		light;light. 9
884	889		c. Transmitting goods by pipeline or sewer; orsewer. 10
885	890		d. Transmitting or producing and transmitting electricity, steam, gas, or 11
886	891		water. 12
887	892		(84) Uncertificated security. – Defined in G.S. 25-8-102. 13
888	893		(b) Definitions in other articles. – "Control" as provided in G.S. 25-7-106 and the 14
889	894		following definitions in other Articles of this Chapter apply to this Article: 15
890	895		"Applicant" G.S. 25-5-102. 16
891	896		"Beneficiary" G.S. 25-5-102. 17
892	897		"Broker" G.S. 25-8-102. 18
893	898		"Certificated security" G.S. 25-8-102. 19
894	899		"Check" G.S. 25-3-104. 20
895	900		"Clearing corporation" G.S. 25-8-102. 21
896	901		"Contract for sale" G.S. 25-2-106. 22
897	902		"Customer" G.S. 25-4-104. 23
898	903		"Entitlement holder" G.S. 25-8-102. 24
899	904		"Financial asset" G.S. 25-8-102. 25
900	905		"Holder in due course" G.S. 25-3-302. 26
901	906		"Issuer" (with respect to a letter of credit 27
902	907		or letter-of-credit right) G.S. 25-5-102. 28
903	908		"Issuer" (with respect to a security) G.S. 25-8-201. 29
904	909		"Issuer" (with respect to documents of title) G.S. 25-7-102. 30
905	910		"Lease" G.S. 25-2A-103. 31
906	911		"Lease agreement" G.S. 25-2A-103. 32
907	912		"Lease contract" G.S. 25-2A-103. 33
908	913		"Leasehold interest" G.S. 25-2A-103. 34
909	914		"Lessee" G.S. 25-2A-103. 35
910	915		"Lessee in ordinary course of business" G.S. 25-2A-103. 36
911	916		"Lessor" G.S. 25-2A-103. 37
912	917		"Lessor's residual interest" G.S. 25-2A-103. 38
913	918		"Letter of credit" G.S. 25-5-102. 39
914	919		"Merchant" G.S. 25-2-104. 40
915	920		"Negotiable instrument" G.S. 25-3-104. 41
916	921		"Nominated person" G.S. 25-5-102. 42
917	922		"Note" G.S. 25-3-104. 43
918	923		"Proceeds of a letter of credit" G.S. 25-5-114. 44
919	924		"Prove" G.S. 25-3-103. 45
920	925		"Sale" G.S. 25-2-106. 46
921	926		"Securities account" G.S. 25-8-501. 47
922	927		"Securities intermediary" G.S. 25-8-102. 48
923	928		"Security" G.S. 25-8-102. 49
924	929		"Security certificate" G.S. 25-8-102. 50
925	930		"Security entitlement" G.S. 25-8-102. 51 General Assembly Of North Carolina Session 2025
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927	932		"Uncertificated security" G.S. 25-8-102. 1
928	933		(c) Article 1 definitions and principles. – Definitions and Principles. – Article 1 of this 2
929	934		Chapter contains general definitions and principles of construction and interpretation applicable 3
930	935		throughout this Article." 4
931	936		SECTION 3. G.S. 25-9-104 reads as rewritten: 5
932	937		"§ 25-9-104. Control of deposit account. 6
933	938		(a) Requirements for control. – Control. – A secured party has control of a deposit 7
934	939		account if:if any of the following applies: 8
935	940		(1) The secured party is the bank with which the deposit account is 9
936	941		maintained;maintained. 10
937	942		(2) The debtor, secured party, and bank have agreed in an authenticated a signed 11
938	943		record that the bank will comply with instructions originated by the secured 12
939	944		party directing disposition of the funds in the deposit account without further 13
940	945		consent by the debtor; ordebtor. 14
941	946		(3) The secured party becomes the bank's customer with respect to the deposit 15
942	947		account. 16
943	948		(4) Another person, other than the debtor, does either of the following: 17
944	949		a. Has control of the deposit account and acknowledges that it has control 18
945	950		on behalf of the secured party. 19
946	951		b. Obtains control of the deposit account after having acknowledged that 20
947	952		it will obtain control of the deposit account on behalf of the secured 21
948	953		party. 22
949	954		(b) Debtor's right to direct disposition. – Right to Direct Disposition. – A secured party 23
950	955		that has satisfied subsection (a) of this section has control, even if the debtor retains the right to 24
951	956		direct the disposition of funds from the deposit account." 25
952	957		SECTION 4. G.S. 25-9-105 reads as rewritten: 26
953	958		"§ 25-9-105. Control of electronic chattel paper.copy of record evidencing chattel paper. 27
954	959		(a) General Rule: Control of Electronic Chattel Paper. – A secured party has control of 28
955	960		electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel 29
956	961		paper reliably establishes the secured party as the person to which the chattel paper was assigned. 30
957	962		(b) Specific Facts Giving Control. – A system satisfies subsection (a) of this section if 31
958	963		the record or records comprising the chattel paper are created, stored, and assigned in such a 32
959	964		manner that: 33
960	965		(1) A single authoritative copy of the record or records exists which is unique, 34
961	966		identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 35
962	967		of this section, unalterable; 36
963	968		(2) The authoritative copy identifies the secured party as the assignee of the 37
964	969		record or records; 38
965	970		(3) The authoritative copy is communicated to and maintained by the secured 39
966	971		party or its designated custodian; 40
967	972		(4) Copies or amendments that add or change an identified assignee of the 41
968	973		authoritative copy can be made only with the consent of the secured party; 42
969	974		(5) Each copy of the authoritative copy and any copy of a copy is readily 43
970	975		identifiable as a copy that is not the authoritative copy; and 44
971	976		(6) Any amendment of the authoritative copy is readily identifiable as authorized 45
972	977		or unauthorized. 46
973	978		(a) General Rule for Control of Electronic Copy of Record Evidencing Chattel Paper. – 47
974	979		A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper 48
975	980		if a system employed for evidencing the assignment of interests in the chattel paper reliably 49
976	981		establishes the purchaser as the person to which the authoritative electronic copy was assigned. 50 General Assembly Of North Carolina Session 2025
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978	983		(b) Single Authoritative Copy. – A system satisfies subsection (a) of this section if the 1
979	984		record or records evidencing the chattel paper are created, stored, and assigned in a manner that 2
980	985		satisfies all of the following requirements: 3
981	986		(1) A single authoritative copy of the record or records exists that is unique, 4
982	987		identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 5
983	988		of this subsection, unalterable. 6
984	989		(2) The authoritative copy identifies the purchaser as the assignee of the record or 7
985	990		records. 8
986	991		(3) The authoritative copy is communicated to and maintained by the purchaser 9
987	992		or its designated custodian. 10
988	993		(4) Copies or amendments that add or change an identified assignee of the 11
989	994		authoritative copy can be made only with the consent of the purchaser. 12
990	995		(5) Each copy of the authoritative copy and any copy of a copy is readily 13
991	996		identifiable as a copy that is not the authoritative copy. 14
992	997		(6) Any amendment of the authoritative copy is readily identifiable as authorized 15
993	998		or unauthorized. 16
994	999		(c) One or More Authoritative Copies. – A system satisfies subsection (a) of this section, 17
995	1000		and a purchaser has control of an authoritative electronic copy of a record evidencing chattel 18
996	1001		paper, if the electronic copy, a record attached to or logically associated with the electronic copy, 19
997	1002		or a system in which the electronic copy is recorded does all of the following: 20
998	1003		(1) Enables the purchaser readily to identify each electronic copy as either an 21
999	1004		authoritative copy or a nonauthoritative copy. 22
1000	1005		(2) Enables the purchaser readily to identify itself in any way, including by name, 23
1001	1006		identifying number, cryptographic key, office, or account number, as the 24
1002	1007		assignee of the authoritative electronic copy. 25
1003	1008		(3) Gives the purchaser exclusive power, subject to subsection (d) of this section, 26
1004	1009		to do both of the following: 27
1005	1010		a. Prevent others from adding or changing an identified assignee of the 28
1006	1011		authoritative electronic copy. 29
1007	1012		b. Transfer control of the authoritative electronic copy. 30
1008	1013		(d) Meaning of Exclusive. – Subject to subsection (e) of this section, a power is exclusive 31
1009	1014		under subdivision (c)(3) of this section even if either of the following applies: 32
1010	1015		(1) The authoritative electronic copy, a record attached to or logically associated 33
1011	1016		with the authoritative electronic copy, or a system in which the authoritative 34
1012	1017		electronic copy is recorded limits the use of the authoritative electronic copy 35
1013	1018		or has a protocol programmed to cause a change, including a transfer or loss 36
1014	1019		of control. 37
1015	1020		(2) The power is shared with another person. 38
1016	1021		(e) When Power Not Shared with Another Person. – A power of a purchaser is not shared 39
1017	1022		with another person under subdivision (d)(2) of this section and the purchaser's power is not 40
1018	1023		exclusive if both of the following apply: 41
1019	1024		(1) The purchaser can exercise the power only if the power also is exercised by 42
1020	1025		the other person. 43
1021	1026		(2) Either of the following applies: 44
1022	1027		a. The other person can exercise the power without exercise of the power 45
1023	1028		by the purchaser. 46
1024	1029		b. The other person is the transferor to the purchaser of an interest in the 47
1025	1030		chattel paper. 48
1026	1031		(f) Presumption of Exclusivity of Certain Powers. – If a purchaser has the powers 49
1027	1032		specified in subdivision (c)(3) of this section, the powers are presumed to be exclusive. 50 General Assembly Of North Carolina Session 2025
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1029	1034		(g) Obtaining Control Through Another Person. – A purchaser has control of an 1
1030	1035		authoritative electronic copy of a record evidencing chattel paper if either of the following applies 2
1031	1036		to another person, other than the transferor to the purchaser of an interest in the chattel paper: 3
1032	1037		(1) The other person has control of the authoritative electronic copy and 4
1033	1038		acknowledges that it has control on behalf of the purchaser. 5
1034	1039		(2) The other person obtains control of the authoritative electronic copy after 6
1035	1040		having acknowledged that it will obtain control of the electronic copy on 7
1036	1041		behalf of the purchaser." 8
1037	1042		SECTION 5. Article 9 of Chapter 25 of the General Statutes is amended by adding 9
1038	1043		a new section to read: 10
1039	1044		"§ 25-9-105.1. Control of electronic money. 11
1040	1045		(a) General Rule for Control of Electronic Money. – A person has control of electronic 12
1041	1046		money if both of the following apply: 13
1042	1047		(1) The electronic money, a record attached to or logically associated with the 14
1043	1048		electronic money, or a system in which the electronic money is recorded gives 15
1044	1049		the person both of the following: 16
1045	1050		a. Power to avail itself of substantially all the benefit from the electronic 17
1046	1051		money. 18
1047	1052		b. Exclusive power, subject to subsection (b) of this section, to do both 19
1048	1053		of the following: 20
1049	1054		1. Prevent others from availing themselves of substantially all the 21
1050	1055		benefit from the electronic money. 22
1051	1056		2. Transfer control of the electronic money to another person or 23
1052	1057		cause another person to obtain control of other electronic 24
1053	1058		money as a result of the transfer of the electronic money. 25
1054	1059		(2) The electronic money, a record attached to or logically associated with the 26
1055	1060		electronic money, or a system in which the electronic money is recorded 27
1056	1061		enables the person readily to identify itself in any way, including by name, 28
1057	1062		identifying number, cryptographic key, office, or account number, as having 29
1058	1063		the powers under subdivision (1) of this subsection. 30
1059	1064		(b) Meaning of Exclusive. – Subject to subsection (c) of this section, a power is exclusive 31
1060	1065		under sub-subdivision (a)(1)b. of this section even if either of the following applies: 32
1061	1066		(1) The electronic money, a record attached to or logically associated with the 33
1062	1067		electronic money, or a system in which the electronic money is recorded limits 34
1063	1068		the use of the electronic money or has a protocol programmed to cause a 35
1064	1069		change, including a transfer or loss of control. 36
1065	1070		(2) The power is shared with another person. 37
1066	1071		(c) When Power Not Shared with Another Person. – A power of a person is not shared 38
1067	1072		with another person under subdivision (b)(2) of this section and the person's power is not 39
1068	1073		exclusive if both of the following apply: 40
1069	1074		(1) The person can exercise the power only if the power also is exercised by the 41
1070	1075		other person. 42
1071	1076		(2) Either of the following applies: 43
1072	1077		a. The other person can exercise the power without exercise of the power 44
1073	1078		by the person. 45
1074	1079		b. The other person is the transferor to the person of an interest in the 46
1075	1080		electronic money. 47
1076	1081		(d) Presumption of Exclusivity of Certain Powers. – If a person has the powers specified 48
1077	1082		in sub-subdivision (a)(1)b. of this section, the powers are presumed to be exclusive. 49 General Assembly Of North Carolina Session 2025
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1079	1084		(e) Control Through Another Person. – A person has control of electronic money if either 1
1080	1085		of the following applies to another person, other than the transferor to the person of an interest 2
1081	1086		in the electronic money: 3
1082	1087		(1) The other person has control of the electronic money and acknowledges that 4
1083	1088		it has control on behalf of the person. 5
1084	1089		(2) The other person obtains control of the electronic money after having 6
1085	1090		acknowledged that it will obtain control of the electronic money on behalf of 7
1086	1091		the person." 8
1087	1092		SECTION 6. Article 9 of Chapter 25 of the General Statutes is amended by adding 9
1088	1093		a new section to read: 10
1089	1094		"§ 25-9-107.1. Control of controllable electronic record, controllable account, or 11
1090	1095		controllable payment intangible. 12
1091	1096		(a) Control Under G.S. 25-12-105. – A secured party has control of a controllable 13
1092	1097		electronic record as provided in G.S. 25-12-105. 14
1093	1098		(b) Control of Controllable Account and Controllable Payment Intangible. – A secured 15
1094	1099		party has control of a controllable account or controllable payment intangible if the secured party 16
1095	1100		has control of the controllable electronic record that evidences the controllable account or 17
1096	1101		controllable payment intangible." 18
1097	1102		SECTION 7. Article 9 of Chapter 25 of the General Statutes is amended by adding 19
1098	1103		a new section to read: 20
1099	1104		"§ 25-9-107.2. No requirement to acknowledge or confirm; no duties. 21
1100	1105		(a) No Requirement to Acknowledge. – A person that has control under G.S. 25-9-104, 22
1101	1106		25-9-105, or 25-9-105.1 is not required to acknowledge that it has control on behalf of another 23
1102	1107		person. 24
1103	1108		(b) No Duties or Confirmation. – If a person acknowledges that it has or will obtain 25
1104	1109		control on behalf of another person, unless the person otherwise agrees or law other than this 26
1105	1110		Article otherwise provides, the person does not owe any duty to the other person and is not 27
1106	1111		required to confirm the acknowledgment to any other person." 28
1107	1112		SECTION 8. G.S. 25-9-203 reads as rewritten: 29
1108	1113		"§ 25-9-203. Attachment and enforceability of security interest; proceeds; supporting 30
1109	1114		obligations; formal requisites. 31
1110	1115		(a) Attachment. – A security interest attaches to collateral when it becomes enforceable 32
1111	1116		against the debtor with respect to the collateral, unless an agreement expressly postpones the time 33
1112	1117		of attachment. 34
1113	1118		(b) Enforceability. – Except as otherwise provided in subsections (c) through (i) of this 35
1114	1119		section, a security interest is enforceable against the debtor and third parties with respect to the 36
1115	1120		collateral only if:if all of the following apply: 37
1116	1121		(1) Value has been given;given. 38
1117	1122		(2) The debtor has rights in the collateral or the power to transfer rights in the 39
1118	1123		collateral to a secured party; andparty. 40
1119	1124		(3) One of the following conditions is met: 41
1120	1125		a. The debtor has authenticated signed a security agreement that provides 42
1121	1126		a description of the collateral and, if the security interest covers timber 43
1122	1127		to be cut, a description of the land concerned;concerned. 44
1123	1128		b. The collateral is not a certificated security and is in the possession of 45
1124	1129		the secured party under G.S. 25-9-313 pursuant to the debtor's security 46
1125	1130		agreement;agreement. 47
1126	1131		c. The collateral is a certificated security in registered form and the 48
1127	1132		security certificate has been delivered to the secured party under 49
1128	1133		G.S. 25-8-301 pursuant to the debtor's security agreement; 50
1129	1134		oragreement. 51 General Assembly Of North Carolina Session 2025
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1131	1136		d. The collateral is controllable accounts, controllable electronic records, 1
1132	1137		controllable payment intangibles, deposit accounts, electronic chattel 2
1133	1138		paper, electronic documents, electronic money, investment property, 3
1134	1139		or letter-of-credit rights, or electronic documents, and the secured 4
1135	1140		party has control under G.S. 25-7-106, 25-9-104, 25-9-105, 5
1136	1141		25-9-105.1, 25-9-106, or 25-9-107 25-9-107, or 25-9-107.1 pursuant 6
1137	1142		to the debtor's security agreement. 7
1138	1143		e. The collateral is chattel paper, and the secured party has possession 8
1139	1144		and control under G.S. 25-9-314.1 pursuant to the debtor's security 9
1140	1145		agreement. 10
1141	1146		(c) Other UCC provisions. – Provisions. – Subsection (b) of this section is subject to 11
1142	1147		G.S. 25-4-208 on the security interest of a collecting bank, G.S. 25-5-118 on the security interest 12
1143	1148		of a letter-of-credit issuer or nominated person, G.S. 25-9-110 on a security interest arising under 13
1144	1149		Article 2 or 2A of this Chapter, and G.S. 25-9-206 on security interests in investment property. 14
1145	1150		(d) When person becomes bound by another person's security agreement. – Person 15
1146	1151		Becomes Bound by Another Person's Security Agreement. – A person becomes bound as debtor 16
1147	1152		by a security agreement entered into by another person if, by operation of law other than this 17
1148	1153		Article or by contract:contract, either of the following applies: 18
1149	1154		(1) The security agreement becomes effective to create a security interest in the 19
1150	1155		person's property; orproperty. 20
1151	1156		(2) The person becomes generally obligated for the obligations of the other 21
1152	1157		person, including the obligation secured under the security agreement, and 22
1153	1158		acquires or succeeds to all or substantially all of the assets of the other person. 23
1154	1159		(e) Effect of new debtor becoming bound. – New Debtor Becoming Bound. – If a new 24
1155	1160		debtor becomes bound as debtor by a security agreement entered into by another person:person, 25
1156	1161		both of the following apply: 26
1157	1162		(1) The agreement satisfies subdivision (b)(3) of this section with respect to 27
1158	1163		existing or after-acquired property of the new debtor to the extent the property 28
1159	1164		is described in the agreement; andagreement. 29
1160	1165		(2) Another agreement is not necessary to make a security interest in the property 30
1161	1166		enforceable. 31
1162	1167		(f) Proceeds and supporting obligations. – Supporting Obligations. – The attachment of 32
1163	1168		a security interest in collateral gives the secured party the rights to proceeds provided by 33
1164	1169		G.S. 25-9-315 and is also an attachment of a security interest in a supporting obligation for the 34
1165	1170		collateral. 35
1166	1171		(g) Lien securing right to payment. – Securing Right to Payment. – The attachment of a 36
1167	1172		security interest in a right to payment or performance secured by a security interest or other lien 37
1168	1173		on personal or real property is also an attachment of a security interest in the security interest, 38
1169	1174		mortgage, or other lien. 39
1170	1175		(h) Security entitlement carried in securities account. – Entitlement Carried in Securities 40
1171	1176		Account. – The attachment of a security interest in a securities account is also an attachment of 41
1172	1177		a security interest in the security entitlements carried in the securities account. 42
1173	1178		(i) Commodity contracts carried in commodity account. – Contracts Carried in 43
1174	1179		Commodity Account. – The attachment of a security interest in a commodity account is also an 44
1175	1180		attachment of a security interest in the commodity contracts carried in the commodity account." 45
1176	1181		SECTION 9. G.S. 25-9-204 reads as rewritten: 46
1177	1182		"§ 25-9-204. After-acquired property; future advances. 47
1178	1183		(a) After-acquired collateral. – After-Acquired Collateral. – Except as otherwise 48
1179	1184		provided in subsection (b) of this section, a security agreement may create or provide for a 49
1180	1185		security interest in after-acquired collateral. 50 General Assembly Of North Carolina Session 2025
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1182	1187		(b) When after-acquired property clause not effective. – A After-Acquired Property 1
1183	1188		Clause Not Effective. – Subject to subsection (b1) of this section, a security interest does not 2
1184	1189		attach under a term constituting an after-acquired property clause to:to either of the following: 3
1185	1190		(1) Consumer goods, other than an accession when given as additional security, 4
1186	1191		unless the debtor acquires rights in them within 10 days after the secured party 5
1187	1192		gives value; orvalue. 6
1188	1193		(2) A commercial tort claim. 7
1189	1194		(b1) Limitation on Subsection (b). – Subsection (b) of this section does not prevent a 8
1190	1195		security interest from attaching to any of the following: 9
1191	1196		(1) To consumer goods as proceeds under G.S. 25-9-315(a) or commingled goods 10
1192	1197		under G.S. 25-9-336(c). 11
1193	1198		(2) To a commercial tort claim as proceeds under G.S. 25-9-315(a). 12
1194	1199		(3) Under an after-acquired property clause, to property that is proceeds of 13
1195	1200		consumer goods or a commercial tort claim. 14
1196	1201		(c) Future advances and other value. – Advances and Other Value. – A security 15
1197	1202		agreement may provide that collateral secures, or that accounts, chattel paper, payment 16
1198	1203		intangibles, or promissory notes are sold in connection with future advances or other value, 17
1199	1204		whether or not the advances or value are given pursuant to commitment." 18
1200	1205		SECTION 10. G.S. 25-9-207 reads as rewritten: 19
1201	1206		"§ 25-9-207. Rights and duties of secured party having possession or control of collateral. 20
1202	1207		(a) Duty of care when secured party in possession. – Care When Secured Party in 21
1203	1208		Possession. – Except as otherwise provided in subsection (d) of this section, a secured party shall 22
1204	1209		use reasonable care in the custody and preservation of collateral in the secured party's possession. 23
1205	1210		In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to 24
1206	1211		preserve rights against prior parties unless otherwise agreed. 25
1207	1212		(b) Expenses, risks, duties, and rights when secured party in possession. – Risks, Duties, 26
1208	1213		and Rights When Secured Party in Possession. – Except as otherwise provided in subsection (d) 27
1209	1214		of this section, if a secured party has possession of collateral:collateral, all of the following apply: 28
1210	1215		(1) Reasonable expenses, including the cost of insurance and payment of taxes or 29
1211	1216		other charges, incurred in the custody, preservation, use, or operation of the 30
1212	1217		collateral are chargeable to the debtor and are secured by the 31
1213	1218		collateral;collateral. 32
1214	1219		(2) The risk of accidental loss or damage is on the debtor to the extent of a 33
1215	1220		deficiency in any effective insurance coverage;coverage. 34
1216	1221		(3) The secured party shall keep the collateral identifiable, but fungible collateral 35
1217	1222		may be commingled; andcommingled. 36
1218	1223		(4) The secured party may use or operate the collateral:collateral as follows: 37
1219	1224		a. For the purpose of preserving the collateral or its value;value. 38
1220	1225		b. As permitted by an order of a court having competent jurisdiction; 39
1221	1226		orjurisdiction. 40
1222	1227		c. Except in the case of consumer goods, in the manner and to the extent 41
1223	1228		agreed by the debtor. 42
1224	1229		(c) Rights and duties when secured party in possession or control. – Duties When Secured 43
1225	1230		Party in Possession or Control. – Except as otherwise provided in subsection (d) of this section, 44
1226	1231		all of the following apply to a secured party having possession of collateral or control of collateral 45
1227	1232		under G.S. 25-7-106, 25-9-104, 25-9-105, 25-9-105.1, 25-9-106, or 25-9-107:25-9-107, or 46
1228	1233		25-9-107.1: 47
1229	1234		(1) May The secured party may hold as additional security any proceeds, except 48
1230	1235		money or funds, received from the collateral;collateral. 49 General Assembly Of North Carolina Session 2025
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1232	1237		(2) Shall The secured party shall apply money or funds received from the 1
1233	1238		collateral to reduce the secured obligation, unless remitted to the debtor; 2
1234	1239		anddebtor. 3
1235	1240		(3) May The secured party may create a security interest in the collateral. 4
1236	1241		(d) Buyer of certain rights to payment. – Certain Rights to Payment. – If the secured party 5
1237	1242		is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a 6
1238	1243		consignor:consignor, both of the following apply: 7
1239	1244		(1) Subsection (a) of this section does not apply unless the secured party is entitled 8
1240	1245		under an agreement:agreement to either of the following: 9
1241	1246		a. To charge back uncollected collateral; orcollateral. 10
1242	1247		b. Otherwise to full or limited recourse against the debtor or a secondary 11
1243	1248		obligor based on the nonpayment or other default of an account debtor 12
1244	1249		or other obligor on the collateral; andcollateral. 13
1245	1250		(2) Subsections (b) and (c) of this section do not apply." 14
1246	1251		SECTION 11. G.S. 25-9-208 reads as rewritten: 15
1247	1252		"§ 25-9-208. Additional duties of secured party having control of collateral. 16
1248	1253		(a) Applicability of section. – Section. – This section applies to cases in which there is 17
1249	1254		no outstanding secured obligation and the secured party is not committed to make advances, incur 18
1250	1255		obligations, or otherwise give value. 19
1251	1256		(b) Duties of secured party after receiving demand from debtor. – Secured Party After 20
1252	1257		Receiving Demand from Debtor. – Within 10 days after receiving an authenticated a signed 21
1253	1258		demand by the debtor:debtor, all of the following apply: 22
1254	1259		(1) A secured party having control of a deposit account under G.S. 25-9-104(a)(2) 23
1255	1260		shall send to the bank with which the deposit account is maintained an 24
1256	1261		authenticated statement a signed record that releases the bank from any further 25
1257	1262		obligation to comply with instructions originated by the secured party;party. 26
1258	1263		(2) A secured party having control of a deposit account under G.S. 25-9-104(a)(3) 27
1259	1264		shall:shall do either of the following: 28
1260	1265		a. Pay the debtor the balance on deposit in the deposit account; 29
1261	1266		oraccount. 30
1262	1267		b. Transfer the balance on deposit into a deposit account in the debtor's 31
1263	1268		name;name. 32
1264	1269		(3) A secured party, other than a buyer, having control of electronic chattel paper 33
1265	1270		under G.S. 25-9-105 shall: 34
1266	1271		a. Communicate the authoritative copy of the electronic chattel paper to 35
1267	1272		the debtor or its designated custodian; 36
1268	1273		b. If the debtor designates a custodian that is the designated custodian 37
1269	1274		with which the authoritative copy of the electronic chattel paper is 38
1270	1275		maintained for the secured party, communicate to the custodian an 39
1271	1276		authenticated record releasing the designated custodian from any 40
1272	1277		further obligation to comply with instructions originated by the 41
1273	1278		secured party and instructing the custodian to comply with instructions 42
1274	1279		originated by the debtor; and 43
1275	1280		c. Take appropriate action to enable the debtor or its designated 44
1276	1281		custodian to make copies of or revisions to the authoritative copy 45
1277	1282		which add or change an identified assignee of the authoritative copy 46
1278	1283		without the consent of the secured party; 47
1279	1284		A secured party, other than a buyer, having control under G.S. 25-9-105 of an 48
1280	1285		authoritative electronic copy of a record evidencing chattel paper shall transfer 49
1281	1286		control of the electronic copy to the debtor or a person designated by the 50
1282	1287		debtor. 51 General Assembly Of North Carolina Session 2025
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1284	1289		(4) A secured party having control of investment property under 1
1285	1290		G.S. 25-8-106(d)(2) or G.S. 25-9-106(b) shall send to the securities 2
1286	1291		intermediary or commodity intermediary with which the security entitlement 3
1287	1292		or commodity contract is maintained an authenticated a signed record that 4
1288	1293		releases the securities intermediary or commodity intermediary from any 5
1289	1294		further obligation to comply with entitlement orders or directions originated 6
1290	1295		by the secured party;party. 7
1291	1296		(5) A secured party having control of a letter-of-credit right under G.S. 25-9-107 8
1292	1297		shall send to each person having an unfulfilled obligation to pay or deliver 9
1293	1298		proceeds of the letter of credit to the secured party an authenticated a signed 10
1294	1299		release from any further obligation to pay or deliver proceeds of the letter of 11
1295	1300		credit to the secured party; andparty. 12
1296	1301		(6) A secured party having control of an electronic document shall: 13
1297	1302		a. Give control of the electronic document to the debtor or its designated 14
1298	1303		custodian; 15
1299	1304		b. If the debtor designates a custodian that is the designated custodian 16
1300	1305		with which the authoritative copy of the electronic document is 17
1301	1306		maintained for the secured party, communicate to the custodian an 18
1302	1307		authenticated record releasing the designated custodian from any 19
1303	1308		further obligation to comply with instructions originated by the 20
1304	1309		secured party and instructing the custodian to comply with instructions 21
1305	1310		originated by the debtor; and 22
1306	1311		c. Take appropriate action to enable the debtor or its designated 23
1307	1312		custodian to make copies of or revisions to the authoritative copy 24
1308	1313		which add or change an identified assignee of the authoritative copy 25
1309	1314		without the consent of the secured party. 26
1310	1315		A secured party having control under G.S. 25-7-106 of an authoritative 27
1311	1316		electronic copy of an electronic document shall transfer control of the 28
1312	1317		electronic copy to the debtor or a person designated by the debtor. 29
1313	1318		(7) A secured party having control under G.S. 25-9-105.1 of electronic money 30
1314	1319		shall transfer control of the electronic money to the debtor or a person 31
1315	1320		designated by the debtor. 32
1316	1321		(8) A secured party having control under G.S. 25-12-105 of a controllable 33
1317	1322		electronic record, other than a buyer of a controllable account or controllable 34
1318	1323		payment intangible evidenced by the controllable electronic record, shall 35
1319	1324		transfer control of the controllable electronic record to the debtor or a person 36
1320	1325		designated by the debtor." 37
1321	1326		SECTION 12. G.S. 25-9-209 reads as rewritten: 38
1322	1327		"§ 25-9-209. Duties of secured party if account debtor has been notified of assignment. 39
1323	1328		(a) Applicability of section. – Section. – Except as otherwise provided in subsection (c) 40
1324	1329		of this section, this section applies if:if there 41
1325	1330		(1) There is no outstanding secured obligation; obligation and the 42
1326	1331		(2) The secured party is not committed to make advances, incur obligations, or 43
1327	1332		otherwise give value. 44
1328	1333		(b) Duties of secured party after receiving demand from debtor. – Secured Party After 45
1329	1334		Receiving Demand from Debtor. – Within 10 days after receiving an authenticated a signed 46
1330	1335		demand by the debtor, a secured party shall send to an account debtor that has received 47
1331	1336		notification under G.S. 25-9-406(a) or G.S. 25-12-106(b) of an assignment to the secured party 48
1332	1337		as assignee under G.S. 25-9-406(a) an authenticated a signed record that releases the account 49
1333	1338		debtor from any further obligation to the secured party. 50 General Assembly Of North Carolina Session 2025
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1335	1340		(c) Inapplicability to sales. – Sales. – This section does not apply to an assignment 1
1336	1341		constituting the sale of an account, chattel paper, or payment intangible." 2
1337	1342		SECTION 13. G.S. 25-9-210 reads as rewritten: 3
1338	1343		"§ 25-9-210. Request for accounting; request regarding list of collateral or statement of 4
1339	1344		account. 5
1340	1345		(a) Definitions. – In this section:section, the following definitions apply: 6
1341	1346		(1) "Request" means a Request. – A record of a type described in subdivision (2), 7
1342	1347		(3), or (4) of this subsection. 8
1343	1348		(2) "Request for an accounting" means a Request for an accounting. – A record 9
1344	1349		authenticated signed by a debtor requesting that the recipient provide an 10
1345	1350		accounting of the unpaid obligations secured by collateral and reasonably 11
1346	1351		identifying the transaction or relationship that is the subject of the request. 12
1347	1352		(3) "Request regarding a list of collateral" means a Request regarding a list of 13
1348	1353		collateral. – A record authenticated signed by a debtor requesting that the 14
1349	1354		recipient approve or correct a list of what the debtor believes to be the 15
1350	1355		collateral securing an obligation and reasonably identifying the transaction or 16
1351	1356		relationship that is the subject of the request. 17
1352	1357		(4) "Request regarding a statement of account" means a Request regarding a 18
1353	1358		statement of account. – A record authenticated signed by a debtor requesting 19
1354	1359		that the recipient approve or correct a statement indicating what the debtor 20
1355	1360		believes to be the aggregate amount of unpaid obligations secured by 21
1356	1361		collateral as of a specified date and reasonably identifying the transaction or 22
1357	1362		relationship that is the subject of the request. 23
1358	1363		(b) Duty to respond to requests. – Respond to Requests. – Subject to subsections (c), (d), 24
1359	1364		(e), and (f) of this section, a secured party, other than a buyer of accounts, chattel paper, payment 25
1360	1365		intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after 26
1361	1366		receipt:receipt as follows: 27
1362	1367		(1) In the case of a request for an accounting, by authenticating signing and 28
1363	1368		sending to the debtor an accounting; andaccounting. 29
1364	1369		(2) In the case of a request regarding a list of collateral or a request regarding a 30
1365	1370		statement of account, by authenticating signing and sending to the debtor an 31
1366	1371		approval or correction. 32
1367	1372		(c) Request regarding list of collateral; statement concerning type of collateral. – 33
1368	1373		Regarding List of Collateral; Statement Concerning Type of Collateral. – A secured party that 34
1369	1374		claims a security interest in all of a particular type of collateral owned by the debtor may comply 35
1370	1375		with a request regarding a list of collateral by sending to the debtor an authenticated a signed 36
1371	1376		record including a statement to that effect within 14 days after receipt. 37
1372	1377		(d) Request regarding list of collateral; no interest claimed. – Regarding List of 38
1373	1378		Collateral; No Interest Claimed. – A person that receives a request regarding a list of collateral, 39
1374	1379		claims no interest in the collateral when it receives the request, and claimed an interest in the 40
1375	1380		collateral at an earlier time shall comply with the request within 14 days after receipt by sending 41
1376	1381		to the debtor an authenticated record:a signed record that does both of the following: 42
1377	1382		(1) Disclaiming Disclaims any interest in the collateral; andcollateral. 43
1378	1383		(2) If known to the recipient, providing provides the name and mailing address of 44
1379	1384		any assignee of or successor to the recipient's interest in the collateral. 45
1380	1385		(e) Request for accounting or regarding statement of account; no interest in obligation 46
1381	1386		claimed. – Accounting or Regarding Statement of Account; No Interest in Obligation Claimed. 47
1382	1387		– A person that receives a request for an accounting or a request regarding a statement of account, 48
1383	1388		claims no interest in the obligations when it receives the request, and claimed an interest in the 49
1384	1389		obligations at an earlier time shall comply with the request within 14 days after receipt by sending 50
1385	1390		to the debtor an authenticated record:a signed record that does both of the following: 51 General Assembly Of North Carolina Session 2025
1386		-	Page 28 ~~Senate Bill 117-First Edition~~
	1391	+	Page 28 DRS35028-MUz-3A
1387	1392		(1) Disclaiming Disclaims any interest in the obligations; andobligations. 1
1388	1393		(2) If known to the recipient, providing provides the name and mailing address of 2
1389	1394		any assignee of or successor to the recipient's interest in the obligations. 3
1390	1395		(f) Charges for responses. – Responses. – A debtor is entitled without charge to one 4
1391	1396		response to a request under this section during any six-month period. The secured party may 5
1392	1397		require payment of a charge not exceeding twenty-five dollars ($25.00) for each additional 6
1393	1398		response." 7
1394	1399		SECTION 14. G.S. 25-9-301 reads as rewritten: 8
1395	1400		"§ 25-9-301. Law governing perfection and priority of security interests. 9
1396	1401		Except as otherwise provided in G.S. 25-9-303 through G.S. 25-9-306, G.S. 25-9-306.2, the 10
1397	1402		following rules determine the law governing perfection, the effect of perfection or nonperfection, 11
1398	1403		and the priority of a security interest in collateral: 12
1399	1404		(1) Except as otherwise provided in this section, while a debtor is located in a 13
1400	1405		jurisdiction, the local law of that jurisdiction governs perfection, the effect of 14
1401	1406		perfection or nonperfection, and the priority of a security interest in collateral. 15
1402	1407		(2) While collateral is located in a jurisdiction, the local law of that jurisdiction 16
1403	1408		governs perfection, the effect of perfection or nonperfection, and the priority 17
1404	1409		of a possessory security interest in that collateral. 18
1405	1410		(3) Except as otherwise provided in paragraph subdivision (4) of this section, 19
1406	1411		while tangible negotiable tangible documents, goods, instruments, money, or 20
1407	1412		tangible chattel paper or tangible money is located in a jurisdiction, the local 21
1408	1413		law of that jurisdiction governs:governs all of the following: 22
1409	1414		a. Perfection of a security interest in the goods by filing a fixture 23
1410	1415		filing;filing. 24
1411	1416		b. Perfection of a security interest in timber to be cut; andcut. 25
1412	1417		c. The effect of perfection or nonperfection and the priority of a 26
1413	1418		nonpossessory security interest in the collateral. 27
1414	1419		(4) The local law of the jurisdiction in which the wellhead or minehead is located 28
1415	1420		governs perfection, the effect of perfection or nonperfection, and the priority 29
1416	1421		of a security interest in as-extracted collateral." 30
1417	1422		SECTION 15. G.S. 25-9-304 reads as rewritten: 31
1418	1423		"§ 25-9-304. Law governing perfection and priority of security interests in deposit accounts. 32
1419	1424		(a) Law of bank's jurisdiction governs. – Bank's Jurisdiction Governs. – The local law of 33
1420	1425		a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority 34
1421	1426		of a security interest in a deposit account maintained with that bank.bank even if the transaction 35
1422	1427		does not bear any relation to the bank's jurisdiction. 36
1423	1428		(b) Bank's jurisdiction. – Jurisdiction. – The following rules determine a bank's 37
1424	1429		jurisdiction for purposes of this Part: 38
1425	1430		…." 39
1426	1431		SECTION 16. G.S. 25-9-305 reads as rewritten: 40
1427	1432		"§ 25-9-305. Law governing perfection and priority of security interests in investment 41
1428	1433		property. 42
1429	1434		(a) Governing law: general rules. – General Rules for Governing Law. – Except as 43
1430	1435		otherwise provided in subsection (c) of this section, the following rules apply: 44
1431	1436		(1) While a security certificate is located in a jurisdiction, the local law of that 45
1432	1437		jurisdiction governs perfection, the effect of perfection or nonperfection, and 46
1433	1438		the priority of a security interest in the certificated security represented 47
1434	1439		thereby. 48
1435	1440		(2) The local law of the issuer's jurisdiction as specified in G.S. 25-8-110(d) 49
1436	1441		governs perfection, the effect of perfection or nonperfection, and the priority 50
1437	1442		of a security interest in an uncertificated security. 51 General Assembly Of North Carolina Session 2025
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	1443	+	DRS35028-MUz-3A Page 29
1439	1444		(3) The local law of the securities intermediary's jurisdiction as specified in 1
1440	1445		G.S. 25-8-110(e) governs perfection, the effect of perfection or nonperfection, 2
1441	1446		and the priority of a security interest in a security entitlement or securities 3
1442	1447		account. 4
1443	1448		(4) The local law of the commodity intermediary's jurisdiction governs 5
1444	1449		perfection, the effect of perfection or nonperfection, and the priority of a 6
1445	1450		security interest in a commodity contract or commodity account. 7
1446	1451		(5) Subdivisions (2), (3), and (4) of this subsection apply even if the transaction 8
1447	1452		does not bear any relation to the jurisdiction. 9
1448	1453		(b) Commodity intermediary's jurisdiction. – Intermediary's Jurisdiction. – The following 10
1449	1454		rules determine a commodity intermediary's jurisdiction for purposes of this Part: 11
1450	1455		… 12
1451	1456		(c) When perfection governed by law of jurisdiction where debtor located. – Perfection 13
1452	1457		Governed by Law of Jurisdiction Where Debtor Located. – The local law of the jurisdiction in 14
1453	1458		which the debtor is located governs:governs all of the following: 15
1454	1459		(1) Perfection of a security interest in investment property by filing;filing. 16
1455	1460		(2) Automatic perfection of a security interest in investment property created by 17
1456	1461		a broker or securities intermediary; andintermediary. 18
1457	1462		(3) Automatic perfection of a security interest in a commodity contract or 19
1458	1463		commodity account created by a commodity intermediary." 20
1459	1464		SECTION 17. Article 9 of Chapter 25 of the General Statutes is amended by adding 21
1460	1465		a new section to read: 22
1461	1466		"§ 25-9-306.1. Law governing perfection and priority of security interests in chattel paper. 23
1462	1467		(a) Chattel Paper Evidenced by Authoritative Electronic Copy. – Except as provided in 24
1463	1468		subsection (d) of this section, if chattel paper is evidenced only by an authoritative electronic 25
1464	1469		copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative 26
1465	1470		tangible copy, the local law of the chattel paper's jurisdiction governs perfection, the effect of 27
1466	1471		perfection or nonperfection, and the priority of a security interest in the chattel paper, even if the 28
1467	1472		transaction does not bear any relation to the chattel paper's jurisdiction. 29
1468	1473		(b) Chattel Paper's Jurisdiction. – The following rules determine the chattel paper's 30
1469	1474		jurisdiction under this section: 31
1470	1475		(1) If the authoritative electronic copy of the record evidencing chattel paper, or 32
1471	1476		a record attached to or logically associated with the electronic copy and 33
1472	1477		readily available for review, expressly provides that a particular jurisdiction 34
1473	1478		is the chattel paper's jurisdiction for purposes of this Part, this Article, or this 35
1474	1479		Chapter, that jurisdiction is the chattel paper's jurisdiction. 36
1475	1480		(2) If subdivision (1) of this subsection does not apply and the rules of the system 37
1476	1481		in which the authoritative electronic copy is recorded are readily available for 38
1477	1482		review and expressly provide that a particular jurisdiction is the chattel paper's 39
1478	1483		jurisdiction for purposes of this Part, this Article, or this Chapter, that 40
1479	1484		jurisdiction is the chattel paper's jurisdiction. 41
1480	1485		(3) If subdivisions (1) and (2) of this subsection do not apply and the authoritative 42
1481	1486		electronic copy, or a record attached to or logically associated with the 43
1482	1487		electronic copy and readily available for review, expressly provides that the 44
1483	1488		chattel paper is governed by the law of a particular jurisdiction, that 45
1484	1489		jurisdiction is the chattel paper's jurisdiction. 46
1485	1490		(4) If subdivisions (1), (2), and (3) of this subsection do not apply and the rules 47
1486	1491		of the system in which the authoritative electronic copy is recorded are readily 48
1487	1492		available for review and expressly provide that the chattel paper or the system 49
1488	1493		is governed by the law of a particular jurisdiction, that jurisdiction is the 50
1489	1494		chattel paper's jurisdiction. 51 General Assembly Of North Carolina Session 2025
1490		-	Page 30 ~~Senate Bill 117-First Edition~~
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1491	1496		(5) If subdivisions (1) through (4) of this subsection do not apply, the chattel 1
1492	1497		paper's jurisdiction is the jurisdiction in which the debtor is located. 2
1493	1498		(c) Chattel Paper Evidenced by Authoritative Tangible Copy. – If an authoritative 3
1494	1499		tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an 4
1495	1500		authoritative electronic copy, while the authoritative tangible copy of the record evidencing 5
1496	1501		chattel paper is located in a jurisdiction, the local law of that jurisdiction governs both of the 6
1497	1502		following: 7
1498	1503		(1) Perfection of a security interest in the chattel paper by possession under 8
1499	1504		G.S. 25-9-314.1. 9
1500	1505		(2) The effect of perfection or nonperfection and the priority of a security interest 10
1501	1506		in the chattel paper. 11
1502	1507		(d) When Perfection Governed by Law of Jurisdiction Where Debtor Located. – The local 12
1503	1508		law of the jurisdiction in which the debtor is located governs perfection of a security interest in 13
1504	1509		chattel paper by filing." 14
1505	1510		SECTION 18. Article 9 of Chapter 25 of the General Statutes is amended by adding 15
1506	1511		a new section to read: 16
1507	1512		"§ 25-9-306.2. Law governing perfection and priority of security interests in controllable 17
1508	1513		accounts, controllable electronic records, and controllable payment intangibles. 18
1509	1514		(a) General Rules for Governing Law. – Except as provided in subsection (b) of this 19
1510	1515		section, the local law of the controllable electronic record's jurisdiction specified in 20
1511	1516		G.S. 25-12-107(c) and (d) governs perfection, the effect of perfection or nonperfection, and the 21
1512	1517		priority of a security interest in a controllable electronic record and a security interest in a 22
1513	1518		controllable account or controllable payment intangible evidenced by the controllable electronic 23
1514	1519		record. 24
1515	1520		(b) When Perfection Governed by Law of Jurisdiction Where Debtor Located. – The local 25
1516	1521		law of the jurisdiction in which the debtor is located governs both of the following: 26
1517	1522		(1) Perfection of a security interest in a controllable account, controllable 27
1518	1523		electronic record, or controllable payment intangible by filing. 28
1519	1524		(2) Automatic perfection of a security interest in a controllable payment 29
1520	1525		intangible created by a sale of the controllable payment intangible." 30
1521	1526		SECTION 19. G.S. 25-9-310 reads as rewritten: 31
1522	1527		"§ 25-9-310. When filing required to perfect security interest or agricultural lien; security 32
1523	1528		interests and agricultural liens to which filing provisions do not apply. 33
1524	1529		(a) General rule: perfection by filing. – Rule for Perfection by Filing. – Except as 34
1525	1530		otherwise provided in subsection (b) of this section and G.S. 25-9-312(b), a financing statement 35
1526	1531		must be filed to perfect all security interests and agricultural liens. 36
1527	1532		(b) Exceptions: filing not necessary. – Exceptions When Filing Not Necessary. – The 37
1528	1533		filing of a financing statement is not necessary to perfect a security interest:any of the following 38
1529	1534		security interests: 39
1530	1535		(1) That A security interest that is perfected under G.S. 25-9-308(d), (e), (f), or 40
1531	1536		(g);G.S. 25-9-308(d), (e), (f), or (g). 41
1532	1537		(2) That A security interest that is perfected under G.S. 25-9-309 when it 42
1533	1538		attaches;attaches. 43
1534	1539		(3) In A security interest in property subject to a statute, regulation, or treaty 44
1535	1540		described in G.S. 25-9-311(a);G.S. 25-9-311(a). 45
1536	1541		(4) In A security interest in goods in possession of a bailee which that is perfected 46
1537	1542		under G.S. 25-9-312(d)(1) or (2);G.S. 25-9-312(d)(1) or (2). 47
1538	1543		(5) In A security interest in certificated securities, documents, goods, or 48
1539	1544		instruments which that is perfected without filing, control, or possession under 49
1540	1545		G.S. 25-9-312(e), (f), or (g);G.S. 25-9-312(e), (f), or (g). 50 General Assembly Of North Carolina Session 2025
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	1546	+	DRS35028-MUz-3A Page 31
1542	1547		(6) In A security interest in collateral in the secured party's possession under 1
1543	1548		G.S. 25-9-313;G.S. 25-9-313. 2
1544	1549		(7) In A security interest in a certificated security which that is perfected by 3
1545	1550		delivery of the security certificate to the secured party under 4
1546	1551		G.S. 25-9-313;G.S. 25-9-313. 5
1547	1552		(8) In A security interest in controllable accounts, controllable electronic records, 6
1548	1553		controllable payment intangibles, deposit accounts, electronic chattel paper, 7
1549	1554		electronic documents, investment property, or letter-of-credit rights which 8
1550	1555		that is perfected by control under G.S. 25-9-314;G.S. 25-9-314. 9
1551	1556		(8a) A security interest in chattel paper that is perfected by possession and control 10
1552	1557		under G.S. 25-9-314.1. 11
1553	1558		(9) In A security interest in proceeds which that is perfected under G.S. 25-9-315; 12
1554	1559		orG.S. 25-9-315. 13
1555	1560		(10) That A security interest that is perfected under G.S. 25-9-316. 14
1556	1561		(c) Assignment of perfected security interest. – Perfected Security Interest. – If a secured 15
1557	1562		party assigns a perfected security interest or agricultural lien, a filing under this Article is not 16
1558	1563		required to continue the perfected status of the security interest against creditors of and 17
1559	1564		transferees from the original debtor." 18
1560	1565		SECTION 20. G.S. 25-9-312 reads as rewritten: 19
1561	1566		"§ 25-9-312. Perfection of security interests in chattel paper, controllable accounts, 20
1562	1567		controllable electronic records, controllable payment intangibles, deposit 21
1563	1568		accounts, negotiable documents, goods covered by documents, instruments, 22
1564	1569		investment property, letter-of-credit rights, and money; perfection by 23
1565	1570		permissive filing; temporary perfection without filing or transfer of possession. 24
1566	1571		(a) Perfection by filing permitted. – Filing Permitted. – A security interest in chattel 25
1567	1572		paper, negotiable documents, controllable accounts, controllable electronic records, controllable 26
1568	1573		payment intangibles, instruments, or investment property investment property, or negotiable 27
1569	1574		documents may be perfected by filing. 28
1570	1575		(b) Control or possession of certain collateral. – Possession of Certain Collateral. – 29
1571	1576		Except as otherwise provided in G.S. 25-9-315(c) and (d) for proceeds:proceeds, all of the 30
1572	1577		following apply: 31
1573	1578		(1) A security interest in a deposit account may be perfected only by control under 32
1574	1579		G.S. 25-9-314;G.S. 25-9-314. 33
1575	1580		(2) And except Except as otherwise provided in G.S. 25-9-308(d), a security 34
1576	1581		interest in a letter-of-credit right may be perfected only by control under G.S. 35
1577	1582		25-9-314; andG.S. 25-9-314. 36
1578	1583		(3) A security interest in tangible money may be perfected only by the secured 37
1579	1584		party's taking possession under G.S. 25-9-313. 38
1580	1585		(4) A security interest in electronic money may be perfected only by control under 39
1581	1586		G.S. 25-9-314. 40
1582	1587		(c) Goods covered by negotiable document. – Covered by Negotiable Document. – While 41
1583	1588		goods are in the possession of a bailee that has issued a negotiable document covering the 42
1584	1589		goods:goods, both of the following apply: 43
1585	1590		(1) A security interest in the goods may be perfected by perfecting a security 44
1586	1591		interest in the document; anddocument. 45
1587	1592		(2) A security interest perfected in the document has priority over any security 46
1588	1593		interest that becomes perfected in the goods by another method during that 47
1589	1594		time. 48
1590	1595		(d) Goods covered by nonnegotiable document. – Covered by Nonnegotiable Document. 49
1591	1596		– While goods are in the possession of a bailee that has issued a nonnegotiable document covering 50
1592	1597		the goods, a security interest in the goods may be perfected by:by any of the following: 51 General Assembly Of North Carolina Session 2025
1593		-	Page 32 ~~Senate Bill 117-First Edition~~
	1598	+	Page 32 DRS35028-MUz-3A
1594	1599		(1) Issuance of a document in the name of the secured party;party. 1
1595	1600		(2) The bailee's receipt of notification of the secured party's interest; orinterest. 2
1596	1601		(3) Filing as to the goods. 3
1597	1602		(e) Temporary perfection: new value. – Perfection for New Value. – A security interest 4
1598	1603		in certificated securities, negotiable documents, or instruments is perfected without filing or the 5
1599	1604		taking of possession or control for a period of 20 days from the time it attaches to the extent that 6
1600	1605		it arises for new value given under an authenticated a signed security agreement. 7
1601	1606		(f) Temporary perfection: goods or documents made available to debtor. – Perfection for 8
1602	1607		Goods or Documents Made Available to Debtor. – A perfected security interest in a negotiable 9
1603	1608		document or goods in possession of a bailee, other than one that has issued a negotiable document 10
1604	1609		for the goods, remains perfected for 20 days without filing if the secured party makes available 11
1605	1610		to the debtor the goods or documents representing the goods for the purpose of:of either of the 12
1606	1611		following: 13
1607	1612		(1) Ultimate sale or exchange; orexchange. 14
1608	1613		(2) Loading, unloading, storing, shipping, transshipping, manufacturing, 15
1609	1614		processing, or otherwise dealing with them in a manner preliminary to their 16
1610	1615		sale or exchange. 17
1611	1616		(g) Temporary perfection: delivery of security certificate or instrument to debtor. – 18
1612	1617		Perfection for Delivery of Security Certificate or Instrument to Debtor. – A perfected security 19
1613	1618		interest in a certificated security or instrument remains perfected for 20 days without filing if the 20
1614	1619		secured party delivers the security certificate or instrument to the debtor for the purpose of:of 21
1615	1620		either of the following: 22
1616	1621		(1) Ultimate sale or exchange; orexchange. 23
1617	1622		(2) Presentation, collection, enforcement, renewal, or registration of transfer. 24
1618	1623		(h) Expiration of temporary perfection. – Temporary Perfection. – After the 20-day 25
1619	1624		period specified in subsection (e), (f), or (g) of this section expires, perfection depends upon 26
1620	1625		compliance with this Article." 27
1621	1626		SECTION 21. G.S. 25-9-313 reads as rewritten: 28
1622	1627		"§ 25-9-313. When possession by or delivery to secured party perfects security interest 29
1623	1628		without filing. 30
1624	1629		(a) Perfection by possession or delivery. – Possession or Delivery. – Except as otherwise 31
1625	1630		provided in subsection (b) of this section, a secured party may perfect a security interest in 32
1626	1631		tangible negotiable documents, goods, instruments, money, or tangible chattel paper negotiable 33
1627	1632		tangible documents, or tangible money by taking possession of the collateral. A secured party 34
1628	1633		may perfect a security interest in certificated securities by taking delivery of the certificated 35
1629	1634		securities under G.S. 25-8-301. 36
1630	1635		(b) Goods covered by certificate of title. – Covered by Certificate of Title. – With respect 37
1631	1636		to goods covered by a certificate of title issued by this State, a secured party may perfect a security 38
1632	1637		interest in the goods by taking possession of the goods only in the circumstances described in 39
1633	1638		G.S. 25-9-316(d). 40
1634	1639		(c) Collateral in possession of person other than debtor. – Possession of Person Other 41
1635	1640		Than Debtor. – With respect to collateral other than certificated securities and goods covered by 42
1636	1641		a document, a secured party takes possession of collateral in the possession of a person other than 43
1637	1642		the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course 44
1638	1643		of the debtor's business, when:when either of the following applies: 45
1639	1644		(1) The person in possession authenticates signs a record acknowledging that it 46
1640	1645		holds possession of the collateral for the secured party's benefit; orbenefit. 47
1641	1646		(2) The person takes possession of the collateral after having authenticated signed 48
1642	1647		a record acknowledging that it will hold possession of the collateral for the 49
1643	1648		secured party's benefit. 50 General Assembly Of North Carolina Session 2025
1644		-	~~Senate Bill 117-First Edition~~ Page 33
	1649	+	DRS35028-MUz-3A Page 33
1645	1650		(d) Time of perfection by possession; continuation of perfection. – Perfection by 1
1646	1651		Possession; Continuation of Perfection. – If perfection of a security interest depends upon 2
1647	1652		possession of the collateral by a secured party, perfection occurs no not earlier than the time the 3
1648	1653		secured party takes possession and continues only while the secured party retains possession. 4
1649	1654		(e) Time of perfection by delivery; continuation of perfection. – Perfection by Delivery; 5
1650	1655		Continuation of Perfection. – A security interest in a certificated security in registered form is 6
1651	1656		perfected by delivery when delivery of the certificated security occurs under G.S. 25-8-301 and 7
1652	1657		remains perfected by delivery until the debtor obtains possession of the security certificate. 8
1653	1658		(f) Acknowledgment not required. – Not Required. – A person in possession of collateral 9
1654	1659		is not required to acknowledge that it holds possession for a secured party's benefit. 10
1655	1660		(g) Effectiveness of acknowledgment; no duties or confirmation. – Acknowledgment; No 11
1656	1661		Duties or Confirmation. – If a person acknowledges that it holds possession for the secured 12
1657	1662		party's benefit:benefit, both of the following apply: 13
1658	1663		(1) The acknowledgment is effective under subsection (c) of this section or 14
1659	1664		G.S. 25-8-301(a), even if the acknowledgment violates the rights of a debtor; 15
1660	1665		anddebtor. 16
1661	1666		(2) Unless the person otherwise agrees or law other than this Article otherwise 17
1662	1667		provides, the person does not owe any duty to the secured party and is not 18
1663	1668		required to confirm the acknowledgment to another person. 19
1664	1669		(h) Secured party's delivery to person other than debtor. – Party's Delivery to Person 20
1665	1670		Other Than Debtor. – A secured party having possession of collateral does not relinquish 21
1666	1671		possession by delivering the collateral to a person other than the debtor or a lessee of the collateral 22
1667	1672		from the debtor in the ordinary course of the debtor's business if the person was instructed before 23
1668	1673		the delivery or is instructed contemporaneously with the delivery:delivery to do either of the 24
1669	1674		following: 25
1670	1675		(1) To hold possession of the collateral for the secured party's benefit; orbenefit. 26
1671	1676		(2) To redeliver the collateral to the secured party. 27
1672	1677		(i) Effect of delivery under subsection (h); no duties or confirmation. – Delivery Under 28
1673	1678		Subsection (h); No Duties or Confirmation. – A secured party does not relinquish possession, 29
1674	1679		even if a delivery under subsection (h) of this section violates the rights of a debtor. A person to 30
1675	1680		which collateral is delivered under subsection (h) of this section does not owe any duty to the 31
1676	1681		secured party and is not required to confirm the delivery to another person unless the person 32
1677	1682		otherwise agrees or law other than this Article otherwise provides." 33
1678	1683		SECTION 22. G.S. 25-9-314 reads as rewritten: 34
1679	1684		"§ 25-9-314. Perfection by control. 35
1680	1685		(a) Perfection by control. – Control. – A security interest in investment property, deposit 36
1681	1686		accounts, letter-of-credit rights, electronic chattel paper, or electronic documents controllable 37
1682	1687		accounts, controllable electronic records, controllable payment intangibles, deposit accounts, 38
1683	1688		electronic documents, electronic money, investment property, or letter-of-credit rights may be 39
1684	1689		perfected by control of the collateral under G.S. 25-7-106, 25-9-104, 25-9-105, 25-9-105.1, 40
1685	1690		25-9-106, or 25-9-107.25-9-107, or 25-9-107.1. 41
1686	1691		(b) Specified collateral: time of perfection by control; continuation of perfection. – 42
1687	1692		Collateral; Time of Perfection by Control; Continuation of Perfection. – A security interest in 43
1688	1693		deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents 44
1689	1694		controllable accounts, controllable electronic records, controllable payment intangibles, deposit 45
1690	1695		accounts, electronic documents, electronic money, or letter-of-credit rights is perfected by 46
1691	1696		control under G.S. 25-7-106, 25-9-104, 25-9-105, or 25-9-107 when 25-9-105.1, 25-9-107, or 47
1692	1697		25-9-107.1 not earlier than the time the secured party obtains control and remains perfected by 48
1693	1698		control only while the secured party retains control. 49
1694	1699		(c) Investment property: time of perfection by control; continuation of perfection. – 50
1695	1700		Property; Time of Perfection by Control; Continuation of Perfection. – A security interest in 51 General Assembly Of North Carolina Session 2025
1696		-	Page 34 ~~Senate Bill 117-First Edition~~
	1701	+	Page 34 DRS35028-MUz-3A
1697	1702		investment property is perfected by control under G.S. 25-9-106 from not earlier than the time 1
1698	1703		the secured party obtains control and remains perfected by control until:until both of the 2
1699	1704		following occur: 3
1700	1705		(1) The secured party does not have control; andcontrol. 4
1701	1706		(2) One of the following occurs: 5
1702	1707		a. If the collateral is a certificated security, the debtor has or acquires 6
1703	1708		possession of the security certificate;certificate. 7
1704	1709		b. If the collateral is an uncertificated security, the issuer has registered 8
1705	1710		or registers the debtor as the registered owner; orowner. 9
1706	1711		c. If the collateral is a security entitlement, the debtor is or becomes the 10
1707	1712		entitlement holder." 11
1708	1713		SECTION 23. Article 9 of Chapter 25 of the General Statutes is amended by adding 12
1709	1714		a new section to read: 13
1710	1715		"§ 25-9-314.1. Perfection by possession and control of chattel paper. 14
1711	1716		(a) Perfection by Possession and Control. – A secured party may perfect a security 15
1712	1717		interest in chattel paper by taking possession of each authoritative tangible copy of the record 16
1713	1718		evidencing the chattel paper and obtaining control of each authoritative electronic copy of the 17
1714	1719		electronic record evidencing the chattel paper. 18
1715	1720		(b) Time of Perfection; Continuation of Perfection. – A security interest is perfected 19
1716	1721		under subsection (a) of this section not earlier than the time the secured party takes possession 20
1717	1722		and obtains control and remains perfected under subsection (a) of this section only while the 21
1718	1723		secured party retains possession and control. 22
1719	1724		(c) Application of G.S. 25-9-313 to Perfection by Possession of Chattel Paper. – 23
1720	1725		G.S. 25-9-313(c) and (f) through (i) apply to perfection by possession of an authoritative tangible 24
1721	1726		copy of a record evidencing chattel paper." 25
1722	1727		SECTION 24. G.S. 25-9-316 reads as rewritten: 26
1723	1728		"§ 25-9-316. Effect of change in governing law. 27
1724	1729		(a) General rule: effect on perfection of change in governing law. – Rule for Effect on 28
1725	1730		Perfection of Change in Governing Law. – A security interest perfected pursuant to the law of 29
1726	1731		the jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) G.S. 25-9-301(1), 30
1727	1732		25-9-305(c), 25-9-306.1(d), or 25-9-306.2(b) remains perfected until the earliest of:of the 31
1728	1733		following: 32
1729	1734		(1) The time perfection would have ceased under the law of that 33
1730	1735		jurisdiction;jurisdiction. 34
1731	1736		(2) The expiration of four months after a change of the debtor's location to another 35
1732	1737		jurisdiction; orjurisdiction. 36
1733	1738		(3) The expiration of one year after a transfer of collateral to a person that thereby 37
1734	1739		becomes a debtor and is located in another jurisdiction. 38
1735	1740		(b) Security interest perfected or unperfected under law of new jurisdiction. – Interest 39
1736	1741		Perfected or Unperfected Under Law of New Jurisdiction. – If a security interest described in 40
1737	1742		subsection (a) of this section becomes perfected under the law of the other jurisdiction before the 41
1738	1743		earliest time or event described in that subsection, it remains perfected thereafter. If the security 42
1739	1744		interest does not become perfected under the law of the other jurisdiction before the earliest time 43
1740	1745		or event, it becomes unperfected and is deemed never to have been perfected as against a 44
1741	1746		purchaser of the collateral for value. 45
1742	1747		(c) Possessory security interest in collateral moved to new jurisdiction. – Security Interest 46
1743	1748		in Collateral Moved to New Jurisdiction. – A possessory security interest in collateral, other than 47
1744	1749		goods covered by a certificate of title and as-extracted collateral consisting of goods, remains 48
1745	1750		continuously perfected if:if all of the following apply: 49
1746	1751		(1) The collateral is located in one jurisdiction and subject to a security interest 50
1747	1752		perfected under the law of that jurisdiction;jurisdiction. 51 General Assembly Of North Carolina Session 2025
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	1753	+	DRS35028-MUz-3A Page 35
1749	1754		(2) Thereafter the collateral is brought into another jurisdiction; andjurisdiction. 1
1750	1755		(3) Upon entry into the other jurisdiction, the security interest is perfected under 2
1751	1756		the law of the other jurisdiction. 3
1752	1757		(d) Goods covered by certificate of title from this State. – Covered by Certificate of Title 4
1753	1758		from this State. – Except as otherwise provided in subsection (e) of this section, a security interest 5
1754	1759		in goods covered by a certificate of title which that is perfected by any method under the law of 6
1755	1760		another jurisdiction when the goods become covered by a certificate of title from this State 7
1756	1761		remains perfected until the security interest would have become unperfected under the law of the 8
1757	1762		other jurisdiction had the goods not become so covered. 9
1758	1763		(e) When subsection (d) security interest becomes unperfected against purchasers. – 10
1759	1764		Subsection (d) Security Interest Becomes Unperfected Against Purchasers. – A security interest 11
1760	1765		described in subsection (d) of this section becomes unperfected as against a purchaser of the 12
1761	1766		goods for value and is deemed never to have been perfected as against a purchaser of the goods 13
1762	1767		for value if the applicable requirements for perfection under G.S. 25-9-311(b) or G.S. 25-9-313 14
1763	1768		are not satisfied before the earlier of:of the following: 15
1764	1769		(1) The time the security interest would have become unperfected under the law 16
1765	1770		of the other jurisdiction had the goods not become covered by a certificate of 17
1766	1771		title from this State; orState. 18
1767	1772		(2) The expiration of four months after the goods had become so covered. 19
1768	1773		(f) Change in jurisdiction of bank, issuer, nominated person, securities intermediary, or 20
1769	1774		commodity intermediary. – Jurisdiction of Chattel Paper, Controllable Electronic Record, Bank, 21
1770	1775		Issuer, Nominated Person, Securities Intermediary, or Commodity Intermediary. – A security 22
1771	1776		interest in chattel paper, controllable accounts, controllable electronic records, controllable 23
1772	1777		payment intangibles, deposit accounts, letter-of-credit rights, or investment property which that 24
1773	1778		is perfected under the law of the chattel paper's jurisdiction, the controllable electronic record's 25
1774	1779		jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, 26
1775	1780		the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as 27
1776	1781		applicable, remains perfected until the earlier of:of the following: 28
1777	1782		(1) The time the security interest would have become unperfected under the law 29
1778	1783		of that jurisdiction; orjurisdiction. 30
1779	1784		(2) The expiration of four months after a change of the applicable jurisdiction to 31
1780	1785		another jurisdiction. 32
1781	1786		(g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction. 33
1782	1787		– Security Interest Perfected or Unperfected Under Law of New Jurisdiction. – If a security 34
1783	1788		interest described in subsection (f) of this section becomes perfected under the law of the other 35
1784	1789		jurisdiction before the earlier of the time or the end of the period described in that subsection, it 36
1785	1790		remains perfected thereafter. If the security interest does not become perfected under the law of 37
1786	1791		the other jurisdiction before the earlier of that time or the end of that period, it becomes 38
1787	1792		unperfected and is deemed never to have been perfected as against a purchaser of the collateral 39
1788	1793		for value. 40
1789	1794		… 41
1790	1795		(i) Effect of Change in Governing Law on Financing Statement Filed Against Original 42
1791	1796		Debtor. – If a financing statement naming an original debtor is filed pursuant to the law of the 43
1792	1797		jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) and the new debtor is located in 44
1793	1798		another jurisdiction, the following rules apply: 45
1794	1799		… 46
1795	1800		(2) A security interest perfected by the financing statement and which that 47
1796	1801		becomes perfected under the law of the other jurisdiction before the earlier of 48
1797	1802		the time the financing statement would have become ineffective under the law 49
1798	1803		of the jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) or the 50
1799	1804		expiration of the four-month period remains perfected thereafter. A security 51 General Assembly Of North Carolina Session 2025
1800		-	Page 36 ~~Senate Bill 117-First Edition~~
	1805	+	Page 36 DRS35028-MUz-3A
1801	1806		interest that is perfected by the financing statement but which that does not 1
1802	1807		become perfected under the law of the other jurisdiction before the earlier time 2
1803	1808		or event becomes unperfected and is deemed never to have been perfected as 3
1804	1809		against a purchaser of the collateral for value." 4
1805	1810		SECTION 25. G.S. 25-9-317 reads as rewritten: 5
1806	1811		"§ 25-9-317. Interests that take priority over or take free of security interest or agricultural 6
1807	1812		lien. 7
1808	1813		(a) Conflicting security interests and rights of lien creditors. – Security Interests and 8
1809	1814		Rights of Lien Creditors. – A security interest or agricultural lien is subordinate to the rights of:of 9
1810	1815		both of the following: 10
1811	1816		(1) A person entitled to priority under G.S. 25-9-322; andG.S. 25-9-322. 11
1812	1817		(2) Except as otherwise provided in subsection (e) of this section, a person that 12
1813	1818		becomes a lien creditor before the earlier of the time:following: 13
1814	1819		a. The security interest or agricultural lien is perfected; orperfected. 14
1815	1820		b. One of the conditions specified in G.S. 25-9-203(b)(3) is met and a 15
1816	1821		financing statement covering the collateral is filed. 16
1817	1822		(b) Buyers that receive delivery. – That Receive Delivery. – Except as otherwise provided 17
1818	1823		in subsection (e) of this section, a buyer, other than a secured party, of tangible chattel paper, 18
1819	1824		tangible documents, goods, instruments, tangible documents, or a certificated security takes free 19
1820	1825		of a security interest or agricultural lien if the buyer gives value and receives delivery of the 20
1821	1826		collateral without knowledge of the security interest or agricultural lien and before it is perfected. 21
1822	1827		(c) Lessees that receive delivery. – That Receive Delivery. – Except as otherwise 22
1823	1828		provided in subsection (e) of this section, a lessee of goods takes free of a security interest or 23
1824	1829		agricultural lien if the lessee gives value and receives delivery of the collateral without 24
1825	1830		knowledge of the security interest or agricultural lien and before it is perfected. 25
1826	1831		(d) Licensees and buyers of certain collateral. – A Buyers of Certain Collateral. – Subject 26
1827	1832		to subsections (f) through (i) of this section, a licensee of a general intangible or a buyer, other 27
1828	1833		than a secured party, of collateral other than tangible chattel paper, tangible documents, electronic 28
1829	1834		money, goods, instruments, tangible documents, or a certificated security takes free of a security 29
1830	1835		interest if the licensee or buyer gives value without knowledge of the security interest and before 30
1831	1836		it is perfected. 31
1832	1837		(e) Purchase-money security interest. – Purchase-Money Security Interest. – Except as 32
1833	1838		otherwise provided in G.S. 25-9-320 and G.S. 25-9-321, if a person files a financing statement 33
1834	1839		with respect to a purchase-money security interest before or within 20 days after the debtor 34
1835	1840		receives delivery of the collateral, the security interest takes priority over the rights of a buyer, 35
1836	1841		lessee, or lien creditor which that arise between the time the security interest attaches and the 36
1837	1842		time of filing. 37
1838	1843		(f) Buyers of Chattel Paper. – A buyer, other than a secured party, of chattel paper takes 38
1839	1844		free of a security interest if, without knowledge of the security interest and before it is perfected, 39
1840	1845		the buyer gives value and does both of the following: 40
1841	1846		(1) Receives delivery of each authoritative tangible copy of the record evidencing 41
1842	1847		the chattel paper. 42
1843	1848		(2) If each authoritative electronic copy of the record evidencing the chattel paper 43
1844	1849		can be subjected to control under G.S. 25-9-105, obtains control of each 44
1845	1850		authoritative electronic copy. 45
1846	1851		(g) Buyers of Electronic Documents. – A buyer of an electronic document takes free of a 46
1847	1852		security interest if, without knowledge of the security interest and before it is perfected, the buyer 47
1848	1853		gives value and, if each authoritative electronic copy of the document can be subjected to control 48
1849	1854		under G.S. 25-7-106, obtains control of each authoritative electronic copy. 49 General Assembly Of North Carolina Session 2025
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	1855	+	DRS35028-MUz-3A Page 37
1851	1856		(h) Buyers of Controllable Electronic Records. – A buyer of a controllable electronic 1
1852	1857		record takes free of a security interest if, without knowledge of the security interest and before it 2
1853	1858		is perfected, the buyer gives value and obtains control of the controllable electronic record. 3
1854	1859		(i) Buyers of Controllable Accounts and Controllable Payment Intangibles. – A buyer, 4
1855	1860		other than a secured party, of a controllable account or a controllable payment intangible takes 5
1856	1861		free of a security interest if, without knowledge of the security interest and before it is perfected, 6
1857	1862		the buyer gives value and obtains control of the controllable account or controllable payment 7
1858	1863		intangible." 8
1859	1864		SECTION 26. G.S. 25-9-323 reads as rewritten: 9
1860	1865		"§ 25-9-323. Future advances. 10
1861	1866		(a) When priority based on time of advance. – Priority Based on Time of Advance. – 11
1862	1867		Except as otherwise provided in subsection (c) of this section, for purposes of determining the 12
1863	1868		priority of a perfected security interest under G.S. 25-9-322(a)(1), perfection of the security 13
1864	1869		interest dates from the time an advance is made to the extent that the security interest secures an 14
1865	1870		advance that:that meets both of the following conditions: 15
1866	1871		(1) Is The advance is made while the security interest is perfected only:only under 16
1867	1872		either of the following: 17
1868	1873		a. Under G.S. 25-9-309 when it attaches; orattaches. 18
1869	1874		b. Temporarily under G.S. 25-9-312(e), (f), or (g); andG.S. 25-9-312(e), 19
1870	1875		(f), or (g). 20
1871	1876		(2) Is The advance is not made pursuant to a commitment entered into before or 21
1872	1877		while the security interest is perfected by a method other than under 22
1873	1878		G.S. 25-9-309 or G.S. 25-9-312(e), (f), or (g). 23
1874	1879		(b) Lien creditor. – Creditor. – Except as otherwise provided in subsection (c) of this 24
1875	1880		section, a security interest is subordinate to the rights of a person that becomes a lien creditor to 25
1876	1881		the extent that the security interest secures an advance made more than 45 days after the person 26
1877	1882		becomes a lien creditor unless the advance is made:made under either of the following 27
1878	1883		circumstances: 28
1879	1884		(1) Without knowledge of the lien; orlien. 29
1880	1885		(2) Pursuant to a commitment entered into without knowledge of the lien. 30
1881	1886		(c) Buyer of receivables. – Receivables. – Subsections (a) and (b) of this section do not 31
1882	1887		apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, 32
1883	1888		payment intangibles, or promissory notes or a consignor. 33
1884	1889		(d) Buyer of goods. – Goods. – Except as otherwise provided in subsection (e) of this 34
1885	1890		section, a buyer of goods other than a buyer in ordinary course of business takes free of a security 35
1886	1891		interest to the extent that it secures advances made after the earlier of:of the following: 36
1887	1892		(1) The time the secured party acquires knowledge of the buyer's purchase; 37
1888	1893		orpurchase. 38
1889	1894		(2) 45 Forty-five days after the purchase. 39
1890	1895		(e) Advances made pursuant to commitment: priority of buyer of goods. – Made Pursuant 40
1891	1896		to Commitment; Priority of Buyer of Goods. – Subsection (d) of this section does not apply if 41
1892	1897		the advance is made pursuant to a commitment entered into without knowledge of the buyer's 42
1893	1898		purchase and before the expiration of the 45-day period. 43
1894	1899		(f) Lessee of goods. – Goods. – Except as otherwise provided in subsection (g) of this 44
1895	1900		section, a lessee of goods, other than a lessee in ordinary course of business, goods takes the 45
1896	1901		leasehold interest free of a security interest to the extent that it secures advances made after the 46
1897	1902		earlier of:of the following: 47
1898	1903		(1) The time the secured party acquires knowledge of the lease; orlease. 48
1899	1904		(2) 45 Forty-five days after the lease contract becomes enforceable. 49
1900	1905		(g) Advances made pursuant to commitment: priority of lessee of goods. – Made Pursuant 50
1901	1906		to Commitment; Priority of Lessee of Goods. – Subsection (f) of this section does not apply if 51 General Assembly Of North Carolina Session 2025
1902		-	Page 38 ~~Senate Bill 117-First Edition~~
	1907	+	Page 38 DRS35028-MUz-3A
1903	1908		the advance is made pursuant to a commitment entered into without knowledge of the lease and 1
1904	1909		before the expiration of the 45-day period." 2
1905	1910		SECTION 27. G.S. 25-9-324 reads as rewritten: 3
1906	1911		"§ 25-9-324. Priority of purchase-money security interests. 4
1907	1912		(a) General rule: purchase-money priority. – Rule for Purchase-Money Priority. – Except 5
1908	1913		as otherwise provided in subsection (g) of this section, a perfected purchase-money security 6
1909	1914		interest in goods other than inventory or livestock has priority over a conflicting security interest 7
1910	1915		in the same goods, and, except as otherwise provided in G.S. 25-9-327, a perfected security 8
1911	1916		interest in its identifiable proceeds also has priority, if the purchase-money security interest is 9
1912	1917		perfected when the debtor receives possession of the collateral or within 20 days thereafter. 10
1913	1918		(b) Inventory purchase-money priority. – Purchase-Money Priority. – Subject to 11
1914	1919		subsection (c) of this section and except as otherwise provided in subsection (g) of this section, 12
1915	1920		a perfected purchase-money security interest in inventory has priority over a conflicting security 13
1916	1921		interest in the same inventory, has priority over a conflicting security interest in chattel paper or 14
1917	1922		an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so 15
1918	1923		provided in G.S. 25-9-330, and, except as otherwise provided in G.S. 25-9-327, also has priority 16
1919	1924		in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are 17
1920	1925		received on or before the delivery of the inventory to a buyer, if:if all of the following apply: 18
1921	1926		(1) The purchase-money security interest is perfected when the debtor receives 19
1922	1927		possession of the inventory;inventory. 20
1923	1928		(2) The purchase-money secured party sends an authenticated a signed 21
1924	1929		notification to the holder of the conflicting security interest;interest. 22
1925	1930		(3) The holder of the conflicting security interest receives the notification within 23
1926	1931		five years before the debtor receives possession of the inventory; 24
1927	1932		andinventory. 25
1928	1933		(4) The notification states that the person sending the notification has or expects 26
1929	1934		to acquire a purchase-money security interest in inventory of the debtor and 27
1930	1935		describes the inventory. 28
1931	1936		(c) Holders of conflicting inventory security interests to be notified. – Conflicting 29
1932	1937		Inventory Security Interests to be Notified. – Subdivisions (b)(2) through (b)(4) of this section 30
1933	1938		apply only if the holder of the conflicting security interest had filed a financing statement 31
1934	1939		covering the same types of inventory:inventory as follows: 32
1935	1940		(1) If the purchase-money security interest is perfected by filing, before the date 33
1936	1941		of the filing; orfiling. 34
1937	1942		(2) If the purchase-money security interest is temporarily perfected without filing 35
1938	1943		or possession under G.S. 25-9-312(f), before the beginning of the 20-day 36
1939	1944		period thereunder.under that provision. 37
1940	1945		(d) Livestock purchase-money priority. – Purchase-Money Priority. – Subject to 38
1941	1946		subsection (e) of this section and except as otherwise provided in subsection (g) of this section, 39
1942	1947		a perfected purchase-money security interest in livestock that are farm products has priority over 40
1943	1948		a conflicting security interest in the same livestock, and, except as otherwise provided in 41
1944	1949		G.S. 25-9-327, a perfected security interest in their identifiable proceeds and identifiable 42
1945	1950		products in their unmanufactured states also has priority, if:if all of the following apply: 43
1946	1951		(1) The purchase-money security interest is perfected when the debtor receives 44
1947	1952		possession of the livestock;livestock. 45
1948	1953		(2) The purchase-money secured party sends an authenticated a signed 46
1949	1954		notification to the holder of the conflicting security interest;interest. 47
1950	1955		(3) The holder of the conflicting security interest receives the notification within 48
1951	1956		six months before the debtor receives possession of the livestock; 49
1952	1957		andlivestock. 50 General Assembly Of North Carolina Session 2025
1953		-	~~Senate Bill 117-First Edition~~ Page 39
	1958	+	DRS35028-MUz-3A Page 39
1954	1959		(4) The notification states that the person sending the notification has or expects 1
1955	1960		to acquire a purchase-money security interest in livestock of the debtor and 2
1956	1961		describes the livestock. 3
1957	1962		(e) Holders of conflicting livestock security interests to be notified. – Conflicting 4
1958	1963		Livestock Security Interests to be Notified. – Subdivisions (d)(2) through (d)(4) of this section 5
1959	1964		apply only if the holder of the conflicting security interest had filed a financing statement 6
1960	1965		covering the same types of livestock:livestock as follows: 7
1961	1966		(1) If the purchase-money security interest is perfected by filing, before the date 8
1962	1967		of the filing; orfiling. 9
1963	1968		(2) If the purchase-money security interest is temporarily perfected without filing 10
1964	1969		or possession under G.S. 25-9-312(f), before the beginning of the 20-day 11
1965	1970		period thereunder.under that provision. 12
1966	1971		(f) Software purchase-money priority. – Purchase-Money Priority. – Except as otherwise 13
1967	1972		provided in subsection (g) of this section, a perfected purchase-money security interest in 14
1968	1973		software has priority over a conflicting security interest in the same collateral, and, except as 15
1969	1974		otherwise provided in G.S. 25-9-327, a perfected security interest in its identifiable proceeds also 16
1970	1975		has priority, to the extent that the purchase-money security interest in the goods in which the 17
1971	1976		software was acquired for use has priority in the goods and proceeds of the goods under this 18
1972	1977		section. 19
1973	1978		(g) Conflicting purchase-money security interests. – Purchase-Money Security Interests. 20
1974	1979		– If more than one security interest qualifies for priority in the same collateral under subsection 21
1975	1980		(a), (b), (d), or (f) of this section:section, the following provisions apply: 22
1976	1981		(1) A security interest securing an obligation incurred as all or part of the price of 23
1977	1982		the collateral has priority over a security interest securing an obligation 24
1978	1983		incurred for value given to enable the debtor to acquire rights in or the use of 25
1979	1984		collateral; andcollateral. 26
1980	1985		(2) In all other cases, G.S. 25-9-322(a) applies to the qualifying security 27
1981	1986		interests." 28
1982	1987		SECTION 28. Article 9 of Chapter 25 of the General Statutes is amended by adding 29
1983	1988		a new section to read: 30
1984	1989		"§ 25-9-326.1. Priority of security interest in controllable account, controllable electronic 31
1985	1990		record, and controllable payment intangible. 32
1986	1991		A security interest in a controllable account, controllable electronic record, or controllable 33
1987	1992		payment intangible held by a secured party having control of the account, electronic record, or 34
1988	1993		payment intangible has priority over a conflicting security interest held by a secured party that 35
1989	1994		does not have control." 36
1990	1995		SECTION 29. G.S. 25-9-330 reads as rewritten: 37
1991	1996		"§ 25-9-330. Priority of purchaser of chattel paper or instrument. 38
1992	1997		(a) Purchaser's priority: security interest claimed merely as proceeds. – Priority; Security 39
1993	1998		Interest Claimed Merely as Proceeds. – A purchaser of chattel paper has priority over a security 40
1994	1999		interest in the chattel paper which that is claimed merely as proceeds of inventory subject to a 41
1995	2000		security interest if:if both of the following requirements are met: 42
1996	2001		(1) In good faith and in the ordinary course of the purchaser's business, the 43
1997	2002		purchaser gives new value and value, takes possession of each authoritative 44
1998	2003		tangible copy of the record evidencing the chattel paper or paper, and obtains 45
1999	2004		control of the chattel paper under G.S. 25-9-105; andunder G.S. 25-9-105 of 46
2000	2005		each authoritative electronic copy of the record evidencing the chattel paper. 47
2001	2006		(2) The chattel paper does authoritative copies of the record evidencing the chattel 48
2002	2007		paper do not indicate that it the chattel paper has been assigned to an identified 49
2003	2008		assignee other than the purchaser. 50 General Assembly Of North Carolina Session 2025
2004		-	Page 40 ~~Senate Bill 117-First Edition~~
	2009	+	Page 40 DRS35028-MUz-3A
2005	2010		(b) Purchaser's priority: other security interests. – Priority; Other Security Interests. – A 1
2006	2011		purchaser of chattel paper has priority over a security interest in the chattel paper which that is 2
2007	2012		claimed other than merely as proceeds of inventory subject to a security interest if the purchaser 3
2008	2013		gives new value and value, takes possession of each authoritative tangible copy of the record 4
2009	2014		evidencing the chattel paper or paper, and obtains control of under G.S. 25-9-105 of each 5
2010	2015		authoritative electronic copy of the record evidencing the chattel paper under G.S. 25-9-105 in 6
2011	2016		good faith, in the ordinary course of the purchaser's business, and without knowledge that the 7
2012	2017		purchase violates the rights of the secured party. 8
2013	2018		(c) Chattel paper purchaser's priority in proceeds. – Paper Purchaser's Priority in 9
2014	2019		Proceeds. – Except as otherwise provided in G.S. 25-9-327, a purchaser having priority in chattel 10
2015	2020		paper under subsection (a) or (b) of this section also has priority in proceeds of the chattel paper 11
2016	2021		to the extent that:that either of the following applies: 12
2017	2022		(1) G.S. 25-9-322 provides for priority in the proceeds; orproceeds. 13
2018	2023		(2) The proceeds consist of the specific goods covered by the chattel paper or cash 14
2019	2024		proceeds of the specific goods, even if the purchaser's security interest in the 15
2020	2025		proceeds is unperfected. 16
2021	2026		(d) Instrument purchaser's priority. – Purchaser's Priority. – Except as otherwise provided 17
2022	2027		in G.S. 25-9-331(a), a purchaser of an instrument has priority over a security interest in the 18
2023	2028		instrument perfected by a method other than possession if the purchaser gives value and takes 19
2024	2029		possession of the instrument in good faith and without knowledge that the purchase violates the 20
2025	2030		rights of the secured party. 21
2026	2031		(e) Holder of purchase-money security interest gives new value. – Purchase-Money 22
2027	2032		Security Interest Gives New Value. – For purposes of subsections (a) and (b) of this section, the 23
2028	2033		holder of a purchase-money security interest in inventory gives new value for chattel paper 24
2029	2034		constituting proceeds of the inventory. 25
2030	2035		(f) Indication of assignment gives knowledge. – Assignment Gives Knowledge. – For 26
2031	2036		purposes of subsections (b) and (d) of this section, if the authoritative copies of the record 27
2032	2037		evidencing chattel paper or an instrument indicates indicate that it the chattel paper or instrument 28
2033	2038		has been assigned to an identified secured party other than the purchaser, a purchaser of the 29
2034	2039		chattel paper or instrument has knowledge that the purchase violates the rights of the secured 30
2035	2040		party." 31
2036	2041		SECTION 30. G.S. 25-9-331 reads as rewritten: 32
2037	2042		"§ 25-9-331. Priority of rights of purchasers of instruments, controllable accounts, 33
2038	2043		controllable electronic records, controllable payment intangibles, documents, 34
2039	2044		instruments, and securities under other Articles; priority of interests in financial 35
2040	2045		assets and security entitlements and protection against assertion of claim under 36
2041	2046		Article 8.Articles 8 and 12. 37
2042	2047		(a) Rights under Articles 3, 7, and 8 not limited. – Under Articles 3, 7, 8, and 12 Not 38
2043	2048		Limited. – This Article does not limit the rights of a holder in due course of a negotiable 39
2044	2049		instrument, a holder to which a negotiable document of title has been duly negotiated, or a 40
2045	2050		protected purchaser of a security. security, or a qualifying purchaser of a controllable account, 41
2046	2051		controllable electronic record, or controllable payment intangible. These holders or purchasers 42
2047	2052		take priority over an earlier security interest, even if perfected, to the extent provided in Articles 43
2048	2053		3, 7, and 8 8, and 12 of this Chapter. 44
2049	2054		(b) Protection under Article 8. Under Articles 8 and 12. – This Article does not limit the 45
2050	2055		rights of or impose liability on a person to the extent that the person is protected against the 46
2051	2056		assertion of a claim under Article 8 or 12 of this Chapter. 47
2052	2057		(c) Filing not notice. – Not Notice. – Filing under this Article does not constitute notice 48
2053	2058		of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and 49
2054	2059		(b) of this section." 50
2055	2060		SECTION 31. G.S. 25-9-332 reads as rewritten: 51 General Assembly Of North Carolina Session 2025
2056		-	~~Senate Bill 117-First Edition~~ Page 41
	2061	+	DRS35028-MUz-3A Page 41
2057	2062		"§ 25-9-332. Transfer of money; transfer of funds from deposit account. 1
2058	2063		(a) Transferee of money. Tangible Money. – A transferee of tangible money takes the 2
2059	2064		money free of a security interest unless the transferee acts if the transferee receives possession 3
2060	2065		of the money without acting in collusion with the debtor in violating the rights of the secured 4
2061	2066		party. 5
2062	2067		(b) Transferee of funds Funds from deposit account. Deposit Account. – A transferee of 6
2063	2068		funds from a deposit account takes the funds free of a security interest in the deposit account 7
2064	2069		unless the transferee acts if the transferee receives the funds without acting in collusion with the 8
2065	2070		debtor in violating the rights of the secured party. 9
2066	2071		(c) Transferee of Electronic Money. – A transferee of electronic money takes the money 10
2067	2072		free of a security interest if the transferee obtains control of the money without acting in collusion 11
2068	2073		with the debtor in violating the rights of the secured party." 12
2069	2074		SECTION 32. G.S. 25-9-334 reads as rewritten: 13
2070	2075		"§ 25-9-334. Priority of security interests in fixtures and crops. 14
2071	2076		(a) Security interest in fixtures under this Article. – Interest in Fixtures Under this Article. 15
2072	2077		– A security interest under this Article may be created in goods that are fixtures or may continue 16
2073	2078		in goods that become fixtures. A security interest does not exist under this Article in ordinary 17
2074	2079		building materials incorporated into an improvement on land. 18
2075	2080		(b) Security interest in fixtures under real-property law. – Interest in Fixtures Under Real 19
2076	2081		Property Law. – This Article does not prevent creation of an encumbrance upon fixtures under 20
2077	2082		real property law. 21
2078	2083		(c) General rule: subordination of security interest in fixtures. – Rule for Subordination 22
2079	2084		of Security Interest in Fixtures. – In cases not governed by subsections (d) through (h) of this 23
2080	2085		section, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer 24
2081	2086		or owner of the related real property other than the debtor. 25
2082	2087		(d) Fixtures purchase-money priority. – Purchase-Money Priority. – Except as otherwise 26
2083	2088		provided in subsection (h) of this section, a perfected security interest in fixtures has priority over 27
2084	2089		a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest 28
2085	2090		of record in or is in possession of the real property and:and all of the following apply: 29
2086	2091		(1) The security interest is a purchase-money security interest;interest. 30
2087	2092		(2) The interest of the encumbrancer or owner arises before the goods become 31
2088	2093		fixtures; andfixtures. 32
2089	2094		(3) The security interest is perfected by a fixture filing before the goods become 33
2090	2095		fixtures or within 20 days thereafter. 34
2091	2096		(e) Priority of security interest in fixtures over interests in real property. – Security 35
2092	2097		Interest in Fixtures over Interests in Real Property. – A perfected security interest in fixtures has 36
2093	2098		priority over a conflicting interest of an encumbrancer or owner of the real property if:if any of 37
2094	2099		the following applies: 38
2095	2100		(1) The debtor has an interest of record in the real property or is in possession of 39
2096	2101		the real property and both of the following apply to the security interest: 40
2097	2102		a. Is The security interest is perfected by a fixture filing before the 41
2098	2103		interest of the encumbrancer or owner is of record; andrecord. 42
2099	2104		b. Has The security interest has priority over any conflicting interest of a 43
2100	2105		predecessor in title of the encumbrancer or owner;owner. 44
2101	2106		(2) Before the goods become fixtures, the security interest is perfected by any 45
2102	2107		method permitted by this Article and the fixtures are any of the following 46
2103	2108		readily removable:removable goods: 47
2104	2109		a. Factory or office machines;machines. 48
2105	2110		b. Equipment that is not primarily used or leased for use in the operation 49
2106	2111		of the real property; orproperty. 50
2107	2112		c. Replacements of domestic appliances that are consumer goods;goods. 51 General Assembly Of North Carolina Session 2025
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2109	2114		(3) The conflicting interest is a lien on the real property obtained by legal or 1
2110	2115		equitable proceedings after the security interest was perfected by any method 2
2111	2116		permitted by this Article; orArticle. 3
2112	2117		(4) The security interest is:is created 4
2113	2118		a. Created in a manufactured home in a manufactured-home transaction; 5
2114	2119		andtransaction and perfected 6
2115	2120		b. Perfected pursuant to a statute described in G.S. 25-9-311(a)(2). 7
2116	2121		(f) Priority based on consent, disclaimer, or right to remove. – Based on Consent, 8
2117	2122		Disclaimer, or Right to Remove. – A security interest in fixtures, whether or not perfected, has 9
2118	2123		priority over a conflicting interest of an encumbrancer or owner of the real property if:if either 10
2119	2124		of the following applies: 11
2120	2125		(1) The encumbrancer or owner has, in an authenticated a signed record, 12
2121	2126		consented to the security interest or disclaimed an interest in the goods as 13
2122	2127		fixtures; orfixtures. 14
2123	2128		(2) The debtor has a right to remove the goods as against the encumbrancer or 15
2124	2129		owner. 16
2125	2130		(g) Continuation of subdivision (f)(2) priority. – Subdivision (f)(2) Priority. – The 17
2126	2131		priority of the security interest under subdivision (f)(2) of this section continues for a reasonable 18
2127	2132		time if the debtor's right to remove the goods as against the encumbrancer or owner terminates. 19
2128	2133		(h) Priority of construction mortgage. – Construction Mortgage. – A mortgage is a 20
2129	2134		construction mortgage to the extent that it secures an obligation incurred for the construction of 21
2130	2135		an improvement on land, including the acquisition cost of the land, if a recorded record of the 22
2131	2136		mortgage so indicates. Except as otherwise provided in subsections (e) and (f) of this section, a 23
2132	2137		security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage 24
2133	2138		is recorded before the goods become fixtures and the goods become fixtures before the 25
2134	2139		completion of the construction. A mortgage has this priority to the same extent as a construction 26
2135	2140		mortgage to the extent that it is given to refinance a construction mortgage. 27
2136	2141		(i) Priority of security interest in crops. – Security Interest in Crops. – Except as provided 28
2137	2142		in G.S. 42-15, a perfected security interest in crops growing on real property has priority over a 29
2138	2143		conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest 30
2139	2144		of record in or is in possession of the real property." 31
2140	2145		SECTION 33. G.S. 25-9-341 reads as rewritten: 32
2141	2146		"§ 25-9-341. Bank's rights and duties with respect to deposit account. 33
2142	2147		Except as otherwise provided in G.S. 25-9-340(c), and unless the bank otherwise agrees in 34
2143	2148		an authenticated a signed record, a bank's rights and duties with respect to a deposit account 35
2144	2149		maintained with the bank are not terminated, suspended, or modified by:by any of the following: 36
2145	2150		(1) The creation, attachment, or perfection of a security interest in the deposit 37
2146	2151		account;account. 38
2147	2152		(2) The bank's knowledge of the security interest; orinterest. 39
2148	2153		(3) The bank's receipt of instructions from the secured party." 40
2149	2154		SECTION 34. G.S. 25-9-404 reads as rewritten: 41
2150	2155		"§ 25-9-404. Rights acquired by assignee; claims and defenses against assignee. 42
2151	2156		(a) Assignee's rights subject to terms, claims, and defenses; exceptions. – Rights Subject 43
2152	2157		to Terms, Claims, and Defenses; Exceptions. – Unless an account debtor has made an enforceable 44
2153	2158		agreement not to assert defenses or claims, and subject to subsections (b) through (e) of this 45
2154	2159		section, the rights of an assignee are subject to:to both of the following: 46
2155	2160		(1) All terms of the agreement between the account debtor and assignor and any 47
2156	2161		defense or claim in recoupment arising from the transaction that gave rise to 48
2157	2162		the contract; andcontract. 49 General Assembly Of North Carolina Session 2025
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	2163	+	DRS35028-MUz-3A Page 43
2159	2164		(2) Any other defense or claim of the account debtor against the assignor which 1
2160	2165		that accrues before the account debtor receives a notification of the assignment 2
2161	2166		authenticated signed by the assignor or the assignee. 3
2162	2167		(b) Account debtor's claim reduces amount owed to assignee. – Debtor's Claim Reduces 4
2163	2168		Amount Owed to Assignee. – Subject to subsection (c) of this section and except as otherwise 5
2164	2169		provided in subsection (d) of this section, the claim of an account debtor against an assignor may 6
2165	2170		be asserted against an assignee under subsection (a) of this section only to reduce the amount the 7
2166	2171		account debtor owes. 8
2167	2172		(c) Rule for individual under other law. – Individual Under Other Law. – This section is 9
2168	2173		subject to law other than this Article which that establishes a different rule for an account debtor 10
2169	2174		who is an individual and who incurred the obligation primarily for personal, family, or household 11
2170	2175		purposes. 12
2171	2176		(d) Omission of required statement in consumer transaction. – Required Statement in 13
2172	2177		Consumer Transaction. – In a consumer transaction, if a record evidences the account debtor's 14
2173	2178		obligation, law other than this Article requires that the record include a statement to the effect 15
2174	2179		that the account debtor's recovery against an assignee with respect to claims and defenses against 16
2175	2180		the assignor may shall not exceed amounts paid by the account debtor under the record, and the 17
2176	2181		record does not include such a this statement, the extent to which a claim of an account debtor 18
2177	2182		against the assignor may be asserted against an assignee is determined as if the record included 19
2178	2183		such a this statement. 20
2179	2184		(e) Inapplicability to health-care-insurance receivable. – Health-Care-Insurance 21
2180	2185		Receivable. – This section does not apply to an assignment of a health-care-insurance 22
2181	2186		receivable." 23
2182	2187		SECTION 35. G.S. 25-9-406 reads as rewritten: 24
2183	2188		"§ 25-9-406. Discharge of account debtor; notification of assignment; identification and 25
2184	2189		proof of assignment; restrictions on assignment of accounts, chattel paper, 26
2185	2190		payment intangibles, and promissory notes ineffective. 27
2186	2191		(a) Discharge of account debtor; effect of notification. – Account Debtor; Effect of 28
2187	2192		Notification. – Subject to subsections (b) through (i) and (l) of this section, an account debtor on 29
2188	2193		an account, chattel paper, or a payment intangible may discharge its obligation by paying the 30
2189	2194		assignor until, but not after, the account debtor receives a notification, authenticated signed by 31
2190	2195		the assignor or the assignee, that the amount due or to become due has been assigned and that 32
2191	2196		payment is to be made to the assignee. After receipt of the notification, the account debtor may 33
2192	2197		discharge its obligation by paying the assignee and may shall not discharge the obligation by 34
2193	2198		paying the assignor. 35
2194	2199		(b) When notification ineffective. – Notification Ineffective. – Subject to subsection (h) 36
2195	2200		subsections (h) and (l) of this section, notification is ineffective under subsection (a) of this 37
2196	2201		section:section under any of the following conditions: 38
2197	2202		(1) If it does not reasonably identify the rights assigned;assigned. 39
2198	2203		(2) To the extent that an agreement between an account debtor and a seller of a 40
2199	2204		payment intangible limits the account debtor's duty to pay a person other than 41
2200	2205		the seller and the limitation is effective under law other than this Article; 42
2201	2206		orArticle. 43
2202	2207		(3) At the option of an account debtor, if the notification notifies the account 44
2203	2208		debtor to make less than the full amount of any installment or other periodic 45
2204	2209		payment to the assignee, even if:if any of the following applies: 46
2205	2210		a. Only a portion of the account, chattel paper, or payment intangible has 47
2206	2211		been assigned to that assignee;assignee. 48
2207	2212		b. A portion has been assigned to another assignee; orassignee. 49
2208	2213		c. The account debtor knows that the assignment to that assignee is 50
2209	2214		limited. 51 General Assembly Of North Carolina Session 2025
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	2215	+	Page 44 DRS35028-MUz-3A
2211	2216		(c) Proof of assignment. – Assignment. – Subject to subsection (h) subsections (h) and 1
2212	2217		(l) of this section, if requested by the account debtor, an assignee shall seasonably furnish 2
2213	2218		reasonable proof that the assignment has been made. Unless the assignee complies, the account 3
2214	2219		debtor may discharge its obligation by paying the assignor, even if the account debtor has 4
2215	2220		received a notification under subsection (a) of this section. 5
2216	2221		(d) Term restricting assignment generally ineffective. – Restricting Assignment 6
2217	2222		Generally Ineffective. – In this subsection, "promissory note" includes a negotiable instrument 7
2218	2223		that evidences chattel paper. Except as otherwise provided in subsection (e) of this section and 8
2219	2224		G.S. 25-2A-303 and G.S. 25-9-407, and subject to subsection (h) of this section, a term in an 9
2220	2225		agreement between an account debtor and an assignor or in a promissory note is ineffective to 10
2221	2226		the extent that it:it does either of the following: 11
2222	2227		(1) Prohibits, restricts, or requires the consent of the account debtor or person 12
2223	2228		obligated on the promissory note to the assignment or transfer of, or the 13
2224	2229		creation, attachment, perfection, or enforcement of a security interest in, the 14
2225	2230		account, chattel paper, payment intangible, or promissory note; ornote. 15
2226	2231		(2) Provides that the assignment or transfer or the creation, attachment, 16
2227	2232		perfection, or enforcement of the security interest may give rise to a default, 17
2228	2233		breach, right of recoupment, claim, defense, termination, right of termination, 18
2229	2234		or remedy under the account, chattel paper, payment intangible, or promissory 19
2230	2235		note. 20
2231	2236		(e) Inapplicability of subsection (d) to certain sales. – Subsection (d) to Certain Sales. – 21
2232	2237		Subsection (d) of this section does not apply to the sale of a payment intangible or promissory 22
2233	2238		note, other than a sale pursuant to a disposition under G.S. 25-9-610 or an acceptance of collateral 23
2234	2239		under G.S. 25-9-620. 24
2235	2240		(f) Legal restrictions on assignment generally ineffective. – Restrictions on Assignment 25
2236	2241		Generally Ineffective. – Except as otherwise provided in G.S. 25-2A-303 and G.S. 25-9-407 and 26
2237	2242		subject to subsections (h) and (i) of this section, a rule of law, statute, or regulation law that 27
2238	2243		prohibits, restricts, or requires the consent of a government, governmental body or official, or 28
2239	2244		account debtor to the assignment or transfer of, or creation of a security interest in, an account or 29
2240	2245		chattel paper is ineffective to the extent that the rule of law, statute, or regulation:law does either 30
2241	2246		of the following: 31
2242	2247		(1) Prohibits, restricts, or requires the consent of the government, governmental 32
2243	2248		body or official, or account debtor to the assignment or transfer of, or the 33
2244	2249		creation, attachment, perfection, or enforcement of a security interest in the 34
2245	2250		account or chattel paper; orpaper. 35
2246	2251		(2) Provides that the assignment or transfer or the creation, attachment, 36
2247	2252		perfection, or enforcement of the security interest may give rise to a default, 37
2248	2253		breach, right of recoupment, claim, defense, termination, right of termination, 38
2249	2254		or remedy under the account or chattel paper. 39
2250	2255		(g) Subdivision (b)(3) not waivable. – Not Waivable. – Subject to subsection (h) 40
2251	2256		subsections (h) and (l) of this section, an account debtor may shall not waive or vary its option 41
2252	2257		under subdivision (b)(3) of this section. 42
2253	2258		(h) Rule for individual under other law. – Individual Under Other Law. – This section is 43
2254	2259		subject to law other than this Article which that establishes a different rule for an account debtor 44
2255	2260		who is an individual and who incurred the obligation primarily for personal, family, or household 45
2256	2261		purposes. 46
2257	2262		… 47
2258	2263		(j) Section prevails over inconsistent law. – Prevails over Inconsistent Law. – Except to 48
2259	2264		the extent otherwise provided in subsection (i) of this section, this section prevails over any 49
2260	2265		inconsistent provision of an existing or future statute, rule, or regulation statute or rule of this 50 General Assembly Of North Carolina Session 2025
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	2266	+	DRS35028-MUz-3A Page 45
2262	2267		State unless the provision is contained in a statute of this State, refers expressly to this section, 1
2263	2268		and states that the provision prevails over this section. 2
2264	2269		(k) Reserved for future codification purposes. 3
2265	2270		(l) Inapplicability of Certain Subsections. – Subsections (a), (b), (c), and (g) of this 4
2266	2271		section do not apply to a controllable account or controllable payment intangible." 5
2267	2272		SECTION 36. G.S. 25-9-408 reads as rewritten: 6
2268	2273		"§ 25-9-408. Restrictions on assignment of promissory notes, health-care-insurance 7
2269	2274		receivables, and certain general intangibles ineffective. 8
2270	2275		(a) Term restricting assignment generally ineffective. – Restricting Assignment 9
2271	2276		Generally Ineffective. – Except as otherwise provided in subsection (b) of this section, a term in 10
2272	2277		a promissory note or in an agreement between an account debtor and a debtor which that relates 11
2273	2278		to a health-care-insurance receivable or a general intangible, including a contract, permit, license, 12
2274	2279		or franchise, and which term that prohibits, restricts, or requires the consent of the person 13
2275	2280		obligated on the promissory note or the account debtor to, the assignment or transfer of, or 14
2276	2281		creation, attachment, or perfection of a security interest in, the promissory note, 15
2277	2282		health-care-insurance receivable, or general intangible, is ineffective to the extent that the 16
2278	2283		term:term would do or does either of the following: 17
2279	2284		(1) Would impair the creation, attachment, or perfection of a security interest; 18
2280	2285		orinterest. 19
2281	2286		(2) Provides that the assignment or transfer or the creation, attachment, or 20
2282	2287		perfection of the security interest may give rise to a default, breach, right of 21
2283	2288		recoupment, claim, defense, termination, right of termination, or remedy 22
2284	2289		under the promissory note, health-care-insurance receivable, or general 23
2285	2290		intangible. 24
2286	2291		(b) Applicability of subsection (a) to sales of certain rights to payment. – Subsection (a) 25
2287	2292		to Sales of Certain Rights to Payment. – Subsection (a) of this section applies to a security interest 26
2288	2293		in a payment intangible or promissory note only if the security interest arises out of a sale of the 27
2289	2294		payment intangible or promissory note, other than a sale pursuant to a disposition under 28
2290	2295		G.S. 25-9-610 or an acceptance of collateral under G.S. 25-9-620. 29
2291	2296		(c) Legal restrictions on assignment generally ineffective. – Restrictions on Assignment 30
2292	2297		Generally Ineffective. – A rule of law, statute, or regulation law that prohibits, restricts, or 31
2293	2298		requires the consent of a government, governmental body or official, person obligated on a 32
2294	2299		promissory note, or account debtor to the assignment or transfer of, or creation of a security 33
2295	2300		interest in, a promissory note, health-care-insurance receivable, or general intangible, including 34
2296	2301		a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to 35
2297	2302		the extent that the rule of law, statute, or regulation:law would do or does either of the following: 36
2298	2303		(1) Would impair the creation, attachment, or perfection of a security interest; 37
2299	2304		orinterest. 38
2300	2305		(2) Provides that the assignment or transfer or the creation, attachment, or 39
2301	2306		perfection of the security interest may give rise to a default, breach, right of 40
2302	2307		recoupment, claim, defense, termination, right of termination, or remedy 41
2303	2308		under the promissory note, health-care-insurance receivable, or general 42
2304	2309		intangible. 43
2305	2310		(d) Limitation on ineffectiveness under subsections (a) and (c). – Ineffectiveness Under 44
2306	2311		Subsections (a) and (c). – To the extent that a term in a promissory note or in an agreement 45
2307	2312		between an account debtor and a debtor which that relates to a health-care-insurance receivable 46
2308	2313		or general intangible or a rule of law, statute, or regulation law described in subsection (c) of this 47
2309	2314		section would be effective under law other than this Article but is ineffective under subsection 48
2310	2315		(a) or (c) of this section, all of the following apply to the creation, attachment, or perfection of a 49
2311	2316		security interest in the promissory note, health-care-insurance receivable, or general intangible: 50 General Assembly Of North Carolina Session 2025
2312		-	Page 46 ~~Senate Bill 117-First Edition~~
	2317	+	Page 46 DRS35028-MUz-3A
2313	2318		(1) Is The security interest is not enforceable against the person obligated on the 1
2314	2319		promissory note or the account debtor;debtor. 2
2315	2320		(2) Does The security interest does not impose a duty or obligation on the person 3
2316	2321		obligated on the promissory note or the account debtor;debtor. 4
2317	2322		(3) Does The security interest does not require the person obligated on the 5
2318	2323		promissory note or the account debtor to recognize the security interest, pay 6
2319	2324		or render performance to the secured party, or accept payment or performance 7
2320	2325		from the secured party;party. 8
2321	2326		(4) Does The security interest does not entitle the secured party to use or assign 9
2322	2327		the debtor's rights under the promissory note, health-care-insurance 10
2323	2328		receivable, or general intangible, including any related information or 11
2324	2329		materials furnished to the debtor in the transaction giving rise to the 12
2325	2330		promissory note, health-care-insurance receivable, or general 13
2326	2331		intangible;intangible. 14
2327	2332		(5) Does The security interest does not entitle the secured party to use, assign, 15
2328	2333		possess, or have access to any trade secrets or confidential information of the 16
2329	2334		person obligated on the promissory note or the account debtor; anddebtor. 17
2330	2335		(6) Does The security interest does not entitle the secured party to enforce the 18
2331	2336		security interest in the promissory note, health-care-insurance receivable, or 19
2332	2337		general intangible. 20
2333	2338		(e) Section prevails over inconsistent law. – Prevails over Inconsistent Law. – Except to 21
2334	2339		the extent otherwise provided in subsection (f) of this section, this section prevails over any 22
2335	2340		inconsistent provision of an existing or future statute, rule, or regulation of statute or rule of this 23
2336	2341		State unless the provision is contained in a statute of this State, refers expressly to this section, 24
2337	2342		and states that the provision prevails over this section. 25
2338	2343		… 26
2339	2344		(g) "Promissory Note." – In this section, "promissory note" includes a negotiable 27
2340	2345		instrument that evidences chattel paper." 28
2341	2346		SECTION 37. G.S. 25-9-509 reads as rewritten: 29
2342	2347		"§ 25-9-509. Persons entitled to file a record. 30
2343	2348		(a) Person entitled to file record. – Entitled to File Record. – A person may file an initial 31
2344	2349		financing statement, amendment that adds collateral covered by a financing statement, or 32
2345	2350		amendment that adds a debtor to a financing statement only if:if either of the following applies: 33
2346	2351		(1) The debtor authorizes the filing in an authenticated a signed record or pursuant 34
2347	2352		to subsection (b) or (c) of this section; orsection. 35
2348	2353		(2) The person holds an agricultural lien that has become effective at the time of 36
2349	2354		filing and the financing statement covers only collateral in which the person 37
2350	2355		holds an agricultural lien. 38
2351	2356		(b) Security agreement as authorization. – By authenticating Agreement as 39
2352	2357		Authorization. – By signing or becoming bound as debtor by a security agreement, a debtor or 40
2353	2358		new debtor authorizes the filing of an initial financing statement, and an amendment, 41
2354	2359		covering:covering both of the following: 42
2355	2360		(1) The collateral described in the security agreement; andagreement. 43
2356	2361		(2) Property that becomes collateral under G.S. 25-9-315(a)(2), whether or not 44
2357	2362		the security agreement expressly covers proceeds. 45
2358	2363		(c) Acquisition of collateral as authorization. – Collateral as Authorization. – By 46
2359	2364		acquiring collateral in which a security interest or agricultural lien continues under 47
2360	2365		G.S. 25-9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an 48
2361	2366		amendment, covering the collateral and property that becomes collateral under 49
2362	2367		G.S. 25-9-315(a)(2). 50 General Assembly Of North Carolina Session 2025
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	2368	+	DRS35028-MUz-3A Page 47
2364	2369		(d) Person entitled to file certain amendments. – Entitled to File Certain Amendments. – 1
2365	2370		A person may file an amendment other than an amendment that adds collateral covered by a 2
2366	2371		financing statement or an amendment that adds a debtor to a financing statement only if:if either 3
2367	2372		of the following applies: 4
2368	2373		(1) The secured party of record authorizes the filing; orfiling. 5
2369	2374		(2) The amendment is a termination statement for a financing statement as to 6
2370	2375		which the secured party of record has failed to file or send a termination 7
2371	2376		statement as required by G.S. 25-9-513(a) or (c), the debtor authorizes the 8
2372	2377		filing, and the termination statement indicates that the debtor authorized it to 9
2373	2378		be filed. 10
2374	2379		(e) Multiple secured parties of record. – Secured Parties of Record. – If there is more than 11
2375	2380		one secured party of record for a financing statement, each secured party of record may authorize 12
2376	2381		the filing of an amendment under subsection (d) of this section." 13
2377	2382		SECTION 38. G.S. 25-9-513 reads as rewritten: 14
2378	2383		"§ 25-9-513. Termination statement. 15
2379	2384		(a) Consumer goods. – Goods. – A secured party shall cause the secured party of record 16
2380	2385		for a financing statement to file a termination statement for the financing statement if the 17
2381	2386		financing statement covers consumer goods and:and either of the following applies: 18
2382	2387		(1) There is no obligation secured by the collateral covered by the financing 19
2383	2388		statement and no commitment to make an advance, incur an obligation, or 20
2384	2389		otherwise give value; orvalue. 21
2385	2390		(2) The debtor did not authorize the filing of the initial financing statement. 22
2386	2391		(b) Time for compliance with subsection (a). – Compliance with Subsection (a). – To 23
2387	2392		comply with subsection (a) of this section, a secured party shall cause the secured party of record 24
2388	2393		to file the termination statement:statement by the earlier of the following: 25
2389	2394		(1) Within one month after there is no obligation secured by the collateral covered 26
2390	2395		by the financing statement and no commitment to make an advance, incur an 27
2391	2396		obligation, or otherwise give value; orvalue. 28
2392	2397		(2) If earlier, within Within 20 days after the secured party receives an 29
2393	2398		authenticated a signed demand from a debtor. 30
2394	2399		(c) Other collateral. – Collateral. – In cases not governed by subsection (a) of this section, 31
2395	2400		within 20 days after a secured party receives an authenticated a signed demand from a debtor, 32
2396	2401		the secured party shall cause the secured party of record for a financing statement to send to the 33
2397	2402		debtor a termination statement for the financing statement or file the termination statement in the 34
2398	2403		filing office if:if any of the following applies: 35
2399	2404		(1) Except in the case of a financing statement covering accounts or chattel paper 36
2400	2405		that has been sold or goods that are the subject of a consignment, there is no 37
2401	2406		obligation secured by the collateral covered by the financing statement and no 38
2402	2407		commitment to make an advance, incur an obligation, or otherwise give 39
2403	2408		value;value. 40
2404	2409		(2) The financing statement covers accounts or chattel paper that has been sold 41
2405	2410		but as to which the account debtor or other person obligated has discharged 42
2406	2411		its obligation;obligation. 43
2407	2412		(3) The financing statement covers goods that were the subject of a consignment 44
2408	2413		to the debtor but are not in the debtor's possession; orpossession. 45
2409	2414		(4) The debtor did not authorize the filing of the initial financing statement. 46
2410	2415		(d) Effect of filing termination statement. – Filing Termination Statement. – Except as 47
2411	2416		otherwise provided in G.S. 25-9-510, upon the filing of a termination statement with the filing 48
2412	2417		office, the financing statement to which the termination statement relates ceases to be effective. 49
2413	2418		Except as otherwise provided in G.S. 25-9-510, for purposes of G.S. 25-9-519(g), 25-9-522(a), 50
2414	2419		and 25-9-523(c), the filing with the filing office of a termination statement relating to a financing 51 General Assembly Of North Carolina Session 2025
2415		-	Page 48 ~~Senate Bill 117-First Edition~~
	2420	+	Page 48 DRS35028-MUz-3A
2416	2421		statement that indicates that the debtor is a transmitting utility also causes the effectiveness of 1
2417	2422		the financing statement to lapse." 2
2418	2423		SECTION 39. G.S. 25-9-601 reads as rewritten: 3
2419	2424		"§ 25-9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, 4
2420	2425		chattel paper, payment intangibles, or promissory notes. 5
2421	2426		(a) Rights of secured party after default. – Secured Party After Default. – After default, 6
2422	2427		a secured party has the rights provided in this Part and, except as otherwise provided in 7
2423	2428		G.S. 25-9-602, those provided by agreement of the parties. A secured party:party may do both of 8
2424	2429		the following: 9
2425	2430		(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, 10
2426	2431		security interest, or agricultural lien by any available judicial procedure; 11
2427	2432		andprocedure. 12
2428	2433		(2) If the collateral is documents, may proceed either as to the documents or as to 13
2429	2434		the goods they cover. 14
2430	2435		(b) Rights and duties of secured party in possession or control. – Duties of Secured Party 15
2431	2436		in Possession or Control. – A secured party in possession of collateral or control of collateral 16
2432	2437		under G.S. 25-7-106, 25-9-104, 25-9-105, 25-9-105.1, 25-9-106, or 25-9-107 25-9-107, or 17
2433	2438		25-9-107.1 has the rights and duties provided in G.S. 25-9-207. 18
2434	2439		(c) Rights cumulative; simultaneous exercise. – Cumulative; Simultaneous Exercise. – 19
2435	2440		The rights under subsections (a) and (b) of this section are cumulative and may be exercised 20
2436	2441		simultaneously. 21
2437	2442		(d) Rights of debtor and obligor. – Debtor and Obligor. – Except as otherwise provided 22
2438	2443		in subsection (g) of this section and G.S. 25-9-605, after default, a debtor and an obligor have the 23
2439	2444		rights provided in this Part and by agreement of the parties. 24
2440	2445		(e) Lien of levy after judgment. – Levy After Judgment. – If a secured party has reduced 25
2441	2446		its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an 26
2442	2447		execution based upon the judgment relates back to the earliest of:of the following: 27
2443	2448		(1) The date of perfection of the security interest or agricultural lien in the 28
2444	2449		collateral;collateral. 29
2445	2450		(2) The date of filing a financing statement covering the collateral; orcollateral. 30
2446	2451		(3) Any date specified in a statute under which the agricultural lien was created. 31
2447	2452		(f) Execution sale. – Sale. – A sale pursuant to an execution is a foreclosure of the 32
2448	2453		security interest or agricultural lien by judicial procedure within the meaning of this section. A 33
2449	2454		secured party may purchase at the sale and thereafter hold the collateral free of any other 34
2450	2455		requirements of this Article. 35
2451	2456		(g) Consignor or buyer of certain rights to payment. – Buyer of Certain Rights to 36
2452	2457		Payment. – Except as otherwise provided in G.S. 25-9-607(c), this Part imposes no duties upon 37
2453	2458		a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, 38
2454	2459		or promissory notes." 39
2455	2460		SECTION 40. G.S. 25-9-605 reads as rewritten: 40
2456	2461		"§ 25-9-605. Unknown debtor or secondary obligor. 41
2457	2462		(a) A No Duty Generally Owed by Secured Party. – Except as provided in subsection (b) 42
2458	2463		of this section, a secured party does not owe a duty based on its status as secured party:party to 43
2459	2464		either of the following: 44
2460	2465		(1) To a person that is a debtor or obligor, unless the secured party knows:knows 45
2461	2466		all of the following: 46
2462	2467		a. That the person is a debtor or obligor;obligor. 47
2463	2468		b. The identity of the person; andperson. 48
2464	2469		c. How to communicate with the person; orperson. 49
2465	2470		(2) To a secured party or lienholder that has filed a financing statement against a 50
2466	2471		person, unless the secured party knows:knows both of the following: 51 General Assembly Of North Carolina Session 2025
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	2472	+	DRS35028-MUz-3A Page 49
2468	2473		a. That the person is a debtor; anddebtor. 1
2469	2474		b. The identity of the person. 2
2470	2475		(b) Exception When Secured Party Owes Duty to Debtor or Obligor. – A secured party 3
2471	2476		owes a duty based on its status as a secured party to a person if, at the time the secured party 4
2472	2477		obtains control of collateral that is a controllable account, controllable electronic record, or 5
2473	2478		controllable payment intangible or at the time the security interest attaches to the collateral, 6
2474	2479		whichever is later, both of the following apply: 7
2475	2480		(1) The person is a debtor or obligor. 8
2476	2481		(2) The secured party knows that the information in sub-subdivision (a)(1)a., b., 9
2477	2482		or c. of this section relating to the person is not provided by the collateral, a 10
2478	2483		record attached to or logically associated with the collateral, or the system in 11
2479	2484		which the collateral is recorded." 12
2480	2485		SECTION 41. G.S. 25-9-608 reads as rewritten: 13
2481	2486		"§ 25-9-608. Application of proceeds of collection or enforcement; liability for deficiency 14
2482	2487		and right to surplus. 15
2483	2488		(a) Application of proceeds, surplus, and deficiency if obligation secured. – Proceeds, 16
2484	2489		Surplus, and Deficiency If Obligation Secured. – If a security interest or agricultural lien secures 17
2485	2490		payment or performance of an obligation, the following rules apply: 18
2486	2491		(1) A secured party shall apply or pay over for application the cash proceeds of 19
2487	2492		collection or enforcement under G.S. 25-9-607 to the following in the 20
2488	2493		following order to:order: 21
2489	2494		a. The reasonable expenses of collection and enforcement and, to the 22
2490	2495		extent provided for by agreement and not prohibited by law, 23
2491	2496		reasonable attorney's attorneys' fees and legal expenses incurred by the 24
2492	2497		secured party;party. 25
2493	2498		b. The satisfaction of obligations secured by the security interest or 26
2494	2499		agricultural lien under which the collection or enforcement is made; 27
2495	2500		andmade. 28
2496	2501		c. The satisfaction of obligations secured by any subordinate security 29
2497	2502		interest in or other lien on the collateral subject to the security interest 30
2498	2503		or agricultural lien under which the collection or enforcement is made 31
2499	2504		if the secured party receives an authenticated a signed demand for 32
2500	2505		proceeds before distribution of the proceeds is completed. 33
2501	2506		… 34
2502	2507		(b) No surplus or deficiency in sales of certain rights to payment. – Surplus or Deficiency 35
2503	2508		in Sales of Certain Rights to Payment. – If the underlying transaction is a sale of accounts, chattel 36
2504	2509		paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the 37
2505	2510		obligor is not liable for any deficiency." 38
2506	2511		SECTION 42. G.S. 25-9-611 reads as rewritten: 39
2507	2512		"§ 25-9-611. Notification before disposition of collateral. 40
2508	2513		(a) "Notification date." – Date." – In this section, "notification date" means the earlier of 41
2509	2514		the date on which:the date of the earlier of the following: 42
2510	2515		(1) A secured party sends to the debtor and any secondary obligor an 43
2511	2516		authenticated a signed notification of disposition; ordisposition. 44
2512	2517		(2) The debtor and any secondary obligor waive the right to notification. 45
2513	2518		(b) Notification of disposition required. – Disposition Required. – Except as otherwise 46
2514	2519		provided in subsection (d) of this section, a secured party that disposes of collateral under 47
2515	2520		G.S. 25-9-610 shall send to the persons specified in subsection (c) of this section a reasonable 48
2516	2521		authenticated signed notification of disposition. 49 General Assembly Of North Carolina Session 2025
2517		-	Page 50 ~~Senate Bill 117-First Edition~~
	2522	+	Page 50 DRS35028-MUz-3A
2518	2523		(c) Persons to be notified. – Notified. – To comply with subsection (b) of this section, the 1
2519	2524		secured party shall send an authenticated a signed notification of disposition to:to all of the 2
2520	2525		following: 3
2521	2526		(1) The debtor;debtor. 4
2522	2527		(2) Any secondary obligor; andobligor. 5
2523	2528		(3) If the collateral is other than consumer goods:goods, all of the following: 6
2524	2529		a. Any other person from which the secured party has received, before 7
2525	2530		the notification date, an authenticated a signed notification of a claim 8
2526	2531		of an interest in the collateral;collateral. 9
2527	2532		b. Any other secured party or lienholder that, 10 days before the 10
2528	2533		notification date, held a security interest in or other lien on the 11
2529	2534		collateral perfected by the filing of a financing statement that:that 12
2530	2535		meets all of the following requirements: 13
2531	2536		1. Identified the collateral;collateral. 14
2532	2537		2. Was indexed under the debtor's name as of that date; anddate. 15
2533	2538		3. Was filed in the office in which to file a financing statement 16
2534	2539		against the debtor covering the collateral as of that date; 17
2535	2540		anddate. 18
2536	2541		c. Any other secured party that, 10 days before the notification date, held 19
2537	2542		a security interest in the collateral perfected by compliance with a 20
2538	2543		statute, regulation, or treaty described in G.S. 25-9-311(a). 21
2539	2544		(d) Subsection (b) inapplicable: perishable collateral; recognized market. – Inapplicable 22
2540	2545		to Perishable Collateral or Recognized Market. – Subsection (b) of this section does not apply if 23
2541	2546		the collateral is perishable or threatens to decline speedily in value or is of a type customarily 24
2542	2547		sold on a recognized market. 25
2543	2548		(e) Compliance with sub-subdivision Sub-Subdivision (c)(3)b. – A secured party 26
2544	2549		complies with the requirement for notification prescribed by sub-subdivision (c)(3)b. of this 27
2545	2550		section if:if both of the following apply: 28
2546	2551		(1) Not later than 20 days or earlier than 30 days before the notification date, the 29
2547	2552		secured party requests, in a commercially reasonable manner, information 30
2548	2553		concerning financing statements indexed under the debtor's name in the office 31
2549	2554		indicated in sub-subdivision (c)(3)b. of this section; andsection. 32
2550	2555		(2) Before the notification date, the secured party:either of the following applied: 33
2551	2556		a. Did The secured party did not receive a response to the request for 34
2552	2557		information; orinformation. 35
2553	2558		b. Received The secured party received a response to the request for 36
2554	2559		information and sent an authenticated a signed notification of 37
2555	2560		disposition to each secured party or other lienholder named in that 38
2556	2561		response whose financing statement covered the collateral." 39
2557	2562		SECTION 43. G.S. 25-9-613 reads as rewritten: 40
2558	2563		"§ 25-9-613. Contents and form of notification before disposition of collateral: general. 41
2559	2564		(a) Contents and Form of Notification. – Except in a consumer-goods transaction, the 42
2560	2565		following rules apply: 43
2561	2566		(1) The contents of a notification of disposition are sufficient if the 44
2562	2567		notification:notification does all of the following: 45
2563	2568		a. Describes the debtor and the secured party;party. 46
2564	2569		b. Describes the collateral that is the subject of the intended 47
2565	2570		disposition;disposition. 48
2566	2571		c. States the method of intended disposition;disposition. 49 General Assembly Of North Carolina Session 2025
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	2572	+	DRS35028-MUz-3A Page 51
2568	2573		d. States that the debtor is entitled to an accounting of the unpaid 1
2569	2574		indebtedness and states the charge, if any, for an accounting; 2
2570	2575		andaccounting. 3
2571	2576		e. States the time and place of a public disposition or the time after which 4
2572	2577		any other disposition is to be made. 5
2573	2578		(2) Whether the contents of a notification that lacks any of the information 6
2574	2579		specified in subdivision (1) of this section subsection are nevertheless 7
2575	2580		sufficient is a question of fact. 8
2576	2581		(3) The contents of a notification providing substantially the information 9
2577	2582		specified in subdivision (1) of this section subsection are sufficient, even if 10
2578	2583		the notification includes:includes either of the following: 11
2579	2584		a. Information not specified by that subdivision; orsubdivision. 12
2580	2585		b. Minor errors that are not seriously misleading. 13
2581	2586		(4) A particular phrasing of the notification is not required. 14
2582	2587		(5) The following form of notification and the form appearing in G.S. 15
2583	2588		25-9-614(3), when completed, G.S. 25-9-614(a)(3), when completed in 16
2584	2589		accordance with the instructions in subsection (b) of this section and 17
2585	2590		G.S. 25-9-614(b), each provides sufficient information: 18
2586	2591		NOTIFICATION OF DISPOSITION OF COLLATERAL 19
2587	2592		20
2588	2593		To: [Name of debtor, obligor, or other person to which the notification 21
2589	2594		is sent] 22
2590	2595		From: [Name, address, and telephone number of secured party] 23
2591	2596		Name of Debtor(s): [Include only if debtor(s) is/are not an addressee] 24
2592	2597		[For a public disposition:] 25
2593	2598		We will sell [or lease or license, as applicable] the [describe collateral] [to the 26
2594	2599		highest qualified bidder] in public as follows: 27
2595	2600		Day and Date: _________________________________ 28
2596	2601		Time: _________________________________ 29
2597	2602		Place: _________________________________ 30
2598	2603		[For a private disposition:] 31
2599	2604		We will sell [or lease or license, as applicable] the [describe collateral] 32
2600	2605		privately sometime after [day and date]. 33
2601	2606		You are entitled to an accounting of the unpaid indebtedness secured by the 34
2602	2607		property that we intend to sell [or lease or license, as applicable] [for a charge 35
2603	2608		of $ _______]. You may request an accounting by calling us at [telephone 36
2604	2609		number] 37
2605	2610		"NOTIFICATION OF DISPOSITION OF COLLATERAL 38
2606	2611		To: (Name of debtor, obligor, or other person to which the notification is 39
2607	2612		sent) 40
2608	2613		From: (Name, address, and telephone number of secured party) 41
2609	2614		{1} (Name of each debtor that is not an addressee) 42
2610	2615		{2} We will sell (describe collateral) (to the highest qualified 43
2611	2616		bidder) at public sale. A sale could include a lease or license. 44
2612	2617		The sale will be held as follows: 45
2613	2618		(Date) 46
2614	2619		(Time) 47
2615	2620		(Place) 48
2616	2621		{3} We will sell (describe collateral) at private sale sometime after 49
2617	2622		(date). A sale could include a lease or license. 50 General Assembly Of North Carolina Session 2025
2618		-	Page 52 ~~Senate Bill 117-First Edition~~
	2623	+	Page 52 DRS35028-MUz-3A
2619	2624		{4} You are entitled to an accounting of the unpaid indebtedness 1
2620	2625		secured by the property that we intend to sell or, as applicable, 2
2621	2626		lease or license. 3
2622	2627		{5} If you request an accounting, you must pay a charge of $ 4
2623	2628		(amount). 5
2624	2629		{6} You may request an accounting by calling us at (telephone 6
2625	2630		number)." 7
2626	2631		(b) Instructions for Form of Notification. – The following instructions apply to the form 8
2627	2632		of notification in subdivision (a)(5) of this section: 9
2628	2633		(1) The instructions in this subsection refer to the numbers in braces before items 10
2629	2634		in the form of notification in subdivision (a)(5) of this section. Do not include 11
2630	2635		the numbers or braces in the notification. The numbers and braces are used 12
2631	2636		only for the purpose of these instructions. 13
2632	2637		(2) Include and complete item {1} only if there is a debtor that is not an addressee 14
2633	2638		of the notification and list the name or names. 15
2634	2639		(3) Include and complete either item {2}, if the notification relates to a public 16
2635	2640		disposition of the collateral, or item {3}, if the notification relates to a private 17
2636	2641		disposition of the collateral. If item {2} is included, include the words "to the 18
2637	2642		highest qualified bidder" only if applicable. 19
2638	2643		(4) Include and complete items {4} and {6}. 20
2639	2644		(5) Include and complete item {5} only if the sender will charge the recipient for 21
2640	2645		an accounting." 22
2641	2646		SECTION 44. G.S. 25-9-614 reads as rewritten: 23
2642	2647		"§ 25-9-614. Contents and form of notification before disposition of collateral: 24
2643	2648		consumer-goods transaction. 25
2644	2649		(a) Contents and Form of Notification. – In a consumer-goods transaction, the following 26
2645	2650		rules apply: 27
2646	2651		(1) A notification of disposition must provide all of the following information: 28
2647	2652		a. The information specified in G.S. 25-9-613(1);G.S. 25-9-613(a)(1). 29
2648	2653		b. A description of any liability for a deficiency of the person to which 30
2649	2654		the notification is sent;sent. 31
2650	2655		c. A telephone number from which the amount that must be paid to the 32
2651	2656		secured party to redeem the collateral under G.S. 25-9-623 is 33
2652	2657		available; andavailable. 34
2653	2658		d. A telephone number or mailing address from which additional 35
2654	2659		information concerning the disposition and the obligation secured is 36
2655	2660		available. 37
2656	2661		(2) A particular phrasing of the notification is not required. 38
2657	2662		(3) The following form of notification, when completed, completed in accordance 39
2658	2663		with the instructions in subsection (b) of this section, provides sufficient 40
2659	2664		information: 41
2660	2665		[Name and address of secured party] 42
2661	2666		[Date] 43
2662	2667		NOTICE OF OUR PLAN TO SELL PROPERTY 44
2663	2668		[Name and address of any obligor who is also a debtor] 45
2664	2669		Subject: [Identification of Transaction] 46
2665	2670		47
2666	2671		We have your [describe collateral], because you broke promises in our agreement. 48
2667	2672		49
2668	2673		[For a public disposition:] 50 General Assembly Of North Carolina Session 2025
2669		-	~~Senate Bill 117-First Edition~~ Page 53
	2674	+	DRS35028-MUz-3A Page 53
2670	2675		We will sell [describe collateral] at public sale. A sale could include a lease or license. The sale 1
2671	2676		will be held as follows: 2
2672	2677		3
2673	2678		Date: _________________________________________________ 4
2674	2679		Time: ________________________________________________ 5
2675	2680		Place: ________________________________________________ 6
2676	2681		You may attend the sale and bring bidders if you want. 7
2677	2682		8
2678	2683		[For a private disposition:] 9
2679	2684		We will sell [describe collateral] at private sale sometime after [date]. A sale could include a 10
2680	2685		lease or license. 11
2681	2686		12
2682	2687		The money that we get from the sale (after paying our costs) will reduce the amount you owe. If 13
2683	2688		we get less money than you owe, you [will or will not, as applicable] still owe us the difference. 14
2684	2689		If we get more money than you owe, you will get the extra money, unless we must pay it to 15
2685	2690		someone else. 16
2686	2691		17
2687	2692		You can get the property back at any time before we sell it by paying us the full amount you owe 18
2688	2693		(not just the past due payments), including our expenses. To learn the exact amount you must 19
2689	2694		pay, call us at [telephone number]. 20
2690	2695		21
2691	2696		If you want us to explain to you in writing how we have figured the amount that you owe us, you 22
2692	2697		may call us at [telephone number] or write us at [secured party's address] and request a written 23
2693	2698		explanation. [We will charge you $__________ for the explanation if we sent you another written 24
2694	2699		explanation of the amount you owe us within the last six months.] 25
2695	2700		26
2696	2701		If you need more information about the sale call us at [telephone number] [or write us at [secured 27
2697	2702		party's address]. 28
2698	2703		29
2699	2704		We are sending this notice to the following other people who have an interest in [describe 30
2700	2705		collateral] or who owe money under your agreement: 31
2701	2706		[Names of all other debtors and obligors, if any] 32
2702	2707		"(Name and address of secured party) 33
2703	2708		(Date) 34
2704	2709		NOTICE OF OUR PLAN TO SELL PROPERTY 35
2705	2710		(Name and address of any obligor who is also a debtor) 36
2706	2711		Subject: (Identify transaction) 37
2707	2712		We have your (describe collateral), because you broke promises in our 38
2708	2713		agreement. 39
2709	2714		{1} We will sell (describe collateral) at public sale. A sale could include a 40
2710	2715		lease or license. The sale will be held as follows: 41
2711	2716		(Date) 42
2712	2717		(Time) 43
2713	2718		(Place) 44
2714	2719		You may attend the sale and bring bidders if you want. 45
2715	2720		{2} We will sell (describe collateral) at private sale sometime after (date). 46
2716	2721		A sale could include a lease or license. 47
2717	2722		{3} The money that we get from the sale, after paying our costs, will 48
2718	2723		reduce the amount you owe. If we get less money than you owe, you 49
2719	2724		(will or will not, as applicable) still owe us the difference. If we get 50 General Assembly Of North Carolina Session 2025
2720		-	Page 54 ~~Senate Bill 117-First Edition~~
	2725	+	Page 54 DRS35028-MUz-3A
2721	2726		more money than you owe, you will get the extra money, unless we 1
2722	2727		must pay it to someone else. 2
2723	2728		{4} You can get the property back at any time before we sell it by paying 3
2724	2729		us the full amount you owe, not just the past due payments, including 4
2725	2730		our expenses. To learn the exact amount you must pay, call us at 5
2726	2731		(telephone number). 6
2727	2732		{5} If you want us to explain to you in (writing) (writing or in (description 7
2728	2733		of electronic record)) (description of electronic record) how we have 8
2729	2734		figured the amount that you owe us, {6} call us at (telephone number) 9
2730	2735		(or) (write us at (secured party's address)) (or contact us by 10
2731	2736		(description of electronic communication method)) {7} and request (a 11
2732	2737		written explanation) (a written explanation or an explanation in 12
2733	2738		(description of electronic record)) (an explanation in (description of 13
2734	2739		electronic record)). 14
2735	2740		{8} We will charge you $ (amount) for the explanation if we sent you 15
2736	2741		another written explanation of the amount you owe us within the last 16
2737	2742		six months. 17
2738	2743		{9} If you need more information about the sale (call us at (telephone 18
2739	2744		number)) (or) (write us at (secured party's address)) (or contact us by 19
2740	2745		(description of electronic communication method)). 20
2741	2746		{10} We are sending this notice to the following other people who have an 21
2742	2747		interest in (describe collateral) or who owe money under your 22
2743	2748		agreement: (Names of all other debtors and obligors, if any)." 23
2744	2749		(4) A notification in the form of subdivision (3) of this section subsection is 24
2745	2750		sufficient, even if additional information appears at the end of the form. 25
2746	2751		(5) A notification in the form of subdivision (3) of this section subsection is 26
2747	2752		sufficient, even if it includes errors in information not required by subdivision 27
2748	2753		(1) of this section, subsection, unless the error is misleading with respect to 28
2749	2754		rights arising under this Article. 29
2750	2755		(6) If a notification under this section is not in the form of subdivision (3) of this 30
2751	2756		section, subsection, law other than this Article determines the effect of 31
2752	2757		including information not required by subdivision (1) of this 32
2753	2758		section.subsection. 33
2754	2759		(b) Instructions for Form of Notification. – The following instructions apply to the form 34
2755	2760		of notification in subdivision (a)(3) of this section: 35
2756	2761		(1) The instructions in this subsection refer to the numbers in braces before items 36
2757	2762		in the form of notification in subdivision (a)(3) of this section. Do not include 37
2758	2763		the numbers or braces in the notification. The numbers and braces are used 38
2759	2764		only for the purpose of these instructions. 39
2760	2765		(2) Include and complete either item {1}, if the notification relates to a public 40
2761	2766		disposition of the collateral, or item {2}, if the notification relates to a private 41
2762	2767		disposition of the collateral. 42
2763	2768		(3) Include and complete items {3}, {4}, {5}, {6}, and {7}. 43
2764	2769		(4) In item {5}, include and complete any one of the three alternative methods for 44
2765	2770		the explanation – writing, writing or electronic record, or electronic record. 45
2766	2771		(5) In item {6}, include the telephone number. In addition, the sender may include 46
2767	2772		and complete either or both of the two additional alternative methods of 47
2768	2773		communication – writing or electronic communication – for the recipient of 48
2769	2774		the notification to communicate with the sender. Neither of the two additional 49
2770	2775		methods of communication is required to be included. 50 General Assembly Of North Carolina Session 2025
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	2776	+	DRS35028-MUz-3A Page 55
2772	2777		(6) In item {7}, include and complete the method or methods for the explanation 1
2773	2778		– writing, writing or electronic record, or electronic record – included in item 2
2774	2779		{5}. 3
2775	2780		(7) Include and complete item {8} only if a written explanation is included in item 4
2776	2781		{5} as a method for communicating the explanation and the sender will charge 5
2777	2782		the recipient for another written explanation. 6
2778	2783		(8) In item {9}, include either the telephone number or the address or both the 7
2779	2784		telephone number and the address. In addition, the sender may include and 8
2780	2785		complete the additional method of communication – electronic 9
2781	2786		communication – for the recipient of the notification to communicate with the 10
2782	2787		sender. The additional method of electronic communication is not required to 11
2783	2788		be included. 12
2784	2789		(9) If item {10} does not apply, insert "None" after "agreement:"." 13
2785	2790		SECTION 45. G.S. 25-9-615 reads as rewritten: 14
2786	2791		"§ 25-9-615. Application of proceeds of disposition; liability for deficiency and right to 15
2787	2792		surplus. 16
2788	2793		(a) Application of proceeds. – Proceeds. – A secured party shall apply or pay over for 17
2789	2794		application the cash proceeds of disposition under G.S. 25-9-610 to the following in the 18
2790	2795		following order to:order: 19
2791	2796		(1) The reasonable expenses of retaking, holding, preparing for disposition, 20
2792	2797		processing, and disposing, and, to the extent provided for by agreement and 21
2793	2798		not prohibited by law, reasonable attorney's attorneys' fees and legal expenses 22
2794	2799		incurred by the secured party;party. 23
2795	2800		(2) The satisfaction of obligations secured by the security interest or agricultural 24
2796	2801		lien under which the disposition is made;made. 25
2797	2802		(3) The satisfaction of obligations secured by any subordinate security interest in 26
2798	2803		or other subordinate lien on the collateral if:if both of the following apply: 27
2799	2804		a. The secured party receives from the holder of the subordinate security 28
2800	2805		interest or other lien an authenticated a signed demand for proceeds 29
2801	2806		before distribution of the proceeds is completed; andcompleted. 30
2802	2807		b. In a case in which a consignor has an interest in the collateral, the 31
2803	2808		subordinate security interest or other lien is senior to the interest of the 32
2804	2809		consignor; andconsignor. 33
2805	2810		(4) A secured party that is a consignor of the collateral if the secured party 34
2806	2811		receives from the consignor an authenticated a signed demand for proceeds 35
2807	2812		before distribution of the proceeds is completed. 36
2808	2813		(b) Proof of subordinate interest. – Subordinate Interest. – If requested by a secured party, 37
2809	2814		a holder of a subordinate security interest or other lien shall furnish reasonable proof of the 38
2810	2815		interest or lien within a reasonable time. Unless the holder does so, the secured party need not 39
2811	2816		comply with the holder's demand under subdivision (a)(3) of this section. 40
2812	2817		(c) Application of noncash proceeds. – Noncash Proceeds. – A secured party need not 41
2813	2818		apply or pay over for application noncash proceeds of disposition under G.S. 25-9-610 unless the 42
2814	2819		failure to do so would be commercially unreasonable. A secured party that applies or pays over 43
2815	2820		for application noncash proceeds shall do so in a commercially reasonable manner. 44
2816	2821		(d) Surplus or deficiency if obligation secured. – Deficiency If Obligation Secured. – If 45
2817	2822		the security interest under which a disposition is made secures payment or performance of an 46
2818	2823		obligation, after making the payments and applications required by subsection (a) of this section 47
2819	2824		and permitted by subsection (c) of this section:section, both of the following apply: 48
2820	2825		(1) Unless subdivision (a)(4) of this section requires the secured party to apply or 49
2821	2826		pay over cash proceeds to a consignor, the secured party shall account to and 50
2822	2827		pay a debtor for any surplus; andsurplus. 51 General Assembly Of North Carolina Session 2025
2823		-	Page 56 ~~Senate Bill 117-First Edition~~
	2828	+	Page 56 DRS35028-MUz-3A
2824	2829		(2) The obligor is liable for any deficiency. 1
2825	2830		(e) No surplus or deficiency in sales of certain rights to payment. – Surplus or Deficiency 2
2826	2831		in Sales of Certain Rights to Payment. – If the underlying transaction is a sale of accounts, chattel 3
2827	2832		paper, payment intangibles, or promissory notes:notes, both of the following apply: 4
2828	2833		(1) The debtor is not entitled to any surplus; andsurplus. 5
2829	2834		(2) The obligor is not liable for any deficiency. 6
2830	2835		(f) Calculation of surplus or deficiency in disposition to person related to secured party. 7
2831	2836		– Surplus or Deficiency in Disposition to Person Related to Secured Party. – The surplus or 8
2832	2837		deficiency following a disposition is calculated based on the amount of proceeds that would have 9
2833	2838		been realized in a disposition complying with this Part to a transferee other than the secured 10
2834	2839		party, a person related to the secured party, or a secondary obligor if:if both of the following 11
2835	2840		apply: 12
2836	2841		(1) The transferee in the disposition is the secured party, a person related to the 13
2837	2842		secured party, or a secondary obligor; andobligor. 14
2838	2843		(2) The amount of proceeds of the disposition is significantly below the range of 15
2839	2844		proceeds that a complying disposition to a person other than the secured party, 16
2840	2845		a person related to the secured party, or a secondary obligor would have 17
2841	2846		brought. 18
2842	2847		(g) Cash proceeds received by junior secured party. – A Proceeds Received by Junior 19
2843	2848		Secured Party. – All of the following apply to a secured party that receives cash proceeds of a 20
2844	2849		disposition in good faith and without knowledge that the receipt violates the rights of the holder 21
2845	2850		of a security interest or other lien that is not subordinate to the security interest or agricultural 22
2846	2851		lien under which the disposition is made: 23
2847	2852		(1) Takes The secured party takes the cash proceeds free of the security interest 24
2848	2853		or other lien;lien. 25
2849	2854		(2) Is The secured party is not obligated to apply the proceeds of the disposition 26
2850	2855		to the satisfaction of obligations secured by the security interest or other lien; 27
2851	2856		andlien. 28
2852	2857		(3) Is The secured party is not obligated to account to or pay the holder of the 29
2853	2858		security interest or other lien for any surplus." 30
2854	2859		SECTION 46. G.S. 25-9-616 reads as rewritten: 31
2855	2860		"§ 25-9-616. Explanation of calculation of surplus or deficiency. 32
2856	2861		(a) Definitions. – In this section:section, the following definitions apply: 33
2857	2862		(1) "Explanation" means a writing that:Explanation. – A record that does all of 34
2858	2863		the following: 35
2859	2864		a. States the amount of the surplus or deficiency;deficiency. 36
2860	2865		b. Provides an explanation information in accordance with subsection (c) 37
2861	2866		of this section of explaining how the secured party calculated the 38
2862	2867		surplus or deficiency;deficiency. 39
2863	2868		c. States, if applicable, that future debits, credits, charges, including 40
2864	2869		additional credit service charges or interest, rebates, and expenses may 41
2865	2870		affect the amount of the surplus or deficiency; anddeficiency. 42
2866	2871		d. Provides a telephone number or mailing address from which additional 43
2867	2872		information concerning the transaction is available. 44
2868	2873		(2) "Request" means a record:Request. – A record to which all of the following 45
2869	2874		apply: 46
2870	2875		a. Authenticated It is signed by a debtor or consumer obligor;obligor. 47
2871	2876		b. Requesting It requests that the recipient provide an explanation; 48
2872	2877		andexplanation. 49
2873	2878		c. Sent It is sent after disposition of the collateral under G.S. 25-9-610. 50 General Assembly Of North Carolina Session 2025
2874		-	~~Senate Bill 117-First Edition~~ Page 57
	2879	+	DRS35028-MUz-3A Page 57
2875	2880		(b) Explanation of calculation. – Calculation. – In a consumer-goods transaction in which 1
2876	2881		the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under 2
2877	2882		G.S. 25-9-615, the secured party shall:shall do either of the following: 3
2878	2883		(1) Send an explanation to the debtor or consumer obligor, as applicable, after the 4
2879	2884		disposition and:and in accordance with both of the following: 5
2880	2885		a. Before or when the secured party accounts to the debtor and pays any 6
2881	2886		surplus or first makes written demand in a record on the consumer 7
2882	2887		obligor after the disposition for payment of the deficiency; 8
2883	2888		anddeficiency. 9
2884	2889		b. Within 14 days after receipt of a request; orrequest. 10
2885	2890		(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days 11
2886	2891		after receipt of a request, send to the consumer obligor a record waiving the 12
2887	2892		secured party's right to a deficiency. 13
2888	2893		(c) Required information. – Information. – To comply with sub-subdivision (a)(1)b. of 14
2889	2894		this section, a writing must an explanation shall provide the following information in the 15
2890	2895		following order: 16
2891	2896		(1) The aggregate amount of obligations secured by the security interest under 17
2892	2897		which the disposition was made, and, if the amount reflects a rebate of 18
2893	2898		unearned interest or credit service charge, an indication of that fact, calculated 19
2894	2899		as of a specified date:date as follows: 20
2895	2900		a. If the secured party takes or receives possession of the collateral after 21
2896	2901		default, not more than 35 days before the secured party takes or 22
2897	2902		receives possession; orpossession. 23
2898	2903		b. If the secured party takes or receives possession of the collateral before 24
2899	2904		default or does not take possession of the collateral, not more than 35 25
2900	2905		days before the disposition;disposition. 26
2901	2906		(2) The amount of proceeds of the disposition;disposition. 27
2902	2907		(3) The aggregate amount of the obligations after deducting the amount of 28
2903	2908		proceeds;proceeds. 29
2904	2909		(4) The amount, in the aggregate or by type, and types of expenses, including 30
2905	2910		expenses of retaking, holding, preparing for disposition, processing, and 31
2906	2911		disposing of the collateral, and attorney's attorneys' fees secured by the 32
2907	2912		collateral which that are known to the secured party and relate to the current 33
2908	2913		disposition;disposition. 34
2909	2914		(5) The amount, in the aggregate or by type, and types of credits, including rebates 35
2910	2915		of interest or credit service charges, to which the obligor is known to be 36
2911	2916		entitled and which that are not reflected in the amount in subdivision (1) of 37
2912	2917		this subsection; andsubsection. 38
2913	2918		(6) The amount of the surplus or deficiency. 39
2914	2919		(d) Substantial compliance. – Compliance. – A particular phrasing of the explanation is 40
2915	2920		not required. An explanation complying substantially with the requirements of subsection (a) of 41
2916	2921		this section is sufficient, even if it includes minor errors that are not seriously misleading. 42
2917	2922		(e) Charges for responses. – Responses. – A debtor or consumer obligor is entitled 43
2918	2923		without charge to one response to a request under this section during any six-month period in 44
2919	2924		which the secured party did not send to the debtor or consumer obligor an explanation pursuant 45
2920	2925		to subdivision (b)(1) of this section. The secured party may require payment of a charge not 46
2921	2926		exceeding twenty-five dollars ($25.00) for each additional response." 47
2922	2927		SECTION 47. G.S. 25-9-619 reads as rewritten: 48
2923	2928		"§ 25-9-619. Transfer of record or legal title. 49
2924	2929		(a) "Transfer statement." – Statement." – In this section, "transfer statement" means a 50
2925	2930		record authenticated signed by a secured party stating:stating all of the following: 51 General Assembly Of North Carolina Session 2025
2926		-	Page 58 ~~Senate Bill 117-First Edition~~
	2931	+	Page 58 DRS35028-MUz-3A
2927	2932		(1) That the debtor has defaulted in connection with an obligation secured by 1
2928	2933		specified collateral;collateral. 2
2929	2934		(2) That the secured party has exercised its postdefault remedies with respect to 3
2930	2935		the collateral;collateral. 4
2931	2936		(3) That, by reason of the exercise, a transferee has acquired the rights of the 5
2932	2937		debtor in the collateral; andcollateral. 6
2933	2938		(4) The name and mailing address of the secured party, debtor, and transferee. 7
2934	2939		(b) Effect of transfer statement. – Transfer Statement. – A transfer statement entitles the 8
2935	2940		transferee to the transfer of record of all rights of the debtor in the collateral specified in the 9
2936	2941		statement in any official filing, recording, registration, or certificate-of-title system covering the 10
2937	2942		collateral. If a transfer statement is presented with the applicable fee and request form to the 11
2938	2943		official or office responsible for maintaining the system, the official or office shall:shall do all of 12
2939	2944		the following: 13
2940	2945		(1) Accept the transfer statement;statement. 14
2941	2946		(2) Promptly amend its records to reflect the transfer; andtransfer. 15
2942	2947		(3) If applicable, issue a new appropriate certificate of title in the name of the 16
2943	2948		transferee. 17
2944	2949		(c) Transfer not a disposition; no relief of secured party's duties. – Not a Disposition; No 18
2945	2950		Relief of Secured Party's Duties. – A transfer of the record or legal title to collateral to a secured 19
2946	2951		party under subsection (b) of this section or otherwise is not of itself a disposition of collateral 20
2947	2952		under this Article and does not of itself relieve the secured party of its duties under this Article." 21
2948	2953		SECTION 48. G.S. 25-9-620 reads as rewritten: 22
2949	2954		"§ 25-9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory 23
2950	2955		disposition of collateral. 24
2951	2956		(a) Conditions to acceptance in satisfaction. – Acceptance in Satisfaction. – Except as 25
2952	2957		otherwise provided in subsection (g) of this section, a secured party may accept collateral in full 26
2953	2958		or partial satisfaction of the obligation it secures only if:if all of the following apply: 27
2954	2959		(1) The debtor consents to the acceptance under subsection (c) of this 28
2955	2960		section;section. 29
2956	2961		(2) The secured party does not receive, within the time set forth in subsection (d) 30
2957	2962		of this section, a notification of objection to the proposal authenticated 31
2958	2963		by:signed by either of the following: 32
2959	2964		a. A person to which the secured party was required to send a proposal 33
2960	2965		under G.S. 25-9-621; orG.S. 25-9-621. 34
2961	2966		b. Any other person, other than the debtor, holding an interest in the 35
2962	2967		collateral subordinate to the security interest that is the subject of the 36
2963	2968		proposal;proposal. 37
2964	2969		(3) If the collateral is consumer goods, the collateral is not in the possession of 38
2965	2970		the debtor when the debtor consents to the acceptance; andacceptance. 39
2966	2971		(4) Subsection (e) of this section does not require the secured party to dispose of 40
2967	2972		the collateral or the debtor waives the requirement pursuant to G.S. 25-9-624. 41
2968	2973		(b) Purported acceptance ineffective. – Acceptance Ineffective. – A purported or apparent 42
2969	2974		acceptance of collateral under this section is ineffective unless:unless both of the following apply: 43
2970	2975		(1) The secured party consents to the acceptance in an authenticated a signed 44
2971	2976		record or sends a proposal to the debtor; anddebtor. 45
2972	2977		(2) The conditions of subsection (a) of this section are met. 46
2973	2978		(c) Debtor's consent. – Consent. – For purposes of this section:section, both of the 47
2974	2979		following apply: 48
2975	2980		(1) A debtor consents to an acceptance of collateral in partial satisfaction of the 49
2976	2981		obligation it secures only if the debtor agrees to the terms of the acceptance in 50
2977	2982		a record authenticated signed after default; anddefault. 51 General Assembly Of North Carolina Session 2025
2978		-	~~Senate Bill 117-First Edition~~ Page 59
	2983	+	DRS35028-MUz-3A Page 59
2979	2984		(2) A debtor consents to an acceptance of collateral in full satisfaction of the 1
2980	2985		obligation it secures only if the debtor agrees to the terms of the acceptance in 2
2981	2986		a record authenticated signed after default or the secured party:all of the 3
2982	2987		following apply: 4
2983	2988		a. Sends The secured party sends to the debtor after default a proposal 5
2984	2989		that is unconditional or subject only to a condition that collateral not 6
2985	2990		in the possession of the secured party be preserved or 7
2986	2991		maintained;maintained. 8
2987	2992		b. In the proposal, the secured party proposes to accept collateral in full 9
2988	2993		satisfaction of the obligation it secures; andsecures. 10
2989	2994		c. Does The secured party does not receive a notification of objection 11
2990	2995		authenticated signed by the debtor within 20 days after the proposal is 12
2991	2996		sent. 13
2992	2997		(d) Effectiveness of notification. – Notification. – To be effective under subdivision 14
2993	2998		(a)(2) of this section, a notification of objection must shall be received by the secured party:party 15
2994	2999		as follows: 16
2995	3000		(1) In the case of a person to which the proposal was sent pursuant to 17
2996	3001		G.S. 25-9-621, within 20 days after notification was sent to that person; 18
2997	3002		andperson. 19
2998	3003		(2) In other cases:cases as follows: 20
2999	3004		a. Within 20 days after the last notification was sent pursuant to 21
3000	3005		G.S. 25-9-621; orG.S. 25-9-621. 22
3001	3006		b. If a notification was not sent, before the debtor consents to the 23
3002	3007		acceptance under subsection (c) of this section. 24
3003	3008		(e) Mandatory disposition of consumer goods. – Disposition of Consumer Goods. – A 25
3004	3009		secured party that has taken possession of collateral shall dispose of the collateral pursuant to 26
3005	3010		G.S. 25-9-610 within the time specified in subsection (f) of this section if:if either of the 27
3006	3011		following applies: 28
3007	3012		(1) Sixty percent (60%) of the cash price has been paid in the case of a 29
3008	3013		purchase-money security interest in consumer goods; orgoods. 30
3009	3014		(2) Sixty percent (60%) of the principal amount of the obligation secured has been 31
3010	3015		paid in the case of a non-purchase-money security interest in consumer goods. 32
3011	3016		(f) Compliance with mandatory disposition requirement. – Mandatory Disposition 33
3012	3017		Requirement. – To comply with subsection (e) of this section, the secured party shall dispose of 34
3013	3018		the collateral:collateral within either of the following time periods: 35
3014	3019		(1) Within 90 days after taking possession; orpossession. 36
3015	3020		(2) Within any longer period to which the debtor and all secondary obligors have 37
3016	3021		agreed in an agreement to that effect entered into and authenticated signed 38
3017	3022		after default. 39
3018	3023		(g) No partial satisfaction in consumer transaction. – Partial Satisfaction in Consumer 40
3019	3024		Transaction. – In a consumer transaction, a secured party may shall not accept collateral in partial 41
3020	3025		satisfaction of the obligation it secures." 42
3021	3026		SECTION 49. G.S. 25-9-621 reads as rewritten: 43
3022	3027		"§ 25-9-621. Notification of proposal to accept collateral. 44
3023	3028		(a) Persons to which proposal to be sent. – Which Proposal to be Sent. – A secured party 45
3024	3029		that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send 46
3025	3030		its proposal to:to all of the following: 47
3026	3031		(1) Any person from which the secured party has received, before the debtor 48
3027	3032		consented to the acceptance, an authenticated a signed notification of a claim 49
3028	3033		of an interest in the collateral;collateral. 50 General Assembly Of North Carolina Session 2025
3029		-	Page 60 ~~Senate Bill 117-First Edition~~
	3034	+	Page 60 DRS35028-MUz-3A
3030	3035		(2) Any other secured party or lienholder that, 10 days before the debtor 1
3031	3036		consented to the acceptance, held a security interest in or other lien on the 2
3032	3037		collateral perfected by the filing of a financing statement that:that meets all of 3
3033	3038		the following requirements: 4
3034	3039		a. Identified the collateral;collateral. 5
3035	3040		b. Was indexed under the debtor's name as of that date; anddate. 6
3036	3041		c. Was filed in the office or offices in which to file a financing statement 7
3037	3042		against the debtor covering the collateral as of that date; anddate. 8
3038	3043		(3) Any other secured party that, 10 days before the debtor consented to the 9
3039	3044		acceptance, held a security interest in the collateral perfected by compliance 10
3040	3045		with a statute, regulation, or treaty described in G.S. 25-9-311(a). 11
3041	3046		(b) Proposal to be sent to secondary obligor in partial satisfaction. – Sent to Secondary 12
3042	3047		Obligor in Partial Satisfaction. – A secured party that desires to accept collateral in partial 13
3043	3048		satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition 14
3044	3049		to the persons described in subsection (a) of this section." 15
3045	3050		SECTION 50. G.S. 25-9-624 reads as rewritten: 16
3046	3051		"§ 25-9-624. Waiver. 17
3047	3052		(a) Waiver of disposition notification. – Disposition Notification. – A debtor or 18
3048	3053		secondary obligor may waive the right to notification of disposition of collateral under 19
3049	3054		G.S. 25-9-611 only by an agreement to that effect entered into and authenticated signed after 20
3050	3055		default. 21
3051	3056		(b) Waiver of mandatory disposition. – Mandatory Disposition. – A debtor may waive 22
3052	3057		the right to require disposition of collateral under G.S. 25-9-620(e) only by an agreement to that 23
3053	3058		effect entered into and authenticated signed after default. 24
3054	3059		(c) Waiver of redemption right. – Redemption Right. – Except in a consumer-goods 25
3055	3060		transaction, a debtor or secondary obligor may waive the right to redeem collateral under 26
3056	3061		G.S. 25-9-623 only by an agreement to that effect entered into and authenticated signed after 27
3057	3062		default." 28
3058	3063		SECTION 51. G.S. 25-9-628 reads as rewritten: 29
3059	3064		"§ 25-9-628. Nonliability and limitation on liability of secured party; liability of secondary 30
3060	3065		obligor. 31
3061	3066		(a) Limitation of liability of secured party for noncompliance with Article. – Unless 32
3062	3067		Liability of Secured Party for Noncompliance with Article. – Subject to subsection (f) of this 33
3063	3068		section, unless a secured party knows that a person is a debtor or obligor, knows the identity of 34
3064	3069		the person, and knows how to communicate with the person:person, both of the following apply: 35
3065	3070		(1) The secured party is not liable to the person, or to a secured party or lienholder 36
3066	3071		that has filed a financing statement against the person, for failure to comply 37
3067	3072		with this Article; andArticle. 38
3068	3073		(2) The secured party's failure to comply with this Article does not affect the 39
3069	3074		liability of the person for a deficiency. 40
3070	3075		(b) Limitation of liability based on status as secured party. – A Liability Based on Status 41
3071	3076		as Secured Party. – Subject to subsection (f) of this section, a secured party is not liable because 42
3072	3077		of its status as secured party:party to either of the following: 43
3073	3078		(1) To a person that is a debtor or obligor, unless the secured party knows:knows 44
3074	3079		all of the following: 45
3075	3080		a. That the person is a debtor or obligor;obligor. 46
3076	3081		b. The identity of the person; andperson. 47
3077	3082		c. How to communicate with the person; orperson. 48
3078	3083		(2) To a secured party or lienholder that has filed a financing statement against a 49
3079	3084		person, unless the secured party knows:knows both of the following: 50
3080	3085		a. That the person is a debtor; anddebtor. 51 General Assembly Of North Carolina Session 2025
3081		-	~~Senate Bill 117-First Edition~~ Page 61
	3086	+	DRS35028-MUz-3A Page 61
3082	3087		b. The identity of the person. 1
3083	3088		(c) Limitation of liability if reasonable belief that transaction not a consumer-goods 2
3084	3089		transaction or consumer transaction. – Liability If Reasonable Belief That Transaction Not a 3
3085	3090		Consumer-Goods Transaction or Consumer Transaction. – A secured party is not liable to any 4
3086	3091		person, and a person's liability for a deficiency is not affected, because of any act or omission 5
3087	3092		arising out of the secured party's reasonable belief that a transaction is not a consumer-goods 6
3088	3093		transaction or a consumer transaction or that goods are not consumer goods, if the secured party's 7
3089	3094		belief is based on its reasonable reliance on:on either of the following: 8
3090	3095		(1) A debtor's representation concerning the purpose for which collateral was to 9
3091	3096		be used, acquired, or held; orheld. 10
3092	3097		(2) An obligor's representation concerning the purpose for which a secured 11
3093	3098		obligation was incurred. 12
3094	3099		(d) Limitation of liability for statutory damages. – Liability for Statutory Damages. – A 13
3095	3100		secured party is not liable to any person under G.S. 25-9-625(c)(2) for its failure to comply with 14
3096	3101		G.S. 25-9-616. 15
3097	3102		(e) Limitation of multiple liability for statutory damages. – Multiple Liability for 16
3098	3103		Statutory Damages. – A secured party is not liable under G.S. 25-9-625(c)(2) more than once 17
3099	3104		with respect to any one secured obligation. 18
3100	3105		(f) Exception to Limitation of Liability Under Subsections (a) and (b). – Subsections (a) 19
3101	3106		and (b) of this section do not apply to limit the liability of a secured party to a person if, at the 20
3102	3107		time the secured party obtains control of collateral that is a controllable account, controllable 21
3103	3108		electronic record, or controllable payment intangible or at the time the security interest attaches 22
3104	3109		to the collateral, whichever is later, both of the following apply: 23
3105	3110		(1) The person is a debtor or obligor. 24
3106	3111		(2) The secured party knows that the information in sub-subdivision (b)(1)a., b., 25
3107	3112		or c. of this section relating to the person is not provided by the collateral, a 26
3108	3113		record attached to or logically associated with the collateral, or the system in 27
3109	3114		which the collateral is recorded." 28
3110	3115		29
3111	3116		PART III. CONFORMING CHANGES AND OTHER AMENDMENTS TO OTHER UCC 30
3112	3117		ARTICLES 31
3113	3118		SECTION 52. G.S. 25-1-201 reads as rewritten: 32
3114	3119		"§ 25-1-201. General definitions. 33
3115	3120		(a) Unless the context otherwise requires, words or phrases defined in this section, or in 34
3116	3121		the additional definitions contained in other Articles articles of this Chapter that apply to 35
3117	3122		particular Articles or Parts thereof, articles or parts of this Chapter, have the meanings stated. 36
3118	3123		(b) Subject to definitions contained in other articles of this Chapter that apply to particular 37
3119	3124		articles or parts thereof:of this Chapter, the following definitions apply in this Chapter: 38
3120	3125		(1) "Action," in Action. – In the sense of a judicial proceeding, includes 39
3121	3126		recoupment, counterclaim, setoff, suit in equity, and any other proceeding in 40
3122	3127		which rights are determined. 41
3123	3128		(2) "Aggrieved party" means a Aggrieved party. – A party entitled to pursue a 42
3124	3129		remedy. 43
3125	3130		(3) "Agreement," as Agreement. – As distinguished from "contract," means the 44
3126	3131		bargain of the parties in fact, as found in their language or inferred from other 45
3127	3132		circumstances, including course of performance, course of dealing, or usage 46
3128	3133		of trade as provided in G.S. 25-1-303. 47
3129	3134		(4) "Bank" means a Bank. – A person engaged in the business of banking and 48
3130	3135		banking. The term includes a savings bank, savings and loan association, 49
3131	3136		credit union, and trust company. 50 General Assembly Of North Carolina Session 2025
3132		-	Page 62 ~~Senate Bill 117-First Edition~~
	3137	+	Page 62 DRS35028-MUz-3A
3133	3138		(5) "Bearer" means a Bearer. – A person in control of a negotiable electronic 1
3134	3139		document of title or a person in possession of a negotiable instrument, 2
3135	3140		negotiable tangible document of title, or certificated security that is payable 3
3136	3141		to bearer or indorsed in blank. 4
3137	3142		(6) "Bill of lading" means a Bill of lading. – A document of title evidencing the 5
3138	3143		receipt of goods for shipment issued by a person engaged in the business of 6
3139	3144		directly or indirectly transporting or forwarding goods. The term does not 7
3140	3145		include a warehouse receipt. 8
3141	3146		(7) "Branch" includes Branch. – Includes a separately incorporated foreign 9
3142	3147		branch of a bank. 10
3143	3148		(8) "Burden of establishing" a fact means the Burden of establishing. – The 11
3144	3149		burden of persuading the trier of fact that the existence of the a fact is more 12
3145	3150		probable than its nonexistence. 13
3146	3151		(9) "Buyer in ordinary course of business" means a Buyer in ordinary course of 14
3147	3152		business. – A person that buys goods in good faith, without knowledge that 15
3148	3153		the sale violates the rights of another person in the goods, and in the ordinary 16
3149	3154		course from a person, other than a pawnbroker, in the business of selling goods 17
3150	3155		of that kind. A person buys goods in the ordinary course if the sale to the 18
3151	3156		person comports with the usual or customary practices in the kind of business 19
3152	3157		in which the seller is engaged or with the seller's own usual or customary 20
3153	3158		practices. A person that sells oil, gas, or other minerals at the wellhead or 21
3154	3159		minehead is a person in the business of selling goods of that kind. A buyer in 22
3155	3160		ordinary course of business may buy for cash, by exchange of other property, 23
3156	3161		or on secured or unsecured credit, and may acquire goods or documents of 24
3157	3162		title under a preexisting contract for sale. Only a buyer that takes possession 25
3158	3163		of the goods or has a right to recover the goods from the seller under Article 26
3159	3164		2 of this Chapter may be a buyer in ordinary course of business. "Buyer in 27
3160	3165		ordinary course of business" The term does not include a person that acquires 28
3161	3166		goods in a transfer in bulk or as security for or in total or partial satisfaction 29
3162	3167		of a money debt. 30
3163	3168		(10) "Conspicuous," with Conspicuous. – With reference to a term, means so 31
3164	3169		written, displayed, or presented that that, based on the totality of the 32
3165	3170		circumstances, a reasonable person against which it is to operate ought to have 33
3166	3171		noticed it. Whether a term is "conspicuous" or not is a decision for the court. 34
3167	3172		Conspicuous terms include the following: 35
3168	3173		a. A heading in capitals equal to or greater in size than the surrounding 36
3169	3174		text, or in contrasting type, font, or color to the surrounding text of the 37
3170	3175		same or lesser size; and 38
3171	3176		b. Language in the body of a record or display in larger type than the 39
3172	3177		surrounding text, or in contrasting type, font, or color to the 40
3173	3178		surrounding text of the same size, or set off from surrounding text of 41
3174	3179		the same size by symbols or other marks that call attention to the 42
3175	3180		language. 43
3176	3181		(11) "Consumer" means an Consumer. – An individual who enters into a 44
3177	3182		transaction primarily for personal, family, or household purposes. 45
3178	3183		(12) "Contract," as Contract. – As distinguished from "agreement," means the total 46
3179	3184		legal obligation that results from the parties' agreement as determined by this 47
3180	3185		Chapter as supplemented by any other applicable laws. 48
3181	3186		(13) "Creditor" includes Creditor. – Includes a general creditor, a secured creditor, 49
3182	3187		a lien creditor, and any representative of creditors, including an assignee for 50 General Assembly Of North Carolina Session 2025
3183		-	~~Senate Bill 117-First Edition~~ Page 63
	3188	+	DRS35028-MUz-3A Page 63
3184	3189		the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an 1
3185	3190		executor or administrator of an insolvent debtor's or assignor's estate. 2
3186	3191		(14) "Defendant" includes Defendant. – Includes a person in the position of 3
3187	3192		defendant in a counterclaim, cross-claim, or third-party claim. 4
3188	3193		(15) "Delivery", with Delivery. – With respect to an electronic document of title 5
3189	3194		title, means voluntary transfer of control and with control. With respect to an 6
3190	3195		instrument, a tangible document of title, or an authoritative tangible copy of a 7
3191	3196		record evidencing chattel paper, the term means voluntary transfer of 8
3192	3197		possession. 9
3193	3198		(16) "Document of title" means a Document of title. – A record (i) that in the 10
3194	3199		regular course of business or financing is treated as adequately evidencing that 11
3195	3200		the person in possession or control of the record is entitled to receive, control, 12
3196	3201		hold, and dispose of the record and the goods the record covers and (ii) that 13
3197	3202		purports to be issued by or addressed to a bailee and to cover goods in the 14
3198	3203		bailee's possession which that are either identified or are fungible portions of 15
3199	3204		an identified mass. The term includes a bill of lading, transport document, 16
3200	3205		dock warrant, dock receipt, warehouse receipt, and order for delivery of 17
3201	3206		goods. An electronic document of title means a document of title evidenced 18
3202	3207		by a record consisting of information stored in an electronic medium. A 19
3203	3208		tangible document of title means a document of title evidenced by a record 20
3204	3209		consisting of information that is inscribed on a tangible medium. 21
3205	3210		(16a) Electronic. – Relating to technology having electrical, digital, magnetic, 22
3206	3211		wireless, optical, electromagnetic, or similar capabilities. 23
3207	3212		(17) "Fault" means a Fault. – A default, breach, or wrongful act or omission. 24
3208	3213		(18) "Fungible goods" means:Fungible goods. – Either of the following: 25
3209	3214		a. Goods of which any unit, by nature or usage of trade, are the equivalent 26
3210	3215		of any other like unit; orunit. 27
3211	3216		b. Goods that by agreement are treated as equivalent. 28
3212	3217		(19) "Genuine" means free Genuine. – Free of forgery or counterfeiting. 29
3213	3218		(20) "Good faith," except Good faith. – Except as otherwise provided in Article 5 30
3214	3219		of this Chapter, means honesty in fact and the observance of reasonable 31
3215	3220		commercial standards of fair dealing. 32
3216	3221		(21) "Holder" means:Holder. – Any of the following: 33
3217	3222		a. The person in possession of a negotiable instrument that is payable 34
3218	3223		either to bearer or to an identified person that is the person in 35
3219	3224		possession;possession. 36
3220	3225		b. The person in possession of a negotiable tangible document of title if 37
3221	3226		the goods are deliverable either to bearer or to the order of the person 38
3222	3227		in possession; orpossession. 39
3223	3228		c. The person in control control, other than pursuant to G.S. 25-7-106(g), 40
3224	3229		of a negotiable electronic document of title. 41
3225	3230		(22) "Insolvency proceeding" includes Insolvency proceeding. – Includes an 42
3226	3231		assignment for the benefit of creditors or other proceeding intended to 43
3227	3232		liquidate or rehabilitate the estate of the person involved. 44
3228	3233		(23) "Insolvent" means:Insolvent. – Any of the following: 45
3229	3234		a. Having generally ceased to pay debts in the ordinary course of 46
3230	3235		business other than as a result of bona fide dispute;dispute. 47
3231	3236		b. Being unable to pay debts as they become due; ordue. 48
3232	3237		c. Being insolvent within the meaning of federal bankruptcy law. 49
3233	3238		(24) "Money" means a Money. – A medium of exchange that is currently 50
3234	3239		authorized or adopted by a domestic or foreign government. The term includes 51 General Assembly Of North Carolina Session 2025
3235		-	Page 64 ~~Senate Bill 117-First Edition~~
	3240	+	Page 64 DRS35028-MUz-3A
3236	3241		a monetary unit of account established by an intergovernmental organization 1
3237	3242		or by agreement between two or more countries. The term does not include an 2
3238	3243		electronic record that is a medium of exchange recorded and transferable in a 3
3239	3244		system that existed and operated for the medium of exchange before the 4
3240	3245		medium of exchange was authorized or adopted by the government. 5
3241	3246		(25) "Organization" means a Organization. – A person other than an individual. 6
3242	3247		(26) "Party," as Party. – As distinguished from "third party," means a person that 7
3243	3248		has engaged in a transaction or made an agreement subject to this Chapter. 8
3244	3249		(27) "Person" means an Person. – An individual, corporation, business trust, estate, 9
3245	3250		trust, partnership, limited liability company, association, joint venture, 10
3246	3251		government, governmental subdivision, agency, or instrumentality, public 11
3247	3252		corporation, or any other legal or commercial entity. The term includes a 12
3248	3253		protected series, however denominated, of an entity if the protected series is 13
3249	3254		established under law other than this Chapter that limits, or limits if conditions 14
3250	3255		specified under the law are satisfied, the ability of a creditor of the entity or of 15
3251	3256		any other protected series of the entity to satisfy a claim from assets of the 16
3252	3257		protected series. 17
3253	3258		(28) "Present value" means the Present value. – The amount as of a date certain of 18
3254	3259		one or more sums payable in the future, discounted to the date certain by use 19
3255	3260		of either an interest rate specified by the parties if that rate is not manifestly 20
3256	3261		unreasonable at the time the transaction is entered into or, if an interest rate is 21
3257	3262		not so specified, a commercially reasonable rate that takes into account the 22
3258	3263		facts and circumstances at the time the transaction is entered into. 23
3259	3264		(29) "Purchase" means taking Purchase. – Taking by sale, lease, discount, 24
3260	3265		negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or 25
3261	3266		any other voluntary transaction creating an interest in property. 26
3262	3267		(30) "Purchaser" means a Purchaser. – A person that takes by purchase. 27
3263	3268		(31) "Record" means information Record. – Information that is inscribed on a 28
3264	3269		tangible medium or that is stored in an electronic or other medium and is 29
3265	3270		retrievable in perceivable form. 30
3266	3271		(32) "Remedy" means any Remedy. – Any remedial right to which an aggrieved 31
3267	3272		party is entitled with or without resort to a tribunal. 32
3268	3273		(33) "Representative" means a Representative. – A person empowered to act for 33
3269	3274		another, including an agent, an officer of a corporation or association, and a 34
3270	3275		trustee, executor, or administrator of an estate. 35
3271	3276		(34) "Right" includes Right. – Includes remedy. 36
3272	3277		(35) "Security interest" means an Security interest. – An interest in personal 37
3273	3278		property or fixtures which that secures payment or performance of an 38
3274	3279		obligation. "Security interest" The term includes any interest of a consignor 39
3275	3280		and a buyer of accounts, chattel paper, a payment intangible, or a promissory 40
3276	3281		note in a transaction that is subject to Article 9 of this Chapter. "Security 41
3277	3282		interest" The term does not include the special property interest of a buyer of 42
3278	3283		goods on identification of those goods to a contract for sale under 43
3279	3284		G.S. 25-2-401, but a buyer may also acquire a "security interest" by 44
3280	3285		complying with Article 9 of this Chapter. Except as otherwise provided in 45
3281	3286		G.S. 25-2-505, the right of a seller or lessor of goods under Article 2 or 2A of 46
3282	3287		this Chapter to retain or acquire possession of the goods is not a "security 47
3283	3288		interest," but a seller or lessor may also acquire a "security interest" by 48
3284	3289		complying with Article 9 of this Chapter. The retention or reservation of title 49
3285	3290		by a seller of goods notwithstanding shipment or delivery to the buyer under 50
3286	3291		G.S. 25-2-401 is limited in effect to a reservation of a "security interest." 51 General Assembly Of North Carolina Session 2025
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	3292	+	DRS35028-MUz-3A Page 65
3288	3293		Whether a transaction in the form of a lease creates a "security interest" is 1
3289	3294		determined pursuant to G.S. 25-1-203. 2
3290	3295		(36) "Send" in connection with a writing, record, or notice means:Send. – In 3
3291	3296		connection with a record or notification, means either of the following: 4
3292	3297		a. To deposit in the mail or mail, deliver for transmission transmission, 5
3293	3298		or transmit by any other usual means of communication 6
3294	3299		communication, with postage or cost of transmission provided for and 7
3295	3300		properly addressed and, in the case of an instrument, to an address 8
3296	3301		specified thereon or otherwise agreed, or if there be none for, 9
3297	3302		addressed to any address reasonable under the circumstances; 10
3298	3303		orcircumstances. 11
3299	3304		b. In any other way to cause to be received any record or notice within 12
3300	3305		the time it would have arrived if properly sent.To cause the record or 13
3301	3306		notification to be received within the time it would have been received 14
3302	3307		if properly sent under sub-subdivision a. of this subdivision. 15
3303	3308		(37) "Signed" includes using any symbol executed or adopted with present 16
3304	3309		intention to adopt or accept a writing.Sign. – With present intent to 17
3305	3310		authenticate or adopt a record, means either of the following: 18
3306	3311		a. Execute or adopt a tangible symbol. 19
3307	3312		b. Attach to or logically associate with the record an electronic symbol, 20
3308	3313		sound, or process. 21
3309	3314		"Signed," "signing," and "signature" have corresponding meanings. 22
3310	3315		(38) "State" means a State State. – A state of the United States, the District of 23
3311	3316		Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 24
3312	3317		insular possession subject to the jurisdiction of the United States. 25
3313	3318		(39) "Surety" includes Surety. – Includes a guarantor or other secondary obligor. 26
3314	3319		(40) "Term" means a Term. – A portion of an agreement that relates to a particular 27
3315	3320		matter. 28
3316	3321		(41) "Unauthorized signature" means a Unauthorized signature. – A signature 29
3317	3322		made without actual, implied, or apparent authority. The term includes a 30
3318	3323		forgery. 31
3319	3324		(42) "Warehouse receipt" means a Warehouse receipt. – A document of title issued 32
3320	3325		by a person engaged in the business of storing goods for hire. 33
3321	3326		(43) "Writing" includes Writing. – Includes printing, typewriting, or any other 34
3322	3327		intentional reduction to tangible form. "Written" has a corresponding 35
3323	3328		meaning." 36
3324	3329		SECTION 53. G.S. 25-1-204 reads as rewritten: 37
3325	3330		"§ 25-1-204. Value. 38
3326	3331		Except as otherwise provided in Articles 3, 4, and 5 5, and 12, of this Chapter, a person gives 39
3327	3332		value for rights if the person acquires them:them in any of the following ways: 40
3328	3333		(1) In return for a binding commitment to extend credit or for the extension of 41
3329	3334		immediately available credit, whether or not drawn upon and whether or not 42
3330	3335		a charge-back is provided for in the event of difficulties in 43
3331	3336		collection;collection. 44
3332	3337		(2) As security for, or in total or partial satisfaction of, a preexisting claim;claim. 45
3333	3338		(3) By accepting delivery under a preexisting contract for purchase; orpurchase. 46
3334	3339		(4) In return for any consideration sufficient to support a simple contract." 47
3335	3340		SECTION 54. G.S. 25-1-301 reads as rewritten: 48
3336	3341		"§ 25-1-301. Territorial applicability; parties' power to choose applicable law. 49
3337	3342		(a) Except as otherwise provided in this section, when a transaction bears a reasonable 50
3338	3343		relation to this State and also to another state or nation the parties may agree that the law either 51 General Assembly Of North Carolina Session 2025
3339		-	Page 66 ~~Senate Bill 117-First Edition~~
	3344	+	Page 66 DRS35028-MUz-3A
3340	3345		of this State or of the other state or nation shall govern governs their rights and duties. Except as 1
3341	3346		otherwise provided in subsection (c) of this section, the parties to a business contract as defined 2
3342	3347		in G.S. 1G-2(1) may agree in the business contract that North Carolina law shall govern governs 3
3343	3348		their rights and duties in whole or in part, pursuant to G.S. 1G-3. 4
3344	3349		(b) In the absence of an agreement effective under subsection (a) of this section, and 5
3345	3350		except as provided in subsection (c) of this section, this Chapter applies to transactions bearing 6
3346	3351		an appropriate relation to this State. 7
3347	3352		(c) If one of the following provisions of this Chapter specifies the applicable law, that 8
3348	3353		provision governs and a contrary agreement is effective only to the extent permitted by the 9
3349	3354		specified law: 10
3350	3355		(1) G.S. 25-2-402;G.S. 25-2-402. 11
3351	3356		(2) G.S. 25-2A-105 and G.S. 25-2A-106;G.S. 25-2A-106. 12
3352	3357		(3) G.S. 25-4-102;G.S. 25-4-102. 13
3353	3358		(4) G.S. 25-4A-507;G.S. 25-4A-507. 14
3354	3359		(5) G.S. 25-5-116;G.S. 25-5-116. 15
3355	3360		(6) G.S. 25-8-110;G.S. 25-8-110. 16
3356	3361		(7) G.S. 25-9-301 through G.S. 25-9-307. 17
3357	3362		(8) G.S. 25-12-107." 18
3358	3363		SECTION 55. G.S. 25-1-306 reads as rewritten: 19
3359	3364		"§ 25-1-306. Waiver or renunciation of claim or right after breach. 20
3360	3365		A claim or right arising out of an alleged breach may be discharged in whole or in part without 21
3361	3366		consideration by agreement of the aggrieved party in an authenticated a signed record." 22
3362	3367		SECTION 56. In all sections of Articles 2 and 2A of Chapter 25 of the General 23
3363	3368		Statutes that are not amended by this act, the Revisor of Statutes shall redesignate subunits in 24
3364	3369		accordance with the General Statutes numbering system and shall make any necessary 25
3365	3370		conforming changes. 26
3366	3371		SECTION 57. G.S. 25-2-102 reads as rewritten: 27
3367	3372		"§ 25-2-102. Scope; certain security and other transactions excluded from this 28
3368	3373		article.Article. 29
3369	3374		Unless the context otherwise requires, this article applies to transactions in goods; it does not 30
3370	3375		apply to any transaction which although in the form of an unconditional contract to sell or present 31
3371	3376		sale is intended to operate only as a security transaction nor does this article impair or repeal any 32
3372	3377		statute regulating sales to consumers, farmers or other specified classes of buyers. 33
3373	3378		(a) Unless the context otherwise requires, and except as provided in subsection (c) of this 34
3374	3379		section, this Article applies to transactions in goods and, in the case of a hybrid transaction, it 35
3375	3380		applies to the extent provided in subsection (b) of this section. 36
3376	3381		(b) In a hybrid transaction, both of the following apply: 37
3377	3382		(1) If the sale-of-goods aspects do not predominate, only the provisions of this 38
3378	3383		Article that relate primarily to the sale-of-goods aspects of the transaction 39
3379	3384		apply, and the provisions that relate primarily to the transaction as a whole do 40
3380	3385		not apply. 41
3381	3386		(2) If the sale-of-goods aspects predominate, this Article applies to the transaction 42
3382	3387		but does not preclude application in appropriate circumstances of other law to 43
3383	3388		aspects of the transaction that do not relate to the sale of goods. 44
3384	3389		(c) This Article does not do either of the following: 45
3385	3390		(1) Apply to a transaction that, even though in the form of an unconditional 46
3386	3391		contract to sell or present sale, operates only to create a security interest. 47
3387	3392		(2) Impair or repeal a statute regulating sales to consumers, farmers, or other 48
3388	3393		specified classes of buyers." 49
3389	3394		SECTION 58. G.S. 25-2-103 reads as rewritten: 50
3390	3395		"§ 25-2-103. Definitions and index of definitions. 51 General Assembly Of North Carolina Session 2025
3391		-	~~Senate Bill 117-First Edition~~ Page 67
	3396	+	DRS35028-MUz-3A Page 67
3392	3397		(1)(a) In this article unless the context otherwise requiresArticle, the following definitions 1
3393	3398		apply: 2
3394	3399		(1) Acceptance. – Defined in G.S. 25-2-606. 3
3395	3400		(2) Banker's credit. – Defined in G.S. 25-2-325. 4
3396	3401		(3) Between merchants. – Defined in G.S. 25-2-104. 5
3397	3402		(a)(4) "Buyer" means a Buyer. – A person who that buys or contracts to buy goods. 6
3398	3403		(b) Repealed by Session Laws 2006-112, s. 2, effective October 1, 2006. 7
3399	3404		(5) Cancellation. – Defined in G.S. 25-2-106. 8
3400	3405		(6) Check. – Defined in G.S. 25-3-104. 9
3401	3406		(7) Commercial unit. – Defined in G.S. 25-2-105. 10
3402	3407		(8) Confirmed credit. – Defined in G.S. 25-2-325. 11
3403	3408		(9) Conforming to contract. – Defined in G.S. 25-2-106. 12
3404	3409		(10) Consignee. – Defined in G.S. 25-7-102. 13
3405	3410		(11) Consignor. – Defined in G.S. 25-7-102. 14
3406	3411		(12) Consumer goods. – Defined in G.S. 25-9-102. 15
3407	3412		(13) Contract for sale. – Defined in G.S. 25-2-106. 16
3408	3413		(14) Control. – Defined in G.S. 25-7-106. 17
3409	3414		(15) Cover. – Defined in G.S. 25-2-712. 18
3410	3415		(16) Dishonor. – Defined in G.S. 25-3-502. 19
3411	3416		(17) Draft. – Defined in G.S. 25-3-104. 20
3412	3417		(18) Entrusting. – Defined in G.S. 25-2-403. 21
3413	3418		(19) Financing agency. – Defined in G.S. 25-2-104. 22
3414	3419		(20) Future goods. – Defined in G.S. 25-2-105. 23
3415	3420		(21) Goods. – Defined in G.S. 25-2-105. 24
3416	3421		(22) Identification. – Defined in G.S. 25-2-501. 25
3417	3422		(23) Installment contract. – Defined in G.S. 25-2-612. 26
3418	3423		(24) Letter of credit. – Defined in G.S. 25-2-325. 27
3419	3424		(25) Lot. – Defined in G.S. 25-2-105. 28
3420	3425		(26) Merchant. – Defined in G.S. 25-2-104. 29
3421	3426		(27) Overseas. – Defined in G.S. 25-2-323. 30
3422	3427		(28) Person in position of seller. – Defined in G.S. 25-2-707. 31
3423	3428		(29) Present sale. – Defined in G.S. 25-2-106. 32
3424	3429		(c)(30) "Receipt" of goods means taking Receipt. – With respect to goods, means 33
3425	3430		taking physical possession of them.the goods. 34
3426	3431		(31) Sale. – Defined in G.S. 25-2-106. 35
3427	3432		(32) Sale on approval. – Defined in G.S. 25-2-326. 36
3428	3433		(33) Sale or return. – Defined in G.S. 25-2-326. 37
3429	3434		(d)(34) "Seller" means a Seller. – A person who that sells or contracts to sell goods. 38
3430	3435		Any manufacturer of self-propelled motor vehicles, as defined in 39
3431	3436		G.S. 20-4.01, is also a "seller" with respect to buyers of its product to whom 40
3432	3437		which it makes an express warranty, notwithstanding any lack of privity 41
3433	3438		between them, for purposes of all rights and remedies available to buyers 42
3434	3439		under this Article. 43
3435	3440		(35) Termination. – Defined in G.S. 25-2-106. 44
3436	3441		(2) Other definitions applying to this article or to specified parts thereof, and the sections 45
3437	3442		in which they appear are: 46
3438	3443		"Acceptance." G.S. 25-2-606. 47
3439	3444		"Banker's credit." G.S. 25-2-325. 48
3440	3445		"Between merchants." G.S. 25-2-104. 49
3441	3446		"Cancellation." G.S. 25-2-106 (4). 50
3442	3447		"Commercial unit." G.S. 25-2-105. 51 General Assembly Of North Carolina Session 2025
3443		-	Page 68 ~~Senate Bill 117-First Edition~~
	3448	+	Page 68 DRS35028-MUz-3A
3444	3449		"Confirmed credit." G.S. 25-2-325. 1
3445	3450		"Conforming to contract." G.S. 25-2-106. 2
3446	3451		"Contract for sale." G.S. 25-2-106. 3
3447	3452		"Cover." G.S. 25-2-712. 4
3448	3453		"Entrusting." G.S. 25-2-403. 5
3449	3454		"Financing agency." G.S. 25-2-104. 6
3450	3455		"Future goods." G.S. 25-2-105. 7
3451	3456		"Goods." G.S. 25-2-105. 8
3452	3457		"Identification." G.S. 25-2-501. 9
3453	3458		"Installment contract." G.S. 25-2-612. 10
3454	3459		"Letter of credit." G.S. 25-2-325. 11
3455	3460		"Lot." G.S. 25-2-105. 12
3456	3461		"Merchant." G.S. 25-2-104. 13
3457	3462		"Overseas." G.S. 25-2-323. 14
3458	3463		"Person in position of seller." G.S. 25-2-707. 15
3459	3464		"Present sale." G.S. 25-2-106. 16
3460	3465		"Sale." G.S. 25-2-106. 17
3461	3466		"Sale on approval." G.S. 25-2-326. 18
3462	3467		"Sale or return." G.S. 25-2-326. 19
3463	3468		"Termination." G.S. 25-2-106. 20
3464	3469		(3) "Control" as provided in G.S. 25-7-106 and the following definitions in other Articles 21
3465	3470		apply to this Article: 22
3466	3471		"Check" G.S. 25-3-104. 23
3467	3472		"Consignee" G.S. 25-7-102. 24
3468	3473		"Consignor" G.S. 25-7-102. 25
3469	3474		"Consumer Goods" G.S. 25-9-102. 26
3470	3475		"Dishonor" G.S. 25-3-502. 27
3471	3476		"Draft" G.S. 25-3-104. 28
3472	3477		(4)(b) In addition article 1 In addition, Article 1 of this Chapter contains general definitions 29
3473	3478		and principles of construction and interpretation applicable throughout this article.Article." 30
3474	3479		SECTION 59. G.S. 25-2-106 reads as rewritten: 31
3475	3480		"§ 25-2-106. Definitions: "Contract"; "agreement"; "contract for sale"; "sale"; "present 32
3476	3481		sale"; "layaway contract"; "conforming" to contract; "termination"; 33
3477	3482		"cancellation.""cancellation"; "hybrid transaction." 34
3478	3483		(1)(a) In this article unless the context otherwise requires Article, "contract" and 35
3479	3484		"agreement" are limited to those relating to the present or future sale of goods, including layaway 36
3480	3485		contracts. "Contract for sale" includes both a present sale of goods and a contract to sell goods at 37
3481	3486		a future time. A "sale" consists in the passing of title from the seller to the buyer for a price 38
3482	3487		(G.S. 25-2-401). A "present sale" means a sale which that is accomplished by the making of the 39
3483	3488		contract. A "layaway contract" means any contract for the sale of goods in which the seller agrees 40
3484	3489		with the purchaser, in consideration for the purchaser's payment of a deposit, down payment, or 41
3485	3490		similar initial payment, to hold identified goods for future delivery upon the purchaser's payment 42
3486	3491		of a specified additional amount, whether in installments or otherwise. 43
3487	3492		(2)(b) Goods or conduct including any part of a performance are "conforming" or conform 44
3488	3493		to the contract when they are in accordance with the obligations under the contract. 45
3489	3494		(3)(c) "Termination" occurs when either party pursuant to a power created by agreement or 46
3490	3495		law puts an end to the contract otherwise than for its breach. On "termination" "termination," all 47
3491	3496		obligations which that are still executory on both sides are discharged discharged, but any right 48
3492	3497		based on prior breach or performance survives. 49 General Assembly Of North Carolina Session 2025
3493		-	~~Senate Bill 117-First Edition~~ Page 69
	3498	+	DRS35028-MUz-3A Page 69
3494	3499		(4)(d) "Cancellation" occurs when either party puts an end to the contract for breach by the 1
3495	3500		other and its effect is the same as that of "termination" except that the cancelling party also retains 2
3496	3501		any remedy for breach of the whole contract or any unperformed balance. 3
3497	3502		(e) "Hybrid transaction" means a single transaction involving a sale of goods and any of 4
3498	3503		the following: 5
3499	3504		(1) The provision of services. 6
3500	3505		(2) A lease of other goods. 7
3501	3506		(3) A sale, lease, or license of property other than goods." 8
3502	3507		SECTION 60. G.S. 25-2-201 reads as rewritten: 9
3503	3508		"§ 25-2-201. Formal requirements; statute of frauds. 10
3504	3509		(1)(a) Except as otherwise provided in this section section, a contract for the sale of goods 11
3505	3510		for the price of five hundred dollars ($500.00) or more is not enforceable by way of action or 12
3506	3511		defense unless there is some writing a record sufficient to indicate that a contract for sale has 13
3507	3512		been made between the parties and signed by the party against whom enforcement is sought or 14
3508	3513		by his the party's authorized agent or broker. A writing record is not insufficient because it omits 15
3509	3514		or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph 16
3510	3515		subsection beyond the quantity of goods shown in such writing.the record. 17
3511	3516		(2)(b) Between merchants merchants, if within a reasonable time a writing record in 18
3512	3517		confirmation of the contract and sufficient against the sender is received and the party receiving 19
3513	3518		it has reason to know its contents, it the record satisfies the requirements of subsection (1) (a) of 20
3514	3519		this section against such the party unless written notice in a record of objection to its contents is 21
3515	3520		given within ten 10 days after it is received. 22
3516	3521		(3)(c) A All of the following apply to a contract which that does not satisfy the requirements 23
3517	3522		of subsection (1) (a) of this section but which that is valid in other respects is enforceablerespects: 24
3518	3523		(a)(1) The contract is enforceable if the goods are to be specially manufactured for 25
3519	3524		the buyer and are not suitable for sale to others in the ordinary course of the 26
3520	3525		seller's business and the seller, before notice of repudiation is received and 27
3521	3526		under circumstances which that reasonably indicate that the goods are for the 28
3522	3527		buyer, has made either a substantial beginning of their manufacture or 29
3523	3528		commitments for their procurement; orprocurement. 30
3524	3529		(b)(2) The contract is enforceable if the party against whom which enforcement is 31
3525	3530		sought admits in his the party's pleading, testimony testimony, or otherwise in 32
3526	3531		court that a contract for sale was made, but the contract is not enforceable 33
3527	3532		under this provision subdivision beyond the quantity of goods admitted; 34
3528	3533		oradmitted. 35
3529	3534		(c)(3) The contract is enforceable with respect to goods for which payment has been 36
3530	3535		made and accepted or which that have been received and accepted 37
3531	3536		(G.S. 25-2-606)." 38
3532	3537		SECTION 61. G.S. 25-2-202 reads as rewritten: 39
3533	3538		"§ 25-2-202. Final written expression; parol or extrinsic evidence. 40
3534	3539		Terms with respect to which the confirmatory memoranda of the parties agree or which that 41
3535	3540		are otherwise set forth in a writing record intended by the parties as a final expression of their 42
3536	3541		agreement with respect to such terms as are included therein may the terms included in it shall 43
3537	3542		not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement 44
3538	3543		but may be explained or supplementedsupplemented by the following: 45
3539	3544		(a)(1) by By course of dealing or usage of trade (G.S. 25-1-205) or by course of 46
3540	3545		performance (G.S. 25-2-208); and(G.S. 25-2-208). 47
3541	3546		(b)(2) by By evidence of consistent additional terms unless the court finds the 48
3542	3547		writing record to have been intended also as a complete and exclusive 49
3543	3548		statement of the terms of the agreement." 50
3544	3549		SECTION 62. G.S. 25-2-203 reads as rewritten: 51 General Assembly Of North Carolina Session 2025
3545		-	Page 70 ~~Senate Bill 117-First Edition~~
	3550	+	Page 70 DRS35028-MUz-3A
3546	3551		"§ 25-2-203. Seals inoperative. 1
3547	3552		The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy or 2
3548	3553		sell goods does not constitute the writing render the record a sealed instrument instrument, and 3
3549	3554		the law with respect to sealed instruments does not apply to such a the contract or offer." 4
3550	3555		SECTION 63. G.S. 25-2-205 reads as rewritten: 5
3551	3556		"§ 25-2-205. Firm offers. 6
3552	3557		An offer by a merchant to buy or sell goods in a signed writing which record that by its terms 7
3553	3558		gives assurance that it will be held open is not revocable, for lack of consideration, during the 8
3554	3559		time stated or if no time is stated for a reasonable time, but in no event may such shall the period 9
3555	3560		of irrevocability exceed three months; but any such the term of assurance on a form supplied by 10
3556	3561		the offeree must shall be separately signed by the offeror." 11
3557	3562		SECTION 64. G.S. 25-2-209 reads as rewritten: 12
3558	3563		"§ 25-2-209. Modification, rescission rescission, and waiver. 13
3559	3564		(1)(a) An agreement modifying a contract within this article Article needs no consideration 14
3560	3565		to be binding. 15
3561	3566		(2)(b) A signed agreement which that excludes modification or rescission except by a signed 16
3562	3567		writing or other signed record cannot be otherwise modified or rescinded, but except as between 17
3563	3568		merchants such a this requirement on a form supplied by the merchant must be separately signed 18
3564	3569		by the other party. 19
3565	3570		(3)(c) The requirements of the statute of frauds section of this article Article (G.S. 25-2-201) 20
3566	3571		must be satisfied if the contract as modified is within its provisions. 21
3567	3572		(4)(d) Although an attempt at modification or rescission does not satisfy the requirements 22
3568	3573		of subsection (2) or (3) (b) or (c) of this section, it can operate as a waiver. 23
3569	3574		(5)(e) A party who that has made a waiver affecting an executory portion of the contract 24
3570	3575		may retract the waiver by reasonable notification received by the other party that strict 25
3571	3576		performance will be required of any term waived, unless the retraction would be unjust in view 26
3572	3577		of a material change of position in reliance on the waiver." 27
3573	3578		SECTION 65. G.S. 25-2A-102 reads as rewritten: 28
3574	3579		"§ 25-2A-102. Scope. 29
3575	3580		(a) This Article applies to any transaction, regardless of form, that creates a lease.lease 30
3576	3581		and, in the case of a hybrid lease, it applies to the extent provided in subsection (b) of this section. 31
3577	3582		(b) In a hybrid lease, both of the following apply: 32
3578	3583		(1) If the lease-of-goods aspects do not predominate, all of the following apply: 33
3579	3584		a. Only the provisions of this Article that relate primarily to the 34
3580	3585		lease-of-goods aspects of the transaction apply, and the provisions of 35
3581	3586		this Article that relate primarily to the transaction as a whole do not 36
3582	3587		apply. 37
3583	3588		b. G.S. 25-2A-209 applies if the lease is a finance lease. 38
3584	3589		c. G.S. 25-2A-407 applies to the promises of the lessee in a finance lease 39
3585	3590		to the extent the promises are consideration for the right to possession 40
3586	3591		and use of the leased goods. 41
3587	3592		(2) If the lease-of-goods aspects predominate, this Article applies to the 42
3588	3593		transaction but does not preclude application in appropriate circumstances of 43
3589	3594		other law to aspects of the lease that do not relate to the lease of goods." 44
3590	3595		SECTION 66. G.S. 25-2A-103 reads as rewritten: 45
3591	3596		"§ 25-2A-103. Definitions and index of definitions. 46
3592	3597		(1)(a) In this Article unless the context otherwise requires:Article, the following definitions 47
3593	3598		apply: 48
3594	3599		(1) Accessions. – Defined in G.S. 25-2A-310. 49
3595	3600		(2) Account. – Defined in G.S. 25-9-102. 50
3596	3601		(3) Between merchants. – Defined in G.S. 25-2-104. 51 General Assembly Of North Carolina Session 2025
3597		-	~~Senate Bill 117-First Edition~~ Page 71
	3602	+	DRS35028-MUz-3A Page 71
3598	3603		(4) Buyer. – Defined in G.S. 25-2-103. 1
3599	3604		(a)(5) "Buyer in ordinary course of business" means a Buyer in ordinary course of 2
3600	3605		business. – A person who, that, in good faith and without knowledge that the 3
3601	3606		sale to him the person is in violation of the ownership rights or security interest 4
3602	3607		or leasehold interest of a third party in the goods, buys in ordinary course from 5
3603	3608		a person person, other than a pawnbroker, in the business of selling goods of 6
3604	3609		that kind but does not include a pawnbroker. kind. "Buying" may be for cash 7
3605	3610		or by exchange of other property or on secured or unsecured credit and 8
3606	3611		includes acquiring goods or documents of title under a preexisting contract for 9
3607	3612		sale but does not include a transfer in bulk or as security for or in total or 10
3608	3613		partial satisfaction of a money debt. 11
3609	3614		(b)(6) "Cancellation" occurs Cancellation. – Occurs when either party puts an end to 12
3610	3615		the lease contract for default by the other party. 13
3611	3616		(7) Chattel paper. – Defined in G.S. 25-9-102. 14
3612	3617		(c)(8) "Commercial unit" means such a Commercial unit. – A unit of goods as that 15
3613	3618		by commercial usage is a single whole for purposes of lease and the division 16
3614	3619		of which materially impairs its character or value on the market or in use. A 17
3615	3620		commercial unit may be a single article, as a machine, or a set of articles, as a 18
3616	3621		suite of furniture or a line of machinery, or a quantity, as a gross or carload, 19
3617	3622		or any other unit treated in use or in the relevant market as a single whole. 20
3618	3623		(d)(9) "Conforming" goods or performance under a lease contract Conforming. – 21
3619	3624		With respect to goods or performance under a lease contract, means goods or 22
3620	3625		performance that are in accordance with the obligations under the lease 23
3621	3626		contract. 24
3622	3627		(10) Construction mortgage. – Defined in G.S. 25-2A-309. 25
3623	3628		(11) Consumer goods. – Defined in G.S. 25-9-102. 26
3624	3629		(e)(12) "Consumer lease" means a Consumer lease. – A lease that a lessor regularly 27
3625	3630		engaged in the business of leasing or selling makes to a lessee who is an 28
3626	3631		individual and who takes under the lease primarily for a personal, family, or 29
3627	3632		household purpose, if the total payments to be made under the lease contract, 30
3628	3633		excluding payments for options to renew or buy, do not exceed twenty-five 31
3629	3634		thousand dollars ($25,000). 32
3630	3635		(13) Document. – Defined in G.S. 25-9-102. 33
3631	3636		(14) Encumbrance. – Defined in G.S. 25-2A-309. 34
3632	3637		(15) Entrusting. – Defined in G.S. 25-2-403. 35
3633	3638		(f)(16) "Fault" means wrongful Fault. – Wrongful act, omission, breach, or default. 36
3634	3639		(g)(17) "Finance lease" means a Finance lease. – A lease with respect to which: which 37
3635	3640		(i) the lessor does not select, manufacture, or supply the goods; (ii) the lessor 38
3636	3641		acquires the goods or the right to possession and use of the goods in 39
3637	3642		connection with the lease; and (iii) one of the following occurs: 40
3638	3643		(A)a. the The lessee receives a copy of the contract by which the lessor 41
3639	3644		acquired the goods or the right to possession and use of the goods 42
3640	3645		before signing the lease contract;contract. 43
3641	3646		(B)b. the The lessee's approval of the contract by which the lessor acquired 44
3642	3647		the goods or the right to possession and use of the goods is a condition 45
3643	3648		to effectiveness of the lease contract;contract. 46
3644	3649		(C)c. the The lessee, before signing the lease contract, receives an accurate 47
3645	3650		and complete statement designating the promises and warranties, and 48
3646	3651		any disclaimers of warranties, limitations or modifications of 49
3647	3652		remedies, or liquidated damages, including those of a third party, such 50
3648	3653		as the manufacturer of the goods, provided to the lessor by the person 51 General Assembly Of North Carolina Session 2025
3649		-	Page 72 ~~Senate Bill 117-First Edition~~
	3654	+	Page 72 DRS35028-MUz-3A
3650	3655		supplying the goods in connection with or as part of the contract by 1
3651	3656		which the lessor acquired the goods or the right to possession and use 2
3652	3657		of the goods; orgoods. 3
3653	3658		(D)d. if If the lease is not a consumer lease, the lessor, before the lessee signs 4
3654	3659		the lease contract, informs the lessee in writing (a) (i) of the identity 5
3655	3660		of the person supplying the goods to the lessor, unless the lessee has 6
3656	3661		selected that person and directed the lessor to acquire the goods or the 7
3657	3662		right to possession and use of the goods from that person, (b) (ii) that 8
3658	3663		the lessee is entitled under this Article to the promises and warranties, 9
3659	3664		including those of any third party, provided to the lessor by the person 10
3660	3665		supplying the goods in connection with or as part of the contract by 11
3661	3666		which the lessor acquired the goods or the right to possession and use 12
3662	3667		of the goods, and (c) (iii) that the lessee may communicate with the 13
3663	3668		person supplying the goods to the lessor and receive an accurate and 14
3664	3669		complete statement of those promises and warranties, including any 15
3665	3670		disclaimers and limitations of them or of remedies. 16
3666	3671		(18) Fixture filing. – Defined in G.S. 25-2A-309. 17
3667	3672		(19) Fixtures. – Defined in G.S. 25-2A-309. 18
3668	3673		(20) General intangible. – Defined in G.S. 25-9-102. 19
3669	3674		(h)(21) "Goods" means all Goods. – All things that are movable at the time of 20
3670	3675		identification to the lease contract, or are fixtures (G.S. 25-2A-309), but the 21
3671	3676		term does not include money, documents, instruments, accounts, chattel 22
3672	3677		paper, general intangibles, or minerals or the like, including oil and gas, before 23
3673	3678		extraction. The term also includes the unborn young of animals. 24
3674	3679		(22) Hybrid lease. – A single transaction involving a lease of goods and any of the 25
3675	3680		following: 26
3676	3681		a. The provision of services. 27
3677	3682		b. A sale of other goods. 28
3678	3683		c. A sale, lease, or license of property other than goods. 29
3679	3684		(i)(23) "Installment lease contract" means a Installment lease contract. – A lease 30
3680	3685		contract that authorizes or requires the delivery of goods in separate lots to be 31
3681	3686		separately accepted, even though the lease contract contains a clause "each 32
3682	3687		delivery is a separate lease" or its equivalent. 33
3683	3688		(24) Instrument. – Defined in G.S. 25-9-102. 34
3684	3689		(j)(25) "Lease" means a Lease. – A transfer of the right to possession and use of goods 35
3685	3690		for a term in return for consideration, but a sale, including a sale on approval 36
3686	3691		or a sale or return, or retention or creation of a security interest is not a lease. 37
3687	3692		Unless the context clearly indicates otherwise, the term includes a sublease. 38
3688	3693		The term includes a motor vehicle operating agreement that is considered a 39
3689	3694		lease under § section 7701(h) of the Internal Revenue Code. 40
3690	3695		(k)(26) "Lease agreement" means the Lease agreement. – The bargain, with respect 41
3691	3696		to the lease, of the lessor and the lessee in fact as found in their language or 42
3692	3697		by implication from other circumstances including course of dealing or usage 43
3693	3698		of trade or course of performance as provided in this Article. Unless the 44
3694	3699		context clearly indicates otherwise, the term includes a sublease agreement. 45
3695	3700		(l)(27) "Lease contract" means the Lease contract. – The total legal obligation that 46
3696	3701		results from the lease agreement as affected by this Article and any other 47
3697	3702		applicable rules of law. Unless the context clearly indicates otherwise, the 48
3698	3703		term includes a sublease contract. 49
3699	3704		(m)(28) "Leasehold interest" means the Leasehold interest. – The interest of the 50
3700	3705		lessor or the lessee under a lease contract. 51 General Assembly Of North Carolina Session 2025
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	3706	+	DRS35028-MUz-3A Page 73
3702	3707		(n)(29) "Lessee" means a Lessee. – A person who that acquires the right to possession 1
3703	3708		and use of goods under a lease. Unless the context clearly indicates otherwise, 2
3704	3709		the term includes a sublessee. 3
3705	3710		(o)(30) "Lessee in ordinary course of business" means a Lessee in ordinary course of 4
3706	3711		business. – A person who, that, in good faith and without knowledge that the 5
3707	3712		lease to him the person is in violation of the ownership rights or security 6
3708	3713		interest or leasehold interest of a third party in the goods, leases in ordinary 7
3709	3714		course from a person person, other than a pawnbroker, in the business of 8
3710	3715		selling or leasing goods of that kind but does not include a pawnbroker. kind. 9
3711	3716		"Leasing" may be for cash or by exchange of other property or on secured or 10
3712	3717		unsecured credit and includes acquiring goods or documents of title under a 11
3713	3718		preexisting lease contract but does not include a transfer in bulk or as security 12
3714	3719		for or in total or partial satisfaction of a money debt. 13
3715	3720		(p)(31) "Lessor" means a Lessor. – A person who that transfers the right to possession 14
3716	3721		and use of goods under a lease. Unless the context clearly indicates otherwise, 15
3717	3722		the term includes a sublessor. 16
3718	3723		(q)(32) "Lessor's residual interest" means the Lessor's residual interest. – The lessor's 17
3719	3724		interest in the goods after expiration, termination, or cancellation of the lease 18
3720	3725		contract. 19
3721	3726		(r)(33) "Lien" means a Lien. – A charge against or interest in goods to secure payment 20
3722	3727		of a debt or performance of an obligation, but the term does not include a 21
3723	3728		security interest. 22
3724	3729		(s)(34) "Lot" means a Lot. – A parcel or a single article that is the subject matter of a 23
3725	3730		separate lease or delivery, whether or not it is sufficient to perform the lease 24
3726	3731		contract. 25
3727	3732		(35) Merchant. – Defined in G.S. 25-2-104. 26
3728	3733		(t)(36) "Merchant lessee" means a Merchant lessee. – A lessee that is a merchant with 27
3729	3734		respect to goods of the kind subject to the lease. 28
3730	3735		(37) Mortgage. – Defined in G.S. 25-9-102. 29
3731	3736		(u)(38) "Present value" means the Present value. – The amount as of a date certain of 30
3732	3737		one or more sums payable in the future, discounted to the date certain. The 31
3733	3738		discount is determined by the interest rate specified by the parties if the rate 32
3734	3739		was not manifestly unreasonable at the time the transaction was entered into; 33
3735	3740		otherwise, the discount is determined by a commercially reasonable rate that 34
3736	3741		takes into account the facts and circumstances of each case at the time the 35
3737	3742		transaction was entered into. 36
3738	3743		(v)(39) "Purchase" includes Purchase. – Includes taking by sale, lease, mortgage, 37
3739	3744		security interest, pledge, gift, or any other voluntary transaction creating an 38
3740	3745		interest in goods. 39
3741	3746		(40) Purchase money lease. – Defined in G.S. 25-2A-309. 40
3742	3747		(41) Pursuant to commitment. – Defined in G.S. 25-9-102. 41
3743	3748		(42) Receipt. – Defined in G.S. 25-2-103. 42
3744	3749		(43) Sale. – Defined in G.S. 25-2-106. 43
3745	3750		(44) Sale on approval. – Defined in G.S. 25-2-326. 44
3746	3751		(45) Sale or return. – Defined in G.S. 25-2-326. 45
3747	3752		(46) Seller. – Defined in G.S. 25-2-103. 46
3748	3753		(w)(47) "Sublease" means a Sublease. – A lease of goods the right to possession 47
3749	3754		and use of which was acquired by the lessor as a lessee under an existing lease. 48
3750	3755		(x)(48) "Supplier" means a Supplier. – A person from whom which a lessor buys or 49
3751	3756		leases goods to be leased under a finance lease. 50 General Assembly Of North Carolina Session 2025
3752		-	Page 74 ~~Senate Bill 117-First Edition~~
	3757	+	Page 74 DRS35028-MUz-3A
3753	3758		(y)(49) "Supply contract" means a Supply contract. – A contract under which a lessor 1
3754	3759		buys or leases goods to be leased. 2
3755	3760		(z)(50) "Termination" occurs Termination. – Occurs when either party pursuant to a 3
3756	3761		power created by agreement or law puts an end to the lease contract otherwise 4
3757	3762		than for default. 5
3758	3763		(2) Other definitions applying to this Article and the sections in which they appear are: 6
3759	3764		"Accessions". G.S. 25-2A-310(1). 7
3760	3765		"Construction mortgage". G.S. 25-2A-309(1)(d). 8
3761	3766		"Encumbrance". G.S. 25-2A-309(1)(e). 9
3762	3767		"Fixtures". G.S. 25-2A-309(1)(a). 10
3763	3768		"Fixture filing". G.S. 25-2A-309(1)(b). 11
3764	3769		"Purchase money lease". G.S. 25-2A-309(1)(c). 12
3765	3770		(3) The following definitions in other Articles apply to this Article: 13
3766	3771		"Account" G.S. 25-9-102(a)(2). 14
3767	3772		"Between merchants" G.S. 25-2-104(3). 15
3768	3773		"Buyer" G.S. 25-2-103(1)(a). 16
3769	3774		"Chattel paper" G.S. 25-9-102(a)(11). 17
3770	3775		"Consumer goods" G.S. 25-9-102(a)(23). 18
3771	3776		"Document" G.S. 25-9-102(a)(30). 19
3772	3777		"Entrusting" G.S. 25-2-403(3). 20
3773	3778		"General intangible" G.S. 25-9-102(a)(42). 21
3774	3779		"Instrument" G.S. 25-9-102(a)(47). 22
3775	3780		"Merchant" G.S. 25-2-104(1). 23
3776	3781		"Mortgage" G.S. 25-9-102(a)(55). 24
3777	3782		"Pursuant to commitment" G.S. 25-9-102(a)(68). 25
3778	3783		"Receipt" G.S. 25-2-103(1)(c). 26
3779	3784		"Sale" G.S. 25-2-106(1). 27
3780	3785		"Sale on approval" G.S. 25-2-326. 28
3781	3786		"Sale or return" G.S. 25-2-326. 29
3782	3787		"Seller" G.S. 25-2-103(1)(d). 30
3783	3788		(4)(b) In addition, Article 1 of this Chapter contains general definitions and principles of 31
3784	3789		construction and interpretation applicable throughout this Article." 32
3785	3790		SECTION 67. G.S. 25-2A-107 reads as rewritten: 33
3786	3791		"§ 25-2A-107. Waiver or renunciation of claim or right after default. 34
3787	3792		Any claim or right arising out of an alleged default or breach of warranty may be discharged 35
3788	3793		in whole or in part without consideration by a written waiver or renunciation in a signed and 36
3789	3794		record delivered by the aggrieved party." 37
3790	3795		SECTION 68. G.S. 25-2A-201 reads as rewritten: 38
3791	3796		"§ 25-2A-201. Statute of frauds. 39
3792	3797		(1)(a) A lease contract is not enforceable by way of action or defense unless:unless either of 40
3793	3798		the following applies: 41
3794	3799		(a)(1) the The total payments to be made under the lease contract, excluding 42
3795	3800		payments for options to renew or buy, are less than one thousand dollars 43
3796	3801		($1,000); or($1,000). 44
3797	3802		(b)(2) there There is a writing, record, signed by the party against whom which 45
3798	3803		enforcement is sought or by that party's authorized agent, sufficient to indicate 46
3799	3804		that a lease contract has been made between the parties and to describe the 47
3800	3805		goods leased and the lease term. 48
3801	3806		(2)(b) Any description of leased goods or of the lease term is sufficient and satisfies 49
3802	3807		subsection (1)(b) subdivision (a)(2) of this section, whether or not it is specific, if it reasonably 50
3803	3808		identifies what is described. 51 General Assembly Of North Carolina Session 2025
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	3809	+	DRS35028-MUz-3A Page 75
3805	3810		(3)(c) A writing record is not insufficient because it omits or incorrectly states a term agreed 1
3806	3811		upon, but the lease contract is not enforceable under subsection (1)(b) subdivision (a)(2) of this 2
3807	3812		section beyond the lease term and the quantity of goods shown in the writing.record. 3
3808	3813		(4)(d) A All of the following apply to a lease contract that does not satisfy the requirements 4
3809	3814		of subsection (1) (a) of this section, but which that is valid in other respects, is 5
3810	3815		enforceable:respects: 6
3811	3816		(a)(1) The contract is enforceable if the goods are to be specially manufactured or 7
3812	3817		obtained for the lessee and are not suitable for lease or sale to others in the 8
3813	3818		ordinary course of the lessor's business, and the lessor, before notice of 9
3814	3819		repudiation is received and under circumstances that reasonably indicate that 10
3815	3820		the goods are for the lessee, has made either a substantial beginning of their 11
3816	3821		manufacture or commitments for their procurement;procurement. 12
3817	3822		(b)(2) The contract is enforceable if the party against whom which enforcement is 13
3818	3823		sought admits in that party's pleading, testimony, or otherwise in court that a 14
3819	3824		lease contract was made, but the lease contract is not enforceable under this 15
3820	3825		provision subdivision beyond the quantity of goods admitted; oradmitted. 16
3821	3826		(c)(3) The contract is enforceable with respect to goods that have been received and 17
3822	3827		accepted by the lessee. 18
3823	3828		(5)(e) The lease term under a lease contract referred to in subsection (4) (d) of this section 19
3824	3829		is:is as follows: 20
3825	3830		(a)(1) if If there is a writing record signed by the party against whom which 21
3826	3831		enforcement is sought or by that party's authorized agent specifying the lease 22
3827	3832		term, the term so specified;specified. 23
3828	3833		(b)(2) if If the party against whom which enforcement is sought admits in that party's 24
3829	3834		pleading, testimony, or otherwise in court a lease term, the term so 25
3830	3835		admitted;admitted. 26
3831	3836		(c)(3) if If there is other evidence of the parties' intent with regard to the lease term, 27
3832	3837		the term so intended; orintended. 28
3833	3838		(d)(4) in In the absence of evidence of the parties' intent, a reasonable lease term." 29
3834	3839		SECTION 69. G.S. 25-2A-202 reads as rewritten: 30
3835	3840		"§ 25-2A-202. Final written expression: parol or extrinsic evidence. 31
3836	3841		Terms with respect to which the confirmatory memoranda of the parties agree or which are 32
3837	3842		otherwise set forth in a writing record intended by the parties as a final expression of their 33
3838	3843		agreement with respect to such terms as are included therein may the terms included in it shall 34
3839	3844		not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement 35
3840	3845		but may be explained or supplemented:supplemented by the following: 36
3841	3846		(a)(1) by By course of dealing or usage of trade or by course of performance; 37
3842	3847		andperformance. 38
3843	3848		(b)(2) by By evidence of consistent additional terms unless the court finds the 39
3844	3849		writing record to have been intended also as a complete and exclusive 40
3845	3850		statement of the terms of the agreement." 41
3846	3851		SECTION 70. G.S. 25-2A-203 reads as rewritten: 42
3847	3852		"§ 25-2A-203. Seals inoperative. 43
3848	3853		The affixing of a seal to a writing record evidencing a lease contract or an offer to enter into 44
3849	3854		a lease contract does not render the writing record a sealed instrument instrument, and the law 45
3850	3855		with respect to sealed instruments does not apply to the lease contract or offer." 46
3851	3856		SECTION 71. G.S. 25-2A-205 reads as rewritten: 47
3852	3857		"§ 25-2A-205. Firm offers. 48
3853	3858		An offer by a merchant to lease goods to or from another person in a signed writing record 49
3854	3859		that by its terms gives assurance it will be held open is not revocable, for lack of consideration, 50
3855	3860		during the time stated or, if no time is stated, for a reasonable time, but in no event may shall the 51 General Assembly Of North Carolina Session 2025
3856		-	Page 76 ~~Senate Bill 117-First Edition~~
	3861	+	Page 76 DRS35028-MUz-3A
3857	3862		period of irrevocability exceed three months. Any such The term of assurance on a form supplied 1
3858	3863		by the offeree must shall be separately signed by the offeror." 2
3859	3864		SECTION 72. G.S. 25-2A-208 reads as rewritten: 3
3860	3865		"§ 25-2A-208. Modification, rescission rescission, and waiver. 4
3861	3866		(1)(a) An agreement modifying a lease contract needs no consideration to be binding. 5
3862	3867		(2)(b) A signed lease agreement that excludes modification or rescission except by a signed 6
3863	3868		writing may record shall not be otherwise modified or rescinded, but, except as between 7
3864	3869		merchants, such a this requirement on a form supplied by a merchant must shall be separately 8
3865	3870		signed by the other party. 9
3866	3871		(3)(c) Although an attempt at modification or rescission does not satisfy the requirements 10
3867	3872		of subsection (2) (b) of this section, it may operate as a waiver. 11
3868	3873		(4)(d) A party who that has made a waiver affecting an executory portion of a lease contract 12
3869	3874		may retract the waiver by reasonable notification received by the other party that strict 13
3870	3875		performance will be required of any term waived, unless the retraction would be unjust in view 14
3871	3876		of a material change of position in reliance on the waiver." 15
3872	3877		SECTION 73. G.S. 25-3-104 reads as rewritten: 16
3873	3878		"§ 25-3-104. Negotiable instrument. 17
3874	3879		(a) Except as provided in subsections (c) and (d) of this section, "negotiable instrument" 18
3875	3880		means an unconditional promise or order to pay a fixed amount of money, with or without interest 19
3876	3881		or other charges described in the promise or order, if it:all of the following apply: 20
3877	3882		(1) Is The promise or order is payable to bearer or to order at the time it is issued 21
3878	3883		or first comes into possession of a holder;holder. 22
3879	3884		(2) Is The promise or order is payable on demand or at a definite time; andtime. 23
3880	3885		(3) Does The promise or order does not state any other undertaking or instruction 24
3881	3886		by the person promising or ordering payment to do any act in addition to the 25
3882	3887		payment of money, but the promise or order may contain (i) an undertaking 26
3883	3888		or power to give, maintain, or protect collateral to secure payment, (ii) an 27
3884	3889		authorization or power to the holder to confess judgment or realize on or 28
3885	3890		dispose of collateral, or (iii) a waiver of the benefit of any law intended for 29
3886	3891		the advantage or protection of an obligor.obligor, (iv) a term that specifies the 30
3887	3892		law that governs the promise or order, or (v) an undertaking to resolve in a 31
3888	3893		specified forum a dispute concerning the promise or order. 32
3889	3894		(b) "Instrument" means a negotiable instrument. 33
3890	3895		(c) An order that meets all of the requirements of subsection (a) of this section, except 34
3891	3896		subdivision (1), (1) of that subsection, and otherwise falls within the definition of "check" in 35
3892	3897		subsection (f) of this section is a negotiable instrument and a check. 36
3893	3898		(d) A promise or order other than a check is not an instrument if, at the time it is issued 37
3894	3899		or first comes into possession of a holder, it contains a conspicuous statement, however 38
3895	3900		expressed, to the effect that the promise or order is not negotiable or is not an instrument governed 39
3896	3901		by this Article. 40
3897	3902		(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an 41
3898	3903		instrument falls within the definition of both "note" and "draft", "draft," a person entitled to 42
3899	3904		enforce the instrument may treat it as either. 43
3900	3905		(f) "Check" means (i) a draft, other than a documentary draft, payable on demand and 44
3901	3906		drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even 45
3902	3907		though it is described on its face by another term, such as "money order".order." 46
3903	3908		…." 47
3904	3909		SECTION 74. G.S. 25-3-105 reads as rewritten: 48
3905	3910		"§ 25-3-105. Issue of instrument. 49
3906	3911		(a) "Issue" means means either of the following: 50 General Assembly Of North Carolina Session 2025
3907		-	~~Senate Bill 117-First Edition~~ Page 77
	3912	+	DRS35028-MUz-3A Page 77
3908	3913		(1) the The first delivery of an instrument by the maker or drawer, whether to a 1
3909	3914		holder or nonholder, for the purpose of giving rights on the instrument to any 2
3910	3915		person. 3
3911	3916		(2) If agreed by the payee, the first transmission by the drawer to the payee of an 4
3912	3917		image of an item and information derived from the item that enables the 5
3913	3918		depositary bank to collect the item by transferring or presenting under federal 6
3914	3919		law an electronic check. 7
3915	3920		(b) An unissued instrument, or an unissued incomplete instrument that is completed, is 8
3916	3921		binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally 9
3917	3922		issued or is issued for a special purpose is binding on the maker or drawer, but failure of the 10
3918	3923		condition or special purpose to be fulfilled is a defense. 11
3919	3924		(c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of 12
3920	3925		an instrument." 13
3921	3926		SECTION 75. G.S. 25-3-401 reads as rewritten: 14
3922	3927		"§ 25-3-401. Signature.Signature necessary for liability on instrument. 15
3923	3928		(a) A person is not liable on an instrument unless (i) the person signed the instrument, or 16
3924	3929		(ii) the person is represented by an agent or representative who signed the instrument and the 17
3925	3930		signature is binding on the represented person under G.S. 25-3-402. 18
3926	3931		(b) A signature may be made (i) manually or by means of a device or machine, and (ii) 19
3927	3932		by the use of any name, including a trade or assumed name, or by a word, mark, or symbol 20
3928	3933		executed or adopted by a person with present intention to authenticate a writing." 21
3929	3934		SECTION 76. G.S. 25-3-604 reads as rewritten: 22
3930	3935		"§ 25-3-604. Discharge by cancellation or renunciation. 23
3931	3936		(a) A person entitled to enforce an instrument, with or without consideration, may 24
3932	3937		discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such 25
3933	3938		as surrender of the instrument to the party, destruction, mutilation, or cancellation of the 26
3934	3939		instrument, cancellation or striking out of the party's signature, or the addition of words to the 27
3935	3940		instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights 28
3936	3941		against the party by a signed writing. The obligation of a party to pay a check is not discharged 29
3937	3942		solely by destruction of the check in connection with a process in which information is extracted 30
3938	3943		from the check and an image of the check is made and, subsequently, the information and image 31
3939	3944		are transmitted for payment. 32
3940	3945		(b) Cancellation or striking out of an endorsement indorsement pursuant to subsection (a) 33
3941	3946		of this section does not affect the status and rights of a party derived from the indorsement." 34
3942	3947		SECTION 77.(a) Subdivision (a)(1) of G.S. 25-4A-103 is recodified as subdivision 35
3943	3948		(a)(3a) of that section. 36
3944	3949		SECTION 77.(b) G.S. 25-4A-103, as amended by subsection (a) of this section, 37
3945	3950		reads as rewritten: 38
3946	3951		"§ 25-4A-103. Payment order – definitions. 39
3947	3952		(a) In this Article:Article, the following definitions apply: 40
3948	3953		(1) Recodified. 41
3949	3954		(2) "Beneficiary" means the Beneficiary. – The person to be paid by the 42
3950	3955		beneficiary's bank. 43
3951	3956		(3) "Beneficiary's bank" means the Beneficiary's bank. – The bank identified in a 44
3952	3957		payment order in which an account of the beneficiary is to be credited pursuant 45
3953	3958		to the order or which that otherwise is to make payment to the beneficiary if 46
3954	3959		the order does not provide for payment to an account. 47
3955	3960		(3a) "Payment order" means an Payment order. – An instruction of a sender to a 48
3956	3961		receiving bank, transmitted orally, electronically, or in writing, orally or in a 49
3957	3962		record, to pay, or to cause another bank to pay, a fixed or determinable amount 50
3958	3963		of money to a beneficiary if:if all of the following apply: 51 General Assembly Of North Carolina Session 2025
3959		-	Page 78 ~~Senate Bill 117-First Edition~~
	3964	+	Page 78 DRS35028-MUz-3A
3960	3965		(i)a. The instruction does not state a condition of payment to the beneficiary 1
3961	3966		other than time of payment,payment. 2
3962	3967		(ii)b. The receiving bank is to be reimbursed by debiting an account of, or 3
3963	3968		otherwise receiving payment from, the sender, andsender. 4
3964	3969		(iii)c. The instruction is transmitted by the sender directly to the receiving 5
3965	3970		bank or to an agent, funds-transfer system, or communication system 6
3966	3971		for transmittal to the receiving bank. 7
3967	3972		(4) "Receiving bank" means the Receiving bank. – The bank to which the sender's 8
3968	3973		instruction is addressed. 9
3969	3974		(5) "Sender" means the Sender. – The person giving the instruction to the 10
3970	3975		receiving bank. 11
3971	3976		(b) If an instruction complying with subsection (a)(1) subdivision (a)(3a) of this section 12
3972	3977		is to make more than one payment to a beneficiary, the instruction is a separate payment order 13
3973	3978		with respect to each payment. 14
3974	3979		(c) A payment order is issued when it is sent to the receiving bank." 15
3975	3980		SECTION 78. G.S. 25-4A-201 reads as rewritten: 16
3976	3981		"§ 25-4A-201. Security procedure. 17
3977	3982		"Security procedure" means a procedure established by agreement of a customer and a 18
3978	3983		receiving bank for the purpose of (i) verifying that a payment order or communication amending 19
3979	3984		or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission 20
3980	3985		or the content of the payment order or communication. A security procedure may impose an 21
3981	3986		obligation on the receiving bank or the customer and may require the use of algorithms or other 22
3982	3987		codes, identifying words or words, numbers, symbols, sounds, biometrics, encryption, call-back 23
3983	3988		procedures, or similar security devices. Comparison of a signature on a payment order or 24
3984	3989		communication with an authorized specimen signature of the customer or requiring a payment 25
3985	3990		order to be sent from a known email address, IP address, or telephone number is not by itself a 26
3986	3991		security procedure." 27
3987	3992		SECTION 79. G.S. 25-4A-202 reads as rewritten: 28
3988	3993		"§ 25-4A-202. Authorized and verified payment orders. 29
3989	3994		(a) A payment order received by the receiving bank is the authorized order of the person 30
3990	3995		identified as sender if that person authorized the order or is otherwise bound by it under the law 31
3991	3996		of agency. 32
3992	3997		(b) If a bank and its customer have agreed that the authenticity of payment orders issued 33
3993	3998		to the bank in the name of the customer as sender will be verified pursuant to a security procedure, 34
3994	3999		a payment order received by the receiving bank is effective as the order of the customer, whether 35
3995	4000		or not authorized, if (i) the security procedure is a commercially reasonable method of providing 36
3996	4001		security against unauthorized payment orders, and (ii) the bank proves that it accepted the 37
3997	4002		payment order in good faith and in compliance with the bank's obligations under the security 38
3998	4003		procedure and any written agreement or instruction of the customer customer, evidenced by a 39
3999	4004		record, restricting acceptance of payment orders issued in the name of the customer. The bank is 40
4000	4005		not required to follow an instruction that violates a written an agreement with the customer 41
4001	4006		customer, evidenced by a record, or notice of which is not received at a time and in a manner 42
4002	4007		affording the bank a reasonable opportunity to act on it before the payment order is accepted. 43
4003	4008		(c) Commercial reasonableness of a security procedure is a question of law to be 44
4004	4009		determined by considering the wishes of the customer expressed to the bank, the circumstances 45
4005	4010		of the customer known to the bank, including the size, type, and frequency of payment orders 46
4006	4011		normally issued by the customer to the bank, alternative security procedures offered to the 47
4007	4012		customer, and security procedures in general use by customers and receiving banks similarly 48
4008	4013		situated. A security procedure is deemed to be commercially reasonable if (i) the security 49
4009	4014		procedure was chosen by the customer after the bank offered, and the customer refused, a security 50
4010	4015		procedure that was commercially reasonable for that customer, and (ii) the customer expressly 51 General Assembly Of North Carolina Session 2025
4011		-	~~Senate Bill 117-First Edition~~ Page 79
	4016	+	DRS35028-MUz-3A Page 79
4012	4017		agreed in writing a record to be bound by any payment order, whether or not authorized, issued 1
4013	4018		in its name and accepted by the bank in compliance with the bank's obligations under the security 2
4014	4019		procedure chosen by the customer. 3
4015	4020		(d) The term "sender" in this Article includes the customer in whose name a payment 4
4016	4021		order is issued if the order is the authorized order of the customer under subsection (a), or it 5
4017	4022		subsection (a) of this section or if the order is effective as the order of the customer under 6
4018	4023		subsection (b).(b) of this section. 7
4019	4024		(e) This section applies to amendments and cancellations of payment orders to the same 8
4020	4025		extent it applies to payment orders. 9
4021	4026		(f) Except as provided in this section and in G.S. 25-4A-203(a)(1), rights and obligations 10
4022	4027		arising under this section or G.S. 25-4A-203 may shall not be varied by agreement." 11
4023	4028		SECTION 80. G.S. 25-4A-203 reads as rewritten: 12
4024	4029		"§ 25-4A-203. Unenforceability of certain verified payment orders. 13
4025	4030		(a) If an accepted payment order is not, under G.S. 25-4A-202(a), an authorized order of 14
4026	4031		a customer identified as sender, sender but is effective as an order of the customer pursuant to 15
4027	4032		G.S. 25-4A-202(b), the following rules apply: 16
4028	4033		(1) By express written agreement, agreement evidenced by a record, the receiving 17
4029	4034		bank may limit the extent to which it is entitled to enforce or retain payment 18
4030	4035		of the payment order. 19
4031	4036		(2) The receiving bank is not entitled to enforce or retain payment of the payment 20
4032	4037		order if the customer proves that the order was not caused, directly or 21
4033	4038		indirectly, by a person (i) entrusted at any time with duties to act for the 22
4034	4039		customer with respect to payment orders or the security procedure, or (ii) who 23
4035	4040		that obtained access to transmitting facilities of the customer or who that 24
4036	4041		obtained, from a source controlled by the customer and without authority of 25
4037	4042		the receiving bank, information facilitating breach of the security procedure, 26
4038	4043		regardless of how the information was obtained or whether the customer was 27
4039	4044		at fault. Information includes any access device, computer software, or the 28
4040	4045		like. 29
4041	4046		(b) This section applies to amendments of payment orders to the same extent it applies to 30
4042	4047		payment orders." 31
4043	4048		SECTION 81. G.S. 25-4A-207 reads as rewritten: 32
4044	4049		"§ 25-4A-207. Misdescription of beneficiary. 33
4045	4050		(a) Subject to subsection (b), (b) of this section, if, in a payment order received by the 34
4046	4051		beneficiary's bank, the name, bank account number, or other identification of the beneficiary 35
4047	4052		refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary 36
4048	4053		of the order and acceptance of the order cannot occur. 37
4049	4054		(b) If a payment order received by the beneficiary's bank identifies the beneficiary both 38
4050	4055		by name and by an identifying or bank account number and the name and number identify 39
4051	4056		different persons, the following rules apply: 40
4052	4057		(1) Except as otherwise provided in subsection (c), (c) of this section, if the 41
4053	4058		beneficiary's bank does not know that the name and number refer to different 42
4054	4059		persons, it may rely on the number as the proper identification of the 43
4055	4060		beneficiary of the order. The beneficiary's bank need not determine whether 44
4056	4061		the name and number refer to the same person. 45
4057	4062		(2) If the beneficiary's bank pays the person identified by name or knows that the 46
4058	4063		name and number identify different persons, no person has rights as 47
4059	4064		beneficiary except the person paid by the beneficiary's bank if that person was 48
4060	4065		entitled to receive payment from the originator of the funds transfer. If no 49
4061	4066		person has rights as beneficiary, acceptance of the order cannot occur. 50 General Assembly Of North Carolina Session 2025
4062		-	Page 80 ~~Senate Bill 117-First Edition~~
	4067	+	Page 80 DRS35028-MUz-3A
4063	4068		(c) If (i) a payment order described in subsection (b) of this section is accepted, (ii) the 1
4064	4069		originator's payment order described the beneficiary inconsistently by name and number, and 2
4065	4070		(iii) the beneficiary's bank pays the person identified by number as permitted by subsection 3
4066	4071		(b)(1), subdivision (b)(1) of this section, the following rules apply: 4
4067	4072		(1) If the originator is a bank, the originator is obliged to pay its order. 5
4068	4073		(2) If the originator is not a bank and proves that the person identified by number 6
4069	4074		was not entitled to receive payment from the originator, the originator is not 7
4070	4075		obliged to pay its order unless the originator's bank proves that the originator, 8
4071	4076		before acceptance of the originator's order, had notice that payment of a 9
4072	4077		payment order issued by the originator might be made by the beneficiary's 10
4073	4078		bank on the basis of an identifying or bank account number even if it identifies 11
4074	4079		a person different from the named beneficiary. Proof of notice may be made 12
4075	4080		by any admissible evidence. The originator's bank satisfies the burden of proof 13
4076	4081		if it proves that the originator, before the payment order was accepted, signed 14
4077	4082		a writing record stating the information to which the notice relates. 15
4078	4083		(d) In a case governed by subsection (b)(1), subdivision (b)(1) of this section, if the 16
4079	4084		beneficiary's bank rightfully pays the person identified by number and that person was not 17
4080	4085		entitled to receive payment from the originator, the amount paid may be recovered from that 18
4081	4086		person to the extent allowed by the law governing mistake and restitution as follows: 19
4082	4087		(1) If the originator is obliged to pay its payment order as stated in subsection (c), 20
4083	4088		(c) of this section, the originator has the right to recover. 21
4084	4089		(2) If the originator is not a bank and is not obliged to pay its payment order, the 22
4085	4090		originator's bank has the right to recover." 23
4086	4091		SECTION 82. G.S. 25-4A-208 reads as rewritten: 24
4087	4092		"§ 25-4A-208. Misdescription of intermediary bank or beneficiary's bank. 25
4088	4093		(a) This subsection applies Both of the following apply to a payment order identifying an 26
4089	4094		intermediary bank or the beneficiary's bank only by an identifying number.number: 27
4090	4095		(1) The receiving bank may rely on the number as the proper identification of the 28
4091	4096		intermediary or beneficiary's bank and need not determine whether the 29
4092	4097		number identifies a bank. 30
4093	4098		(2) The sender is obliged to compensate the receiving bank for any loss and 31
4094	4099		expenses incurred by the receiving bank as a result of its reliance on the 32
4095	4100		number in executing or attempting to execute the order. 33
4096	4101		(b) This subsection applies All of the following apply to a payment order identifying an 34
4097	4102		intermediary bank or the beneficiary's bank both by name and an identifying number if the name 35
4098	4103		and number identify different persons.persons: 36
4099	4104		(1) If the sender is a bank, the receiving bank may rely on the number as the 37
4100	4105		proper identification of the intermediary or beneficiary's bank if the receiving 38
4101	4106		bank, when it executes the sender's order, does not know that the name and 39
4102	4107		number identify different persons. The receiving bank need not determine 40
4103	4108		whether the name and number refer to the same person or whether the number 41
4104	4109		refers to a bank. The sender is obliged to compensate the receiving bank for 42
4105	4110		any loss and expenses incurred by the receiving bank as a result of its reliance 43
4106	4111		on the number in executing or attempting to execute the order. 44
4107	4112		(2) If the sender is not a bank and the receiving bank proves that the sender, before 45
4108	4113		the payment order was accepted, had notice that the receiving bank might rely 46
4109	4114		on the number as the proper identification of the intermediary or beneficiary's 47
4110	4115		bank even if it identifies a person different from the bank identified by name, 48
4111	4116		the rights and obligations of the sender and the receiving bank are governed 49
4112	4117		by subsection (b)(1), subdivision (b)(1) of this section, as though the sender 50
4113	4118		were a bank. Proof of notice may be made by any admissible evidence. The 51 General Assembly Of North Carolina Session 2025
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	4119	+	DRS35028-MUz-3A Page 81
4115	4120		receiving bank satisfies the burden of proof if it proves that the sender, before 1
4116	4121		the payment order was accepted, signed a writing record stating the 2
4117	4122		information to which the notice relates. 3
4118	4123		(3) Regardless of whether the sender is a bank, the receiving bank may rely on 4
4119	4124		the name as the proper identification of the intermediary or beneficiary's bank 5
4120	4125		if the receiving bank, at the time it executes the sender's order, does not know 6
4121	4126		that the name and number identify different persons. The receiving bank need 7
4122	4127		not determine whether the name and number refer to the same person. 8
4123	4128		(4) If the receiving bank knows that the name and number identify different 9
4124	4129		persons, reliance on either the name or the number in executing the sender's 10
4125	4130		payment order is a breach of the obligation stated in G.S. 25-4A-302(a)(1)." 11
4126	4131		SECTION 83. G.S. 25-4A-210 reads as rewritten: 12
4127	4132		"§ 25-4A-210. Rejection of payment order. 13
4128	4133		(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted 14
4129	4134		to the sender orally, electronically, or in writing. orally or in a record. A notice of rejection need 15
4130	4135		not use any particular words and is sufficient if it indicates that the receiving bank is rejecting 16
4131	4136		the order or will not execute or pay the order. Rejection is effective when the notice is given if 17
4132	4137		transmission is by a means that is reasonable in the circumstances. If notice of rejection is given 18
4133	4138		by a means that is not reasonable, rejection is effective when the notice is received. If an 19
4134	4139		agreement of the sender and receiving bank establishes the means to be used to reject a payment 20
4135	4140		order, (i) any means complying with the agreement is reasonable and (ii) any means not 21
4136	4141		complying is not reasonable unless no significant delay in receipt of the notice resulted from the 22
4137	4142		use of the noncomplying means. 23
4138	4143		…." 24
4139	4144		SECTION 84. G.S. 25-4A-211 reads as rewritten: 25
4140	4145		"§ 25-4A-211. Cancellation and amendment of payment order. 26
4141	4146		(a) A communication of the sender of a payment order cancelling or amending the order 27
4142	4147		may be transmitted to the receiving bank orally, electronically, or in writing. orally or in a record. 28
4143	4148		If a security procedure is in effect between the sender and the receiving bank, the communication 29
4144	4149		is not effective to cancel or amend the order unless the communication is verified pursuant to the 30
4145	4150		security procedure or the bank agrees to the cancellation or amendment. 31
4146	4151		(b) Subject to subsection (a), (a) of this section, a communication by the sender cancelling 32
4147	4152		or amending a payment order is effective to cancel or amend the order if notice of the 33
4148	4153		communication is received at a time and in a manner affording the receiving bank a reasonable 34
4149	4154		opportunity to act on the communication before the bank accepts the payment order. 35
4150	4155		(c) After a payment order has been accepted, cancellation or amendment of the order is 36
4151	4156		not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation 37
4152	4157		or amendment without agreement of the bank. The following provisions apply: 38
4153	4158		(1) With respect to a payment order accepted by a receiving bank other than the 39
4154	4159		beneficiary's bank, cancellation or amendment is not effective unless a 40
4155	4160		conforming cancellation or amendment of the payment order issued by the 41
4156	4161		receiving bank is also made. 42
4157	4162		(2) With respect to a payment order accepted by the beneficiary's bank, 43
4158	4163		cancellation or amendment is not effective unless the order was issued in 44
4159	4164		execution of an unauthorized payment order, or because of a mistake by a 45
4160	4165		sender in the funds transfer which that resulted in the issuance of a payment 46
4161	4166		order (i) that is a duplicate of a payment order previously issued by the sender, 47
4162	4167		(ii) that orders payment to a beneficiary not entitled to receive payment from 48
4163	4168		the originator, or (iii) that orders payment in an amount greater than the 49
4164	4169		amount the beneficiary was entitled to receive from the originator. If the 50
4165	4170		payment order is cancelled or amended, the beneficiary's bank is entitled to 51 General Assembly Of North Carolina Session 2025
4166		-	Page 82 ~~Senate Bill 117-First Edition~~
	4171	+	Page 82 DRS35028-MUz-3A
4167	4172		recover from the beneficiary any amount paid to the beneficiary to the extent 1
4168	4173		allowed by the law governing mistake and restitution. 2
4169	4174		… 3
4170	4175		(h) A funds-transfer system rule is not effective to the extent it conflicts with subsection 4
4171	4176		(c)(2).subdivision (c)(2) of this section." 5
4172	4177		SECTION 85. G.S. 25-4A-305 reads as rewritten: 6
4173	4178		"§ 25-4A-305. Liability for late or improper execution or failure to execute payment order. 7
4174	4179		(a) If a funds transfer is completed but execution of a payment order by the receiving 8
4175	4180		bank in breach of G.S. 25-4A-302 results in delay in payment to the beneficiary, the bank is 9
4176	4181		obliged to pay interest to either the originator or the beneficiary of the funds transfer for the 10
4177	4182		period of delay caused by the improper execution. Except as provided in subsection (c), (c) of 11
4178	4183		this section, additional damages are not recoverable. 12
4179	4184		(b) If execution of a payment order by a receiving bank in breach of G.S. 25-4A-302 13
4180	4185		results in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank 14
4181	4186		designated by the originator, or (iii) issuance of a payment order that does not comply with the 15
4182	4187		terms of the payment order of the originator, the bank is liable to the originator for its expenses 16
4183	4188		in the funds transfer and for incidental expenses and interest losses, to the extent not covered by 17
4184	4189		subsection (a), (a) of this section, resulting from the improper execution. Except as provided in 18
4185	4190		subsection (c), (c) of this section, additional damages are not recoverable. 19
4186	4191		(c) In addition to the amounts payable under subsections (a) and (b), (b) of this section, 20
4187	4192		damages, including consequential damages, are recoverable to the extent provided in an express 21
4188	4193		written agreement of the receiving bank.bank, evidenced by a record. 22
4189	4194		(d) If a receiving bank fails to execute a payment order it was obliged by express 23
4190	4195		agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction 24
4191	4196		and for incidental expenses and interest losses resulting from the failure to execute. Additional 25
4192	4197		damages, including consequential damages, are recoverable to the extent provided in an express 26
4193	4198		written agreement of the receiving bank, evidenced by a record, but are not otherwise 27
4194	4199		recoverable. 28
4195	4200		(e) Reasonable attorneys' fees are recoverable if demand for compensation under 29
4196	4201		subsection (a) or (b) of this section is made and refused before an action is brought on the claim. 30
4197	4202		If a claim is made for breach of an agreement under subsection (d) of this section and the 31
4198	4203		agreement does not provide for damages, reasonable attorneys' fees are recoverable if demand 32
4199	4204		for compensation under subsection (d) of this section is made and refused before an action is 33
4200	4205		brought on the claim. 34
4201	4206		(f) Except as stated in this section, the liability of a receiving bank under subsections (a) 35
4202	4207		and (b) may of this section shall not be varied by agreement." 36
4203	4208		SECTION 86. G.S. 25-5-104 reads as rewritten: 37
4204	4209		"§ 25-5-104. Formal requirements. 38
4205	4210		A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued 39
4206	4211		in any form that is a record and is authenticated (i) by a signature or (ii) in accordance with the 40
4207	4212		agreement of the parties or the standard practice referred to in G.S. 25-5-108(e).signed record." 41
4208	4213		SECTION 87. G.S. 25-5-116 reads as rewritten: 42
4209	4214		"§ 25-5-116. Choice of law and forum. 43
4210	4215		(a) The liability of an issuer, nominated person, or adviser for action or omission is 44
4211	4216		governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or 45
4212	4217		otherwise authenticated by the affected parties in the manner provided in G.S. 25-5-104 or by a 46
4213	4218		provision in the person's letter of credit, confirmation, or other undertaking. The jurisdiction 47
4214	4219		whose law is chosen need not bear any relation to the transaction. 48
4215	4220		(b) Unless subsection (a) of this section applies, the liability of an issuer, nominated 49
4216	4221		person, or adviser for action or omission is governed by the law of the jurisdiction in which the 50
4217	4222		person is located. The person is considered to be located at the address indicated in the person's 51 General Assembly Of North Carolina Session 2025
4218		-	~~Senate Bill 117-First Edition~~ Page 83
	4223	+	DRS35028-MUz-3A Page 83
4219	4224		undertaking. If more than one address is indicated, the person is considered to be located at the 1
4220	4225		address from which the person's undertaking was issued. 2
4221	4226		(b1) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters 3
4222	4227		of credit, but not enforcement of a judgment, all branches of a bank are considered separate 4
4223	4228		juridical entities and a bank is considered to be located at the place where its relevant branch is 5
4224	4229		considered to be located under this subsection.subsection (b2) of this section. 6
4225	4230		(b2) A branch of a bank is considered to be located at the address indicated in the branch's 7
4226	4231		undertaking. If more than one address is indicated, the branch is considered to be located at the 8
4227	4232		address from which the undertaking was issued. 9
4228	4233		…." 10
4229	4234		SECTION 88. G.S. 25-7-102 reads as rewritten: 11
4230	4235		"§ 25-7-102. Definitions and index of definitions. 12
4231	4236		(a) In this Article, unless the context otherwise requires:the following definitions apply: 13
4232	4237		(1) "Bailee" means a Bailee. – A person that by a warehouse receipt, bill of lading, 14
4233	4238		or other document of title acknowledges possession of goods and contracts to 15
4234	4239		deliver them. 16
4235	4240		(2) "Carrier" means a Carrier. – A person that issues a bill of lading. 17
4236	4241		(3) "Consignee" means a Consignee. – A person named in a bill of lading to whom 18
4237	4242		which or to whose order the bill promises delivery. 19
4238	4243		(4) "Consignor" means a Consignor. – A person named in a bill of lading as the 20
4239	4244		person from whom which the goods have been received for shipment. 21
4240	4245		(4a) Contract for sale. – Defined in G.S. 25-2-106. 22
4241	4246		(5) "Delivery order" means a Delivery order. – A record that contains an order to 23
4242	4247		deliver goods directed to a warehouse, carrier, or other person that in the 24
4243	4248		ordinary course of business issues warehouse receipts or bills of lading. 25
4244	4249		(6) Reserved for future codification purposes. 26
4245	4250		(7) "Goods" means all Goods. – All things that are treated as movable for the 27
4246	4251		purposes of a contract for storage or transportation. 28
4247	4252		(8) "Issuer" means a Issuer. – A bailee that issues a document of title or, in the 29
4248	4253		case of an unaccepted delivery order, the person that orders the possessor of 30
4249	4254		goods to deliver. The term includes a person for whom which an agent or 31
4250	4255		employee purports to act in issuing a document if the agent or employee has 32
4251	4256		real or apparent authority to issue documents, even if the issuer did not receive 33
4252	4257		any goods, the goods were misdescribed, or in any other respect the agent or 34
4253	4258		employee violated the issuer's instructions. 35
4254	4259		(8a) Lessee in ordinary course of business. – Defined in G.S. 25-2A-103. 36
4255	4260		(9) "Person entitled under the document" means the Person entitled under the 37
4256	4261		document. – The holder, in the case of a negotiable document of title, or the 38
4257	4262		person to whom which delivery of the goods is to be made by the terms of, or 39
4258	4263		pursuant to instructions in a record under, a nonnegotiable document of title. 40
4259	4264		(10) "Receipt" of goods. – Defined in G.S. 25-2-103. 41
4260	4265		(11) "Sign" means, with present intent to authenticate or adopt a record: 42
4261	4266		a. To execute or adopt a tangible symbol; or 43
4262	4267		b. To attach to or logically associate with the record an electronic sound, 44
4263	4268		symbol, or process. 45
4264	4269		(12) "Shipper" means a Shipper. – A person that enters into a contract of 46
4265	4270		transportation with a carrier. 47
4266	4271		(13) "Warehouse" means a Warehouse. – A person engaged in the business of 48
4267	4272		storing goods for hire. 49
4268	4273		(b) Definitions in other Articles applying to this Article and the sections in which they 50
4269	4274		appear are: 51 General Assembly Of North Carolina Session 2025
4270		-	Page 84 ~~Senate Bill 117-First Edition~~
	4275	+	Page 84 DRS35028-MUz-3A
4271	4276		(1) "Contract for sale," G.S. 25-2-106. 1
4272	4277		(2) "Lessee in the ordinary course of business," G.S. 25-2A-103. 2
4273	4278		(3) "Receipt" of goods, G.S. 25-2-103. 3
4274	4279		(c) In addition, Article 1 of this Chapter contains general definitions and principles of 4
4275	4280		construction and interpretation applicable throughout this Article." 5
4276	4281		SECTION 89. G.S. 25-7-106 reads as rewritten: 6
4277	4282		"§ 25-7-106. Control of electronic document of title. 7
4278	4283		(a) A person has control of an electronic document of title if a system employed for 8
4279	4284		evidencing the transfer of interests in the electronic document reliably establishes that person as 9
4280	4285		the person to which the electronic document was issued or transferred. 10
4281	4286		(b) A system satisfies subsection (a) of this section, and a person is deemed to have has 11
4282	4287		control of an electronic document of title, if the document is created, stored, and assigned 12
4283	4288		transferred in such a manner that:where all of the following apply: 13
4284	4289		(1) A single authoritative copy of the document exists which that is unique, 14
4285	4290		identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 15
4286	4291		of this subsection, unalterable;unalterable. 16
4287	4292		(2) The authoritative copy identifies the person asserting control as:as either of 17
4288	4293		the following: 18
4289	4294		a. The person to whom which the document was issued; orissued. 19
4290	4295		b. If the authoritative copy indicates that the document has been 20
4291	4296		transferred, the person to whom which the document was most 21
4292	4297		recently transferred;transferred. 22
4293	4298		(3) The authoritative copy is communicated to and maintained by the person 23
4294	4299		asserting control or its designated custodian;custodian. 24
4295	4300		(4) Copies or amendments that add or change an identified assignee transferee of 25
4296	4301		the authoritative copy can be made only with the consent of the person 26
4297	4302		asserting control;control. 27
4298	4303		(5) Each copy of the authoritative copy and any copy of a copy is readily 28
4299	4304		identifiable as a copy that is not the authoritative copy; andcopy. 29
4300	4305		(6) Any amendment of the authoritative copy is readily identifiable as authorized 30
4301	4306		or unauthorized. 31
4302	4307		(c) A system satisfies subsection (a) of this section, and a person has control of an 32
4303	4308		electronic document of title, if an authoritative electronic copy of the document, a record attached 33
4304	4309		to or logically associated with the electronic copy, or a system in which the electronic copy is 34
4305	4310		recorded does all of the following: 35
4306	4311		(1) Enables the person readily to identify each electronic copy as either an 36
4307	4312		authoritative copy or a nonauthoritative copy. 37
4308	4313		(2) Enables the person readily to identify itself in any way, including by name, 38
4309	4314		identifying number, cryptographic key, office, or account number, as the 39
4310	4315		person to which each authoritative electronic copy was issued or transferred. 40
4311	4316		(3) Gives the person exclusive power, subject to subsection (d) of this section, to 41
4312	4317		do both of the following: 42
4313	4318		a. Prevent others from adding or changing the person to which each 43
4314	4319		authoritative electronic copy has been issued or transferred. 44
4315	4320		b. Transfer control of each authoritative electronic copy. 45
4316	4321		(d) Subject to subsection (e) of this section, a power is exclusive under subdivision (c)(3) 46
4317	4322		of this section even if either of the following applies: 47
4318	4323		(1) The authoritative electronic copy, a record attached to or logically associated 48
4319	4324		with the authoritative electronic copy, or a system in which the authoritative 49
4320	4325		electronic copy is recorded limits the use of the document of title or has a 50 General Assembly Of North Carolina Session 2025
4321		-	~~Senate Bill 117-First Edition~~ Page 85
	4326	+	DRS35028-MUz-3A Page 85
4322	4327		protocol that is programmed to cause a change, including a transfer or loss of 1
4323	4328		control. 2
4324	4329		(2) The power is shared with another person. 3
4325	4330		(e) A power of a person is not shared with another person under subdivision (d)(2) of this 4
4326	4331		section and the person's power is not exclusive if both of the following apply: 5
4327	4332		(1) The person can exercise the power only if the power also is exercised by the 6
4328	4333		other person. 7
4329	4334		(2) Either of the following applies to the other person: 8
4330	4335		a. The other person can exercise the power without exercise of the power 9
4331	4336		by the person. 10
4332	4337		b. The other person is the transferor to the person of an interest in the 11
4333	4338		document of title. 12
4334	4339		(f) If a person has the powers specified in subdivision (c)(3) of this section, the powers 13
4335	4340		are presumed to be exclusive. 14
4336	4341		(g) A person has control of an electronic document of title if either of the following 15
4337	4342		applies to another person, other than the transferor to the person of an interest in the document: 16
4338	4343		(1) The other person has control of the document and acknowledges that it has 17
4339	4344		control on behalf of the person. 18
4340	4345		(2) The other person obtains control of the document after having acknowledged 19
4341	4346		that it will obtain control of the document on behalf of the person. 20
4342	4347		(h) A person that has control under this section is not required to acknowledge that it has 21
4343	4348		control on behalf of another person. 22
4344	4349		(i) If a person acknowledges that it has or will obtain control on behalf of another person, 23
4345	4350		unless the person otherwise agrees or law other than this Article or Article 9 of this Chapter 24
4346	4351		otherwise provides, the person does not owe any duty to the other person and is not required to 25
4347	4352		confirm the acknowledgment to any other person." 26
4348	4353		SECTION 90. G.S. 25-8-102 reads as rewritten: 27
4349	4354		"§ 25-8-102. Definitions. 28
4350	4355		(a) In this Article:Article, the following definitions apply: 29
4351	4356		(1) "Adverse claim" means a Adverse claim. – A claim that a claimant has a 30
4352	4357		property interest in a financial asset and that it is a violation of the rights of 31
4353	4358		the claimant for another person to hold, transfer, or deal with the financial 32
4354	4359		asset. 33
4355	4360		(1a) Appropriate person. – Defined in G.S. 25-8-107. 34
4356	4361		(2) "Bearer form", as Bearer form. – As applied to a certificated security, means 35
4357	4362		a form in which the security is payable to the bearer of the security certificate 36
4358	4363		according to its terms but not by reason of an indorsement. 37
4359	4364		(3) "Broker" means a Broker. – A person defined as a broker or dealer under the 38
4360	4365		federal securities laws, but without excluding a bank acting in that capacity. 39
4361	4366		(4) "Certificated security" means a Certificated security. – A security that is 40
4362	4367		represented by a certificate. 41
4363	4368		(5) "Clearing corporation" means:Clearing corporation. – Any of the following: 42
4364	4369		(i)a. A person that is registered as a "clearing agency" under the federal 43
4365	4370		securities laws;laws. 44
4366	4371		(ii)b. A federal reserve bank; orbank. 45
4367	4372		(iii)c. Any other person that provides clearance or settlement services with 46
4368	4373		respect to financial assets that would require it to register as a clearing 47
4369	4374		agency under the federal securities laws but for an exclusion or 48
4370	4375		exemption from the registration requirement, if its activities as a 49
4371	4376		clearing corporation, including promulgation of rules, are subject to 50
4372	4377		regulation by a federal or state governmental authority. 51 General Assembly Of North Carolina Session 2025
4373		-	Page 86 ~~Senate Bill 117-First Edition~~
	4378	+	Page 86 DRS35028-MUz-3A
4374	4379		(6) "Communicate" means to:Communicate. – Either of the following: 1
4375	4380		(i)a. Send a signed writing; orrecord. 2
4376	4381		(ii)b. Transmit information by any mechanism agreed upon by the persons 3
4377	4382		transmitting and receiving the information. 4
4378	4383		(6a) Control. – Defined in G.S. 25-8-106. 5
4379	4384		(6b) Controllable account. – Defined in G.S. 25-9-102. 6
4380	4385		(6c) Controllable electronic record. – Defined in G.S. 25-12-102. 7
4381	4386		(6d) Controllable payment intangible. – Defined in G.S. 25-9-102. 8
4382	4387		(6e) Delivery. – Defined in G.S. 25-8-301. 9
4383	4388		(7) "Entitlement holder" means a Entitlement holder. – A person identified in the 10
4384	4389		records of a securities intermediary as the person having a security entitlement 11
4385	4390		against the securities intermediary. If a person acquires a security entitlement 12
4386	4391		by virtue of G.S. 25-8-501(b)(2) or (3), that person is the entitlement holder. 13
4387	4392		(8) "Entitlement order" means a Entitlement order. – A notification 14
4388	4393		communicated to a securities intermediary directing transfer or redemption of 15
4389	4394		a financial asset to which the entitlement holder has a security entitlement. 16
4390	4395		(9) "Financial asset", except Financial asset. – Except as otherwise provided in 17
4391	4396		G.S. 25-8-103, means:means any of the following: 18
4392	4397		(i)a. A security;security. 19
4393	4398		(ii)b. An obligation of a person or a share, participation, or other interest in 20
4394	4399		a person or in property or an enterprise of a person, which that is, or is 21
4395	4400		of a type, dealt in or traded on financial markets, or which that is 22
4396	4401		recognized in any area in which it is issued or dealt in as a medium for 23
4397	4402		investment; orinvestment. 24
4398	4403		(iii)c. Any property that is held by a securities intermediary for another 25
4399	4404		person in a securities account if the securities intermediary has 26
4400	4405		expressly agreed with the other person that the property is to be treated 27
4401	4406		as a financial asset under this Article. 28
4402	4407		As context requires, the term means either the interest itself or the means by 29
4403	4408		which a person's claim to it is evidenced, including a certificated or 30
4404	4409		uncertificated security, a security certificate, or a security entitlement. 31
4405	4410		(10) Repealed by Session Laws 2006-112, s. 20, effective October 1, 2006. 32
4406	4411		(11) "Indorsement" means a Indorsement. – A signature that alone or accompanied 33
4407	4412		by other words is made on a security certificate in registered form or on a 34
4408	4413		separate document for the purpose of assigning, transferring, or redeeming the 35
4409	4414		security or granting a power to assign, transfer, or redeem it. 36
4410	4415		(12) "Instruction" means a Instruction. – A notification communicated to the issuer 37
4411	4416		of an uncertificated security which that directs that the transfer of the security 38
4412	4417		be registered or that the security be redeemed. 39
4413	4418		(12a) Investment company security. – Defined in G.S. 25-8-103. 40
4414	4419		(12b) Issuer. – Defined in G.S. 25-8-201. 41
4415	4420		(12c) Overissue. – Defined in G.S. 25-8-210. 42
4416	4421		(12d) Protected purchaser. – Defined in G.S. 25-8-303. 43
4417	4422		(13) "Registered form", as Registered form. – As applied to a certificated security, 44
4418	4423		means a form in which:which both of the following apply: 45
4419	4424		(i)a. The security certificate specifies a person entitled to the security; 46
4420	4425		andsecurity. 47
4421	4426		(ii)b. A transfer of the security may be registered upon books maintained for 48
4422	4427		that purpose by or on behalf of the issuer, or the security certificate so 49
4423	4428		states. 50
4424	4429		(13a) Securities account. – Defined in G.S. 25-8-501. 51 General Assembly Of North Carolina Session 2025
4425		-	~~Senate Bill 117-First Edition~~ Page 87
	4430	+	DRS35028-MUz-3A Page 87
4426	4431		(14) "Securities intermediary" means:Securities intermediary. – Either of the 1
4427	4432		following: 2
4428	4433		(i)a. A clearing corporation; orcorporation. 3
4429	4434		(ii)b. A person, including a bank or broker, that in the ordinary course of its 4
4430	4435		business maintains securities accounts for others and is acting in that 5
4431	4436		capacity. 6
4432	4437		(15) "Security", except Security. – Except as otherwise provided in G.S. 25-8-103, 7
4433	4438		means an obligation of an issuer or a share, participation, or other interest in 8
4434	4439		an issuer or in property or an enterprise of an issuer:issuer that satisfies all of 9
4435	4440		the following requirements: 10
4436	4441		(i)a. Which It is represented by a security certificate in bearer or registered 11
4437	4442		form, or the its transfer of which may be registered upon books 12
4438	4443		maintained for that purpose by or on behalf of the issuer;issuer. 13
4439	4444		(ii)b. Which It is one of a class or series or by its terms is divisible into a 14
4440	4445		class or series of shares, participations, interests, or obligations; 15
4441	4446		andobligations. 16
4442	4447		(iii)c. Which:It satisfies either of the following: 17
4443	4448		(A)1. Is, It is, or is of a type, dealt in or traded on securities exchanges 18
4444	4449		or securities markets; ormarkets. 19
4445	4450		(B)2. Is It is a medium for investment and by its terms expressly 20
4446	4451		provides that it is a security governed by this Article. 21
4447	4452		(16) "Security certificate" means a Security certificate. – A certificate representing 22
4448	4453		a security. 23
4449	4454		(17) "Security entitlement" means the Security entitlement. – The rights and 24
4450	4455		property interest of an entitlement holder with respect to a financial asset 25
4451	4456		specified in Part 5 of this Article. 26
4452	4457		(18) "Uncertificated security" means a Uncertificated security. – A security that is 27
4453	4458		not represented by a certificate. 28
4454	4459		(b) Other definitions applying to this Article and the sections in which they appear are: 29
4455	4460		"Appropriate person" G.S. 25-8-107. 30
4456	4461		"Control" G.S. 25-8-106. 31
4457	4462		"Delivery" G.S. 25-8-301. 32
4458	4463		"Investment company security" G.S. 25-8-103. 33
4459	4464		"Issuer" G.S. 25-8-201. 34
4460	4465		"Overissue" G.S. 25-8-210. 35
4461	4466		"Protected purchaser" G.S. 25-8-303. 36
4462	4467		"Securities account" G.S. 25-8-501. 37
4463	4468		(c) In addition, Article 1 of this Chapter contains general definitions and principles of 38
4464	4469		construction and interpretation applicable throughout this Article. 39
4465	4470		(d) The characterization of a person, business, or transaction for purposes of this Article 40
4466	4471		does not determine the characterization of the person, business, or transaction for purposes of 41
4467	4472		any other law, regulation, or rule.law." 42
4468	4473		SECTION 91. G.S. 25-8-103 reads as rewritten: 43
4469	4474		"§ 25-8-103. Rules for determining whether certain obligations and interests are securities 44
4470	4475		or financial assets. 45
4471	4476		… 46
4472	4477		(d) A writing that is a security certificate is governed by this Article and not by Article 3 47
4473	4478		of this Chapter, even though it also meets the requirements of that Article. However, a negotiable 48
4474	4479		instrument governed by Article 3 of this Chapter is a financial asset if it is held in a securities 49
4475	4480		account. 50 General Assembly Of North Carolina Session 2025
4476		-	Page 88 ~~Senate Bill 117-First Edition~~
	4481	+	Page 88 DRS35028-MUz-3A
4477	4482		(e) An option or similar obligation issued by a clearing corporation to its participants is 1
4478	4483		not a security, security but is a financial asset. 2
4479	4484		(f) A commodity contract, as defined in G.S. 25-9-102(a)(15), G.S. 25-9-102, is not a 3
4480	4485		security or financial asset. 4
4481	4486		(g) A document of title is not a financial asset unless G.S. 25-8-102(a)(9)(iii) 5
4482	4487		G.S. 25-8-102(a)(9)c. applies. 6
4483	4488		(h) A controllable account, controllable electronic record, or controllable payment 7
4484	4489		intangible is not a financial asset unless G.S. 25-8-102(a)(9)c. applies." 8
4485	4490		SECTION 92. G.S. 25-8-106 reads as rewritten: 9
4486	4491		"§ 25-8-106. Control. 10
4487	4492		(a) A purchaser has "control" of a certificated security in bearer form if the certificated 11
4488	4493		security is delivered to the purchaser. 12
4489	4494		(b) A purchaser has "control" of a certificated security in registered form if the 13
4490	4495		certificated security is delivered to the purchaser, and:and either of the following applies: 14
4491	4496		(1) The certificate is endorsed indorsed to the purchaser or in blank by an effective 15
4492	4497		endorsement; orindorsement. 16
4493	4498		(2) The certificate is registered in the name of the purchaser, upon original issue 17
4494	4499		or registration of transfer by the issuer. 18
4495	4500		(c) A purchaser has "control" of an uncertificated security if:if either of the following 19
4496	4501		applies: 20
4497	4502		(1) The uncertificated security is delivered to the purchaser; orpurchaser. 21
4498	4503		(2) The issuer has agreed that it will comply with instructions originated by the 22
4499	4504		purchaser without further consent by the registered owner. 23
4500	4505		(d) A purchaser has "control" of a security entitlement if:if any of the following applies: 24
4501	4506		(1) The purchaser becomes the entitlement holder;holder. 25
4502	4507		(2) The securities intermediary has agreed that it will comply with entitlement 26
4503	4508		orders originated by the purchaser without further consent by the entitlement 27
4504	4509		holder; orholder. 28
4505	4510		(3) Another person has control of the security entitlement on behalf of the 29
4506	4511		purchaser or, having previously acquired control of the security entitlement, 30
4507	4512		acknowledges that it has control on behalf of the purchaser.Either of the 31
4508	4513		following applies to another person, other than the transferor to the purchaser 32
4509	4514		of an interest in the security entitlement: 33
4510	4515		a. The other person has control of the security entitlement and 34
4511	4516		acknowledges that it has control on behalf of the purchaser. 35
4512	4517		b. The other person obtains control of the security entitlement after 36
4513	4518		having acknowledged that it will obtain control of the security 37
4514	4519		entitlement on behalf of the purchaser. 38
4515	4520		(e) If an interest in a security entitlement is granted by the entitlement holder to the 39
4516	4521		entitlement holder's own securities intermediary, the securities intermediary has control. 40
4517	4522		(f) A purchaser who that has satisfied the requirements of subsection (c) or (d) of this 41
4518	4523		section has control, even if the registered owner in the case of subsection (c) of this section or 42
4519	4524		the entitlement holder in the case of subsection (d) of this section retains the right to make 43
4520	4525		substitutions for the uncertificated security or security entitlement, to originate instructions or 44
4521	4526		entitlement orders to the issuer or securities intermediary, or otherwise to deal with the 45
4522	4527		uncertificated security or security entitlement. 46
4523	4528		(g) An issuer or a securities intermediary may shall not enter into an agreement of the 47
4524	4529		kind described in subdivision (c)(2) or (d)(2) of this section without the consent of the registered 48
4525	4530		owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into 49
4526	4531		such an this kind of agreement even though the registered owner or entitlement holder so directs. 50
4527	4532		An issuer or securities intermediary that has entered into such an this kind of agreement is not 51 General Assembly Of North Carolina Session 2025
4528		-	~~Senate Bill 117-First Edition~~ Page 89
	4533	+	DRS35028-MUz-3A Page 89
4529	4534		required to confirm the existence of the agreement to another party unless requested to do so by 1
4530	4535		the registered owner or entitlement holder. 2
4531	4536		(h) A person that has control under this section is not required to acknowledge that it has 3
4532	4537		control on behalf of a purchaser. 4
4533	4538		(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, 5
4534	4539		unless the person otherwise agrees or law other than this Article or Article 9 of this Chapter 6
4535	4540		otherwise provides, the person does not owe any duty to the purchaser and is not required to 7
4536	4541		confirm the acknowledgment to any other person." 8
4537	4542		SECTION 93. G.S. 25-8-110 reads as rewritten: 9
4538	4543		"§ 25-8-110. Applicability; choice of law. 10
4539	4544		(a) The local law of the issuer's jurisdiction, as specified in subsection (d) of this section, 11
4540	4545		governs:governs all of the following: 12
4541	4546		(1) The validity of a security;security. 13
4542	4547		(2) The rights and duties of the issuer with respect to registration of 14
4543	4548		transfer;transfer. 15
4544	4549		(3) The effectiveness of registration of transfer by the issuer;issuer. 16
4545	4550		(4) Whether the issuer owes any duties to an adverse claimant to a security; 17
4546	4551		andsecurity. 18
4547	4552		(5) Whether an adverse claim can be asserted against a person to whom which 19
4548	4553		transfer of a certificated or uncertificated security is registered or a person 20
4549	4554		who that obtains control of an uncertificated security. 21
4550	4555		(b) The local law of the securities intermediary's jurisdiction, as specified in subsection 22
4551	4556		(e) of this section, governs:governs all of the following: 23
4552	4557		(1) Acquisition of a security entitlement from the securities 24
4553	4558		intermediary;intermediary. 25
4554	4559		(2) The rights and duties of the securities intermediary and entitlement holder 26
4555	4560		arising out of a security entitlement;entitlement. 27
4556	4561		(3) Whether the securities intermediary owes any duties to an adverse claimant to 28
4557	4562		a security entitlement; andentitlement. 29
4558	4563		(4) Whether an adverse claim can be asserted against a person who that acquires 30
4559	4564		a security entitlement from the securities intermediary or a person who that 31
4560	4565		purchases a security entitlement or interest therein from an entitlement holder. 32
4561	4566		(c) The local law of the jurisdiction in which a security certificate is located at the time 33
4562	4567		of delivery governs whether an adverse claim can be asserted against a person to whom which 34
4563	4568		the security certificate is delivered. 35
4564	4569		(d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is 36
4565	4570		organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified 37
4566	4571		by the issuer. An issuer organized under the law of this State may specify the law of another 38
4567	4572		jurisdiction as the law governing the matters specified in subdivisions (a)(2) through (5) of this 39
4568	4573		section. 40
4569	4574		(e) The following rules determine a "securities intermediary's jurisdiction" for purposes 41
4570	4575		of this section: 42
4571	4576		(1) If an agreement between the securities intermediary and its entitlement holder 43
4572	4577		governing the securities account expressly provides that a particular 44
4573	4578		jurisdiction is the securities intermediary's jurisdiction for purposes of this 45
4574	4579		Part, this Article, or this Chapter, that jurisdiction is the securities 46
4575	4580		intermediary's jurisdiction. 47
4576	4581		(2) If subdivision (1) of this subsection does not apply and an agreement between 48
4577	4582		the securities intermediary and its entitlement holder governing the securities 49
4578	4583		account expressly provides that the agreement is governed by the law of a 50 General Assembly Of North Carolina Session 2025
4579		-	Page 90 ~~Senate Bill 117-First Edition~~
	4584	+	Page 90 DRS35028-MUz-3A
4580	4585		particular jurisdiction, that jurisdiction is the securities intermediary's 1
4581	4586		jurisdiction. 2
4582	4587		(3) If neither subdivision (1) nor subdivision (2) of this section subsection applies 3
4583	4588		and an agreement between the securities intermediary and its entitlement 4
4584	4589		holder governing the securities account expressly provides that the securities 5
4585	4590		account is maintained at an office in a particular jurisdiction, that jurisdiction 6
4586	4591		is the securities intermediary's jurisdiction. 7
4587	4592		(4) If none of the preceding subdivisions of this subsection applies, the securities 8
4588	4593		intermediary's jurisdiction is the jurisdiction in which the office identified in 9
4589	4594		an account statement as the office serving the entitlement holder's account is 10
4590	4595		located. 11
4591	4596		(5) If none of the preceding subdivisions of this subsection applies, the securities 12
4592	4597		intermediary's jurisdiction is the jurisdiction in which the chief executive 13
4593	4598		office of the securities intermediary is located. 14
4594	4599		(f) A securities intermediary's jurisdiction is not determined by the physical location of 15
4595	4600		certificates representing financial assets, or by the jurisdiction in which is organized the issuer of 16
4596	4601		the financial asset with respect to which an entitlement holder has a security entitlement, or by 17
4597	4602		the location of facilities for data processing or other record keeping concerning the account. 18
4598	4603		(g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction 19
4599	4604		governs a matter or transaction specified in subsection (a) or (b) of this section even if the matter 20
4600	4605		or transaction does not bear any relation to the jurisdiction." 21
4601	4606		SECTION 94. G.S. 25-8-303 reads as rewritten: 22
4602	4607		"§ 25-8-303. Protected purchaser. 23
4603	4608		(a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, 24
4604	4609		or of an interest therein, who:to which all of the following apply: 25
4605	4610		(1) Gives value;The purchaser gives value. 26
4606	4611		(2) Does The purchaser does not have notice of any adverse claim to the security; 27
4607	4612		andsecurity. 28
4608	4613		(3) Obtains The purchaser obtains control of the certificated or uncertificated 29
4609	4614		security. 30
4610	4615		(b) In addition to acquiring the rights of a purchaser, a A protected purchaser also 31
4611	4616		acquires its interest in the security free of any adverse claim." 32
4612	4617		33
4613	4618		PART IV. OTHER CONFORMING CHANGES 34
4614	4619		SECTION 95. G.S. 44A-40 reads as rewritten: 35
4615	4620		"§ 44A-40. Definitions. 36
4616	4621		As used in this Article, unless the context clearly requires otherwise:the following definitions 37
4617	4622		apply: 38
4618	4623		(1) "E-mail" or "electronic mail" means an Email or electronic mail. – An 39
4619	4624		electronic message or an executable program or computer file that contains an 40
4620	4625		image of a message that is transmitted between two or more computers or 41
4621	4626		electronic terminals. The term includes electronic messages that are 42
4622	4627		transmitted within or between computer networks. 43
4623	4628		(1a) "Independent bidder" means a Independent bidder. – A person who that is not 44
4624	4629		related to the lienor, within the meaning of G.S. 25-9-102(62), in the case of 45
4625	4630		a lienor who is an individual, or G.S. 25-9-102(63), in the case of a lienor that 46
4626	4631		is an organization.G.S. 25-9-102(a)(62). 47
4627	4632		(1b) "Last known address" means that Last known address. – The mailing address 48
4628	4633		or e-mail email address provided by the occupant in the latest rental agreement 49
4629	4634		or the address provided by the occupant in a subsequent written notice of a 50
4630	4635		change of address. 51 General Assembly Of North Carolina Session 2025
4631		-	~~Senate Bill 117-First Edition~~ Page 91
	4636	+	DRS35028-MUz-3A Page 91
4632	4637		(2) "Lienor" means any Lienor. – A person entitled to a lien under this Article. 1
4633	4638		(3) "Occupant" means a Occupant. – A person, his or a person's sublessee, 2
4634	4639		successor, or assign, entitled to the use of the storage space at a self-service 3
4635	4640		storage facility under a rental agreement, to the exclusion of others. 4
4636	4641		(4) "Owner" means the Owner. – Consists of the following: 5
4637	4642		a. The owner, operator, lessor, or sublessor of a self-service storage 6
4638	4643		facility,facility. 7
4639	4644		b. his agent, or The agent of a person described in sub-subdivision a. of 8
4640	4645		this subdivision. 9
4641	4646		c. any other person authorized by him A person authorized by a person 10
4642	4647		described in sub-subdivision a. of this subdivision to manage the 11
4643	4648		facility or to receive rent from an occupant under a rental agreement. 12
4644	4649		(5) "Personal property" means movable Personal property. – Movable property 13
4645	4650		not affixed to land and land. The term includes, but is not limited to, goods, 14
4646	4651		merchandise, household items, and watercraft. 15
4647	4652		(6) "Rental agreement" means any Rental agreement. – An agreement or lease, 16
4648	4653		written or oral, that establishes or modifies the terms, conditions, rules rules, 17
4649	4654		or any other provisions concerning the use and occupancy of a self-service 18
4650	4655		storage facility. 19
4651	4656		(7) "Self-service storage facility" means any real Self-service storage facility. – 20
4652	4657		Real property designed and used for the purpose of renting or leasing 21
4653	4658		individual storage space to occupants who that are to have access to such for 22
4654	4659		the purpose of storing and removing personal property. No occupant shall use 23
4655	4660		a self-service storage facility for residential purposes. A self-service storage 24
4656	4661		facility is not subject to the provisions of Article 7 of General Statutes Chapter 25
4657	4662		25. Provided, however, if Article 7 of Chapter 25 of the General Statutes. If, 26
4658	4663		however, an owner issues any warehouse receipt, bill of lading, or other 27
4659	4664		document of title for the personal property stored, the owner and the occupant 28
4660	4665		are subject to the provisions of Article 7 of General Statutes Chapter 25 and 29
4661	4666		the provisions of this Article do not apply.Article 7 of Chapter 25 of the 30
4662	4667		General Statutes and this Article does not apply. 31
4663	4668		(8) "Verified electronic mail" means electronic Verified electronic mail. – 32
4664	4669		Electronic mail that is transmitted to an e-mail email address that the sender 33
4665	4670		has verified by any reasonable means as being a working electronic mail 34
4666	4671		address." 35
4667	4672		36
4668	4673		PART V. TRANSITIONAL PROVISIONS 37
4669	4674		38
4670	4675		GENERAL PROVISIONS AND DEFINITIONS 39
4671	4676		SECTION 96. Title. – This Part may be cited as Transitional Provisions for Uniform 40
4672	4677		Commercial Code Amendments (2022). 41
4673	4678		SECTION 97.(a) Part Definitions. – In this Part, the following definitions apply: 42
4674	4679		(1) Adjustment date. – The date that is one year after the effective date of this act. 43
4675	4680		(2) Amended Article 9. – Article 9 of Chapter 25 of the General Statutes, as 44
4676	4681		amended by this act. 45
4677	4682		(3) Article 12. – Article 12 of Chapter 25 of the General Statutes. 46
4678	4683		(4) Article 12 property. – A controllable account, controllable electronic record, 47
4679	4684		or controllable payment intangible. 48
4680	4685		(5) Controllable account. – Defined in G.S. 25-9-102. 49
4681	4686		(6) Controllable electronic record. – Defined in G.S. 25-12-102. 50
4682	4687		(7) Controllable payment intangible. – Defined in G.S. 25-9-102. 51 General Assembly Of North Carolina Session 2025
4683		-	Page 92 ~~Senate Bill 117-First Edition~~
	4688	+	Page 92 DRS35028-MUz-3A
4684	4689		(8) Electronic money. – Defined in G.S. 25-9-102. 1
4685	4690		(9) Financing statement. – Defined in G.S. 25-9-102. 2
4686	4691		SECTION 97.(b) Article 1 Definitions and Principles. – Article 1 of Chapter 25 of 3
4687	4692		the General Statutes contains general definitions and principles of construction and interpretation 4
4688	4693		applicable throughout this Part. 5
4689	4694		6
4690	4695		GENERAL TRANSITIONAL PROVISION 7
4691	4696		SECTION 98. General Applicability; Saving Clause. – This act applies to a 8
4692	4697		transaction, lien, or other interest in property that is entered into, created, or acquired on or after 9
4693	4698		the effective date of this act. Except as otherwise provided in this Part, a transaction validly 10
4694	4699		entered into before the effective date of this act and the rights, duties, and interests flowing from 11
4695	4700		the transaction remain valid thereafter and may be terminated, completed, consummated, or 12
4696	4701		enforced as required or permitted by law other than Chapter 25 of the General Statutes or, if 13
4697	4702		applicable, Chapter 25 of the General Statutes, as though this act had not taken effect. 14
4698	4703		15
4699	4704		TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12 16
4700	4705		SECTION 99.(a) Pre-Effective-Date Transaction, Lien, or Interest. – Except as 17
4701	4706		provided in this section, amended Article 9 and Article 12 apply to a transaction, lien, or other 18
4702	4707		interest in property, even if the transaction, lien, or interest was entered into, created, or acquired 19
4703	4708		before the effective date of this act. 20
4704	4709		SECTION 99.(b) Continuing Validity. – Except as provided in subsections (c) 21
4705	4710		through (j) of this section, both of the following apply: 22
4706	4711		(1) A transaction, lien, or interest in property that was validly entered into, 23
4707	4712		created, or transferred before the effective date of this act and was not 24
4708	4713		governed by Chapter 25 of the General Statutes, but would be subject to 25
4709	4714		amended Article 9 or Article 12 if it had been entered into, created, or 26
4710	4715		transferred on or after the effective date of this act, including the rights, duties, 27
4711	4716		and interests flowing from the transaction, lien, or interest, remains valid on 28
4712	4717		and after the effective date of this act. 29
4713	4718		(2) A transaction, lien, or interest described in subdivision (1) of this subsection 30
4714	4719		may be terminated, completed, consummated, and enforced as required or 31
4715	4720		permitted by this act or by the law that would apply if this act had not taken 32
4716	4721		effect. 33
4717	4722		SECTION 99.(c) Pre-Effective-Date Proceeding. – This act does not affect an action, 34
4718	4723		case, or proceeding commenced before the effective date of this act. 35
4719	4724		SECTION 99.(d) Security Interest Perfected Before Effective Date. – Both of the 36
4720	4725		following apply to a security interest perfected before the effective date of this act: 37
4721	4726		(1) A security interest that is enforceable and perfected immediately before the 38
4722	4727		effective date of this act is a perfected security interest under this act if, on the 39
4723	4728		effective date of this act, the requirements for enforceability and perfection 40
4724	4729		under this act are satisfied without further action. 41
4725	4730		(2) If a security interest is enforceable and perfected immediately before the 42
4726	4731		effective date of this act, but the requirements for enforceability or perfection 43
4727	4732		under this act are not satisfied on the effective date of this act, all of the 44
4728	4733		following apply to the security interest: 45
4729	4734		a. The security interest is a perfected security interest until the earlier of 46
4730	4735		the time perfection would have ceased under the law in effect 47
4731	4736		immediately before the effective date of this act or the adjustment date. 48
4732	4737		b. The security interest remains enforceable thereafter only if the security 49
4733	4738		interest satisfies the requirements for enforceability under 50
4734	4739		G.S. 25-9-203, as amended by this act, before the adjustment date. 51 General Assembly Of North Carolina Session 2025
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	4740	+	DRS35028-MUz-3A Page 93
4736	4741		c. The security interest remains perfected thereafter only if the 1
4737	4742		requirements for perfection under this act are satisfied before the time 2
4738	4743		specified in sub-subdivision a. of this subdivision. 3
4739	4744		SECTION 99.(e) Security Interest Unperfected Before Effective Date. – All of the 4
4740	4745		following apply to a security interest that is enforceable immediately before the effective date of 5
4741	4746		this act but is unperfected at that time: 6
4742	4747		(1) The security interest remains an enforceable security interest until the 7
4743	4748		adjustment date. 8
4744	4749		(2) The security interest remains enforceable thereafter if the security interest 9
4745	4750		becomes enforceable under G.S. 25-9-203, as amended by this act, on the 10
4746	4751		effective date of this act or before the adjustment date. 11
4747	4752		(3) The security interest becomes perfected at either of the following times: 12
4748	4753		a. Without further action, on the effective date of this act if the 13
4749	4754		requirements for perfection under this act are satisfied before or at that 14
4750	4755		time. 15
4751	4756		b. When the requirements for perfection are satisfied if the requirements 16
4752	4757		are satisfied after the effective date of this act. 17
4753	4758		SECTION 99.(f) Pre-Effective-Date Action; Attachment and Perfection Before 18
4754	4759		Adjustment Date. – If action, other than the filing of a financing statement, is taken before the 19
4755	4760		effective date of this act and the action would have resulted in perfection of the security interest 20
4756	4761		had the security interest become enforceable before the effective date of this act, the action is 21
4757	4762		effective to perfect a security interest that attaches under this act before the adjustment date. An 22
4758	4763		attached security interest becomes unperfected on the adjustment date unless the security interest 23
4759	4764		becomes a perfected security interest under this act before the adjustment date. 24
4760	4765		SECTION 99.(g) Pre-Effective-Date Filing. – The filing of a financing statement 25
4761	4766		before the effective date of this act is effective to perfect a security interest on the effective date 26
4762	4767		of this act to the extent the filing would satisfy the requirements for perfection under this act. 27
4763	4768		SECTION 99.(h) Pre-Effective-Date Enforceability Action. – The taking of an 28
4764	4769		action before the effective date of this act is sufficient for the enforceability of a security interest 29
4765	4770		on the effective date of this act if the action would satisfy the requirements for enforceability 30
4766	4771		under this act. 31
4767	4772		SECTION 99.(i) Priority. – 32
4768	4773		(1) Determination of priority. – Subject to subdivisions (2) and (3) of this 33
4769	4774		subsection, this act determines the priority of conflicting claims to collateral. 34
4770	4775		(2) Established priorities. – Subject to subdivision (3) of this subsection, if the 35
4771	4776		priorities of claims to collateral were established before the effective date of 36
4772	4777		this act, Article 9 of Chapter 25 of the General Statutes as in effect before the 37
4773	4778		effective date of this act determines priority. 38
4774	4779		(3) Determination of certain priorities on adjustment date. – On the adjustment 39
4775	4780		date, to the extent the priorities determined by amended Article 9 modify the 40
4776	4781		priorities established before the effective date of this act, the priorities of 41
4777	4782		claims to Article 12 property and electronic money established before the 42
4778	4783		effective date of this act cease to apply. 43
4779	4784		SECTION 99.(j) Priority of Claims When Priority Rules of Article 9 Do Not Apply. 44
4780	4785		– 45
4781	4786		(1) Determination of priority. – Subject to subdivisions (1) and (2) of this 46
4782	4787		subsection, Article 12 determines the priority of conflicting claims to Article 47
4783	4788		12 property when the priority rules of amended Article 9 do not apply. 48
4784	4789		(2) Established priorities. – Subject to subdivision (3) of this subsection, when the 49
4785	4790		priority rules of amended Article 9 do not apply and the priorities of claims to 50 General Assembly Of North Carolina Session 2025
4786		-	Page 94 ~~Senate Bill 117-First Edition~~
	4791	+	Page 94 DRS35028-MUz-3A
4787	4792		Article 12 property were established before the effective date of this act, law 1
4788	4793		other than Article 12 determines priority. 2
4789	4794		(3) Determination of certain priorities on adjustment date. – When the priority 3
4790	4795		rules of amended Article 9 do not apply, to the extent the priorities determined 4
4791	4796		by this act modify the priorities established before the effective date of this 5
4792	4797		act, the priorities of claims to Article 12 property established before the 6
4793	4798		effective date of this act cease to apply on the adjustment date. 7
4794	4799		8
4795	4800		PART VI. COMMENTS AND EFFECTIVE DATE 9
4796	4801		SECTION 100. The Revisor of Statutes shall cause to be printed as annotations to 10
4797	4802		the published General Statutes all relevant portions of the Official Comments to the Uniform 11
4798	4803		Commercial Code and all explanatory comments of the drafters of this act as the Revisor deems 12
4799	4804		appropriate. 13
4800	4805		SECTION 101. This act becomes effective October 1, 2025. 14