GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 117
Short Title: GSC Uniform Comm. Code/Emerging Technologies. (Public)
Sponsors: Senators Galey, B. Newton, and Britt (Primary Sponsors).
Referred to: Rules and Operations of the Senate
February 21, 2025
*S117 -v-1*
A BILL TO BE ENTITLED 1
AN ACT TO UPDATE THE UNIFORM COMMERCIAL CODE TO GOVERN 2
TRANSACTIONS INVOLVI NG CERTAIN EMERGING TECHNOLOGIES, AS 3
RECOMMENDED BY THE G ENERAL STATUTES COMM ISSION. 4
The General Assembly of North Carolina enacts: 5
6
PART I. CONTROLLABLE ELECTRONIC RECORDS 7
SECTION 1. Chapter 25 of the General Statutes is amended by adding a new Article 8
to read: 9
"Article 12. 10
"Controllable Electronic Records. 11
"§ 25-12-101. Title. 12
This Article may be cited as Uniform Commercial Code – Controllable Electronic Records. 13
"§ 25-12-102. Definitions. 14
(a) Article 12 Definitions. – In this Article, the following definitions apply: 15
(1) Account debtor. – Defined in G.S. 25-9-102. 16
(2) Chattel paper. – Defined in G.S. 25-9-102. 17
(3) Controllable account. – Defined in G.S. 25-9-102. 18
(4) Controllable electronic record. – A record stored in an electronic medium that 19
can be subjected to control under G.S. 25-12-105. The term does not include 20
a controllable account, a controllable payment intangible, a deposit account, 21
an electronic copy of a record evidencing chattel paper, an electronic 22
document of title, electronic money, investment property, or a transferable 23
record. 24
(5) Controllable payment intangible. – Defined in G.S. 25-9-102. 25
(6) Deposit account. – Defined in G.S. 25-9-102. 26
(7) Electronic money. – Defined in G.S. 25-9-102. 27
(8) Investment property. – Defined in G.S. 25-9-102. 28
(9) Qualifying purchaser. – A purchaser of a controllable electronic record or an 29
interest in a controllable electronic record that obtains control of the 30
controllable electronic record for value, in good faith, and without notice of a 31
claim of a property right in the controllable electronic record. 32
(10) Transferable record. – Has the meaning provided for that term in either of the 33
following: 34
a. Section 201(a)(1) of the Electronic Signatures in Global and National 35
Commerce Act, 15 U.S.C. § 7021(a)(1). 36 General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 117-First Edition
b. G.S. 66-326(a). 1
(11) Value. – Has the meaning provided in G.S. 25-3-303(a), as if references in 2
that subsection to an "instrument" were references to a controllable account, 3
controllable electronic record, or controllable payment intangible. 4
(b) Article 1 Definitions and Principles. – Article 1 of this Chapter contains general 5
definitions and principles of construction and interpretation applicable throughout this Article. 6
"§ 25-12-103. Relation to Article 9 and consumer laws. 7
(a) Article 9 Governs in Case of Conflict. – If there is conflict between this Article and 8
Article 9 of this Chapter, Article 9 of this Chapter governs. 9
(b) Applicable Consumer Law and Other Laws. – A transaction subject to this Article is 10
subject to any applicable rule of law that establishes a different rule for consumers, to any other 11
statute or rule of this State that regulates the rates, charges, agreements, and practices for loans, 12
credit sales, or other extensions of credit, and to any consumer-protection statute or rule of this 13
State, including Chapter 24 of the General Statutes, the Retail Installment Sales Act (Chapter 14
25A of the General Statutes), the North Carolina Consumer Finance Act (Article 15 of Chapter 15
53 of the General Statutes), and the Pawnbrokers and Currency Converters Modernization Act 16
(Part 1 of Article 45 of Chapter 66 of the General Statutes). 17
"§ 25-12-104. Rights in controllable account, controllable electronic record, and 18
controllable payment intangible. 19
(a) Applicability of Section to Controllable Account and Controllable Payment 20
Intangible. – This section applies to the acquisition and purchase of rights in a controllable 21
account or controllable payment intangible, including the rights and benefits under subsections 22
(c), (d), (e), (g), and (h) of this section of a purchaser and qualifying purchaser, in the same 23
manner this section applies to a controllable electronic record. 24
(b) Control of Controllable Account and Controllable Payment Intangible. – To 25
determine whether a purchaser of a controllable account or a controllable payment intangible is 26
a qualifying purchaser, the purchaser obtains control of the account or payment intangible if it 27
obtains control of the controllable electronic record that evidences the account or payment 28
intangible. 29
(c) Applicability of Other Law to Acquisition of Rights. – Except as provided in this 30
section, law other than this Article determines whether a person acquires a right in a controllable 31
electronic record and the right the person acquires. 32
(d) Shelter Principle and Purchase of Limited Interest. – A purchaser of a controllable 33
electronic record acquires all rights in the controllable electronic record that the transferor had or 34
had power to transfer, except that a purchaser of a limited interest in a controllable electronic 35
record acquires rights only to the extent of the interest purchased. 36
(e) Rights of Qualifying Purchaser. – A qualifying purchaser acquires its rights in the 37
controllable electronic record free of a claim of a property right in the controllable electronic 38
record. 39
(f) Limitation of Rights of Qualifying Purchaser in Other Property. – Except as provided 40
in subsections (a) and (e) of this section for a controllable account and a controllable payment 41
intangible or law other than this Article, a qualifying purchaser takes a right to payment, right to 42
performance, or other interest in property evidenced by the controllable electronic record subject 43
to a claim of a property right in the right to payment, right to performance, or other interest in 44
property. 45
(g) No-Action Protection for Qualifying Purchaser. – An action shall not be asserted 46
against a qualifying purchaser based on both a purchase by the qualifying purchaser of a 47
controllable electronic record and a claim of a property right in another controllable electronic 48
record, whether the action is framed in conversion, replevin, constructive trust, equitable lien, or 49
other theory. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 3
(h) Filing Not Notice. – Filing of a financing statement under Article 9 of this Chapter is 1
not notice of a claim of a property right in a controllable electronic record. 2
"§ 25-12-105. Control of controllable electronic record. 3
(a) General Rule for Control of Controllable Electronic Record. – A person has control 4
of a controllable electronic record if the electronic record, a record attached to or logically 5
associated with the electronic record, or a system in which the electronic record is recorded does 6
both of the following: 7
(1) Gives the person both of the following: 8
a. Power to avail itself of substantially all the benefit from the electronic 9
record. 10
b. Exclusive power, subject to subsection (b) of this section, to do both 11
of the following: 12
1. Prevent others from availing themselves of substantially all the 13
benefit from the electronic record. 14
2. Transfer control of the electronic record to another person or 15
cause another person to obtain control of another controllable 16
electronic record as a result of the transfer of the electronic 17
record. 18
(2) Enables the person readily to identify itself in any way, including by name, 19
identifying number, cryptographic key, office, or account number, as having 20
the powers specified in subdivision (1) of this subsection. 21
(b) Meaning of Exclusive. – Subject to subsection (c) of this section, a power is exclusive 22
under sub-subdivision (a)(1)b. of this section even if either of the following applies: 23
(1) The controllable electronic record, a record attached to or logically associated 24
with the electronic record, or a system in which the electronic record is 25
recorded limits the use of the electronic record or has a protocol programmed 26
to cause a change, including a transfer or loss of control or a modification of 27
benefits afforded by the electronic record. 28
(2) The power is shared with another person. 29
(c) When Power Not Shared with Another Person. – A power of a person is not shared 30
with another person under subdivision (b)(2) of this section and the person's power is not 31
exclusive if both of the following apply: 32
(1) The person can exercise the power only if the power also is exercised by the 33
other person. 34
(2) Either of the following applies: 35
a. The other person can exercise the power without exercise of the power 36
by the person. 37
b. The other person is the transferor to the person of an interest in the 38
controllable electronic record or a controllable account or controllable 39
payment intangible evidenced by the controllable electronic record. 40
(d) Presumption of Exclusivity of Certain Powers. – If a person has the powers specified 41
in sub-subdivision (a)(1)b. of this section, the powers are presumed to be exclusive. 42
(e) Control Through Another Person. – A person has control of a controllable electronic 43
record if either of the following applies to another person, other than the transferor to the person 44
of an interest in the controllable electronic record or a controllable account or controllable 45
payment intangible evidenced by the controllable electronic record: 46
(1) The other person has control of the electronic record and acknowledges that it 47
has control on behalf of the person. 48
(2) The other person obtains control of the electronic record after having 49
acknowledged that it will obtain control of the electronic record on behalf of 50
the person. 51 General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 117-First Edition
(f) No Requirement to Acknowledge. – A person that has control under this section is 1
not required to acknowledge that it has control on behalf of another person. 2
(g) No Duties or Confirmation. – If a person acknowledges that it has or will obtain 3
control on behalf of another person, unless the person otherwise agrees or law other than this 4
Article or Article 9 of this Chapter otherwise provides, the person does not owe any duty to the 5
other person and is not required to confirm the acknowledgment to any other person. 6
"§ 25-12-106. Discharge of account debtor on controllable account or controllable payment 7
intangible. 8
(a) Discharge of Account Debtor. – An account debtor on a controllable account or 9
controllable payment intangible may discharge its obligation by paying either of the following 10
persons: 11
(1) The person having control of the controllable electronic record that evidences 12
the controllable account or controllable payment intangible. 13
(2) Except as provided in subsection (b) of this section, a person that formerly had 14
control of the controllable electronic record. 15
(b) Content and Effect of Notification. – Subject to subsection (d) of this section, the 16
account debtor shall not discharge its obligation by paying a person that formerly had control of 17
the controllable electronic record if the account debtor receives a notification that satisfies all of 18
the following requirements: 19
(1) The notification is signed by a person that formerly had control or the person 20
to which control was transferred. 21
(2) The notification reasonably identifies the controllable account or controllable 22
payment intangible. 23
(3) The notification notifies the account debtor that control of the controllable 24
electronic record that evidences the controllable account or controllable 25
payment intangible was transferred. 26
(4) The notification identifies the transferee, in any reasonable way, including by 27
name, identifying number, cryptographic key, office, or account number. 28
(5) The notification provides a commercially reasonable method by which the 29
account debtor is to pay the transferee. 30
(c) Discharge Following Effective Notification. – After receipt of a notification that 31
complies with subsection (b) of this section, the account debtor may discharge its obligation by 32
paying in accordance with the notification and shall not discharge the obligation by paying a 33
person that formerly had control. 34
(d) When Notification Ineffective. – Subject to subsection (h) of this section, all of the 35
following apply to a notification under subsection (b) of this section: 36
(1) The notification is ineffective unless, before the notification is sent, the 37
account debtor and the person that, at that time, had control of the controllable 38
electronic record that evidences the controllable account or controllable 39
payment intangible agree in a signed record to a commercially reasonable 40
method by which a person may furnish reasonable proof that control has been 41
transferred. 42
(2) The notification is ineffective to the extent an agreement between the account 43
debtor and seller of a payment intangible limits the account debtor's duty to 44
pay a person other than the seller and the limitation is effective under law 45
other than this Article. 46
(3) The notification is ineffective at the option of the account debtor, if the 47
notification notifies the account debtor to do any of the following: 48
a. Divide a payment. 49
b. Make less than the full amount of an installment or other periodic 50
payment. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 5
c. Pay any part of a payment by more than one method or to more than 1
one person. 2
(e) Proof of Transfer of Control. – Subject to subsection (h) of this section, if requested 3
by the account debtor, the person giving the notification under subsection (b) of this section 4
seasonably shall furnish reasonable proof, using the method in the agreement referred to in 5
subdivision (d)(1) of this section, that control of the controllable electronic record has been 6
transferred. Unless the person complies with the request, the account debtor may discharge its 7
obligation by paying a person that formerly had control, even if the account debtor has received 8
a notification under subsection (b) of this section. 9
(f) What Constitutes Reasonable Proof. – A person furnishes reasonable proof under 10
subsection (e) of this section that control has been transferred if the person demonstrates, using 11
the method in the agreement referred to in subdivision (d)(1) of this section, that the transferee 12
has the power to do all of the following: 13
(1) Avail itself of substantially all the benefit from the controllable electronic 14
record. 15
(2) Prevent others from availing themselves of substantially all the benefit from 16
the controllable electronic record. 17
(3) Transfer the powers specified in subdivisions (1) and (2) of this subsection to 18
another person. 19
(g) Rights Not Waivable. – Subject to subsection (h) of this section, an account debtor 20
shall not waive or vary its rights under subdivision (d)(1) and subsection (e) of this section or its 21
option under subdivision (d)(3) of this section. 22
(h) Rule for Individual Under Other Law. – This section is subject to law other than this 23
Article that establishes a different rule for an account debtor who is an individual and who 24
incurred the obligation primarily for personal, family, or household purposes. 25
"§ 25-12-107. Governing law. 26
(a) General Rule for Governing Law. – Except as provided in subsection (b) of this 27
section, the local law of a controllable electronic record's jurisdiction governs a matter covered 28
by this Article. 29
(b) Governing Law for G.S. 25-12-106. – For a controllable electronic record that 30
evidences a controllable account or controllable payment intangible, the local law of the 31
controllable electronic record's jurisdiction governs a matter covered by G.S. 25-12-106 unless 32
an effective agreement determines that the local law of another jurisdiction governs. 33
(c) Controllable Electronic Record's Jurisdiction. – The following rules determine a 34
controllable electronic record's jurisdiction under this section: 35
(1) If the controllable electronic record, or a record attached to or logically 36
associated with the controllable electronic record and readily available for 37
review, expressly provides that a particular jurisdiction is the controllable 38
electronic record's jurisdiction for purposes of this Article or Chapter, that 39
jurisdiction is the controllable electronic record's jurisdiction. 40
(2) If subdivision (1) of this subsection does not apply and the rules of the system 41
in which the controllable electronic record is recorded are readily available for 42
review and expressly provide that a particular jurisdiction is the controllable 43
electronic record's jurisdiction for purposes of this Article or Chapter, that 44
jurisdiction is the controllable electronic record's jurisdiction. 45
(3) If subdivisions (1) and (2) of this subsection do not apply and the controllable 46
electronic record, or a record attached to or logically associated with the 47
controllable electronic record and readily available for review, expressly 48
provides that the controllable electronic record is governed by the law of a 49
particular jurisdiction, that jurisdiction is the controllable electronic record's 50
jurisdiction. 51 General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 117-First Edition
(4) If subdivisions (1), (2), and (3) of this subsection do not apply and the rules 1
of the system in which the controllable electronic record is recorded are 2
readily available for review and expressly provide that the controllable 3
electronic record or the system is governed by the law of a particular 4
jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction. 5
(5) If subdivisions (1) through (4) of this subsection do not apply, the controllable 6
electronic record's jurisdiction is the District of Columbia. 7
(d) Applicability of Article 12. – If subdivision (c)(5) of this section applies and Article 8
12 is not in effect in the District of Columbia without material modification, the governing law 9
for a matter covered by this Article is the law of the District of Columbia as though Article 12 10
were in effect in the District of Columbia without material modification. In this subsection, 11
"Article 12" means Article 12 of Uniform Commercial Code Amendments (2022). 12
(e) Relation of Matter or Transaction to Controllable Electronic Record's Jurisdiction Not 13
Necessary. – To the extent subsections (a) and (b) of this section provide that the local law of the 14
controllable electronic record's jurisdiction governs a matter covered by this Article, that law 15
governs even if the matter or a transaction to which the matter relates does not bear any relation 16
to the controllable electronic record's jurisdiction. 17
(f) Rights of Purchasers Determined at Time of Purchase. – The rights acquired under 18
G.S. 25-12-104 by a purchaser or qualifying purchaser are governed by the law applicable under 19
this section at the time of purchase." 20
21
PART II. CONFORMING CHANGES AND OTHER AM ENDMENTS TO ARTICLE 9 22
(SECURED TRANSACTION S) OF THE UCC 23
SECTION 2. G.S. 25-9-102 reads as rewritten: 24
"§ 25-9-102. Definitions and index of definitions. 25
(a) Article 9 definitions. – Definitions. – In this Article:Article, the following definitions 26
apply: 27
(1) "Accession" means goods Accession. – Goods that are physically united with 28
other goods in such a manner that in which the identity of the original goods 29
is not lost. 30
(2) "Account", except as used in "account for", means a Account. – Except as 31
used in "account for," "account statement," "account to," "commodity 32
account," "customer's account," "deposit account," "on account of," and 33
"statement of account," means a right to payment of a monetary obligation, 34
whether or not earned by performance, (i) for property that has been or is to 35
be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services 36
rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, 37
(iv) for a secondary obligation incurred or to be incurred, (v) for energy 38
provided or to be provided, (vi) for the use or hire of a vessel under a charter 39
or other contract, (vii) arising out of the use of a credit or charge card or 40
information contained on or for use with the card, or (viii) as winnings in a 41
lottery or other game of chance operated or sponsored by a state, governmental 42
unit of a state, or person licensed or authorized to operate the game by a state 43
or governmental unit of a state. The term includes controllable accounts and 44
health-care-insurance receivables. The term does not include (i) rights to 45
payment evidenced by chattel paper or an instrument, chattel paper, (ii) 46
commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) 47
letter-of-credit rights or letters of credit, or (vi) rights to payment for money 48
or funds advanced or sold, other than rights arising out of the use of a credit 49
or charge card or information contained on or for use with the card.card, or 50
(vii) rights to payment evidenced by an instrument. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 7
(3) "Account debtor" means a Account debtor. – A person obligated on an 1
account, chattel paper, or general intangible. The term does not include 2
persons obligated to pay a negotiable instrument, even if the negotiable 3
instrument constitutes part of evidences chattel paper. 4
(4) "Accounting", except as used in "accounting for", means a record: 5
Accounting. – Except as used in "accounting for," means a record that meets 6
all of the following requirements: 7
a. Authenticated Signed by a secured party;party. 8
b. Indicating the aggregate unpaid secured obligations as of a date not 9
more than 35 days earlier or 35 days later than the date of the record; 10
andrecord. 11
c. Identifying the components of the obligations in reasonable detail. 12
(5) "Agricultural lien" means an Agricultural lien. – An interest, other than a 13
security interest, in farm products:products that satisfies all of the following 14
requirements: 15
a. Which The interest secures payment or performance of an obligation 16
for:for either of the following: 17
1. Goods or services furnished in connection with a debtor's 18
farming operation; oroperation. 19
2. Rent on real property leased by a debtor in connection with its 20
the debtor's farming operation;operation. 21
b. Which The interest is created by statute in favor of a person that:that 22
did either of the following: 23
1. In the ordinary course of its business business, furnished goods 24
or services to a debtor in connection with a the debtor's farming 25
operation; oroperation. 26
2. Leased real property to a debtor in connection with the debtor's 27
farming operation; andoperation. 28
c. Whose The interest's effectiveness does not depend on the person's 29
interest holder's possession of the personal property. 30
(5a) Applicant. – Defined in G.S. 25-5-102. 31
(6) "As-extracted collateral" means:As-extracted collateral. – Either of the 32
following: 33
a. Oil, gas, or other minerals that are subject to a security interest that:that 34
satisfies both of the following: 35
1. Is The security interest is created by a debtor having an interest 36
in the minerals before extraction; andextraction. 37
2. Attaches The security interest attaches to the minerals as 38
extracted; orextracted. 39
b. Accounts arising out of the sale at the wellhead or minehead of oil, 40
gas, or other minerals in which the debtor had an interest before 41
extraction. 42
(6a) Assignee. – Except as used in "assignee for benefit of creditors," means a 43
person (i) in whose favor a security interest that secures an obligation is 44
created or provided for under a security agreement, whether or not the 45
obligation is outstanding or (ii) to which an account, chattel paper, payment 46
intangible, or promissory note has been sold. The term includes a person to 47
which a security interest has been transferred by a secured party. 48
(6b) Assignor. – A person that (i) under a security agreement creates or provides 49
for a security interest that secures an obligation or (ii) sells an account, chattel 50 General Assembly Of North Carolina Session 2025
Page 8 Senate Bill 117-First Edition
paper, payment intangible, or promissory note. The term includes a secured 1
party that has transferred a security interest to another person. 2
(7) "Authenticate" means: 3
a. To sign; or 4
b. With present intent to adopt or accept a record, to attach to or logically 5
associate with the record an electronic sound, symbol, or process. 6
(8) "Bank" means an Bank. – An organization that is engaged in the business of 7
banking. The term includes savings banks, savings and loan associations, 8
credit unions, and trust companies. 9
(8a) Beneficiary. – Defined in G.S. 25-5-102. 10
(8b) Broker. – Defined in G.S. 25-8-102. 11
(9) "Cash proceeds" means proceeds Cash proceeds. – Proceeds that are money, 12
checks, deposit accounts, or the like. 13
(10) "Certificate of title" means a Certificate of title. – A certificate of title with 14
respect to which a statute provides for the security interest in question to be 15
indicated on the certificate as a condition or result of the security interest's 16
obtaining priority over the rights of a lien creditor with respect to the 17
collateral. The term includes another record maintained as an alternative to a 18
certificate of title by the governmental unit that issues certificates of title if a 19
statute permits the security interest in question to be indicated on the record 20
as a condition or result of the security interest's obtaining priority over the 21
rights of a lien creditor with respect to the collateral. 22
(10a) Certificated security. – Defined in G.S. 25-8-102. 23
(11) "Chattel paper" means a record or records that evidence both a monetary 24
obligation and a security interest in specific goods, a security interest in 25
specific goods and software used in the goods, a security interest in specific 26
goods and license of software used in the goods, a lease of specific goods, or 27
a lease of specific goods and license of software used in the goods. In this 28
subdivision, "monetary obligation" means a monetary obligation secured by 29
the goods or owed under a lease of the goods and includes a monetary 30
obligation with respect to software used in the goods. The term does not 31
include (i) charters or other contracts involving the use or hire of a vessel or 32
(ii) records that evidence a right to payment arising out of the use of a credit 33
or charge card or information contained on or for use with the card. If a 34
transaction is evidenced by records that include an instrument or series of 35
instruments, the group of records taken together constitutes chattel 36
paper.Chattel paper. – Either of the following: 37
a. A right to payment of a monetary obligation secured by specific goods, 38
if the right to payment and security agreement are evidenced by a 39
record. 40
b. A right to payment of a monetary obligation owed by a lessee under a 41
lease agreement with respect to specific goods and a monetary 42
obligation owed by the lessee in connection with the transaction giving 43
rise to the lease, if both of the following apply: 44
1. The right to payment and lease agreement are evidenced by a 45
record. 46
2. The predominant purpose of the transaction giving rise to the 47
lease was to give the lessee the right to possession and use of 48
the goods. 49
The term does not include a right to payment arising out of a charter or other 50
contract involving the use or hire of a vessel or a right to payment arising out 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 9
of the use of a credit or charge card or information contained on or for use 1
with the card. 2
(11a) Check. – Defined in G.S. 25-3-104. 3
(11b) Clearing corporation. – Defined in G.S. 25-8-102. 4
(12) "Collateral" means the Collateral. – The property subject to a security interest 5
or agricultural lien. The term includes:includes all of the following: 6
a. Proceeds to which a security interest attaches;attaches. 7
b. Accounts, chattel paper, payment intangibles, and promissory notes 8
that have been sold; andsold. 9
c. Goods that are the subject of a consignment. 10
(13) "Commercial tort claim" means a Commercial tort claim. – A claim arising in 11
tort with respect to which:if either of the following applies: 12
a. The claimant is an organization; ororganization. 13
b. The claimant is an individual and the claim:both of the following 14
apply: 15
1. Arose The claim arose in the course of the claimant's business 16
or profession; andprofession. 17
2. Does The claim does not include damages arising out of 18
personal injury to or the death of an individual. 19
(14) "Commodity account" means an Commodity account. – An account 20
maintained by a commodity intermediary in which a commodity contract is 21
carried for a commodity customer. 22
(15) "Commodity contract" means a Commodity contract. – A commodity futures 23
contract, an option on a commodity futures contract, a commodity option, or 24
another contract if the contract or option is:either of the following applies: 25
a. Traded The contract or option is traded on or subject to the rules of a 26
board of trade that has been designated as a contract market for such a 27
contract the contract or option pursuant to federal commodities laws; 28
orlaw. 29
b. Traded The contract or option is traded on a foreign commodity board 30
of trade, exchange, or market, and is carried on the books of a 31
commodity intermediary for a commodity customer. 32
(16) "Commodity customer" means a Commodity customer. – A person for which 33
a commodity intermediary carries a commodity contract on its books. 34
(17) "Commodity intermediary" means a Commodity intermediary. – A person 35
that:that satisfies either of the following: 36
a. Is registered as a futures commission merchant under federal 37
commodities law; orlaw. 38
b. In the ordinary course of its business business, provides clearance or 39
settlement services for a board of trade that has been designated as a 40
contract market pursuant to federal commodities law. 41
(18) "Communicate" means:Communicate. – Any of the following: 42
a. To send a written or other tangible record;record. 43
b. To transmit a record by any means agreed upon by the persons sending 44
and receiving the record; orrecord. 45
c. In the case of transmission of a record to or by a filing office, to 46
transmit a record by any means prescribed by filing-office rule. 47
(19) "Consignee" means a Consignee. – A merchant to which goods are delivered 48
in a consignment. 49 General Assembly Of North Carolina Session 2025
Page 10 Senate Bill 117-First Edition
(20) "Consignment" means a Consignment. – A transaction, regardless of its form, 1
in which a person delivers goods to a merchant for the purpose of sale and:and 2
all of the following apply: 3
a. The merchant:All of the following apply to the merchant: 4
1. Deals The merchant deals in goods of that kind under a name 5
other than the name of the person making delivery;delivery. 6
2. Is The merchant is not an auctioneer; andauctioneer. 7
3. Is The merchant is not generally known by its creditors to be 8
substantially engaged in selling the goods of others;others. 9
b. With respect to each delivery, the aggregate value of the goods is one 10
thousand dollars ($1,000) or more at the time of delivery;delivery. 11
c. The goods are not consumer goods immediately before delivery;and 12
delivery. 13
d. The transaction does not create a security interest that secures an 14
obligation. 15
(21) "Consignor" means a Consignor. – A person that delivers goods to a consignee 16
in a consignment. 17
(22) "Consumer debtor" means a Consumer debtor. – A debtor in a consumer 18
transaction. 19
(23) "Consumer goods" means goods Consumer goods. – Goods that are used or 20
bought for use primarily for personal, family, or household purposes. 21
(24) "Consumer-goods transaction" means a Consumer-goods transaction. – A 22
consumer transaction in which:which both of the following apply: 23
a. An individual incurs an obligation primarily for personal, family, or 24
household purposes; andpurposes. 25
b. A security interest in consumer goods secures the obligation. 26
(25) "Consumer obligor" means an Consumer obligor. – An obligor who is an 27
individual and who incurred the obligation as part of a transaction entered into 28
primarily for personal, family, or household purposes. 29
(26) "Consumer transaction" means a Consumer transaction. – A transaction in 30
which (i) an individual incurs an obligation primarily for personal, family, or 31
household purposes, (ii) a security interest secures the obligation, and (iii) the 32
collateral is held or acquired primarily for personal, family, or household 33
purposes. The term includes consumer-goods transactions. 34
(27) "Continuation statement" means an Continuation statement. – An amendment 35
of a financing statement which:that does both of the following: 36
a. Identifies, by its file number, the initial financing statement to which 37
it relates; andrelates. 38
b. Indicates that it is a continuation statement for, or that it is filed to 39
continue the effectiveness of, the identified financing statement. 40
(27a) Contract for sale. – Defined in G.S. 25-2-106. 41
(27b) Control. – Defined in G.S. 25-7-106. 42
(27c) Controllable account. – An account evidenced by a controllable electronic 43
record that provides that the account debtor undertakes to pay the person that 44
has control under G.S. 25-12-105 of the controllable electronic record. 45
(27d) Controllable electronic record. – Defined in G.S. 25-12-102. 46
(27e) Controllable payment intangible. – A payment intangible evidenced by a 47
controllable electronic record that provides that the account debtor undertakes 48
to pay the person that has control under G.S. 25-12-105 of the controllable 49
electronic record. 50
(27f) Customer. – Defined in G.S. 25-4-104. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 11
(28) "Debtor" means:Debtor. – Any of the following: 1
a. A person having an interest, other than a security interest or other lien, 2
in the collateral, whether or not the person is an obligor;obligor. 3
b. A seller of accounts, chattel paper, payment intangibles, or promissory 4
notes; ornotes. 5
c. A consignee. 6
(29) "Deposit account" means a Deposit account. – A demand, time, savings, 7
passbook, or similar account maintained with a bank. The term does not 8
include investment property or accounts evidenced by an instrument. 9
(30) "Document" means a Document. – A document of title or a receipt of the type 10
described in G.S. 25-7-201(b). 11
(31) "Electronic chattel paper" means chattel paper evidenced by a record or 12
records consisting of information stored in an electronic medium. 13
(31a) Electronic money. – Money in an electronic form. 14
(32) "Encumbrance" means a Encumbrance. – A right, other than an ownership 15
interest, in real property. The term includes mortgages and other liens on real 16
property. 17
(32a) Entitlement holder. – Defined in G.S. 25-8-102. 18
(33) "Equipment" means goods Equipment. – Goods other than inventory, farm 19
products, or consumer goods. 20
(34) "Farm products" means goods, Farm products. – Any of the following goods, 21
other than standing timber, with respect to which the debtor is engaged in a 22
farming operation and which are:operation: 23
a. Crops grown, growing, or to be grown, including:including both of the 24
following: 25
1. Crops produced on trees, vines, and bushes; andbushes. 26
2. Aquatic goods produced in aquacultural operations;operations. 27
b. Livestock, born or unborn, including aquatic goods produced in 28
aquacultural operations;operations. 29
c. Supplies used or produced in a farming operation; oroperation. 30
d. Products of crops or livestock in their unmanufactured states. 31
(35) "Farming operation" means raising, Farming operation. – Raising, cultivating, 32
propagating, fattening, grazing, or any other farming, livestock, or 33
aquacultural operation. 34
(36) "File number" means the File number. – The number assigned to an initial 35
financing statement pursuant to G.S. 25-9-519(a). 36
(37) "Filing office" means an Filing office. – An office designated in G.S. 25-9-501 37
as the place to file a financing statement. 38
(38) "Filing-office rule" means a Filing-office rule. – A rule adopted pursuant to 39
G.S. 25-9-526. 40
(38a) Financial asset. – Defined in G.S. 25-8-102. 41
(39) "Financing statement" means a Financing statement. – A record or records 42
composed of an initial financing statement and any filed record relating to the 43
initial financing statement. 44
(40) "Fixture filing" means the Fixture filing. – The filing of a financing statement 45
covering goods that are or are to become fixtures and satisfying 46
G.S. 25-9-502(a) and (b). The term includes the filing of a financing statement 47
covering goods of a transmitting utility which that are or are to become 48
fixtures. 49
(41) "Fixtures" means goods Fixtures. – Goods that have become so related to 50
particular real property that an interest in them arises under real property law. 51 General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 117-First Edition
(42) "General intangible" means any General intangible. – Any personal property, 1
including things in action, other than accounts, chattel paper, commercial tort 2
claims, deposit accounts, documents, goods, instruments, investment 3
property, letter-of-credit rights, letters of credit, money, and oil, gas, or other 4
minerals before extraction. The term includes controllable electronic records, 5
payment intangibles intangibles, and software. 6
(43) Repealed by Session Laws 2006-112, s. 21, effective October 1, 2006. 7
(44) "Goods" means all Goods. – All things that are movable when a security 8
interest attaches. The term includes (i) fixtures, (ii) standing timber that is to 9
be cut and removed under a conveyance or contract for sale, (iii) the unborn 10
young of animals, (iv) crops grown, growing, or to be grown, even if the crops 11
are produced on trees, vines, or bushes, and (v) manufactured homes. The term 12
also includes a computer program embedded in goods and any supporting 13
information provided in connection with a transaction relating to the program 14
if (i) the program is associated with the goods in such a manner that it 15
customarily is considered part of the goods, or (ii) by becoming the owner of 16
the goods, a person acquires a right to use the program in connection with the 17
goods. The term does not include a computer program embedded in goods that 18
consist solely of the medium in which the program is embedded. The term 19
also does not include accounts, chattel paper, commercial tort claims, deposit 20
accounts, documents, general intangibles, instruments, investment property, 21
letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals 22
before extraction. 23
(45) "Governmental unit" means a Governmental unit. – A subdivision, agency, 24
department, county, parish, municipality, or other unit of the government of 25
the United States, a state, or a foreign country. The term includes an 26
organization having a separate corporate existence if the organization (i) is 27
eligible to issue debt on which interest is exempt from income taxation under 28
the laws of the United States, States or (ii) was created to facilitate the issuance 29
of notes, bonds, other evidences of indebtedness indebtedness, or payment 30
obligations for borrowed money by, or in conjunction with, installment or 31
lease purchase financings for, for this State or any county, municipality, or 32
other agency or political subdivision thereof as evidenced by the documents 33
creating the organization. 34
(46) "Health-care-insurance receivable" means an Health-care-insurance 35
receivable. – An interest in or claim under a policy of insurance which that is 36
a right to payment of a monetary obligation for health-care goods or services 37
provided. 38
(46a) Holder in due course. – Defined in G.S. 25-3-302. 39
(47) "Instrument" means a Instrument. – A negotiable instrument or any other 40
writing that evidences a right to the payment of a monetary obligation, is not 41
itself a security agreement or lease, and is of a type that in the ordinary course 42
of business is transferred by delivery with any necessary indorsement or 43
assignment. The term does not include (i) investment property, (ii) letters of 44
credit, or (iii) writings that evidence a right to payment arising out of the use 45
of a credit or charge card or information contained on or for use with the card. 46
card, or (iv) writings that evidence chattel paper. 47
(48) "Inventory" means goods, Inventory. – Goods, other than farm products, 48
which:that satisfy any of the following descriptions: 49
a. Are leased by a person as lessor;lessor. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 13
b. Are held by a person for sale or lease or to be furnished under a 1
contract of service;service. 2
c. Are furnished by a person under a contract of service; orservice. 3
d. Consist of raw materials, work in process, or materials used or 4
consumed in a business. 5
(49) "Investment property" means a Investment property. – A security, whether 6
certificated or uncertificated, security entitlement, securities account, 7
commodity contract, or commodity account. 8
(49a) Issuer. – Defined as follows: 9
a. With respect to a letter of credit or letter-of-credit right, defined in 10
G.S. 25-5-102. 11
b. With respect to a security, defined in G.S. 25-8-201. 12
c. With respect to documents of title, defined in G.S. 25-7-102. 13
(50) "Jurisdiction of organization", with respect to a registered organization, means 14
the Jurisdiction of organization. – With respect to a registered organization, 15
the jurisdiction under whose law the organization is formed or organized. 16
(50a) Lease. – Defined in G.S. 25-2A-103. 17
(50b) Lease agreement. – Defined in G.S. 25-2A-103. 18
(50c) Lease contract. – Defined in G.S. 25-2A-103. 19
(50d) Leasehold interest. – Defined in G.S. 25-2A-103. 20
(50e) Lessee. – Defined in G.S. 25-2A-103. 21
(50f) Lessee in ordinary course of business. – Defined in G.S. 25-2A-103. 22
(50g) Lessor. – Defined in G.S. 25-2A-103. 23
(50h) Lessor's residual interest. – Defined in G.S. 25-2A-103. 24
(50i) Letter of credit. – Defined in G.S. 25-5-102. 25
(51) "Letter-of-credit right" means a Letter-of-credit right. – A right to payment or 26
performance under a letter of credit, whether or not the beneficiary has 27
demanded or is at the time entitled to demand payment or performance. The 28
term does not include the right of a beneficiary to demand payment or 29
performance under a letter of credit. 30
(52) "Lien creditor" means:Lien creditor. – Any of the following: 31
a. A creditor that has acquired a lien on the property involved by 32
attachment, levy, or the like;like. 33
b. An assignee for benefit of creditors from the time of 34
assignment;assignment. 35
c. A trustee in bankruptcy from the date of the filing of the petition; 36
orpetition. 37
d. A receiver in equity from the time of appointment. 38
(53) "Manufactured home" means a Manufactured home. – A structure, 39
transportable in one or more sections, which, sections that satisfies all of the 40
following requirements: 41
a. in In the traveling mode, is eight body feet or more in width or 40 body 42
feet or more in length, or, when erected on site, is 320 or more square 43
feet, and whichfeet. 44
b. is Is built on a permanent chassis and designed to be used as a dwelling 45
with or without a permanent foundation when connected to the 46
required utilities, andutilities. 47
c. includes the Includes plumbing, heating, air-conditioning, and 48
electrical systems contained therein.systems. 49
The term includes any structure that meets all of the requirements of this 50
subdivision except the size requirements and with respect to which the 51 General Assembly Of North Carolina Session 2025
Page 14 Senate Bill 117-First Edition
manufacturer voluntarily files a certification required by the United States 1
Secretary of Housing and Urban Development and complies with the 2
standards established under Title 42 of the United States Code. 3
(54) "Manufactured-home transaction" means a secured transaction: 4
Manufactured-home transaction. – A secured transaction if either of the 5
following applies: 6
a. That The transaction creates a purchase-money security interest in a 7
manufactured home, other than a manufactured home held as 8
inventory; orinventory. 9
b. In which a manufactured home, other than a manufactured home held 10
as inventory, is the primary collateral. 11
(54a) Merchant. – Defined in G.S. 25-2-104. 12
(54b) Money. – Defined in G.S. 25-1-201(b) but does not include (i) a deposit 13
account or (ii) money in an electronic form that cannot be subjected to control 14
under G.S. 25-9-105.1. 15
(55) "Mortgage" means a Mortgage. – A consensual interest in real property, 16
including fixtures, which that secures payment or performance of an 17
obligation. 18
(55a) Negotiable instrument. – Defined in G.S. 25-3-104. 19
(56) "New debtor" means a New debtor. – A person that becomes bound as debtor 20
under G.S. 25-9-203(d) by a security agreement previously entered into by 21
another person. 22
(57) "New value" meansNew value. – Any of the following: 23
a. (i) money, Money. 24
b. (ii) money's Money's worth in property, services, or new credit, 25
orcredit. 26
c. (iii) release Release by a transferee of an interest in property 27
previously transferred to the transferee. 28
The term does not include an obligation substituted for another obligation. 29
(57a) Nominated person. – Defined in G.S. 25-5-102. 30
(58) "Noncash proceeds" means proceeds Noncash proceeds. – Proceeds other than 31
cash proceeds. 32
(58a) Note. – Defined in G.S. 25-3-104. 33
(59) "Obligor" means a Obligor. – A person that, with respect to an obligation 34
secured by a security interest in or an agricultural lien on the collateral, (i) 35
owes payment or other performance of the obligation, (ii) has provided 36
property other than the collateral to secure payment or other performance of 37
the obligation, or (iii) is otherwise accountable in whole or in part for payment 38
or other performance of the obligation. The term does not include issuers or 39
nominated persons under a letter of credit. 40
(60) "Original debtor", except as used in G.S. 25-9-310(c), means a Original 41
debtor, except as used in G.S. 25-9-310(c). – A person that, as debtor, entered 42
into a security agreement to which a new debtor has become bound under 43
G.S. 25-9-203(d). 44
(61) "Payment intangible" means a Payment intangible. – A general intangible 45
under which the account debtor's principal obligation is a monetary obligation. 46
The term includes a controllable payment intangible. 47
(62) "Person related to", with respect to an individual, means:Person related to. – 48
Defined as follows: 49
a. With respect to an individual, any of the following: 50
a.1. The spouse of the individual;individual. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 15
b.2. A brother, brother-in-law, sister, or sister-in-law of the 1
individual;individual. 2
c.3. An ancestor or lineal descendant of the individual or the 3
individual's spouse; orspouse. 4
d.4. Any other relative, by blood or marriage, of the individual or 5
the individual's spouse who shares the same home with the 6
individual. 7
(63) "Person related to", with respect to an organization, means: 8
b. With respect to an organization, any of the following: 9
a.1. A person directly or indirectly controlling, controlled by, or 10
under common control with the organization;organization. 11
b.2. An officer or director of, or a person performing similar 12
functions with respect to, the organization;organization. 13
c.3. An officer or director of, or a person performing similar 14
functions with respect to, a person described in 15
sub-subdivision a. of this subdivision;sub-sub-subdivision 1. 16
of this sub-subdivision. 17
d.4. The spouse of an individual described in sub-subdivision a., b., 18
or c. of this subdivision; orsub-sub-subdivision 1., 2., or 3., of 19
this sub-subdivision. 20
e.5. An individual who is related by blood or marriage to an 21
individual described in sub-subdivision a., b., c., or d. of this 22
subdivision sub-sub-subdivision 1., 2., 3., or 4. of this 23
sub-subdivision and shares the same home with the individual. 24
(64) "Proceeds", except as used in G.S. 25-9-609(b), means the Proceeds. – Except 25
as used in G.S. 25-9-609(b), means any of the following property: 26
a. Whatever is acquired upon the sale, lease, license, exchange, or other 27
disposition of collateral;collateral. 28
b. Whatever is collected on, or distributed on account of, 29
collateral;collateral. 30
c. Rights arising out of collateral;collateral. 31
d. To the extent of the value of collateral, claims arising out of the loss, 32
nonconformity, or interference with the use of, defects or infringement 33
of rights in, or damage to, thecollateral; orcollateral. 34
e. To the extent of the value of collateral and to the extent payable to the 35
debtor or the secured party, insurance payable by reason of the loss or 36
nonconformity of, defects or infringement of rights in, or damage to, 37
the collateral. 38
(64a) Proceeds of a letter of credit. – Defined in G.S. 25-5-114. 39
(65) "Production-money crops" means crops Production-money crops. – Crops that 40
secure a production-money obligation incurred with respect to the production 41
of those crops. 42
(66) "Production-money obligation" means an Production-money obligation. – An 43
obligation of an obligor incurred for new value given to enable the debtor to 44
produce crops if the value is in fact used for the production of the crops. 45
(67) "Production of crops" includes Production of crops. – Includes tilling and 46
otherwise preparing land for growing, planting, cultivating, fertilizing, 47
irrigating, harvesting, gathering, and curing crops, crops and protecting them 48
from damage or disease. 49
(68) "Promissory note" means an Promissory note. – An instrument that evidences 50
a promise to pay a monetary obligation, does not evidence an order to pay, 51 General Assembly Of North Carolina Session 2025
Page 16 Senate Bill 117-First Edition
and does not contain an acknowledgment by a bank that the bank has received 1
for deposit a sum of money or funds. 2
(69) "Proposal" means a Proposal. – A record authenticated signed by a secured 3
party which that includes the terms on which the secured party is willing to 4
accept collateral in full or partial satisfaction of the obligation it secures 5
pursuant to G.S. 25-9-620, 25-9-621, and 25-9-622. 6
(69a) Protected purchaser. – Defined in G.S. 25-8-303. 7
(69b) Prove. – Defined in G.S. 25-3-103. 8
(70) "Public-finance transaction" means a Public-finance transaction. – A secured 9
transaction in connection with which:to which all of the following apply: 10
a. Debt securities are issued;issued. 11
b. All or a portion of the securities issued have an initial stated maturity 12
of at least 20 years; andyears. 13
c. The debtor, obligor, secured party, account debtor or other person 14
obligated on collateral, assignor or assignee of a secured obligation, or 15
assignor or assignee of a security interest is a state or a governmental 16
unit of a state. 17
(70a) "Public organic record" means a Public organic record. – A record that is 18
available to the public for inspection and is:is any of the following: 19
a. A record consisting of the record initially filed with or issued by a state 20
or the United States to form or organize an organization and any record 21
filed with or issued by the state or the United States which that amends 22
or restates the initial record;record. 23
b. An organic record of a business trust consisting of the record initially 24
filed with a state and any record filed with the state which that amends 25
or restates the initial record, if a statute of the state governing business 26
trusts requires that the record be filed with the state; orstate. 27
c. A record consisting of legislation enacted by the legislature of a state 28
or the Congress of the United States which that forms or organizes an 29
organization, any record amending the legislation, and any record filed 30
with or issued by the state or the United States which that amends or 31
restates the name of the organization. 32
(71) "Pursuant to commitment", with Pursuant to commitment. – With respect to 33
an advance made or other value given by a secured party, means pursuant to 34
the secured party's obligation, whether or not a subsequent event of default or 35
other event not within the secured party's control has relieved or may relieve 36
the secured party from its obligation. 37
(71a) Qualifying purchaser. – Defined in G.S. 25-12-102. 38
(72) "Record", except as used in "for record", "of record", "record or legal title", 39
and "record owner", Record. – Except as used in "for record," "of record," 40
"record or legal title," and "record owner," means information that is inscribed 41
on a tangible medium or that is stored in an electronic or other medium and is 42
retrievable in perceivable form. 43
(73) "Registered organization" means an Registered organization. – An 44
organization formed or organized solely under the law of a single state or the 45
United States by the filing of a public organic record with, the issuance of a 46
public organic record by, or the enactment of legislation by the state or the 47
United States. The term includes a business trust that is formed or organized 48
under the law of a single state if a statute of the state governing business trusts 49
requires that the business trust's organic record be filed with the state. 50
(73a) Sale. – Defined in G.S. 25-2-106. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 17
(74) "Secondary obligor" means an Secondary obligor. – An obligor to the extent 1
that:that either of the following applies: 2
a. The obligor's obligation is secondary; orsecondary. 3
b. The obligor has a right of recourse with respect to an obligation 4
secured by collateral against the debtor, another obligor, or property 5
of either. 6
(75) "Secured party" means:Secured party. – Any of the following: 7
a. A person in whose favor a security interest is created or provided for 8
under a security agreement, whether or not any obligation to be 9
secured is outstanding;outstanding. 10
b. A person that holds an agricultural lien;lien. 11
c. A consignor;consignor. 12
d. A person to which accounts, chattel paper, payment intangibles, or 13
promissory notes have been sold;sold. 14
e. A trustee, indenture trustee, agent, collateral agent, or other 15
representative in whose favor a security interest or agricultural lien is 16
created or provided for; orfor. 17
f. A person that holds a security interest arising under G.S. 25-2-401, 18
25-2-505, 25-2-711(3), 25-2A-508(5), 25-4-208, or 25-5-118. 19
(75a) Securities account. – Defined in G.S. 25-8-501. 20
(75b) Securities intermediary. – Defined in G.S. 25-8-102. 21
(75c) Security. – Defined in G.S. 25-8-102. 22
(76) "Security agreement" means an Security agreement. – An agreement that 23
creates or provides for a security interest. 24
(76a) Security certificate. – Defined in G.S. 25-8-102. 25
(76b) Security entitlement. – Defined in G.S. 25-8-102. 26
(77) "Send", in connection with a record or notification, means: 27
a. To deposit in the mail, deliver for transmission, or transmit by any 28
other usual means of communication, with postage or cost of 29
transmission provided for, addressed to any address reasonable under 30
the circumstances; or 31
b. To cause the record or notification to be received within the time that 32
it would have been received if properly sent under sub-subdivision a. 33
of this subdivision. 34
(78) "Software" means a Software. – A computer program and any supporting 35
information provided in connection with a transaction relating to the program. 36
The term does not include a computer program that is included in the 37
definition of goods. 38
(79) "State" means a State. – A state of the United States, the District of Columbia, 39
Puerto Rico, the United States Virgin Islands, or any territory or insular 40
possession subject to the jurisdiction of the United States. 41
(80) "Supporting obligation" means a Supporting obligation. – A letter-of-credit 42
right or secondary obligation that supports the payment or performance of an 43
account, chattel paper, a document, a general intangible, an instrument, or 44
investment property. 45
(81) "Tangible chattel paper" means chattel paper evidenced by a record or records 46
consisting of information that is inscribed on a tangible medium. 47
(81a) Tangible money. – Money in a tangible form. 48
(82) "Termination statement" means an Termination statement. – An amendment 49
of a financing statement which:that does both of the following: 50 General Assembly Of North Carolina Session 2025
Page 18 Senate Bill 117-First Edition
a. Identifies, by its file number, the initial financing statement to which 1
it relates; andrelates. 2
b. Indicates either that it is a termination statement or that the identified 3
financing statement is no longer effective. 4
(83) "Transmitting utility" means a Transmitting utility. – A person primarily 5
engaged in the business of:of any of the following: 6
a. Operating a railroad, subway, street railway, or trolley bus;bus. 7
b. Transmitting communications electrically, electromagnetically, or by 8
light;light. 9
c. Transmitting goods by pipeline or sewer; orsewer. 10
d. Transmitting or producing and transmitting electricity, steam, gas, or 11
water. 12
(84) Uncertificated security. – Defined in G.S. 25-8-102. 13
(b) Definitions in other articles. – "Control" as provided in G.S. 25-7-106 and the 14
following definitions in other Articles of this Chapter apply to this Article: 15
"Applicant" G.S. 25-5-102. 16
"Beneficiary" G.S. 25-5-102. 17
"Broker" G.S. 25-8-102. 18
"Certificated security" G.S. 25-8-102. 19
"Check" G.S. 25-3-104. 20
"Clearing corporation" G.S. 25-8-102. 21
"Contract for sale" G.S. 25-2-106. 22
"Customer" G.S. 25-4-104. 23
"Entitlement holder" G.S. 25-8-102. 24
"Financial asset" G.S. 25-8-102. 25
"Holder in due course" G.S. 25-3-302. 26
"Issuer" (with respect to a letter of credit 27
or letter-of-credit right) G.S. 25-5-102. 28
"Issuer" (with respect to a security) G.S. 25-8-201. 29
"Issuer" (with respect to documents of title) G.S. 25-7-102. 30
"Lease" G.S. 25-2A-103. 31
"Lease agreement" G.S. 25-2A-103. 32
"Lease contract" G.S. 25-2A-103. 33
"Leasehold interest" G.S. 25-2A-103. 34
"Lessee" G.S. 25-2A-103. 35
"Lessee in ordinary course of business" G.S. 25-2A-103. 36
"Lessor" G.S. 25-2A-103. 37
"Lessor's residual interest" G.S. 25-2A-103. 38
"Letter of credit" G.S. 25-5-102. 39
"Merchant" G.S. 25-2-104. 40
"Negotiable instrument" G.S. 25-3-104. 41
"Nominated person" G.S. 25-5-102. 42
"Note" G.S. 25-3-104. 43
"Proceeds of a letter of credit" G.S. 25-5-114. 44
"Prove" G.S. 25-3-103. 45
"Sale" G.S. 25-2-106. 46
"Securities account" G.S. 25-8-501. 47
"Securities intermediary" G.S. 25-8-102. 48
"Security" G.S. 25-8-102. 49
"Security certificate" G.S. 25-8-102. 50
"Security entitlement" G.S. 25-8-102. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 19
"Uncertificated security" G.S. 25-8-102. 1
(c) Article 1 definitions and principles. – Definitions and Principles. – Article 1 of this 2
Chapter contains general definitions and principles of construction and interpretation applicable 3
throughout this Article." 4
SECTION 3. G.S. 25-9-104 reads as rewritten: 5
"§ 25-9-104. Control of deposit account. 6
(a) Requirements for control. – Control. – A secured party has control of a deposit 7
account if:if any of the following applies: 8
(1) The secured party is the bank with which the deposit account is 9
maintained;maintained. 10
(2) The debtor, secured party, and bank have agreed in an authenticated a signed 11
record that the bank will comply with instructions originated by the secured 12
party directing disposition of the funds in the deposit account without further 13
consent by the debtor; ordebtor. 14
(3) The secured party becomes the bank's customer with respect to the deposit 15
account. 16
(4) Another person, other than the debtor, does either of the following: 17
a. Has control of the deposit account and acknowledges that it has control 18
on behalf of the secured party. 19
b. Obtains control of the deposit account after having acknowledged that 20
it will obtain control of the deposit account on behalf of the secured 21
party. 22
(b) Debtor's right to direct disposition. – Right to Direct Disposition. – A secured party 23
that has satisfied subsection (a) of this section has control, even if the debtor retains the right to 24
direct the disposition of funds from the deposit account." 25
SECTION 4. G.S. 25-9-105 reads as rewritten: 26
"§ 25-9-105. Control of electronic chattel paper.copy of record evidencing chattel paper. 27
(a) General Rule: Control of Electronic Chattel Paper. – A secured party has control of 28
electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel 29
paper reliably establishes the secured party as the person to which the chattel paper was assigned. 30
(b) Specific Facts Giving Control. – A system satisfies subsection (a) of this section if 31
the record or records comprising the chattel paper are created, stored, and assigned in such a 32
manner that: 33
(1) A single authoritative copy of the record or records exists which is unique, 34
identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 35
of this section, unalterable; 36
(2) The authoritative copy identifies the secured party as the assignee of the 37
record or records; 38
(3) The authoritative copy is communicated to and maintained by the secured 39
party or its designated custodian; 40
(4) Copies or amendments that add or change an identified assignee of the 41
authoritative copy can be made only with the consent of the secured party; 42
(5) Each copy of the authoritative copy and any copy of a copy is readily 43
identifiable as a copy that is not the authoritative copy; and 44
(6) Any amendment of the authoritative copy is readily identifiable as authorized 45
or unauthorized. 46
(a) General Rule for Control of Electronic Copy of Record Evidencing Chattel Paper. – 47
A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper 48
if a system employed for evidencing the assignment of interests in the chattel paper reliably 49
establishes the purchaser as the person to which the authoritative electronic copy was assigned. 50 General Assembly Of North Carolina Session 2025
Page 20 Senate Bill 117-First Edition
(b) Single Authoritative Copy. – A system satisfies subsection (a) of this section if the 1
record or records evidencing the chattel paper are created, stored, and assigned in a manner that 2
satisfies all of the following requirements: 3
(1) A single authoritative copy of the record or records exists that is unique, 4
identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 5
of this subsection, unalterable. 6
(2) The authoritative copy identifies the purchaser as the assignee of the record or 7
records. 8
(3) The authoritative copy is communicated to and maintained by the purchaser 9
or its designated custodian. 10
(4) Copies or amendments that add or change an identified assignee of the 11
authoritative copy can be made only with the consent of the purchaser. 12
(5) Each copy of the authoritative copy and any copy of a copy is readily 13
identifiable as a copy that is not the authoritative copy. 14
(6) Any amendment of the authoritative copy is readily identifiable as authorized 15
or unauthorized. 16
(c) One or More Authoritative Copies. – A system satisfies subsection (a) of this section, 17
and a purchaser has control of an authoritative electronic copy of a record evidencing chattel 18
paper, if the electronic copy, a record attached to or logically associated with the electronic copy, 19
or a system in which the electronic copy is recorded does all of the following: 20
(1) Enables the purchaser readily to identify each electronic copy as either an 21
authoritative copy or a nonauthoritative copy. 22
(2) Enables the purchaser readily to identify itself in any way, including by name, 23
identifying number, cryptographic key, office, or account number, as the 24
assignee of the authoritative electronic copy. 25
(3) Gives the purchaser exclusive power, subject to subsection (d) of this section, 26
to do both of the following: 27
a. Prevent others from adding or changing an identified assignee of the 28
authoritative electronic copy. 29
b. Transfer control of the authoritative electronic copy. 30
(d) Meaning of Exclusive. – Subject to subsection (e) of this section, a power is exclusive 31
under subdivision (c)(3) of this section even if either of the following applies: 32
(1) The authoritative electronic copy, a record attached to or logically associated 33
with the authoritative electronic copy, or a system in which the authoritative 34
electronic copy is recorded limits the use of the authoritative electronic copy 35
or has a protocol programmed to cause a change, including a transfer or loss 36
of control. 37
(2) The power is shared with another person. 38
(e) When Power Not Shared with Another Person. – A power of a purchaser is not shared 39
with another person under subdivision (d)(2) of this section and the purchaser's power is not 40
exclusive if both of the following apply: 41
(1) The purchaser can exercise the power only if the power also is exercised by 42
the other person. 43
(2) Either of the following applies: 44
a. The other person can exercise the power without exercise of the power 45
by the purchaser. 46
b. The other person is the transferor to the purchaser of an interest in the 47
chattel paper. 48
(f) Presumption of Exclusivity of Certain Powers. – If a purchaser has the powers 49
specified in subdivision (c)(3) of this section, the powers are presumed to be exclusive. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 21
(g) Obtaining Control Through Another Person. – A purchaser has control of an 1
authoritative electronic copy of a record evidencing chattel paper if either of the following applies 2
to another person, other than the transferor to the purchaser of an interest in the chattel paper: 3
(1) The other person has control of the authoritative electronic copy and 4
acknowledges that it has control on behalf of the purchaser. 5
(2) The other person obtains control of the authoritative electronic copy after 6
having acknowledged that it will obtain control of the electronic copy on 7
behalf of the purchaser." 8
SECTION 5. Article 9 of Chapter 25 of the General Statutes is amended by adding 9
a new section to read: 10
"§ 25-9-105.1. Control of electronic money. 11
(a) General Rule for Control of Electronic Money. – A person has control of electronic 12
money if both of the following apply: 13
(1) The electronic money, a record attached to or logically associated with the 14
electronic money, or a system in which the electronic money is recorded gives 15
the person both of the following: 16
a. Power to avail itself of substantially all the benefit from the electronic 17
money. 18
b. Exclusive power, subject to subsection (b) of this section, to do both 19
of the following: 20
1. Prevent others from availing themselves of substantially all the 21
benefit from the electronic money. 22
2. Transfer control of the electronic money to another person or 23
cause another person to obtain control of other electronic 24
money as a result of the transfer of the electronic money. 25
(2) The electronic money, a record attached to or logically associated with the 26
electronic money, or a system in which the electronic money is recorded 27
enables the person readily to identify itself in any way, including by name, 28
identifying number, cryptographic key, office, or account number, as having 29
the powers under subdivision (1) of this subsection. 30
(b) Meaning of Exclusive. – Subject to subsection (c) of this section, a power is exclusive 31
under sub-subdivision (a)(1)b. of this section even if either of the following applies: 32
(1) The electronic money, a record attached to or logically associated with the 33
electronic money, or a system in which the electronic money is recorded limits 34
the use of the electronic money or has a protocol programmed to cause a 35
change, including a transfer or loss of control. 36
(2) The power is shared with another person. 37
(c) When Power Not Shared with Another Person. – A power of a person is not shared 38
with another person under subdivision (b)(2) of this section and the person's power is not 39
exclusive if both of the following apply: 40
(1) The person can exercise the power only if the power also is exercised by the 41
other person. 42
(2) Either of the following applies: 43
a. The other person can exercise the power without exercise of the power 44
by the person. 45
b. The other person is the transferor to the person of an interest in the 46
electronic money. 47
(d) Presumption of Exclusivity of Certain Powers. – If a person has the powers specified 48
in sub-subdivision (a)(1)b. of this section, the powers are presumed to be exclusive. 49 General Assembly Of North Carolina Session 2025
Page 22 Senate Bill 117-First Edition
(e) Control Through Another Person. – A person has control of electronic money if either 1
of the following applies to another person, other than the transferor to the person of an interest 2
in the electronic money: 3
(1) The other person has control of the electronic money and acknowledges that 4
it has control on behalf of the person. 5
(2) The other person obtains control of the electronic money after having 6
acknowledged that it will obtain control of the electronic money on behalf of 7
the person." 8
SECTION 6. Article 9 of Chapter 25 of the General Statutes is amended by adding 9
a new section to read: 10
"§ 25-9-107.1. Control of controllable electronic record, controllable account, or 11
controllable payment intangible. 12
(a) Control Under G.S. 25-12-105. – A secured party has control of a controllable 13
electronic record as provided in G.S. 25-12-105. 14
(b) Control of Controllable Account and Controllable Payment Intangible. – A secured 15
party has control of a controllable account or controllable payment intangible if the secured party 16
has control of the controllable electronic record that evidences the controllable account or 17
controllable payment intangible." 18
SECTION 7. Article 9 of Chapter 25 of the General Statutes is amended by adding 19
a new section to read: 20
"§ 25-9-107.2. No requirement to acknowledge or confirm; no duties. 21
(a) No Requirement to Acknowledge. – A person that has control under G.S. 25-9-104, 22
25-9-105, or 25-9-105.1 is not required to acknowledge that it has control on behalf of another 23
person. 24
(b) No Duties or Confirmation. – If a person acknowledges that it has or will obtain 25
control on behalf of another person, unless the person otherwise agrees or law other than this 26
Article otherwise provides, the person does not owe any duty to the other person and is not 27
required to confirm the acknowledgment to any other person." 28
SECTION 8. G.S. 25-9-203 reads as rewritten: 29
"§ 25-9-203. Attachment and enforceability of security interest; proceeds; supporting 30
obligations; formal requisites. 31
(a) Attachment. – A security interest attaches to collateral when it becomes enforceable 32
against the debtor with respect to the collateral, unless an agreement expressly postpones the time 33
of attachment. 34
(b) Enforceability. – Except as otherwise provided in subsections (c) through (i) of this 35
section, a security interest is enforceable against the debtor and third parties with respect to the 36
collateral only if:if all of the following apply: 37
(1) Value has been given;given. 38
(2) The debtor has rights in the collateral or the power to transfer rights in the 39
collateral to a secured party; andparty. 40
(3) One of the following conditions is met: 41
a. The debtor has authenticated signed a security agreement that provides 42
a description of the collateral and, if the security interest covers timber 43
to be cut, a description of the land concerned;concerned. 44
b. The collateral is not a certificated security and is in the possession of 45
the secured party under G.S. 25-9-313 pursuant to the debtor's security 46
agreement;agreement. 47
c. The collateral is a certificated security in registered form and the 48
security certificate has been delivered to the secured party under 49
G.S. 25-8-301 pursuant to the debtor's security agreement; 50
oragreement. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 23
d. The collateral is controllable accounts, controllable electronic records, 1
controllable payment intangibles, deposit accounts, electronic chattel 2
paper, electronic documents, electronic money, investment property, 3
or letter-of-credit rights, or electronic documents, and the secured 4
party has control under G.S. 25-7-106, 25-9-104, 25-9-105, 5
25-9-105.1, 25-9-106, or 25-9-107 25-9-107, or 25-9-107.1 pursuant 6
to the debtor's security agreement. 7
e. The collateral is chattel paper, and the secured party has possession 8
and control under G.S. 25-9-314.1 pursuant to the debtor's security 9
agreement. 10
(c) Other UCC provisions. – Provisions. – Subsection (b) of this section is subject to 11
G.S. 25-4-208 on the security interest of a collecting bank, G.S. 25-5-118 on the security interest 12
of a letter-of-credit issuer or nominated person, G.S. 25-9-110 on a security interest arising under 13
Article 2 or 2A of this Chapter, and G.S. 25-9-206 on security interests in investment property. 14
(d) When person becomes bound by another person's security agreement. – Person 15
Becomes Bound by Another Person's Security Agreement. – A person becomes bound as debtor 16
by a security agreement entered into by another person if, by operation of law other than this 17
Article or by contract:contract, either of the following applies: 18
(1) The security agreement becomes effective to create a security interest in the 19
person's property; orproperty. 20
(2) The person becomes generally obligated for the obligations of the other 21
person, including the obligation secured under the security agreement, and 22
acquires or succeeds to all or substantially all of the assets of the other person. 23
(e) Effect of new debtor becoming bound. – New Debtor Becoming Bound. – If a new 24
debtor becomes bound as debtor by a security agreement entered into by another person:person, 25
both of the following apply: 26
(1) The agreement satisfies subdivision (b)(3) of this section with respect to 27
existing or after-acquired property of the new debtor to the extent the property 28
is described in the agreement; andagreement. 29
(2) Another agreement is not necessary to make a security interest in the property 30
enforceable. 31
(f) Proceeds and supporting obligations. – Supporting Obligations. – The attachment of 32
a security interest in collateral gives the secured party the rights to proceeds provided by 33
G.S. 25-9-315 and is also an attachment of a security interest in a supporting obligation for the 34
collateral. 35
(g) Lien securing right to payment. – Securing Right to Payment. – The attachment of a 36
security interest in a right to payment or performance secured by a security interest or other lien 37
on personal or real property is also an attachment of a security interest in the security interest, 38
mortgage, or other lien. 39
(h) Security entitlement carried in securities account. – Entitlement Carried in Securities 40
Account. – The attachment of a security interest in a securities account is also an attachment of 41
a security interest in the security entitlements carried in the securities account. 42
(i) Commodity contracts carried in commodity account. – Contracts Carried in 43
Commodity Account. – The attachment of a security interest in a commodity account is also an 44
attachment of a security interest in the commodity contracts carried in the commodity account." 45
SECTION 9. G.S. 25-9-204 reads as rewritten: 46
"§ 25-9-204. After-acquired property; future advances. 47
(a) After-acquired collateral. – After-Acquired Collateral. – Except as otherwise 48
provided in subsection (b) of this section, a security agreement may create or provide for a 49
security interest in after-acquired collateral. 50 General Assembly Of North Carolina Session 2025
Page 24 Senate Bill 117-First Edition
(b) When after-acquired property clause not effective. – A After-Acquired Property 1
Clause Not Effective. – Subject to subsection (b1) of this section, a security interest does not 2
attach under a term constituting an after-acquired property clause to:to either of the following: 3
(1) Consumer goods, other than an accession when given as additional security, 4
unless the debtor acquires rights in them within 10 days after the secured party 5
gives value; orvalue. 6
(2) A commercial tort claim. 7
(b1) Limitation on Subsection (b). – Subsection (b) of this section does not prevent a 8
security interest from attaching to any of the following: 9
(1) To consumer goods as proceeds under G.S. 25-9-315(a) or commingled goods 10
under G.S. 25-9-336(c). 11
(2) To a commercial tort claim as proceeds under G.S. 25-9-315(a). 12
(3) Under an after-acquired property clause, to property that is proceeds of 13
consumer goods or a commercial tort claim. 14
(c) Future advances and other value. – Advances and Other Value. – A security 15
agreement may provide that collateral secures, or that accounts, chattel paper, payment 16
intangibles, or promissory notes are sold in connection with future advances or other value, 17
whether or not the advances or value are given pursuant to commitment." 18
SECTION 10. G.S. 25-9-207 reads as rewritten: 19
"§ 25-9-207. Rights and duties of secured party having possession or control of collateral. 20
(a) Duty of care when secured party in possession. – Care When Secured Party in 21
Possession. – Except as otherwise provided in subsection (d) of this section, a secured party shall 22
use reasonable care in the custody and preservation of collateral in the secured party's possession. 23
In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to 24
preserve rights against prior parties unless otherwise agreed. 25
(b) Expenses, risks, duties, and rights when secured party in possession. – Risks, Duties, 26
and Rights When Secured Party in Possession. – Except as otherwise provided in subsection (d) 27
of this section, if a secured party has possession of collateral:collateral, all of the following apply: 28
(1) Reasonable expenses, including the cost of insurance and payment of taxes or 29
other charges, incurred in the custody, preservation, use, or operation of the 30
collateral are chargeable to the debtor and are secured by the 31
collateral;collateral. 32
(2) The risk of accidental loss or damage is on the debtor to the extent of a 33
deficiency in any effective insurance coverage;coverage. 34
(3) The secured party shall keep the collateral identifiable, but fungible collateral 35
may be commingled; andcommingled. 36
(4) The secured party may use or operate the collateral:collateral as follows: 37
a. For the purpose of preserving the collateral or its value;value. 38
b. As permitted by an order of a court having competent jurisdiction; 39
orjurisdiction. 40
c. Except in the case of consumer goods, in the manner and to the extent 41
agreed by the debtor. 42
(c) Rights and duties when secured party in possession or control. – Duties When Secured 43
Party in Possession or Control. – Except as otherwise provided in subsection (d) of this section, 44
all of the following apply to a secured party having possession of collateral or control of collateral 45
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
25-9-107.1: 47
(1) May The secured party may hold as additional security any proceeds, except 48
money or funds, received from the collateral;collateral. 49 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 25
(2) Shall The secured party shall apply money or funds received from the 1
collateral to reduce the secured obligation, unless remitted to the debtor; 2
anddebtor. 3
(3) May The secured party may create a security interest in the collateral. 4
(d) Buyer of certain rights to payment. – Certain Rights to Payment. – If the secured party 5
is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a 6
consignor:consignor, both of the following apply: 7
(1) Subsection (a) of this section does not apply unless the secured party is entitled 8
under an agreement:agreement to either of the following: 9
a. To charge back uncollected collateral; orcollateral. 10
b. Otherwise to full or limited recourse against the debtor or a secondary 11
obligor based on the nonpayment or other default of an account debtor 12
or other obligor on the collateral; andcollateral. 13
(2) Subsections (b) and (c) of this section do not apply." 14
SECTION 11. G.S. 25-9-208 reads as rewritten: 15
"§ 25-9-208. Additional duties of secured party having control of collateral. 16
(a) Applicability of section. – Section. – This section applies to cases in which there is 17
no outstanding secured obligation and the secured party is not committed to make advances, incur 18
obligations, or otherwise give value. 19
(b) Duties of secured party after receiving demand from debtor. – Secured Party After 20
Receiving Demand from Debtor. – Within 10 days after receiving an authenticated a signed 21
demand by the debtor:debtor, all of the following apply: 22
(1) A secured party having control of a deposit account under G.S. 25-9-104(a)(2) 23
shall send to the bank with which the deposit account is maintained an 24
authenticated statement a signed record that releases the bank from any further 25
obligation to comply with instructions originated by the secured party;party. 26
(2) A secured party having control of a deposit account under G.S. 25-9-104(a)(3) 27
shall:shall do either of the following: 28
a. Pay the debtor the balance on deposit in the deposit account; 29
oraccount. 30
b. Transfer the balance on deposit into a deposit account in the debtor's 31
name;name. 32
(3) A secured party, other than a buyer, having control of electronic chattel paper 33
under G.S. 25-9-105 shall: 34
a. Communicate the authoritative copy of the electronic chattel paper to 35
the debtor or its designated custodian; 36
b. If the debtor designates a custodian that is the designated custodian 37
with which the authoritative copy of the electronic chattel paper is 38
maintained for the secured party, communicate to the custodian an 39
authenticated record releasing the designated custodian from any 40
further obligation to comply with instructions originated by the 41
secured party and instructing the custodian to comply with instructions 42
originated by the debtor; and 43
c. Take appropriate action to enable the debtor or its designated 44
custodian to make copies of or revisions to the authoritative copy 45
which add or change an identified assignee of the authoritative copy 46
without the consent of the secured party; 47
A secured party, other than a buyer, having control under G.S. 25-9-105 of an 48
authoritative electronic copy of a record evidencing chattel paper shall transfer 49
control of the electronic copy to the debtor or a person designated by the 50
debtor. 51 General Assembly Of North Carolina Session 2025
Page 26 Senate Bill 117-First Edition
(4) A secured party having control of investment property under 1
G.S. 25-8-106(d)(2) or G.S. 25-9-106(b) shall send to the securities 2
intermediary or commodity intermediary with which the security entitlement 3
or commodity contract is maintained an authenticated a signed record that 4
releases the securities intermediary or commodity intermediary from any 5
further obligation to comply with entitlement orders or directions originated 6
by the secured party;party. 7
(5) A secured party having control of a letter-of-credit right under G.S. 25-9-107 8
shall send to each person having an unfulfilled obligation to pay or deliver 9
proceeds of the letter of credit to the secured party an authenticated a signed 10
release from any further obligation to pay or deliver proceeds of the letter of 11
credit to the secured party; andparty. 12
(6) A secured party having control of an electronic document shall: 13
a. Give control of the electronic document to the debtor or its designated 14
custodian; 15
b. If the debtor designates a custodian that is the designated custodian 16
with which the authoritative copy of the electronic document is 17
maintained for the secured party, communicate to the custodian an 18
authenticated record releasing the designated custodian from any 19
further obligation to comply with instructions originated by the 20
secured party and instructing the custodian to comply with instructions 21
originated by the debtor; and 22
c. Take appropriate action to enable the debtor or its designated 23
custodian to make copies of or revisions to the authoritative copy 24
which add or change an identified assignee of the authoritative copy 25
without the consent of the secured party. 26
A secured party having control under G.S. 25-7-106 of an authoritative 27
electronic copy of an electronic document shall transfer control of the 28
electronic copy to the debtor or a person designated by the debtor. 29
(7) A secured party having control under G.S. 25-9-105.1 of electronic money 30
shall transfer control of the electronic money to the debtor or a person 31
designated by the debtor. 32
(8) A secured party having control under G.S. 25-12-105 of a controllable 33
electronic record, other than a buyer of a controllable account or controllable 34
payment intangible evidenced by the controllable electronic record, shall 35
transfer control of the controllable electronic record to the debtor or a person 36
designated by the debtor." 37
SECTION 12. G.S. 25-9-209 reads as rewritten: 38
"§ 25-9-209. Duties of secured party if account debtor has been notified of assignment. 39
(a) Applicability of section. – Section. – Except as otherwise provided in subsection (c) 40
of this section, this section applies if:if there 41
(1) There is no outstanding secured obligation; obligation and the 42
(2) The secured party is not committed to make advances, incur obligations, or 43
otherwise give value. 44
(b) Duties of secured party after receiving demand from debtor. – Secured Party After 45
Receiving Demand from Debtor. – Within 10 days after receiving an authenticated a signed 46
demand by the debtor, a secured party shall send to an account debtor that has received 47
notification under G.S. 25-9-406(a) or G.S. 25-12-106(b) of an assignment to the secured party 48
as assignee under G.S. 25-9-406(a) an authenticated a signed record that releases the account 49
debtor from any further obligation to the secured party. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 27
(c) Inapplicability to sales. – Sales. – This section does not apply to an assignment 1
constituting the sale of an account, chattel paper, or payment intangible." 2
SECTION 13. G.S. 25-9-210 reads as rewritten: 3
"§ 25-9-210. Request for accounting; request regarding list of collateral or statement of 4
account. 5
(a) Definitions. – In this section:section, the following definitions apply: 6
(1) "Request" means a Request. – A record of a type described in subdivision (2), 7
(3), or (4) of this subsection. 8
(2) "Request for an accounting" means a Request for an accounting. – A record 9
authenticated signed by a debtor requesting that the recipient provide an 10
accounting of the unpaid obligations secured by collateral and reasonably 11
identifying the transaction or relationship that is the subject of the request. 12
(3) "Request regarding a list of collateral" means a Request regarding a list of 13
collateral. – A record authenticated signed by a debtor requesting that the 14
recipient approve or correct a list of what the debtor believes to be the 15
collateral securing an obligation and reasonably identifying the transaction or 16
relationship that is the subject of the request. 17
(4) "Request regarding a statement of account" means a Request regarding a 18
statement of account. – A record authenticated signed by a debtor requesting 19
that the recipient approve or correct a statement indicating what the debtor 20
believes to be the aggregate amount of unpaid obligations secured by 21
collateral as of a specified date and reasonably identifying the transaction or 22
relationship that is the subject of the request. 23
(b) Duty to respond to requests. – Respond to Requests. – Subject to subsections (c), (d), 24
(e), and (f) of this section, a secured party, other than a buyer of accounts, chattel paper, payment 25
intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after 26
receipt:receipt as follows: 27
(1) In the case of a request for an accounting, by authenticating signing and 28
sending to the debtor an accounting; andaccounting. 29
(2) In the case of a request regarding a list of collateral or a request regarding a 30
statement of account, by authenticating signing and sending to the debtor an 31
approval or correction. 32
(c) Request regarding list of collateral; statement concerning type of collateral. – 33
Regarding List of Collateral; Statement Concerning Type of Collateral. – A secured party that 34
claims a security interest in all of a particular type of collateral owned by the debtor may comply 35
with a request regarding a list of collateral by sending to the debtor an authenticated a signed 36
record including a statement to that effect within 14 days after receipt. 37
(d) Request regarding list of collateral; no interest claimed. – Regarding List of 38
Collateral; No Interest Claimed. – A person that receives a request regarding a list of collateral, 39
claims no interest in the collateral when it receives the request, and claimed an interest in the 40
collateral at an earlier time shall comply with the request within 14 days after receipt by sending 41
to the debtor an authenticated record:a signed record that does both of the following: 42
(1) Disclaiming Disclaims any interest in the collateral; andcollateral. 43
(2) If known to the recipient, providing provides the name and mailing address of 44
any assignee of or successor to the recipient's interest in the collateral. 45
(e) Request for accounting or regarding statement of account; no interest in obligation 46
claimed. – Accounting or Regarding Statement of Account; No Interest in Obligation Claimed. 47
– A person that receives a request for an accounting or a request regarding a statement of account, 48
claims no interest in the obligations when it receives the request, and claimed an interest in the 49
obligations at an earlier time shall comply with the request within 14 days after receipt by sending 50
to the debtor an authenticated record:a signed record that does both of the following: 51 General Assembly Of North Carolina Session 2025
Page 28 Senate Bill 117-First Edition
(1) Disclaiming Disclaims any interest in the obligations; andobligations. 1
(2) If known to the recipient, providing provides the name and mailing address of 2
any assignee of or successor to the recipient's interest in the obligations. 3
(f) Charges for responses. – Responses. – A debtor is entitled without charge to one 4
response to a request under this section during any six-month period. The secured party may 5
require payment of a charge not exceeding twenty-five dollars ($25.00) for each additional 6
response." 7
SECTION 14. G.S. 25-9-301 reads as rewritten: 8
"§ 25-9-301. Law governing perfection and priority of security interests. 9
Except as otherwise provided in G.S. 25-9-303 through G.S. 25-9-306, G.S. 25-9-306.2, the 10
following rules determine the law governing perfection, the effect of perfection or nonperfection, 11
and the priority of a security interest in collateral: 12
(1) Except as otherwise provided in this section, while a debtor is located in a 13
jurisdiction, the local law of that jurisdiction governs perfection, the effect of 14
perfection or nonperfection, and the priority of a security interest in collateral. 15
(2) While collateral is located in a jurisdiction, the local law of that jurisdiction 16
governs perfection, the effect of perfection or nonperfection, and the priority 17
of a possessory security interest in that collateral. 18
(3) Except as otherwise provided in paragraph subdivision (4) of this section, 19
while tangible negotiable tangible documents, goods, instruments, money, or 20
tangible chattel paper or tangible money is located in a jurisdiction, the local 21
law of that jurisdiction governs:governs all of the following: 22
a. Perfection of a security interest in the goods by filing a fixture 23
filing;filing. 24
b. Perfection of a security interest in timber to be cut; andcut. 25
c. The effect of perfection or nonperfection and the priority of a 26
nonpossessory security interest in the collateral. 27
(4) The local law of the jurisdiction in which the wellhead or minehead is located 28
governs perfection, the effect of perfection or nonperfection, and the priority 29
of a security interest in as-extracted collateral." 30
SECTION 15. G.S. 25-9-304 reads as rewritten: 31
"§ 25-9-304. Law governing perfection and priority of security interests in deposit accounts. 32
(a) Law of bank's jurisdiction governs. – Bank's Jurisdiction Governs. – The local law of 33
a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority 34
of a security interest in a deposit account maintained with that bank.bank even if the transaction 35
does not bear any relation to the bank's jurisdiction. 36
(b) Bank's jurisdiction. – Jurisdiction. – The following rules determine a bank's 37
jurisdiction for purposes of this Part: 38
…." 39
SECTION 16. G.S. 25-9-305 reads as rewritten: 40
"§ 25-9-305. Law governing perfection and priority of security interests in investment 41
property. 42
(a) Governing law: general rules. – General Rules for Governing Law. – Except as 43
otherwise provided in subsection (c) of this section, the following rules apply: 44
(1) While a security certificate is located in a jurisdiction, the local law of that 45
jurisdiction governs perfection, the effect of perfection or nonperfection, and 46
the priority of a security interest in the certificated security represented 47
thereby. 48
(2) The local law of the issuer's jurisdiction as specified in G.S. 25-8-110(d) 49
governs perfection, the effect of perfection or nonperfection, and the priority 50
of a security interest in an uncertificated security. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 29
(3) The local law of the securities intermediary's jurisdiction as specified in 1
G.S. 25-8-110(e) governs perfection, the effect of perfection or nonperfection, 2
and the priority of a security interest in a security entitlement or securities 3
account. 4
(4) The local law of the commodity intermediary's jurisdiction governs 5
perfection, the effect of perfection or nonperfection, and the priority of a 6
security interest in a commodity contract or commodity account. 7
(5) Subdivisions (2), (3), and (4) of this subsection apply even if the transaction 8
does not bear any relation to the jurisdiction. 9
(b) Commodity intermediary's jurisdiction. – Intermediary's Jurisdiction. – The following 10
rules determine a commodity intermediary's jurisdiction for purposes of this Part: 11
… 12
(c) When perfection governed by law of jurisdiction where debtor located. – Perfection 13
Governed by Law of Jurisdiction Where Debtor Located. – The local law of the jurisdiction in 14
which the debtor is located governs:governs all of the following: 15
(1) Perfection of a security interest in investment property by filing;filing. 16
(2) Automatic perfection of a security interest in investment property created by 17
a broker or securities intermediary; andintermediary. 18
(3) Automatic perfection of a security interest in a commodity contract or 19
commodity account created by a commodity intermediary." 20
SECTION 17. Article 9 of Chapter 25 of the General Statutes is amended by adding 21
a new section to read: 22
"§ 25-9-306.1. Law governing perfection and priority of security interests in chattel paper. 23
(a) Chattel Paper Evidenced by Authoritative Electronic Copy. – Except as provided in 24
subsection (d) of this section, if chattel paper is evidenced only by an authoritative electronic 25
copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative 26
tangible copy, the local law of the chattel paper's jurisdiction governs perfection, the effect of 27
perfection or nonperfection, and the priority of a security interest in the chattel paper, even if the 28
transaction does not bear any relation to the chattel paper's jurisdiction. 29
(b) Chattel Paper's Jurisdiction. – The following rules determine the chattel paper's 30
jurisdiction under this section: 31
(1) If the authoritative electronic copy of the record evidencing chattel paper, or 32
a record attached to or logically associated with the electronic copy and 33
readily available for review, expressly provides that a particular jurisdiction 34
is the chattel paper's jurisdiction for purposes of this Part, this Article, or this 35
Chapter, that jurisdiction is the chattel paper's jurisdiction. 36
(2) If subdivision (1) of this subsection does not apply and the rules of the system 37
in which the authoritative electronic copy is recorded are readily available for 38
review and expressly provide that a particular jurisdiction is the chattel paper's 39
jurisdiction for purposes of this Part, this Article, or this Chapter, that 40
jurisdiction is the chattel paper's jurisdiction. 41
(3) If subdivisions (1) and (2) of this subsection do not apply and the authoritative 42
electronic copy, or a record attached to or logically associated with the 43
electronic copy and readily available for review, expressly provides that the 44
chattel paper is governed by the law of a particular jurisdiction, that 45
jurisdiction is the chattel paper's jurisdiction. 46
(4) If subdivisions (1), (2), and (3) of this subsection do not apply and the rules 47
of the system in which the authoritative electronic copy is recorded are readily 48
available for review and expressly provide that the chattel paper or the system 49
is governed by the law of a particular jurisdiction, that jurisdiction is the 50
chattel paper's jurisdiction. 51 General Assembly Of North Carolina Session 2025
Page 30 Senate Bill 117-First Edition
(5) If subdivisions (1) through (4) of this subsection do not apply, the chattel 1
paper's jurisdiction is the jurisdiction in which the debtor is located. 2
(c) Chattel Paper Evidenced by Authoritative Tangible Copy. – If an authoritative 3
tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an 4
authoritative electronic copy, while the authoritative tangible copy of the record evidencing 5
chattel paper is located in a jurisdiction, the local law of that jurisdiction governs both of the 6
following: 7
(1) Perfection of a security interest in the chattel paper by possession under 8
G.S. 25-9-314.1. 9
(2) The effect of perfection or nonperfection and the priority of a security interest 10
in the chattel paper. 11
(d) When Perfection Governed by Law of Jurisdiction Where Debtor Located. – The local 12
law of the jurisdiction in which the debtor is located governs perfection of a security interest in 13
chattel paper by filing." 14
SECTION 18. Article 9 of Chapter 25 of the General Statutes is amended by adding 15
a new section to read: 16
"§ 25-9-306.2. Law governing perfection and priority of security interests in controllable 17
accounts, controllable electronic records, and controllable payment intangibles. 18
(a) General Rules for Governing Law. – Except as provided in subsection (b) of this 19
section, the local law of the controllable electronic record's jurisdiction specified in 20
G.S. 25-12-107(c) and (d) governs perfection, the effect of perfection or nonperfection, and the 21
priority of a security interest in a controllable electronic record and a security interest in a 22
controllable account or controllable payment intangible evidenced by the controllable electronic 23
record. 24
(b) When Perfection Governed by Law of Jurisdiction Where Debtor Located. – The local 25
law of the jurisdiction in which the debtor is located governs both of the following: 26
(1) Perfection of a security interest in a controllable account, controllable 27
electronic record, or controllable payment intangible by filing. 28
(2) Automatic perfection of a security interest in a controllable payment 29
intangible created by a sale of the controllable payment intangible." 30
SECTION 19. G.S. 25-9-310 reads as rewritten: 31
"§ 25-9-310. When filing required to perfect security interest or agricultural lien; security 32
interests and agricultural liens to which filing provisions do not apply. 33
(a) General rule: perfection by filing. – Rule for Perfection by Filing. – Except as 34
otherwise provided in subsection (b) of this section and G.S. 25-9-312(b), a financing statement 35
must be filed to perfect all security interests and agricultural liens. 36
(b) Exceptions: filing not necessary. – Exceptions When Filing Not Necessary. – The 37
filing of a financing statement is not necessary to perfect a security interest:any of the following 38
security interests: 39
(1) That A security interest that is perfected under G.S. 25-9-308(d), (e), (f), or 40
(g);G.S. 25-9-308(d), (e), (f), or (g). 41
(2) That A security interest that is perfected under G.S. 25-9-309 when it 42
attaches;attaches. 43
(3) In A security interest in property subject to a statute, regulation, or treaty 44
described in G.S. 25-9-311(a);G.S. 25-9-311(a). 45
(4) In A security interest in goods in possession of a bailee which that is perfected 46
under G.S. 25-9-312(d)(1) or (2);G.S. 25-9-312(d)(1) or (2). 47
(5) In A security interest in certificated securities, documents, goods, or 48
instruments which that is perfected without filing, control, or possession under 49
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
Senate Bill 117-First Edition Page 31
(6) In A security interest in collateral in the secured party's possession under 1
G.S. 25-9-313;G.S. 25-9-313. 2
(7) In A security interest in a certificated security which that is perfected by 3
delivery of the security certificate to the secured party under 4
G.S. 25-9-313;G.S. 25-9-313. 5
(8) In A security interest in controllable accounts, controllable electronic records, 6
controllable payment intangibles, deposit accounts, electronic chattel paper, 7
electronic documents, investment property, or letter-of-credit rights which 8
that is perfected by control under G.S. 25-9-314;G.S. 25-9-314. 9
(8a) A security interest in chattel paper that is perfected by possession and control 10
under G.S. 25-9-314.1. 11
(9) In A security interest in proceeds which that is perfected under G.S. 25-9-315; 12
orG.S. 25-9-315. 13
(10) That A security interest that is perfected under G.S. 25-9-316. 14
(c) Assignment of perfected security interest. – Perfected Security Interest. – If a secured 15
party assigns a perfected security interest or agricultural lien, a filing under this Article is not 16
required to continue the perfected status of the security interest against creditors of and 17
transferees from the original debtor." 18
SECTION 20. G.S. 25-9-312 reads as rewritten: 19
"§ 25-9-312. Perfection of security interests in chattel paper, controllable accounts, 20
controllable electronic records, controllable payment intangibles, deposit 21
accounts, negotiable documents, goods covered by documents, instruments, 22
investment property, letter-of-credit rights, and money; perfection by 23
permissive filing; temporary perfection without filing or transfer of possession. 24
(a) Perfection by filing permitted. – Filing Permitted. – A security interest in chattel 25
paper, negotiable documents, controllable accounts, controllable electronic records, controllable 26
payment intangibles, instruments, or investment property investment property, or negotiable 27
documents may be perfected by filing. 28
(b) Control or possession of certain collateral. – Possession of Certain Collateral. – 29
Except as otherwise provided in G.S. 25-9-315(c) and (d) for proceeds:proceeds, all of the 30
following apply: 31
(1) A security interest in a deposit account may be perfected only by control under 32
G.S. 25-9-314;G.S. 25-9-314. 33
(2) And except Except as otherwise provided in G.S. 25-9-308(d), a security 34
interest in a letter-of-credit right may be perfected only by control under G.S. 35
25-9-314; andG.S. 25-9-314. 36
(3) A security interest in tangible money may be perfected only by the secured 37
party's taking possession under G.S. 25-9-313. 38
(4) A security interest in electronic money may be perfected only by control under 39
G.S. 25-9-314. 40
(c) Goods covered by negotiable document. – Covered by Negotiable Document. – While 41
goods are in the possession of a bailee that has issued a negotiable document covering the 42
goods:goods, both of the following apply: 43
(1) A security interest in the goods may be perfected by perfecting a security 44
interest in the document; anddocument. 45
(2) A security interest perfected in the document has priority over any security 46
interest that becomes perfected in the goods by another method during that 47
time. 48
(d) Goods covered by nonnegotiable document. – Covered by Nonnegotiable Document. 49
– While goods are in the possession of a bailee that has issued a nonnegotiable document covering 50
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
Page 32 Senate Bill 117-First Edition
(1) Issuance of a document in the name of the secured party;party. 1
(2) The bailee's receipt of notification of the secured party's interest; orinterest. 2
(3) Filing as to the goods. 3
(e) Temporary perfection: new value. – Perfection for New Value. – A security interest 4
in certificated securities, negotiable documents, or instruments is perfected without filing or the 5
taking of possession or control for a period of 20 days from the time it attaches to the extent that 6
it arises for new value given under an authenticated a signed security agreement. 7
(f) Temporary perfection: goods or documents made available to debtor. – Perfection for 8
Goods or Documents Made Available to Debtor. – A perfected security interest in a negotiable 9
document or goods in possession of a bailee, other than one that has issued a negotiable document 10
for the goods, remains perfected for 20 days without filing if the secured party makes available 11
to the debtor the goods or documents representing the goods for the purpose of:of either of the 12
following: 13
(1) Ultimate sale or exchange; orexchange. 14
(2) Loading, unloading, storing, shipping, transshipping, manufacturing, 15
processing, or otherwise dealing with them in a manner preliminary to their 16
sale or exchange. 17
(g) Temporary perfection: delivery of security certificate or instrument to debtor. – 18
Perfection for Delivery of Security Certificate or Instrument to Debtor. – A perfected security 19
interest in a certificated security or instrument remains perfected for 20 days without filing if the 20
secured party delivers the security certificate or instrument to the debtor for the purpose of:of 21
either of the following: 22
(1) Ultimate sale or exchange; orexchange. 23
(2) Presentation, collection, enforcement, renewal, or registration of transfer. 24
(h) Expiration of temporary perfection. – Temporary Perfection. – After the 20-day 25
period specified in subsection (e), (f), or (g) of this section expires, perfection depends upon 26
compliance with this Article." 27
SECTION 21. G.S. 25-9-313 reads as rewritten: 28
"§ 25-9-313. When possession by or delivery to secured party perfects security interest 29
without filing. 30
(a) Perfection by possession or delivery. – Possession or Delivery. – Except as otherwise 31
provided in subsection (b) of this section, a secured party may perfect a security interest in 32
tangible negotiable documents, goods, instruments, money, or tangible chattel paper negotiable 33
tangible documents, or tangible money by taking possession of the collateral. A secured party 34
may perfect a security interest in certificated securities by taking delivery of the certificated 35
securities under G.S. 25-8-301. 36
(b) Goods covered by certificate of title. – Covered by Certificate of Title. – With respect 37
to goods covered by a certificate of title issued by this State, a secured party may perfect a security 38
interest in the goods by taking possession of the goods only in the circumstances described in 39
G.S. 25-9-316(d). 40
(c) Collateral in possession of person other than debtor. – Possession of Person Other 41
Than Debtor. – With respect to collateral other than certificated securities and goods covered by 42
a document, a secured party takes possession of collateral in the possession of a person other than 43
the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course 44
of the debtor's business, when:when either of the following applies: 45
(1) The person in possession authenticates signs a record acknowledging that it 46
holds possession of the collateral for the secured party's benefit; orbenefit. 47
(2) The person takes possession of the collateral after having authenticated signed 48
a record acknowledging that it will hold possession of the collateral for the 49
secured party's benefit. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 33
(d) Time of perfection by possession; continuation of perfection. – Perfection by 1
Possession; Continuation of Perfection. – If perfection of a security interest depends upon 2
possession of the collateral by a secured party, perfection occurs no not earlier than the time the 3
secured party takes possession and continues only while the secured party retains possession. 4
(e) Time of perfection by delivery; continuation of perfection. – Perfection by Delivery; 5
Continuation of Perfection. – A security interest in a certificated security in registered form is 6
perfected by delivery when delivery of the certificated security occurs under G.S. 25-8-301 and 7
remains perfected by delivery until the debtor obtains possession of the security certificate. 8
(f) Acknowledgment not required. – Not Required. – A person in possession of collateral 9
is not required to acknowledge that it holds possession for a secured party's benefit. 10
(g) Effectiveness of acknowledgment; no duties or confirmation. – Acknowledgment; No 11
Duties or Confirmation. – If a person acknowledges that it holds possession for the secured 12
party's benefit:benefit, both of the following apply: 13
(1) The acknowledgment is effective under subsection (c) of this section or 14
G.S. 25-8-301(a), even if the acknowledgment violates the rights of a debtor; 15
anddebtor. 16
(2) Unless the person otherwise agrees or law other than this Article otherwise 17
provides, the person does not owe any duty to the secured party and is not 18
required to confirm the acknowledgment to another person. 19
(h) Secured party's delivery to person other than debtor. – Party's Delivery to Person 20
Other Than Debtor. – A secured party having possession of collateral does not relinquish 21
possession by delivering the collateral to a person other than the debtor or a lessee of the collateral 22
from the debtor in the ordinary course of the debtor's business if the person was instructed before 23
the delivery or is instructed contemporaneously with the delivery:delivery to do either of the 24
following: 25
(1) To hold possession of the collateral for the secured party's benefit; orbenefit. 26
(2) To redeliver the collateral to the secured party. 27
(i) Effect of delivery under subsection (h); no duties or confirmation. – Delivery Under 28
Subsection (h); No Duties or Confirmation. – A secured party does not relinquish possession, 29
even if a delivery under subsection (h) of this section violates the rights of a debtor. A person to 30
which collateral is delivered under subsection (h) of this section does not owe any duty to the 31
secured party and is not required to confirm the delivery to another person unless the person 32
otherwise agrees or law other than this Article otherwise provides." 33
SECTION 22. G.S. 25-9-314 reads as rewritten: 34
"§ 25-9-314. Perfection by control. 35
(a) Perfection by control. – Control. – A security interest in investment property, deposit 36
accounts, letter-of-credit rights, electronic chattel paper, or electronic documents controllable 37
accounts, controllable electronic records, controllable payment intangibles, deposit accounts, 38
electronic documents, electronic money, investment property, or letter-of-credit rights may be 39
perfected by control of the collateral under G.S. 25-7-106, 25-9-104, 25-9-105, 25-9-105.1, 40
25-9-106, or 25-9-107.25-9-107, or 25-9-107.1. 41
(b) Specified collateral: time of perfection by control; continuation of perfection. – 42
Collateral; Time of Perfection by Control; Continuation of Perfection. – A security interest in 43
deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents 44
controllable accounts, controllable electronic records, controllable payment intangibles, deposit 45
accounts, electronic documents, electronic money, or letter-of-credit rights is perfected by 46
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
25-9-107.1 not earlier than the time the secured party obtains control and remains perfected by 48
control only while the secured party retains control. 49
(c) Investment property: time of perfection by control; continuation of perfection. – 50
Property; Time of Perfection by Control; Continuation of Perfection. – A security interest in 51 General Assembly Of North Carolina Session 2025
Page 34 Senate Bill 117-First Edition
investment property is perfected by control under G.S. 25-9-106 from not earlier than the time 1
the secured party obtains control and remains perfected by control until:until both of the 2
following occur: 3
(1) The secured party does not have control; andcontrol. 4
(2) One of the following occurs: 5
a. If the collateral is a certificated security, the debtor has or acquires 6
possession of the security certificate;certificate. 7
b. If the collateral is an uncertificated security, the issuer has registered 8
or registers the debtor as the registered owner; orowner. 9
c. If the collateral is a security entitlement, the debtor is or becomes the 10
entitlement holder." 11
SECTION 23. Article 9 of Chapter 25 of the General Statutes is amended by adding 12
a new section to read: 13
"§ 25-9-314.1. Perfection by possession and control of chattel paper. 14
(a) Perfection by Possession and Control. – A secured party may perfect a security 15
interest in chattel paper by taking possession of each authoritative tangible copy of the record 16
evidencing the chattel paper and obtaining control of each authoritative electronic copy of the 17
electronic record evidencing the chattel paper. 18
(b) Time of Perfection; Continuation of Perfection. – A security interest is perfected 19
under subsection (a) of this section not earlier than the time the secured party takes possession 20
and obtains control and remains perfected under subsection (a) of this section only while the 21
secured party retains possession and control. 22
(c) Application of G.S. 25-9-313 to Perfection by Possession of Chattel Paper. – 23
G.S. 25-9-313(c) and (f) through (i) apply to perfection by possession of an authoritative tangible 24
copy of a record evidencing chattel paper." 25
SECTION 24. G.S. 25-9-316 reads as rewritten: 26
"§ 25-9-316. Effect of change in governing law. 27
(a) General rule: effect on perfection of change in governing law. – Rule for Effect on 28
Perfection of Change in Governing Law. – A security interest perfected pursuant to the law of 29
the jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) G.S. 25-9-301(1), 30
25-9-305(c), 25-9-306.1(d), or 25-9-306.2(b) remains perfected until the earliest of:of the 31
following: 32
(1) The time perfection would have ceased under the law of that 33
jurisdiction;jurisdiction. 34
(2) The expiration of four months after a change of the debtor's location to another 35
jurisdiction; orjurisdiction. 36
(3) The expiration of one year after a transfer of collateral to a person that thereby 37
becomes a debtor and is located in another jurisdiction. 38
(b) Security interest perfected or unperfected under law of new jurisdiction. – Interest 39
Perfected or Unperfected Under Law of New Jurisdiction. – If a security interest described in 40
subsection (a) of this section becomes perfected under the law of the other jurisdiction before the 41
earliest time or event described in that subsection, it remains perfected thereafter. If the security 42
interest does not become perfected under the law of the other jurisdiction before the earliest time 43
or event, it becomes unperfected and is deemed never to have been perfected as against a 44
purchaser of the collateral for value. 45
(c) Possessory security interest in collateral moved to new jurisdiction. – Security Interest 46
in Collateral Moved to New Jurisdiction. – A possessory security interest in collateral, other than 47
goods covered by a certificate of title and as-extracted collateral consisting of goods, remains 48
continuously perfected if:if all of the following apply: 49
(1) The collateral is located in one jurisdiction and subject to a security interest 50
perfected under the law of that jurisdiction;jurisdiction. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 35
(2) Thereafter the collateral is brought into another jurisdiction; andjurisdiction. 1
(3) Upon entry into the other jurisdiction, the security interest is perfected under 2
the law of the other jurisdiction. 3
(d) Goods covered by certificate of title from this State. – Covered by Certificate of Title 4
from this State. – Except as otherwise provided in subsection (e) of this section, a security interest 5
in goods covered by a certificate of title which that is perfected by any method under the law of 6
another jurisdiction when the goods become covered by a certificate of title from this State 7
remains perfected until the security interest would have become unperfected under the law of the 8
other jurisdiction had the goods not become so covered. 9
(e) When subsection (d) security interest becomes unperfected against purchasers. – 10
Subsection (d) Security Interest Becomes Unperfected Against Purchasers. – A security interest 11
described in subsection (d) of this section becomes unperfected as against a purchaser of the 12
goods for value and is deemed never to have been perfected as against a purchaser of the goods 13
for value if the applicable requirements for perfection under G.S. 25-9-311(b) or G.S. 25-9-313 14
are not satisfied before the earlier of:of the following: 15
(1) The time the security interest would have become unperfected under the law 16
of the other jurisdiction had the goods not become covered by a certificate of 17
title from this State; orState. 18
(2) The expiration of four months after the goods had become so covered. 19
(f) Change in jurisdiction of bank, issuer, nominated person, securities intermediary, or 20
commodity intermediary. – Jurisdiction of Chattel Paper, Controllable Electronic Record, Bank, 21
Issuer, Nominated Person, Securities Intermediary, or Commodity Intermediary. – A security 22
interest in chattel paper, controllable accounts, controllable electronic records, controllable 23
payment intangibles, deposit accounts, letter-of-credit rights, or investment property which that 24
is perfected under the law of the chattel paper's jurisdiction, the controllable electronic record's 25
jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, 26
the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as 27
applicable, remains perfected until the earlier of:of the following: 28
(1) The time the security interest would have become unperfected under the law 29
of that jurisdiction; orjurisdiction. 30
(2) The expiration of four months after a change of the applicable jurisdiction to 31
another jurisdiction. 32
(g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction. 33
– Security Interest Perfected or Unperfected Under Law of New Jurisdiction. – If a security 34
interest described in subsection (f) of this section becomes perfected under the law of the other 35
jurisdiction before the earlier of the time or the end of the period described in that subsection, it 36
remains perfected thereafter. If the security interest does not become perfected under the law of 37
the other jurisdiction before the earlier of that time or the end of that period, it becomes 38
unperfected and is deemed never to have been perfected as against a purchaser of the collateral 39
for value. 40
… 41
(i) Effect of Change in Governing Law on Financing Statement Filed Against Original 42
Debtor. – If a financing statement naming an original debtor is filed pursuant to the law of the 43
jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) and the new debtor is located in 44
another jurisdiction, the following rules apply: 45
… 46
(2) A security interest perfected by the financing statement and which that 47
becomes perfected under the law of the other jurisdiction before the earlier of 48
the time the financing statement would have become ineffective under the law 49
of the jurisdiction designated in G.S. 25-9-301(1) or G.S. 25-9-305(c) or the 50
expiration of the four-month period remains perfected thereafter. A security 51 General Assembly Of North Carolina Session 2025
Page 36 Senate Bill 117-First Edition
interest that is perfected by the financing statement but which that does not 1
become perfected under the law of the other jurisdiction before the earlier time 2
or event becomes unperfected and is deemed never to have been perfected as 3
against a purchaser of the collateral for value." 4
SECTION 25. G.S. 25-9-317 reads as rewritten: 5
"§ 25-9-317. Interests that take priority over or take free of security interest or agricultural 6
lien. 7
(a) Conflicting security interests and rights of lien creditors. – Security Interests and 8
Rights of Lien Creditors. – A security interest or agricultural lien is subordinate to the rights of:of 9
both of the following: 10
(1) A person entitled to priority under G.S. 25-9-322; andG.S. 25-9-322. 11
(2) Except as otherwise provided in subsection (e) of this section, a person that 12
becomes a lien creditor before the earlier of the time:following: 13
a. The security interest or agricultural lien is perfected; orperfected. 14
b. One of the conditions specified in G.S. 25-9-203(b)(3) is met and a 15
financing statement covering the collateral is filed. 16
(b) Buyers that receive delivery. – That Receive Delivery. – Except as otherwise provided 17
in subsection (e) of this section, a buyer, other than a secured party, of tangible chattel paper, 18
tangible documents, goods, instruments, tangible documents, or a certificated security takes free 19
of a security interest or agricultural lien if the buyer gives value and receives delivery of the 20
collateral without knowledge of the security interest or agricultural lien and before it is perfected. 21
(c) Lessees that receive delivery. – That Receive Delivery. – Except as otherwise 22
provided in subsection (e) of this section, a lessee of goods takes free of a security interest or 23
agricultural lien if the lessee gives value and receives delivery of the collateral without 24
knowledge of the security interest or agricultural lien and before it is perfected. 25
(d) Licensees and buyers of certain collateral. – A Buyers of Certain Collateral. – Subject 26
to subsections (f) through (i) of this section, a licensee of a general intangible or a buyer, other 27
than a secured party, of collateral other than tangible chattel paper, tangible documents, electronic 28
money, goods, instruments, tangible documents, or a certificated security takes free of a security 29
interest if the licensee or buyer gives value without knowledge of the security interest and before 30
it is perfected. 31
(e) Purchase-money security interest. – Purchase-Money Security Interest. – Except as 32
otherwise provided in G.S. 25-9-320 and G.S. 25-9-321, if a person files a financing statement 33
with respect to a purchase-money security interest before or within 20 days after the debtor 34
receives delivery of the collateral, the security interest takes priority over the rights of a buyer, 35
lessee, or lien creditor which that arise between the time the security interest attaches and the 36
time of filing. 37
(f) Buyers of Chattel Paper. – A buyer, other than a secured party, of chattel paper takes 38
free of a security interest if, without knowledge of the security interest and before it is perfected, 39
the buyer gives value and does both of the following: 40
(1) Receives delivery of each authoritative tangible copy of the record evidencing 41
the chattel paper. 42
(2) If each authoritative electronic copy of the record evidencing the chattel paper 43
can be subjected to control under G.S. 25-9-105, obtains control of each 44
authoritative electronic copy. 45
(g) Buyers of Electronic Documents. – A buyer of an electronic document takes free of a 46
security interest if, without knowledge of the security interest and before it is perfected, the buyer 47
gives value and, if each authoritative electronic copy of the document can be subjected to control 48
under G.S. 25-7-106, obtains control of each authoritative electronic copy. 49 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 37
(h) Buyers of Controllable Electronic Records. – A buyer of a controllable electronic 1
record takes free of a security interest if, without knowledge of the security interest and before it 2
is perfected, the buyer gives value and obtains control of the controllable electronic record. 3
(i) Buyers of Controllable Accounts and Controllable Payment Intangibles. – A buyer, 4
other than a secured party, of a controllable account or a controllable payment intangible takes 5
free of a security interest if, without knowledge of the security interest and before it is perfected, 6
the buyer gives value and obtains control of the controllable account or controllable payment 7
intangible." 8
SECTION 26. G.S. 25-9-323 reads as rewritten: 9
"§ 25-9-323. Future advances. 10
(a) When priority based on time of advance. – Priority Based on Time of Advance. – 11
Except as otherwise provided in subsection (c) of this section, for purposes of determining the 12
priority of a perfected security interest under G.S. 25-9-322(a)(1), perfection of the security 13
interest dates from the time an advance is made to the extent that the security interest secures an 14
advance that:that meets both of the following conditions: 15
(1) Is The advance is made while the security interest is perfected only:only under 16
either of the following: 17
a. Under G.S. 25-9-309 when it attaches; orattaches. 18
b. Temporarily under G.S. 25-9-312(e), (f), or (g); andG.S. 25-9-312(e), 19
(f), or (g). 20
(2) Is The advance is not made pursuant to a commitment entered into before or 21
while the security interest is perfected by a method other than under 22
G.S. 25-9-309 or G.S. 25-9-312(e), (f), or (g). 23
(b) Lien creditor. – Creditor. – Except as otherwise provided in subsection (c) of this 24
section, a security interest is subordinate to the rights of a person that becomes a lien creditor to 25
the extent that the security interest secures an advance made more than 45 days after the person 26
becomes a lien creditor unless the advance is made:made under either of the following 27
circumstances: 28
(1) Without knowledge of the lien; orlien. 29
(2) Pursuant to a commitment entered into without knowledge of the lien. 30
(c) Buyer of receivables. – Receivables. – Subsections (a) and (b) of this section do not 31
apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, 32
payment intangibles, or promissory notes or a consignor. 33
(d) Buyer of goods. – Goods. – Except as otherwise provided in subsection (e) of this 34
section, a buyer of goods other than a buyer in ordinary course of business takes free of a security 35
interest to the extent that it secures advances made after the earlier of:of the following: 36
(1) The time the secured party acquires knowledge of the buyer's purchase; 37
orpurchase. 38
(2) 45 Forty-five days after the purchase. 39
(e) Advances made pursuant to commitment: priority of buyer of goods. – Made Pursuant 40
to Commitment; Priority of Buyer of Goods. – Subsection (d) of this section does not apply if 41
the advance is made pursuant to a commitment entered into without knowledge of the buyer's 42
purchase and before the expiration of the 45-day period. 43
(f) Lessee of goods. – Goods. – Except as otherwise provided in subsection (g) of this 44
section, a lessee of goods, other than a lessee in ordinary course of business, goods takes the 45
leasehold interest free of a security interest to the extent that it secures advances made after the 46
earlier of:of the following: 47
(1) The time the secured party acquires knowledge of the lease; orlease. 48
(2) 45 Forty-five days after the lease contract becomes enforceable. 49
(g) Advances made pursuant to commitment: priority of lessee of goods. – Made Pursuant 50
to Commitment; Priority of Lessee of Goods. – Subsection (f) of this section does not apply if 51 General Assembly Of North Carolina Session 2025
Page 38 Senate Bill 117-First Edition
the advance is made pursuant to a commitment entered into without knowledge of the lease and 1
before the expiration of the 45-day period." 2
SECTION 27. G.S. 25-9-324 reads as rewritten: 3
"§ 25-9-324. Priority of purchase-money security interests. 4
(a) General rule: purchase-money priority. – Rule for Purchase-Money Priority. – Except 5
as otherwise provided in subsection (g) of this section, a perfected purchase-money security 6
interest in goods other than inventory or livestock has priority over a conflicting security interest 7
in the same goods, and, except as otherwise provided in G.S. 25-9-327, a perfected security 8
interest in its identifiable proceeds also has priority, if the purchase-money security interest is 9
perfected when the debtor receives possession of the collateral or within 20 days thereafter. 10
(b) Inventory purchase-money priority. – Purchase-Money Priority. – Subject to 11
subsection (c) of this section and except as otherwise provided in subsection (g) of this section, 12
a perfected purchase-money security interest in inventory has priority over a conflicting security 13
interest in the same inventory, has priority over a conflicting security interest in chattel paper or 14
an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so 15
provided in G.S. 25-9-330, and, except as otherwise provided in G.S. 25-9-327, also has priority 16
in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are 17
received on or before the delivery of the inventory to a buyer, if:if all of the following apply: 18
(1) The purchase-money security interest is perfected when the debtor receives 19
possession of the inventory;inventory. 20
(2) The purchase-money secured party sends an authenticated a signed 21
notification to the holder of the conflicting security interest;interest. 22
(3) The holder of the conflicting security interest receives the notification within 23
five years before the debtor receives possession of the inventory; 24
andinventory. 25
(4) The notification states that the person sending the notification has or expects 26
to acquire a purchase-money security interest in inventory of the debtor and 27
describes the inventory. 28
(c) Holders of conflicting inventory security interests to be notified. – Conflicting 29
Inventory Security Interests to be Notified. – Subdivisions (b)(2) through (b)(4) of this section 30
apply only if the holder of the conflicting security interest had filed a financing statement 31
covering the same types of inventory:inventory as follows: 32
(1) If the purchase-money security interest is perfected by filing, before the date 33
of the filing; orfiling. 34
(2) If the purchase-money security interest is temporarily perfected without filing 35
or possession under G.S. 25-9-312(f), before the beginning of the 20-day 36
period thereunder.under that provision. 37
(d) Livestock purchase-money priority. – Purchase-Money Priority. – Subject to 38
subsection (e) of this section and except as otherwise provided in subsection (g) of this section, 39
a perfected purchase-money security interest in livestock that are farm products has priority over 40
a conflicting security interest in the same livestock, and, except as otherwise provided in 41
G.S. 25-9-327, a perfected security interest in their identifiable proceeds and identifiable 42
products in their unmanufactured states also has priority, if:if all of the following apply: 43
(1) The purchase-money security interest is perfected when the debtor receives 44
possession of the livestock;livestock. 45
(2) The purchase-money secured party sends an authenticated a signed 46
notification to the holder of the conflicting security interest;interest. 47
(3) The holder of the conflicting security interest receives the notification within 48
six months before the debtor receives possession of the livestock; 49
andlivestock. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 39
(4) The notification states that the person sending the notification has or expects 1
to acquire a purchase-money security interest in livestock of the debtor and 2
describes the livestock. 3
(e) Holders of conflicting livestock security interests to be notified. – Conflicting 4
Livestock Security Interests to be Notified. – Subdivisions (d)(2) through (d)(4) of this section 5
apply only if the holder of the conflicting security interest had filed a financing statement 6
covering the same types of livestock:livestock as follows: 7
(1) If the purchase-money security interest is perfected by filing, before the date 8
of the filing; orfiling. 9
(2) If the purchase-money security interest is temporarily perfected without filing 10
or possession under G.S. 25-9-312(f), before the beginning of the 20-day 11
period thereunder.under that provision. 12
(f) Software purchase-money priority. – Purchase-Money Priority. – Except as otherwise 13
provided in subsection (g) of this section, a perfected purchase-money security interest in 14
software has priority over a conflicting security interest in the same collateral, and, except as 15
otherwise provided in G.S. 25-9-327, a perfected security interest in its identifiable proceeds also 16
has priority, to the extent that the purchase-money security interest in the goods in which the 17
software was acquired for use has priority in the goods and proceeds of the goods under this 18
section. 19
(g) Conflicting purchase-money security interests. – Purchase-Money Security Interests. 20
– If more than one security interest qualifies for priority in the same collateral under subsection 21
(a), (b), (d), or (f) of this section:section, the following provisions apply: 22
(1) A security interest securing an obligation incurred as all or part of the price of 23
the collateral has priority over a security interest securing an obligation 24
incurred for value given to enable the debtor to acquire rights in or the use of 25
collateral; andcollateral. 26
(2) In all other cases, G.S. 25-9-322(a) applies to the qualifying security 27
interests." 28
SECTION 28. Article 9 of Chapter 25 of the General Statutes is amended by adding 29
a new section to read: 30
"§ 25-9-326.1. Priority of security interest in controllable account, controllable electronic 31
record, and controllable payment intangible. 32
A security interest in a controllable account, controllable electronic record, or controllable 33
payment intangible held by a secured party having control of the account, electronic record, or 34
payment intangible has priority over a conflicting security interest held by a secured party that 35
does not have control." 36
SECTION 29. G.S. 25-9-330 reads as rewritten: 37
"§ 25-9-330. Priority of purchaser of chattel paper or instrument. 38
(a) Purchaser's priority: security interest claimed merely as proceeds. – Priority; Security 39
Interest Claimed Merely as Proceeds. – A purchaser of chattel paper has priority over a security 40
interest in the chattel paper which that is claimed merely as proceeds of inventory subject to a 41
security interest if:if both of the following requirements are met: 42
(1) In good faith and in the ordinary course of the purchaser's business, the 43
purchaser gives new value and value, takes possession of each authoritative 44
tangible copy of the record evidencing the chattel paper or paper, and obtains 45
control of the chattel paper under G.S. 25-9-105; andunder G.S. 25-9-105 of 46
each authoritative electronic copy of the record evidencing the chattel paper. 47
(2) The chattel paper does authoritative copies of the record evidencing the chattel 48
paper do not indicate that it the chattel paper has been assigned to an identified 49
assignee other than the purchaser. 50 General Assembly Of North Carolina Session 2025
Page 40 Senate Bill 117-First Edition
(b) Purchaser's priority: other security interests. – Priority; Other Security Interests. – A 1
purchaser of chattel paper has priority over a security interest in the chattel paper which that is 2
claimed other than merely as proceeds of inventory subject to a security interest if the purchaser 3
gives new value and value, takes possession of each authoritative tangible copy of the record 4
evidencing the chattel paper or paper, and obtains control of under G.S. 25-9-105 of each 5
authoritative electronic copy of the record evidencing the chattel paper under G.S. 25-9-105 in 6
good faith, in the ordinary course of the purchaser's business, and without knowledge that the 7
purchase violates the rights of the secured party. 8
(c) Chattel paper purchaser's priority in proceeds. – Paper Purchaser's Priority in 9
Proceeds. – Except as otherwise provided in G.S. 25-9-327, a purchaser having priority in chattel 10
paper under subsection (a) or (b) of this section also has priority in proceeds of the chattel paper 11
to the extent that:that either of the following applies: 12
(1) G.S. 25-9-322 provides for priority in the proceeds; orproceeds. 13
(2) The proceeds consist of the specific goods covered by the chattel paper or cash 14
proceeds of the specific goods, even if the purchaser's security interest in the 15
proceeds is unperfected. 16
(d) Instrument purchaser's priority. – Purchaser's Priority. – Except as otherwise provided 17
in G.S. 25-9-331(a), a purchaser of an instrument has priority over a security interest in the 18
instrument perfected by a method other than possession if the purchaser gives value and takes 19
possession of the instrument in good faith and without knowledge that the purchase violates the 20
rights of the secured party. 21
(e) Holder of purchase-money security interest gives new value. – Purchase-Money 22
Security Interest Gives New Value. – For purposes of subsections (a) and (b) of this section, the 23
holder of a purchase-money security interest in inventory gives new value for chattel paper 24
constituting proceeds of the inventory. 25
(f) Indication of assignment gives knowledge. – Assignment Gives Knowledge. – For 26
purposes of subsections (b) and (d) of this section, if the authoritative copies of the record 27
evidencing chattel paper or an instrument indicates indicate that it the chattel paper or instrument 28
has been assigned to an identified secured party other than the purchaser, a purchaser of the 29
chattel paper or instrument has knowledge that the purchase violates the rights of the secured 30
party." 31
SECTION 30. G.S. 25-9-331 reads as rewritten: 32
"§ 25-9-331. Priority of rights of purchasers of instruments, controllable accounts, 33
controllable electronic records, controllable payment intangibles, documents, 34
instruments, and securities under other Articles; priority of interests in financial 35
assets and security entitlements and protection against assertion of claim under 36
Article 8.Articles 8 and 12. 37
(a) Rights under Articles 3, 7, and 8 not limited. – Under Articles 3, 7, 8, and 12 Not 38
Limited. – This Article does not limit the rights of a holder in due course of a negotiable 39
instrument, a holder to which a negotiable document of title has been duly negotiated, or a 40
protected purchaser of a security. security, or a qualifying purchaser of a controllable account, 41
controllable electronic record, or controllable payment intangible. These holders or purchasers 42
take priority over an earlier security interest, even if perfected, to the extent provided in Articles 43
3, 7, and 8 8, and 12 of this Chapter. 44
(b) Protection under Article 8. Under Articles 8 and 12. – This Article does not limit the 45
rights of or impose liability on a person to the extent that the person is protected against the 46
assertion of a claim under Article 8 or 12 of this Chapter. 47
(c) Filing not notice. – Not Notice. – Filing under this Article does not constitute notice 48
of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and 49
(b) of this section." 50
SECTION 31. G.S. 25-9-332 reads as rewritten: 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 41
"§ 25-9-332. Transfer of money; transfer of funds from deposit account. 1
(a) Transferee of money. Tangible Money. – A transferee of tangible money takes the 2
money free of a security interest unless the transferee acts if the transferee receives possession 3
of the money without acting in collusion with the debtor in violating the rights of the secured 4
party. 5
(b) Transferee of funds Funds from deposit account. Deposit Account. – A transferee of 6
funds from a deposit account takes the funds free of a security interest in the deposit account 7
unless the transferee acts if the transferee receives the funds without acting in collusion with the 8
debtor in violating the rights of the secured party. 9
(c) Transferee of Electronic Money. – A transferee of electronic money takes the money 10
free of a security interest if the transferee obtains control of the money without acting in collusion 11
with the debtor in violating the rights of the secured party." 12
SECTION 32. G.S. 25-9-334 reads as rewritten: 13
"§ 25-9-334. Priority of security interests in fixtures and crops. 14
(a) Security interest in fixtures under this Article. – Interest in Fixtures Under this Article. 15
– A security interest under this Article may be created in goods that are fixtures or may continue 16
in goods that become fixtures. A security interest does not exist under this Article in ordinary 17
building materials incorporated into an improvement on land. 18
(b) Security interest in fixtures under real-property law. – Interest in Fixtures Under Real 19
Property Law. – This Article does not prevent creation of an encumbrance upon fixtures under 20
real property law. 21
(c) General rule: subordination of security interest in fixtures. – Rule for Subordination 22
of Security Interest in Fixtures. – In cases not governed by subsections (d) through (h) of this 23
section, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer 24
or owner of the related real property other than the debtor. 25
(d) Fixtures purchase-money priority. – Purchase-Money Priority. – Except as otherwise 26
provided in subsection (h) of this section, a perfected security interest in fixtures has priority over 27
a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest 28
of record in or is in possession of the real property and:and all of the following apply: 29
(1) The security interest is a purchase-money security interest;interest. 30
(2) The interest of the encumbrancer or owner arises before the goods become 31
fixtures; andfixtures. 32
(3) The security interest is perfected by a fixture filing before the goods become 33
fixtures or within 20 days thereafter. 34
(e) Priority of security interest in fixtures over interests in real property. – Security 35
Interest in Fixtures over Interests in Real Property. – A perfected security interest in fixtures has 36
priority over a conflicting interest of an encumbrancer or owner of the real property if:if any of 37
the following applies: 38
(1) The debtor has an interest of record in the real property or is in possession of 39
the real property and both of the following apply to the security interest: 40
a. Is The security interest is perfected by a fixture filing before the 41
interest of the encumbrancer or owner is of record; andrecord. 42
b. Has The security interest has priority over any conflicting interest of a 43
predecessor in title of the encumbrancer or owner;owner. 44
(2) Before the goods become fixtures, the security interest is perfected by any 45
method permitted by this Article and the fixtures are any of the following 46
readily removable:removable goods: 47
a. Factory or office machines;machines. 48
b. Equipment that is not primarily used or leased for use in the operation 49
of the real property; orproperty. 50
c. Replacements of domestic appliances that are consumer goods;goods. 51 General Assembly Of North Carolina Session 2025
Page 42 Senate Bill 117-First Edition
(3) The conflicting interest is a lien on the real property obtained by legal or 1
equitable proceedings after the security interest was perfected by any method 2
permitted by this Article; orArticle. 3
(4) The security interest is:is created 4
a. Created in a manufactured home in a manufactured-home transaction; 5
andtransaction and perfected 6
b. Perfected pursuant to a statute described in G.S. 25-9-311(a)(2). 7
(f) Priority based on consent, disclaimer, or right to remove. – Based on Consent, 8
Disclaimer, or Right to Remove. – A security interest in fixtures, whether or not perfected, has 9
priority over a conflicting interest of an encumbrancer or owner of the real property if:if either 10
of the following applies: 11
(1) The encumbrancer or owner has, in an authenticated a signed record, 12
consented to the security interest or disclaimed an interest in the goods as 13
fixtures; orfixtures. 14
(2) The debtor has a right to remove the goods as against the encumbrancer or 15
owner. 16
(g) Continuation of subdivision (f)(2) priority. – Subdivision (f)(2) Priority. – The 17
priority of the security interest under subdivision (f)(2) of this section continues for a reasonable 18
time if the debtor's right to remove the goods as against the encumbrancer or owner terminates. 19
(h) Priority of construction mortgage. – Construction Mortgage. – A mortgage is a 20
construction mortgage to the extent that it secures an obligation incurred for the construction of 21
an improvement on land, including the acquisition cost of the land, if a recorded record of the 22
mortgage so indicates. Except as otherwise provided in subsections (e) and (f) of this section, a 23
security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage 24
is recorded before the goods become fixtures and the goods become fixtures before the 25
completion of the construction. A mortgage has this priority to the same extent as a construction 26
mortgage to the extent that it is given to refinance a construction mortgage. 27
(i) Priority of security interest in crops. – Security Interest in Crops. – Except as provided 28
in G.S. 42-15, a perfected security interest in crops growing on real property has priority over a 29
conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest 30
of record in or is in possession of the real property." 31
SECTION 33. G.S. 25-9-341 reads as rewritten: 32
"§ 25-9-341. Bank's rights and duties with respect to deposit account. 33
Except as otherwise provided in G.S. 25-9-340(c), and unless the bank otherwise agrees in 34
an authenticated a signed record, a bank's rights and duties with respect to a deposit account 35
maintained with the bank are not terminated, suspended, or modified by:by any of the following: 36
(1) The creation, attachment, or perfection of a security interest in the deposit 37
account;account. 38
(2) The bank's knowledge of the security interest; orinterest. 39
(3) The bank's receipt of instructions from the secured party." 40
SECTION 34. G.S. 25-9-404 reads as rewritten: 41
"§ 25-9-404. Rights acquired by assignee; claims and defenses against assignee. 42
(a) Assignee's rights subject to terms, claims, and defenses; exceptions. – Rights Subject 43
to Terms, Claims, and Defenses; Exceptions. – Unless an account debtor has made an enforceable 44
agreement not to assert defenses or claims, and subject to subsections (b) through (e) of this 45
section, the rights of an assignee are subject to:to both of the following: 46
(1) All terms of the agreement between the account debtor and assignor and any 47
defense or claim in recoupment arising from the transaction that gave rise to 48
the contract; andcontract. 49 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 43
(2) Any other defense or claim of the account debtor against the assignor which 1
that accrues before the account debtor receives a notification of the assignment 2
authenticated signed by the assignor or the assignee. 3
(b) Account debtor's claim reduces amount owed to assignee. – Debtor's Claim Reduces 4
Amount Owed to Assignee. – Subject to subsection (c) of this section and except as otherwise 5
provided in subsection (d) of this section, the claim of an account debtor against an assignor may 6
be asserted against an assignee under subsection (a) of this section only to reduce the amount the 7
account debtor owes. 8
(c) Rule for individual under other law. – Individual Under Other Law. – This section is 9
subject to law other than this Article which that establishes a different rule for an account debtor 10
who is an individual and who incurred the obligation primarily for personal, family, or household 11
purposes. 12
(d) Omission of required statement in consumer transaction. – Required Statement in 13
Consumer Transaction. – In a consumer transaction, if a record evidences the account debtor's 14
obligation, law other than this Article requires that the record include a statement to the effect 15
that the account debtor's recovery against an assignee with respect to claims and defenses against 16
the assignor may shall not exceed amounts paid by the account debtor under the record, and the 17
record does not include such a this statement, the extent to which a claim of an account debtor 18
against the assignor may be asserted against an assignee is determined as if the record included 19
such a this statement. 20
(e) Inapplicability to health-care-insurance receivable. – Health-Care-Insurance 21
Receivable. – This section does not apply to an assignment of a health-care-insurance 22
receivable." 23
SECTION 35. G.S. 25-9-406 reads as rewritten: 24
"§ 25-9-406. Discharge of account debtor; notification of assignment; identification and 25
proof of assignment; restrictions on assignment of accounts, chattel paper, 26
payment intangibles, and promissory notes ineffective. 27
(a) Discharge of account debtor; effect of notification. – Account Debtor; Effect of 28
Notification. – Subject to subsections (b) through (i) and (l) of this section, an account debtor on 29
an account, chattel paper, or a payment intangible may discharge its obligation by paying the 30
assignor until, but not after, the account debtor receives a notification, authenticated signed by 31
the assignor or the assignee, that the amount due or to become due has been assigned and that 32
payment is to be made to the assignee. After receipt of the notification, the account debtor may 33
discharge its obligation by paying the assignee and may shall not discharge the obligation by 34
paying the assignor. 35
(b) When notification ineffective. – Notification Ineffective. – Subject to subsection (h) 36
subsections (h) and (l) of this section, notification is ineffective under subsection (a) of this 37
section:section under any of the following conditions: 38
(1) If it does not reasonably identify the rights assigned;assigned. 39
(2) To the extent that an agreement between an account debtor and a seller of a 40
payment intangible limits the account debtor's duty to pay a person other than 41
the seller and the limitation is effective under law other than this Article; 42
orArticle. 43
(3) At the option of an account debtor, if the notification notifies the account 44
debtor to make less than the full amount of any installment or other periodic 45
payment to the assignee, even if:if any of the following applies: 46
a. Only a portion of the account, chattel paper, or payment intangible has 47
been assigned to that assignee;assignee. 48
b. A portion has been assigned to another assignee; orassignee. 49
c. The account debtor knows that the assignment to that assignee is 50
limited. 51 General Assembly Of North Carolina Session 2025
Page 44 Senate Bill 117-First Edition
(c) Proof of assignment. – Assignment. – Subject to subsection (h) subsections (h) and 1
(l) of this section, if requested by the account debtor, an assignee shall seasonably furnish 2
reasonable proof that the assignment has been made. Unless the assignee complies, the account 3
debtor may discharge its obligation by paying the assignor, even if the account debtor has 4
received a notification under subsection (a) of this section. 5
(d) Term restricting assignment generally ineffective. – Restricting Assignment 6
Generally Ineffective. – In this subsection, "promissory note" includes a negotiable instrument 7
that evidences chattel paper. Except as otherwise provided in subsection (e) of this section and 8
G.S. 25-2A-303 and G.S. 25-9-407, and subject to subsection (h) of this section, a term in an 9
agreement between an account debtor and an assignor or in a promissory note is ineffective to 10
the extent that it:it does either of the following: 11
(1) Prohibits, restricts, or requires the consent of the account debtor or person 12
obligated on the promissory note to the assignment or transfer of, or the 13
creation, attachment, perfection, or enforcement of a security interest in, the 14
account, chattel paper, payment intangible, or promissory note; ornote. 15
(2) Provides that the assignment or transfer or the creation, attachment, 16
perfection, or enforcement of the security interest may give rise to a default, 17
breach, right of recoupment, claim, defense, termination, right of termination, 18
or remedy under the account, chattel paper, payment intangible, or promissory 19
note. 20
(e) Inapplicability of subsection (d) to certain sales. – Subsection (d) to Certain Sales. – 21
Subsection (d) of this section does not apply to the sale of a payment intangible or promissory 22
note, other than a sale pursuant to a disposition under G.S. 25-9-610 or an acceptance of collateral 23
under G.S. 25-9-620. 24
(f) Legal restrictions on assignment generally ineffective. – Restrictions on Assignment 25
Generally Ineffective. – Except as otherwise provided in G.S. 25-2A-303 and G.S. 25-9-407 and 26
subject to subsections (h) and (i) of this section, a rule of law, statute, or regulation law that 27
prohibits, restricts, or requires the consent of a government, governmental body or official, or 28
account debtor to the assignment or transfer of, or creation of a security interest in, an account or 29
chattel paper is ineffective to the extent that the rule of law, statute, or regulation:law does either 30
of the following: 31
(1) Prohibits, restricts, or requires the consent of the government, governmental 32
body or official, or account debtor to the assignment or transfer of, or the 33
creation, attachment, perfection, or enforcement of a security interest in the 34
account or chattel paper; orpaper. 35
(2) Provides that the assignment or transfer or the creation, attachment, 36
perfection, or enforcement of the security interest may give rise to a default, 37
breach, right of recoupment, claim, defense, termination, right of termination, 38
or remedy under the account or chattel paper. 39
(g) Subdivision (b)(3) not waivable. – Not Waivable. – Subject to subsection (h) 40
subsections (h) and (l) of this section, an account debtor may shall not waive or vary its option 41
under subdivision (b)(3) of this section. 42
(h) Rule for individual under other law. – Individual Under Other Law. – This section is 43
subject to law other than this Article which that establishes a different rule for an account debtor 44
who is an individual and who incurred the obligation primarily for personal, family, or household 45
purposes. 46
… 47
(j) Section prevails over inconsistent law. – Prevails over Inconsistent Law. – Except to 48
the extent otherwise provided in subsection (i) of this section, this section prevails over any 49
inconsistent provision of an existing or future statute, rule, or regulation statute or rule of this 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 45
State unless the provision is contained in a statute of this State, refers expressly to this section, 1
and states that the provision prevails over this section. 2
(k) Reserved for future codification purposes. 3
(l) Inapplicability of Certain Subsections. – Subsections (a), (b), (c), and (g) of this 4
section do not apply to a controllable account or controllable payment intangible." 5
SECTION 36. G.S. 25-9-408 reads as rewritten: 6
"§ 25-9-408. Restrictions on assignment of promissory notes, health-care-insurance 7
receivables, and certain general intangibles ineffective. 8
(a) Term restricting assignment generally ineffective. – Restricting Assignment 9
Generally Ineffective. – Except as otherwise provided in subsection (b) of this section, a term in 10
a promissory note or in an agreement between an account debtor and a debtor which that relates 11
to a health-care-insurance receivable or a general intangible, including a contract, permit, license, 12
or franchise, and which term that prohibits, restricts, or requires the consent of the person 13
obligated on the promissory note or the account debtor to, the assignment or transfer of, or 14
creation, attachment, or perfection of a security interest in, the promissory note, 15
health-care-insurance receivable, or general intangible, is ineffective to the extent that the 16
term:term would do or does either of the following: 17
(1) Would impair the creation, attachment, or perfection of a security interest; 18
orinterest. 19
(2) Provides that the assignment or transfer or the creation, attachment, or 20
perfection of the security interest may give rise to a default, breach, right of 21
recoupment, claim, defense, termination, right of termination, or remedy 22
under the promissory note, health-care-insurance receivable, or general 23
intangible. 24
(b) Applicability of subsection (a) to sales of certain rights to payment. – Subsection (a) 25
to Sales of Certain Rights to Payment. – Subsection (a) of this section applies to a security interest 26
in a payment intangible or promissory note only if the security interest arises out of a sale of the 27
payment intangible or promissory note, other than a sale pursuant to a disposition under 28
G.S. 25-9-610 or an acceptance of collateral under G.S. 25-9-620. 29
(c) Legal restrictions on assignment generally ineffective. – Restrictions on Assignment 30
Generally Ineffective. – A rule of law, statute, or regulation law that prohibits, restricts, or 31
requires the consent of a government, governmental body or official, person obligated on a 32
promissory note, or account debtor to the assignment or transfer of, or creation of a security 33
interest in, a promissory note, health-care-insurance receivable, or general intangible, including 34
a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to 35
the extent that the rule of law, statute, or regulation:law would do or does either of the following: 36
(1) Would impair the creation, attachment, or perfection of a security interest; 37
orinterest. 38
(2) Provides that the assignment or transfer or the creation, attachment, or 39
perfection of the security interest may give rise to a default, breach, right of 40
recoupment, claim, defense, termination, right of termination, or remedy 41
under the promissory note, health-care-insurance receivable, or general 42
intangible. 43
(d) Limitation on ineffectiveness under subsections (a) and (c). – Ineffectiveness Under 44
Subsections (a) and (c). – To the extent that a term in a promissory note or in an agreement 45
between an account debtor and a debtor which that relates to a health-care-insurance receivable 46
or general intangible or a rule of law, statute, or regulation law described in subsection (c) of this 47
section would be effective under law other than this Article but is ineffective under subsection 48
(a) or (c) of this section, all of the following apply to the creation, attachment, or perfection of a 49
security interest in the promissory note, health-care-insurance receivable, or general intangible: 50 General Assembly Of North Carolina Session 2025
Page 46 Senate Bill 117-First Edition
(1) Is The security interest is not enforceable against the person obligated on the 1
promissory note or the account debtor;debtor. 2
(2) Does The security interest does not impose a duty or obligation on the person 3
obligated on the promissory note or the account debtor;debtor. 4
(3) Does The security interest does not require the person obligated on the 5
promissory note or the account debtor to recognize the security interest, pay 6
or render performance to the secured party, or accept payment or performance 7
from the secured party;party. 8
(4) Does The security interest does not entitle the secured party to use or assign 9
the debtor's rights under the promissory note, health-care-insurance 10
receivable, or general intangible, including any related information or 11
materials furnished to the debtor in the transaction giving rise to the 12
promissory note, health-care-insurance receivable, or general 13
intangible;intangible. 14
(5) Does The security interest does not entitle the secured party to use, assign, 15
possess, or have access to any trade secrets or confidential information of the 16
person obligated on the promissory note or the account debtor; anddebtor. 17
(6) Does The security interest does not entitle the secured party to enforce the 18
security interest in the promissory note, health-care-insurance receivable, or 19
general intangible. 20
(e) Section prevails over inconsistent law. – Prevails over Inconsistent Law. – Except to 21
the extent otherwise provided in subsection (f) of this section, this section prevails over any 22
inconsistent provision of an existing or future statute, rule, or regulation of statute or rule of this 23
State unless the provision is contained in a statute of this State, refers expressly to this section, 24
and states that the provision prevails over this section. 25
… 26
(g) "Promissory Note." – In this section, "promissory note" includes a negotiable 27
instrument that evidences chattel paper." 28
SECTION 37. G.S. 25-9-509 reads as rewritten: 29
"§ 25-9-509. Persons entitled to file a record. 30
(a) Person entitled to file record. – Entitled to File Record. – A person may file an initial 31
financing statement, amendment that adds collateral covered by a financing statement, or 32
amendment that adds a debtor to a financing statement only if:if either of the following applies: 33
(1) The debtor authorizes the filing in an authenticated a signed record or pursuant 34
to subsection (b) or (c) of this section; orsection. 35
(2) The person holds an agricultural lien that has become effective at the time of 36
filing and the financing statement covers only collateral in which the person 37
holds an agricultural lien. 38
(b) Security agreement as authorization. – By authenticating Agreement as 39
Authorization. – By signing or becoming bound as debtor by a security agreement, a debtor or 40
new debtor authorizes the filing of an initial financing statement, and an amendment, 41
covering:covering both of the following: 42
(1) The collateral described in the security agreement; andagreement. 43
(2) Property that becomes collateral under G.S. 25-9-315(a)(2), whether or not 44
the security agreement expressly covers proceeds. 45
(c) Acquisition of collateral as authorization. – Collateral as Authorization. – By 46
acquiring collateral in which a security interest or agricultural lien continues under 47
G.S. 25-9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an 48
amendment, covering the collateral and property that becomes collateral under 49
G.S. 25-9-315(a)(2). 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 47
(d) Person entitled to file certain amendments. – Entitled to File Certain Amendments. – 1
A person may file an amendment other than an amendment that adds collateral covered by a 2
financing statement or an amendment that adds a debtor to a financing statement only if:if either 3
of the following applies: 4
(1) The secured party of record authorizes the filing; orfiling. 5
(2) The amendment is a termination statement for a financing statement as to 6
which the secured party of record has failed to file or send a termination 7
statement as required by G.S. 25-9-513(a) or (c), the debtor authorizes the 8
filing, and the termination statement indicates that the debtor authorized it to 9
be filed. 10
(e) Multiple secured parties of record. – Secured Parties of Record. – If there is more than 11
one secured party of record for a financing statement, each secured party of record may authorize 12
the filing of an amendment under subsection (d) of this section." 13
SECTION 38. G.S. 25-9-513 reads as rewritten: 14
"§ 25-9-513. Termination statement. 15
(a) Consumer goods. – Goods. – A secured party shall cause the secured party of record 16
for a financing statement to file a termination statement for the financing statement if the 17
financing statement covers consumer goods and:and either of the following applies: 18
(1) There is no obligation secured by the collateral covered by the financing 19
statement and no commitment to make an advance, incur an obligation, or 20
otherwise give value; orvalue. 21
(2) The debtor did not authorize the filing of the initial financing statement. 22
(b) Time for compliance with subsection (a). – Compliance with Subsection (a). – To 23
comply with subsection (a) of this section, a secured party shall cause the secured party of record 24
to file the termination statement:statement by the earlier of the following: 25
(1) Within one month after there is no obligation secured by the collateral covered 26
by the financing statement and no commitment to make an advance, incur an 27
obligation, or otherwise give value; orvalue. 28
(2) If earlier, within Within 20 days after the secured party receives an 29
authenticated a signed demand from a debtor. 30
(c) Other collateral. – Collateral. – In cases not governed by subsection (a) of this section, 31
within 20 days after a secured party receives an authenticated a signed demand from a debtor, 32
the secured party shall cause the secured party of record for a financing statement to send to the 33
debtor a termination statement for the financing statement or file the termination statement in the 34
filing office if:if any of the following applies: 35
(1) Except in the case of a financing statement covering accounts or chattel paper 36
that has been sold or goods that are the subject of a consignment, there is no 37
obligation secured by the collateral covered by the financing statement and no 38
commitment to make an advance, incur an obligation, or otherwise give 39
value;value. 40
(2) The financing statement covers accounts or chattel paper that has been sold 41
but as to which the account debtor or other person obligated has discharged 42
its obligation;obligation. 43
(3) The financing statement covers goods that were the subject of a consignment 44
to the debtor but are not in the debtor's possession; orpossession. 45
(4) The debtor did not authorize the filing of the initial financing statement. 46
(d) Effect of filing termination statement. – Filing Termination Statement. – Except as 47
otherwise provided in G.S. 25-9-510, upon the filing of a termination statement with the filing 48
office, the financing statement to which the termination statement relates ceases to be effective. 49
Except as otherwise provided in G.S. 25-9-510, for purposes of G.S. 25-9-519(g), 25-9-522(a), 50
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
Page 48 Senate Bill 117-First Edition
statement that indicates that the debtor is a transmitting utility also causes the effectiveness of 1
the financing statement to lapse." 2
SECTION 39. G.S. 25-9-601 reads as rewritten: 3
"§ 25-9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, 4
chattel paper, payment intangibles, or promissory notes. 5
(a) Rights of secured party after default. – Secured Party After Default. – After default, 6
a secured party has the rights provided in this Part and, except as otherwise provided in 7
G.S. 25-9-602, those provided by agreement of the parties. A secured party:party may do both of 8
the following: 9
(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, 10
security interest, or agricultural lien by any available judicial procedure; 11
andprocedure. 12
(2) If the collateral is documents, may proceed either as to the documents or as to 13
the goods they cover. 14
(b) Rights and duties of secured party in possession or control. – Duties of Secured Party 15
in Possession or Control. – A secured party in possession of collateral or control of collateral 16
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
25-9-107.1 has the rights and duties provided in G.S. 25-9-207. 18
(c) Rights cumulative; simultaneous exercise. – Cumulative; Simultaneous Exercise. – 19
The rights under subsections (a) and (b) of this section are cumulative and may be exercised 20
simultaneously. 21
(d) Rights of debtor and obligor. – Debtor and Obligor. – Except as otherwise provided 22
in subsection (g) of this section and G.S. 25-9-605, after default, a debtor and an obligor have the 23
rights provided in this Part and by agreement of the parties. 24
(e) Lien of levy after judgment. – Levy After Judgment. – If a secured party has reduced 25
its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an 26
execution based upon the judgment relates back to the earliest of:of the following: 27
(1) The date of perfection of the security interest or agricultural lien in the 28
collateral;collateral. 29
(2) The date of filing a financing statement covering the collateral; orcollateral. 30
(3) Any date specified in a statute under which the agricultural lien was created. 31
(f) Execution sale. – Sale. – A sale pursuant to an execution is a foreclosure of the 32
security interest or agricultural lien by judicial procedure within the meaning of this section. A 33
secured party may purchase at the sale and thereafter hold the collateral free of any other 34
requirements of this Article. 35
(g) Consignor or buyer of certain rights to payment. – Buyer of Certain Rights to 36
Payment. – Except as otherwise provided in G.S. 25-9-607(c), this Part imposes no duties upon 37
a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, 38
or promissory notes." 39
SECTION 40. G.S. 25-9-605 reads as rewritten: 40
"§ 25-9-605. Unknown debtor or secondary obligor. 41
(a) A No Duty Generally Owed by Secured Party. – Except as provided in subsection (b) 42
of this section, a secured party does not owe a duty based on its status as secured party:party to 43
either of the following: 44
(1) To a person that is a debtor or obligor, unless the secured party knows:knows 45
all of the following: 46
a. That the person is a debtor or obligor;obligor. 47
b. The identity of the person; andperson. 48
c. How to communicate with the person; orperson. 49
(2) To a secured party or lienholder that has filed a financing statement against a 50
person, unless the secured party knows:knows both of the following: 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 49
a. That the person is a debtor; anddebtor. 1
b. The identity of the person. 2
(b) Exception When Secured Party Owes Duty to Debtor or Obligor. – A secured party 3
owes a duty based on its status as a secured party to a person if, at the time the secured party 4
obtains control of collateral that is a controllable account, controllable electronic record, or 5
controllable payment intangible or at the time the security interest attaches to the collateral, 6
whichever is later, both of the following apply: 7
(1) The person is a debtor or obligor. 8
(2) The secured party knows that the information in sub-subdivision (a)(1)a., b., 9
or c. of this section relating to the person is not provided by the collateral, a 10
record attached to or logically associated with the collateral, or the system in 11
which the collateral is recorded." 12
SECTION 41. G.S. 25-9-608 reads as rewritten: 13
"§ 25-9-608. Application of proceeds of collection or enforcement; liability for deficiency 14
and right to surplus. 15
(a) Application of proceeds, surplus, and deficiency if obligation secured. – Proceeds, 16
Surplus, and Deficiency If Obligation Secured. – If a security interest or agricultural lien secures 17
payment or performance of an obligation, the following rules apply: 18
(1) A secured party shall apply or pay over for application the cash proceeds of 19
collection or enforcement under G.S. 25-9-607 to the following in the 20
following order to:order: 21
a. The reasonable expenses of collection and enforcement and, to the 22
extent provided for by agreement and not prohibited by law, 23
reasonable attorney's attorneys' fees and legal expenses incurred by the 24
secured party;party. 25
b. The satisfaction of obligations secured by the security interest or 26
agricultural lien under which the collection or enforcement is made; 27
andmade. 28
c. The satisfaction of obligations secured by any subordinate security 29
interest in or other lien on the collateral subject to the security interest 30
or agricultural lien under which the collection or enforcement is made 31
if the secured party receives an authenticated a signed demand for 32
proceeds before distribution of the proceeds is completed. 33
… 34
(b) No surplus or deficiency in sales of certain rights to payment. – Surplus or Deficiency 35
in Sales of Certain Rights to Payment. – If the underlying transaction is a sale of accounts, chattel 36
paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the 37
obligor is not liable for any deficiency." 38
SECTION 42. G.S. 25-9-611 reads as rewritten: 39
"§ 25-9-611. Notification before disposition of collateral. 40
(a) "Notification date." – Date." – In this section, "notification date" means the earlier of 41
the date on which:the date of the earlier of the following: 42
(1) A secured party sends to the debtor and any secondary obligor an 43
authenticated a signed notification of disposition; ordisposition. 44
(2) The debtor and any secondary obligor waive the right to notification. 45
(b) Notification of disposition required. – Disposition Required. – Except as otherwise 46
provided in subsection (d) of this section, a secured party that disposes of collateral under 47
G.S. 25-9-610 shall send to the persons specified in subsection (c) of this section a reasonable 48
authenticated signed notification of disposition. 49 General Assembly Of North Carolina Session 2025
Page 50 Senate Bill 117-First Edition
(c) Persons to be notified. – Notified. – To comply with subsection (b) of this section, the 1
secured party shall send an authenticated a signed notification of disposition to:to all of the 2
following: 3
(1) The debtor;debtor. 4
(2) Any secondary obligor; andobligor. 5
(3) If the collateral is other than consumer goods:goods, all of the following: 6
a. Any other person from which the secured party has received, before 7
the notification date, an authenticated a signed notification of a claim 8
of an interest in the collateral;collateral. 9
b. Any other secured party or lienholder that, 10 days before the 10
notification date, held a security interest in or other lien on the 11
collateral perfected by the filing of a financing statement that:that 12
meets all of the following requirements: 13
1. Identified the collateral;collateral. 14
2. Was indexed under the debtor's name as of that date; anddate. 15
3. Was filed in the office in which to file a financing statement 16
against the debtor covering the collateral as of that date; 17
anddate. 18
c. Any other secured party that, 10 days before the notification date, held 19
a security interest in the collateral perfected by compliance with a 20
statute, regulation, or treaty described in G.S. 25-9-311(a). 21
(d) Subsection (b) inapplicable: perishable collateral; recognized market. – Inapplicable 22
to Perishable Collateral or Recognized Market. – Subsection (b) of this section does not apply if 23
the collateral is perishable or threatens to decline speedily in value or is of a type customarily 24
sold on a recognized market. 25
(e) Compliance with sub-subdivision Sub-Subdivision (c)(3)b. – A secured party 26
complies with the requirement for notification prescribed by sub-subdivision (c)(3)b. of this 27
section if:if both of the following apply: 28
(1) Not later than 20 days or earlier than 30 days before the notification date, the 29
secured party requests, in a commercially reasonable manner, information 30
concerning financing statements indexed under the debtor's name in the office 31
indicated in sub-subdivision (c)(3)b. of this section; andsection. 32
(2) Before the notification date, the secured party:either of the following applied: 33
a. Did The secured party did not receive a response to the request for 34
information; orinformation. 35
b. Received The secured party received a response to the request for 36
information and sent an authenticated a signed notification of 37
disposition to each secured party or other lienholder named in that 38
response whose financing statement covered the collateral." 39
SECTION 43. G.S. 25-9-613 reads as rewritten: 40
"§ 25-9-613. Contents and form of notification before disposition of collateral: general. 41
(a) Contents and Form of Notification. – Except in a consumer-goods transaction, the 42
following rules apply: 43
(1) The contents of a notification of disposition are sufficient if the 44
notification:notification does all of the following: 45
a. Describes the debtor and the secured party;party. 46
b. Describes the collateral that is the subject of the intended 47
disposition;disposition. 48
c. States the method of intended disposition;disposition. 49 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 51
d. States that the debtor is entitled to an accounting of the unpaid 1
indebtedness and states the charge, if any, for an accounting; 2
andaccounting. 3
e. States the time and place of a public disposition or the time after which 4
any other disposition is to be made. 5
(2) Whether the contents of a notification that lacks any of the information 6
specified in subdivision (1) of this section subsection are nevertheless 7
sufficient is a question of fact. 8
(3) The contents of a notification providing substantially the information 9
specified in subdivision (1) of this section subsection are sufficient, even if 10
the notification includes:includes either of the following: 11
a. Information not specified by that subdivision; orsubdivision. 12
b. Minor errors that are not seriously misleading. 13
(4) A particular phrasing of the notification is not required. 14
(5) The following form of notification and the form appearing in G.S. 15
25-9-614(3), when completed, G.S. 25-9-614(a)(3), when completed in 16
accordance with the instructions in subsection (b) of this section and 17
G.S. 25-9-614(b), each provides sufficient information: 18
NOTIFICATION OF DISPOSITION OF COLLATERAL 19
20
To: [Name of debtor, obligor, or other person to which the notification 21
is sent] 22
From: [Name, address, and telephone number of secured party] 23
Name of Debtor(s): [Include only if debtor(s) is/are not an addressee] 24
[For a public disposition:] 25
We will sell [or lease or license, as applicable] the [describe collateral] [to the 26
highest qualified bidder] in public as follows: 27
Day and Date: _________________________________ 28
Time: _________________________________ 29
Place: _________________________________ 30
[For a private disposition:] 31
We will sell [or lease or license, as applicable] the [describe collateral] 32
privately sometime after [day and date]. 33
You are entitled to an accounting of the unpaid indebtedness secured by the 34
property that we intend to sell [or lease or license, as applicable] [for a charge 35
of $ _______]. You may request an accounting by calling us at [telephone 36
number] 37
"NOTIFICATION OF DISPOSITION OF COLLATERAL 38
To: (Name of debtor, obligor, or other person to which the notification is 39
sent) 40
From: (Name, address, and telephone number of secured party) 41
{1} (Name of each debtor that is not an addressee) 42
{2} We will sell (describe collateral) (to the highest qualified 43
bidder) at public sale. A sale could include a lease or license. 44
The sale will be held as follows: 45
(Date) 46
(Time) 47
(Place) 48
{3} We will sell (describe collateral) at private sale sometime after 49
(date). A sale could include a lease or license. 50 General Assembly Of North Carolina Session 2025
Page 52 Senate Bill 117-First Edition
{4} You are entitled to an accounting of the unpaid indebtedness 1
secured by the property that we intend to sell or, as applicable, 2
lease or license. 3
{5} If you request an accounting, you must pay a charge of $ 4
(amount). 5
{6} You may request an accounting by calling us at (telephone 6
number)." 7
(b) Instructions for Form of Notification. – The following instructions apply to the form 8
of notification in subdivision (a)(5) of this section: 9
(1) The instructions in this subsection refer to the numbers in braces before items 10
in the form of notification in subdivision (a)(5) of this section. Do not include 11
the numbers or braces in the notification. The numbers and braces are used 12
only for the purpose of these instructions. 13
(2) Include and complete item {1} only if there is a debtor that is not an addressee 14
of the notification and list the name or names. 15
(3) Include and complete either item {2}, if the notification relates to a public 16
disposition of the collateral, or item {3}, if the notification relates to a private 17
disposition of the collateral. If item {2} is included, include the words "to the 18
highest qualified bidder" only if applicable. 19
(4) Include and complete items {4} and {6}. 20
(5) Include and complete item {5} only if the sender will charge the recipient for 21
an accounting." 22
SECTION 44. G.S. 25-9-614 reads as rewritten: 23
"§ 25-9-614. Contents and form of notification before disposition of collateral: 24
consumer-goods transaction. 25
(a) Contents and Form of Notification. – In a consumer-goods transaction, the following 26
rules apply: 27
(1) A notification of disposition must provide all of the following information: 28
a. The information specified in G.S. 25-9-613(1);G.S. 25-9-613(a)(1). 29
b. A description of any liability for a deficiency of the person to which 30
the notification is sent;sent. 31
c. A telephone number from which the amount that must be paid to the 32
secured party to redeem the collateral under G.S. 25-9-623 is 33
available; andavailable. 34
d. A telephone number or mailing address from which additional 35
information concerning the disposition and the obligation secured is 36
available. 37
(2) A particular phrasing of the notification is not required. 38
(3) The following form of notification, when completed, completed in accordance 39
with the instructions in subsection (b) of this section, provides sufficient 40
information: 41
[Name and address of secured party] 42
[Date] 43
NOTICE OF OUR PLAN TO SELL PROPERTY 44
[Name and address of any obligor who is also a debtor] 45
Subject: [Identification of Transaction] 46
47
We have your [describe collateral], because you broke promises in our agreement. 48
49
[For a public disposition:] 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 53
We will sell [describe collateral] at public sale. A sale could include a lease or license. The sale 1
will be held as follows: 2
3
Date: _________________________________________________ 4
Time: ________________________________________________ 5
Place: ________________________________________________ 6
You may attend the sale and bring bidders if you want. 7
8
[For a private disposition:] 9
We will sell [describe collateral] at private sale sometime after [date]. A sale could include a 10
lease or license. 11
12
The money that we get from the sale (after paying our costs) will reduce the amount you owe. If 13
we get less money than you owe, you [will or will not, as applicable] still owe us the difference. 14
If we get more money than you owe, you will get the extra money, unless we must pay it to 15
someone else. 16
17
You can get the property back at any time before we sell it by paying us the full amount you owe 18
(not just the past due payments), including our expenses. To learn the exact amount you must 19
pay, call us at [telephone number]. 20
21
If you want us to explain to you in writing how we have figured the amount that you owe us, you 22
may call us at [telephone number] or write us at [secured party's address] and request a written 23
explanation. [We will charge you $__________ for the explanation if we sent you another written 24
explanation of the amount you owe us within the last six months.] 25
26
If you need more information about the sale call us at [telephone number] [or write us at [secured 27
party's address]. 28
29
We are sending this notice to the following other people who have an interest in [describe 30
collateral] or who owe money under your agreement: 31
[Names of all other debtors and obligors, if any] 32
"(Name and address of secured party) 33
(Date) 34
NOTICE OF OUR PLAN TO SELL PROPERTY 35
(Name and address of any obligor who is also a debtor) 36
Subject: (Identify transaction) 37
We have your (describe collateral), because you broke promises in our 38
agreement. 39
{1} We will sell (describe collateral) at public sale. A sale could include a 40
lease or license. The sale will be held as follows: 41
(Date) 42
(Time) 43
(Place) 44
You may attend the sale and bring bidders if you want. 45
{2} We will sell (describe collateral) at private sale sometime after (date). 46
A sale could include a lease or license. 47
{3} The money that we get from the sale, after paying our costs, will 48
reduce the amount you owe. If we get less money than you owe, you 49
(will or will not, as applicable) still owe us the difference. If we get 50 General Assembly Of North Carolina Session 2025
Page 54 Senate Bill 117-First Edition
more money than you owe, you will get the extra money, unless we 1
must pay it to someone else. 2
{4} You can get the property back at any time before we sell it by paying 3
us the full amount you owe, not just the past due payments, including 4
our expenses. To learn the exact amount you must pay, call us at 5
(telephone number). 6
{5} If you want us to explain to you in (writing) (writing or in (description 7
of electronic record)) (description of electronic record) how we have 8
figured the amount that you owe us, {6} call us at (telephone number) 9
(or) (write us at (secured party's address)) (or contact us by 10
(description of electronic communication method)) {7} and request (a 11
written explanation) (a written explanation or an explanation in 12
(description of electronic record)) (an explanation in (description of 13
electronic record)). 14
{8} We will charge you $ (amount) for the explanation if we sent you 15
another written explanation of the amount you owe us within the last 16
six months. 17
{9} If you need more information about the sale (call us at (telephone 18
number)) (or) (write us at (secured party's address)) (or contact us by 19
(description of electronic communication method)). 20
{10} We are sending this notice to the following other people who have an 21
interest in (describe collateral) or who owe money under your 22
agreement: (Names of all other debtors and obligors, if any)." 23
(4) A notification in the form of subdivision (3) of this section subsection is 24
sufficient, even if additional information appears at the end of the form. 25
(5) A notification in the form of subdivision (3) of this section subsection is 26
sufficient, even if it includes errors in information not required by subdivision 27
(1) of this section, subsection, unless the error is misleading with respect to 28
rights arising under this Article. 29
(6) If a notification under this section is not in the form of subdivision (3) of this 30
section, subsection, law other than this Article determines the effect of 31
including information not required by subdivision (1) of this 32
section.subsection. 33
(b) Instructions for Form of Notification. – The following instructions apply to the form 34
of notification in subdivision (a)(3) of this section: 35
(1) The instructions in this subsection refer to the numbers in braces before items 36
in the form of notification in subdivision (a)(3) of this section. Do not include 37
the numbers or braces in the notification. The numbers and braces are used 38
only for the purpose of these instructions. 39
(2) Include and complete either item {1}, if the notification relates to a public 40
disposition of the collateral, or item {2}, if the notification relates to a private 41
disposition of the collateral. 42
(3) Include and complete items {3}, {4}, {5}, {6}, and {7}. 43
(4) In item {5}, include and complete any one of the three alternative methods for 44
the explanation – writing, writing or electronic record, or electronic record. 45
(5) In item {6}, include the telephone number. In addition, the sender may include 46
and complete either or both of the two additional alternative methods of 47
communication – writing or electronic communication – for the recipient of 48
the notification to communicate with the sender. Neither of the two additional 49
methods of communication is required to be included. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 55
(6) In item {7}, include and complete the method or methods for the explanation 1
– writing, writing or electronic record, or electronic record – included in item 2
{5}. 3
(7) Include and complete item {8} only if a written explanation is included in item 4
{5} as a method for communicating the explanation and the sender will charge 5
the recipient for another written explanation. 6
(8) In item {9}, include either the telephone number or the address or both the 7
telephone number and the address. In addition, the sender may include and 8
complete the additional method of communication – electronic 9
communication – for the recipient of the notification to communicate with the 10
sender. The additional method of electronic communication is not required to 11
be included. 12
(9) If item {10} does not apply, insert "None" after "agreement:"." 13
SECTION 45. G.S. 25-9-615 reads as rewritten: 14
"§ 25-9-615. Application of proceeds of disposition; liability for deficiency and right to 15
surplus. 16
(a) Application of proceeds. – Proceeds. – A secured party shall apply or pay over for 17
application the cash proceeds of disposition under G.S. 25-9-610 to the following in the 18
following order to:order: 19
(1) The reasonable expenses of retaking, holding, preparing for disposition, 20
processing, and disposing, and, to the extent provided for by agreement and 21
not prohibited by law, reasonable attorney's attorneys' fees and legal expenses 22
incurred by the secured party;party. 23
(2) The satisfaction of obligations secured by the security interest or agricultural 24
lien under which the disposition is made;made. 25
(3) The satisfaction of obligations secured by any subordinate security interest in 26
or other subordinate lien on the collateral if:if both of the following apply: 27
a. The secured party receives from the holder of the subordinate security 28
interest or other lien an authenticated a signed demand for proceeds 29
before distribution of the proceeds is completed; andcompleted. 30
b. In a case in which a consignor has an interest in the collateral, the 31
subordinate security interest or other lien is senior to the interest of the 32
consignor; andconsignor. 33
(4) A secured party that is a consignor of the collateral if the secured party 34
receives from the consignor an authenticated a signed demand for proceeds 35
before distribution of the proceeds is completed. 36
(b) Proof of subordinate interest. – Subordinate Interest. – If requested by a secured party, 37
a holder of a subordinate security interest or other lien shall furnish reasonable proof of the 38
interest or lien within a reasonable time. Unless the holder does so, the secured party need not 39
comply with the holder's demand under subdivision (a)(3) of this section. 40
(c) Application of noncash proceeds. – Noncash Proceeds. – A secured party need not 41
apply or pay over for application noncash proceeds of disposition under G.S. 25-9-610 unless the 42
failure to do so would be commercially unreasonable. A secured party that applies or pays over 43
for application noncash proceeds shall do so in a commercially reasonable manner. 44
(d) Surplus or deficiency if obligation secured. – Deficiency If Obligation Secured. – If 45
the security interest under which a disposition is made secures payment or performance of an 46
obligation, after making the payments and applications required by subsection (a) of this section 47
and permitted by subsection (c) of this section:section, both of the following apply: 48
(1) Unless subdivision (a)(4) of this section requires the secured party to apply or 49
pay over cash proceeds to a consignor, the secured party shall account to and 50
pay a debtor for any surplus; andsurplus. 51 General Assembly Of North Carolina Session 2025
Page 56 Senate Bill 117-First Edition
(2) The obligor is liable for any deficiency. 1
(e) No surplus or deficiency in sales of certain rights to payment. – Surplus or Deficiency 2
in Sales of Certain Rights to Payment. – If the underlying transaction is a sale of accounts, chattel 3
paper, payment intangibles, or promissory notes:notes, both of the following apply: 4
(1) The debtor is not entitled to any surplus; andsurplus. 5
(2) The obligor is not liable for any deficiency. 6
(f) Calculation of surplus or deficiency in disposition to person related to secured party. 7
– Surplus or Deficiency in Disposition to Person Related to Secured Party. – The surplus or 8
deficiency following a disposition is calculated based on the amount of proceeds that would have 9
been realized in a disposition complying with this Part to a transferee other than the secured 10
party, a person related to the secured party, or a secondary obligor if:if both of the following 11
apply: 12
(1) The transferee in the disposition is the secured party, a person related to the 13
secured party, or a secondary obligor; andobligor. 14
(2) The amount of proceeds of the disposition is significantly below the range of 15
proceeds that a complying disposition to a person other than the secured party, 16
a person related to the secured party, or a secondary obligor would have 17
brought. 18
(g) Cash proceeds received by junior secured party. – A Proceeds Received by Junior 19
Secured Party. – All of the following apply to a secured party that receives cash proceeds of a 20
disposition in good faith and without knowledge that the receipt violates the rights of the holder 21
of a security interest or other lien that is not subordinate to the security interest or agricultural 22
lien under which the disposition is made: 23
(1) Takes The secured party takes the cash proceeds free of the security interest 24
or other lien;lien. 25
(2) Is The secured party is not obligated to apply the proceeds of the disposition 26
to the satisfaction of obligations secured by the security interest or other lien; 27
andlien. 28
(3) Is The secured party is not obligated to account to or pay the holder of the 29
security interest or other lien for any surplus." 30
SECTION 46. G.S. 25-9-616 reads as rewritten: 31
"§ 25-9-616. Explanation of calculation of surplus or deficiency. 32
(a) Definitions. – In this section:section, the following definitions apply: 33
(1) "Explanation" means a writing that:Explanation. – A record that does all of 34
the following: 35
a. States the amount of the surplus or deficiency;deficiency. 36
b. Provides an explanation information in accordance with subsection (c) 37
of this section of explaining how the secured party calculated the 38
surplus or deficiency;deficiency. 39
c. States, if applicable, that future debits, credits, charges, including 40
additional credit service charges or interest, rebates, and expenses may 41
affect the amount of the surplus or deficiency; anddeficiency. 42
d. Provides a telephone number or mailing address from which additional 43
information concerning the transaction is available. 44
(2) "Request" means a record:Request. – A record to which all of the following 45
apply: 46
a. Authenticated It is signed by a debtor or consumer obligor;obligor. 47
b. Requesting It requests that the recipient provide an explanation; 48
andexplanation. 49
c. Sent It is sent after disposition of the collateral under G.S. 25-9-610. 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 57
(b) Explanation of calculation. – Calculation. – In a consumer-goods transaction in which 1
the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under 2
G.S. 25-9-615, the secured party shall:shall do either of the following: 3
(1) Send an explanation to the debtor or consumer obligor, as applicable, after the 4
disposition and:and in accordance with both of the following: 5
a. Before or when the secured party accounts to the debtor and pays any 6
surplus or first makes written demand in a record on the consumer 7
obligor after the disposition for payment of the deficiency; 8
anddeficiency. 9
b. Within 14 days after receipt of a request; orrequest. 10
(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days 11
after receipt of a request, send to the consumer obligor a record waiving the 12
secured party's right to a deficiency. 13
(c) Required information. – Information. – To comply with sub-subdivision (a)(1)b. of 14
this section, a writing must an explanation shall provide the following information in the 15
following order: 16
(1) The aggregate amount of obligations secured by the security interest under 17
which the disposition was made, and, if the amount reflects a rebate of 18
unearned interest or credit service charge, an indication of that fact, calculated 19
as of a specified date:date as follows: 20
a. If the secured party takes or receives possession of the collateral after 21
default, not more than 35 days before the secured party takes or 22
receives possession; orpossession. 23
b. If the secured party takes or receives possession of the collateral before 24
default or does not take possession of the collateral, not more than 35 25
days before the disposition;disposition. 26
(2) The amount of proceeds of the disposition;disposition. 27
(3) The aggregate amount of the obligations after deducting the amount of 28
proceeds;proceeds. 29
(4) The amount, in the aggregate or by type, and types of expenses, including 30
expenses of retaking, holding, preparing for disposition, processing, and 31
disposing of the collateral, and attorney's attorneys' fees secured by the 32
collateral which that are known to the secured party and relate to the current 33
disposition;disposition. 34
(5) The amount, in the aggregate or by type, and types of credits, including rebates 35
of interest or credit service charges, to which the obligor is known to be 36
entitled and which that are not reflected in the amount in subdivision (1) of 37
this subsection; andsubsection. 38
(6) The amount of the surplus or deficiency. 39
(d) Substantial compliance. – Compliance. – A particular phrasing of the explanation is 40
not required. An explanation complying substantially with the requirements of subsection (a) of 41
this section is sufficient, even if it includes minor errors that are not seriously misleading. 42
(e) Charges for responses. – Responses. – A debtor or consumer obligor is entitled 43
without charge to one response to a request under this section during any six-month period in 44
which the secured party did not send to the debtor or consumer obligor an explanation pursuant 45
to subdivision (b)(1) of this section. The secured party may require payment of a charge not 46
exceeding twenty-five dollars ($25.00) for each additional response." 47
SECTION 47. G.S. 25-9-619 reads as rewritten: 48
"§ 25-9-619. Transfer of record or legal title. 49
(a) "Transfer statement." – Statement." – In this section, "transfer statement" means a 50
record authenticated signed by a secured party stating:stating all of the following: 51 General Assembly Of North Carolina Session 2025
Page 58 Senate Bill 117-First Edition
(1) That the debtor has defaulted in connection with an obligation secured by 1
specified collateral;collateral. 2
(2) That the secured party has exercised its postdefault remedies with respect to 3
the collateral;collateral. 4
(3) That, by reason of the exercise, a transferee has acquired the rights of the 5
debtor in the collateral; andcollateral. 6
(4) The name and mailing address of the secured party, debtor, and transferee. 7
(b) Effect of transfer statement. – Transfer Statement. – A transfer statement entitles the 8
transferee to the transfer of record of all rights of the debtor in the collateral specified in the 9
statement in any official filing, recording, registration, or certificate-of-title system covering the 10
collateral. If a transfer statement is presented with the applicable fee and request form to the 11
official or office responsible for maintaining the system, the official or office shall:shall do all of 12
the following: 13
(1) Accept the transfer statement;statement. 14
(2) Promptly amend its records to reflect the transfer; andtransfer. 15
(3) If applicable, issue a new appropriate certificate of title in the name of the 16
transferee. 17
(c) Transfer not a disposition; no relief of secured party's duties. – Not a Disposition; No 18
Relief of Secured Party's Duties. – A transfer of the record or legal title to collateral to a secured 19
party under subsection (b) of this section or otherwise is not of itself a disposition of collateral 20
under this Article and does not of itself relieve the secured party of its duties under this Article." 21
SECTION 48. G.S. 25-9-620 reads as rewritten: 22
"§ 25-9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory 23
disposition of collateral. 24
(a) Conditions to acceptance in satisfaction. – Acceptance in Satisfaction. – Except as 25
otherwise provided in subsection (g) of this section, a secured party may accept collateral in full 26
or partial satisfaction of the obligation it secures only if:if all of the following apply: 27
(1) The debtor consents to the acceptance under subsection (c) of this 28
section;section. 29
(2) The secured party does not receive, within the time set forth in subsection (d) 30
of this section, a notification of objection to the proposal authenticated 31
by:signed by either of the following: 32
a. A person to which the secured party was required to send a proposal 33
under G.S. 25-9-621; orG.S. 25-9-621. 34
b. Any other person, other than the debtor, holding an interest in the 35
collateral subordinate to the security interest that is the subject of the 36
proposal;proposal. 37
(3) If the collateral is consumer goods, the collateral is not in the possession of 38
the debtor when the debtor consents to the acceptance; andacceptance. 39
(4) Subsection (e) of this section does not require the secured party to dispose of 40
the collateral or the debtor waives the requirement pursuant to G.S. 25-9-624. 41
(b) Purported acceptance ineffective. – Acceptance Ineffective. – A purported or apparent 42
acceptance of collateral under this section is ineffective unless:unless both of the following apply: 43
(1) The secured party consents to the acceptance in an authenticated a signed 44
record or sends a proposal to the debtor; anddebtor. 45
(2) The conditions of subsection (a) of this section are met. 46
(c) Debtor's consent. – Consent. – For purposes of this section:section, both of the 47
following apply: 48
(1) A debtor consents to an acceptance of collateral in partial satisfaction of the 49
obligation it secures only if the debtor agrees to the terms of the acceptance in 50
a record authenticated signed after default; anddefault. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 59
(2) A debtor consents to an acceptance of collateral in full satisfaction of the 1
obligation it secures only if the debtor agrees to the terms of the acceptance in 2
a record authenticated signed after default or the secured party:all of the 3
following apply: 4
a. Sends The secured party sends to the debtor after default a proposal 5
that is unconditional or subject only to a condition that collateral not 6
in the possession of the secured party be preserved or 7
maintained;maintained. 8
b. In the proposal, the secured party proposes to accept collateral in full 9
satisfaction of the obligation it secures; andsecures. 10
c. Does The secured party does not receive a notification of objection 11
authenticated signed by the debtor within 20 days after the proposal is 12
sent. 13
(d) Effectiveness of notification. – Notification. – To be effective under subdivision 14
(a)(2) of this section, a notification of objection must shall be received by the secured party:party 15
as follows: 16
(1) In the case of a person to which the proposal was sent pursuant to 17
G.S. 25-9-621, within 20 days after notification was sent to that person; 18
andperson. 19
(2) In other cases:cases as follows: 20
a. Within 20 days after the last notification was sent pursuant to 21
G.S. 25-9-621; orG.S. 25-9-621. 22
b. If a notification was not sent, before the debtor consents to the 23
acceptance under subsection (c) of this section. 24
(e) Mandatory disposition of consumer goods. – Disposition of Consumer Goods. – A 25
secured party that has taken possession of collateral shall dispose of the collateral pursuant to 26
G.S. 25-9-610 within the time specified in subsection (f) of this section if:if either of the 27
following applies: 28
(1) Sixty percent (60%) of the cash price has been paid in the case of a 29
purchase-money security interest in consumer goods; orgoods. 30
(2) Sixty percent (60%) of the principal amount of the obligation secured has been 31
paid in the case of a non-purchase-money security interest in consumer goods. 32
(f) Compliance with mandatory disposition requirement. – Mandatory Disposition 33
Requirement. – To comply with subsection (e) of this section, the secured party shall dispose of 34
the collateral:collateral within either of the following time periods: 35
(1) Within 90 days after taking possession; orpossession. 36
(2) Within any longer period to which the debtor and all secondary obligors have 37
agreed in an agreement to that effect entered into and authenticated signed 38
after default. 39
(g) No partial satisfaction in consumer transaction. – Partial Satisfaction in Consumer 40
Transaction. – In a consumer transaction, a secured party may shall not accept collateral in partial 41
satisfaction of the obligation it secures." 42
SECTION 49. G.S. 25-9-621 reads as rewritten: 43
"§ 25-9-621. Notification of proposal to accept collateral. 44
(a) Persons to which proposal to be sent. – Which Proposal to be Sent. – A secured party 45
that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send 46
its proposal to:to all of the following: 47
(1) Any person from which the secured party has received, before the debtor 48
consented to the acceptance, an authenticated a signed notification of a claim 49
of an interest in the collateral;collateral. 50 General Assembly Of North Carolina Session 2025
Page 60 Senate Bill 117-First Edition
(2) Any other secured party or lienholder that, 10 days before the debtor 1
consented to the acceptance, held a security interest in or other lien on the 2
collateral perfected by the filing of a financing statement that:that meets all of 3
the following requirements: 4
a. Identified the collateral;collateral. 5
b. Was indexed under the debtor's name as of that date; anddate. 6
c. Was filed in the office or offices in which to file a financing statement 7
against the debtor covering the collateral as of that date; anddate. 8
(3) Any other secured party that, 10 days before the debtor consented to the 9
acceptance, held a security interest in the collateral perfected by compliance 10
with a statute, regulation, or treaty described in G.S. 25-9-311(a). 11
(b) Proposal to be sent to secondary obligor in partial satisfaction. – Sent to Secondary 12
Obligor in Partial Satisfaction. – A secured party that desires to accept collateral in partial 13
satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition 14
to the persons described in subsection (a) of this section." 15
SECTION 50. G.S. 25-9-624 reads as rewritten: 16
"§ 25-9-624. Waiver. 17
(a) Waiver of disposition notification. – Disposition Notification. – A debtor or 18
secondary obligor may waive the right to notification of disposition of collateral under 19
G.S. 25-9-611 only by an agreement to that effect entered into and authenticated signed after 20
default. 21
(b) Waiver of mandatory disposition. – Mandatory Disposition. – A debtor may waive 22
the right to require disposition of collateral under G.S. 25-9-620(e) only by an agreement to that 23
effect entered into and authenticated signed after default. 24
(c) Waiver of redemption right. – Redemption Right. – Except in a consumer-goods 25
transaction, a debtor or secondary obligor may waive the right to redeem collateral under 26
G.S. 25-9-623 only by an agreement to that effect entered into and authenticated signed after 27
default." 28
SECTION 51. G.S. 25-9-628 reads as rewritten: 29
"§ 25-9-628. Nonliability and limitation on liability of secured party; liability of secondary 30
obligor. 31
(a) Limitation of liability of secured party for noncompliance with Article. – Unless 32
Liability of Secured Party for Noncompliance with Article. – Subject to subsection (f) of this 33
section, unless a secured party knows that a person is a debtor or obligor, knows the identity of 34
the person, and knows how to communicate with the person:person, both of the following apply: 35
(1) The secured party is not liable to the person, or to a secured party or lienholder 36
that has filed a financing statement against the person, for failure to comply 37
with this Article; andArticle. 38
(2) The secured party's failure to comply with this Article does not affect the 39
liability of the person for a deficiency. 40
(b) Limitation of liability based on status as secured party. – A Liability Based on Status 41
as Secured Party. – Subject to subsection (f) of this section, a secured party is not liable because 42
of its status as secured party:party to either of the following: 43
(1) To a person that is a debtor or obligor, unless the secured party knows:knows 44
all of the following: 45
a. That the person is a debtor or obligor;obligor. 46
b. The identity of the person; andperson. 47
c. How to communicate with the person; orperson. 48
(2) To a secured party or lienholder that has filed a financing statement against a 49
person, unless the secured party knows:knows both of the following: 50
a. That the person is a debtor; anddebtor. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 61
b. The identity of the person. 1
(c) Limitation of liability if reasonable belief that transaction not a consumer-goods 2
transaction or consumer transaction. – Liability If Reasonable Belief That Transaction Not a 3
Consumer-Goods Transaction or Consumer Transaction. – A secured party is not liable to any 4
person, and a person's liability for a deficiency is not affected, because of any act or omission 5
arising out of the secured party's reasonable belief that a transaction is not a consumer-goods 6
transaction or a consumer transaction or that goods are not consumer goods, if the secured party's 7
belief is based on its reasonable reliance on:on either of the following: 8
(1) A debtor's representation concerning the purpose for which collateral was to 9
be used, acquired, or held; orheld. 10
(2) An obligor's representation concerning the purpose for which a secured 11
obligation was incurred. 12
(d) Limitation of liability for statutory damages. – Liability for Statutory Damages. – A 13
secured party is not liable to any person under G.S. 25-9-625(c)(2) for its failure to comply with 14
G.S. 25-9-616. 15
(e) Limitation of multiple liability for statutory damages. – Multiple Liability for 16
Statutory Damages. – A secured party is not liable under G.S. 25-9-625(c)(2) more than once 17
with respect to any one secured obligation. 18
(f) Exception to Limitation of Liability Under Subsections (a) and (b). – Subsections (a) 19
and (b) of this section do not apply to limit the liability of a secured party to a person if, at the 20
time the secured party obtains control of collateral that is a controllable account, controllable 21
electronic record, or controllable payment intangible or at the time the security interest attaches 22
to the collateral, whichever is later, both of the following apply: 23
(1) The person is a debtor or obligor. 24
(2) The secured party knows that the information in sub-subdivision (b)(1)a., b., 25
or c. of this section relating to the person is not provided by the collateral, a 26
record attached to or logically associated with the collateral, or the system in 27
which the collateral is recorded." 28
29
PART III. CONFORMING CHANGES AND OTHER A MENDMENTS TO OTHER U CC 30
ARTICLES 31
SECTION 52. G.S. 25-1-201 reads as rewritten: 32
"§ 25-1-201. General definitions. 33
(a) Unless the context otherwise requires, words or phrases defined in this section, or in 34
the additional definitions contained in other Articles articles of this Chapter that apply to 35
particular Articles or Parts thereof, articles or parts of this Chapter, have the meanings stated. 36
(b) Subject to definitions contained in other articles of this Chapter that apply to particular 37
articles or parts thereof:of this Chapter, the following definitions apply in this Chapter: 38
(1) "Action," in Action. – In the sense of a judicial proceeding, includes 39
recoupment, counterclaim, setoff, suit in equity, and any other proceeding in 40
which rights are determined. 41
(2) "Aggrieved party" means a Aggrieved party. – A party entitled to pursue a 42
remedy. 43
(3) "Agreement," as Agreement. – As distinguished from "contract," means the 44
bargain of the parties in fact, as found in their language or inferred from other 45
circumstances, including course of performance, course of dealing, or usage 46
of trade as provided in G.S. 25-1-303. 47
(4) "Bank" means a Bank. – A person engaged in the business of banking and 48
banking. The term includes a savings bank, savings and loan association, 49
credit union, and trust company. 50 General Assembly Of North Carolina Session 2025
Page 62 Senate Bill 117-First Edition
(5) "Bearer" means a Bearer. – A person in control of a negotiable electronic 1
document of title or a person in possession of a negotiable instrument, 2
negotiable tangible document of title, or certificated security that is payable 3
to bearer or indorsed in blank. 4
(6) "Bill of lading" means a Bill of lading. – A document of title evidencing the 5
receipt of goods for shipment issued by a person engaged in the business of 6
directly or indirectly transporting or forwarding goods. The term does not 7
include a warehouse receipt. 8
(7) "Branch" includes Branch. – Includes a separately incorporated foreign 9
branch of a bank. 10
(8) "Burden of establishing" a fact means the Burden of establishing. – The 11
burden of persuading the trier of fact that the existence of the a fact is more 12
probable than its nonexistence. 13
(9) "Buyer in ordinary course of business" means a Buyer in ordinary course of 14
business. – A person that buys goods in good faith, without knowledge that 15
the sale violates the rights of another person in the goods, and in the ordinary 16
course from a person, other than a pawnbroker, in the business of selling goods 17
of that kind. A person buys goods in the ordinary course if the sale to the 18
person comports with the usual or customary practices in the kind of business 19
in which the seller is engaged or with the seller's own usual or customary 20
practices. A person that sells oil, gas, or other minerals at the wellhead or 21
minehead is a person in the business of selling goods of that kind. A buyer in 22
ordinary course of business may buy for cash, by exchange of other property, 23
or on secured or unsecured credit, and may acquire goods or documents of 24
title under a preexisting contract for sale. Only a buyer that takes possession 25
of the goods or has a right to recover the goods from the seller under Article 26
2 of this Chapter may be a buyer in ordinary course of business. "Buyer in 27
ordinary course of business" The term does not include a person that acquires 28
goods in a transfer in bulk or as security for or in total or partial satisfaction 29
of a money debt. 30
(10) "Conspicuous," with Conspicuous. – With reference to a term, means so 31
written, displayed, or presented that that, based on the totality of the 32
circumstances, a reasonable person against which it is to operate ought to have 33
noticed it. Whether a term is "conspicuous" or not is a decision for the court. 34
Conspicuous terms include the following: 35
a. A heading in capitals equal to or greater in size than the surrounding 36
text, or in contrasting type, font, or color to the surrounding text of the 37
same or lesser size; and 38
b. Language in the body of a record or display in larger type than the 39
surrounding text, or in contrasting type, font, or color to the 40
surrounding text of the same size, or set off from surrounding text of 41
the same size by symbols or other marks that call attention to the 42
language. 43
(11) "Consumer" means an Consumer. – An individual who enters into a 44
transaction primarily for personal, family, or household purposes. 45
(12) "Contract," as Contract. – As distinguished from "agreement," means the total 46
legal obligation that results from the parties' agreement as determined by this 47
Chapter as supplemented by any other applicable laws. 48
(13) "Creditor" includes Creditor. – Includes a general creditor, a secured creditor, 49
a lien creditor, and any representative of creditors, including an assignee for 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 63
the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an 1
executor or administrator of an insolvent debtor's or assignor's estate. 2
(14) "Defendant" includes Defendant. – Includes a person in the position of 3
defendant in a counterclaim, cross-claim, or third-party claim. 4
(15) "Delivery", with Delivery. – With respect to an electronic document of title 5
title, means voluntary transfer of control and with control. With respect to an 6
instrument, a tangible document of title, or an authoritative tangible copy of a 7
record evidencing chattel paper, the term means voluntary transfer of 8
possession. 9
(16) "Document of title" means a Document of title. – A record (i) that in the 10
regular course of business or financing is treated as adequately evidencing that 11
the person in possession or control of the record is entitled to receive, control, 12
hold, and dispose of the record and the goods the record covers and (ii) that 13
purports to be issued by or addressed to a bailee and to cover goods in the 14
bailee's possession which that are either identified or are fungible portions of 15
an identified mass. The term includes a bill of lading, transport document, 16
dock warrant, dock receipt, warehouse receipt, and order for delivery of 17
goods. An electronic document of title means a document of title evidenced 18
by a record consisting of information stored in an electronic medium. A 19
tangible document of title means a document of title evidenced by a record 20
consisting of information that is inscribed on a tangible medium. 21
(16a) Electronic. – Relating to technology having electrical, digital, magnetic, 22
wireless, optical, electromagnetic, or similar capabilities. 23
(17) "Fault" means a Fault. – A default, breach, or wrongful act or omission. 24
(18) "Fungible goods" means:Fungible goods. – Either of the following: 25
a. Goods of which any unit, by nature or usage of trade, are the equivalent 26
of any other like unit; orunit. 27
b. Goods that by agreement are treated as equivalent. 28
(19) "Genuine" means free Genuine. – Free of forgery or counterfeiting. 29
(20) "Good faith," except Good faith. – Except as otherwise provided in Article 5 30
of this Chapter, means honesty in fact and the observance of reasonable 31
commercial standards of fair dealing. 32
(21) "Holder" means:Holder. – Any of the following: 33
a. The person in possession of a negotiable instrument that is payable 34
either to bearer or to an identified person that is the person in 35
possession;possession. 36
b. The person in possession of a negotiable tangible document of title if 37
the goods are deliverable either to bearer or to the order of the person 38
in possession; orpossession. 39
c. The person in control control, other than pursuant to G.S. 25-7-106(g), 40
of a negotiable electronic document of title. 41
(22) "Insolvency proceeding" includes Insolvency proceeding. – Includes an 42
assignment for the benefit of creditors or other proceeding intended to 43
liquidate or rehabilitate the estate of the person involved. 44
(23) "Insolvent" means:Insolvent. – Any of the following: 45
a. Having generally ceased to pay debts in the ordinary course of 46
business other than as a result of bona fide dispute;dispute. 47
b. Being unable to pay debts as they become due; ordue. 48
c. Being insolvent within the meaning of federal bankruptcy law. 49
(24) "Money" means a Money. – A medium of exchange that is currently 50
authorized or adopted by a domestic or foreign government. The term includes 51 General Assembly Of North Carolina Session 2025
Page 64 Senate Bill 117-First Edition
a monetary unit of account established by an intergovernmental organization 1
or by agreement between two or more countries. The term does not include an 2
electronic record that is a medium of exchange recorded and transferable in a 3
system that existed and operated for the medium of exchange before the 4
medium of exchange was authorized or adopted by the government. 5
(25) "Organization" means a Organization. – A person other than an individual. 6
(26) "Party," as Party. – As distinguished from "third party," means a person that 7
has engaged in a transaction or made an agreement subject to this Chapter. 8
(27) "Person" means an Person. – An individual, corporation, business trust, estate, 9
trust, partnership, limited liability company, association, joint venture, 10
government, governmental subdivision, agency, or instrumentality, public 11
corporation, or any other legal or commercial entity. The term includes a 12
protected series, however denominated, of an entity if the protected series is 13
established under law other than this Chapter that limits, or limits if conditions 14
specified under the law are satisfied, the ability of a creditor of the entity or of 15
any other protected series of the entity to satisfy a claim from assets of the 16
protected series. 17
(28) "Present value" means the Present value. – The amount as of a date certain of 18
one or more sums payable in the future, discounted to the date certain by use 19
of either an interest rate specified by the parties if that rate is not manifestly 20
unreasonable at the time the transaction is entered into or, if an interest rate is 21
not so specified, a commercially reasonable rate that takes into account the 22
facts and circumstances at the time the transaction is entered into. 23
(29) "Purchase" means taking Purchase. – Taking by sale, lease, discount, 24
negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or 25
any other voluntary transaction creating an interest in property. 26
(30) "Purchaser" means a Purchaser. – A person that takes by purchase. 27
(31) "Record" means information Record. – Information that is inscribed on a 28
tangible medium or that is stored in an electronic or other medium and is 29
retrievable in perceivable form. 30
(32) "Remedy" means any Remedy. – Any remedial right to which an aggrieved 31
party is entitled with or without resort to a tribunal. 32
(33) "Representative" means a Representative. – A person empowered to act for 33
another, including an agent, an officer of a corporation or association, and a 34
trustee, executor, or administrator of an estate. 35
(34) "Right" includes Right. – Includes remedy. 36
(35) "Security interest" means an Security interest. – An interest in personal 37
property or fixtures which that secures payment or performance of an 38
obligation. "Security interest" The term includes any interest of a consignor 39
and a buyer of accounts, chattel paper, a payment intangible, or a promissory 40
note in a transaction that is subject to Article 9 of this Chapter. "Security 41
interest" The term does not include the special property interest of a buyer of 42
goods on identification of those goods to a contract for sale under 43
G.S. 25-2-401, but a buyer may also acquire a "security interest" by 44
complying with Article 9 of this Chapter. Except as otherwise provided in 45
G.S. 25-2-505, the right of a seller or lessor of goods under Article 2 or 2A of 46
this Chapter to retain or acquire possession of the goods is not a "security 47
interest," but a seller or lessor may also acquire a "security interest" by 48
complying with Article 9 of this Chapter. The retention or reservation of title 49
by a seller of goods notwithstanding shipment or delivery to the buyer under 50
G.S. 25-2-401 is limited in effect to a reservation of a "security interest." 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 65
Whether a transaction in the form of a lease creates a "security interest" is 1
determined pursuant to G.S. 25-1-203. 2
(36) "Send" in connection with a writing, record, or notice means:Send. – In 3
connection with a record or notification, means either of the following: 4
a. To deposit in the mail or mail, deliver for transmission transmission, 5
or transmit by any other usual means of communication 6
communication, with postage or cost of transmission provided for and 7
properly addressed and, in the case of an instrument, to an address 8
specified thereon or otherwise agreed, or if there be none for, 9
addressed to any address reasonable under the circumstances; 10
orcircumstances. 11
b. In any other way to cause to be received any record or notice within 12
the time it would have arrived if properly sent.To cause the record or 13
notification to be received within the time it would have been received 14
if properly sent under sub-subdivision a. of this subdivision. 15
(37) "Signed" includes using any symbol executed or adopted with present 16
intention to adopt or accept a writing.Sign. – With present intent to 17
authenticate or adopt a record, means either of the following: 18
a. Execute or adopt a tangible symbol. 19
b. Attach to or logically associate with the record an electronic symbol, 20
sound, or process. 21
"Signed," "signing," and "signature" have corresponding meanings. 22
(38) "State" means a State State. – A state of the United States, the District of 23
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 24
insular possession subject to the jurisdiction of the United States. 25
(39) "Surety" includes Surety. – Includes a guarantor or other secondary obligor. 26
(40) "Term" means a Term. – A portion of an agreement that relates to a particular 27
matter. 28
(41) "Unauthorized signature" means a Unauthorized signature. – A signature 29
made without actual, implied, or apparent authority. The term includes a 30
forgery. 31
(42) "Warehouse receipt" means a Warehouse receipt. – A document of title issued 32
by a person engaged in the business of storing goods for hire. 33
(43) "Writing" includes Writing. – Includes printing, typewriting, or any other 34
intentional reduction to tangible form. "Written" has a corresponding 35
meaning." 36
SECTION 53. G.S. 25-1-204 reads as rewritten: 37
"§ 25-1-204. Value. 38
Except as otherwise provided in Articles 3, 4, and 5 5, and 12, of this Chapter, a person gives 39
value for rights if the person acquires them:them in any of the following ways: 40
(1) In return for a binding commitment to extend credit or for the extension of 41
immediately available credit, whether or not drawn upon and whether or not 42
a charge-back is provided for in the event of difficulties in 43
collection;collection. 44
(2) As security for, or in total or partial satisfaction of, a preexisting claim;claim. 45
(3) By accepting delivery under a preexisting contract for purchase; orpurchase. 46
(4) In return for any consideration sufficient to support a simple contract." 47
SECTION 54. G.S. 25-1-301 reads as rewritten: 48
"§ 25-1-301. Territorial applicability; parties' power to choose applicable law. 49
(a) Except as otherwise provided in this section, when a transaction bears a reasonable 50
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
Page 66 Senate Bill 117-First Edition
of this State or of the other state or nation shall govern governs their rights and duties. Except as 1
otherwise provided in subsection (c) of this section, the parties to a business contract as defined 2
in G.S. 1G-2(1) may agree in the business contract that North Carolina law shall govern governs 3
their rights and duties in whole or in part, pursuant to G.S. 1G-3. 4
(b) In the absence of an agreement effective under subsection (a) of this section, and 5
except as provided in subsection (c) of this section, this Chapter applies to transactions bearing 6
an appropriate relation to this State. 7
(c) If one of the following provisions of this Chapter specifies the applicable law, that 8
provision governs and a contrary agreement is effective only to the extent permitted by the 9
specified law: 10
(1) G.S. 25-2-402;G.S. 25-2-402. 11
(2) G.S. 25-2A-105 and G.S. 25-2A-106;G.S. 25-2A-106. 12
(3) G.S. 25-4-102;G.S. 25-4-102. 13
(4) G.S. 25-4A-507;G.S. 25-4A-507. 14
(5) G.S. 25-5-116;G.S. 25-5-116. 15
(6) G.S. 25-8-110;G.S. 25-8-110. 16
(7) G.S. 25-9-301 through G.S. 25-9-307. 17
(8) G.S. 25-12-107." 18
SECTION 55. G.S. 25-1-306 reads as rewritten: 19
"§ 25-1-306. Waiver or renunciation of claim or right after breach. 20
A claim or right arising out of an alleged breach may be discharged in whole or in part without 21
consideration by agreement of the aggrieved party in an authenticated a signed record." 22
SECTION 56. In all sections of Articles 2 and 2A of Chapter 25 of the General 23
Statutes that are not amended by this act, the Revisor of Statutes shall redesignate subunits in 24
accordance with the General Statutes numbering system and shall make any necessary 25
conforming changes. 26
SECTION 57. G.S. 25-2-102 reads as rewritten: 27
"§ 25-2-102. Scope; certain security and other transactions excluded from this 28
article.Article. 29
Unless the context otherwise requires, this article applies to transactions in goods; it does not 30
apply to any transaction which although in the form of an unconditional contract to sell or present 31
sale is intended to operate only as a security transaction nor does this article impair or repeal any 32
statute regulating sales to consumers, farmers or other specified classes of buyers. 33
(a) Unless the context otherwise requires, and except as provided in subsection (c) of this 34
section, this Article applies to transactions in goods and, in the case of a hybrid transaction, it 35
applies to the extent provided in subsection (b) of this section. 36
(b) In a hybrid transaction, both of the following apply: 37
(1) If the sale-of-goods aspects do not predominate, only the provisions of this 38
Article that relate primarily to the sale-of-goods aspects of the transaction 39
apply, and the provisions that relate primarily to the transaction as a whole do 40
not apply. 41
(2) If the sale-of-goods aspects predominate, this Article applies to the transaction 42
but does not preclude application in appropriate circumstances of other law to 43
aspects of the transaction that do not relate to the sale of goods. 44
(c) This Article does not do either of the following: 45
(1) Apply to a transaction that, even though in the form of an unconditional 46
contract to sell or present sale, operates only to create a security interest. 47
(2) Impair or repeal a statute regulating sales to consumers, farmers, or other 48
specified classes of buyers." 49
SECTION 58. G.S. 25-2-103 reads as rewritten: 50
"§ 25-2-103. Definitions and index of definitions. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 67
(1)(a) In this article unless the context otherwise requiresArticle, the following definitions 1
apply: 2
(1) Acceptance. – Defined in G.S. 25-2-606. 3
(2) Banker's credit. – Defined in G.S. 25-2-325. 4
(3) Between merchants. – Defined in G.S. 25-2-104. 5
(a)(4) "Buyer" means a Buyer. – A person who that buys or contracts to buy goods. 6
(b) Repealed by Session Laws 2006-112, s. 2, effective October 1, 2006. 7
(5) Cancellation. – Defined in G.S. 25-2-106. 8
(6) Check. – Defined in G.S. 25-3-104. 9
(7) Commercial unit. – Defined in G.S. 25-2-105. 10
(8) Confirmed credit. – Defined in G.S. 25-2-325. 11
(9) Conforming to contract. – Defined in G.S. 25-2-106. 12
(10) Consignee. – Defined in G.S. 25-7-102. 13
(11) Consignor. – Defined in G.S. 25-7-102. 14
(12) Consumer goods. – Defined in G.S. 25-9-102. 15
(13) Contract for sale. – Defined in G.S. 25-2-106. 16
(14) Control. – Defined in G.S. 25-7-106. 17
(15) Cover. – Defined in G.S. 25-2-712. 18
(16) Dishonor. – Defined in G.S. 25-3-502. 19
(17) Draft. – Defined in G.S. 25-3-104. 20
(18) Entrusting. – Defined in G.S. 25-2-403. 21
(19) Financing agency. – Defined in G.S. 25-2-104. 22
(20) Future goods. – Defined in G.S. 25-2-105. 23
(21) Goods. – Defined in G.S. 25-2-105. 24
(22) Identification. – Defined in G.S. 25-2-501. 25
(23) Installment contract. – Defined in G.S. 25-2-612. 26
(24) Letter of credit. – Defined in G.S. 25-2-325. 27
(25) Lot. – Defined in G.S. 25-2-105. 28
(26) Merchant. – Defined in G.S. 25-2-104. 29
(27) Overseas. – Defined in G.S. 25-2-323. 30
(28) Person in position of seller. – Defined in G.S. 25-2-707. 31
(29) Present sale. – Defined in G.S. 25-2-106. 32
(c)(30) "Receipt" of goods means taking Receipt. – With respect to goods, means 33
taking physical possession of them.the goods. 34
(31) Sale. – Defined in G.S. 25-2-106. 35
(32) Sale on approval. – Defined in G.S. 25-2-326. 36
(33) Sale or return. – Defined in G.S. 25-2-326. 37
(d)(34) "Seller" means a Seller. – A person who that sells or contracts to sell goods. 38
Any manufacturer of self-propelled motor vehicles, as defined in 39
G.S. 20-4.01, is also a "seller" with respect to buyers of its product to whom 40
which it makes an express warranty, notwithstanding any lack of privity 41
between them, for purposes of all rights and remedies available to buyers 42
under this Article. 43
(35) Termination. – Defined in G.S. 25-2-106. 44
(2) Other definitions applying to this article or to specified parts thereof, and the sections 45
in which they appear are: 46
"Acceptance." G.S. 25-2-606. 47
"Banker's credit." G.S. 25-2-325. 48
"Between merchants." G.S. 25-2-104. 49
"Cancellation." G.S. 25-2-106 (4). 50
"Commercial unit." G.S. 25-2-105. 51 General Assembly Of North Carolina Session 2025
Page 68 Senate Bill 117-First Edition
"Confirmed credit." G.S. 25-2-325. 1
"Conforming to contract." G.S. 25-2-106. 2
"Contract for sale." G.S. 25-2-106. 3
"Cover." G.S. 25-2-712. 4
"Entrusting." G.S. 25-2-403. 5
"Financing agency." G.S. 25-2-104. 6
"Future goods." G.S. 25-2-105. 7
"Goods." G.S. 25-2-105. 8
"Identification." G.S. 25-2-501. 9
"Installment contract." G.S. 25-2-612. 10
"Letter of credit." G.S. 25-2-325. 11
"Lot." G.S. 25-2-105. 12
"Merchant." G.S. 25-2-104. 13
"Overseas." G.S. 25-2-323. 14
"Person in position of seller." G.S. 25-2-707. 15
"Present sale." G.S. 25-2-106. 16
"Sale." G.S. 25-2-106. 17
"Sale on approval." G.S. 25-2-326. 18
"Sale or return." G.S. 25-2-326. 19
"Termination." G.S. 25-2-106. 20
(3) "Control" as provided in G.S. 25-7-106 and the following definitions in other Articles 21
apply to this Article: 22
"Check" G.S. 25-3-104. 23
"Consignee" G.S. 25-7-102. 24
"Consignor" G.S. 25-7-102. 25
"Consumer Goods" G.S. 25-9-102. 26
"Dishonor" G.S. 25-3-502. 27
"Draft" G.S. 25-3-104. 28
(4)(b) In addition article 1 In addition, Article 1 of this Chapter contains general definitions 29
and principles of construction and interpretation applicable throughout this article.Article." 30
SECTION 59. G.S. 25-2-106 reads as rewritten: 31
"§ 25-2-106. Definitions: "Contract"; "agreement"; "contract for sale"; "sale"; "present 32
sale"; "layaway contract"; "conforming" to contract; "termination"; 33
"cancellation.""cancellation"; "hybrid transaction." 34
(1)(a) In this article unless the context otherwise requires Article, "contract" and 35
"agreement" are limited to those relating to the present or future sale of goods, including layaway 36
contracts. "Contract for sale" includes both a present sale of goods and a contract to sell goods at 37
a future time. A "sale" consists in the passing of title from the seller to the buyer for a price 38
(G.S. 25-2-401). A "present sale" means a sale which that is accomplished by the making of the 39
contract. A "layaway contract" means any contract for the sale of goods in which the seller agrees 40
with the purchaser, in consideration for the purchaser's payment of a deposit, down payment, or 41
similar initial payment, to hold identified goods for future delivery upon the purchaser's payment 42
of a specified additional amount, whether in installments or otherwise. 43
(2)(b) Goods or conduct including any part of a performance are "conforming" or conform 44
to the contract when they are in accordance with the obligations under the contract. 45
(3)(c) "Termination" occurs when either party pursuant to a power created by agreement or 46
law puts an end to the contract otherwise than for its breach. On "termination" "termination," all 47
obligations which that are still executory on both sides are discharged discharged, but any right 48
based on prior breach or performance survives. 49 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 69
(4)(d) "Cancellation" occurs when either party puts an end to the contract for breach by the 1
other and its effect is the same as that of "termination" except that the cancelling party also retains 2
any remedy for breach of the whole contract or any unperformed balance. 3
(e) "Hybrid transaction" means a single transaction involving a sale of goods and any of 4
the following: 5
(1) The provision of services. 6
(2) A lease of other goods. 7
(3) A sale, lease, or license of property other than goods." 8
SECTION 60. G.S. 25-2-201 reads as rewritten: 9
"§ 25-2-201. Formal requirements; statute of frauds. 10
(1)(a) Except as otherwise provided in this section section, a contract for the sale of goods 11
for the price of five hundred dollars ($500.00) or more is not enforceable by way of action or 12
defense unless there is some writing a record sufficient to indicate that a contract for sale has 13
been made between the parties and signed by the party against whom enforcement is sought or 14
by his the party's authorized agent or broker. A writing record is not insufficient because it omits 15
or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph 16
subsection beyond the quantity of goods shown in such writing.the record. 17
(2)(b) Between merchants merchants, if within a reasonable time a writing record in 18
confirmation of the contract and sufficient against the sender is received and the party receiving 19
it has reason to know its contents, it the record satisfies the requirements of subsection (1) (a) of 20
this section against such the party unless written notice in a record of objection to its contents is 21
given within ten 10 days after it is received. 22
(3)(c) A All of the following apply to a contract which that does not satisfy the requirements 23
of subsection (1) (a) of this section but which that is valid in other respects is enforceablerespects: 24
(a)(1) The contract is enforceable if the goods are to be specially manufactured for 25
the buyer and are not suitable for sale to others in the ordinary course of the 26
seller's business and the seller, before notice of repudiation is received and 27
under circumstances which that reasonably indicate that the goods are for the 28
buyer, has made either a substantial beginning of their manufacture or 29
commitments for their procurement; orprocurement. 30
(b)(2) The contract is enforceable if the party against whom which enforcement is 31
sought admits in his the party's pleading, testimony testimony, or otherwise in 32
court that a contract for sale was made, but the contract is not enforceable 33
under this provision subdivision beyond the quantity of goods admitted; 34
oradmitted. 35
(c)(3) The contract is enforceable with respect to goods for which payment has been 36
made and accepted or which that have been received and accepted 37
(G.S. 25-2-606)." 38
SECTION 61. G.S. 25-2-202 reads as rewritten: 39
"§ 25-2-202. Final written expression; parol or extrinsic evidence. 40
Terms with respect to which the confirmatory memoranda of the parties agree or which that 41
are otherwise set forth in a writing record intended by the parties as a final expression of their 42
agreement with respect to such terms as are included therein may the terms included in it shall 43
not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement 44
but may be explained or supplementedsupplemented by the following: 45
(a)(1) by By course of dealing or usage of trade (G.S. 25-1-205) or by course of 46
performance (G.S. 25-2-208); and(G.S. 25-2-208). 47
(b)(2) by By evidence of consistent additional terms unless the court finds the 48
writing record to have been intended also as a complete and exclusive 49
statement of the terms of the agreement." 50
SECTION 62. G.S. 25-2-203 reads as rewritten: 51 General Assembly Of North Carolina Session 2025
Page 70 Senate Bill 117-First Edition
"§ 25-2-203. Seals inoperative. 1
The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy or 2
sell goods does not constitute the writing render the record a sealed instrument instrument, and 3
the law with respect to sealed instruments does not apply to such a the contract or offer." 4
SECTION 63. G.S. 25-2-205 reads as rewritten: 5
"§ 25-2-205. Firm offers. 6
An offer by a merchant to buy or sell goods in a signed writing which record that by its terms 7
gives assurance that it will be held open is not revocable, for lack of consideration, during the 8
time stated or if no time is stated for a reasonable time, but in no event may such shall the period 9
of irrevocability exceed three months; but any such the term of assurance on a form supplied by 10
the offeree must shall be separately signed by the offeror." 11
SECTION 64. G.S. 25-2-209 reads as rewritten: 12
"§ 25-2-209. Modification, rescission rescission, and waiver. 13
(1)(a) An agreement modifying a contract within this article Article needs no consideration 14
to be binding. 15
(2)(b) A signed agreement which that excludes modification or rescission except by a signed 16
writing or other signed record cannot be otherwise modified or rescinded, but except as between 17
merchants such a this requirement on a form supplied by the merchant must be separately signed 18
by the other party. 19
(3)(c) The requirements of the statute of frauds section of this article Article (G.S. 25-2-201) 20
must be satisfied if the contract as modified is within its provisions. 21
(4)(d) Although an attempt at modification or rescission does not satisfy the requirements 22
of subsection (2) or (3) (b) or (c) of this section, it can operate as a waiver. 23
(5)(e) A party who that has made a waiver affecting an executory portion of the contract 24
may retract the waiver by reasonable notification received by the other party that strict 25
performance will be required of any term waived, unless the retraction would be unjust in view 26
of a material change of position in reliance on the waiver." 27
SECTION 65. G.S. 25-2A-102 reads as rewritten: 28
"§ 25-2A-102. Scope. 29
(a) This Article applies to any transaction, regardless of form, that creates a lease.lease 30
and, in the case of a hybrid lease, it applies to the extent provided in subsection (b) of this section. 31
(b) In a hybrid lease, both of the following apply: 32
(1) If the lease-of-goods aspects do not predominate, all of the following apply: 33
a. Only the provisions of this Article that relate primarily to the 34
lease-of-goods aspects of the transaction apply, and the provisions of 35
this Article that relate primarily to the transaction as a whole do not 36
apply. 37
b. G.S. 25-2A-209 applies if the lease is a finance lease. 38
c. G.S. 25-2A-407 applies to the promises of the lessee in a finance lease 39
to the extent the promises are consideration for the right to possession 40
and use of the leased goods. 41
(2) If the lease-of-goods aspects predominate, this Article applies to the 42
transaction but does not preclude application in appropriate circumstances of 43
other law to aspects of the lease that do not relate to the lease of goods." 44
SECTION 66. G.S. 25-2A-103 reads as rewritten: 45
"§ 25-2A-103. Definitions and index of definitions. 46
(1)(a) In this Article unless the context otherwise requires:Article, the following definitions 47
apply: 48
(1) Accessions. – Defined in G.S. 25-2A-310. 49
(2) Account. – Defined in G.S. 25-9-102. 50
(3) Between merchants. – Defined in G.S. 25-2-104. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 71
(4) Buyer. – Defined in G.S. 25-2-103. 1
(a)(5) "Buyer in ordinary course of business" means a Buyer in ordinary course of 2
business. – A person who, that, in good faith and without knowledge that the 3
sale to him the person is in violation of the ownership rights or security interest 4
or leasehold interest of a third party in the goods, buys in ordinary course from 5
a person person, other than a pawnbroker, in the business of selling goods of 6
that kind but does not include a pawnbroker. kind. "Buying" may be for cash 7
or by exchange of other property or on secured or unsecured credit and 8
includes acquiring goods or documents of title under a preexisting contract for 9
sale but does not include a transfer in bulk or as security for or in total or 10
partial satisfaction of a money debt. 11
(b)(6) "Cancellation" occurs Cancellation. – Occurs when either party puts an end to 12
the lease contract for default by the other party. 13
(7) Chattel paper. – Defined in G.S. 25-9-102. 14
(c)(8) "Commercial unit" means such a Commercial unit. – A unit of goods as that 15
by commercial usage is a single whole for purposes of lease and the division 16
of which materially impairs its character or value on the market or in use. A 17
commercial unit may be a single article, as a machine, or a set of articles, as a 18
suite of furniture or a line of machinery, or a quantity, as a gross or carload, 19
or any other unit treated in use or in the relevant market as a single whole. 20
(d)(9) "Conforming" goods or performance under a lease contract Conforming. – 21
With respect to goods or performance under a lease contract, means goods or 22
performance that are in accordance with the obligations under the lease 23
contract. 24
(10) Construction mortgage. – Defined in G.S. 25-2A-309. 25
(11) Consumer goods. – Defined in G.S. 25-9-102. 26
(e)(12) "Consumer lease" means a Consumer lease. – A lease that a lessor regularly 27
engaged in the business of leasing or selling makes to a lessee who is an 28
individual and who takes under the lease primarily for a personal, family, or 29
household purpose, if the total payments to be made under the lease contract, 30
excluding payments for options to renew or buy, do not exceed twenty-five 31
thousand dollars ($25,000). 32
(13) Document. – Defined in G.S. 25-9-102. 33
(14) Encumbrance. – Defined in G.S. 25-2A-309. 34
(15) Entrusting. – Defined in G.S. 25-2-403. 35
(f)(16) "Fault" means wrongful Fault. – Wrongful act, omission, breach, or default. 36
(g)(17) "Finance lease" means a Finance lease. – A lease with respect to which: which 37
(i) the lessor does not select, manufacture, or supply the goods; (ii) the lessor 38
acquires the goods or the right to possession and use of the goods in 39
connection with the lease; and (iii) one of the following occurs: 40
(A)a. the The lessee receives a copy of the contract by which the lessor 41
acquired the goods or the right to possession and use of the goods 42
before signing the lease contract;contract. 43
(B)b. the The lessee's approval of the contract by which the lessor acquired 44
the goods or the right to possession and use of the goods is a condition 45
to effectiveness of the lease contract;contract. 46
(C)c. the The lessee, before signing the lease contract, receives an accurate 47
and complete statement designating the promises and warranties, and 48
any disclaimers of warranties, limitations or modifications of 49
remedies, or liquidated damages, including those of a third party, such 50
as the manufacturer of the goods, provided to the lessor by the person 51 General Assembly Of North Carolina Session 2025
Page 72 Senate Bill 117-First Edition
supplying the goods in connection with or as part of the contract by 1
which the lessor acquired the goods or the right to possession and use 2
of the goods; orgoods. 3
(D)d. if If the lease is not a consumer lease, the lessor, before the lessee signs 4
the lease contract, informs the lessee in writing (a) (i) of the identity 5
of the person supplying the goods to the lessor, unless the lessee has 6
selected that person and directed the lessor to acquire the goods or the 7
right to possession and use of the goods from that person, (b) (ii) that 8
the lessee is entitled under this Article to the promises and warranties, 9
including those of any third party, provided to the lessor by the person 10
supplying the goods in connection with or as part of the contract by 11
which the lessor acquired the goods or the right to possession and use 12
of the goods, and (c) (iii) that the lessee may communicate with the 13
person supplying the goods to the lessor and receive an accurate and 14
complete statement of those promises and warranties, including any 15
disclaimers and limitations of them or of remedies. 16
(18) Fixture filing. – Defined in G.S. 25-2A-309. 17
(19) Fixtures. – Defined in G.S. 25-2A-309. 18
(20) General intangible. – Defined in G.S. 25-9-102. 19
(h)(21) "Goods" means all Goods. – All things that are movable at the time of 20
identification to the lease contract, or are fixtures (G.S. 25-2A-309), but the 21
term does not include money, documents, instruments, accounts, chattel 22
paper, general intangibles, or minerals or the like, including oil and gas, before 23
extraction. The term also includes the unborn young of animals. 24
(22) Hybrid lease. – A single transaction involving a lease of goods and any of the 25
following: 26
a. The provision of services. 27
b. A sale of other goods. 28
c. A sale, lease, or license of property other than goods. 29
(i)(23) "Installment lease contract" means a Installment lease contract. – A lease 30
contract that authorizes or requires the delivery of goods in separate lots to be 31
separately accepted, even though the lease contract contains a clause "each 32
delivery is a separate lease" or its equivalent. 33
(24) Instrument. – Defined in G.S. 25-9-102. 34
(j)(25) "Lease" means a Lease. – A transfer of the right to possession and use of goods 35
for a term in return for consideration, but a sale, including a sale on approval 36
or a sale or return, or retention or creation of a security interest is not a lease. 37
Unless the context clearly indicates otherwise, the term includes a sublease. 38
The term includes a motor vehicle operating agreement that is considered a 39
lease under § section 7701(h) of the Internal Revenue Code. 40
(k)(26) "Lease agreement" means the Lease agreement. – The bargain, with respect 41
to the lease, of the lessor and the lessee in fact as found in their language or 42
by implication from other circumstances including course of dealing or usage 43
of trade or course of performance as provided in this Article. Unless the 44
context clearly indicates otherwise, the term includes a sublease agreement. 45
(l)(27) "Lease contract" means the Lease contract. – The total legal obligation that 46
results from the lease agreement as affected by this Article and any other 47
applicable rules of law. Unless the context clearly indicates otherwise, the 48
term includes a sublease contract. 49
(m)(28) "Leasehold interest" means the Leasehold interest. – The interest of the 50
lessor or the lessee under a lease contract. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 73
(n)(29) "Lessee" means a Lessee. – A person who that acquires the right to possession 1
and use of goods under a lease. Unless the context clearly indicates otherwise, 2
the term includes a sublessee. 3
(o)(30) "Lessee in ordinary course of business" means a Lessee in ordinary course of 4
business. – A person who, that, in good faith and without knowledge that the 5
lease to him the person is in violation of the ownership rights or security 6
interest or leasehold interest of a third party in the goods, leases in ordinary 7
course from a person person, other than a pawnbroker, in the business of 8
selling or leasing goods of that kind but does not include a pawnbroker. kind. 9
"Leasing" may be for cash or by exchange of other property or on secured or 10
unsecured credit and includes acquiring goods or documents of title under a 11
preexisting lease contract but does not include a transfer in bulk or as security 12
for or in total or partial satisfaction of a money debt. 13
(p)(31) "Lessor" means a Lessor. – A person who that transfers the right to possession 14
and use of goods under a lease. Unless the context clearly indicates otherwise, 15
the term includes a sublessor. 16
(q)(32) "Lessor's residual interest" means the Lessor's residual interest. – The lessor's 17
interest in the goods after expiration, termination, or cancellation of the lease 18
contract. 19
(r)(33) "Lien" means a Lien. – A charge against or interest in goods to secure payment 20
of a debt or performance of an obligation, but the term does not include a 21
security interest. 22
(s)(34) "Lot" means a Lot. – A parcel or a single article that is the subject matter of a 23
separate lease or delivery, whether or not it is sufficient to perform the lease 24
contract. 25
(35) Merchant. – Defined in G.S. 25-2-104. 26
(t)(36) "Merchant lessee" means a Merchant lessee. – A lessee that is a merchant with 27
respect to goods of the kind subject to the lease. 28
(37) Mortgage. – Defined in G.S. 25-9-102. 29
(u)(38) "Present value" means the Present value. – The amount as of a date certain of 30
one or more sums payable in the future, discounted to the date certain. The 31
discount is determined by the interest rate specified by the parties if the rate 32
was not manifestly unreasonable at the time the transaction was entered into; 33
otherwise, the discount is determined by a commercially reasonable rate that 34
takes into account the facts and circumstances of each case at the time the 35
transaction was entered into. 36
(v)(39) "Purchase" includes Purchase. – Includes taking by sale, lease, mortgage, 37
security interest, pledge, gift, or any other voluntary transaction creating an 38
interest in goods. 39
(40) Purchase money lease. – Defined in G.S. 25-2A-309. 40
(41) Pursuant to commitment. – Defined in G.S. 25-9-102. 41
(42) Receipt. – Defined in G.S. 25-2-103. 42
(43) Sale. – Defined in G.S. 25-2-106. 43
(44) Sale on approval. – Defined in G.S. 25-2-326. 44
(45) Sale or return. – Defined in G.S. 25-2-326. 45
(46) Seller. – Defined in G.S. 25-2-103. 46
(w)(47) "Sublease" means a Sublease. – A lease of goods the right to possession 47
and use of which was acquired by the lessor as a lessee under an existing lease. 48
(x)(48) "Supplier" means a Supplier. – A person from whom which a lessor buys or 49
leases goods to be leased under a finance lease. 50 General Assembly Of North Carolina Session 2025
Page 74 Senate Bill 117-First Edition
(y)(49) "Supply contract" means a Supply contract. – A contract under which a lessor 1
buys or leases goods to be leased. 2
(z)(50) "Termination" occurs Termination. – Occurs when either party pursuant to a 3
power created by agreement or law puts an end to the lease contract otherwise 4
than for default. 5
(2) Other definitions applying to this Article and the sections in which they appear are: 6
"Accessions". G.S. 25-2A-310(1). 7
"Construction mortgage". G.S. 25-2A-309(1)(d). 8
"Encumbrance". G.S. 25-2A-309(1)(e). 9
"Fixtures". G.S. 25-2A-309(1)(a). 10
"Fixture filing". G.S. 25-2A-309(1)(b). 11
"Purchase money lease". G.S. 25-2A-309(1)(c). 12
(3) The following definitions in other Articles apply to this Article: 13
"Account" G.S. 25-9-102(a)(2). 14
"Between merchants" G.S. 25-2-104(3). 15
"Buyer" G.S. 25-2-103(1)(a). 16
"Chattel paper" G.S. 25-9-102(a)(11). 17
"Consumer goods" G.S. 25-9-102(a)(23). 18
"Document" G.S. 25-9-102(a)(30). 19
"Entrusting" G.S. 25-2-403(3). 20
"General intangible" G.S. 25-9-102(a)(42). 21
"Instrument" G.S. 25-9-102(a)(47). 22
"Merchant" G.S. 25-2-104(1). 23
"Mortgage" G.S. 25-9-102(a)(55). 24
"Pursuant to commitment" G.S. 25-9-102(a)(68). 25
"Receipt" G.S. 25-2-103(1)(c). 26
"Sale" G.S. 25-2-106(1). 27
"Sale on approval" G.S. 25-2-326. 28
"Sale or return" G.S. 25-2-326. 29
"Seller" G.S. 25-2-103(1)(d). 30
(4)(b) In addition, Article 1 of this Chapter contains general definitions and principles of 31
construction and interpretation applicable throughout this Article." 32
SECTION 67. G.S. 25-2A-107 reads as rewritten: 33
"§ 25-2A-107. Waiver or renunciation of claim or right after default. 34
Any claim or right arising out of an alleged default or breach of warranty may be discharged 35
in whole or in part without consideration by a written waiver or renunciation in a signed and 36
record delivered by the aggrieved party." 37
SECTION 68. G.S. 25-2A-201 reads as rewritten: 38
"§ 25-2A-201. Statute of frauds. 39
(1)(a) A lease contract is not enforceable by way of action or defense unless:unless either of 40
the following applies: 41
(a)(1) the The total payments to be made under the lease contract, excluding 42
payments for options to renew or buy, are less than one thousand dollars 43
($1,000); or($1,000). 44
(b)(2) there There is a writing, record, signed by the party against whom which 45
enforcement is sought or by that party's authorized agent, sufficient to indicate 46
that a lease contract has been made between the parties and to describe the 47
goods leased and the lease term. 48
(2)(b) Any description of leased goods or of the lease term is sufficient and satisfies 49
subsection (1)(b) subdivision (a)(2) of this section, whether or not it is specific, if it reasonably 50
identifies what is described. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 75
(3)(c) A writing record is not insufficient because it omits or incorrectly states a term agreed 1
upon, but the lease contract is not enforceable under subsection (1)(b) subdivision (a)(2) of this 2
section beyond the lease term and the quantity of goods shown in the writing.record. 3
(4)(d) A All of the following apply to a lease contract that does not satisfy the requirements 4
of subsection (1) (a) of this section, but which that is valid in other respects, is 5
enforceable:respects: 6
(a)(1) The contract is enforceable if the goods are to be specially manufactured or 7
obtained for the lessee and are not suitable for lease or sale to others in the 8
ordinary course of the lessor's business, and the lessor, before notice of 9
repudiation is received and under circumstances that reasonably indicate that 10
the goods are for the lessee, has made either a substantial beginning of their 11
manufacture or commitments for their procurement;procurement. 12
(b)(2) The contract is enforceable if the party against whom which enforcement is 13
sought admits in that party's pleading, testimony, or otherwise in court that a 14
lease contract was made, but the lease contract is not enforceable under this 15
provision subdivision beyond the quantity of goods admitted; oradmitted. 16
(c)(3) The contract is enforceable with respect to goods that have been received and 17
accepted by the lessee. 18
(5)(e) The lease term under a lease contract referred to in subsection (4) (d) of this section 19
is:is as follows: 20
(a)(1) if If there is a writing record signed by the party against whom which 21
enforcement is sought or by that party's authorized agent specifying the lease 22
term, the term so specified;specified. 23
(b)(2) if If the party against whom which enforcement is sought admits in that party's 24
pleading, testimony, or otherwise in court a lease term, the term so 25
admitted;admitted. 26
(c)(3) if If there is other evidence of the parties' intent with regard to the lease term, 27
the term so intended; orintended. 28
(d)(4) in In the absence of evidence of the parties' intent, a reasonable lease term." 29
SECTION 69. G.S. 25-2A-202 reads as rewritten: 30
"§ 25-2A-202. Final written expression: parol or extrinsic evidence. 31
Terms with respect to which the confirmatory memoranda of the parties agree or which are 32
otherwise set forth in a writing record intended by the parties as a final expression of their 33
agreement with respect to such terms as are included therein may the terms included in it shall 34
not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement 35
but may be explained or supplemented:supplemented by the following: 36
(a)(1) by By course of dealing or usage of trade or by course of performance; 37
andperformance. 38
(b)(2) by By evidence of consistent additional terms unless the court finds the 39
writing record to have been intended also as a complete and exclusive 40
statement of the terms of the agreement." 41
SECTION 70. G.S. 25-2A-203 reads as rewritten: 42
"§ 25-2A-203. Seals inoperative. 43
The affixing of a seal to a writing record evidencing a lease contract or an offer to enter into 44
a lease contract does not render the writing record a sealed instrument instrument, and the law 45
with respect to sealed instruments does not apply to the lease contract or offer." 46
SECTION 71. G.S. 25-2A-205 reads as rewritten: 47
"§ 25-2A-205. Firm offers. 48
An offer by a merchant to lease goods to or from another person in a signed writing record 49
that by its terms gives assurance it will be held open is not revocable, for lack of consideration, 50
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
Page 76 Senate Bill 117-First Edition
period of irrevocability exceed three months. Any such The term of assurance on a form supplied 1
by the offeree must shall be separately signed by the offeror." 2
SECTION 72. G.S. 25-2A-208 reads as rewritten: 3
"§ 25-2A-208. Modification, rescission rescission, and waiver. 4
(1)(a) An agreement modifying a lease contract needs no consideration to be binding. 5
(2)(b) A signed lease agreement that excludes modification or rescission except by a signed 6
writing may record shall not be otherwise modified or rescinded, but, except as between 7
merchants, such a this requirement on a form supplied by a merchant must shall be separately 8
signed by the other party. 9
(3)(c) Although an attempt at modification or rescission does not satisfy the requirements 10
of subsection (2) (b) of this section, it may operate as a waiver. 11
(4)(d) A party who that has made a waiver affecting an executory portion of a lease contract 12
may retract the waiver by reasonable notification received by the other party that strict 13
performance will be required of any term waived, unless the retraction would be unjust in view 14
of a material change of position in reliance on the waiver." 15
SECTION 73. G.S. 25-3-104 reads as rewritten: 16
"§ 25-3-104. Negotiable instrument. 17
(a) Except as provided in subsections (c) and (d) of this section, "negotiable instrument" 18
means an unconditional promise or order to pay a fixed amount of money, with or without interest 19
or other charges described in the promise or order, if it:all of the following apply: 20
(1) Is The promise or order is payable to bearer or to order at the time it is issued 21
or first comes into possession of a holder;holder. 22
(2) Is The promise or order is payable on demand or at a definite time; andtime. 23
(3) Does The promise or order does not state any other undertaking or instruction 24
by the person promising or ordering payment to do any act in addition to the 25
payment of money, but the promise or order may contain (i) an undertaking 26
or power to give, maintain, or protect collateral to secure payment, (ii) an 27
authorization or power to the holder to confess judgment or realize on or 28
dispose of collateral, or (iii) a waiver of the benefit of any law intended for 29
the advantage or protection of an obligor.obligor, (iv) a term that specifies the 30
law that governs the promise or order, or (v) an undertaking to resolve in a 31
specified forum a dispute concerning the promise or order. 32
(b) "Instrument" means a negotiable instrument. 33
(c) An order that meets all of the requirements of subsection (a) of this section, except 34
subdivision (1), (1) of that subsection, and otherwise falls within the definition of "check" in 35
subsection (f) of this section is a negotiable instrument and a check. 36
(d) A promise or order other than a check is not an instrument if, at the time it is issued 37
or first comes into possession of a holder, it contains a conspicuous statement, however 38
expressed, to the effect that the promise or order is not negotiable or is not an instrument governed 39
by this Article. 40
(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an 41
instrument falls within the definition of both "note" and "draft", "draft," a person entitled to 42
enforce the instrument may treat it as either. 43
(f) "Check" means (i) a draft, other than a documentary draft, payable on demand and 44
drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even 45
though it is described on its face by another term, such as "money order".order." 46
…." 47
SECTION 74. G.S. 25-3-105 reads as rewritten: 48
"§ 25-3-105. Issue of instrument. 49
(a) "Issue" means means either of the following: 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 77
(1) the The first delivery of an instrument by the maker or drawer, whether to a 1
holder or nonholder, for the purpose of giving rights on the instrument to any 2
person. 3
(2) If agreed by the payee, the first transmission by the drawer to the payee of an 4
image of an item and information derived from the item that enables the 5
depositary bank to collect the item by transferring or presenting under federal 6
law an electronic check. 7
(b) An unissued instrument, or an unissued incomplete instrument that is completed, is 8
binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally 9
issued or is issued for a special purpose is binding on the maker or drawer, but failure of the 10
condition or special purpose to be fulfilled is a defense. 11
(c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of 12
an instrument." 13
SECTION 75. G.S. 25-3-401 reads as rewritten: 14
"§ 25-3-401. Signature.Signature necessary for liability on instrument. 15
(a) A person is not liable on an instrument unless (i) the person signed the instrument, or 16
(ii) the person is represented by an agent or representative who signed the instrument and the 17
signature is binding on the represented person under G.S. 25-3-402. 18
(b) A signature may be made (i) manually or by means of a device or machine, and (ii) 19
by the use of any name, including a trade or assumed name, or by a word, mark, or symbol 20
executed or adopted by a person with present intention to authenticate a writing." 21
SECTION 76. G.S. 25-3-604 reads as rewritten: 22
"§ 25-3-604. Discharge by cancellation or renunciation. 23
(a) A person entitled to enforce an instrument, with or without consideration, may 24
discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such 25
as surrender of the instrument to the party, destruction, mutilation, or cancellation of the 26
instrument, cancellation or striking out of the party's signature, or the addition of words to the 27
instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights 28
against the party by a signed writing. The obligation of a party to pay a check is not discharged 29
solely by destruction of the check in connection with a process in which information is extracted 30
from the check and an image of the check is made and, subsequently, the information and image 31
are transmitted for payment. 32
(b) Cancellation or striking out of an endorsement indorsement pursuant to subsection (a) 33
of this section does not affect the status and rights of a party derived from the indorsement." 34
SECTION 77.(a) Subdivision (a)(1) of G.S. 25-4A-103 is recodified as subdivision 35
(a)(3a) of that section. 36
SECTION 77.(b) G.S. 25-4A-103, as amended by subsection (a) of this section, 37
reads as rewritten: 38
"§ 25-4A-103. Payment order – definitions. 39
(a) In this Article:Article, the following definitions apply: 40
(1) Recodified. 41
(2) "Beneficiary" means the Beneficiary. – The person to be paid by the 42
beneficiary's bank. 43
(3) "Beneficiary's bank" means the Beneficiary's bank. – The bank identified in a 44
payment order in which an account of the beneficiary is to be credited pursuant 45
to the order or which that otherwise is to make payment to the beneficiary if 46
the order does not provide for payment to an account. 47
(3a) "Payment order" means an Payment order. – An instruction of a sender to a 48
receiving bank, transmitted orally, electronically, or in writing, orally or in a 49
record, to pay, or to cause another bank to pay, a fixed or determinable amount 50
of money to a beneficiary if:if all of the following apply: 51 General Assembly Of North Carolina Session 2025
Page 78 Senate Bill 117-First Edition
(i)a. The instruction does not state a condition of payment to the beneficiary 1
other than time of payment,payment. 2
(ii)b. The receiving bank is to be reimbursed by debiting an account of, or 3
otherwise receiving payment from, the sender, andsender. 4
(iii)c. The instruction is transmitted by the sender directly to the receiving 5
bank or to an agent, funds-transfer system, or communication system 6
for transmittal to the receiving bank. 7
(4) "Receiving bank" means the Receiving bank. – The bank to which the sender's 8
instruction is addressed. 9
(5) "Sender" means the Sender. – The person giving the instruction to the 10
receiving bank. 11
(b) If an instruction complying with subsection (a)(1) subdivision (a)(3a) of this section 12
is to make more than one payment to a beneficiary, the instruction is a separate payment order 13
with respect to each payment. 14
(c) A payment order is issued when it is sent to the receiving bank." 15
SECTION 78. G.S. 25-4A-201 reads as rewritten: 16
"§ 25-4A-201. Security procedure. 17
"Security procedure" means a procedure established by agreement of a customer and a 18
receiving bank for the purpose of (i) verifying that a payment order or communication amending 19
or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission 20
or the content of the payment order or communication. A security procedure may impose an 21
obligation on the receiving bank or the customer and may require the use of algorithms or other 22
codes, identifying words or words, numbers, symbols, sounds, biometrics, encryption, call-back 23
procedures, or similar security devices. Comparison of a signature on a payment order or 24
communication with an authorized specimen signature of the customer or requiring a payment 25
order to be sent from a known email address, IP address, or telephone number is not by itself a 26
security procedure." 27
SECTION 79. G.S. 25-4A-202 reads as rewritten: 28
"§ 25-4A-202. Authorized and verified payment orders. 29
(a) A payment order received by the receiving bank is the authorized order of the person 30
identified as sender if that person authorized the order or is otherwise bound by it under the law 31
of agency. 32
(b) If a bank and its customer have agreed that the authenticity of payment orders issued 33
to the bank in the name of the customer as sender will be verified pursuant to a security procedure, 34
a payment order received by the receiving bank is effective as the order of the customer, whether 35
or not authorized, if (i) the security procedure is a commercially reasonable method of providing 36
security against unauthorized payment orders, and (ii) the bank proves that it accepted the 37
payment order in good faith and in compliance with the bank's obligations under the security 38
procedure and any written agreement or instruction of the customer customer, evidenced by a 39
record, restricting acceptance of payment orders issued in the name of the customer. The bank is 40
not required to follow an instruction that violates a written an agreement with the customer 41
customer, evidenced by a record, or notice of which is not received at a time and in a manner 42
affording the bank a reasonable opportunity to act on it before the payment order is accepted. 43
(c) Commercial reasonableness of a security procedure is a question of law to be 44
determined by considering the wishes of the customer expressed to the bank, the circumstances 45
of the customer known to the bank, including the size, type, and frequency of payment orders 46
normally issued by the customer to the bank, alternative security procedures offered to the 47
customer, and security procedures in general use by customers and receiving banks similarly 48
situated. A security procedure is deemed to be commercially reasonable if (i) the security 49
procedure was chosen by the customer after the bank offered, and the customer refused, a security 50
procedure that was commercially reasonable for that customer, and (ii) the customer expressly 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 79
agreed in writing a record to be bound by any payment order, whether or not authorized, issued 1
in its name and accepted by the bank in compliance with the bank's obligations under the security 2
procedure chosen by the customer. 3
(d) The term "sender" in this Article includes the customer in whose name a payment 4
order is issued if the order is the authorized order of the customer under subsection (a), or it 5
subsection (a) of this section or if the order is effective as the order of the customer under 6
subsection (b).(b) of this section. 7
(e) This section applies to amendments and cancellations of payment orders to the same 8
extent it applies to payment orders. 9
(f) Except as provided in this section and in G.S. 25-4A-203(a)(1), rights and obligations 10
arising under this section or G.S. 25-4A-203 may shall not be varied by agreement." 11
SECTION 80. G.S. 25-4A-203 reads as rewritten: 12
"§ 25-4A-203. Unenforceability of certain verified payment orders. 13
(a) If an accepted payment order is not, under G.S. 25-4A-202(a), an authorized order of 14
a customer identified as sender, sender but is effective as an order of the customer pursuant to 15
G.S. 25-4A-202(b), the following rules apply: 16
(1) By express written agreement, agreement evidenced by a record, the receiving 17
bank may limit the extent to which it is entitled to enforce or retain payment 18
of the payment order. 19
(2) The receiving bank is not entitled to enforce or retain payment of the payment 20
order if the customer proves that the order was not caused, directly or 21
indirectly, by a person (i) entrusted at any time with duties to act for the 22
customer with respect to payment orders or the security procedure, or (ii) who 23
that obtained access to transmitting facilities of the customer or who that 24
obtained, from a source controlled by the customer and without authority of 25
the receiving bank, information facilitating breach of the security procedure, 26
regardless of how the information was obtained or whether the customer was 27
at fault. Information includes any access device, computer software, or the 28
like. 29
(b) This section applies to amendments of payment orders to the same extent it applies to 30
payment orders." 31
SECTION 81. G.S. 25-4A-207 reads as rewritten: 32
"§ 25-4A-207. Misdescription of beneficiary. 33
(a) Subject to subsection (b), (b) of this section, if, in a payment order received by the 34
beneficiary's bank, the name, bank account number, or other identification of the beneficiary 35
refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary 36
of the order and acceptance of the order cannot occur. 37
(b) If a payment order received by the beneficiary's bank identifies the beneficiary both 38
by name and by an identifying or bank account number and the name and number identify 39
different persons, the following rules apply: 40
(1) Except as otherwise provided in subsection (c), (c) of this section, if the 41
beneficiary's bank does not know that the name and number refer to different 42
persons, it may rely on the number as the proper identification of the 43
beneficiary of the order. The beneficiary's bank need not determine whether 44
the name and number refer to the same person. 45
(2) If the beneficiary's bank pays the person identified by name or knows that the 46
name and number identify different persons, no person has rights as 47
beneficiary except the person paid by the beneficiary's bank if that person was 48
entitled to receive payment from the originator of the funds transfer. If no 49
person has rights as beneficiary, acceptance of the order cannot occur. 50 General Assembly Of North Carolina Session 2025
Page 80 Senate Bill 117-First Edition
(c) If (i) a payment order described in subsection (b) of this section is accepted, (ii) the 1
originator's payment order described the beneficiary inconsistently by name and number, and 2
(iii) the beneficiary's bank pays the person identified by number as permitted by subsection 3
(b)(1), subdivision (b)(1) of this section, the following rules apply: 4
(1) If the originator is a bank, the originator is obliged to pay its order. 5
(2) If the originator is not a bank and proves that the person identified by number 6
was not entitled to receive payment from the originator, the originator is not 7
obliged to pay its order unless the originator's bank proves that the originator, 8
before acceptance of the originator's order, had notice that payment of a 9
payment order issued by the originator might be made by the beneficiary's 10
bank on the basis of an identifying or bank account number even if it identifies 11
a person different from the named beneficiary. Proof of notice may be made 12
by any admissible evidence. The originator's bank satisfies the burden of proof 13
if it proves that the originator, before the payment order was accepted, signed 14
a writing record stating the information to which the notice relates. 15
(d) In a case governed by subsection (b)(1), subdivision (b)(1) of this section, if the 16
beneficiary's bank rightfully pays the person identified by number and that person was not 17
entitled to receive payment from the originator, the amount paid may be recovered from that 18
person to the extent allowed by the law governing mistake and restitution as follows: 19
(1) If the originator is obliged to pay its payment order as stated in subsection (c), 20
(c) of this section, the originator has the right to recover. 21
(2) If the originator is not a bank and is not obliged to pay its payment order, the 22
originator's bank has the right to recover." 23
SECTION 82. G.S. 25-4A-208 reads as rewritten: 24
"§ 25-4A-208. Misdescription of intermediary bank or beneficiary's bank. 25
(a) This subsection applies Both of the following apply to a payment order identifying an 26
intermediary bank or the beneficiary's bank only by an identifying number.number: 27
(1) The receiving bank may rely on the number as the proper identification of the 28
intermediary or beneficiary's bank and need not determine whether the 29
number identifies a bank. 30
(2) The sender is obliged to compensate the receiving bank for any loss and 31
expenses incurred by the receiving bank as a result of its reliance on the 32
number in executing or attempting to execute the order. 33
(b) This subsection applies All of the following apply to a payment order identifying an 34
intermediary bank or the beneficiary's bank both by name and an identifying number if the name 35
and number identify different persons.persons: 36
(1) If the sender is a bank, the receiving bank may rely on the number as the 37
proper identification of the intermediary or beneficiary's bank if the receiving 38
bank, when it executes the sender's order, does not know that the name and 39
number identify different persons. The receiving bank need not determine 40
whether the name and number refer to the same person or whether the number 41
refers to a bank. The sender is obliged to compensate the receiving bank for 42
any loss and expenses incurred by the receiving bank as a result of its reliance 43
on the number in executing or attempting to execute the order. 44
(2) If the sender is not a bank and the receiving bank proves that the sender, before 45
the payment order was accepted, had notice that the receiving bank might rely 46
on the number as the proper identification of the intermediary or beneficiary's 47
bank even if it identifies a person different from the bank identified by name, 48
the rights and obligations of the sender and the receiving bank are governed 49
by subsection (b)(1), subdivision (b)(1) of this section, as though the sender 50
were a bank. Proof of notice may be made by any admissible evidence. The 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 81
receiving bank satisfies the burden of proof if it proves that the sender, before 1
the payment order was accepted, signed a writing record stating the 2
information to which the notice relates. 3
(3) Regardless of whether the sender is a bank, the receiving bank may rely on 4
the name as the proper identification of the intermediary or beneficiary's bank 5
if the receiving bank, at the time it executes the sender's order, does not know 6
that the name and number identify different persons. The receiving bank need 7
not determine whether the name and number refer to the same person. 8
(4) If the receiving bank knows that the name and number identify different 9
persons, reliance on either the name or the number in executing the sender's 10
payment order is a breach of the obligation stated in G.S. 25-4A-302(a)(1)." 11
SECTION 83. G.S. 25-4A-210 reads as rewritten: 12
"§ 25-4A-210. Rejection of payment order. 13
(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted 14
to the sender orally, electronically, or in writing. orally or in a record. A notice of rejection need 15
not use any particular words and is sufficient if it indicates that the receiving bank is rejecting 16
the order or will not execute or pay the order. Rejection is effective when the notice is given if 17
transmission is by a means that is reasonable in the circumstances. If notice of rejection is given 18
by a means that is not reasonable, rejection is effective when the notice is received. If an 19
agreement of the sender and receiving bank establishes the means to be used to reject a payment 20
order, (i) any means complying with the agreement is reasonable and (ii) any means not 21
complying is not reasonable unless no significant delay in receipt of the notice resulted from the 22
use of the noncomplying means. 23
…." 24
SECTION 84. G.S. 25-4A-211 reads as rewritten: 25
"§ 25-4A-211. Cancellation and amendment of payment order. 26
(a) A communication of the sender of a payment order cancelling or amending the order 27
may be transmitted to the receiving bank orally, electronically, or in writing. orally or in a record. 28
If a security procedure is in effect between the sender and the receiving bank, the communication 29
is not effective to cancel or amend the order unless the communication is verified pursuant to the 30
security procedure or the bank agrees to the cancellation or amendment. 31
(b) Subject to subsection (a), (a) of this section, a communication by the sender cancelling 32
or amending a payment order is effective to cancel or amend the order if notice of the 33
communication is received at a time and in a manner affording the receiving bank a reasonable 34
opportunity to act on the communication before the bank accepts the payment order. 35
(c) After a payment order has been accepted, cancellation or amendment of the order is 36
not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation 37
or amendment without agreement of the bank. The following provisions apply: 38
(1) With respect to a payment order accepted by a receiving bank other than the 39
beneficiary's bank, cancellation or amendment is not effective unless a 40
conforming cancellation or amendment of the payment order issued by the 41
receiving bank is also made. 42
(2) With respect to a payment order accepted by the beneficiary's bank, 43
cancellation or amendment is not effective unless the order was issued in 44
execution of an unauthorized payment order, or because of a mistake by a 45
sender in the funds transfer which that resulted in the issuance of a payment 46
order (i) that is a duplicate of a payment order previously issued by the sender, 47
(ii) that orders payment to a beneficiary not entitled to receive payment from 48
the originator, or (iii) that orders payment in an amount greater than the 49
amount the beneficiary was entitled to receive from the originator. If the 50
payment order is cancelled or amended, the beneficiary's bank is entitled to 51 General Assembly Of North Carolina Session 2025
Page 82 Senate Bill 117-First Edition
recover from the beneficiary any amount paid to the beneficiary to the extent 1
allowed by the law governing mistake and restitution. 2
… 3
(h) A funds-transfer system rule is not effective to the extent it conflicts with subsection 4
(c)(2).subdivision (c)(2) of this section." 5
SECTION 85. G.S. 25-4A-305 reads as rewritten: 6
"§ 25-4A-305. Liability for late or improper execution or failure to execute payment order. 7
(a) If a funds transfer is completed but execution of a payment order by the receiving 8
bank in breach of G.S. 25-4A-302 results in delay in payment to the beneficiary, the bank is 9
obliged to pay interest to either the originator or the beneficiary of the funds transfer for the 10
period of delay caused by the improper execution. Except as provided in subsection (c), (c) of 11
this section, additional damages are not recoverable. 12
(b) If execution of a payment order by a receiving bank in breach of G.S. 25-4A-302 13
results in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank 14
designated by the originator, or (iii) issuance of a payment order that does not comply with the 15
terms of the payment order of the originator, the bank is liable to the originator for its expenses 16
in the funds transfer and for incidental expenses and interest losses, to the extent not covered by 17
subsection (a), (a) of this section, resulting from the improper execution. Except as provided in 18
subsection (c), (c) of this section, additional damages are not recoverable. 19
(c) In addition to the amounts payable under subsections (a) and (b), (b) of this section, 20
damages, including consequential damages, are recoverable to the extent provided in an express 21
written agreement of the receiving bank.bank, evidenced by a record. 22
(d) If a receiving bank fails to execute a payment order it was obliged by express 23
agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction 24
and for incidental expenses and interest losses resulting from the failure to execute. Additional 25
damages, including consequential damages, are recoverable to the extent provided in an express 26
written agreement of the receiving bank, evidenced by a record, but are not otherwise 27
recoverable. 28
(e) Reasonable attorneys' fees are recoverable if demand for compensation under 29
subsection (a) or (b) of this section is made and refused before an action is brought on the claim. 30
If a claim is made for breach of an agreement under subsection (d) of this section and the 31
agreement does not provide for damages, reasonable attorneys' fees are recoverable if demand 32
for compensation under subsection (d) of this section is made and refused before an action is 33
brought on the claim. 34
(f) Except as stated in this section, the liability of a receiving bank under subsections (a) 35
and (b) may of this section shall not be varied by agreement." 36
SECTION 86. G.S. 25-5-104 reads as rewritten: 37
"§ 25-5-104. Formal requirements. 38
A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued 39
in any form that is a record and is authenticated (i) by a signature or (ii) in accordance with the 40
agreement of the parties or the standard practice referred to in G.S. 25-5-108(e).signed record." 41
SECTION 87. G.S. 25-5-116 reads as rewritten: 42
"§ 25-5-116. Choice of law and forum. 43
(a) The liability of an issuer, nominated person, or adviser for action or omission is 44
governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or 45
otherwise authenticated by the affected parties in the manner provided in G.S. 25-5-104 or by a 46
provision in the person's letter of credit, confirmation, or other undertaking. The jurisdiction 47
whose law is chosen need not bear any relation to the transaction. 48
(b) Unless subsection (a) of this section applies, the liability of an issuer, nominated 49
person, or adviser for action or omission is governed by the law of the jurisdiction in which the 50
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
Senate Bill 117-First Edition Page 83
undertaking. If more than one address is indicated, the person is considered to be located at the 1
address from which the person's undertaking was issued. 2
(b1) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters 3
of credit, but not enforcement of a judgment, all branches of a bank are considered separate 4
juridical entities and a bank is considered to be located at the place where its relevant branch is 5
considered to be located under this subsection.subsection (b2) of this section. 6
(b2) A branch of a bank is considered to be located at the address indicated in the branch's 7
undertaking. If more than one address is indicated, the branch is considered to be located at the 8
address from which the undertaking was issued. 9
…." 10
SECTION 88. G.S. 25-7-102 reads as rewritten: 11
"§ 25-7-102. Definitions and index of definitions. 12
(a) In this Article, unless the context otherwise requires:the following definitions apply: 13
(1) "Bailee" means a Bailee. – A person that by a warehouse receipt, bill of lading, 14
or other document of title acknowledges possession of goods and contracts to 15
deliver them. 16
(2) "Carrier" means a Carrier. – A person that issues a bill of lading. 17
(3) "Consignee" means a Consignee. – A person named in a bill of lading to whom 18
which or to whose order the bill promises delivery. 19
(4) "Consignor" means a Consignor. – A person named in a bill of lading as the 20
person from whom which the goods have been received for shipment. 21
(4a) Contract for sale. – Defined in G.S. 25-2-106. 22
(5) "Delivery order" means a Delivery order. – A record that contains an order to 23
deliver goods directed to a warehouse, carrier, or other person that in the 24
ordinary course of business issues warehouse receipts or bills of lading. 25
(6) Reserved for future codification purposes. 26
(7) "Goods" means all Goods. – All things that are treated as movable for the 27
purposes of a contract for storage or transportation. 28
(8) "Issuer" means a Issuer. – A bailee that issues a document of title or, in the 29
case of an unaccepted delivery order, the person that orders the possessor of 30
goods to deliver. The term includes a person for whom which an agent or 31
employee purports to act in issuing a document if the agent or employee has 32
real or apparent authority to issue documents, even if the issuer did not receive 33
any goods, the goods were misdescribed, or in any other respect the agent or 34
employee violated the issuer's instructions. 35
(8a) Lessee in ordinary course of business. – Defined in G.S. 25-2A-103. 36
(9) "Person entitled under the document" means the Person entitled under the 37
document. – The holder, in the case of a negotiable document of title, or the 38
person to whom which delivery of the goods is to be made by the terms of, or 39
pursuant to instructions in a record under, a nonnegotiable document of title. 40
(10) "Receipt" of goods. – Defined in G.S. 25-2-103. 41
(11) "Sign" means, with present intent to authenticate or adopt a record: 42
a. To execute or adopt a tangible symbol; or 43
b. To attach to or logically associate with the record an electronic sound, 44
symbol, or process. 45
(12) "Shipper" means a Shipper. – A person that enters into a contract of 46
transportation with a carrier. 47
(13) "Warehouse" means a Warehouse. – A person engaged in the business of 48
storing goods for hire. 49
(b) Definitions in other Articles applying to this Article and the sections in which they 50
appear are: 51 General Assembly Of North Carolina Session 2025
Page 84 Senate Bill 117-First Edition
(1) "Contract for sale," G.S. 25-2-106. 1
(2) "Lessee in the ordinary course of business," G.S. 25-2A-103. 2
(3) "Receipt" of goods, G.S. 25-2-103. 3
(c) In addition, Article 1 of this Chapter contains general definitions and principles of 4
construction and interpretation applicable throughout this Article." 5
SECTION 89. G.S. 25-7-106 reads as rewritten: 6
"§ 25-7-106. Control of electronic document of title. 7
(a) A person has control of an electronic document of title if a system employed for 8
evidencing the transfer of interests in the electronic document reliably establishes that person as 9
the person to which the electronic document was issued or transferred. 10
(b) A system satisfies subsection (a) of this section, and a person is deemed to have has 11
control of an electronic document of title, if the document is created, stored, and assigned 12
transferred in such a manner that:where all of the following apply: 13
(1) A single authoritative copy of the document exists which that is unique, 14
identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6) 15
of this subsection, unalterable;unalterable. 16
(2) The authoritative copy identifies the person asserting control as:as either of 17
the following: 18
a. The person to whom which the document was issued; orissued. 19
b. If the authoritative copy indicates that the document has been 20
transferred, the person to whom which the document was most 21
recently transferred;transferred. 22
(3) The authoritative copy is communicated to and maintained by the person 23
asserting control or its designated custodian;custodian. 24
(4) Copies or amendments that add or change an identified assignee transferee of 25
the authoritative copy can be made only with the consent of the person 26
asserting control;control. 27
(5) Each copy of the authoritative copy and any copy of a copy is readily 28
identifiable as a copy that is not the authoritative copy; andcopy. 29
(6) Any amendment of the authoritative copy is readily identifiable as authorized 30
or unauthorized. 31
(c) A system satisfies subsection (a) of this section, and a person has control of an 32
electronic document of title, if an authoritative electronic copy of the document, a record attached 33
to or logically associated with the electronic copy, or a system in which the electronic copy is 34
recorded does all of the following: 35
(1) Enables the person readily to identify each electronic copy as either an 36
authoritative copy or a nonauthoritative copy. 37
(2) Enables the person readily to identify itself in any way, including by name, 38
identifying number, cryptographic key, office, or account number, as the 39
person to which each authoritative electronic copy was issued or transferred. 40
(3) Gives the person exclusive power, subject to subsection (d) of this section, to 41
do both of the following: 42
a. Prevent others from adding or changing the person to which each 43
authoritative electronic copy has been issued or transferred. 44
b. Transfer control of each authoritative electronic copy. 45
(d) Subject to subsection (e) of this section, a power is exclusive under subdivision (c)(3) 46
of this section even if either of the following applies: 47
(1) The authoritative electronic copy, a record attached to or logically associated 48
with the authoritative electronic copy, or a system in which the authoritative 49
electronic copy is recorded limits the use of the document of title or has a 50 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 85
protocol that is programmed to cause a change, including a transfer or loss of 1
control. 2
(2) The power is shared with another person. 3
(e) A power of a person is not shared with another person under subdivision (d)(2) of this 4
section and the person's power is not exclusive if both of the following apply: 5
(1) The person can exercise the power only if the power also is exercised by the 6
other person. 7
(2) Either of the following applies to the other person: 8
a. The other person can exercise the power without exercise of the power 9
by the person. 10
b. The other person is the transferor to the person of an interest in the 11
document of title. 12
(f) If a person has the powers specified in subdivision (c)(3) of this section, the powers 13
are presumed to be exclusive. 14
(g) A person has control of an electronic document of title if either of the following 15
applies to another person, other than the transferor to the person of an interest in the document: 16
(1) The other person has control of the document and acknowledges that it has 17
control on behalf of the person. 18
(2) The other person obtains control of the document after having acknowledged 19
that it will obtain control of the document on behalf of the person. 20
(h) A person that has control under this section is not required to acknowledge that it has 21
control on behalf of another person. 22
(i) If a person acknowledges that it has or will obtain control on behalf of another person, 23
unless the person otherwise agrees or law other than this Article or Article 9 of this Chapter 24
otherwise provides, the person does not owe any duty to the other person and is not required to 25
confirm the acknowledgment to any other person." 26
SECTION 90. G.S. 25-8-102 reads as rewritten: 27
"§ 25-8-102. Definitions. 28
(a) In this Article:Article, the following definitions apply: 29
(1) "Adverse claim" means a Adverse claim. – A claim that a claimant has a 30
property interest in a financial asset and that it is a violation of the rights of 31
the claimant for another person to hold, transfer, or deal with the financial 32
asset. 33
(1a) Appropriate person. – Defined in G.S. 25-8-107. 34
(2) "Bearer form", as Bearer form. – As applied to a certificated security, means 35
a form in which the security is payable to the bearer of the security certificate 36
according to its terms but not by reason of an indorsement. 37
(3) "Broker" means a Broker. – A person defined as a broker or dealer under the 38
federal securities laws, but without excluding a bank acting in that capacity. 39
(4) "Certificated security" means a Certificated security. – A security that is 40
represented by a certificate. 41
(5) "Clearing corporation" means:Clearing corporation. – Any of the following: 42
(i)a. A person that is registered as a "clearing agency" under the federal 43
securities laws;laws. 44
(ii)b. A federal reserve bank; orbank. 45
(iii)c. Any other person that provides clearance or settlement services with 46
respect to financial assets that would require it to register as a clearing 47
agency under the federal securities laws but for an exclusion or 48
exemption from the registration requirement, if its activities as a 49
clearing corporation, including promulgation of rules, are subject to 50
regulation by a federal or state governmental authority. 51 General Assembly Of North Carolina Session 2025
Page 86 Senate Bill 117-First Edition
(6) "Communicate" means to:Communicate. – Either of the following: 1
(i)a. Send a signed writing; orrecord. 2
(ii)b. Transmit information by any mechanism agreed upon by the persons 3
transmitting and receiving the information. 4
(6a) Control. – Defined in G.S. 25-8-106. 5
(6b) Controllable account. – Defined in G.S. 25-9-102. 6
(6c) Controllable electronic record. – Defined in G.S. 25-12-102. 7
(6d) Controllable payment intangible. – Defined in G.S. 25-9-102. 8
(6e) Delivery. – Defined in G.S. 25-8-301. 9
(7) "Entitlement holder" means a Entitlement holder. – A person identified in the 10
records of a securities intermediary as the person having a security entitlement 11
against the securities intermediary. If a person acquires a security entitlement 12
by virtue of G.S. 25-8-501(b)(2) or (3), that person is the entitlement holder. 13
(8) "Entitlement order" means a Entitlement order. – A notification 14
communicated to a securities intermediary directing transfer or redemption of 15
a financial asset to which the entitlement holder has a security entitlement. 16
(9) "Financial asset", except Financial asset. – Except as otherwise provided in 17
G.S. 25-8-103, means:means any of the following: 18
(i)a. A security;security. 19
(ii)b. An obligation of a person or a share, participation, or other interest in 20
a person or in property or an enterprise of a person, which that is, or is 21
of a type, dealt in or traded on financial markets, or which that is 22
recognized in any area in which it is issued or dealt in as a medium for 23
investment; orinvestment. 24
(iii)c. Any property that is held by a securities intermediary for another 25
person in a securities account if the securities intermediary has 26
expressly agreed with the other person that the property is to be treated 27
as a financial asset under this Article. 28
As context requires, the term means either the interest itself or the means by 29
which a person's claim to it is evidenced, including a certificated or 30
uncertificated security, a security certificate, or a security entitlement. 31
(10) Repealed by Session Laws 2006-112, s. 20, effective October 1, 2006. 32
(11) "Indorsement" means a Indorsement. – A signature that alone or accompanied 33
by other words is made on a security certificate in registered form or on a 34
separate document for the purpose of assigning, transferring, or redeeming the 35
security or granting a power to assign, transfer, or redeem it. 36
(12) "Instruction" means a Instruction. – A notification communicated to the issuer 37
of an uncertificated security which that directs that the transfer of the security 38
be registered or that the security be redeemed. 39
(12a) Investment company security. – Defined in G.S. 25-8-103. 40
(12b) Issuer. – Defined in G.S. 25-8-201. 41
(12c) Overissue. – Defined in G.S. 25-8-210. 42
(12d) Protected purchaser. – Defined in G.S. 25-8-303. 43
(13) "Registered form", as Registered form. – As applied to a certificated security, 44
means a form in which:which both of the following apply: 45
(i)a. The security certificate specifies a person entitled to the security; 46
andsecurity. 47
(ii)b. A transfer of the security may be registered upon books maintained for 48
that purpose by or on behalf of the issuer, or the security certificate so 49
states. 50
(13a) Securities account. – Defined in G.S. 25-8-501. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 87
(14) "Securities intermediary" means:Securities intermediary. – Either of the 1
following: 2
(i)a. A clearing corporation; orcorporation. 3
(ii)b. A person, including a bank or broker, that in the ordinary course of its 4
business maintains securities accounts for others and is acting in that 5
capacity. 6
(15) "Security", except Security. – Except as otherwise provided in G.S. 25-8-103, 7
means an obligation of an issuer or a share, participation, or other interest in 8
an issuer or in property or an enterprise of an issuer:issuer that satisfies all of 9
the following requirements: 10
(i)a. Which It is represented by a security certificate in bearer or registered 11
form, or the its transfer of which may be registered upon books 12
maintained for that purpose by or on behalf of the issuer;issuer. 13
(ii)b. Which It is one of a class or series or by its terms is divisible into a 14
class or series of shares, participations, interests, or obligations; 15
andobligations. 16
(iii)c. Which:It satisfies either of the following: 17
(A)1. Is, It is, or is of a type, dealt in or traded on securities exchanges 18
or securities markets; ormarkets. 19
(B)2. Is It is a medium for investment and by its terms expressly 20
provides that it is a security governed by this Article. 21
(16) "Security certificate" means a Security certificate. – A certificate representing 22
a security. 23
(17) "Security entitlement" means the Security entitlement. – The rights and 24
property interest of an entitlement holder with respect to a financial asset 25
specified in Part 5 of this Article. 26
(18) "Uncertificated security" means a Uncertificated security. – A security that is 27
not represented by a certificate. 28
(b) Other definitions applying to this Article and the sections in which they appear are: 29
"Appropriate person" G.S. 25-8-107. 30
"Control" G.S. 25-8-106. 31
"Delivery" G.S. 25-8-301. 32
"Investment company security" G.S. 25-8-103. 33
"Issuer" G.S. 25-8-201. 34
"Overissue" G.S. 25-8-210. 35
"Protected purchaser" G.S. 25-8-303. 36
"Securities account" G.S. 25-8-501. 37
(c) In addition, Article 1 of this Chapter contains general definitions and principles of 38
construction and interpretation applicable throughout this Article. 39
(d) The characterization of a person, business, or transaction for purposes of this Article 40
does not determine the characterization of the person, business, or transaction for purposes of 41
any other law, regulation, or rule.law." 42
SECTION 91. G.S. 25-8-103 reads as rewritten: 43
"§ 25-8-103. Rules for determining whether certain obligations and interests are securities 44
or financial assets. 45
… 46
(d) A writing that is a security certificate is governed by this Article and not by Article 3 47
of this Chapter, even though it also meets the requirements of that Article. However, a negotiable 48
instrument governed by Article 3 of this Chapter is a financial asset if it is held in a securities 49
account. 50 General Assembly Of North Carolina Session 2025
Page 88 Senate Bill 117-First Edition
(e) An option or similar obligation issued by a clearing corporation to its participants is 1
not a security, security but is a financial asset. 2
(f) A commodity contract, as defined in G.S. 25-9-102(a)(15), G.S. 25-9-102, is not a 3
security or financial asset. 4
(g) A document of title is not a financial asset unless G.S. 25-8-102(a)(9)(iii) 5
G.S. 25-8-102(a)(9)c. applies. 6
(h) A controllable account, controllable electronic record, or controllable payment 7
intangible is not a financial asset unless G.S. 25-8-102(a)(9)c. applies." 8
SECTION 92. G.S. 25-8-106 reads as rewritten: 9
"§ 25-8-106. Control. 10
(a) A purchaser has "control" of a certificated security in bearer form if the certificated 11
security is delivered to the purchaser. 12
(b) A purchaser has "control" of a certificated security in registered form if the 13
certificated security is delivered to the purchaser, and:and either of the following applies: 14
(1) The certificate is endorsed indorsed to the purchaser or in blank by an effective 15
endorsement; orindorsement. 16
(2) The certificate is registered in the name of the purchaser, upon original issue 17
or registration of transfer by the issuer. 18
(c) A purchaser has "control" of an uncertificated security if:if either of the following 19
applies: 20
(1) The uncertificated security is delivered to the purchaser; orpurchaser. 21
(2) The issuer has agreed that it will comply with instructions originated by the 22
purchaser without further consent by the registered owner. 23
(d) A purchaser has "control" of a security entitlement if:if any of the following applies: 24
(1) The purchaser becomes the entitlement holder;holder. 25
(2) The securities intermediary has agreed that it will comply with entitlement 26
orders originated by the purchaser without further consent by the entitlement 27
holder; orholder. 28
(3) Another person has control of the security entitlement on behalf of the 29
purchaser or, having previously acquired control of the security entitlement, 30
acknowledges that it has control on behalf of the purchaser.Either of the 31
following applies to another person, other than the transferor to the purchaser 32
of an interest in the security entitlement: 33
a. The other person has control of the security entitlement and 34
acknowledges that it has control on behalf of the purchaser. 35
b. The other person obtains control of the security entitlement after 36
having acknowledged that it will obtain control of the security 37
entitlement on behalf of the purchaser. 38
(e) If an interest in a security entitlement is granted by the entitlement holder to the 39
entitlement holder's own securities intermediary, the securities intermediary has control. 40
(f) A purchaser who that has satisfied the requirements of subsection (c) or (d) of this 41
section has control, even if the registered owner in the case of subsection (c) of this section or 42
the entitlement holder in the case of subsection (d) of this section retains the right to make 43
substitutions for the uncertificated security or security entitlement, to originate instructions or 44
entitlement orders to the issuer or securities intermediary, or otherwise to deal with the 45
uncertificated security or security entitlement. 46
(g) An issuer or a securities intermediary may shall not enter into an agreement of the 47
kind described in subdivision (c)(2) or (d)(2) of this section without the consent of the registered 48
owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into 49
such an this kind of agreement even though the registered owner or entitlement holder so directs. 50
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
Senate Bill 117-First Edition Page 89
required to confirm the existence of the agreement to another party unless requested to do so by 1
the registered owner or entitlement holder. 2
(h) A person that has control under this section is not required to acknowledge that it has 3
control on behalf of a purchaser. 4
(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, 5
unless the person otherwise agrees or law other than this Article or Article 9 of this Chapter 6
otherwise provides, the person does not owe any duty to the purchaser and is not required to 7
confirm the acknowledgment to any other person." 8
SECTION 93. G.S. 25-8-110 reads as rewritten: 9
"§ 25-8-110. Applicability; choice of law. 10
(a) The local law of the issuer's jurisdiction, as specified in subsection (d) of this section, 11
governs:governs all of the following: 12
(1) The validity of a security;security. 13
(2) The rights and duties of the issuer with respect to registration of 14
transfer;transfer. 15
(3) The effectiveness of registration of transfer by the issuer;issuer. 16
(4) Whether the issuer owes any duties to an adverse claimant to a security; 17
andsecurity. 18
(5) Whether an adverse claim can be asserted against a person to whom which 19
transfer of a certificated or uncertificated security is registered or a person 20
who that obtains control of an uncertificated security. 21
(b) The local law of the securities intermediary's jurisdiction, as specified in subsection 22
(e) of this section, governs:governs all of the following: 23
(1) Acquisition of a security entitlement from the securities 24
intermediary;intermediary. 25
(2) The rights and duties of the securities intermediary and entitlement holder 26
arising out of a security entitlement;entitlement. 27
(3) Whether the securities intermediary owes any duties to an adverse claimant to 28
a security entitlement; andentitlement. 29
(4) Whether an adverse claim can be asserted against a person who that acquires 30
a security entitlement from the securities intermediary or a person who that 31
purchases a security entitlement or interest therein from an entitlement holder. 32
(c) The local law of the jurisdiction in which a security certificate is located at the time 33
of delivery governs whether an adverse claim can be asserted against a person to whom which 34
the security certificate is delivered. 35
(d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is 36
organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified 37
by the issuer. An issuer organized under the law of this State may specify the law of another 38
jurisdiction as the law governing the matters specified in subdivisions (a)(2) through (5) of this 39
section. 40
(e) The following rules determine a "securities intermediary's jurisdiction" for purposes 41
of this section: 42
(1) If an agreement between the securities intermediary and its entitlement holder 43
governing the securities account expressly provides that a particular 44
jurisdiction is the securities intermediary's jurisdiction for purposes of this 45
Part, this Article, or this Chapter, that jurisdiction is the securities 46
intermediary's jurisdiction. 47
(2) If subdivision (1) of this subsection does not apply and an agreement between 48
the securities intermediary and its entitlement holder governing the securities 49
account expressly provides that the agreement is governed by the law of a 50 General Assembly Of North Carolina Session 2025
Page 90 Senate Bill 117-First Edition
particular jurisdiction, that jurisdiction is the securities intermediary's 1
jurisdiction. 2
(3) If neither subdivision (1) nor subdivision (2) of this section subsection applies 3
and an agreement between the securities intermediary and its entitlement 4
holder governing the securities account expressly provides that the securities 5
account is maintained at an office in a particular jurisdiction, that jurisdiction 6
is the securities intermediary's jurisdiction. 7
(4) If none of the preceding subdivisions of this subsection applies, the securities 8
intermediary's jurisdiction is the jurisdiction in which the office identified in 9
an account statement as the office serving the entitlement holder's account is 10
located. 11
(5) If none of the preceding subdivisions of this subsection applies, the securities 12
intermediary's jurisdiction is the jurisdiction in which the chief executive 13
office of the securities intermediary is located. 14
(f) A securities intermediary's jurisdiction is not determined by the physical location of 15
certificates representing financial assets, or by the jurisdiction in which is organized the issuer of 16
the financial asset with respect to which an entitlement holder has a security entitlement, or by 17
the location of facilities for data processing or other record keeping concerning the account. 18
(g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction 19
governs a matter or transaction specified in subsection (a) or (b) of this section even if the matter 20
or transaction does not bear any relation to the jurisdiction." 21
SECTION 94. G.S. 25-8-303 reads as rewritten: 22
"§ 25-8-303. Protected purchaser. 23
(a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, 24
or of an interest therein, who:to which all of the following apply: 25
(1) Gives value;The purchaser gives value. 26
(2) Does The purchaser does not have notice of any adverse claim to the security; 27
andsecurity. 28
(3) Obtains The purchaser obtains control of the certificated or uncertificated 29
security. 30
(b) In addition to acquiring the rights of a purchaser, a A protected purchaser also 31
acquires its interest in the security free of any adverse claim." 32
33
PART IV. OTHER CONFO RMING CHANGES 34
SECTION 95. G.S. 44A-40 reads as rewritten: 35
"§ 44A-40. Definitions. 36
As used in this Article, unless the context clearly requires otherwise:the following definitions 37
apply: 38
(1) "E-mail" or "electronic mail" means an Email or electronic mail. – An 39
electronic message or an executable program or computer file that contains an 40
image of a message that is transmitted between two or more computers or 41
electronic terminals. The term includes electronic messages that are 42
transmitted within or between computer networks. 43
(1a) "Independent bidder" means a Independent bidder. – A person who that is not 44
related to the lienor, within the meaning of G.S. 25-9-102(62), in the case of 45
a lienor who is an individual, or G.S. 25-9-102(63), in the case of a lienor that 46
is an organization.G.S. 25-9-102(a)(62). 47
(1b) "Last known address" means that Last known address. – The mailing address 48
or e-mail email address provided by the occupant in the latest rental agreement 49
or the address provided by the occupant in a subsequent written notice of a 50
change of address. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 91
(2) "Lienor" means any Lienor. – A person entitled to a lien under this Article. 1
(3) "Occupant" means a Occupant. – A person, his or a person's sublessee, 2
successor, or assign, entitled to the use of the storage space at a self-service 3
storage facility under a rental agreement, to the exclusion of others. 4
(4) "Owner" means the Owner. – Consists of the following: 5
a. The owner, operator, lessor, or sublessor of a self-service storage 6
facility,facility. 7
b. his agent, or The agent of a person described in sub-subdivision a. of 8
this subdivision. 9
c. any other person authorized by him A person authorized by a person 10
described in sub-subdivision a. of this subdivision to manage the 11
facility or to receive rent from an occupant under a rental agreement. 12
(5) "Personal property" means movable Personal property. – Movable property 13
not affixed to land and land. The term includes, but is not limited to, goods, 14
merchandise, household items, and watercraft. 15
(6) "Rental agreement" means any Rental agreement. – An agreement or lease, 16
written or oral, that establishes or modifies the terms, conditions, rules rules, 17
or any other provisions concerning the use and occupancy of a self-service 18
storage facility. 19
(7) "Self-service storage facility" means any real Self-service storage facility. – 20
Real property designed and used for the purpose of renting or leasing 21
individual storage space to occupants who that are to have access to such for 22
the purpose of storing and removing personal property. No occupant shall use 23
a self-service storage facility for residential purposes. A self-service storage 24
facility is not subject to the provisions of Article 7 of General Statutes Chapter 25
25. Provided, however, if Article 7 of Chapter 25 of the General Statutes. If, 26
however, an owner issues any warehouse receipt, bill of lading, or other 27
document of title for the personal property stored, the owner and the occupant 28
are subject to the provisions of Article 7 of General Statutes Chapter 25 and 29
the provisions of this Article do not apply.Article 7 of Chapter 25 of the 30
General Statutes and this Article does not apply. 31
(8) "Verified electronic mail" means electronic Verified electronic mail. – 32
Electronic mail that is transmitted to an e-mail email address that the sender 33
has verified by any reasonable means as being a working electronic mail 34
address." 35
36
PART V. TRANSITIONAL PROVISIONS 37
38
GENERAL PROVISIONS AND DEFINITIONS 39
SECTION 96. Title. – This Part may be cited as Transitional Provisions for Uniform 40
Commercial Code Amendments (2022). 41
SECTION 97.(a) Part Definitions. – In this Part, the following definitions apply: 42
(1) Adjustment date. – The date that is one year after the effective date of this act. 43
(2) Amended Article 9. – Article 9 of Chapter 25 of the General Statutes, as 44
amended by this act. 45
(3) Article 12. – Article 12 of Chapter 25 of the General Statutes. 46
(4) Article 12 property. – A controllable account, controllable electronic record, 47
or controllable payment intangible. 48
(5) Controllable account. – Defined in G.S. 25-9-102. 49
(6) Controllable electronic record. – Defined in G.S. 25-12-102. 50
(7) Controllable payment intangible. – Defined in G.S. 25-9-102. 51 General Assembly Of North Carolina Session 2025
Page 92 Senate Bill 117-First Edition
(8) Electronic money. – Defined in G.S. 25-9-102. 1
(9) Financing statement. – Defined in G.S. 25-9-102. 2
SECTION 97.(b) Article 1 Definitions and Principles. – Article 1 of Chapter 25 of 3
the General Statutes contains general definitions and principles of construction and interpretation 4
applicable throughout this Part. 5
6
GENERAL TRANSITIONAL PROVISION 7
SECTION 98. General Applicability; Saving Clause. – This act applies to a 8
transaction, lien, or other interest in property that is entered into, created, or acquired on or after 9
the effective date of this act. Except as otherwise provided in this Part, a transaction validly 10
entered into before the effective date of this act and the rights, duties, and interests flowing from 11
the transaction remain valid thereafter and may be terminated, completed, consummated, or 12
enforced as required or permitted by law other than Chapter 25 of the General Statutes or, if 13
applicable, Chapter 25 of the General Statutes, as though this act had not taken effect. 14
15
TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12 16
SECTION 99.(a) Pre-Effective-Date Transaction, Lien, or Interest. – Except as 17
provided in this section, amended Article 9 and Article 12 apply to a transaction, lien, or other 18
interest in property, even if the transaction, lien, or interest was entered into, created, or acquired 19
before the effective date of this act. 20
SECTION 99.(b) Continuing Validity. – Except as provided in subsections (c) 21
through (j) of this section, both of the following apply: 22
(1) A transaction, lien, or interest in property that was validly entered into, 23
created, or transferred before the effective date of this act and was not 24
governed by Chapter 25 of the General Statutes, but would be subject to 25
amended Article 9 or Article 12 if it had been entered into, created, or 26
transferred on or after the effective date of this act, including the rights, duties, 27
and interests flowing from the transaction, lien, or interest, remains valid on 28
and after the effective date of this act. 29
(2) A transaction, lien, or interest described in subdivision (1) of this subsection 30
may be terminated, completed, consummated, and enforced as required or 31
permitted by this act or by the law that would apply if this act had not taken 32
effect. 33
SECTION 99.(c) Pre-Effective-Date Proceeding. – This act does not affect an action, 34
case, or proceeding commenced before the effective date of this act. 35
SECTION 99.(d) Security Interest Perfected Before Effective Date. – Both of the 36
following apply to a security interest perfected before the effective date of this act: 37
(1) A security interest that is enforceable and perfected immediately before the 38
effective date of this act is a perfected security interest under this act if, on the 39
effective date of this act, the requirements for enforceability and perfection 40
under this act are satisfied without further action. 41
(2) If a security interest is enforceable and perfected immediately before the 42
effective date of this act, but the requirements for enforceability or perfection 43
under this act are not satisfied on the effective date of this act, all of the 44
following apply to the security interest: 45
a. The security interest is a perfected security interest until the earlier of 46
the time perfection would have ceased under the law in effect 47
immediately before the effective date of this act or the adjustment date. 48
b. The security interest remains enforceable thereafter only if the security 49
interest satisfies the requirements for enforceability under 50
G.S. 25-9-203, as amended by this act, before the adjustment date. 51 General Assembly Of North Carolina Session 2025
Senate Bill 117-First Edition Page 93
c. The security interest remains perfected thereafter only if the 1
requirements for perfection under this act are satisfied before the time 2
specified in sub-subdivision a. of this subdivision. 3
SECTION 99.(e) Security Interest Unperfected Before Effective Date. – All of the 4
following apply to a security interest that is enforceable immediately before the effective date of 5
this act but is unperfected at that time: 6
(1) The security interest remains an enforceable security interest until the 7
adjustment date. 8
(2) The security interest remains enforceable thereafter if the security interest 9
becomes enforceable under G.S. 25-9-203, as amended by this act, on the 10
effective date of this act or before the adjustment date. 11
(3) The security interest becomes perfected at either of the following times: 12
a. Without further action, on the effective date of this act if the 13
requirements for perfection under this act are satisfied before or at that 14
time. 15
b. When the requirements for perfection are satisfied if the requirements 16
are satisfied after the effective date of this act. 17
SECTION 99.(f) Pre-Effective-Date Action; Attachment and Perfection Before 18
Adjustment Date. – If action, other than the filing of a financing statement, is taken before the 19
effective date of this act and the action would have resulted in perfection of the security interest 20
had the security interest become enforceable before the effective date of this act, the action is 21
effective to perfect a security interest that attaches under this act before the adjustment date. An 22
attached security interest becomes unperfected on the adjustment date unless the security interest 23
becomes a perfected security interest under this act before the adjustment date. 24
SECTION 99.(g) Pre-Effective-Date Filing. – The filing of a financing statement 25
before the effective date of this act is effective to perfect a security interest on the effective date 26
of this act to the extent the filing would satisfy the requirements for perfection under this act. 27
SECTION 99.(h) Pre-Effective-Date Enforceability Action. – The taking of an 28
action before the effective date of this act is sufficient for the enforceability of a security interest 29
on the effective date of this act if the action would satisfy the requirements for enforceability 30
under this act. 31
SECTION 99.(i) Priority. – 32
(1) Determination of priority. – Subject to subdivisions (2) and (3) of this 33
subsection, this act determines the priority of conflicting claims to collateral. 34
(2) Established priorities. – Subject to subdivision (3) of this subsection, if the 35
priorities of claims to collateral were established before the effective date of 36
this act, Article 9 of Chapter 25 of the General Statutes as in effect before the 37
effective date of this act determines priority. 38
(3) Determination of certain priorities on adjustment date. – On the adjustment 39
date, to the extent the priorities determined by amended Article 9 modify the 40
priorities established before the effective date of this act, the priorities of 41
claims to Article 12 property and electronic money established before the 42
effective date of this act cease to apply. 43
SECTION 99.(j) Priority of Claims When Priority Rules of Article 9 Do Not Apply. 44
– 45
(1) Determination of priority. – Subject to subdivisions (1) and (2) of this 46
subsection, Article 12 determines the priority of conflicting claims to Article 47
12 property when the priority rules of amended Article 9 do not apply. 48
(2) Established priorities. – Subject to subdivision (3) of this subsection, when the 49
priority rules of amended Article 9 do not apply and the priorities of claims to 50 General Assembly Of North Carolina Session 2025
Page 94 Senate Bill 117-First Edition
Article 12 property were established before the effective date of this act, law 1
other than Article 12 determines priority. 2
(3) Determination of certain priorities on adjustment date. – When the priority 3
rules of amended Article 9 do not apply, to the extent the priorities determined 4
by this act modify the priorities established before the effective date of this 5
act, the priorities of claims to Article 12 property established before the 6
effective date of this act cease to apply on the adjustment date. 7
8
PART VI. COMMENTS AN D EFFECTIVE DATE 9
SECTION 100. The Revisor of Statutes shall cause to be printed as annotations to 10
the published General Statutes all relevant portions of the Official Comments to the Uniform 11
Commercial Code and all explanatory comments of the drafters of this act as the Revisor deems 12
appropriate. 13
SECTION 101. This act becomes effective October 1, 2025. 14