Texas 2019 - 86th Regular

Texas Senate Bill SB2033 Compare Versions

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1	1	86R9499 TSR-F
2	2	By: Hall S.B. No. 2033
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the development of a central filing system by the
8	8	secretary of state for the filing of financing statements for
9	9	certain security interests; authorizing fees; providing civil
10	10	penalties.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 9.302, Business & Commerce Code, is
13	13	amended to read as follows:
14	14	Sec. 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF
15	15	AGRICULTURAL LIENS. (a) Subject to Chapter 607, while [While] farm
16	16	products are located in a jurisdiction, the local law of that
17	17	jurisdiction governs perfection, the effect of perfection or
18	18	nonperfection, and the priority of an agricultural lien on the farm
19	19	products.
20	20	(b) Notwithstanding any law to the contrary, to the extent
21	21	of any conflict between this chapter and Chapter 607, Chapter 607
22	22	controls.
23	23	SECTION 2. Section 9.501, Business & Commerce Code, is
24	24	amended by amending Subsection (a) and adding Subsection (c) to
25	25	read as follows:
26	26	(a) Except as otherwise provided in Subsection (b) or (c),
27	27	if the local law of this state governs perfection of a security
28	28	interest [or agricultural lien], the office in which to file a
29	29	financing statement to perfect the security interest [or
30	30	agricultural lien] is:
31	31	(1) the office designated for the filing or recording
32	32	of a record of a mortgage on the related real property, if:
33	33	(A) the collateral is as-extracted collateral or
34	34	timber to be cut; or
35	35	(B) the financing statement is filed as a fixture
36	36	filing and the collateral is goods that are or are to become
37	37	fixtures; or
38	38	(2) the office of the Secretary of State, in all other
39	39	cases, including a case in which the collateral is goods that are or
40	40	are to become fixtures and the financing statement is not filed as a
41	41	fixture filing.
42	42	(c) Notwithstanding any other law to the contrary, the
43	43	office in which to file a financing statement to perfect an
44	44	agricultural lien is the office of the Secretary of State as
45	45	provided by Chapter 607.
46	46	SECTION 3. Title 12, Business & Commerce Code, is amended by
47	47	adding Chapter 607 to read as follows:
48	48	CHAPTER 607. CENTRAL FILING SYSTEM AND NOTICE REQUIREMENTS FOR
49	49	FARM PRODUCTS
50	50	Sec. 607.001. DEFINITIONS. In this chapter:
51	51	(1) "Buyer" means a person who, in the ordinary course
52	52	of business, buys farm products from another person who is engaged
53	53	in farming operations and who is in the business of selling farm
54	54	products.
55	55	(2) "Central filing system" means a statewide system
56	56	that is developed by the secretary of state and certified by the
57	57	secretary of the United States Department of Agriculture to be used
58	58	for the filing of an effective financing statement.
59	59	(3) "Commission merchant" means a person engaged in
60	60	the business of receiving a farm product for the purpose of selling
61	61	the farm product on commission or on behalf of another person.
62	62	(4) "Debtor" has the meaning assigned by Section
63	63	9.102.
64	64	(5) "Effective financing statement" means a financing
65	65	statement, as defined by Section 9.102, that covers a farm product
66	66	and that is filed in compliance with this chapter.
67	67	(6) "Farm products" has the meaning assigned by
68	68	Section 9.102.
69	69	(7) "Selling agent" means a person, other than a
70	70	commission merchant, who is engaged in the business of negotiating
71	71	the sale or purchase of a farm product on behalf of a person engaged
72	72	in farming operations.
73	73	(8) "Writing" or "written" means information that is
74	74	inscribed on a tangible medium or that is stored in an electronic or
75	75	other medium and is retrievable in perceivable form.
76	76	Sec. 607.002. RULES. The secretary of state shall adopt
77	77	rules as necessary to implement this chapter.
78	78	Sec. 607.003. FORMS; NOTICE. (a) The secretary of state
79	79	shall develop and maintain standard forms for an effective
80	80	financing statement, a statement of continuation, a statement of
81	81	partial release, a statement of amendment, a statement of
82	82	assignment, and a statement of termination that are consistent with
83	83	this chapter.
84	84	(b) Except as otherwise provided by this chapter, receipt of
85	85	a written notice required by this chapter is presumed if the notice
86	86	is sent by first class mail, postage prepaid.
87	87	Sec. 607.004. EFFECTIVE FINANCING STATEMENT. (a) An
88	88	effective financing statement must:
89	89	(1) be signed by the secured party and filed by the
90	90	secured party with the office of the secretary of state in the
91	91	central filing system under Section 607.007;
92	92	(2) be signed by the debtor; and
93	93	(3) provide the following information:
94	94	(A) the name and address of the secured party;
95	95	(B) the name and address of the debtor;
96	96	(C) one of the following:
97	97	(i) the social security number of the
98	98	debtor;
99	99	(ii) if the debtor is not an individual, the
100	100	taxpayer identification number of the debtor; or
101	101	(iii) another unique identifier
102	102	established by rule of the secretary of state;
103	103	(D) the farm product covered by the effective
104	104	financing statement;
105	105	(E) each county in this state where the farm
106	106	product is produced or will be produced, or a blanket code
107	107	established by the secretary of state that covers all counties in
108	108	this state;
109	109	(F) a description of the farm product that is
110	110	subject to a security interest only if a description is needed to
111	111	distinguish that farm product from other farm products owned by the
112	112	same person but not subject to the security interest; and
113	113	(G) the crop year, unless for the duration of the
114	114	effective financing statement every crop of the farm product that
115	115	is subject to the security interest is to be subject to the
116	116	interest.
117	117	(b) A secured party may use one effective financing
118	118	statement to reflect multiple farm products or farm products in
119	119	multiple counties.
120	120	(c) An effective financing statement must be amended to
121	121	reflect material changes. An amendment to an effective financing
122	122	statement must be:
123	123	(1) in writing;
124	124	(2) signed by the secured party and the debtor; and
125	125	(3) filed not later than the 90th day after the
126	126	original filing date.
127	127	(d) An effective financing statement remains in effect for a
128	128	period of five years from the date of filing and may be extended for
129	129	an additional five-year period by filing or refiling a statement of
130	130	continuation at least 180 days before the expiration date of the
131	131	initial effective period.
132	132	(e) The secretary of state shall remove an effective
133	133	financing statement from the central filing system when the
134	134	statement expires or when a statement of termination is received
135	135	from a secured party, whichever occurs first.
136	136	(f) The secretary of state may collect a fee for each
137	137	effective financing statement filed under this chapter. An
138	138	effective financing statement is not filed until the fee authorized
139	139	by this section is paid as provided by Section 607.007(l).
140	140	(g) An effective financing statement is considered
141	141	satisfactory if it substantially complies with the requirements of
142	142	this section even if the statement contains minor errors that are
143	143	not seriously misleading as determined by the secretary of state.
144	144	Sec. 607.005. PROTECTION OF BUYERS, COMMISSION MERCHANTS,
145	145	AND SELLING AGENTS. A buyer, a commission merchant, or a selling
146	146	agent who, in the ordinary course of business, purchases a farm
147	147	product from a person engaged in farming operations takes the farm
148	148	product subject to a security interest in the farm product if:
149	149	(1) either:
150	150	(A) the buyer, commission merchant, or selling
151	151	agent fails to register with the secretary of state as prescribed by
152	152	rule before purchasing the farm product and the secured party has
153	153	filed an effective financing statement in the central filing system
154	154	that covers the farm product being purchased; or
155	155	(B) the buyer, commission merchant, or selling
156	156	agent:
157	157	(i) receives from the secretary of state
158	158	written notice under Section 607.007(e) or (i); and
159	159	(ii) does not secure, by performing any
160	160	payment obligation or other method, a waiver or release from the
161	161	secured party of the security interest specified in an effective
162	162	financing statement; or
163	163	(2) the secured party or the seller of the farm product
164	164	provides written notice of the security interest to the buyer,
165	165	commission merchant, or selling agent.
166	166	Sec. 607.006. IMMUNITY FROM LIABILITY. A buyer, commission
167	167	merchant, or selling agent who, in the ordinary course of business,
168	168	purchases farm products from or sells farm products for a person
169	169	engaged in farming operations may not be liable for errors or
170	170	inaccuracies generated by the central filing system if the buyer,
171	171	commission merchant, or selling agent has otherwise complied with
172	172	this chapter.
173	173	Sec. 607.007. CENTRAL FILING SYSTEM. (a) The secretary of
174	174	state shall develop and implement a central filing system, and
175	175	shall obtain the necessary certification for the system from the
176	176	United States Department of Agriculture.
177	177	(b) The secretary of state may adopt rules for the
178	178	implementation and operation of the central filing system.
179	179	(c) The Department of Information Resources shall assist
180	180	the secretary of state in developing and implementing the central
181	181	filing system.
182	182	(d) The secretary of state shall use the central filing
183	183	system to:
184	184	(1) record the date and hour of the filing of each
185	185	effective financing statement;
186	186	(2) compile all effective financing statements into a
187	187	master list that:
188	188	(A) is organized by farm product;
189	189	(B) is arranged within each farm product:
190	190	(i) as appropriate:
191	191	(a) in alphabetical order by last name
192	192	of the debtor or, if the debtor is not an individual, the first word
193	193	in the name of the debtor;
194	194	(b) in numerical order by social
195	195	security number of the debtor or, if the debtor is not an
196	196	individual, the tax identification number of the debtor; or
197	197	(c) according to a unique identifier
198	198	established by rule of the secretary of state;
199	199	(ii) geographically by county in which the
200	200	farm product was produced; and
201	201	(iii) by crop year;
202	202	(C) includes the information described by
203	203	Section 607.004(a)(3);
204	204	(D) is available in part in print or electronic
205	205	format; and
206	206	(E) can be organized by other additional sorting
207	207	methods; and
208	208	(3) maintain records of all buyers of farm products,
209	209	commission merchants, selling agents, and others who register with
210	210	the secretary of state, using a form that requires:
211	211	(A) the name and address of each registrant;
212	212	(B) information on the farm product or products
213	213	that the registrant is requesting;
214	214	(C) the name of each county in this state where
215	215	the farm product is produced or will be produced, or a blanket code
216	216	indicating the product is produced or will be produced in all
217	217	counties of this state; and
218	218	(D) an authorized signature.
219	219	(e) On or before the last business day of each month, the
220	220	secretary of state shall provide to a registrant a copy of those
221	221	portions of the master list that include information requested by
222	222	the registrant. The copy shall be presumed to have been received by
223	223	the third business day of the following month.
224	224	(f) A registrant is considered registered only for those
225	225	portions of the master list for which the registrant registers.
226	226	(g) A registrant is subject only to security interests shown
227	227	on the portions of the master list that the registrant receives as a
228	228	consequence of registration with the secretary of state. If a
229	229	particular security interest is shown on the master list but was
230	230	included after the last regular distribution of portions of the
231	231	master list to registrants, a registrant may not be subject to that
232	232	security interest.
233	233	(h) The registration with the secretary of state of a buyer,
234	234	commission merchant, selling agent, or other registrant expires one
235	235	year after the effective date of the registration.
236	236	(i) On request, the secretary of state shall provide, not
237	237	later than 24 hours after the time of the request, verbal
238	238	confirmation of the existence or nonexistence of any effective
239	239	financing statement on file. Not later than the close of the
240	240	business day following the date on which the request was received,
241	241	the secretary of state shall provide to a requestor written
242	242	confirmation of the existence of an effective financing statement.
243	243	(j) The state or a political subdivision of the state is not
244	244	liable if a loss or claim results from a confirmation of the
245	245	existence or nonexistence of an effective financing statement on
246	246	file with the secretary of state made in good faith by an employee
247	247	of the secretary of state under this section.
248	248	(k) A filing with the secretary of state under this section
249	249	is in addition to other filing requirements under this chapter.
250	250	(l) An effective financing statement is not considered
251	251	filed under this section until all authorized fees are paid to the
252	252	secretary of state.
253	253	(m) The secured party shall file a termination statement not
254	254	later than the 20th day after the date there are no outstanding
255	255	secured obligations or commitments to make advances, incur
256	256	obligations, or otherwise give value. The secured party may not be
257	257	required to file a termination statement if the debtor makes a
258	258	written request addressed to the secured party that a termination
259	259	not be filed. The request must be signed by the debtor or an
260	260	authorized representative of the debtor and may be made at any time
261	261	before the expiration date of the effective financing statement.
262	262	If the affected secured party does not file a termination statement
263	263	as required by this subsection, the secured party is liable to this
264	264	state for a civil penalty of $500 and to the debtor for any loss
265	265	caused to the debtor by the secured party's failure to terminate the
266	266	effective financing statement.
267	267	(n) The attorney general may enforce Subsection (m) on
268	268	behalf of the secretary of state and may take appropriate actions to
269	269	collect any penalties owed under Subsection (m).
270	270	Sec. 607.008. WRITTEN NOTICE AFFECTING FARM PRODUCTS;
271	271	DISCLOSURE REQUIREMENTS; PENALTY. (a) A secured party or a seller
272	272	of farm products may provide to a buyer, a commission merchant, or a
273	273	selling agent, not earlier than one year before the sale of the farm
274	274	products, a written notice of a security interest organized
275	275	according to farm products that:
276	276	(1) is an original or reproduced copy thereof;
277	277	(2) includes:
278	278	(A) the name and address of the secured party;
279	279	(B) the name and address of the debtor;
280	280	(C) one of the following:
281	281	(i) the social security number of the
282	282	debtor;
283	283	(ii) if the debtor is not an individual, the
284	284	taxpayer identification number of the debtor; or
285	285	(iii) another unique identifier
286	286	established by rule of the secretary of state; and
287	287	(D) a description of the farm product that is
288	288	subject to the security interest created by the debtor, including
289	289	the amount of the product where applicable, crop year, county, and a
290	290	reasonable description of the property; and
291	291	(3) states any payment obligations imposed on the
292	292	buyer, commission merchant, or selling agent by the secured party
293	293	as conditions for waiver or release of the security interest.
294	294	(b) A written notice under Subsection (a) must be amended to
295	295	reflect material changes. An amendment to a written notice must be:
296	296	(1) in writing;
297	297	(2) signed; and
298	298	(3) provided not later than the 10th day after the
299	299	original notice date.
300	300	(c) A written notice remains in effect until the earlier of
301	301	the expiration period of the effective filing statement or the date
302	302	of a transmission of notice signed by the secured party that the
303	303	effective filing statement has lapsed.
304	304	(d) For purposes of this section, "receipt" of a written
305	305	notice to a buyer, a commission merchant, or a selling agent occurs
306	306	within a reasonable time after the secured party or the seller of
307	307	the farm product sends the notice if the notice is sent in a manner
308	308	consistent with Section 1.201(b)(36). If a written notice is
309	309	transmitted electronically, the notice is presumed to be received
310	310	immediately on transmission. If the written notice is deposited in
311	311	the mail, the notice is presumed to be received on the third
312	312	business day after the date on which the notice was deposited.
313	313	(e) A secured party who intends to provide written notice of
314	314	the existence of a security interest in a farm product as provided
315	315	by this section shall require the person engaged in farming
316	316	operations to execute a security agreement that includes a
317	317	provision requiring the person to provide to the secured party a
318	318	list of the buyers, commission merchants, and selling agents to or
319	319	through whom the person may sell the farm product. If the person
320	320	engaged in farming operations sells the farm product collateral to
321	321	a buyer or through a commission merchant or selling agent not
322	322	included on the list, the person engaged in farming operations is
323	323	subject to Subsection (f), unless the person:
324	324	(1) has notified the secured party in writing of the
325	325	identity of the buyer, commission merchant, or selling agent at
326	326	least seven days before the date of the sale; or
327	327	(2) has accounted to the secured party for the
328	328	proceeds of the sale not later than the 20th day after the date of
329	329	the sale.
330	330	(f) A person who violates this section is liable to this
331	331	state for a civil penalty in an amount that is the greater of:
332	332	(1) $5,000; or
333	333	(2) 15 percent of the value or benefit received for the
334	334	farm product described in the security agreement.
335	335	SECTION 4. As soon as practicable after the effective date
336	336	of this Act, the office of the secretary of state shall adopt rules
337	337	and forms necessary to implement Chapter 607, Business & Commerce
338	338	Code, as added by this Act.
339	339	SECTION 5. This Act takes effect September 1, 2019.