Bill Text: IA SF2333 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to the uniform commercial code by providing for controllable electronic records.(Formerly SSB 3091.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2022-05-23 - Withdrawn. S.J. 880. [SF2333 Detail]
Download: Iowa-2021-SF2333-Introduced.html
Senate
File
2333
-
Introduced
SENATE
FILE
2333
BY
COMMITTEE
ON
JUDICIARY
(SUCCESSOR
TO
SSB
3091)
(COMPANION
TO
HF
2445
BY
COMMITTEE
ON
JUDICIARY)
A
BILL
FOR
An
Act
relating
to
the
uniform
commercial
code
by
providing
for
1
controllable
electronic
records.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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DIVISION
I
1
CONTROLLABLE
ELECTRONIC
RECORDS
2
Section
1.
NEW
SECTION
.
554.14101
Short
title.
3
This
Article
may
be
cited
as
Uniform
Commercial
Code
——
4
Controllable
Electronic
Records.
5
Sec.
2.
NEW
SECTION
.
554.14102
Definitions.
6
1.
Controllable
electronic
record
defined.
In
this
7
Article,
“controllable
electronic
record”
means
a
controllable
8
electronic
record
that
can
be
subjected
to
control
under
9
section
554.14105.
The
term
does
not
include
deposit
accounts,
10
electronic
chattel
paper,
electronic
documents
of
title,
11
intangible
money,
investment
property,
or
“transferable
12
records”
,
as
defined
in
the
federal
Electronic
Signatures
in
13
Global
and
National
Commerce
Act,
15
U.S.C.
§7021(a)(1)
or
as
14
defined
in
the
uniform
electronic
transactions
Act,
section
15
554.118,
subsection
1.
16
2.
Article
9
definitions
applicable
to
this
Article.
The
17
definitions
of
“account
debtor”
,
“authenticate”
,
“controllable
18
account”
,
“controllable
payment
intangible”
,
“deposit
account”
,
19
“electronic
chattel
paper”
,
“intangible
money”
,
“investment
20
property”
,
and
“proceeds”
in
Article
9
apply
to
this
Article.
21
3.
Definition
of
value.
“Value”
has
the
meaning
provided
in
22
section
554.3303,
subsection
1.
23
Sec.
3.
NEW
SECTION
.
554.14103
Scope.
24
1.
General
scope
of
Article.
This
Article
applies
to
25
controllable
electronic
records,
controllable
accounts,
and
26
controllable
payment
intangibles.
27
2.
Conflict
with
Article
9.
If
there
is
conflict
between
28
this
Article
and
Article
9,
Article
9
governs.
29
3.
Applicable
consumer
laws
and
other
laws.
A
transaction
30
subject
to
this
Article
is
subject
to
any
applicable
rule
of
31
law
which
establishes
a
different
rule
for
consumers,
including
32
as
provided
in
chapter
537,
or
any
other
statute
or
regulation
33
of
this
state
that
regulates
the
rates,
charges,
agreements,
34
and
practices
for
loans,
credit
sales,
or
other
extensions
of
35
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credit,
and
to
any
consumer
protection
statute
or
regulation.
1
Sec.
4.
NEW
SECTION
.
554.14104
Rights
in
controllable
2
electronic
records,
controllable
accounts,
and
controllable
3
payment
intangibles.
4
1.
Definition
of
qualifying
purchaser.
“Qualifying
5
purchaser”
means
a
purchaser
of
a
controllable
electronic
6
record
or
an
interest
in
the
controllable
electronic
record
7
that
obtains
control
of
the
controllable
electronic
record
8
for
value,
in
good
faith,
and
without
notice
of
a
claim
of
9
a
property
right
in
the
controllable
electronic
record
or
10
a
controllable
account
or
controllable
payment
intangible
11
evidenced
by
the
controllable
electronic
record.
12
2.
Applicability
of
other
law.
Except
as
provided
in
this
13
section,
law
other
than
this
Article
determines
whether
a
14
person
acquires
a
right
in
a
controllable
electronic
record
and
15
the
right,
if
any,
the
person
acquires.
16
3.
Rights
acquired
by
purchaser.
A
purchaser
of
a
17
controllable
electronic
record
acquires
all
rights
in
the
18
controllable
electronic
record
that
the
transferor
had
or
had
19
power
to
transfer.
20
4.
Purchase
of
limited
interest.
A
purchaser
of
a
limited
21
interest
in
a
controllable
electronic
record
acquires
rights
22
only
to
the
extent
of
the
interest
purchased.
23
5.
Rights
acquired
by
qualifying
purchaser.
In
addition
to
24
acquiring
the
rights
of
a
purchaser,
a
qualifying
purchaser
25
acquires
its
rights
in
the
controllable
electronic
record
and
26
a
controllable
account
or
controllable
payment
intangible
27
evidenced
by
the
controllable
electronic
record
free
of
a
claim
28
of
a
property
right
in
the
controllable
electronic
record,
29
controllable
account,
or
controllable
payment
intangible.
30
6.
Exception
for
claim
of
property
right
in
right
to
31
payment,
right
to
performance,
or
interest
in
property.
Except
32
as
provided
in
subsection
5
or
law
other
than
the
Uniform
33
Commercial
Code,
as
provided
in
this
chapter,
a
qualifying
34
purchaser
takes
a
right
to
payment,
right
to
performance,
or
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interest
in
property
evidenced
by
the
controllable
electronic
1
record
subject
to
a
claim
of
a
property
right
in
the
right
to
2
payment,
right
to
performance,
or
interest
in
property.
3
7.
Rights
of
a
purchaser
of
a
controllable
electronic
4
record
traceable
to
another
controllable
electronic
record.
The
5
following
rules
apply
to
a
purchaser
of
a
controllable
6
electronic
record
traceable
to
another
controllable
electronic
7
record:
8
a.
An
action
based
on
a
claim
of
a
property
right
in
the
9
other
controllable
electronic
record
or
a
controllable
account
10
or
controllable
payment
intangible
evidenced
by
the
other
11
controllable
electronic
record,
whether
framed
in
conversion,
12
replevin,
constructive
trust,
equitable
lien,
or
other
theory,
13
may
not
be
asserted
against
the
purchaser
if
the
purchaser
14
acquires
its
interest
in
and
obtains
control
of
the
traceable
15
controllable
electronic
record
for
value,
in
good
faith,
and
16
without
notice
of
a
claim
of
a
property
right
in
the
traceable
17
controllable
electronic
record
or
a
controllable
account
or
18
controllable
payment
intangible
evidenced
by
the
traceable
19
controllable
electronic
record.
20
b.
The
purchaser
takes
free
of
a
security
interest
in
the
21
traceable
controllable
electronic
record
and
a
controllable
22
account
or
controllable
payment
intangible
evidenced
by
the
23
traceable
controllable
electronic
record
if:
24
(1)
the
purchaser
acquires
its
interest
in
and
obtains
25
control
of
the
traceable
controllable
electronic
record
for
26
value,
in
good
faith,
and
without
notice
of
a
claim
of
a
27
property
right
in
the
traceable
controllable
electronic
record
28
or
a
controllable
account
or
controllable
payment
intangible
29
evidenced
by
the
traceable
controllable
electronic
record;
and
30
(2)
the
traceable
controllable
electronic
record
31
constitutes
proceeds
of
the
other
controllable
electronic
32
record.
33
8.
Filing
not
notice.
Filing
of
a
financing
statement
under
34
Article
9
is
not
notice
of
a
claim
of
a
property
interest
in
a
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controllable
electronic
record.
1
Sec.
5.
NEW
SECTION
.
554.14105
Control
of
controllable
2
electronic
record.
3
1.
Requirements
for
control.
A
person
has
control
of
a
4
controllable
electronic
record
if:
5
a.
the
controllable
electronic
record,
a
record
attached
6
to
or
logically
associated
with
the
controllable
electronic
7
record,
or
the
system
in
which
the
controllable
electronic
8
record
is
recorded,
if
any,
gives
the
person:
9
(1)
the
power
to
avail
itself
of
substantially
all
the
10
benefit
from
the
controllable
electronic
record;
and
11
(2)
subject
to
subsection
2,
the
exclusive
power
to:
12
(a)
prevent
others
from
availing
themselves
of
13
substantially
all
the
benefit
from
the
controllable
electronic
14
record;
and
15
(b)
transfer
control
of
the
controllable
electronic
record
16
to
another
person
or
cause
another
person
to
obtain
control
17
of
a
controllable
electronic
record
that
is
traceable
to
the
18
controllable
electronic
record;
and
19
b.
the
controllable
electronic
record,
a
record
attached
20
to
or
logically
associated
with
the
controllable
electronic
21
record,
or
the
system
in
which
the
controllable
electronic
22
record
is
recorded,
if
any,
enables
the
person
to
readily
23
identify
itself
as
having
the
powers
specified
in
paragraph
24
“a”
.
The
person
may
be
identified
in
any
way,
including
by
25
name,
identifying
number,
cryptographic
key,
office,
or
account
26
number.
27
2.
Certain
limitations
on
exclusivity
permitted.
A
power
28
specified
in
subsection
1,
paragraph
“a”
,
is
exclusive,
even
if:
29
a.
the
controllable
electronic
record
or
the
system
in
which
30
the
controllable
electronic
record
is
recorded,
if
any,
limits
31
the
use
to
which
the
controllable
electronic
record
may
be
put
32
or
has
a
protocol
that
is
programmed
to
result
in
a
transfer
of
33
control;
or
34
b.
the
person
has
agreed
to
share
the
power
with
another
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person.
1
Sec.
6.
NEW
SECTION
.
554.14106
Discharge
of
account
debtor
2
on
controllable
account
or
controllable
payment
intangible.
3
1.
General
rule
——
discharge
of
account
debtor
on
4
controllable
account
or
controllable
payment
intangible.
Except
5
as
provided
in
this
section,
an
account
debtor
on
a
6
controllable
account
or
controllable
payment
intangible
may
7
discharge
its
obligation:
8
a.
by
paying
the
person
having
control
of
the
controllable
9
electronic
record
that
evidences
the
controllable
account
or
10
controllable
payment
intangible;
or
11
b.
by
paying
a
person
that
formerly
had
control
of
the
12
controllable
electronic
record.
13
2.
Discharge
of
account
debtor
——
effect
of
notification
of
14
transfer
of
control.
Subject
to
subsections
3
and
7,
an
account
15
debtor
may
not
discharge
its
obligation
by
paying
a
person
that
16
formerly
had
control
of
the
controllable
electronic
record
if
17
the
account
debtor
receives
a
notification,
authenticated
by
a
18
person
that
formerly
had
control
or
the
person
to
which
control
19
was
transferred,
that
reasonably
identifies
the
controllable
20
account
or
controllable
payment
intangible,
notifies
the
21
account
debtor
that
control
of
the
controllable
electronic
22
record
that
evidences
the
controllable
account
or
controllable
23
payment
intangible
was
transferred,
identifies
the
transferee,
24
and
provides
a
commercially
reasonable
method
by
which
the
25
account
debtor
is
to
pay
the
transferee.
The
transferee
may
be
26
identified
in
any
way,
including
by
name,
identifying
number,
27
cryptographic
key,
office,
or
account
number.
After
receipt
28
of
the
notification,
the
account
debtor
may
discharge
its
29
obligation
only
by
paying
in
accordance
with
the
notification
30
and
may
not
discharge
the
obligation
by
paying
a
person
that
31
formerly
had
control.
32
3.
When
notification
ineffective.
Subject
to
subsection
7,
33
notification
is
ineffective
under
subsection
2:
34
a.
unless,
before
the
notification
is
sent,
the
account
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debtor
and
the
person
that
at
that
time
had
control
of
the
1
controllable
electronic
record
that
evidences
the
controllable
2
account
or
controllable
payment
intangible
agree
in
an
3
authenticated
record
to
a
commercially
reasonable
method
by
4
which
a
person
can
furnish
reasonable
proof
that
control
has
5
been
transferred;
6
b.
to
the
extent
that
an
agreement
between
the
account
7
debtor
and
the
seller
of
a
payment
intangible
limits
the
8
account
debtor’s
duty
to
pay
a
person
other
than
the
seller
and
9
the
limitation
is
effective
under
law
other
than
this
Article;
10
or
11
c.
at
the
option
of
the
account
debtor,
if
the
notification
12
notifies
the
account
debtor
to
divide
a
payment
and
pay
13
portions
by
more
than
one
method.
14
4.
Proof
of
transfer.
Subject
to
subsection
7,
if
requested
15
by
the
account
debtor,
the
person
giving
the
notification
shall
16
seasonably
furnish
reasonable
proof,
using
the
agreed
method,
17
that
control
of
the
controllable
electronic
record
has
been
18
transferred.
Unless
the
person
complies
with
the
request,
the
19
account
debtor
may
discharge
its
obligation
by
paying
a
person
20
that
formerly
had
control,
even
if
the
account
debtor
has
21
received
a
notification
under
subsection
2.
22
5.
When
proof
sufficient.
A
person
furnishes
reasonable
23
proof
that
control
has
been
transferred
if
the
person
24
demonstrates,
using
the
agreed
method,
that
the
transferee
has
25
the
power
to
avail
itself
of
substantially
all
the
benefit
26
from
the
controllable
electronic
record,
prevent
others
from
27
availing
themselves
of
substantially
all
the
benefit
from
the
28
controllable
electronic
record,
and
transfer
these
powers
to
29
another
person.
30
6.
Subsection
3,
paragraph
“c”,
not
waivable.
Subject
to
31
subsection
7,
an
account
debtor
may
not
waive
or
vary
its
32
option
under
subsection
3,
paragraph
“c”
.
33
7.
Rule
for
individual
under
other
law.
This
section
is
34
subject
to
law
other
than
this
Article
which
establishes
a
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different
rule
for
an
account
debtor
who
is
an
individual
and
1
who
incurred
the
obligation
primarily
for
personal,
family,
or
2
household
purposes.
3
Sec.
7.
NEW
SECTION
.
554.14107
Governing
law.
4
Unless
otherwise
agreed
to
by
the
parties,
the
laws
of
this
5
state
shall
govern
any
actions
taken
pursuant
to
this
Article.
6
Sec.
8.
NEW
SECTION
.
554.14108
Applicability.
7
This
Article
applies
to
any
transaction
involving
a
8
controllable
electronic
record
that
arises
on
or
after
the
9
effective
date
of
this
section.
This
Article
does
not
apply
to
10
any
transaction
involving
a
controllable
electronic
record
that
11
arises
before
the
effective
date
of
this
section
even
if
the
12
transaction
would
be
subject
to
this
Article
if
the
transaction
13
had
arisen
on
or
after
the
effective
date
of
this
section.
14
This
Article
does
not
apply
to
a
right
of
action
with
regard
to
15
any
transaction
involving
a
controllable
electronic
record
that
16
has
accrued
before
the
effective
date
of
this
section.
17
Sec.
9.
NEW
SECTION
.
554.14109
Savings
clause.
18
Any
transaction
involving
a
controllable
electronic
record
19
that
arose
before
the
effective
date
of
this
section
and
20
the
rights,
obligations,
and
interests
flowing
from
that
21
transaction
are
governed
by
any
statute
or
other
rule
amended
22
or
repealed
by
this
Act
as
if
such
amendment
or
repeal
had
not
23
occurred
and
may
be
terminated,
completed,
consummated,
or
24
enforced
under
that
statute
or
other
rule.
25
DIVISION
II
26
CORRESPONDING
CHANGES
27
PART
A
28
GENERAL
PROVISIONS
29
Sec.
10.
Section
554.1201,
subsection
2,
Code
2022,
is
30
amended
by
adding
the
following
new
paragraph:
31
NEW
PARAGRAPH
.
0q.
“Electronic”
means
relating
to
32
technology
having
electrical,
digital,
magnetic,
wireless,
33
optical,
electromagnetic,
or
similar
capabilities.
34
Sec.
11.
Section
554.1201,
subsection
2,
paragraph
x,
Code
35
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2022,
is
amended
to
read
as
follows:
1
x.
“Money”
means
a
medium
of
exchange
currently
authorized
2
or
adopted
by
a
domestic
or
foreign
government.
The
term
3
includes
a
monetary
unit
of
account
established
by
an
4
intergovernmental
organization
or
by
agreement
between
two
or
5
more
countries.
6
Sec.
12.
Section
554.1204,
unnumbered
paragraph
1,
Code
7
2022,
is
amended
to
read
as
follows:
8
Except
as
otherwise
provided
in
Articles
3
,
4
,
and
5
,
and
14
,
9
a
person
gives
value
for
rights
if
the
person
acquires
them:
10
PART
B
11
SECURED
TRANSACTIONS
12
Sec.
13.
Section
554.9102,
subsection
1,
paragraphs
b,
ac,
13
and
bi,
Code
2022,
are
amended
to
read
as
follows:
14
b.
“Account”
,
except
as
used
in
“account
for”
,
means
a
15
right
to
payment
of
a
monetary
obligation,
whether
or
not
16
earned
by
performance,
for
property
that
has
been
or
is
to
17
be
sold,
leased,
licensed,
assigned,
or
otherwise
disposed
18
of;
for
services
rendered
or
to
be
rendered;
for
a
policy
of
19
insurance
issued
or
to
be
issued;
for
a
secondary
obligation
20
incurred
or
to
be
incurred;
for
energy
provided
or
to
be
21
provided;
for
the
use
or
hire
of
a
vessel
under
a
charter
or
22
other
contract;
arising
out
of
the
use
of
a
credit
or
charge
23
card
or
information
contained
on
or
for
use
with
the
card;
24
or
as
winnings
in
a
lottery
or
other
game
of
chance
operated
25
or
sponsored
by
a
state,
governmental
unit
of
a
state,
or
26
person
licensed
or
authorized
to
operate
the
game
by
a
state
or
27
governmental
unit
of
a
state.
The
term
includes
controllable
28
accounts
and
health
care
insurance
receivables.
The
term
29
does
not
include
rights
to
payment
evidenced
by
chattel
paper
30
or
an
instrument,
commercial
tort
claims,
deposit
accounts,
31
investment
property,
letter-of-credit
rights
or
letters
of
32
credit,
or
rights
to
payment
for
money
or
funds
advanced
or
33
sold,
other
than
rights
arising
out
of
the
use
of
a
credit
or
34
charge
card
or
information
contained
on
or
for
use
with
the
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card.
1
ac.
“Deposit
account”
means
a
demand,
time,
savings,
2
passbook,
or
similar
account
maintained
with
a
bank.
The
term
3
includes
an
account
that
is
money
under
section
554.1201,
4
subsection
2,
paragraph
“x”
.
The
term
does
not
include
5
investment
property
or
accounts
evidenced
by
an
instrument.
6
bi.
“Payment
intangible”
means
a
general
intangible
7
under
which
the
account
debtor’s
principal
obligation
is
a
8
monetary
obligation.
The
term
includes
controllable
payment
9
intangibles.
10
Sec.
14.
Section
554.9102,
subsection
1,
Code
2022,
is
11
amended
by
adding
the
following
new
paragraphs:
12
NEW
PARAGRAPH
.
0ab.
“Controllable
account”
means
an
account
13
evidenced
by
a
controllable
electronic
record
that
provides
14
that
the
account
debtor
undertakes
to
pay
the
person
that
has
15
control
of
the
controllable
electronic
record
under
section
16
554.14105.
17
NEW
PARAGRAPH
.
00ab.
“Controllable
payment
intangible”
means
18
a
payment
intangible
evidenced
by
a
controllable
electronic
19
record
that
provides
that
the
account
debtor
undertakes
to
pay
20
the
person
that
has
control
of
the
controllable
electronic
21
record
under
section
554.14105.
22
NEW
PARAGRAPH
.
0av.
“Intangible
money”
means
money
that
23
is
represented
or
evidenced
by
an
electronic
record.
The
term
24
does
not
include
money
that
is
a
deposit
account.
25
NEW
PARAGRAPH
.
0cb.
“Tangible
money”
means
money
that
is
26
represented
or
evidenced
by
a
record
consisting
of
information
27
that
is
inscribed
on
a
tangible
medium.
28
Sec.
15.
Section
554.9102,
subsection
2,
Code
2022,
is
29
amended
by
adding
the
following
new
paragraph:
30
NEW
PARAGRAPH
.
0i.
“Controllable
electronic
31
record”
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Section
554.14102.
32
Sec.
16.
NEW
SECTION
.
554.9105A
Control
of
intangible
33
money.
34
1.
Requirements
for
control.
A
person
has
control
of
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intangible
money
if
the
following
conditions
are
met:
1
a.
the
intangible
money
or
the
system
in
which
the
2
intangible
money
is
recorded,
if
any,
gives
the
person:
3
(1)
the
power
to
avail
itself
of
substantially
all
the
4
benefit
from
the
intangible
money;
and
5
(2)
subject
to
subsection
2,
the
exclusive
power
to:
6
(a)
prevent
others
from
availing
themselves
of
7
substantially
all
the
benefit
from
the
intangible
money;
and
8
(b)
transfer
control
of
the
intangible
money
to
another
9
person
or
cause
another
person
to
obtain
control
of
intangible
10
money
that
is
traceable
to
the
intangible
money;
and
11
b.
the
intangible
money,
a
record
attached
to
or
logically
12
associated
with
the
intangible
money,
or
the
system
in
which
13
the
intangible
money
is
recorded,
if
any,
enables
the
person
to
14
readily
identify
itself
as
having
the
powers
under
paragraph
15
“a”
.
The
person
may
be
identified
in
any
way,
including
by
16
name,
identifying
number,
cryptographic
key,
office,
or
account
17
number.
18
2.
Certain
limitations
on
exclusivity
permitted.
A
power
19
specified
in
subsection
1
is
exclusive,
even
if:
20
a.
the
intangible
money
or
the
system
in
which
the
21
intangible
money
is
recorded,
if
any,
limits
the
use
to
which
22
the
intangible
money
may
be
put
or
has
protocols
that
are
23
programmed
to
result
in
a
transfer
of
control;
or
24
b.
the
person
has
agreed
to
share
the
power
with
another
25
person.
26
Sec.
17.
NEW
SECTION
.
554.9107A
Control
of
controllable
27
electronic
record,
controllable
account,
or
controllable
payment
28
intangible.
29
1.
Control
under
section
554.14105.
A
secured
party
has
30
control
of
a
controllable
electronic
record
as
provided
in
31
section
554.14105.
32
2.
Controllable
account
or
controllable
payment
33
intangible.
A
secured
party
has
control
of
a
controllable
34
account
or
controllable
payment
intangible
if
the
secured
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party
has
control
of
the
controllable
electronic
record
that
1
evidences
the
controllable
account
or
controllable
payment
2
intangible.
3
Sec.
18.
Section
554.9203,
subsection
2,
Code
2022,
is
4
amended
to
read
as
follows:
5
2.
Enforceability.
Except
as
otherwise
provided
in
6
subsections
3
through
9
10
,
a
security
interest
is
enforceable
7
against
the
debtor
and
third
parties
with
respect
to
the
8
collateral
only
if:
9
a.
value
has
been
given;
10
b.
the
debtor
has
rights
in
the
collateral
or
the
power
to
11
transfer
rights
in
the
collateral
to
a
secured
party;
and
12
c.
one
of
the
following
conditions
is
met:
13
(1)
the
debtor
has
authenticated
a
security
agreement
that
14
provides
a
description
of
the
collateral
and,
if
the
security
15
interest
covers
timber
to
be
cut,
a
description
of
the
land
16
concerned;
17
(2)
the
collateral
is
not
a
certificated
security
and
is
18
in
the
possession
of
the
secured
party
under
section
554.9313
19
pursuant
to
the
debtor’s
security
agreement;
20
(3)
the
collateral
is
a
certificated
security
in
registered
21
form
and
the
security
certificate
has
been
delivered
to
the
22
secured
party
under
section
554.8301
pursuant
to
the
debtor’s
23
security
agreement;
or
24
(4)
the
collateral
is
controllable
electronic
records,
25
controllable
accounts,
controllable
payment
intangibles,
26
deposit
accounts,
electronic
chattel
paper,
intangible
money,
27
investment
property,
letter-of-credit
rights,
or
electronic
28
documents,
and
the
secured
party
has
control
under
section
29
554.7106
,
554.9104
,
554.9105
,
554.9105A,
554.9106
,
or
554.9107
,
30
or
554.9107A
pursuant
to
the
debtor’s
security
agreement.
31
Sec.
19.
Section
554.9203,
Code
2022,
is
amended
by
adding
32
the
following
new
subsection:
33
NEW
SUBSECTION
.
10.
Controllable
account
or
payment
34
intangible.
The
attachment
of
a
security
interest
in
a
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controllable
electronic
record
that
evidences
a
controllable
1
account
or
controllable
payment
intangible
is
also
attachment
2
of
a
security
interest
in
the
controllable
account
or
3
controllable
payment
intangible.
4
Sec.
20.
Section
554.9207,
subsection
3,
Code
2022,
is
5
amended
to
read
as
follows:
6
3.
Duties
and
rights
when
secured
party
in
possession
or
7
control.
Except
as
otherwise
provided
in
subsection
4
,
a
8
secured
party
having
possession
of
collateral
or
control
9
of
collateral
under
section
554.7106
,
554.9104
,
554.9105
,
10
554.9106
,
or
554.9107
,
or
554.9107A
:
11
a.
may
hold
as
additional
security
any
proceeds,
except
12
money
or
funds,
received
from
the
collateral;
13
b.
shall
apply
money
or
funds
received
from
the
collateral
14
to
reduce
the
secured
obligation,
unless
remitted
to
the
15
debtor;
and
16
c.
may
create
a
security
interest
in
the
collateral.
17
Sec.
21.
Section
554.9301,
subsection
3,
Code
2022,
is
18
amended
to
read
as
follows:
19
3.
Except
as
otherwise
provided
in
subsection
4
,
while
20
tangible
negotiable
documents,
goods,
instruments,
tangible
21
money,
or
tangible
chattel
paper
is
located
in
a
jurisdiction,
22
the
local
law
of
that
jurisdiction
governs:
23
a.
perfection
of
a
security
interest
in
the
goods
by
filing
24
a
fixture
filing;
25
b.
perfection
of
a
security
interest
in
timber
to
be
cut;
26
and
27
c.
the
effect
of
perfection
or
nonperfection
and
the
28
priority
of
a
nonpossessory
security
interest
in
the
29
collateral.
30
Sec.
22.
Section
554.9308,
Code
2022,
is
amended
by
adding
31
the
following
new
subsection:
32
NEW
SUBSECTION
.
8.
Controllable
account
or
payment
33
intangible.
Perfection
of
a
security
interest
in
a
controllable
34
electronic
record
that
evidences
a
controllable
account
or
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controllable
payment
intangible
also
perfects
a
security
1
interest
in
the
controllable
account
or
controllable
payment
2
intangible.
3
Sec.
23.
Section
554.9310,
subsection
2,
paragraph
h,
Code
4
2022,
is
amended
to
read
as
follows:
5
h.
in
deposit
accounts,
electronic
chattel
paper,
electronic
6
documents,
intangible
money,
investment
property,
controllable
7
electronic
records,
controllable
accounts,
controllable
payment
8
intangible,
or
letter-of-credit
rights
which
is
perfected
by
9
control
under
section
554.9314
;
10
Sec.
24.
Section
554.9312,
Code
2022,
is
amended
to
read
as
11
follows:
12
554.9312
Perfection
of
security
interests
in
controllable
13
electronic
records,
controllable
accounts,
controllable
payment
14
intangibles,
chattel
paper,
deposit
accounts,
documents,
15
goods
covered
by
documents,
instruments,
investment
property,
16
letter-of-credit
rights,
and
money
——
perfection
by
permissive
17
filing
——
temporary
perfection
without
filing
or
transfer
of
18
possession.
19
1.
Perfection
by
filing
permitted.
A
security
interest
20
in
controllable
electronic
records,
controllable
accounts,
21
controllable
payment
intangibles,
chattel
paper,
negotiable
22
documents,
instruments,
or
investment
property
may
be
perfected
23
by
filing.
24
2.
Control
or
possession
of
certain
collateral.
Except
as
25
otherwise
provided
in
section
554.9315,
subsections
3
and
4
,
26
for
proceeds:
27
a.
a
security
interest
in
a
deposit
account
may
be
perfected
28
only
by
control
under
section
554.9314
;
29
b.
and
except
as
otherwise
provided
in
section
554.9308,
30
subsection
4
,
a
security
interest
in
a
letter-of-credit
right
31
may
be
perfected
only
by
control
under
section
554.9314
;
and
32
c.
a
security
interest
in
tangible
money
may
be
perfected
33
only
by
the
secured
party’s
taking
possession
under
section
34
554.9313
;
and
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d.
a
security
interest
in
intangible
money
may
be
perfected
1
only
by
control
under
section
554.9105A
.
2
3.
Goods
covered
by
negotiable
document.
While
goods
are
3
in
the
possession
of
a
bailee
that
has
issued
a
negotiable
4
document
covering
the
goods:
5
a.
a
security
interest
in
the
goods
may
be
perfected
by
6
perfecting
a
security
interest
in
the
document;
and
7
b.
a
security
interest
perfected
in
the
document
has
8
priority
over
any
security
interest
that
becomes
perfected
in
9
the
goods
by
another
method
during
that
time.
10
4.
Goods
covered
by
nonnegotiable
document.
While
goods
are
11
in
the
possession
of
a
bailee
that
has
issued
a
nonnegotiable
12
document
covering
the
goods,
a
security
interest
in
the
goods
13
may
be
perfected
by:
14
a.
issuance
of
a
document
in
the
name
of
the
secured
party;
15
b.
the
bailee’s
receipt
of
notification
of
the
secured
16
party’s
interest;
or
17
c.
filing
as
to
the
goods.
18
5.
Temporary
perfection
——
new
value.
A
security
19
interest
in
certificated
securities,
negotiable
documents,
20
or
instruments
is
perfected
without
filing
or
the
taking
of
21
possession
or
control
for
a
period
of
twenty
days
from
the
time
22
it
attaches
to
the
extent
that
it
arises
for
new
value
given
23
under
an
authenticated
security
agreement.
24
6.
Temporary
perfection
——
goods
or
documents
made
available
25
to
debtor.
A
perfected
security
interest
in
a
negotiable
26
document
or
goods
in
possession
of
a
bailee,
other
than
one
27
that
has
issued
a
negotiable
document
for
the
goods,
remains
28
perfected
for
twenty
days
without
filing
if
the
secured
29
party
makes
available
to
the
debtor
the
goods
or
documents
30
representing
the
goods
for
the
purpose
of:
31
a.
ultimate
sale
or
exchange;
or
32
b.
loading,
unloading,
storing,
shipping,
transshipping,
33
manufacturing,
processing,
or
otherwise
dealing
with
them
in
a
34
manner
preliminary
to
their
sale
or
exchange.
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7.
Temporary
perfection
——
delivery
of
security
certificate
1
or
instrument
to
debtor.
A
perfected
security
interest
in
2
a
certificated
security
or
instrument
remains
perfected
for
3
twenty
days
without
filing
if
the
secured
party
delivers
the
4
security
certificate
or
instrument
to
the
debtor
for
the
5
purpose
of:
6
a.
ultimate
sale
or
exchange;
or
7
b.
presentation,
collection,
enforcement,
renewal,
or
8
registration
of
transfer.
9
8.
Expiration
of
temporary
perfection.
After
the
twenty-day
10
period
specified
in
subsection
5,
6,
or
7
expires,
perfection
11
depends
upon
compliance
with
this
Article
.
12
Sec.
25.
Section
554.9313,
subsection
1,
Code
2022,
is
13
amended
to
read
as
follows:
14
1.
Perfection
by
possession
or
delivery.
Except
as
otherwise
15
provided
in
subsection
2
,
a
secured
party
may
perfect
a
16
security
interest
in
tangible
negotiable
documents,
goods,
17
instruments,
tangible
money,
or
tangible
chattel
paper
by
18
taking
possession
of
the
collateral.
A
secured
party
may
19
perfect
a
security
interest
in
certificated
securities
by
20
taking
delivery
of
the
certificated
securities
under
section
21
554.8301
.
22
Sec.
26.
Section
554.9314,
subsections
1
and
2,
Code
2022,
23
are
amended
to
read
as
follows:
24
1.
Perfection
by
control.
A
security
interest
in
investment
25
property,
deposit
accounts,
intangible
money,
letter-of-credit
26
rights,
controllable
electronic
records,
controllable
accounts,
27
controllable
payment
intangibles,
electronic
chattel
paper,
28
or
electronic
documents
may
be
perfected
by
control
of
the
29
collateral
under
section
554.7106
,
554.9104
,
554.9105
,
30
554.9105A,
554.9106
,
or
554.9107
,
or
554.9107A
.
31
2.
Specified
collateral
——
time
of
perfection
by
control
——
32
continuation
of
perfection.
A
security
interest
in
controllable
33
electronic
records,
controllable
accounts,
controllable
payment
34
intangibles,
deposit
accounts,
intangible
money,
electronic
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chattel
paper,
letter-of-credit
rights,
or
electronic
documents
1
is
perfected
by
control
under
section
554.7106
,
554.9104
,
2
554.9105
,
or
554.9107
,
or
554.9107A
when
the
secured
party
3
obtains
control
and
remains
perfected
by
control
only
while
the
4
secured
party
retains
control.
5
Sec.
27.
NEW
SECTION
.
554.9326A
Priority
of
security
6
interests
in
controllable
electronic
records,
controllable
7
accounts,
and
controllable
payment
intangibles.
8
A
security
interest
in
a
controllable
electronic
record,
9
controllable
account,
or
controllable
payment
intangible
10
held
by
a
secured
party
having
control
of
the
controllable
11
electronic
record,
controllable
account,
or
controllable
12
payment
intangible
has
priority
over
a
conflicting
security
13
interest
held
by
a
secured
party
that
does
not
have
control.
14
Sec.
28.
Section
554.9331,
Code
2022,
is
amended
to
read
as
15
follows:
16
554.9331
Priority
of
rights
of
purchasers
of
instruments,
17
documents,
and
securities
,
controllable
electronic
records,
18
controllable
accounts,
and
controllable
payment
intangibles
under
19
other
articles
Articles
——
priority
of
interests
in
financial
20
assets
and
security
entitlements
under
Article
8
and
controllable
21
electronic
records
under
Article
14
.
22
1.
Rights
under
Articles
3
,
7
,
and
8
,
and
14
not
23
limited.
This
Article
does
not
limit
the
rights
of
a
holder
24
in
due
course
of
a
negotiable
instrument,
a
holder
to
which
a
25
negotiable
document
of
title
has
been
duly
negotiated,
or
a
26
protected
purchaser
of
a
security
,
or
a
qualifying
purchaser
of
27
a
controllable
electronic
record
.
These
holders
or
purchasers
28
take
priority
over
an
earlier
security
interest,
even
if
29
perfected,
to
the
extent
provided
in
Articles
3
,
7
,
and
8
,
and
30
14
.
31
2.
Protection
under
Article
Articles
8
and
14
.
This
Article
32
does
not
limit
the
rights
of
or
impose
liability
on
a
person
to
33
the
extent
that
the
person
is
protected
against
the
assertion
34
of
a
claim
under
Article
8
or
14
.
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3.
Filing
not
notice.
Filing
under
this
Article
does
not
1
constitute
notice
of
a
claim
or
defense
to
the
holders,
or
2
purchasers,
or
persons
described
in
subsections
1
and
2
.
3
Sec.
29.
Section
554.9406,
subsections
1,
2,
and
3,
Code
4
2022,
are
amended
to
read
as
follows:
5
1.
Discharge
of
account
debtor
——
effect
of
6
notification.
Subject
to
subsections
2
through
9
and
7
11
,
an
account
debtor
on
an
account,
chattel
paper,
or
a
8
payment
intangible
may
discharge
its
obligation
by
paying
the
9
assignor
until,
but
not
after,
the
account
debtor
receives
a
10
notification,
authenticated
by
the
assignor
or
the
assignee,
11
that
the
amount
due
or
to
become
due
has
been
assigned
and
that
12
payment
is
to
be
made
to
the
assignee.
After
receipt
of
the
13
notification,
the
account
debtor
may
discharge
its
obligation
14
by
paying
the
assignee
and
may
not
discharge
the
obligation
by
15
paying
the
assignor.
16
2.
When
notification
ineffective.
Subject
to
subsection
17
subsections
8
and
11
,
notification
is
ineffective
under
18
subsection
1
:
19
a.
if
it
does
not
reasonably
identify
the
rights
assigned;
20
b.
to
the
extent
that
an
agreement
between
an
account
21
debtor
and
a
seller
of
a
payment
intangible
limits
the
account
22
debtor’s
duty
to
pay
a
person
other
than
the
seller
and
the
23
limitation
is
effective
under
law
other
than
this
Article
;
or
24
c.
at
the
option
of
an
account
debtor,
if
the
notification
25
notifies
the
account
debtor
to
make
less
than
the
full
amount
26
of
any
installment
or
other
periodic
payment
to
the
assignee,
27
even
if:
28
(1)
only
a
portion
of
the
account,
chattel
paper,
or
payment
29
intangible
has
been
assigned
to
that
assignee;
30
(2)
a
portion
has
been
assigned
to
another
assignee;
or
31
(3)
the
account
debtor
knows
that
the
assignment
to
that
32
assignee
is
limited.
33
3.
Proof
of
assignment.
Subject
to
subsection
subsections
34
8
and
11
,
if
requested
by
the
account
debtor,
an
assignee
shall
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seasonably
furnish
reasonable
proof
that
the
assignment
has
1
been
made.
Unless
the
assignee
complies,
the
account
debtor
2
may
discharge
its
obligation
by
paying
the
assignor,
even
if
3
the
account
debtor
has
received
a
notification
under
subsection
4
1
.
5
Sec.
30.
Section
554.9406,
Code
2022,
is
amended
by
adding
6
the
following
new
subsection:
7
NEW
SUBSECTION
.
11.
Inapplicability
of
certain
8
subsections.
Subsections
1
through
3
and
7
do
not
apply
to
a
9
controllable
account
or
controllable
payment
intangible.
10
Sec.
31.
Section
554.9601,
subsection
2,
Code
2022,
is
11
amended
to
read
as
follows:
12
2.
Rights
and
duties
of
secured
party
in
possession
or
13
control.
A
secured
party
in
possession
of
collateral
or
control
14
of
collateral
under
section
554.7106
,
554.9104
,
554.9105
,
15
554.9106
,
or
554.9107
,
or
554.9107A
has
the
rights
and
duties
16
provided
in
section
554.9207
.
17
Sec.
32.
Section
554.9605,
Code
2022,
is
amended
to
read
as
18
follows:
19
554.9605
Unknown
debtor
or
secondary
obligor.
20
1.
Duties
to
unknown
persons
——
general
rule.
A
Subject
to
21
subsection
2,
a
secured
party
does
not
owe
a
duty
based
on
its
22
status
as
secured
party:
23
1.
a.
to
a
person
that
is
a
debtor
or
obligor,
unless
the
24
secured
party
knows:
25
a.
(1)
that
the
person
is
a
debtor
or
obligor;
26
b.
(2)
the
identity
of
the
person;
and
27
c.
(3)
how
to
communicate
with
the
person;
or
28
2.
b.
to
a
secured
party
or
lienholder
that
has
filed
a
29
financing
statement
against
a
person,
unless
the
secured
party
30
knows:
31
a.
(1)
that
the
person
is
a
debtor;
and
32
b.
(2)
the
identity
of
the
person.
33
2.
When
subsection
1
not
applicable
——
notice
that
nature
34
of
collateral
or
system
in
which
collateral
recorded
prevents
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acquisition
of
knowledge.
Subsection
1
does
not
apply
to
a
1
secured
party
that,
at
the
time
the
secured
party’s
security
2
interest
attaches
to
a
controllable
electronic
record,
3
controllable
account,
or
controllable
payment
intangible,
has
4
notice
that
the
nature
of
the
collateral
or
the
system
in
5
which
the
collateral
is
recorded,
if
any,
would
prevent
the
6
secured
party
from
acquiring
the
knowledge
specified
in
that
7
subsection.
8
Sec.
33.
Section
554.9628,
subsection
2,
Code
2022,
is
9
amended
to
read
as
follows:
10
2.
Limitation
of
liability
based
on
status
as
secured
11
party.
A
Subject
to
subsection
2A,
a
secured
party
is
not
12
liable
because
of
its
status
as
secured
party:
13
a.
to
a
person
that
is
a
debtor
or
obligor,
unless
the
14
secured
party
knows:
15
(1)
that
the
person
is
a
debtor
or
obligor;
16
(2)
the
identity
of
the
person;
and
17
(3)
how
to
communicate
with
the
person;
or
18
b.
to
a
secured
party
or
lienholder
that
has
filed
a
19
financing
statement
against
a
person,
unless
the
secured
party
20
knows:
21
(1)
that
the
person
is
a
debtor;
and
22
(2)
the
identity
of
the
person.
23
Sec.
34.
Section
554.9628,
Code
2022,
is
amended
by
adding
24
the
following
new
subsection:
25
NEW
SUBSECTION
.
2A.
When
subsection
2
not
applicable
——
26
notice
that
nature
of
collateral
or
system
in
which
collateral
27
recorded
prevents
acquisition
of
knowledge.
Subsection
2
does
28
not
apply
to
a
secured
party
that,
at
the
time
the
secured
29
party’s
security
interest
attaches
to
a
controllable
electronic
30
record,
controllable
account,
or
controllable
payment
31
intangible,
has
notice
that
the
nature
of
the
collateral
32
or
the
system
in
which
the
collateral
is
recorded,
if
any,
33
would
prevent
the
secured
party
from
acquiring
the
knowledge
34
specified
in
that
subsection.
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EXPLANATION
1
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
2
the
explanation’s
substance
by
the
members
of
the
general
assembly.
3
BACKGROUND.
This
bill
creates
a
new
article
within
Code
4
chapter
554,
Iowa’s
version
of
the
uniform
commercial
code
5
(UCC)
covering
commercial
transactions
involving
personal
6
property.
New
Article
12
cited
as
“Uniform
Commercial
7
Code
——
Controllable
Electronic
Records”
was
drafted
by
a
8
committee
appointed
jointly
by
the
uniform
law
commission
9
and
the
American
law
institute.
The
bill
incorporates
the
10
provisions
of
that
draft
under
new
Article
14
(new
Code
section
11
554.14101).
New
Article
14
governs
commercial
transactions
12
involving
digital
assets,
including
those
involving
virtual
13
currencies,
and
the
use
of
distributed
ledger
technology
(DLT).
14
Traditionally,
a
currency
is
a
government-authorized
medium
of
15
exchange
and
specifically
money
(Code
section
554.1201(2)(x)).
16
By
comparison,
a
virtual
currency
is
only
available
as
an
17
electronic
record
and
is
decentralized.
An
electronic
record
18
is
used
to
create
or
transfer
rights
to
receive
payment,
to
19
receive
performance
of
services
or
delivery
of
goods,
and
to
20
transfer
an
interest
in
property.
It
may
also
be
used
as
a
21
medium
of
exchange
and
assigned
intrinsic
value.
22
CONTROLLABLE
ELECTRONIC
RECORDS.
The
bill
applies
to
a
form
23
of
digital
assets
used
in
electronic
commerce
and
referred
24
to
as
controllable
electronic
records.
The
UCC
defines
a
25
record
as
information
retrievable
in
an
electronic
form
(Code
26
section
554.1201(2)(ae)).
A
controllable
electronic
record
is
27
a
record
that
is
stored
in
an
electronic
or
other
intangible
28
medium
and
that
must
be
subject
to
control
(new
Code
section
29
554.14105).
Control
is
determined
by
the
type
of
property
30
involved
and
new
Article
14
specifies
the
rights
of
a
purchaser
31
of
a
controllable
electronic
record
who
acquires
whatever
32
rights
the
transferor
had
or
had
the
power
to
transfer;
33
the
rule
recognized
generally
under
the
UCC
as
shelter
(new
34
Code
section
554.14104).
Specifically,
control
involves
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the
power
to
(1)
derive
substantially
all
the
benefit
from
1
the
controllable
electronic
record,
(2)
prevent
others
from
2
deriving
substantially
all
the
benefit
from
the
controllable
3
electronic
record,
and
(3)
transfer
control
of
the
controllable
4
electronic
record
to
another
person
or
cause
another
person
to
5
obtain
control
of
a
controllable
electronic
record.
6
QUALIFIED
PURCHASERS.
A
purchaser
who
is
transferred
7
control
of
a
controllable
electronic
record
for
value,
in
good
8
faith,
and
without
notice
of
any
claim
of
a
property
interest
9
in
the
controllable
electronic
record
is
referred
to
as
a
10
qualified
purchaser
who
takes
the
controllable
electronic
11
record
free
of
any
claims
against
the
property.
Generally,
law
12
outside
Article
14
determines
what
rights
a
person
must
take
13
in
order
to
acquire
an
interest
in
a
controllable
electronic
14
record
which
would
include
the
creditor-debtor
provisions
in
15
Article
9.
A
security
interest
in
a
controllable
electronic
16
record,
controllable
account,
or
controllable
payment
17
intangible
perfected
by
control
has
priority
over
a
conflicting
18
security
interest
perfected
by
another
method
(e.g.,
the
19
filing
of
an
Article
9
financing
statement)
(new
Code
section
20
554.9326A).
21
SPECIAL
TYPES
OF
PROPERTY.
Special
provisions
apply
to
22
accounts
and
payment
intangibles
in
the
form
of
controllable
23
electronic
records.
The
right
to
payment
under
these
24
intangibles
is
referred
to
as
controllable
accounts
and
25
controllable
payment
intangibles
(amended
Code
section
26
554.9102(2)).
Under
Article
9,
the
attachment
and
perfection
27
of
a
security
interest
in
a
controllable
electronic
record
28
would
also
be
attachment
of
a
security
interest
in
controllable
29
accounts
and
controllable
payment
intangibles
evidenced
by
30
the
controllable
electronic
record
(amended
Code
section
31
554.9203(10)).
Under
Article
14,
a
qualifying
purchaser
32
of
a
controllable
electronic
record
acquires
rights
in
the
33
controllable
account
or
controllable
payment
intangible
34
free
of
any
claim
(new
Code
section
554.14104).
The
bill
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also
recognizes
intangible
money
evidenced
by
a
controllable
1
electronic
record
(amended
Code
section
554.9102(1)).
2
Similarly,
a
person
having
control
over
the
controllable
3
electronic
record
takes
free
of
any
claim
(new
Code
section
4
554.9105A).
5
BACKGROUND
——
ARTICLES
1
AND
9.
Article
1
includes
general
6
provisions,
including
definitions,
that
apply
throughout
the
7
Code
chapter.
This
includes
providing
a
definition
of
the
8
term
“electronic”
and
amending
the
definition
of
“account”
9
to
include
“controllable
accounts”
(Code
section
554.1201).
10
Closely
connected
to
new
Article
14
is
current
Article
9,
cited
11
as
the
“Uniform
Commercial
Code
——
Secured
Transactions”
(Code
12
section
554.9101).
Article
9
governs
how
a
debtor
provides
13
the
debtor’s
property
as
collateral
to
secure
financing
14
provided
by
a
creditor.
The
creditor
obtains
a
lien
in
the
15
collateral
to
secure
the
debt.
Article
9
provides
for
the
16
rights
and
obligations
of
the
debtor
and
creditor
as
well
17
as
other
persons,
including
other
creditors,
engaged
in
18
commercial
transactions
which
involve
that
debtor’s
collateral.
19
Generally,
the
creditor
becomes
a
secured
party
able
to
enforce
20
rights
against
the
debtor
when
a
security
interest
attaches
to
21
the
debtor’s
collateral.
The
secured
party
is
able
to
enforce
22
creditor
rights
against
other
persons
when
the
creditor’s
23
security
agreement
is
perfected.
Article
9
provides
different
24
procedures
to
attach
a
security
interest
to
collateral,
and
25
to
perfect
that
security
interest,
depending
upon
how
Article
26
9
classifies
that
collateral.
Generally,
Article
9
covers
27
two
broad
categories
of
collateral
described
as
tangible
or
28
intangible
property.
Tangible
property
includes
firm
assets
29
such
as
cars,
equipment,
inventory,
and
goods.
In
the
case
of
30
a
security
interest
in
money,
perfection
requires
possession.
31
Intangible
property
includes
accounts
receivable,
promissory
32
notes,
securities,
letters
of
credit,
and
interests
in
business
33
entities.
The
two
principal
forms
of
perfection
are
(1)
the
34
secured
party’s
possession
of
the
collateral
and
(2)
the
filing
35
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