Bill Text: IA SF540 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to commercial transactions, including control and transmission of electronic records and digital assets.(Formerly SSB 1177; See SF 2389.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2024-02-19 - Committee report approving bill, renumbered as SF 2389. S.J. 338. [SF540 Detail]

Download: Iowa-2023-SF540-Introduced.html

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Senate File 540 - Introduced
SENATE FILE 540
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO SSB 1177)
(COMPANION TO HF 618 BY
COMMITTEE ON JUDICIARY)
A BILL FOR
An Act relating to commercial transactions, including control
and transmission of electronic records and digital assets.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
UNIFORM COMMERCIAL CODE
PART A
CONTROLLABLE ELECTRONIC RECORDS
Section 1. Section 554.14101, Code 2023, is amended to read
as follows:
554.14101 Short title.
This Article may be cited as the Uniform Commercial Code ——
Controllable Electronic Records.
Sec. 2. Section 554.14102, Code 2023, is amended to read as
follows:
554.14102 Definitions.
1. Article 14 definitions. Article 14 definitions. In this
Article :
a. “Controllable electronic record” means a record stored
in an electronic medium that can be subjected to control under
section 554.14105 . The term does not include a controllable
account, a controllable payment intangible, a deposit account,
electronic chattel paper, an electronic copy of a record
evidencing chattel paper, an electronic document of title,
electronic money, investment property, or a transferable
record.
b. “Qualifying purchaser” means a purchaser of a
controllable electronic record or an interest in the a
controllable electronic record that obtains control of the
controllable electronic record for value, in good faith,
and without notice of a claim of a property right in the
controllable electronic record.
c. “Transferable record” means has the meaning provided for
that term in :
(1) “Transferable record” , as defined in the federal Section
201(a)(1) of the Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. §7021(a)(1), as amended . ; or
(2) “Transferable record” as defined in the uniform
electronic transactions Uniform Electronic Transactions Act,
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section 554D.118, subsection 1 .
d. “Value” has the meaning provided in section 554.3303,
subsection 1 , as if references in that subsection to an
“instrument” were references to a controllable account,
controllable electronic record, or controllable payment
intangible .
2. Definitions in Article 9 . Definitions in Article 9 . The
definitions in Article 9 of “account debtor” , “authenticate” ,
“controllable account” , “controllable payment intangible” ,
“chattel paper” , “deposit account” , “electronic chattel paper” ,
“electronic money” , and “investment property” apply to this
Article .
3. Article 1 definitions and principles. Article 1 contains
general definitions and principles of construction and
interpretation applicable throughout this Article.
Sec. 3. Section 554.14103, Code 2023, is amended to read as
follows:
554.14103 Scope Relation to Article 9 and consumer laws .
1. Article 9 governs in case of conflict. If there is
conflict between this Article and Article 9 , Article 9 governs.
2. Applicable consumer law and other laws. A transaction
subject to this Article is subject to:
a. any applicable rule of law that establishes a different
rule for consumers, including as provided in chapter 537 and
any other consumer protection statute or regulation of this
state; and
b. any other statute or regulation of this state that
regulates the rates, charges, agreements, and practices for
loans, credit sales, or other extensions of credit or credit
transactions, including as provided in chapter 535 .
Sec. 4. Section 554.14104, Code 2023, is amended to read as
follows:
554.14104 Rights in controllable account, controllable
electronic record, and controllable payment intangible.
1. Applicability of section to controllable account and
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controllable payment intangible. This section applies to the
acquisition and purchase of rights in a controllable account
or controllable payment intangible, including the rights and
benefits under subsections 3, 4, 5, 7, and 8 of a purchaser
and a qualifying purchaser , and under subsections 3, 4, and 6 ,
and in the same manner this section applies to a controllable
electronic record.
2. Control of controllable account and controllable payment
intangible. To determine whether a purchaser of a controllable
account or a controllable payment intangible is a qualifying
purchaser, the purchaser obtains control of the account or
payment intangible if it obtains control of the controllable
electronic record that evidences the account or payment
intangible.
2. 3. Applicability of other law to acquisition of
rights. Except as provided in this section , law other than
this Article determines whether a person acquires a right in
a controllable electronic record and the right the person
acquires.
3. 4. Shelter principle and purchase of limited interest. A
purchaser of a controllable electronic record acquires
all rights in the controllable electronic record that the
transferor had or had power to transfer, except that a
purchaser of a limited interest in a controllable electronic
record acquires rights only to the extent of the interest
purchased.
4. 5. Rights of qualifying purchaser. A qualifying
purchaser acquires its rights in the controllable electronic
record free of a claim of a property right in the controllable
electronic record.
5. 6. Limitation of rights of qualifying purchaser in
other property. Except as provided in subsections 1 and 4
5 for a controllable accounts account and a controllable
payment intangibles intangible or law other than this Article ,
a qualifying purchaser takes a right to payment, right to
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performance, or other interest in property evidenced by the
controllable electronic record subject to a claim of a property
right in the right to payment, right to performance, or other
interest in property.
6. 7. No-action protection for qualifying purchaser. An
action shall not be asserted against a qualifying purchaser
based on both a purchase by the qualifying purchaser of a
controllable electronic record and a claim of a property
right in another controllable electronic record, whether the
action is framed in conversion, replevin, constructive trust,
equitable lien, or other theory.
7. 8. Filing not notice. Filing of a financing statement
under Article 9 is not notice of a claim of a property right in
a controllable electronic record.
Sec. 5. Section 554.14105, Code 2023, is amended to read as
follows:
554.14105 Control of controllable electronic record.
1. General rule : —— control of controllable electronic
record. A person has control of a controllable electronic
record if the electronic record, a record attached to or
logically associated with the electronic record, or a system in
which the electronic record is recorded :
a. the electronic record, a record attached to or logically
associated with the electronic record, or a system in which the
electronic record is recorded gives the person:
(1) the power to avail itself of substantially all the
benefit from the electronic record; and
(2) exclusive power, subject to subsection 2 , to:
(a) prevent others from availing themselves of
substantially all the benefit from the electronic record; and
(b) transfer control of the electronic record to another
person or cause another person to obtain control of another
controllable electronic record as a result of the transfer of
the electronic record; and
b. the electronic record, a record attached to or logically
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associated with the electronic record, or a system in which
the electronic record is recorded enables the person readily
to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having
the powers specified in paragraph “a” .
2. Control through another person. A person has control of
a controllable electronic record if another person, other than
the transferor of an interest in the electronic record:
a. has control of the electronic record and acknowledges
that it has control on behalf of the person, or
b. obtains control of the electronic record after having
acknowledged that it will obtain control of the electronic
record on behalf of the person.
3. 2. Meaning of exclusive. A power specified in Subject
to subsection 1 3 , paragraph “a” , subparagraph (2), a power is
exclusive , under subsection 1, paragraph “a” , subparagraph (2),
subparagraph divisions (a) and (b) even if:
a. the controllable electronic record , a record attached
to or logically associated with the electronic record, or a
system in which the electronic record is recorded limits the
use of the electronic record or has a protocol programmed to
cause a change, including a transfer or loss of control or a
modification of benefits afforded by the electronic record; or
b. the person has agreed to share the power is shared with
another person.
3. When power not shared with another person. A power of a
person is not shared with another person under subsection 2,
paragraph “b” and the person’s power is not exclusive if:
a. the person can exercise the power only if the power also
is exercised by the other person; and
b. the other person:
(1) can exercise the power without exercise of the power by
the person; or
(2) is the transferor to the person of an interest in the
controllable electronic record or a controllable account or
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controllable payment intangible evidenced by the controllable
electronic record.
4. Presumption of exclusivity of certain powers. If a
person has the powers specified in subsection 1, paragraph “a” ,
subparagraph (2), subparagraph divisions (a) and (b) the powers
are presumed to be exclusive.
5. Control through another person. A person has control of
a controllable electronic record if another person, other than
the transferor to the person of an interest in the controllable
electronic record or a controllable account or controllable
payment intangible evidenced by the controllable electronic
record:
a. has control of the electronic record and acknowledges
that it has control on behalf of the person; or
b. obtains control of the electronic record after having
acknowledged that it will obtain control of the electronic
record on behalf of the person.
6. No requirement to acknowledge. A person that has control
under this section is not required to acknowledge that it has
control on behalf of another person.
7. No duties or confirmation. If a person acknowledges that
it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this
Article or Article 9 otherwise provides, the person does not
owe any duty to the other person and is not required to confirm
the acknowledgment to any other person.
Sec. 6. Section 554.14106, Code 2023, is amended to read as
follows:
554.14106 Discharge of account debtor on controllable account
or controllable payment intangible.
1. Discharge of account debtor. An account debtor on a
controllable account or controllable payment intangible may
discharge its obligation by paying:
a. the person having control of the controllable electronic
record that evidences the controllable account or controllable
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payment intangible; or
b. except as provided in subsection 2 , a person that
formerly had control of the controllable electronic record.
2. Effect Content and effect of notification. Subject to
subsection 4 , an the account debtor shall not discharge its
obligation by paying a person that formerly had control of the
controllable electronic record if the account debtor receives a
notification that:
a. is authenticated signed by a person that formerly had
control or the person to which control was transferred;
b. reasonably identifies the controllable account or
controllable payment intangible;
c. notifies the account debtor that control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible was transferred;
d. identifies the transferee, in any reasonable way,
including by name, identifying number, cryptographic key,
office, or account number; and
e. provides a commercially reasonable method by which the
account debtor is to pay the transferee.
3. Discharge following effective notification. After
receipt of a notification that complies with subsection 2 , the
account debtor may discharge its obligation only by paying in
accordance with the notification and shall not discharge the
obligation by paying a person that formerly had control.
4. When notification ineffective. Notification Subject to
subsection 8, notification is ineffective under subsection 2 :
a. unless, before the notification is sent, an the account
debtor and the person that, at that time, had control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible agree in an
authenticated a signed record to a commercially reasonable
method by which a person must furnish reasonable proof that
control has been transferred;
b. to the extent an agreement between an the account debtor
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and seller of a payment intangible limits the account debtor’s
duty to pay a person other than the seller and the limitation
is effective under law other than this Article ; or
c. at the option of an the account debtor, if the
notification notifies the account debtor to:
(1) divide a payment;
(2) make less than the full amount of any an installment or
other periodic payment; or
(3) pay any part of a payment by more than one method or to
more than one person.
5. Proof of transfer of control. If Subject to subsection
8, if requested by the account debtor, the person giving the
notification under subsection 2 seasonably shall furnish
reasonable proof, using the agreed method in the agreement
referred to in subsection 4, paragraph “a” , that control of the
controllable electronic record has been transferred. Unless
the person complies with the request, the account debtor may
discharge its obligation by paying a person that formerly had
control, even if the account debtor has received a notification
under subsection 2 .
6. What constitutes reasonable proof. A person furnishes
reasonable proof under subsection 5 that control has been
transferred if the person demonstrates, using the agreed method
in the agreement referred to in subsection 4, paragraph “a” ,
that the transferee has the power to:
a. avail itself of substantially all the benefit from the
controllable electronic record;
b. prevent others from availing themselves of substantially
all the benefit from the controllable electronic record; and
c. transfer the powers mentioned specified in paragraphs “a”
and “b” to another person.
7. Rights not waivable. An Subject to subsection 8,
an account debtor shall not waive or vary its rights under
subsection 4 , paragraph “a” , and subsection 5 or its option
under subsection 4 , paragraph “c” .
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8. Rule for individual under other law. This section is
subject to law other than this Article which establishes a
different rule for an account debtor who is an individual and
who incurred the obligation primarily for personal, family, or
household purposes.
Sec. 7. Section 554.14107, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
554.14107 Governing law.
1. Governing law: general rule. Except as provided in
subsection 2, the local law of a controllable electronic
record’s jurisdiction governs a matter covered by this Article.
2. Governing law: section 554.14106. For a controllable
electronic record that evidences a controllable account
or controllable payment intangible, the local law of the
controllable electronic record’s jurisdiction governs a matter
covered by section 554.14106 unless an effective agreement
determines that the local law of another jurisdiction governs.
3. Controllable electronic record’s jurisdiction. The
following rules determine a controllable electronic record’s
jurisdiction under this section:
a. if the controllable electronic record, or a record
attached to or logically associated with the controllable
electronic record and readily available for review, expressly
provides that a particular jurisdiction is the controllable
electronic record’s jurisdiction for purposes of this section,
Article, or chapter, that jurisdiction is the controllable
electronic record’s jurisdiction.
b. if paragraph “a” does not apply and the rules of the
system in which the controllable electronic record is recorded
are readily available for review and expressly provide that a
particular jurisdiction is the controllable electronic record’s
jurisdiction for purposes of this section, Article, or chapter,
that jurisdiction is the controllable electronic record’s
jurisdiction.
c. if paragraphs “a” and “b” do not apply and the
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controllable electronic record, or a record attached to or
logically associated with the controllable electronic record
and readily available for review, expressly provides that the
controllable electronic record is governed by the law of a
particular jurisdiction, that jurisdiction is the controllable
electronic record’s jurisdiction.
d. if paragraphs “a” , “b” , and “c” do not apply and the
rules of the system in which the controllable electronic
record is recorded are readily available for review and
expressly provide that the controllable electronic record or
the system is governed by the law of a particular jurisdiction,
that jurisdiction is the controllable electronic record’s
jurisdiction.
e. if paragraphs “a” through “d” do not apply, the
controllable electronic record’s jurisdiction is the District
of Columbia.
4. Applicability of Article 12. If subsection 3, paragraph
“e” , applies and Article 12 is not in effect in the District of
Columbia without material modification, the governing law for
a matter covered by this Article is the law of the District of
Columbia as though Article 12 were in effect in the District of
Columbia without material modification. In this subsection,
“Article 12” means Article 12 of Uniform Commercial Code
Amendments (2022) approved by the uniform law commission at its
annual meeting in July 2022.
5. Relation of matter or transaction to controllable
electronic record’s jurisdiction not necessary. To the
extent subsections 1 and 2 provide that the local law of the
controllable electronic record’s jurisdiction governs a matter
covered by this Article, that law governs even if the matter
or a transaction to which the matter relates does not bear any
relation to the controllable electronic record’s jurisdiction.
6. Rights of purchasers determined at time of purchase. The
rights acquired under section 554.14104 by a purchaser or
qualifying purchaser are governed by the law applicable under
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this section at the time of purchase.
Sec. 8. Section 554.14108, Code 2023, is amended to read as
follows:
554.14108 Applicability.
1. This Article applies to any transaction involving a
controllable electronic record that arises on or after July 1,
2022. This Article does not apply to any transaction involving
a controllable electronic record that arises before July 1,
2022, even if the transaction would be subject to this Article
if the transaction had arisen on or after July 1, 2022. This
Article does not apply to a right of action with regard to any
transaction involving a controllable electronic record that has
accrued before July 1, 2022.
2. This section is repealed on July 1, 2025.
Sec. 9. Section 554.14109, Code 2023, is amended to read as
follows:
554.14109 Savings clause.
1. Any transaction involving a controllable electronic
record that arose before July 1, 2022, and the rights,
obligations, and interests flowing from that transaction are
governed by any statute or other rule amended or repealed by
this Article as if such amendment or repeal had not occurred
and may be terminated, completed, consummated, or enforced
under that statute or other rule.
2. This section is repealed on July 1, 2025.
PART B
RELATED ARTICLES
GENERAL
Sec. 10. Section 554.1201, subsection 2, paragraphs o, y,
ak, and al, Code 2023, are amended to read as follows:
o. “Delivery” , with respect to an electronic document
of title , means voluntary transfer of control and , with
respect to an instrument, a tangible document of title, or an
authoritative tangible copy of a record evidencing chattel
paper, means voluntary transfer of possession.
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y. “Money” means a medium of exchange that : is currently
authorized or adopted by a domestic or foreign government. The
term includes a monetary unit of account established by an
intergovernmental organization, or pursuant to an agreement
between two or more countries. The term does not include an
electronic record that is a medium of exchange recorded and
transferable in a system that existed and operated for the
medium of exchange before the medium of exchange was authorized
or adopted by the government.
(1) is currently authorized or adopted by a domestic or
foreign government, by an intergovernmental organization, or
pursuant to an agreement between two or more governments; and
(2) was initially issued, created, or distributed by
a domestic or foreign government, by an intergovernmental
organization, or pursuant to an agreement between two or more
governments.
ak. “Send” in connection with a writing, record , or notice
notification means:
(1) to deposit in the mail , or deliver for transmission ,
or transmit by any other usual means of communication , with
postage or cost of transmission provided for , and properly
addressed and, in the case of an instrument, to an address
specified thereon or otherwise agreed, or if there be none to
any address reasonable under the circumstances; or
(2) in any other way to cause to be received any the record
or notice notification to be received within the time it would
have arrived been received if properly sent under subparagraph
(1) .
al. (1) “Signed” includes using any symbol executed
or adopted “Sign” means with present intention intent to
authenticate or adopt or accept a writing. record that:
(a) executes or adopts a tangible symbol; or
(b) attaches to or logically associates with the record an
electronic symbol, sound, or process.
(2) “Signed” , “signing” , and “signature” have corresponding
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meanings.
Sec. 11. Section 554.1301, subsection 3, paragraph g, Code
2023, is amended to read as follows:
g. Sections 554.13105 and 554.13106 . ;
Sec. 12. Section 554.1301, subsection 3, Code 2023, is
amended by adding the following new paragraph:
NEW PARAGRAPH . h. Section 554.14107.
Sec. 13. Section 554.1306, Code 2023, is amended to read as
follows:
554.1306 Waiver or renunciation of claim or right after
breach.
A claim or right arising out of an alleged breach may
be discharged in whole or in part without consideration by
agreement of the aggrieved party in an authenticated a signed
record.
PART C
RELATED ARTICLES
SECURED TRANSACTIONS
Sec. 14. Section 554.9102, subsection 1, paragraphs b, c,
d, ab, ac, as, ax, bf, and br, Code 2023, are amended to read
as follows:
b. “Account” , except as used in “account for” , “account
statement” , “account to” , “commodity account” in paragraph “n” ,
“customer’s account” , “deposit account” in paragraph “ae” , “on
account of” , and paragraph “ae” “statement of account” , means
a right to payment of a monetary obligation, whether or not
earned by performance, (i) for property that has been or is
to be sold, leased, licensed, assigned, or otherwise disposed
of; (ii) for services rendered or to be rendered; (iii) for
a policy of insurance issued or to be issued; (iv) for a
secondary obligation incurred or to be incurred; (v) for energy
provided or to be provided; (vi) for the use or hire of a vessel
under a charter or other contract; (vii) arising out of the use
of a credit or charge card or information contained on or for
use with the card; or (viii) as winnings in a lottery or other
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game of chance operated or sponsored by a state, governmental
unit of a state, or person licensed or authorized to operate
the game by a state or governmental unit of a state. The
term includes controllable accounts and health care insurance
receivables. The term does not include (i) chattel paper, (ii)
commercial tort claims, (iii) deposit accounts, (iv) investment
property, (v) letter-of-credit rights or letters of credit,
(vi) rights to payment for money or funds advanced or sold,
other than rights arising out of the use of a credit or charge
card or information contained on or for use with the card, or
(vii) rights to payment evidenced by an instrument.
c. “Account debtor” means a person obligated on an account,
chattel paper, or general intangible. The term does not
include persons obligated to pay a negotiable instrument, even
if the negotiable instrument constitutes part of evidences
chattel paper.
d. “Accounting” , except as used in “accounting for” , means a
record:
(1) authenticated signed by a secured party;
(2) indicating the aggregate unpaid secured obligations as
of a date not more than thirty-five days earlier or thirty-five
days later than the date of the record; and
(3) identifying the components of the obligations in
reasonable detail.
ab. “Controllable account” means an account evidenced by a
controllable electronic record that provides that the account
debtor undertakes to pay the person that has control under
section 554.14105 has control of the controllable electronic
record.
ac. “Controllable payment intangible” means a payment
intangible evidenced by a controllable electronic record that
provides that the account debtor undertakes to pay the person
that has control under section 554.14105 has control of the
controllable electronic record.
as. “General intangible” means any personal property,
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including things in action, other than accounts, chattel paper,
commercial tort claims, deposit accounts, documents, goods,
instruments, investment property, letter-of-credit rights,
letters of credit, money, and oil, gas, or other minerals
before extraction. The term includes controllable electronic
records, payment intangibles , and software.
ax. “Instrument” means a negotiable instrument or any
other writing that evidences a right to the payment of a
monetary obligation, is not itself a security agreement or
lease, and is of a type that in ordinary course of business
is transferred by delivery with any necessary indorsement or
assignment. The term does not include (i) investment property,
(ii) letters of credit, or (iii) writings that evidence a right
to payment arising out of the use of a credit or charge card
or information contained on or for use with the card , or (iv)
writings that evidence chattel paper .
bf. “Money” has the meaning provided in section 554.1201,
subsection 2 , paragraph “y” , but does not include (i) a deposit
account or (ii) money in an electronic form that cannot be
subjected to control under section 554.9105A .
br. “Proposal” means a record authenticated signed by a
secured party which includes the terms on which the secured
party is willing to accept collateral in full or partial
satisfaction of the obligation it secures pursuant to sections
554.9620 , 554.9621 , and 554.9622 .
Sec. 15. Section 554.9102, subsection 1, Code 2023, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . 0g. “Assignee” , except as used in “assignee
for benefit of creditors” , means a person (i) in whose favor
a security interest that secures an obligation is created or
provided for under a security agreement, whether or not the
obligation is outstanding or (ii) to which an account, chattel
paper, payment intangible, or promissory note has been sold.
The term includes a person to which a security interest has
been transferred by a secured party.
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NEW PARAGRAPH . 00g. “Assignor” means a person that (i)
under a security agreement creates or provides for a security
interest that secures an obligation or (ii) sells an account,
chattel paper, payment intangible, or promissory note. The
term includes a secured party that has transferred a security
interest to another person.
Sec. 16. Section 554.9102, subsection 1, paragraphs g, ag,
ca, and ce, Code 2023, are amended by striking the paragraphs.
Sec. 17. Section 554.9102, subsection 1, paragraph k, Code
2023, is amended by striking the paragraph and inserting in
lieu thereof the following:
k. (1) “Chattel paper” means:
(a) a right to payment of a monetary obligation secured by
specific goods, if the right to payment and security agreement
are evidenced by a record; or
(b) a right to payment of a monetary obligation owed by a
lessee under a lease agreement with respect to specific goods
and a monetary obligation owed by the lessee in connection with
the transaction giving rise to the lease, if:
(i) the right to payment and lease agreement are evidenced
by a record; and
(ii) the predominant purpose of the transaction giving rise
to the lease was to give the lessee the right to possession and
use of the goods.
(2) “Chattel paper” does not include a right to payment
arising out of a charter or other contract involving the use or
hire of a vessel or a right to payment arising out of the use of
a credit or charge card or information contained on or for use
with the card.
Sec. 18. Section 554.9102, subsection 2, Code 2023, is
amended by adding the following new paragraph:
NEW PARAGRAPH . 0ae. “Protected purchaser” ... Section
554.8303.
Sec. 19. Section 554.9104, subsection 1, Code 2023, is
amended to read as follows:
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1. Requirements for control. A secured party has control
of a deposit account if:
a. the secured party is the bank with which the deposit
account is maintained;
b. the debtor, secured party, and bank have agreed in
an authenticated a signed record that the bank will comply
with instructions originated by the secured party directing
disposition of the funds in the deposit account without further
consent by the debtor; or
c. the secured party becomes the bank’s customer with
respect to the deposit account . ; or
d. another person, other than the debtor:
(1) has control of the deposit account and acknowledges that
it has control on behalf of the secured party; or
(2) obtains control of the deposit account after having
acknowledged that it will obtain control of the deposit account
on behalf of the secured party.
DIVISION II
UNIFORM COMMERCIAL CODE
PART A
SECURED TRANSACTIONS
Sec. 20. Section 554.9105, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
554.9105 Control of electronic copy of record evidencing
chattel paper.
1. General rule: control of electronic copy of record
evidencing chattel paper. A purchaser has control of an
authoritative electronic copy of a record evidencing chattel
paper if a system employed for evidencing the assignment
of interests in the chattel paper reliably establishes the
purchaser as the person to which the authoritative electronic
copy was assigned.
2. Single authoritative copy. A system satisfies subsection
1 if the record or records evidencing the chattel paper are
created, stored, and assigned in a manner that:
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a. a single authoritative copy of the record or records
exists which is unique, identifiable, and, except as otherwise
provided in paragraphs “d” , “e” , and “f” , unalterable;
b. the authoritative copy identifies the purchaser as the
assignee of the record or records;
c. the authoritative copy is communicated to and maintained
by the purchaser or its designated custodian;
d. copies or amendments that add or change an identified
assignee of the authoritative copy can be made only with the
consent of the purchaser;
e. each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the
authoritative copy; and
f. any amendment of the authoritative copy is readily
identifiable as authorized or unauthorized.
3. One or more authoritative copies. A system satisfies
subsection 1, and a purchaser has control of an authoritative
electronic copy of a record evidencing chattel paper, if the
electronic copy, a record attached to or logically associated
with the electronic copy, or a system in which the electronic
copy is recorded:
a. enables the purchaser readily to identify each electronic
copy as either an authoritative copy or a nonauthoritative
copy;
b. enables the purchaser readily to identify itself in any
way, including by name, identifying number, cryptographic key,
office, or account number, as the assignee of the authoritative
electronic copy; and
c. gives the purchaser exclusive power, subject to
subsection 4, to:
(1) prevent others from adding or changing an identified
assignee of the authoritative electronic copy; and
(2) transfer control of the authoritative electronic copy.
4. Meaning of exclusive. Subject to subsection 5, a power
is exclusive under subsection 3, paragraph “c” , subparagraphs
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(1) and (2), even if:
a. the authoritative electronic copy, a record attached
to or logically associated with the authoritative electronic
copy, or a system in which the authoritative electronic copy is
recorded limits the use of the authoritative electronic copy
or has a protocol programmed to cause a change, including a
transfer or loss of control; or
b. the power is shared with another person.
5. When power not shared with another person. A power of a
purchaser is not shared with another person under subsection 4,
paragraph “b” , and the purchaser’s power is not exclusive if:
a. the purchaser can exercise the power only if the power
also is exercised by the other person; and
b. the other person:
(1) can exercise the power without exercise of the power by
the purchaser; or
(2) is the transferor to the purchaser of an interest in the
chattel paper.
6. Presumption of exclusivity of certain powers. If a
purchaser has the powers specified in subsection 3, paragraph
“c” , subparagraphs (1) and (2), the powers are presumed to be
exclusive.
7. Obtaining control through another person. A purchaser
has control of an authoritative electronic copy of a record
evidencing chattel paper if another person, other than the
transferor to the purchaser of an interest in the chattel
paper:
a. has control of the authoritative electronic copy and
acknowledges that it has control on behalf of the purchaser; or
b. obtains control of the authoritative electronic copy
after having acknowledged that it will obtain control of the
electronic copy on behalf of the purchaser.
Sec. 21. Section 554.9105A, Code 2023, is amended to read
as follows:
554.9105A Control of electronic money.
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1. General rule : —— control of electronic money. A person
has control of electronic money if:
a. the electronic money , a record attached to or logically
associated with the electronic money, or a system in which the
electronic money is recorded gives the person:
(1) the power to avail itself of substantially all the
benefit from the electronic money; and
(2) exclusive power, subject to subsection 2 , to:
(a) prevent others from availing themselves of
substantially all the benefit from the electronic money; and
(b) transfer control of the electronic money to another
person or cause another person to obtain control of other
electronic money as a result of the transfer of the electronic
money; and
b. the electronic money, a record attached to or logically
associated with the electronic money, or a system in which
the electronic money is recorded enables the person readily
to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having
the powers under paragraph “a” .
2. Meaning of exclusive. Subject to subsection 3, a power
is exclusive under subsection 1, paragraph “a” , subparagraph
(2), subparagraph divisions (a) and (b) even if:
a. the electronic money, a record attached to or logically
associated with the electronic money, or a system in which the
electronic money is recorded limits the use of the electronic
money or has a protocol programmed to cause a change, including
a transfer or loss of control; or
b. the power is shared with another person.
3. When power not shared with another person. A power of a
person is not shared with another person under subsection 2,
paragraph “b” and the person’s power is not exclusive if:
a. the person can exercise the power only if the power also
is exercised by the other person; and
b. the other person:
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(1) can exercise the power without exercise of the power by
the person; or
(2) is the transferor to the person of an interest in the
electronic money.
4. Presumption of exclusivity of certain powers. If a
person has the powers specified in subsection 1, paragraph “a” ,
subparagraph (2), subparagraph divisions (a) and (b) the powers
are presumed to be exclusive.
2. 5. Control through another person. A person has
control of electronic money if another person, other than the
transferor of an interest in the electronic money:
a. has control of the electronic money and acknowledges that
it has control on behalf of the person, or
b. obtains control of the electronic money after having
acknowledged that it will obtain control of the electronic
money on behalf of the person.
3. Meaning of exclusive. A power is exclusive under
subsection 1 , paragraph “a” , subparagraph (2), even if:
a. the electronic money or a system in which the electronic
money is recorded limits the use of the electronic money or has
a protocol programmed to transfer control; or
b. the person has agreed to share the power with another
person.
Sec. 22. NEW SECTION . 554.9107B No requirement to
acknowledge or confirm; no duties.
1. No requirement to acknowledge. A person that has control
under section 554.9104, 554.9105, or 554.9105A is not required
to acknowledge that it has control on behalf of another person.
2. No duties or confirmation. If a person acknowledges
that it has or will obtain control on behalf of another
person, unless the person otherwise agrees or law other than
this Article otherwise provides, the person does not owe any
duty to the other person and is not required to confirm the
acknowledgment to any other person.
Sec. 23. Section 554.9203, subsection 2, Code 2023, is
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amended to read as follows:
2. Enforceability. Except as otherwise provided in
subsections 3 through 10 9 , a security interest is enforceable
against the debtor and third parties with respect to the
collateral only if:
a. value has been given;
b. the debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party; and
c. one of the following conditions is met:
(1) the debtor has authenticated signed a security
agreement that provides a description of the collateral and, if
the security interest covers timber to be cut, a description
of the land concerned;
(2) the collateral is not a certificated security and is
in the possession of the secured party under section 554.9313
pursuant to the debtor’s security agreement;
(3) the collateral is a certificated security in registered
form and the security certificate has been delivered to the
secured party under section 554.8301 pursuant to the debtor’s
security agreement; or
(4) the collateral is controllable accounts, controllable
electronic records, controllable payment intangibles, deposit
accounts, electronic chattel paper, electronic documents,
electronic money, investment property, or letter-of-credit
rights, and the secured party has control under section
554.7106 , 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or
554.9107A pursuant to the debtor’s security agreement . ; or
(5) the collateral is chattel paper and the secured party
has possession and control under section 554.9314A pursuant to
the debtor’s security agreement.
Sec. 24. Section 554.9203, subsection 10, Code 2023, is
amended by striking the subsection.
Sec. 25. Section 554.9208, subsection 2, Code 2023, is
amended to read as follows:
2. Duties of secured party after receiving demand from
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debtor. Within ten days after receiving an authenticated a
signed demand by the debtor:
a. a secured party having control of a deposit account
under section 554.9104, subsection 1 , paragraph “b” , shall
send to the bank with which the deposit account is maintained
an authenticated statement a signed record that releases the
bank from any further obligation to comply with instructions
originated by the secured party;
b. a secured party having control of a deposit account under
section 554.9104, subsection 1 , paragraph “c” , shall:
(1) pay the debtor the balance on deposit in the deposit
account; or
(2) transfer the balance on deposit into a deposit account
in the debtor’s name;
c. a secured party, other than a buyer, having control of
electronic chattel paper under section 554.9105 shall: of an
authoritative electronic copy of a record evidencing chattel
paper shall transfer control of the electronic copy to the
debtor or a person designated by the debtor;
(1) communicate the authoritative copy of the electronic
chattel paper to the debtor or its designated custodian;
(2) if the debtor designates a custodian that is the
designated custodian with which the authoritative copy of
the electronic chattel paper is maintained for the secured
party, communicate to the custodian an authenticated record
releasing the designated custodian from any further obligation
to comply with instructions originated by the secured party
and instructing the custodian to comply with instructions
originated by the debtor; and
(3) take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee
of the authoritative copy without the consent of the secured
party;
d. a secured party having control of investment property
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under section 554.8106, subsection 4 , paragraph “b” , or
section 554.9106, subsection 2 , shall send to the securities
intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained an
authenticated a signed record that releases the securities
intermediary or commodity intermediary from any further
obligation to comply with entitlement orders or directions
originated by the secured party;
e. a secured party having control of a letter-of-credit
right under section 554.9107 shall send to each person having
an unfulfilled obligation to pay or deliver proceeds of the
letter of credit to the secured party an authenticated a signed
release from any further obligation to pay or deliver proceeds
of the letter of credit to the secured party;
f. a secured party having control under section 554.7106
of an authoritative electronic copy of an electronic document
shall : transfer control of the electronic copy to the debtor or
a person designated by the debtor;
(1) give control of the electronic document to the debtor or
its designated custodian;
(2) if the debtor designates a custodian that is the
designated custodian with which the authoritative copy of
the electronic document is maintained for the secured party,
communicate to the custodian an authenticated record releasing
the designated custodian from any further obligation to
comply with instructions originated by the secured party
and instructing the custodian to comply with instructions
originated by the debtor; and
(3) take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee
of the authoritative copy without the consent of the secured
party; and
g. a secured party having control under section 554.9105A of
electronic money shall transfer control of the electronic money
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to the debtor or a person designated by the debtor; and
h. a secured party having control under section 554.14105
of a controllable electronic record , other than a buyer of
a controllable account or controllable payment intangible
evidenced by the controllable electronic record, shall transfer
control of the controllable electronic record to the debtor or
a person designated by the debtor.
Sec. 26. Section 554.9209, subsection 2, Code 2023, is
amended to read as follows:
2. Duties of secured party after receiving demand from
debtor. Within ten days after receiving an authenticated a
signed demand by the debtor, a secured party shall send to
an account debtor under section 554.9406, subsection 1 or
554.14106, subsection 2, that has received notification of
an assignment to the secured party as assignee under section
554.9406, subsection 1 , an authenticated a signed record that
releases the account debtor from any further obligation to the
secured party.
Sec. 27. Section 554.9210, subsections 1, 2, 3, 4, and 5,
Code 2023, are amended to read as follows:
1. Definitions. In this section :
a. “Request” means a record of a type described in paragraph
“b” , “c” , or “d” .
b. “Request for an accounting” means a record authenticated
signed by a debtor requesting that the recipient provide an
accounting of the unpaid obligations secured by collateral and
reasonably identifying the transaction or relationship that is
the subject of the request.
c. “Request regarding a list of collateral” means a record
authenticated signed by a debtor requesting that the recipient
approve or correct a list of what the debtor believes to be the
collateral securing an obligation and reasonably identifying
the transaction or relationship that is the subject of the
request.
d. “Request regarding a statement of account” means a record
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authenticated signed by a debtor requesting that the recipient
approve or correct a statement indicating what the debtor
believes to be the aggregate amount of unpaid obligations
secured by collateral as of a specified date and reasonably
identifying the transaction or relationship that is the subject
of the request.
2. Duty to respond to requests. Subject to subsections 3,
4, 5, and 6 , a secured party, other than a buyer of accounts,
chattel paper, payment intangibles, or promissory notes or a
consignor, shall comply with a request within fourteen days
after receipt:
a. in the case of a request for an accounting, by
authenticating signing and sending to the debtor an accounting;
and
b. in the case of a request regarding a list of
collateral or a request regarding a statement of account, by
authenticating signing and sending to the debtor an approval
or correction.
3. Request regarding list of collateral —— statement
concerning type of collateral. A secured party that claims a
security interest in all of a particular type of collateral
owned by the debtor may comply with a request regarding a
list of collateral by sending to the debtor an authenticated
a signed record including a statement to that effect within
fourteen days after receipt.
4. Request regarding list of collateral —— no interest
claimed. A person that receives a request regarding a list
of collateral, claims no interest in the collateral when
it receives the request, and claimed an interest in the
collateral at an earlier time shall comply with the request
within fourteen days after receipt by sending to the debtor an
authenticated a signed record:
a. disclaiming any interest in the collateral; and
b. if known to the recipient, providing the name and mailing
address of any assignee of or successor to the recipient’s
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interest in the collateral.
5. Request for accounting or regarding statement of account
—— no interest in obligation claimed. A person that receives a
request for an accounting or a request regarding a statement of
account, claims no interest in the obligations when it receives
the request, and claimed an interest in the obligations at an
earlier time shall comply with the request within fourteen
days after receipt by sending to the debtor an authenticated a
signed record:
a. disclaiming any interest in the obligations; and
b. if known to the recipient, providing the name and mailing
address of any assignee of or successor to the recipient’s
interest in the obligations.
Sec. 28. Section 554.9301, unnumbered paragraph 1, Code
2023, is amended to read as follows:
Except as otherwise provided in sections 554.9303 , 554.9304 ,
554.9305 , and 554.9306 through 554.9306B , the following
rules determine the law governing perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in collateral:
Sec. 29. Section 554.9301, subsection 3, unnumbered
paragraph 1, Code 2023, is amended to read as follows:
Except as otherwise provided in subsection 4 , while tangible
negotiable tangible documents, goods, instruments, or tangible
money , or tangible chattel paper is located in a jurisdiction,
the local law of that jurisdiction governs:
Sec. 30. Section 554.9305, subsection 1, Code 2023, is
amended by adding the following new paragraph:
NEW PARAGRAPH . e. Paragraphs “b” , “c” , and “d” apply
even if the transaction does not bear any relation to the
jurisdiction.
Sec. 31. Section 554.9306A, Code 2023, is amended by
striking the section and inserting in lieu thereof the
following:
554.9306A Law governing perfection and priority of security
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interests in chattel paper.
1. Chattel paper evidenced by authoritative electronic
copy. Except as provided in subsection 4, if chattel paper
is evidenced only by an authoritative electronic copy of the
chattel paper or is evidenced by an authoritative electronic
copy and an authoritative tangible copy, the local law of the
chattel paper’s jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in the chattel paper, even if the transaction does not
bear any relation to the chattel paper’s jurisdiction.
2. Chattel paper’s jurisdiction. The following rules
determine the chattel paper’s jurisdiction under this section:
a. If the authoritative electronic copy of the record
evidencing chattel paper, or a record attached to or logically
associated with the electronic copy and readily available for
review, expressly provides that a particular jurisdiction is
the chattel paper’s jurisdiction for purposes of this section,
this part, this Article, or this chapter, that jurisdiction is
the chattel paper’s jurisdiction.
b. If paragraph “a” does not apply and the rules of the
system in which the authoritative electronic copy is recorded
are readily available for review and expressly provide that a
particular jurisdiction is the chattel paper’s jurisdiction
for purposes of this section, this part, this Article, or this
chapter that jurisdiction is the chattel paper’s jurisdiction.
c. If paragraphs “a” and “b” do not apply and the
authoritative electronic copy, or a record attached to or
logically associated with the electronic copy and readily
available for review, expressly provides that the chattel paper
is governed by the law of a particular jurisdiction, that
jurisdiction is the chattel paper’s jurisdiction.
d. If paragraphs “a” , “b” , and “c” do not apply and the
rules of the system in which the authoritative electronic copy
is recorded are readily available for review and expressly
provide that the chattel paper or the system is governed by
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the law of a particular jurisdiction, that jurisdiction is the
chattel paper’s jurisdiction.
e. If paragraphs “a” through “d” do not apply, the chattel
paper’s jurisdiction is the jurisdiction in which the debtor
is located.
3. Chattel paper evidenced by authoritative tangible
copy. If an authoritative tangible copy of a record evidences
chattel paper and the chattel paper is not evidenced by an
authoritative electronic copy, while the authoritative tangible
copy of the record evidencing chattel paper is located in a
jurisdiction, the local law of that jurisdiction governs:
a. perfection of a security interest in the chattel paper by
possession under section 554.9314A; and
b. the effect of perfection or nonperfection and the
priority of a security interest in the chattel paper.
4. When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the
debtor is located governs perfection of a security interest in
chattel paper by filing.
Sec. 32. NEW SECTION . 554.9306B Law governing perfection
and priority of security interests in controllable accounts,
controllable electronic records, and controllable payment
intangibles.
1. Governing law: general rules. Except as provided in
subsection 2, the local law of the controllable electronic
record’s jurisdiction specified in section 554.14107,
subsections 3 and 4 governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in a controllable electronic record and a security
interest in a controllable account or controllable payment
intangible evidenced by the controllable electronic record.
2. When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the
debtor is located governs:
a. perfection of a security interest in a controllable
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account, controllable electronic record, or controllable
payment intangible by filing; and
b. automatic perfection of a security interest in a
controllable payment intangible created by a sale of the
controllable payment intangible.
Sec. 33. Section 554.9308, subsection 8, Code 2023, is
amended by striking the subsection.
Sec. 34. Section 554.9310, subsection 2, paragraph h, Code
2023, is amended to read as follows:
h. in controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts,
electronic chattel paper, electronic documents, investment
property, or letter-of-credit rights which is are perfected by
control under section 554.9314 ;
Sec. 35. Section 554.9310, subsection 2, Code 2023, is
amended by adding the following new paragraph:
NEW PARAGRAPH . 0i. in chattel paper which is perfected by
possession and control under section 554.9314A;
Sec. 36. Section 554.9312, Code 2023, is amended to read as
follows:
554.9312 Perfection of security interests in chattel
paper, controllable accounts, controllable electronic records,
controllable payment intangibles, chattel paper, deposit
accounts, negotiable documents, goods covered by documents,
instruments, investment property, letter-of-credit rights, and
money —— perfection by permissive filing —— temporary perfection
without filing or transfer of possession.
1. Perfection by filing permitted. A security interest in
chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, chattel paper,
negotiable documents, instruments, or investment property , or
negotiable documents may be perfected by filing.
2. Control or possession of certain collateral. Except as
otherwise provided in section 554.9315, subsections 3 and 4 ,
for proceeds:
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a. a security interest in a deposit account may be perfected
only by control under section 554.9314 ;
b. and except as otherwise provided in section 554.9308,
subsection 4 , a security interest in a letter-of-credit right
may be perfected only by control under section 554.9314 ;
c. a security interest in tangible money may be perfected
only by the secured party’s taking possession under section
554.9313 ; and
d. a security interest in electronic money may be perfected
only by control under section 554.9314 .
3. Goods covered by negotiable document. While goods are
in the possession of a bailee that has issued a negotiable
document covering the goods:
a. a security interest in the goods may be perfected by
perfecting a security interest in the document; and
b. a security interest perfected in the document has
priority over any security interest that becomes perfected in
the goods by another method during that time.
4. Goods covered by nonnegotiable document. While goods are
in the possession of a bailee that has issued a nonnegotiable
document covering the goods, a security interest in the goods
may be perfected by:
a. issuance of a document in the name of the secured party;
b. the bailee’s receipt of notification of the secured
party’s interest; or
c. filing as to the goods.
5. Temporary perfection —— new value. A security
interest in certificated securities, negotiable documents,
or instruments is perfected without filing or the taking of
possession or control for a period of twenty days from the time
it attaches to the extent that it arises for new value given
under an authenticated a signed security agreement.
6. Temporary perfection —— goods or documents made available
to debtor. A perfected security interest in a negotiable
document or goods in possession of a bailee, other than one
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that has issued a negotiable document for the goods, remains
perfected for twenty days without filing if the secured
party makes available to the debtor the goods or documents
representing the goods for the purpose of:
a. ultimate sale or exchange; or
b. loading, unloading, storing, shipping, transshipping,
manufacturing, processing, or otherwise dealing with them in a
manner preliminary to their sale or exchange.
7. Temporary perfection —— delivery of security certificate
or instrument to debtor. A perfected security interest in
a certificated security or instrument remains perfected for
twenty days without filing if the secured party delivers the
security certificate or instrument to the debtor for the
purpose of:
a. ultimate sale or exchange; or
b. presentation, collection, enforcement, renewal, or
registration of transfer.
8. Expiration of temporary perfection. After the twenty-day
period specified in subsection 5, 6, or 7 expires, perfection
depends upon compliance with this Article .
Sec. 37. Section 554.9313, subsections 1, 3, and 4, Code
2023, are amended to read as follows:
1. Perfection by possession or delivery. Except as otherwise
provided in subsection 2 , a secured party may perfect a
security interest in tangible negotiable documents, goods,
instruments, negotiable tangible documents, or tangible
money , or tangible chattel paper by taking possession of the
collateral. A secured party may perfect a security interest in
certificated securities by taking delivery of the certificated
securities under section 554.8301 .
3. Collateral in possession of person other than
debtor. With respect to collateral other than certificated
securities and goods covered by a document, a secured party
takes possession of collateral in the possession of a person
other than the debtor, the secured party, or a lessee of
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the collateral from the debtor in the ordinary course of the
debtor’s business, when:
a. the person in possession authenticates signs a record
acknowledging that it holds possession of the collateral for
the secured party’s benefit; or
b. the person takes possession of the collateral after
having authenticated signed a record acknowledging that it
will hold possession of the collateral for the secured party’s
benefit.
4. Time of perfection by possession —— continuation of
perfection. If perfection of a security interest depends upon
possession of the collateral by a secured party, perfection
occurs no not earlier than the time the secured party takes
possession and continues only while the secured party retains
possession.
Sec. 38. Section 554.9314, subsections 1, 2, and 3, Code
2023, are amended to read as follows:
1. Perfection by control. A security interest in
controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic
chattel paper, electronic documents, electronic money,
investment property, or letter-of-credit rights may be
perfected by control of the collateral under section 554.7106 ,
554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or
554.9107A .
2. Specified collateral —— time of perfection by control ——
continuation of perfection. A security interest in controllable
accounts, controllable electronic records, controllable payment
intangibles, deposit accounts, electronic chattel paper,
electronic documents, electronic money, or letter-of-credit
rights is perfected by control under section 554.7106 ,
554.9104 , 554.9105 , 554.9105A , 554.9107 , or 554.9107A when
not earlier than the time the secured party obtains control
and remains perfected by control only while the secured party
retains control.
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3. Investment property —— time of perfection by control ——
continuation of perfection. A security interest in investment
property is perfected by control under section 554.9106 from
not earlier than the time the secured party obtains control and
remains perfected by control until:
a. the secured party does not have control; and
b. one of the following occurs:
(1) if the collateral is a certificated security, the debtor
has or acquires possession of the security certificate;
(2) if the collateral is an uncertificated security, the
issuer has registered or registers the debtor as the registered
owner; or
(3) if the collateral is a security entitlement, the debtor
is or becomes the entitlement holder.
Sec. 39. NEW SECTION . 554.9314A Perfection by possession
and control of chattel paper.
1. Perfection by possession and control. A secured party
may perfect a security interest in chattel paper by taking
possession of each authoritative tangible copy of the record
evidencing the chattel paper and obtaining control of each
authoritative electronic copy of the electronic record
evidencing the chattel paper.
2. Time of perfection; continuation of perfection. A
security interest is perfected under subsection 1 not earlier
than the time the secured party takes possession and obtains
control and remains perfected under subsection 1 only while the
secured party retains possession and control.
3. Application of section 554.9313 to perfection by
possession of chattel paper. Section 554.9313, subsections
3 and 6 through 9, apply to perfection by possession of an
authoritative tangible copy of a record evidencing chattel
paper.
Sec. 40. Section 554.9316, subsections 1 and 6, Code 2023,
are amended to read as follows:
1. General rule —— effect on perfection of change in
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governing law. A security interest perfected pursuant to
the law of the jurisdiction designated in section 554.9301,
subsection 1 , or section 554.9305, subsection 3 , section
554.9306A, subsection 4, or section 554.9306B, subsection 2,
remains perfected until the earliest of:
a. the time perfection would have ceased under the law of
that jurisdiction;
b. the expiration of four months after a change of the
debtor’s location to another jurisdiction; or
c. the expiration of one year after a transfer of collateral
to a person that thereby becomes a debtor and is located in
another jurisdiction.
6. Change in jurisdiction of chattel paper, controllable
electronic record, bank, issuer, nominated person, securities
intermediary, or commodity intermediary. A security interest in
chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts,
letter-of-credit rights, or investment property which is
perfected under the law of the chattel paper’s jurisdiction,
the controllable electronic record’s jurisdiction, the bank’s
jurisdiction, the issuer’s jurisdiction, a nominated person’s
jurisdiction, the securities intermediary’s jurisdiction, or
the commodity intermediary’s jurisdiction, as applicable,
remains perfected until the earlier of:
a. the time the security interest would have become
unperfected under the law of that jurisdiction; or
b. the expiration of four months after a change of the
applicable jurisdiction to another jurisdiction.
Sec. 41. Section 554.9317, subsections 2 and 4, Code 2023,
are amended to read as follows:
2. Buyers that receive delivery. Except as otherwise
provided in subsection 5 , a buyer, other than a secured
party, of tangible chattel paper, tangible documents, goods,
instruments, tangible documents, or a certificated security
certificate takes free of a security interest or agricultural
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lien if the buyer gives value and receives delivery of the
collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
4. Licensees and buyers of certain collateral. A Subject to
subsections 6 through 9, a licensee of a general intangible or
a buyer, other than a secured party, of collateral other than
tangible chattel paper, tangible documents, electronic money,
goods, instruments, tangible documents, or a certificated
security takes free of a security interest if the licensee or
buyer gives value without knowledge of the security interest
and before it is perfected.
Sec. 42. Section 554.9317, Code 2023, is amended by adding
the following new subsections:
NEW SUBSECTION . 6. Buyers of chattel paper. A buyer, other
than a secured party, of chattel paper takes free of a security
interest if, without knowledge of the security interest and
before it is perfected, the buyer gives value and:
a. receives delivery of each authoritative tangible copy of
the record evidencing the chattel paper; and
b. if each authoritative electronic copy of the record
evidencing the chattel paper can be subjected to control
under section 554.9105, obtains control of each authoritative
electronic copy.
NEW SUBSECTION . 7. Buyers of electronic documents. A buyer
of an electronic document takes free of a security interest
if, without knowledge of the security interest and before it
is perfected, the buyer gives value and, if each authoritative
electronic copy of the document can be subjected to control
under section 554.7106, obtains control of each authoritative
electronic copy.
NEW SUBSECTION . 8. Buyers of controllable electronic
records. A buyer of a controllable electronic record takes free
of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and
obtains control of the controllable electronic record.
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NEW SUBSECTION . 9. Buyers of controllable accounts and
controllable payment intangibles. A buyer, other than a secured
party, of a controllable account or a controllable payment
intangible takes free of a security interest if, without
knowledge of the security interest and before it is perfected,
the buyer gives value and obtains control of the controllable
account or controllable payment intangible.
Sec. 43. Section 554.9324, subsection 2, paragraph b, Code
2023, is amended to read as follows:
b. the purchase-money secured party sends an authenticated
signed notification to the holder of the conflicting security
interest;
Sec. 44. Section 554.9324, subsection 4, paragraph b, Code
2023, is amended to read as follows:
b. the purchase-money secured party sends an authenticated
a signed notification to the holder of the conflicting security
interest;
Sec. 45. Section 554.9330, subsections 1, 2, and 6, Code
2023, are amended to read as follows:
1. Purchaser’s priority —— security interest claimed merely
as proceeds. A purchaser of chattel paper has priority over a
security interest in the chattel paper which is claimed merely
as proceeds of inventory subject to a security interest if:
a. in good faith and in the ordinary course of the
purchaser’s business, the purchaser gives new value , and takes
possession of each authoritative tangible copy of the record
evidencing the chattel paper or , and obtains control of under
section 554.9105 of each authoritative electronic copy of the
record evidencing the chattel paper under section 554.9105 ; and
b. the chattel paper does authoritative copies of the
record evidencing the chattel paper do not indicate that it the
chattel paper has been assigned to an identified assignee other
than the purchaser.
2. Purchaser’s priority —— other security interests. A
purchaser of chattel paper has priority over a security
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interest in the chattel paper which is claimed other than
merely as proceeds of inventory subject to a security interest
if the purchaser gives new value , and takes possession of
each authoritative tangible copy of the record evidencing the
chattel paper or , and obtains control of under section 554.9105
of each authoritative electronic copy of the record evidencing
the chattel paper under section 554.9105 in good faith, in
the ordinary course of the purchaser’s business, and without
knowledge that the purchase violates the rights of the secured
party.
6. Indication of assignment gives knowledge. For purposes of
subsections 2 and 4 , if the authoritative copies of the record
evidencing chattel paper or an instrument indicates indicate
that it the chattel paper or instrument has been assigned to an
identified secured party other than the purchaser, a purchaser
of the chattel paper or instrument has knowledge that the
purchase violates the rights of the secured party.
Sec. 46. Section 554.9331, Code 2023, is amended to read as
follows:
554.9331 Priority of rights of purchasers of controllable
accounts, controllable electronic records, controllable payment
intangibles, documents, instruments, and securities under
other Articles —— priority of interests in financial assets
and security entitlements and protections protection against
assertions assertion of claims under Articles 8 and 14.
1. Rights under Articles 3, 7, 8, and 14 not limited. This
Article does not limit the rights of a holder in due course of a
negotiable instrument, a holder to which a negotiable document
of title has been duly negotiated, a protected purchaser of a
security, or a qualifying purchaser of a controllable account,
controllable electronic record, or controllable payment
intangible. These holders or purchasers take priority over an
earlier security interest, even if perfected, to the extent
provided in Articles 3 , 7 , 8 , and 14 .
2. Protection under Articles 8 and 14. This Article does
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not limit the rights of or impose liability on a person to the
extent that the person is protected against the assertion of
a claim under Article 8 or 14 .
3. Filing not notice. Filing under this Article does
not constitute notice of a claim or defense to the holders,
purchasers, or persons described in subsections 1 and 2 .
Sec. 47. Section 554.9332, Code 2023, is amended to read as
follows:
554.9332 Transfer of money —— transfer of funds from deposit
account.
1. Transferee of tangible money. A transferee of tangible
money takes the money free of a security interest in the money
if the transferee when receiving delivery receives possession
of the money does not act without acting in collusion with the
debtor in violating the rights of the secured party.
2. Transferee of electronic money. A transferee of
electronic money takes the money free of a security interest
in the money if the transferee when obtaining control of the
money does not act in collusion with the debtor in violating
the rights of the secured party.
3. 2. Transferee of funds from deposit account. A
transferee of funds from a deposit account takes the funds free
of a security interest in the deposit account if the transferee
when receiving receives the funds does not act without acting
in collusion with the debtor in violating the rights of the
secured party.
3. Transferee of electronic money. A transferee of
electronic money takes the money free of a security interest
if the transferee obtains control of the money without acting
in collusion with the debtor in violating the rights of the
secured party.
Sec. 48. Section 554.9334, subsection 6, paragraph a, Code
2023, is amended to read as follows:
a. the encumbrancer or owner has, in an authenticated a
signed record, consented to the security interest or disclaimed
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an interest in the goods as fixtures; or
Sec. 49. Section 554.9341, unnumbered paragraph 1, Code
2023, is amended to read as follows:
Except as otherwise provided in section 554.9340, subsection
3 , and unless the bank otherwise agrees in an authenticated a
signed record, a bank’s rights and duties with respect to a
deposit account maintained with the bank are not terminated,
suspended, or modified by:
Sec. 50. Section 554.9404, subsection 1, paragraph b, Code
2023, is amended to read as follows:
b. any other defense or claim of the account debtor against
the assignor which accrues before the account debtor receives
a notification of the assignment authenticated signed by the
assignor or the assignee.
Sec. 51. Section 554.9406, subsections 1, 4, 7, and 11, Code
2023, are amended to read as follows:
1. Discharge of account debtor —— effect of
notification. Subject to subsections 2 through 9 and
11 , an account debtor on an account, chattel paper, or a
payment intangible may discharge its obligation by paying the
assignor until, but not after, the account debtor receives
a notification, authenticated signed by the assignor or
the assignee, that the amount due or to become due has been
assigned and that payment is to be made to the assignee. After
receipt of the notification, the account debtor may discharge
its obligation by paying the assignee and may not discharge the
obligation by paying the assignor.
4. Term restricting assignment generally ineffective. In
this subsection, “promissory note” includes a negotiable
instrument that evidences chattel paper. Except as otherwise
provided in subsection subsections 5 and 11 and sections
554.9407 and 554.13303 , and subject to subsection 8 , a term in
an agreement between an account debtor and an assignor or in a
promissory note is ineffective to the extent that it:
a. prohibits, restricts, or requires the consent of the
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account debtor or person obligated on the promissory note to
the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in, the
account, chattel paper, payment intangible, or promissory note;
or
b. provides that the assignment or transfer or the creation,
attachment, perfection, or enforcement of the security interest
may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the
account, chattel paper, payment intangible, or promissory note.
7. Subsection 2 , paragraph “c”, not waivable. Subject to
subsection subsections 8 and 11 , an account debtor may shall
not waive or vary its option under subsection 2 , paragraph “c” .
11. Inapplicability of certain subsections. Subsections 1
through , 2, 3 , and 7 do not apply to a controllable account or
controllable payment intangible.
Sec. 52. Section 554.9509, subsections 1 and 2, Code 2023,
are amended to read as follows:
1. Person entitled to file record. A person may file an
initial financing statement, amendment that adds collateral
covered by a financing statement, or amendment that adds a
debtor to a financing statement only if:
a. the debtor authorizes the filing in an authenticated a
signed record or pursuant to subsection 2 or 3 ; or
b. the person holds an agricultural lien that has
become effective at the time of filing and the financing
statement covers only collateral in which the person holds an
agricultural lien.
2. Security agreement as authorization. By authenticating
signing or becoming bound as debtor by a security agreement,
a debtor or new debtor authorizes the filing of an initial
financing statement, and an amendment, covering:
a. the collateral described in the security agreement; and
b. property that becomes collateral under section 554.9315,
subsection 1 , paragraph “b” , whether or not the security
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agreement expressly covers proceeds.
Sec. 53. Section 554.9513, subsections 2 and 3, Code 2023,
are amended to read as follows:
2. Time for compliance with subsection 1 . To comply with
subsection 1 , a secured party shall cause the secured party of
record to file the termination statement:
a. within one month after there is no obligation secured
by the collateral covered by the financing statement and
no commitment to make an advance, incur an obligation, or
otherwise give value; or
b. if earlier, within twenty days after the secured party
receives an authenticated a signed demand from a debtor.
3. Other collateral. In cases not governed by subsection
1 , within twenty days after a secured party receives an
authenticated a signed demand from a debtor, the secured
party shall cause the secured party of record for a financing
statement to send to the debtor a termination statement for the
financing statement or file the termination statement in the
filing office if:
a. except in the case of a financing statement covering
accounts or chattel paper that has been sold or goods that
are the subject of a consignment, there is no obligation
secured by the collateral covered by the financing statement
and no commitment to make an advance, incur an obligation, or
otherwise give value;
b. the financing statement covers accounts or chattel paper
that has been sold but as to which the account debtor or other
person obligated has discharged its obligation;
c. the financing statement covers goods that were the
subject of a consignment to the debtor but are not in the
debtor’s possession; or
d. the debtor did not authorize the filing of the initial
financing statement.
Sec. 54. Section 554.9605, Code 2023, is amended to read as
follows:
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554.9605 Unknown debtor or secondary obligor.
1. Duties to unknown persons —— general rule In general: no
duty owed by a secured party . Except as provided in subsection
2 , a secured party does not owe a duty based on its status as
secured party:
a. to a person that is a debtor or obligor, unless the
secured party knows:
(1) that the person is a debtor or obligor;
(2) the identity of the person; and
(3) how to communicate with the person; or
b. to a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
(1) that the person is a debtor; and
(2) the identity of the person.
2. When secured party owes duty to debtor notwithstanding
subsection 1 Exception: secured party owes a duty to debtor
or obligor . A secured party owes a duty based on its status
as a secured party to a person that is a debtor if, at the
time the secured party obtains control of collateral that is
a controllable account, controllable electronic record, or
controllable payment intangible, or at the time the security
interest attaches to the collateral, whichever is later:
a. the person is a debtor or obligor; and
b. the secured party has knowledge knows that the nature
of the collateral or a system in which the collateral is
recorded would prevent the secured party from acquiring the
knowledge specified information in subsection 1 , paragraph “a” ,
subparagraph (1), (2), or (3) relating to the person is not
provided by the collateral, a record attached to or logically
associated with the collateral, or the system in which the
collateral is recorded .
Sec. 55. Section 554.9608, subsection 1, paragraph a,
subparagraph (3), Code 2023, is amended to read as follows:
(3) the satisfaction of obligations secured by any
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subordinate security interest in or other lien on the
collateral subject to the security interest or agricultural
lien under which the collection or enforcement is made if the
secured party receives an authenticated a signed demand for
proceeds before distribution of the proceeds is completed.
Sec. 56. Section 554.9611, subsection 1, paragraph a, Code
2023, is amended to read as follows:
a. a secured party sends to the debtor and any secondary
obligor an authenticated a signed notification of disposition;
or
Sec. 57. Section 554.9611, subsections 2 and 3, Code 2023,
are amended to read as follows:
2. Notification of disposition required. Except as otherwise
provided in subsection 4 , a secured party that disposes of
collateral under section 554.9610 shall send to the persons
specified in subsection 3 a reasonable authenticated signed
notification of disposition.
3. Persons to be notified. To comply with subsection 2 , the
secured party shall send an authenticated a signed notification
of disposition to:
a. the debtor;
b. any secondary obligor; and
c. if the collateral is other than consumer goods:
(1) any other person from which the secured party has
received, before the notification date, an authenticated
a signed notification of a claim of an interest in the
collateral;
(2) any other secured party or lienholder that, ten days
before the notification date, held a security interest in or
other lien on the collateral perfected by the filing of a
financing statement that:
(a) identified the collateral;
(b) was indexed under the debtor’s name as of that date; and
(c) was filed in the office in which to file a financing
statement against the debtor covering the collateral as of that
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date; and
(3) any other secured party that, ten days before the
notification date, held a security interest in the collateral
perfected by compliance with a statute, regulation, or treaty
described in section 554.9311, subsection 1 .
Sec. 58. Section 554.9611, subsection 5, paragraph b,
subparagraph (2), Code 2023, is amended to read as follows:
(2) received a response to the request for information and
sent an authenticated a signed notification of disposition to
each secured party or other lienholder named in that response
whose financing statement covered the collateral.
Sec. 59. Section 554.9615, subsection 1, paragraph c,
subparagraph (1), Code 2023, is amended to read as follows:
(1) the secured party receives from the holder of the
subordinate security interest or other lien an authenticated a
signed demand for proceeds before distribution of the proceeds
is completed; and
Sec. 60. Section 554.9615, subsection 1, paragraph d, Code
2023, is amended to read as follows:
d. a secured party that is a consignor of the collateral if
the secured party receives from the consignor an authenticated
a signed demand for proceeds before distribution of the
proceeds is completed.
Sec. 61. Section 554.9616, subsection 1, paragraph b,
subparagraph (1), Code 2023, is amended to read as follows:
(1) authenticated signed by a debtor or consumer obligor;
Sec. 62. Section 554.9619, subsection 1, unnumbered
paragraph 1, Code 2023, is amended to read as follows:
In this section , “transfer statement” means a record
authenticated signed by a secured party stating:
Sec. 63. Section 554.9620, subsection 1, paragraph b,
unnumbered paragraph 1, Code 2023, is amended to read as
follows:
the secured party does not receive, within the time set forth
in subsection 4 , a notification of objection to the proposal
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authenticated signed by:
Sec. 64. Section 554.9620, subsection 2, paragraph a, Code
2023, is amended to read as follows:
a. the secured party consents to the acceptance in an
authenticated a signed record or sends a proposal to the
debtor; and
Sec. 65. Section 554.9620, subsection 3, Code 2023, is
amended to read as follows:
3. Debtor’s consent. For purposes of this section :
a. a debtor consents to an acceptance of collateral in
partial satisfaction of the obligation it secures only if
the debtor agrees to the terms of the acceptance in a record
authenticated signed after default; and
b. a debtor consents to an acceptance of collateral in full
satisfaction of the obligation it secures only if the debtor
agrees to the terms of the acceptance in a record authenticated
signed after default or the secured party:
(1) sends to the debtor after default a proposal that is
unconditional or subject only to a condition that collateral
not in the possession of the secured party be preserved or
maintained;
(2) in the proposal, proposes to accept collateral in full
satisfaction of the obligation it secures; and
(3) does not receive a notification of objection
authenticated signed by the debtor within twenty days after the
proposal is sent.
Sec. 66. Section 554.9620, subsection 6, paragraph b, Code
2023, is amended to read as follows:
b. within any longer period to which the debtor and all
secondary obligors have agreed in an agreement to that effect
entered into and authenticated signed after default.
Sec. 67. Section 554.9621, subsection 1, paragraph a, Code
2023, is amended to read as follows:
a. any person from which the secured party has received,
before the debtor consented to the acceptance, an authenticated
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a signed notification of a claim of an interest in the
collateral;
Sec. 68. Section 554.9624, Code 2023, is amended to read as
follows:
554.9624 Waiver.
1. Waiver of disposition notification. A debtor or secondary
obligor may waive the right to notification of disposition of
collateral under section 554.9611 only by an agreement to that
effect entered into and authenticated signed after default.
2. Waiver of mandatory disposition. A debtor may waive
the right to require disposition of collateral under section
554.9620, subsection 5 , only by an agreement to that effect
entered into and authenticated signed after default.
3. Waiver of redemption right. Except in a consumer-goods
transaction, a debtor or secondary obligor may waive the
right to redeem collateral under section 554.9623 only by an
agreement to that effect entered into and authenticated signed
after default.
Sec. 69. Section 554.9628, subsection 1, unnumbered
paragraph 1, Code 2023, is amended to read as follows:
Unless Subject to subsection 6, unless a secured party knows
that a person is a debtor or obligor, knows the identity of the
person, and knows how to communicate with the person:
Sec. 70. Section 554.9628, subsection 6, Code 2023, is
amended by striking the subsection and inserting in lieu
thereof the following:
6. Exception: limitation of liability under subsections
1 and 2 does not apply. Subsections 1 and 2 do not apply to
limit the liability of a secured party to a person if, at the
time the secured party obtains control of collateral that is
a controllable account, controllable electronic record, or
controllable payment intangible or at the time the security
interest attaches to the collateral, whichever is later:
a. the person is a debtor or obligor; and
b. the secured party knows that the information in
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subsection 2, paragraph “a” , subparagraph (1), (2), or (3),
relating to the person is not provided by the collateral, a
record attached to or logically associated with the collateral,
or the system in which the collateral is recorded.
PART B
TRANSITIONAL PROVISIONS
Sec. 71. NEW SECTION . 554.15101 Short title.
This Article may be cited as the Transitional Provisions for
Uniform Commercial Code Amendments (2022).
Sec. 72. NEW SECTION . 554.15102 Definitions.
1. Article 15 definitions. In this Article:
a. “Article 14” means Article 14 of this chapter.
b. “Article 14 property” means a controllable account,
controllable electronic record, or controllable payment
intangible.
2. Definitions in other Articles. The following definitions
in other Articles of this chapter apply to this Article:
a. “Controllable account” ... Section 554.9102.
b. “Controllable electronic record” ... Section 554.14102.
c. “Controllable payment intangible” ... Section 554.9102.
d. “Electronic money” ... Section 554.9102.
e. “Financing statement” ... Section 554.9102.
3. Article 1 definitions and principles. Article 1 contains
general definitions and principles of construction and
interpretation applicable throughout this Article.
Sec. 73. NEW SECTION . 554.15201 Saving clause.
Except as provided in part 3, a transaction validly entered
into before the effective date of this Act and the rights,
duties, and interests flowing from the transaction remain valid
thereafter and may be terminated, completed, consummated,
or enforced as required or permitted by law other than this
chapter or, if applicable, this chapter, as though this Act had
not taken effect.
Sec. 74. NEW SECTION . 554.15301 Saving clause.
1. Pre-effective-date transaction, lien, or interest. Except
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as provided in this part, Article 9, as amended by this Act,
and Article 14, as amended by this Act, apply to a transaction,
lien, or other interest in property, even if the transaction,
lien, or interest was entered into, created, or acquired before
the effective date of this Act.
2. Continuing validity. Except as provided in subsection 3
and sections 554.15302 through 554.15306:
a. a transaction, lien, or interest in property that
was validly entered into, created, or transferred before
the effective date of this Act and was not governed by this
chapter, but would be subject to Article 9 as amended by this
Act or Article 14, as amended by this Act, if it had been
entered into, created, or transferred on or after the effective
date of this Act, including the rights, duties, and interests
flowing from the transaction, lien, or interest, remains valid
on and after the effective date of this Act; and
b. the transaction, lien, or interest may be terminated,
completed, consummated, and enforced as required or permitted
by this Act or by the law that would apply if this Act had not
taken effect.
3. Pre-effective-date proceeding. This Act does not affect
an action, case, or proceeding commenced before the effective
date of this Act.
Sec. 75. NEW SECTION . 554.15302 Security interest perfected
before effective date.
1. Continuing perfection: perfection requirements
satisfied. A security interest that is enforceable and
perfected immediately before the effective date of this Act
is a perfected security interest under this Act if, on the
effective date of this Act, the requirements for enforceability
and perfection under this Act are satisfied without further
action.
2. Continuing perfection: enforceability or perfection
requirements not satisfied. If a security interest is
enforceable and perfected immediately before the effective
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date of this Act, but the requirements for enforceability or
perfection under this Act are not satisfied on the effective
date of this Act, the security interest:
a. is a perfected security interest until the earlier of
the time perfection would have ceased under the law in effect
immediately before the effective date of this Act or July 1,
2025;
b. remains enforceable thereafter only if the security
interest satisfies the requirements for enforceability under
section 554.9203, as amended by this Act, before July 1, 2025;
and
c. remains perfected thereafter only if the requirements
for perfection under this Act are satisfied before the time
specified in paragraph “a” .
Sec. 76. NEW SECTION . 554.15303 Security interest
unperfected before effective date.
A security interest that is enforceable immediately before
the effective date of this Act but is unperfected at that time:
1. remains an enforceable security interest until July 1,
2025;
2. remains enforceable thereafter if the security interest
becomes enforceable under section 554.9203, as amended by this
Act, on the effective date of this Act or before July 1, 2025;
and
3. becomes perfected:
a. without further action, on the effective date of this Act
if the requirements for perfection under this Act are satisfied
before or at that time; or
b. when the requirements for perfection are satisfied if the
requirements are satisfied after that time.
Sec. 77. NEW SECTION . 554.15304 Effectiveness of actions
taken before effective date.
1. Pre-effective-date action; attachment and perfection
before July 1, 2025. If action, other than the filing of a
financing statement, is taken before the effective date of this
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Act and this action would have resulted in perfection of the
security interest had the security interest become enforceable
before the effective date of this Act, this action is effective
to perfect a security interest that attaches under this Act
before July 1, 2025. An attached security interest becomes
unperfected on July 1, 2025, unless the security interest
becomes a perfected security interest under this Act before
July 1, 2025.
2. Pre-effective-date filing. The filing of a financing
statement before the effective date of this Act is effective
to perfect a security interest on the effective date of this
Act to the extent the filing would satisfy the requirements for
perfection under this Act.
3. Pre-effective-date enforceability action. The taking of
an action before the effective date of this Act is sufficient
for the enforceability of a security interest on the effective
date of this Act if this action would satisfy the requirements
for enforceability under this Act.
Sec. 78. NEW SECTION . 554.15305 Priority.
1. Determination of priority. Subject to subsections 2 and
3, this Act determines the priority of conflicting claims to
collateral.
2. Established priorities. Subject to subsection 3, if the
priorities of claims to collateral were established before the
effective date of this Act, Article 9, as in effect before the
effective date of this Act, determines priority.
3. Determination of certain priorities on July 1, 2025. On
July 1, 2025, to the extent the priorities determined by
Article 9, as amended by this Act, modify the priorities
established before the effective date of this Act, the
priorities of claims to Article 14 property and electronic
money established before the effective date of this Act cease
to apply.
Sec. 79. NEW SECTION . 554.15306 Priority of claims when
priority rules of Article 9 do not apply.
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1. Determination of priority. Subject to subsections 2 and
3, Article 14 determines the priority of conflicting claims to
Article 14 property when the priority rules of Article 9, as
amended by this Act, do not apply.
2. Established priorities. Subject to subsection 3, when
the priority rules of Article 9, as amended by this Act, do not
apply and the priorities of claims to Article 14 property were
established before the effective date of this Act, law other
than Article 14 determines priority.
3. Determination of certain priorities on July 1, 2025. When
the priority rules of Article 9, as amended by this Act, do
not apply, to the extent the priorities determined by this Act
modify the priorities established before the effective date
of this Act, the priorities of claims to Article 14 property
established before the effective date of this Act cease to
apply on July 1, 2025.
Sec. 80. DIRECTIONS TO THE CODE EDITOR —— ARTICLE 15
PARTS. The Code editor is directed to divide the provisions of
chapter 554, Article 15, as enacted in this division of this
Act, into parts as follows:
1. Part 1, including sections 554.15101 and 554.15102.
2. Part 2, including section 554.15201.
3. Part 3, including sections 554.15301, 554.15302,
554.15303, 554.15304, 554.15305, and 554.15306.
DIVISION III
DIGITAL ASSETS
Sec. 81. Section 554E.1, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
554E.1 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Contract” means the same as defined in section 554D.103.
2. “Digital asset” means any electronic record that
represents, evidences, or comprises economic value or economic,
proprietary, or access rights, is maintained or stored in or
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as an electronic ledger or other record of transactions, or
is used as a medium of exchange, unit of account, method of
payment, or store of value.
3. “Distributed ledger technology” means an electronic
record that is a ledger or other record of transactions or
other data to which all of the following apply:
a. The electronic record is uniformly ordered.
b. The electronic record is redundantly maintained or
processed by or distributed over more than one computer
or machine to ensure the consistency, immutability,
decentralization, or nonrepudiation of the ledger or other
record of transactions or other data.
4. “Electronic” means the same as defined in section
554D.103.
5. “Electronic record” means the same as defined in section
554D.103.
6. “Electronic services system” means the county land record
information system, or electronic services system, created
under the agreement entered into under chapter 28E between the
counties and the Iowa county recorders association as required
by 2005 Iowa Acts, ch. 179, §101, as amended by 2021 Iowa Acts,
ch. 126, §2.
7. “Record” means the same as defined in section 554D.103.
8. a. “Smart contract” means an electronic record that is
an event-driven program or computerized transaction protocol
that runs on a distributed, decentralized, shared, and
replicated ledger that executes the terms of a contract.
b. For purposes of this subsection, “executes the terms
of a contract” may include taking, obtaining, exercising, or
transferring control or custody of assets or other property.
9. “Transaction” means a sale, trade, exchange, transfer,
payment, or conversion of a digital asset or any other property
or any other action or set of actions occurring between two or
more persons relating to the conduct of business, commercial,
or governmental affairs.
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Sec. 82. Section 554E.2, Code 2023, is amended to read as
follows:
554E.2 Classification of digital assets.
Digital assets are intangible personal property.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
GENERAL. This bill amends Code chapter 554, Iowa’s version
of the uniform commercial code (UCC), governing certain
commercial transactions involving forms of personal electronic
property that do not derive value from physical attributes
(sometimes referred to as form of intangible personal
property). In 2022, the general assembly enacted two bills
dealing with these types of transactions: (1) new Article 14
of the UCC (Code chapter 554) and referred to as the “Uniform
Commercial Code —— Controllable Electronic Records” (2022 Iowa
Acts, chapter 1117) and (2) new Code chapter 554E referring to
smart contracts, distributed ledger technology, and digital
assets (2022 Iowa Acts, chapter 1116).
CONTROLLABLE ELECTRONIC RECORDS —— BACKGROUND. The 2022 Act
creating new Article 14 of the UCC, in part included amendments
to Article 1 providing general provisions applicable throughout
the UCC, and amendments to Article 9 governing secured
transactions, as prepared by a committee appointed jointly by
the uniform law commission and the American law institute.
The Act provided for forms of electronic property sometimes
referred to as digital assets including non-fiat currency
and blockchain based non-fungible tokens, commonly referred
to as NFTs, and transactions involving sale to a purchaser
(qualified purchaser) and associated payment obligations
(a controllable payment intangible) by an account debtor.
Note, the UCC does not use the term “intangible property”
but “personal property” which includes general intangibles,
including controllable electronic records. Iowa’s new Article
14 is connected to Article 9, which allows a creditor to
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obtain a security interest attached to a debtor’s personal
property as collateral and to obtain priority when enforcing
that security interest over other creditors having a security
interest in that same collateral. Under Code section 554.9102,
the term “account” means having a present and future right
to a payment based on the transfer of services or property
including by sale or lease, and includes accounts receivable,
but excludes an item represented by a negotiable instrument
or chattel paper. The term “payment intangible” (under the
catchall term “general intangible”) means a debtor’s principal
obligation is the payment of money and includes a controllable
payment intangible. An account debtor is a person who owes
an obligation on an account, chattel paper, or intangible
property. Chattel paper is a debt obligation supported with a
security interest in tangible property and includes electronic
chattel paper evidenced by an electronic record. An electronic
record cannot include electronic money operating as a medium of
exchange before being authorized or adopted by a governmental
entity. Like a controllable electronic record, electronic
money is perfected by rules of control rather than rules of
possession traditionally governing forms of tangible personal
property.
CONTROLLABLE ELECTRONIC RECORDS —— BILL’S PROVISIONS. The
bill eliminates several terms, including “electronic chattel
paper” and substitutes the term used to complete a document
from “authenticate” to “sign”. The bill provides for rights
in controllable accounts, controllable electronic records,
and controllable payment intangibles (amended Code section
554.14104), the control of controllable electronic records
(amended Code section 554.14105), and what state law controls
in cases of jurisdictional questions (amended Code section
554.14107). The bill defines a number of terms used throughout
the UCC, including “money”. The bill amends a number of
Article 9 provisions, including the control of an electronic
copy of a record evidencing chattel paper (amended Code section
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554.9105); the control of electronic money (amended Code
section 554.9105A); that no duty exists to confirm control on
behalf of another person (new Code section 554.9107B); the
duty of a secured party to transfer control of electronic
document of title to a debtor (amended Code section 554.9208);
the law governing the perfection and priority of a security
interest in chattel paper (amended Code section 554.9306A) and
in controllable accounts, controllable electronic records,
and controllable payment intangibles (new Code section
554.9306B); the perfection of chattel paper, including an
electronic copy of a record evidencing chattel paper (new Code
section 554.9314A); the right of a buyer of chattel paper,
electronic document, a controllable electronic record, and
a controllable account or controllable payment intangible
to take clear of a security interest prior to perfection
(amended Code section 554.9317); and the liability of a secured
party obtaining control of collateral that is a controllable
account, controllable electronic record, or controllable
payment intangible (amended Code section 554.9628). The bill
also includes a number of transitional provisions, including
a saving clause (new Code sections 554.15201 and 554.15301),
the enforceability of a security interest that is perfected
or unperfected before the bill’s effective date (new Code
sections 554.15302 and 554.15303), the effectiveness of actions
taken before the bill’s effective date (new Code section
554.15304), and rules of priority (new Code sections 554.15305
and 554.15306).
REGULATION OF DIGITAL ASSETS —— BACKGROUND. The 2022 Act
regulating transactions involving distributed ledger technology
and smart contracts is connected to Article 14. In both
cases, the medium of exchange is a digital asset. Distributed
ledger technology allows different computers to validate
transactions and update records and a smart contract is a type
of electronic record that executes the term of a contract,
including the transfer of assets. A digital asset is a form
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of an electronic record that represents or is used as a medium
of exchange, unit of account, method of payment, or store of
value. However, the term expressly excludes certain personal
property recognized under the UCC, including a deposit account,
electronic record evidencing chattel paper, electronic chattel
paper, controllable account, controllable payment intangible,
money, electronic document of title, investment property, or a
transferable record (Code section 554E.1). A contract cannot
be denied legal effect or enforceability solely because it
is effectuated by distributed ledger technology or a smart
contract (Code section 554E.3). In addition, the 2022 Act
provides that a real estate conveyance can be recorded by a
county if the evidence of conveyance complies with the general
requirements of Code chapter 558 and is in a format conforming
with standards established by the electronic services system
allowing counties and the Iowa county recorders association
to enter into an agreement under Code chapter 28E for the
implementation of the county land record information system
(Code section 554E.4).
REGULATION OF DIGITAL ASSETS —— BILL’S PROVISIONS. The
bill amends the definition of “digital asset” by eliminating
exceptions recognized by the UCC including electronic records
evidencing chattel paper. The bill provides that a digital
asset is classified simply as personal property rather than
intangible personal property. Finally, the bill defines
“electronic services system” by citing its source in the Iowa
Acts.
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