RETRIEVE BILL PPGG - 0102
Legislative Bill Drafting Commission
12020-01-1
S. --------
SENATE
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IN SENATE--Introduced by Sen
--read twice and ordered printed,
and when printed to be committed
to the Committee on
-------- A.
ASSEMBLY
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IN ASSEMBLY--Introduced by M. of A.
--read once and referred to the
Committee on
*BUDGBI*
(Enacts major components of legis-
lation necessary to implement the
state fiscal plan for the 2001-2002
state fiscal year)
--------
2001-2002 Fiscal Plan
AN ACT
to provide for the utilization of
utility assessment funds (A); to
amend chapter 886 of the laws of
1972 amending the correction law and
the penal law relating to prisoner
furloughs in certain cases and the
crime of absconding therefrom; to
amend chapter 261 of the laws of
1987, amending chapters 50, 53 and
54 of the laws of 1987, the
correction law, the penal law and
other chapters and laws relating to
correctional facilities and earned
eligibility; to amend chapter 55 of
the laws of 1992, amending the tax
2 12020-01-1
law and other laws relating to
taxes, surcharges, fees and funding
and to extend the provision of the
comprehensive alcohol and substance
abuse program; to amend chapter 339
of the laws of 1972, amending the
correction law and the penal law
relating to inmate work release,
furlough and leave; to amend chapter
60 of the laws of 1994 relating to
certain provisions which impact upon
expenditure of certain appropri-
ations made by chapter 50 of the
laws of 1994 enacting the state
operations budget and which desig-
nate the capacity of the comprehen-
sive alcohol and substance abuse
program; to amend chapter 554 of the
laws of 1986, amending the
correction law and the penal law
relating to providing for community
treatment facilities and establish-
ing the crime of absconding from a
community treatment facility; to
amend chapter 3 of the laws of 1995
amending the penal law and other
laws relating to the incarceration
fee; to amend chapter 79 of the laws
of 1989, amending the correction law
and other laws relating to release
and supervision of persons serving a
definite sentence; to amend chapter
907 of the laws of 1984 amending the
correction law, the New York city
criminal court act and the executive
law relating to prison and jail
housing and alternatives to
detention and incarceration
programs; to amend chapter 713 of
the laws of 1988 amending the vehi-
cle and traffic law relating to the
ignition interlock device program,
in relation to extending the expira-
tion thereof; to amend chapter 55 of
the laws of 1992 amending the tax
law and other laws relating to
taxes, surcharges, fees and funding,
in relation to extending certain
provisions relating to release on
medical parole; to amend chapter 887
of the laws of 1983 amending the
correction law relating to the
psychological testing of candidates,
in relation to extending the expira-
tion of such chapter (B); to amend
3 12020-01-1
the election law, in relation to
publishing proposed constitutional
amendments or other propositions or
questions, and printing compilations
of the election law for transmittal
to each board of elections at least
once each year (C); to amend chapter
989 of the laws of 1958, relating to
the temporary state commission of
investigation, in relation to
extending the provisions of such
chapter; and to repeal certain
provisions of such chapter relating
thereto (D); to amend the executive
law, the state finance law and the
insurance law, in relation to
authorizing the use of owner
controlled insurance programs for
certain public construction
contracts and make conforming chang-
es thereto (E); to amend the state
finance law, in relation to the
assessment of collection fees on
debts owed to the state (F); to
amend chapter 268 of the laws of
1996, amending the education law and
the state finance law, relating to
providing a recruitment and
retention incentive program for
certain active members of the New
York army national guard, New York
air national guard, and New York
naval militia, in relation to the
effective date thereof (G); to amend
the military law, in relation to the
military funds of the organized
militia (H); to amend the real prop-
erty law, the general business law
and the executive law, in relation
to the fees charged for certain
license, registration and commission
applications and examinations; and
to repeal certain provisions of the
general business law and the execu-
tive law relating thereto (I); to
amend the executive law, in relation
to the community services block
grant program (J); to amend the
environmental conservation law, in
relation to fees charged by the Lake
George park commission (K); to amend
the uniform commercial code, in
relation to secured transactions;
and to repeal certain provisions of
such code relating thereto (L); to
4 12020-01-1
amend the education law, the execu-
tive law and the penal law, in
relation to fire safety at colleges
and universities (M); to amend chap-
ter 428 of the laws of 1999 amending
the executive law and the criminal
procedure law relating to expanding
the geographic area of employment of
certain police officers, in relation
to the effective date thereof (N);
to amend the state finance law, in
relation to the payment of general
purpose local government aid during
the state fiscal year commencing
April 1, 2001, and every fiscal year
thereafter (O); to amend the state
finance law, in relation to elimi-
nating a general fund appropriation
thereto (P); to amend the state
finance law, in relation to provid-
ing for the administration of
certain funds and accounts related
to the 2001-2002 budget; to amend
the state finance law and chapter
389 of the laws of 1997, relating to
the financing of the correctional
facilities improvement fund and the
youth facility improvement fund; to
amend the state finance law, in
relation to the debt reduction
reserve fund; to amend the private
housing finance law, in relation to
housing program bonds and notes, in
relation to such funds; to amend the
state finance law, in relation to
the court facilities aid fund; to
amend the state finance law, in
relation to the New York city county
clerks operations offset fund; to
amend the state finance law, in
relation to the judiciary data proc-
essing offset fund; to amend the
state finance law, in relation to
the New York state collectible
series fund; to amend the state
finance law, in relation to the Lake
George park trust fund; to amend the
state finance law, in relation to
the sewage treatment program manage-
ment and administration fund; to
amend the state finance law, in
relation to the school tax relief
fund; to amend the state finance
law, in relation to the criminal
justice improvement account; to
5 12020-01-1
amend the state finance law, in
relation to the state police motor
vehicle law enforcement account; to
amend the state finance law, in
relation to the biodiversity
stewardship and research fund; to
amend the state finance law, in
relation to the New York state wire-
less telephone emergency service
account; to amend the state finance
law, in relation to the tax proceed-
ing fee account; to amend the state
finance law, in relation to the
drinking water program management
and administration fund; to amend
the state finance law, in relation
to the clean water/clean air imple-
mentation fund; to amend the state
finance law, in relation to the
vocational rehabilitation fund; to
amend the state finance law, in
relation to the city university
stabilization account; to amend the
state finance law, in relation to
the spinal cord injury research
trust fund; to amend the labor law,
in relation to unemployment insur-
ance fund; to amend the state
finance law, in relation to estab-
lishing the additional mass trans-
portation fund; to amend the state
finance law, in relation to the
court facilities incentive aid fund;
to amend the state finance law, in
relation to the sale of bonds by the
comptroller; to amend the state
finance law, in relation to the
issuance of certificates of partic-
ipation; to amend the judiciary law,
in relation to provision of the
judicial training institute; to
amend the public authorities law, in
relation to sale of bonds by the
dormitory authority; to amend the
public authorities law, in relation
to the sale of bonds by the environ-
mental facilities corporation; to
amend the public authorities law, in
relation to the sale of bonds by the
thruway authority; to amend chapter
152 of the laws of 1964 relating to
authorizing the commissioner of
general services to contract on
behalf of the state with counties in
the state of New York for the
6 12020-01-1
construction of office buildings and
other public improvements in such
counties, in relation to contracts
between the commissioner of general
services and counties; to amend the
public authorities law, in relation
to powers of the public authorities
control board; to repeal section 96
of the state finance law, relating
to the grade crossing elimination
debt fund; to repeal paragraph (b)
of subdivision 3-a of section 378 of
the education law, relating to the
state university construction fund
educational facilities payment
account; to repeal section 92-m of
the state finance law, relating to
the Lake Champlain bridges fund; to
repeal section 94-c of the state
finance law, relating to the supple-
mental jury facilities fund; to
repeal section 97-o of the state
finance law, relating to the Pine
Barrens fund; to repeal section 97-n
of the state finance law, relating
to the Hudson river valley greenway
fund; and providing for the repeal
of certain provisions upon expira-
tion thereof (Q); to amend the state
finance law, in relation to creating
a fund within the general debt
service fund to be known as the
revenue bond tax fund, and to create
a revenue-supported financing
program (R)
The People of the State of New
York, represented in Senate and
Assembly, do enact as follows:
7 12020-01-1
1 Section 1. This act enacts into law major components of legislation
2 which are necessary to implement the state fiscal plan for the 2001-2002
3 state fiscal year. Each component is wholly contained within a Part
4 identified as Parts A through R. The effective date for each particular
5 provision contained within such Part is set forth in the last section of
6 such Part. Any provision in any section contained within a Part, includ-
7 ing the effective date of the Part, which makes reference to a section
8 "of this act", when used in connection with that particular component,
9 shall be deemed to mean and refer to the corresponding section of the
10 Part in which it is found. Section three of this act sets forth the
11 general effective date of this act.
12 PART A
13 Section 1. Notwithstanding any other law, rule or regulation to the
14 contrary, expenses of the department of health public service education
15 program incurred pursuant to appropriations from the cable television
16 account of the state miscellaneous special revenue funds shall be deemed
17 expenses of the department of public service.
18 § 2. Expenditures of moneys appropriated in a chapter of the laws of
19 2001 to the department of agriculture and markets from the special
20 revenue funds-other/state operations (miscellaneous special revenue
21 fund-339) public service account for the agricultural business services
22 program shall be subject to the provisions of this section. Notwith-
23 standing any law to the contrary, expenditures from the miscellaneous
24 special revenue fund appropriation, and indirect costs under the comp-
25 troller's statewide cost allocation plan, shall be deemed expenses of
26 the department of public service within the meaning of section 18-a of
8 12020-01-1
1 the public service law and assessed accordingly. Expenditures subject to
2 assessment shall include those for direct and indirect participation in
3 certification proceedings pursuant to article 7 of the public service
4 law.
5 § 3. Expenditures of moneys appropriated in a chapter of the laws of
6 2001 to the department of economic development from the special revenue
7 funds-other/state operations (miscellaneous special revenue fund-339)
8 public service account for the administration program shall be subject
9 to the provisions of this section. Notwithstanding any law to the
10 contrary, expenditures from the miscellaneous special revenue fund
11 appropriations and indirect costs under the comptroller's statewide cost
12 allocation plan, shall be deemed expenses of the department of public
13 service within the meaning of section 18-a of the public service law and
14 assessed accordingly. Expenditures subject to assessment shall include
15 those for direct and indirect participation in certification proceedings
16 pursuant to article 7 of the public service law.
17 § 4. Expenditures of moneys appropriated in a chapter of the laws of
18 2001 to the office of parks, recreation and historic preservation from
19 the special revenue funds-other/state operations (miscellaneous special
20 revenue fund-339) public service account under the historic preservation
21 program shall be subject to the provisions of this section. Notwith-
22 standing any law to the contrary, expenditures from the miscellaneous
23 special revenue fund appropriations, and indirect costs under the comp-
24 troller's statewide cost allocation plan, shall be deemed expenses of
25 the department of public service within the meaning of section 18-a of
26 the public service law and assessed accordingly. Expenditures subject to
27 assessment shall include those for direct and indirect participation in
9 12020-01-1
1 certification proceedings pursuant to article 7 of the public service
2 law.
3 § 5. Expenditures of moneys appropriated in a chapter of the laws of
4 2001 to the consumer protection board from the special revenue funds-
5 other/state operations (miscellaneous special revenue fund-339) public
6 service account for the consumer protection program for services and
7 expenses related to consumer protection activities, including travel
8 outside the state, shall be subject to the provisions of this section.
9 Notwithstanding any provision of law to the contrary, such expenditures
10 shall be deemed an expense of the department of public service within
11 the meaning of section 18-a of the public service law.
12 § 6. Expenditures of moneys appropriated in a chapter of the laws of
13 2001 to the department of environmental conservation from the special
14 revenue fund-other/state operations (miscellaneous special revenue
15 fund-339) utility environmental regulation account shall be subject to
16 the provisions of this section. Notwithstanding any law to the contrary,
17 expenditures from the miscellaneous special revenue fund and indirect
18 costs under the comptroller's statewide cost allocation plan, shall be
19 deemed expenses of the department of public service within the meaning
20 of section 18-a of the public service law and assessed accordingly.
21 Expenditures subject to assessment shall include those for direct and
22 indirect participation in certification proceedings pursuant to article
23 7 of the public service law; oil and gas, coal and nuclear regulatory
24 and planning activities; and small hydropower, cogeneration, alternate
25 energy and electric generation facility sitings.
26 § 7. This act shall take effect April 1, 2001.
27 PART B
10 12020-01-1
1 Section 1. Section 3 of chapter 886 of the laws of 1972, amending the
2 correction law and the penal law relating to prisoner furloughs in
3 certain cases and the crime of absconding therefrom, as amended by chap-
4 ter 452 of the laws of 1999, is amended to read as follows:
5 § 3. This act shall take effect 60 days after it shall have become a
6 law and shall remain in effect until September 1, 2001 2003.
7 § 2. Section 20 of chapter 261 of the laws of 1987, amending chapters
8 50, 53 and 54 of the laws of 1987, the correction law, the penal law and
9 other chapters and laws relating to correctional facilities and earned
10 eligibility, as amended by chapter 452 of the laws of 1999, is amended
11 to read as follows:
12 § 20. This act shall take effect immediately except that section thir-
13 teen of this act shall expire and be of no further force or effect on
14 and after September 1, 2001 2003 and shall not apply to persons
15 committed to the custody of the department after such date, and provided
16 further that the commissioner of correctional services shall report each
17 January first and July first during such time as the earned eligibility
18 program is in effect, to the chairmen of the senate crime and correction
19 committee, the senate codes committee, the assembly correction commit-
20 tee, and the assembly codes committee, the standards in effect for
21 earned eligibility during the prior six-month period, the number of
22 inmates subject to the provisions of earned eligibility, the number who
23 actually received certificates of earned eligibility during that period
24 of time, the number of inmates with certificates who are granted parole
25 upon their first consideration for parole, the number with certificates
26 who are denied parole upon their first consideration, and the number of
27 individuals granted and denied parole who did not have earned eligibil-
28 ity certificates.
11 12020-01-1
1 § 3. Subdivision (q) of section 427 of chapter 55 of the laws of 1992,
2 amending the tax law and other laws relating to taxes, surcharges, fees
3 and funding, as amended by chapter 452 of the laws of 1999, is amended
4 to read as follows:
5 (q) the provisions of section two hundred eighty-four of this act
6 shall remain in effect until September 1, 2001 2003 and be applicable
7 to all persons entering the program on or before August 31, 2001 2003.
8 § 4. Section 10 of chapter 339 of the laws of 1972, amending the
9 correction law and the penal law relating to inmate work release,
10 furlough and leave, as amended by chapter 452 of the laws of 1999, is
11 amended to read as follows:
12 § 10. This act shall take effect 30 days after it shall have become a
13 law and shall remain in effect until September 1, 2001 2003, and
14 provided further that the commissioner of correctional services shall
15 report each January first, and July first, to the chairman of the senate
16 crime victims, crime and correction committee, the senate codes commit-
17 tee, the assembly correction committee, and the assembly codes commit-
18 tee, the number of eligible inmates in each facility under the custody
19 and control of the commissioner who have applied for participation in
20 any program offered under the provisions of work release, furlough, or
21 leave, and the number of such inmates who have been approved for partic-
22 ipation.
23 § 5. Subdivision (c) of section 46 of chapter 60 of the laws of 1994
24 relating to certain provisions which impact upon expenditure of certain
25 appropriations made by chapter 50 of the laws of 1994 enacting the state
26 operations budget, as amended by chapter 452 of the laws of 1999, is
27 amended to read as follows:
12 12020-01-1
1 (c) sections forty-one and forty-two of this act shall expire Septem-
2 ber 1, 2001 2003; provided, that the provisions of section forty-two
3 of this act shall apply to inmates entering the work release program on
4 or after such effective date; and
5 § 6. Section 5 of chapter 554 of the laws of 1986, amending the
6 correction law and the penal law relating to providing for community
7 treatment facilities and establishing the crime of absconding from a
8 community treatment facility, as amended by chapter 452 of the laws of
9 1999, is amended to read as follows:
10 § 5. This act shall take effect immediately and shall remain in full
11 force and effect until September 1, 2001 2003, and provided further
12 that the commissioner of correctional services shall report each January
13 first and July first during such time as this legislation is in effect,
14 to the chairmen of the senate crime and correctional committee, the
15 senate codes committee, the assembly correction committee, and the
16 assembly codes committee, the number of individuals who are released to
17 community treatment facilities during the previous six-month period,
18 including the total number for each date at each facility who are not
19 residing within the facility, but who are required to report to the
20 facility on a daily or less frequent basis.
21 § 7. Subdivision h of section 74 of chapter 3 of the laws of 1995,
22 amending the penal law and other laws relating to the incarceration fee,
23 as amended by chapter 452 of the laws of 1999, is amended to read as
24 follows:
25 h. Section fifty-two of this act shall be deemed to have been in full
26 force and effect on and after April 1, 1995; provided, however, that the
27 provisions of section 189 of the correction law, as amended by section
28 fifty-five of this act, subdivision 5 of section 60.35 of the penal law,
13 12020-01-1
1 as amended by section fifty-six of the act, and section fifty-seven of
2 this act shall expire September 1, 2001 2003, when upon such date the
3 amendments to the correction law and penal law made by sections fifty-
4 five and fifty-six of this act shall revert to and be read as if the
5 provisions of this act had not been enacted; provided, further, however,
6 that sections sixty-two, sixty-three and sixty-four of this act shall be
7 deemed to have been in full force and effect on and after March 1, 1995
8 and shall be deemed repealed April 1, 1996 and upon such date the
9 provisions of subsection (e) of section 9110 of the insurance law and
10 subdivision 2 of section 89-d of the state finance law shall revert to
11 and be read as set out in law on the date immediately preceding the
12 effective date of sections sixty-two and sixty-three of this act;
13 § 8. Section 7 of chapter 79 of the laws of 1989, amending the
14 correction law and other laws relating to release and supervision of
15 persons serving a definite sentence, as amended by chapter 452 of the
16 laws of 1999, is amended to read as follows:
17 § 7. This act shall take effect immediately and shall remain in effect
18 until September 1, 2001 2003, at which time article 12 of the
19 correction law and section 257-b of the executive law, as added, respec-
20 tively, by sections one and two of this act, shall be repealed. In addi-
21 tion, on such date the amendatory deletions and additions made by
22 sections three through six of this act shall likewise be repealed.
23 § 9. Subdivision (z) of section 427 of chapter 55 of the laws of 1992,
24 amending the tax law and other laws relating to taxes, surcharges, fees
25 and funding, as amended by chapter 452 of the laws of 1999, is amended
26 to read as follows:
27 (z) the provisions of section three hundred eighty-one of this act
28 shall apply to all persons supervised by the division of parole on or
14 12020-01-1
1 after the effective date of this act, provided however, that subdivision
2 9 of section 259-a of the executive law, as added by section three
3 hundred eighty-one of this act, shall expire on September 1, 2001
4 2003;
5 § 10. Subdivision (aa) of section 427 of chapter 55 of the laws of
6 1992, amending the tax law and other laws relating to increases in
7 taxes, fees and charges, as amended by chapter 452 of the laws of 1999,
8 is amended to read as follows:
9 (aa) the provisions of sections three hundred eighty-two, three
10 hundred eighty-three and three hundred eighty-four of this act shall
11 expire on September 1, 2001 2003;
12 § 11. Section 12 of chapter 907 of the laws of 1984, amending the
13 correction law, the New York City criminal court act and the executive
14 law relating to prison and jail housing and alternatives to detention
15 and incarceration programs, as amended by chapter 452 of the laws of
16 1999, is amended to read as follows:
17 § 12. This act shall take effect immediately, except that the
18 provisions of sections one through ten of this act shall remain in full
19 force and effect until September 1, 2001 2003 on which date those
20 provisions shall be deemed to be repealed.
21 § 12. Section 6 of chapter 713 of the laws of 1988, amending the vehi-
22 cle and traffic law relating to the ignition interlock device program,
23 as amended by chapter 135 of the laws of 1999, is amended to read as
24 follows:
25 § 6. This act shall take effect on the first day of April next
26 succeeding the date on which it shall have become a law; provided,
27 however, that effective immediately, the addition, amendment or repeal
28 of any rule or regulation necessary for the implementation of the fore-
15 12020-01-1
1 going sections of this act on their effective date is authorized and
2 directed to be made and completed on or before such effective date and
3 shall remain in full force and effect until the first day of July,
4 2001 2003 when upon such date the provisions of this act shall be
5 deemed repealed.
6 § 13. Subdivision (r) of section 427 of chapter 55 of the laws of
7 1992, amending the tax law and other laws relating to taxes, surcharges,
8 fees and funding, as amended by chapter 16 of the laws of 2000, is
9 amended to read as follows:
10 (r) the provisions of sections two hundred eighty-six through two
11 hundred ninety-one of this act shall apply to all persons released on
12 medical parole prior to September 1, 2001 2003, and shall expire and
13 be of no further effect on September 1, 2001 2003;
14 § 14. Section 2 of chapter 887 of the laws of 1983, amending the
15 correction law relating to the psychological testing of candidates, as
16 amended by chapter 15 of the laws of 2000, is amended to read as
17 follows:
18 § 2. This act shall take effect on the one hundred eightieth day after
19 it shall have become a law and shall remain in effect until September 1,
20 2001 2003.
21 § 15. This act shall take effect immediately and shall be deemed to
22 have been in full force and effect on and after April 1, 2001.
23 PART C
24 Section 1. Section 4-116 of the election law is amended by adding a
25 new subdivision 4 to read as follows:
16 12020-01-1
1 4. The state board of elections shall be deemed to have satisfied the
2 requirements of subdivisions two and three of this section by posting an
3 abstract of the proposed constitutional amendments or other propositions
4 or questions, a brief statement of the law or proceedings authorizing
5 such submission, a statement that such submission will be made and the
6 form in which it is to be submitted on the board of elections' homepage
7 of the internet, in the week preceding any election at which such amend-
8 ments, propositions or questions are to be submitted to the voters of
9 the state; or as soon as practicable after such information is available
10 provided, however, that, in no instance, shall such information be post-
11 ed on the internet via the agency's homepage for less than seven days
12 preceding such election. The aforementioned posting shall be made avail-
13 able electronically at all times until such time as the polls for such
14 election close.
15 § 2. Section 4-126 of the election law is amended by adding a new
16 subdivision 3 to read as follows:
17 3. The state board of elections shall be deemed to have satisfied the
18 requirements of subdivisions one and two of this section by posting an
19 amendment to the election law on the board of elections' homepage of the
20 internet within seven days after the enactment of such amendment and by
21 providing compilations of the election law on the internet via the board
22 of elections' homepage where such compilations shall be available at all
23 times.
24 § 3. This act shall take effect immediately and shall be deemed to
25 have been in full force and effect on and after April 1, 2001.
26 PART D
17 12020-01-1
1 Section 1. Subdivision 4 of section 1 of chapter 989 of the laws of
2 1958 is REPEALED and a new subdivision 4 is added to read as follows:
3 4. The basic annual salary of the chairman of the commission shall be
4 equal to the salary of the state officers indicated in paragraph (e) of
5 subdivision one of section one hundred sixty-nine of the executive law
6 and the basic annual salaries of the remaining commissioners shall be
7 seventy-nine thousand one hundred ninety-one dollars.
8 The basic annual salaries of the commissioners of the commission shall
9 be increased in accordance with the percentage increases authorized for
10 officers and employees whose salaries are prescribed by paragraph (e) of
11 subdivision one of section one hundred sixty-nine of the executive law.
12 Each member of the commission shall also be entitled to expenses actu-
13 ally and necessarily incurred in the performance of his or her duties,
14 including expenses of travel outside of the state.
15 § 2. Section 13 of chapter 989 of the laws of 1958, relating to the
16 temporary state commission of investigation, as amended by chapter 15 of
17 the laws of 2000, is amended to read as follows:
18 § 13. This act shall take effect May 1, 1958 and remain in effect
19 until September 1, 2001 2003.
20 § 3. This act shall take effect immediately and shall be deemed to
21 have been in full force and effect on and after April 1, 2001; provided,
22 that the provisions of section one of this act shall be subject to the
23 expiration set forth in section 13 of chapter 989 of the laws of 1958,
24 as amended.
25 PART E
18 12020-01-1
1 Section 1. Section 202 of the executive law, as added by chapter 170
2 of the laws of 1994, is amended to read as follows:
3 § 202. General duties. The office of general services shall provide
4 coordinated or centralized services in support of state departments and
5 agencies, and, as specified, authorities, municipalities and not-for-
6 profit organizations, hereafter for the purposes of this section
7 referred to as agencies. Such support services shall (i) serve to
8 conserve state resources, (ii) benefit multiple agencies, and (iii) be
9 consistent with the needs and interests of the agencies receiving those
10 services. Support services may be delivered directly by the office of
11 general services or by other means which ensure the cost effectiveness
12 of those services. The commissioner of general services may recommend to
13 the governor new coordinated or centralized services which could be
14 offered by the office of general services, and that would reduce state
15 or local expenditures and facilitate the mission of agencies currently
16 receiving or which could receive such services.
17 § 2. Subdivision 4 of section 97-g of the state finance law, as
18 amended by chapter 577 of the laws of 1988, is amended to read as
19 follows:
20 4. The term "centralized services" as used in this section shall mean
21 and include only (a) communications services, (b) mail, messenger and
22 reproduction services, (c) computer services, (d) gasoline and automo-
23 tive services, (e) renovation and maintenance services, (f) purchases of
24 electricity from the power authority of the state of New York, (g) real
25 property management services, (h) building design and construction
26 services, (i) parking services, (j) distribution of United States
27 department of agriculture donated foods to eligible recipients, pursuant
28 to all applicable statutes and regulations, (k) distribution of federal
19 12020-01-1
1 surplus property donations to all eligible recipients, pursuant to
2 applicable statutes and regulations and , (1) payments and related
3 services for lease purchases and installment purchases by or for state
4 agencies and institutions for personal property purposes financed
5 through the issuance of certificates of participation . , and (m) insur-
6 ance and risk management services. The services defined in items (a)
7 through (h) of this subdivision shall be provided to state agencies and
8 institutions only. ; provided, however, such limitation shall not
9 preclude the commissioner of general services from providing related
10 expertise, advice, consultation and services to other persons or enti-
11 ties in a manner incidental to the purposes described therein.
12 § 3. Subsection (c) of section 2504 of the insurance law is amended to
13 read as follows:
14 (c) This section shall not, however, prevent an officer or employee of
15 this state, or of any public corporation or public authority, or any
16 person acting or purporting to act on behalf of such officer or employee
17 from providing, for individual public construction projects having an
18 actual or estimated total value, exclusive of insurance and surety
19 costs, of twenty-five million dollars or more or for multiple public
20 construction projects having an actual or estimated total aggregate
21 value, exclusive of insurance and surety costs, of fifty million dollars
22 or more, all insurance policies or surety bonds required by such
23 contract without reimbursement from the contractor or subcontractor.
24 Nor shall it preclude such officer or employee of this state, or of any
25 public corporation or public authority, or any person acting or purport-
26 ing to act on behalf of such officer or employee from requiring that the
27 contractor or subcontractor provide a credit in its bid which reflects
28 the amount the bidding contractor or subcontractor would otherwise add
20 12020-01-1
1 if it provided its own insurance as required in the bid specifications.
2 For purposes of this section, public construction projects shall include
3 projects which are characterized by phases, segments or component parts
4 relating to a site or sites which are constituent elements of a govern-
5 mental program or function, or which relate to a unitary system or which
6 are constituent elements of a definable infrastructure, but shall not
7 include the bundling together of disparate or functionally unrelated
8 projects for the purpose of exceeding any threshold set forth herein.
9 The procurement of insurance and surety contracts related to public
10 construction projects authorized hereby shall be performed in accordance
11 with article eleven of the state finance law when the owner is a state
12 department or agency. Provided further that this section shall not
13 prevent the exercise by such officer or employee on behalf of the state
14 or such public corporation or public authority of its right to approve
15 the form, sufficiency, or manner of execution, of surety bonds or
16 contracts of insurance furnished by the insurance company selected by
17 the bidder to underwrite such bonds or contracts. Any provisions in any
18 invitation for bids, or in any of the contract documents, in conflict
19 herewith are contrary to the public policy of this state.
20 § 4. This act shall take effect immediately and shall be deemed to
21 have been in full force and effect on and after April 1, 2001.
22 PART F
23 Section 1. Subdivisions 1, 5, 6 and 10 of section 18 of the state
24 finance law, as added by chapter 55 of the laws of 1992, are amended to
25 read as follows:
21 12020-01-1
1 1. As used in this section: (a) "state agency" shall mean any state
2 department, board, bureau, division, commission, committee, public
3 authority, public benefit corporation, council, office, or other govern-
4 mental entity performing a governmental or proprietary function for the
5 state; (b) "debt" shall mean any liquidated sum due and owing any state
6 agency which has accrued pursuant to law or through contract, subroga-
7 tion, tort or other cause of action, except a liability resulting from
8 taxes or other impositions administered by the state commissioner of
9 taxation and finance, regardless of whether there is an outstanding
10 judgment for that sum; and (c) "debtor" shall mean any individual,
11 business, or other entity, which is not a state agency, municipal corpo-
12 ration or district corporation, having a debt with any state agency; (d)
13 "liquidated" shall mean an amount which is fixed or certain or capable
14 of being readily calculated, whether or not the underlying liability or
15 amount of the debt is disputed; and (e) "outstanding debt" shall mean
16 the amount set forth in the billing invoice or notice mailed to the
17 debtor, together with late payment charges and interest, less any
18 payments made by or on behalf of the debtor.
19 5. In addition to the charges referred to in subdivision four of this
20 section, and unless provided otherwise by contract, statute or regu-
21 lation, a debtor that fails to make payment of a debt subject to this
22 section within ninety days of receipt by the debtor of the first billing
23 invoice or notice may be assessed an additional collection fee charge ,
24 not to exceed twenty-two percent of the outstanding debt which is owed,
25 by a state agency to cover the cost of processing, handling and
26 collecting such debt; not to exceed twenty-two percent of the outstand-
27 ing debt, which collection fee shall be added to and payable in the same
28 manner as the outstanding debt. The assessed collection fee charge may
22 12020-01-1
1 not exceed the agency's estimated cost of processing, handling and
2 collecting such debt.
3 6. Any interest or late payment charges assessed pursuant to this
4 section shall be paid upon notice and demand and shall be treated and
5 collected in the same manner as the original debt which is due and owing
6 and shall be collected by a state agency when such agency deems
7 collection to be administratively practical and cost-effective. Any
8 collection fee charges assessed pursuant to this section shall be paid
9 upon notice and demand and shall be collected by a state agency when
10 such agency deems collection to be administratively practical and cost-
11 effective. In any action brought by or on behalf of a state agency to
12 recover an outstanding debt, a demand for collection fee charges may be
13 set forth in the statement of damages sought.
14 10. Every state agency to which this section is applicable is author-
15 ized to enter into written agreements with any debtor under which such
16 debtor is allowed to satisfy liability for payment of any debt, includ-
17 ing any interest imposed by this section on that portion of such debt as
18 to which an extension is granted, in installment payments if the state
19 agency determines that such agreement will facilitate collection of such
20 liability. Provided futher further, that where such state agency
21 determines that immediate collection of the debt would jeopardize the
22 debtor's fiscal viability and thereby pose a hardship to the public,
23 such agency shall offer to enter into a written agreement to temporarily
24 defer collection of the debt, collect the debt on an installment basis,
25 or make other reasonable arrangements to reduce such hardship on the
26 public of collecting the debt.
27 § 2. This act shall take effect immediately and shall apply to any
28 action or proceeding currently pending or commenced after such date.
23 12020-01-1
1 PART G
2 Section 1. Section 5 of chapter 268 of the laws of 1996, amending the
3 education law and the state finance law relating to providing a recruit-
4 ment and retention incentive program for certain active members of the
5 New York army national guard, New York air national guard, and New York
6 naval militia, is amended to read as follows:
7 § 5. This act shall take effect January 1, 1997 and shall expire and
8 be deemed repealed five years after it shall have become a law March
9 31, 2006; provided that any person who has begun to receive the benefits
10 of this act prior to its expiration and repeal shall be entitled to
11 continue to receive the benefits of this act after its expiration and
12 repeal until completion of a baccalaureate degree or cessation of status
13 as an active member, whichever occurs first.
14 § 2. This act shall take effect immediately and shall be deemed to
15 have been in full force and effect on and after March 31, 2001.
16 PART H
17 Section 1. Subdivision 5 of section 183 of the military law, as
18 amended by chapter 141 of the laws of 1988, is amended to read as
19 follows:
20 5. a. Fifty per centum of all All moneys paid as rent as provided in
21 this section, together with all sums paid to cover expenses of heating
22 and lighting, shall be transmitted by the officer in charge and control
23 of the armory through the adjutant general to the state treasury for
24 deposit to the miscellaneous special revenue fund - 339 armory rental
25 account.
24 12020-01-1
1 b. The balance of such moneys paid as rent shall be transmitted to
2 the adjutant general who shall hold the same until the first day of
3 April next ensuing and he shall then apportion and divide the same to
4 and among all the units of the organized militia located within the
5 state in proportion to the number of officer and enlisted personnel
6 assigned strength on the preceding March thirty-one as certified in
7 accordance with regulations issued pursuant to this chapter. Such moneys
8 so apportioned and divided shall become a part of the military fund of
9 each such unit and shall be in addition to and not in diminution of any
10 amount constituting the military fund of such unit according to any
11 other provisions of this chapter.
12 c. Any unobligated balances remaining in the military funds of units
13 of the organized militia at the end of any fiscal year shall be trans-
14 mitted through the adjutant general to the state treasury.
15 § 2. Subdivision 1 of section 221 of the military law, as amended by
16 chapter 141 of the laws of 1988, is amended to read as follows:
17 1. The military fund of a unit of the organized militia shall consist
18 of the sums paid to the adjutant general as prescribed in this section,
19 the fines paid pursuant to the sentence of a military court and the
20 moneys recovered from property losses and paid as provided by this chap-
21 ter and the share of armory rentals credited to such fund as provided
22 by this chapter . Such fund may be created by the receipt of moneys from
23 any of the above sources.
24 § 3. This act shall take effect on the same date as the reversion of
25 subdivision 5 of section 183 and subdivision 1 of section 221 of the
26 military law as provided by section 76 of chapter 435 of the laws of
27 1997, as amended by section 1 of chapter 19 of the laws of 1999.
25 12020-01-1
1 PART I
2 Section 1. Subdivisions 9, 10 and 11 of section 441-a of the real
3 property law, as added by chapter 61 of the laws of 1989, are amended to
4 read as follows:
5 9. Except for changes made on a renewal application, the fee for
6 changing an address on a license shall be ten dollars.
7 10 9. Except for changes made on a renewal application, the fee for
8 changing a name or for changing the status of a real estate broker's
9 license shall be one hundred fifty dollars. The fee for changing a
10 salesperson's name shall be fifty dollars.
11 11 10. If a real estate salesperson shall leave the service of a
12 real estate broker, the real estate broker shall file a termination of
13 association notice on such form as secretary may designate. The fee for
14 terminating the record of association shall be ten dollars. The
15 salesperson's license may be endorsed to a new sponsoring broker upon
16 the establishment of a new record of association filed with the depart-
17 ment of state. The fee for filing a record of association shall be ten
18 dollars.
19 § 2. Subdivisions 1 and 1-A of section 441-b of the real property law,
20 subdivision 1 as amended by chapter 324 of the laws of 1998 and subdivi-
21 sion 1-A as amended by section 12 of part B of chapter 411 of the laws
22 of 1999, are amended to read as follows:
23 1. The fee for a license issued or reissued under the provisions of
24 this article entitling a person, co-partnership, limited liability
25 company or corporation to act as a real estate broker shall be one
26 hundred fifty seventy-five dollars. The fee for a license issued or
27 reissued under the provisions of this article entitling a person to act
26 12020-01-1
1 as a real estate salesman shall be fifty sixty dollars. Notwith-
2 standing the provisions of subdivision seven of section four hundred
3 forty-one-a of this article, after January first, nineteen hundred
4 eighty-six, the secretary of state shall assign staggered expiration
5 dates for outstanding licenses that have been previously renewed on
6 October thirty-first of each year from the assigned date unless renewed.
7 If the assigned date results in a term that exceeds twenty-four months,
8 the applicant shall pay an additional prorated adjustment together with
9 the regular renewal fee. The secretary of state shall assign dates to
10 existing licenses in a manner which shall result in a term of not less
11 than two years.
12 1-A. The fee for a person to take an examination offered by the secre-
13 tary of state pursuant to this article shall be fifteen twenty-five
14 dollars. Fees collected by the department of state pursuant to this
15 article shall be deposited to the credit of the business and licensing
16 services account established pursuant to section ninety-seven-y of the
17 state finance law.
18 § 3. Subdivisions 2, 3 and 5 of section 446-b of the real property
19 law, subdivision 2 as amended by chapter 61 of the laws of 1989 and
20 subdivisions 3 and 5 as amended by chapter 805 of the laws of 1980, are
21 amended to read as follows:
22 2. The application for such license shall be filed in the office of
23 the secretary of state on such forms as the secretary may prescribe and
24 shall be accompanied by a fee of four hundred thirty-five dollars.
25 3. When the apartment information vendor maintains more than one place
26 of business, he shall apply for and the secretary shall issue a supple-
27 mental license for each branch office so maintained upon payment of a
28 fee of two hundred fifty seventy-five dollars for each supplemental
27 12020-01-1
1 license so issued. Supplemental licenses shall be conspicuously
2 displayed in each branch office. The display of an expired license by
3 any person, firm, partnership or corporation is a violation of the
4 provisions of this article.
5 5. Any license granted under the provisions hereof may be renewed for
6 one year by the secretary upon application therefor by the holder, in
7 such form as the secretary may prescribe, and payment of a two hundred
8 fifty seventy-five dollar fee for such license. The secretary may
9 dispense with the requirement for the filing of such statements as was
10 contained in the original application for license.
11 § 4. Subdivision 5 of section 69-o of the general business law, as
12 amended by chapter 575 of the laws of 1993, is amended to read as
13 follows:
14 5. There shall be an examination fee of fifteen twenty-five dollars.
15 § 5. Section 69-r of the general business law, as amended by chapter
16 575 of the laws of 1993, is amended to read as follows:
17 § 69-r. Fees. 1. The fee for a license to engage in the business of
18 installing, servicing or maintaining security or fire alarm systems
19 shall be two hundred twenty-five dollars plus an amount to be determined
20 by the division of criminal justice services to cover the cost of the
21 division's fingerprint search and report. For each renewal thereof, the
22 fee shall be one hundred twenty-five dollars plus an amount to be deter-
23 mined by the division of criminal justice services to cover the cost of
24 the division's fingerprint search and report.
25 2. The fee for taking an examination under this article shall be
26 fifteen twenty-five dollars; provided, however, that if the applicant
27 qualifies for a license as the result of such examination, the fee paid
28 12020-01-1
1 for the privilege of taking such examination shall be included in the
2 license fee for the license issued to him thereon.
3 3. The fee for issuing a duplicate license in substitution for one
4 lost, destroyed or mutilated shall be twenty-five dollars.
5 4. The fee for changing a name or address shall be ten dollars.
6 5 4. The fees hereinabove set forth shall be those for licenses
7 issued for the license period of two years or fraction of such period.
8 § 6. Subdivision 5 of section 74 of the general business law is
9 REPEALED.
10 § 7. Paragraphs (a) and (c) of subdivision 1 of section 74 of the
11 general business law, paragraph (a) as amended by chapter 324 of the
12 laws of 1998 and paragraph (c) as amended by section 7 of part B of
13 chapter 411 of the laws of 1999, are amended to read as follows:
14 (a) The application shall be accompanied by a non-refundable fee,
15 payable to the department of state for the use of the state, for each
16 certificate of license, as hereinbelow enumerated, issued to the appli-
17 cant, if the applicant be an individual, of four hundred thirty-five
18 dollars for a license as private investigator or a fee of three hundred
19 thirty-five dollars for a license as watch, guard or patrol agency, or
20 if the applicant be a firm, partnership, limited liability company or
21 corporation, a fee of five hundred thirty-five dollars for a license as
22 private investigator or a fee of four hundred thirty-five dollars for a
23 license as watch, guard or patrol agency.
24 (c) The secretary of state shall receive a non-refundable examination
25 fee of fifteen twenty-five dollars from each person who takes an exam-
26 ination to qualify for application for licensure pursuant to this arti-
27 cle. Fees paid to the department of state pursuant to this article shall
29 12020-01-1
1 be deposited in the business and licensing services account established
2 pursuant to section ninety-seven-y of the state finance law.
3 § 8. Subdivision 2 of section 89-ddd of the general business law, as
4 added by chapter 557 of the laws of 1997, is amended to read as follows:
5 2. Upon original application for a license to operate as an armored
6 car carrier, the applicant shall pay an application fee in the amount of
7 three hundred thirty-five dollars. Upon application for a license
8 renewal, the licensee shall pay a renewal processing fee in the amount
9 of three hundred thirty-five dollars.
10 § 9. Subdivision 7 of section 89-rrr of the general business law, as
11 added by chapter 557 of the laws of 1997, is amended to read as follows:
12 7. An application processing fee of fifty sixty dollars and a fee
13 pursuant to subdivision eight-a of section eight hundred thirty-seven of
14 the executive law, and amendments thereto, for the cost of the divi-
15 sion's full search and retain procedures, which fee shall be remitted by
16 the department to the division for deposit by the comptroller into the
17 general fund.
18 § 10. Subdivision 1 of section 89-m of the general business law, as
19 added by chapter 336 of the laws of 1992, is amended to read as follows:
20 1. Registration cards shall expire two years from the date of issuance
21 or last renewal as the case may be. Not less than sixty nor more than
22 ninety days prior to the expiration date of a registration card, the
23 department shall mail to each registrant at his last known address,
24 notice of renewal and a registration renewal form. Registration cards
25 shall not be renewed unless not more than sixty nor less than thirty
26 days prior to the expiration date of the registration card, the holder
27 submits to the department, a registration renewal form sworn to or
28 affirmed by the holder under the penalty of perjury together with a
30 12020-01-1
1 biennial renewal fee in the amount of twenty-five thirty-six dollars
2 payable to the department and a certificate certifying that the holder
3 has satisfactorily completed the required annual in-service training
4 courses as prescribed by the commissioner pursuant to subdivision one of
5 section eight hundred forty-one-c of the executive law. Unless the
6 department determines the existence of facts which would constitute
7 cause for denial, revocation or suspension of the registration card
8 pursuant to this article, it shall renew the registration card. Denial
9 of renewal hereunder shall be reviewable by an administrative hearing as
10 set forth in section seventy-nine of this chapter. The twenty-five
11 thirty-six dollar biennial renewal fee collected by the department shall
12 be deposited to the licensing examinations services account established
13 pursuant to the provisions of section 97-aa ninety-seven-aa of the
14 state finance law. Notice that a registration card has expired or has
15 not been renewed pursuant to this section shall be given by the secre-
16 tary to the holder of such registration card and to the security guard
17 company by which such holder was employed at the time of such expiration
18 or non-renewal.
19 § 11. Section 386 of the general business law, as amended by chapter
20 249 of the laws of 1999, is amended to read as follows:
21 § 386. Fees. 1. Every manufacturer of new or used bedding and each
22 repairer-renovator or rebuilder of bedding shall pay a registration fee
23 of one hundred fifty seventy-five dollars to the department of state.
24 2. Every person engaged in the sale of used bedding shall pay a regis-
25 tration fee of one hundred twenty-five dollars to the department of
26 state.
27 § 12. Section 409 of the general business law, as added by chapter 509
28 of the laws of 1992, subdivision 1 as amended by chapter 341 of the laws
31 12020-01-1
1 of 1998 and subdivision 3 as amended by section 9 of part B of chapter
2 411 of the laws of 1999, is amended to read as follows:
3 § 409. Fees. 1. The non-refundable fee for an application for a
4 license to engage in the practice of nail specialty, waxing, natural
5 hair styling, esthetics or cosmetology, shall be twenty twenty-five
6 dollars initially and for each renewal thereof the fee shall be twenty
7 twenty-five dollars; the fee for a temporary license and each renewal
8 shall be ten fifteen dollars.
9 2. The fee for an appearance enhancement business license shall be
10 thirty thirty-five dollars initially and thirty thirty-five dollars
11 for each renewal thereof.
12 3. The secretary shall receive a non-refundable examination fee of
13 fifteen twenty-five dollars from each person who takes a written or
14 practical examination pursuant to this article. Fees collected pursuant
15 to this article shall be deposited to the credit of the business and
16 licensing services account established pursuant to the provisions of
17 section ninety-seven-y of the state finance law.
18 4. The fee for issuing a duplicate license certificate, in substi-
19 tution for one lost, destroyed or mutilated shall be ten dollars.
20 5. The fee for changing a name on an appearance enhancement business
21 license shall be thirty dollars.
22 6. The fee for changing the address on a license shall be ten dollars.
23 7 5. The fees herein set forth shall be those for licenses issued
24 for the license period of two years.
25 § 13. Subdivision 2 of section 421 of the general business law, as
26 added by chapter 402 of the laws of 1998, is amended to read as follows:
27 2. Upon original application for a license to operate as a coin
28 processor, the applicant shall pay an application fee, in such amount as
32 12020-01-1
1 may be determined by the secretary, not to exceed three hundred thirty-
2 five dollars. Upon application for a license renewal, the licensee
3 shall pay a renewal processing fee in such amount as shall be determined
4 by the secretary, not to exceed three hundred thirty-five dollars.
5 § 14. Section 440 of the general business law, as amended by chapter
6 61 of the laws of 1989, is amended to read as follows:
7 § 440. Fees. 1. The fee for a license to engage in the practice of
8 barbering shall be twenty twenty-five dollars and for each renewal
9 thereof the fee shall be twenty twenty-five dollars.
10 2. The fee for a license to conduct a barber shop shall be thirty
11 thirty-five dollars and for each renewal thereof the fee shall be thir-
12 ty thirty-five dollars.
13 3. The fee for taking a written or practical examination under this
14 article shall be fifteen twenty-five dollars.
15 4. The fee for the registration or the renewal of the registration of
16 an apprentice shall be ten fifteen dollars.
17 5. The fee for issuing a duplicate license in substitution for one
18 lost, destroyed or mutilated shall be ten dollars.
19 6. The fee for changing a name on a license shall be thirty dollars.
20 7. The fee for changing the address on a license shall be ten dollars.
21 8 6. The fees hereinabove set forth shall be those for licenses
22 issued for the license period of two years. Notwithstanding the
23 provisions of subdivision one of section four hundred thirty-nine of
24 this article, after January first, nineteen hundred eighty-six, the
25 secretary of state shall assign staggered expiration dates for outstand-
26 ing licenses that have been previously renewed on June thirtieth of each
27 year and such licenses shall thereafter expire two years from the
28 assigned date unless renewed. If the assigned date results in a term
33 12020-01-1
1 that exceeds twenty-four months, the applicant shall pay an additional
2 prorated adjustment together with the regular renewal fee. The secretary
3 of state shall assign dates to existing licenses in a manner which shall
4 result in a term of not less than two years.
5 § 15. Subdivision 1 of section 750-g of the general business law, as
6 added by chapter 526 of the laws of 1992, is amended to read as follows:
7 1. The fee for a license to engage in the business of operating a pet
8 cemetery or pet crematorium shall be one hundred fifty seventy-five
9 dollars. For each renewal thereof, the fee shall be one hundred fifty
10 seventy-five dollars.
11 § 16. Subdivision 3 of section 750-g of the general business law is
12 REPEALED and subdivisions 4 and 5 are renumbered subdivisions 3 and 4.
13 § 17. Section 797 of the general business law, as added by chapter 599
14 of the laws of 1998 and the opening paragraph as amended by chapter 133
15 of the laws of 1999, is amended to read as follows:
16 § 797. Fees. The secretary shall receive the following fees to be
17 deposited into a special revenue fund - other entitled the "hearing aid
18 dispensers account" for the implementation, operation and enforcement of
19 this article:
20 1. a nonrefundable fee of fifty dollars from each person who takes the
21 required examination or any component thereof pursuant to this article;
22 2. for an individual certificate of registration, one hundred fifty
23 seventy-five dollars and for the renewal of such registration, one
24 hundred twenty-five dollars;
25 3. for a business certificate of registration and renewal thereof:
26 (a) for a business certificate of registration for each permanent
27 business location with ten or less employees, one hundred fifty seven-
34 12020-01-1
1 ty-five dollars and for the renewal of such registration, one hundred
2 twenty-five dollars;
3 (b) for a business certificate of registration for each permanent
4 business location with more than ten employees, two hundred twenty-five
5 dollars and for the renewal of such registration, one hundred fifty
6 seventy-five dollars;
7 4. for a temporary certificate of registration, thirty thirty-five
8 dollars and for the renewal of such registration, thirty thirty-five
9 dollars;
10 5. for filing a change of business address or change of name of the
11 registrant whether individual or business, ten dollars;
12 6 5. for a duplicate certificate of registration, ten dollars;
13 7 6. except fees associated with a temporary certificate of regis-
14 tration the fees set forth shall be those for registrations issued for a
15 period of two years; and
16 8 7. employees of a not-for-profit corporation doing business in
17 this state who are required to register pursuant to this article who are
18 not otherwise engaged in the dispensing of hearing aids for profit shall
19 be exempt from payment of the registration fee required by this section.
20 § 18. Subdivisions 3 and 9 of section 131 of the executive law, as
21 amended by chapter 171 of the laws of 2000, are amended to read as
22 follows:
23 3. The secretary of state shall receive a non-refundable application
24 fee of sixty seventy dollars from applicants for appointment, which
25 fee shall be submitted together with the application. No further fee
26 shall be paid for the issuance of the commission.
27 9. The county clerk shall receive a non-refundable application fee of
28 sixty seventy dollars from each applicant for reappointment, which fee
35 12020-01-1
1 shall be submitted together with the application. No further fee shall
2 be paid for the issuance of the commission.
3 § 19. Subdivision 12 of section 131 of the executive law is REPEALED
4 and a new subdivision 12 is added to read as follows:
5 12. The secretary of state shall receive a non-refundable examination
6 fee of twenty-five dollars from each person who takes an examination to
7 qualify for application for a commission as a notary public pursuant to
8 this article.
9 § 20. Paragraphs a and d of subdivision 1 of section 160-f of the
10 executive law, as amended by chapter 397 of the laws of 1991, are
11 amended to read as follows:
12 a. An application fee for certification and licensing of two hundred
13 fifty seventy-five dollars.
14 d. A fee for recertification or renewal of license of two hundred
15 fifty seventy-five dollars.
16 § 21. Subdivision 1 of section 160-hh of the executive law, as added
17 by chapter 49 of the laws of 1999, is amended to read as follows:
18 1. The membership of the fund shall be composed of all central
19 dispatch facilities. Each central dispatch facility shall be required,
20 as a condition of doing business within this state, to pay the depart-
21 ment a two hundred twenty-five dollar annual fee for the purpose of
22 registering as a member of the fund and receiving a certificate of
23 registration. Such sums shall be used by the department for the adminis-
24 tration of this article. The initial registration fee shall be due no
25 later than ninety days after the effective date of this article. The
26 department shall have the power to assess an additional fee against each
27 registrant in the amount necessary to provide it with sufficient funds
28 to cover its expenses in performing its duties pursuant to this article.
36 12020-01-1
1 The department shall provide the fund with an updated list of regis-
2 trants on a monthly basis.
3 § 22. This act shall take effect April 1, 2001; provided, however,
4 that section eighteen of this act shall take effect on the same date as
5 section 2 of chapter 171 of the laws of 2000 takes effect, as amended.
6 PART J
7 Section 1. Subdivision 2 of section 159-e of the executive law, as
8 amended by chapter 710 of the laws of 1983, is amended to read as
9 follows:
10 2. "Eligible entity" shall mean any organization which was officially
11 designated as a community action agency or a community action program
12 under the provisions of section two hundred ten of the economic opportu-
13 nity act of 1964 for fiscal year 1981, unless such community action
14 agency or a community action program lost its designation under section
15 two hundred ten of such act as a result of a failure to comply with the
16 provisions of such act. Such eligible entity shall have a governing
17 board which is constituted so as to assure that one-third of the members
18 of the board are elected public officials, currently holding office, or
19 their representatives, to be selected by the chief elected officials of
20 the state or local government or combination thereof, who possess the
21 authority to designate an eligible entity pursuant to this article,
22 except that if the number of elected officials reasonably available and
23 willing to serve is less than one-third of the membership of the board,
24 membership on the board of appointive public officials may be counted in
25 meeting such one-third requirements . At ; at least one-third of the
26 members are persons chosen in accordance with any democratic selection
37 12020-01-1
1 procedure which assures maximum feasible participation of poor persons
2 residing in the area to be served by the eligible entity; and the
3 remainder of the members are representatives of interest groups and
4 private organizations within the community to be served, including but
5 not limited to social service agencies, educational institutions, busi-
6 ness, industrial, labor, law enforcement, and religious organizations.
7 § 2. Section 159-i of the executive law, as amended by chapter 338 of
8 the laws of 2000, is amended to read as follows:
9 § 159-i. Distribution of funds. For federal fiscal year two thousand
10 one at At least ninety percent of the community services block grant
11 funds received by the state shall be distributed pursuant to a contract
12 by the secretary to grantees as defined in subdivision one of section
13 one hundred fifty-nine-e of this article. Each such grantee shall
14 receive the same proportion of community services block grant funds as
15 was the proportion of funds received in federal fiscal year nineteen
16 hundred eighty-one by such grantee under the federal community services
17 administration program account numbers 01 and 05 pursuant to section two
18 hundred twenty-one of title II and for migrant and seasonal farm worker
19 organizations pursuant to section two hundred twenty-two of title II of
20 the economic opportunity act of 1964, as amended, as compared to the
21 total amount received by all grantees in the state, under the federal
22 community services administration program account numbers 01 and 05
23 pursuant to section two hundred twenty-one of title II and for migrant
24 and seasonal farm worker organizations pursuant to section two hundred
25 twenty-two of title II of such act in federal fiscal year nineteen
26 hundred eighty-one.
27 For federal fiscal year two thousand one the The secretary shall,
28 pursuant to section one hundred fifty-nine-h of this article, retain not
38 12020-01-1
1 more than five percent of the community services block grant funds for
2 administration at the state level.
3 For federal fiscal year two thousand one the The remainder of the
4 community services block grant funds received by the state shall be
5 distributed pursuant to a contract by the secretary in the following
6 order of preference: a sum of up to one-half of one percent of the
7 community services block grant funds received by the state to Indian
8 tribes and tribal organizations as defined in this article, on the basis
9 of need; community action agencies eligible entities established in
10 subsequent to federal fiscal year nineteen hundred eighty-three; coun-
11 ties which do not have a community action agency in existence and seek
12 to establish an organization which is consistent with the objectives of
13 an eligible entity; limited purpose agencies which had received funding
14 during federal fiscal year nineteen hundred eighty-one under section two
15 hundred twenty-one, section two hundred twenty-two(a)(4) or section two
16 hundred thirty-two of title II of the economic opportunity act of 1964,
17 as amended; and community based organizations.
18 § 3. This act shall take effect immediately; provided, however, that
19 the amendments to subdivision 2 of section 159-e and section 159-i of
20 the executive law made by sections one and two of this act shall not
21 affect the expiration of such sections as provided by section 5 of chap-
22 ter 728 of the laws of 1982, as amended, and shall be deemed to expire
23 therewith.
24 PART K
39 12020-01-1
1 Section 1. Subdivision 2 of section 43-0125 of the environmental
2 conservation law, as added by chapter 617 of the laws of 1987, is
3 amended to read as follows:
4 2. The following annual fees to be paid to the commission are hereby
5 established:
6 (a) Dock, wharf and mooring fees. The owner of a dock, wharf or moor-
7 ing within the park used for non-commercial residential purposes shall
8 pay an annual fee of twenty-five thirty-seven dollars and fifty cents.
9 The owner of a dock or wharf within the park used for commercial
10 purposes shall pay an annual fee of two three dollars and fifty
11 seventy-five cents per linear foot for each such dock. The owner of a
12 mooring used for commercial purposes shall pay an annual fee of fifty
13 seventy-five dollars for each mooring. New docks constructed for commer-
14 cial use after the effective date of this section shall pay a first time
15 fee of five seven dollars and fifty cents per linear foot and two
16 three dollars and fifty seventy-five cents per linear foot annually
17 thereafter.
18 (b) Boat fees. In addition to the registration required by the state,
19 any mechanically propelled boat or vessel with ten horsepower or more
20 and any non-mechanically propelled boat or vessel eighteen feet or more
21 in length used within the park shall have an annual permit issued by the
22 commission. The fee therefor for boats twenty feet or less in length
23 overall shall be twenty thirty dollars; for boats twenty-one to twen-
24 ty-five feet in length overall, twenty-five thirty-seven dollars and
25 fifty cents; and for boats over twenty-five feet in length overall,
26 twenty-five thirty-seven dollars and fifty cents and five seven
27 dollars and fifty cents for each foot by which the length overall
28 exceeds twenty-five feet; for boats over twenty-five feet in length
40 12020-01-1
1 overall outfitted for overnight use, twenty-five thirty-seven dollars
2 and fifty cents and twenty thirty dollars for each foot by which the
3 overall length exceeds twenty-five feet. The commission may establish a
4 one week use permit for eleven dollars and twenty-five cents. The
5 commission may establish a one day use permit for five seven dollars
6 and fifty cents for any mechanically propelled boat or vessel with less
7 than twenty-five horsepower or nonmechanically propelled boat or vessel
8 subject to the annual fee.
9 § 2. This act shall take effect immediately and shall be deemed to
10 have been in full force and effect on and after April 1, 2001.
11 PART L
12 Section 1. Subsection 2 of section 1-105 of the uniform commercial
13 code, as amended by chapter 471 of the laws of 2000, is amended to read
14 as follows:
15 (2) Where one of the following provisions of this Act specifies the
16 applicable law, that provision governs and a contrary agreement is
17 effective only to the extent permitted by the law (including the
18 conflict of laws rules) so specified:
19 Rights of creditors against sold goods. Section 2--402.
20 Applicability of the Article on leases Leases. Sections 2-A--105
21 and 2-A--106.
22 Applicability of the Article on Bank Deposits and Collections. Section
23 4--102.
24 Governing Law in the Article on Fund Transfers. Section 4-A--507.
25 Letters of Credit. Section 5--116.
41 12020-01-1
1 Bulk transfers subject to the Article on Bulk Transfers. Section
2 6--102.
3 Applicability of the Article on Investment Securities. Section 8--110.
4 Perfection provisions of the Article on Secured Transactions. Section
5 9--103.
6 Law governing perfection, the effect of perfection or nonperfection,
7 and the priority of security interests and agricultural liens. Sections
8 9--301 through 9--307.
9 § 2. Subsection 9 of section 1-201 of the uniform commercial code, as
10 amended by chapter 321 of the laws of 1983, is amended to read as
11 follows:
12 (9) "Buyer in ordinary course of business" means a person who that
13 buys goods in good faith and , without knowledge that the sale to him
14 is in violation of violates the ownership rights or security inter-
15 est of a third party another person in the goods buys , and in the
16 ordinary course from a person, other than a pawnbroker, in the business
17 of selling goods of that kind but does not include a collateral loan
18 broker. All persons who sell minerals or the like (including oil and
19 gas) at wellhead or minehead shall be deemed to be persons . A person
20 buys goods in the ordinary course if the sale to the person comports
21 with the usual or customary practices in the kind of business in which
22 the seller is engaged or with the seller's own usual or customary prac-
23 tices. A person that sells oil, gas, or other minerals at the wellhead
24 or minehead is a person in the business of selling goods of that kind.
25 "Buying" A buyer in ordinary course of business may be buy for cash
26 or , by exchange of other property, or on secured or unsecured credit,
27 and includes receiving may acquire goods or documents of title under a
28 pre-existing contract for sale but does not include a transfer in bulk
42 12020-01-1
1 or as security for or in total or partial satisfaction of a money debt .
2 Only a buyer that takes possession of the goods or has a right to
3 recover the goods from the seller under article 2 may be a buyer in
4 ordinary course of business. A person that acquires goods in a transfer
5 in bulk or as security for or in total or partial satisfaction of a
6 money debt is not a buyer in ordinary course of business.
7 § 3. Subsection 32 of section 1-201 of the uniform commercial code is
8 amended to read as follows:
9 (32) "Purchase" includes taking by sale, discount, negotiation, mort-
10 gage, pledge, lien, security interest, issue or re-issue, gift or any
11 other voluntary transaction creating an interest in property.
12 § 4. Subsection 37 of section 1-201 of the uniform commercial code is
13 REPEALED and a new subsection 37 is added to read as follows:
14 (37) "Security interest" means an interest in personal property or
15 fixtures which secures payment or performance of an obligation. The term
16 also includes any interest of a consignor and a buyer of accounts, chat-
17 tel paper, a payment intangible, or a promissory note in a transaction
18 that is subject to Article 9. The special property interest of a buyer
19 of goods on identification of those goods to a contract for sale under
20 Section 2-401 is not a "security interest", but a buyer may also acquire
21 a "security interest" by complying with Article 9. Except as otherwise
22 provided in Section 2-505, the right of a seller or lessor of goods
23 under Article 2 or 2-A to retain or acquire possession of the goods is
24 not a "security interest", but a seller or lessor may also acquire a
25 "security interest" by complying with Article 9. The retention or reser-
26 vation of title by a seller of goods notwithstanding shipment or deliv-
27 ery to the buyer (Section 2-401) is limited in effect to a reservation
28 of a "security interest".
43 12020-01-1
1 § 5. Subsection 3 of section 2-103 of the uniform commercial code is
2 amended to read as follows:
3 (3) The following definitions in other Articles apply to this Article:
4 "Check". Section 3--104.
5 "Consignee". Section 7--102.
6 "Consignor". Section 7--102.
7 "Consumer goods". Section 9--109 9--102.
8 "Dishonor". Section 3--507.
9 "Draft". Section 3--104.
10 § 6. Subsection 2 of section 2-210 of the uniform commercial code is
11 amended to read as follows:
12 (2) Unless Except as otherwise provided in Section 9--406, unless
13 otherwise agreed, all rights of either seller or buyer can be assigned
14 except where the assignment would materially change the duty of the
15 other party, or increase materially the burden or risk imposed on him by
16 his contract, or impair materially his chance of obtaining return
17 performance. A right to damages for breach of the whole contract or a
18 right arising out of the assignor's due performance of his entire obli-
19 gation can be assigned despite agreement otherwise.
20 § 7. The section heading of section 2-326 of the uniform commercial
21 code is amended to read as follows:
22 Sale on Approval and Sale or Return; Consignment Sales and Rights of
23 Creditors.
24 § 8. Subsection 2 of section 2-326 of the uniform commercial code is
25 amended to read as follows:
26 (2) Except as provided in subsection (3), goods Goods held on
27 approval are not subject to the claims of the buyer's creditors until
44 12020-01-1
1 acceptance; goods held on sale or return are subject to such claims
2 while in the buyer's possession.
3 § 9. Subsection 3 of section 2-326 of the uniform commercial code is
4 REPEALED.
5 § 10. Section 2-502 of the uniform commercial code is amended to read
6 as follows:
7 Section 2--502. Buyers Right to Goods on Seller's Insolvency.
8 (1) Subject to subsection subsections (2) and (3) and even though
9 the goods have not been shipped a buyer who has paid a part or all of
10 the price of goods in which he has a special property under the
11 provisions of the immediately preceding section may on making and keep-
12 ing good a tender of any unpaid portion of their price recover them from
13 the seller if:
14 (a) in the case of goods bought for personal, family, or household
15 purposes, the seller repudiates or fails to deliver as required by the
16 contract; or
17 (b) in all cases, the seller becomes insolvent within ten days after
18 receipt of the first installment on their price.
19 (2) The buyer's right to recover the goods under paragraph (a) of
20 subsection (1) vests upon acquisition of a special property, even if the
21 seller had not then repudiated or failed to deliver.
22 (3) If the identification creating his special property has been made
23 by the buyer he acquires the right to recover the goods only if they
24 conform to the contract for sale.
25 § 11. Subdivision 3 of section 2-716 of the uniform commercial code is
26 amended to read as follows:
27 (3) The buyer has a right of replevin for goods identified to the
28 contract if after reasonable effort he is unable to effect cover for
45 12020-01-1
1 such goods or the circumstances reasonably indicate that such effort
2 will be unavailing or if the goods have been shipped under reservation
3 and satisfaction of the security interest in them has been made or
4 tendered. In the case of goods bought for personal, family or household
5 purposes, the buyer's right of replevin vests upon acquisition of a
6 special property, even if the seller had not then repudiated or failed
7 to deliver.
8 § 12. Subsection 3 of section 2-A-103 of the uniform commercial code,
9 as added by chapter 114 of the laws of 1994, is amended to read as
10 follows:
11 (3) The following definitions in other articles apply to this Article:
12 "Account". Section 9--106 9--102(a)(2).
13 "Between merchants". Section 2-104(3).
14 "Buyer". Section 2-103(1)(a).
15 "Chattel paper". Section 9--105(1)(b) 9--102(a)(11).
16 "Consumer goods". Section 9--109(1) 9--102(a)(23).
17 "Document". Section 9--105(1)(f) 9--102(a)(30).
18 "Entrusting". Section 2-403(3).
19 "General intangibles". Section 9--106 9--102(a)(42).
20 "Good faith". Section 2-103(1)(b).
21 "Instrument". Section 9--105(1)(i) 9--102(a)(47).
22 "Merchant". Section 2-104(1).
23 "Mortgage". Section 9--105(1)(j) 9--102(a)(55).
24 "Pursuant to commitment". Section 9--105(1)(k) 9--102 (a)(68).
25 "Receipt". Section 2-103(1)(c).
26 "Sale". Section 2-106(1).
27 "Sale on approval". Section 2-326.
28 "Sale or return". Section 2-326.
46 12020-01-1
1 "Seller". Section 2-103(1)(d).
2 § 13. Section 2-A-303 of the uniform commercial code, as added by
3 chapter 114 of the laws of 1994, is amended to read as follows:
4 Section 2-A-303. Alienability of Party's Interest Under Lease Contract
5 or of Lessor's Residual Interest in Goods; Delegation
6 of Performance; Transfer of Rights.
7 (1) As used in this section, "creation of a security interest"
8 includes the sale of a lease contract that is subject to Article 9,
9 secured transactions, by reason of Section 9--102(1)(b) 9--109(a)(3).
10 (2) Except as provided in subsections subsection (3) and (4)
11 Section 9--407, a provision in a lease agreement which (i) prohibits the
12 voluntary or involuntary transfer, including a transfer by sale,
13 sublease, creation or enforcement of a security interest, or attachment,
14 levy, or other judicial process, of an interest of a party under the
15 lease contract or of the lessor's residual interest in the goods, or
16 (ii) makes such a transfer an event of default, gives rise to the rights
17 and remedies provided in subsection (5) (4), but a transfer that is
18 prohibited or is an event of default under the lease agreement is other-
19 wise effective.
20 (3) A provision in a lease agreement which (i) prohibits the creation
21 or enforcement of a security interest in an interest of party under the
22 lease contract or in the lessor's residual interest in the goods, or
23 (ii) makes such a transfer an event of default, is not enforceable
24 unless, and then only to the extent that, there is an actual transfer by
25 the lessee of the lessee's right of possession or use of the goods in
26 violation of the provision or an actual delegation of a material
27 performance of either party to the lease contract in violation of the
28 provision. Neither the granting nor the enforcement of a security
47 12020-01-1
1 interest in (i) the lessor's interest under the lease contract or (ii)
2 the lessor's residual interest in the goods is a transfer that mate-
3 rially impairs the prospect of obtaining return performance by, mate-
4 rially changes the duty of, or materially increases the burden or risk
5 imposed on, the lessee within the purview of subsection (5) unless, and
6 then only to the extent that, there is an actual delegation of a materi-
7 al performance of the lessor.
8 (4) A provision in a lease agreement which (i) prohibits a transfer
9 of a right to damages for default with respect to the whole lease
10 contract or of a right to payment arising out of the transferor's due
11 performance of the transferor's entire obligation, or (ii) makes such a
12 transfer an event of default, is not enforceable, and such a transfer is
13 not a transfer that materially impairs the prospect of obtaining return
14 performance by, materially changes the duty of, or materially increases
15 the burden or risk imposed on, the other party to the lease contract
16 within the purview of subsection (5) (4).
17 (5) (4) Subject to subsections subsection (3) and (4) Section
18 9--407:
19 (a) if a transfer is made which is made an event of default under the
20 lease agreement, the party to the lease contract not making the trans-
21 fer, unless that party waives the default or otherwise agrees, has the
22 rights and remedies described in Section 2-A-501(2);
23 (b) if paragraph (a) is not applicable and if a transfer is made that
24 (i) is prohibited under a lease agreement or (ii) materially impairs the
25 prospect of obtaining return performance by, materially changes the duty
26 of, or materially increases the burden or risk imposed on, the other
27 party to the lease contract, unless the party not making the transfer
28 agrees at any time to the transfer in the lease contract or otherwise,
48 12020-01-1
1 then, except as limited by contract, (i) the transferor is liable to the
2 party not making the transfer for damages caused by the transfer to the
3 extent that the damages could not reasonably be prevented by the party
4 not making the transfer and (ii) a court having jurisdiction may grant
5 other appropriate relief, including cancellation of the lease contract
6 or an injunction against the transfer.
7 (6) (5) A transfer of "the lease" or of "all my rights under the
8 lease", or a transfer in similar general terms, is a transfer of rights
9 and, unless the language or the circumstances, as in a transfer for
10 security, indicate the contrary, the transfer is a delegation of duties
11 by the transferor to the transferee. Acceptance by the transferee
12 constitutes a promise by the transferee to perform those duties. The
13 promise is enforceable by either the transferor or the other party to
14 the lease contract.
15 (7) (6) Unless otherwise agreed by the lessor and the lessee, a
16 delegation of performance does not relieve the transferor as against the
17 other party of any duty to perform or of any liability for default.
18 (8) (7) In a consumer lease, to prohibit the transfer of an interest
19 of a party under the lease contract or to make a transfer an event of
20 default, the language must be specific, by a writing, and conspicuous.
21 § 14. Subsection 2 of section 2-A-307 of the uniform commercial code,
22 as added by chapter 114 of the laws of 1994, is amended to read as
23 follows:
24 (2) Except as otherwise provided in subsections subsection (3) and
25 (4) and in Sections 2-A-306 and 2-A-308, a creditor of a lessor takes
26 subject to the lease contract unless :
27 (a) the creditor holds a lien that attached to the goods before the
28 lease contract became enforceable ;
49 12020-01-1
1 (b) the creditor holds a security interest in the goods and the lessee
2 did not give value and receive delivery of the goods without knowledge
3 of the security interest; or
4 (c) the creditor holds a security interest in the goods that was
5 perfected (Section 9--303) before the lease contract became enforcea-
6 ble .
7 § 15. Subsections 3 and 4 of section 2-A-307 of the uniform commercial
8 code is REPEALED and a new subsection 3 is added to read as follows:
9 (3) Except as otherwise provided in Sections 9--317, 9--321 and
10 9--323, a lessee takes a leasehold interest subject to a security inter-
11 est held by a creditor of the lessor.
12 § 16. Paragraph (b) of subsection 1 of section 2-A-309 of the uniform
13 commercial code, as added by chapter 114 of the laws of 1994, is amended
14 to read as follows:
15 (b) A "fixture filing" is the filing, in the office where a mortgage
16 on the real estate would be filed or recorded, of a financing statement
17 covering goods that are or are to become fixtures and conforming to the
18 requirements of Section 9--402(5) 9--502(a) and (b);
19 § 17. Paragraph (a) of subsection 3 of section 4-208 of the uniform
20 commercial code is amended to read as follows:
21 (a) no security agreement is necessary to make the security interest
22 enforceable ( subsection (1) (b) of Section 9--203 (b)(3)(A)); and
23 § 18. The uniform commercial code is amended by adding a new section
24 5-117-a to read as follows:
25 Section 5-117-a. Security Interest of Issuer or Nominated Person.
26 (a) An issuer or nominated person has a security interest in a docu-
27 ment presented under a letter of credit and any identifiable proceeds of
50 12020-01-1
1 the collateral to the extent that the issuer or nominated person honors
2 or gives value for the presentation.
3 (b) Subject to subsection (a), as long as and to the extent that an
4 issuer or nominated person has not been reimbursed or has not otherwise
5 recovered the value given with respect to a security interest in a docu-
6 ment under subsection (a), the security interest continues and is
7 subject to Article 9, but:
8 (1) a security agreement is not necessary to make the security inter-
9 est enforceable under Section 9--203(b)(3);
10 (2) if the document is presented in a medium other than a written or
11 other tangible medium, the security interest is perfected; and
12 (3) if the document is presented in a written or other tangible medium
13 and is not a certificated security, chattel paper, a document of title,
14 an instrument, or a letter of credit, so long as the debtor does not
15 have possession of the document, the security interest is perfected and
16 has priority over a conflicting security interest in the document.
17 § 19. Article 6 of the uniform commercial code is REPEALED.
18 § 20. Paragraph (a) of subsection 1 of section 7-503 of the uniform
19 commercial code is amended to read as follows:
20 (a) delivered or entrusted them or any document of title covering
21 them to the bailor or his nominee with actual or apparent authority to
22 ship, store or sell or with power to obtain delivery under this Article
23 (Section 7--403) or with power of disposition under this Act (Sections
24 2--403 and 9--307 9--320) or other statute or rule of law; nor
25 § 21. Section 8-102 of the uniform commercial code is amended by
26 adding a new subsection (e) to read as follows:
27 (e) The following definitions in Article 9 apply to this article:
28 Cooperative Interest Section 9--102(a)(27b)
51 12020-01-1
1 Cooperative Organization Section 9--102(a)(27c)
2 Cooperative Record Section 9--102(a)(27e)
3 § 22. Subsection (f) of section 8-103 of the uniform commercial code,
4 as added by chapter 566 of the laws of 1997, is amended to read as
5 follows:
6 (f) A commodity contract, as defined in Section 9--115 9--102 (a)
7 (15), is not a security or a financial asset.
8 § 23. Subsection (e) of section 8-105 of the uniform commercial code,
9 as added by chapter 566 of the laws of 1997, is amended to read as
10 follows:
11 (e) Filing Except as provided in section 9--516(e), filing of a
12 financing statement under Article 9 is not notice of an adverse claim to
13 a financial asset.
14 § 24. Subsection (d) of section 8-106 of the uniform commercial code,
15 as added by chapter 566 of the laws of 1997, is amended to read as
16 follows:
17 (d) A purchaser has "control" of a security entitlement if:
18 (1) the purchaser becomes the entitlement holder; or
19 (2) the securities intermediary has agreed that it will comply with
20 entitlement orders originated by the purchaser without further consent
21 by the entitlement holder; or
22 (3) another person has control of the security entitlement on behalf
23 of the purchaser or, having previously acquired control of the security
24 entitlement, acknowledges that it has control on behalf of the
25 purchaser.
26 § 25. Subsection (f) of section 8-106 of the uniform commercial code,
27 as added by chapter 566 of the laws of 1997, is amended to read as
28 follows:
52 12020-01-1
1 (f) A purchaser who has satisfied the requirements of subsection
2 (c) (2) or (d) (2) has control, even if the registered owner in the
3 case of subsection (c) (2) or the entitlement holder in the case of
4 subsection (d) (2) retains the right to make substitutions for the
5 uncertificated security or security entitlement, to originate
6 instructions or entitlement orders to the issuer or securities interme-
7 diary, or otherwise to deal with the uncertificated security or security
8 entitlement.
9 § 26. Subsection (c) of section 8-110 of the uniform commercial code,
10 as added by chapter 566 of the laws of 1997, is amended to read as
11 follows:
12 (c) The Except with respect to cooperative interests, the local law
13 of the jurisdiction in which a security certificate is located at the
14 time of delivery governs whether an adverse claim can be asserted
15 against a person to whom the security certificate is delivered.
16 § 27. Subsection (e) of section 8-110 of the uniform commercial code,
17 as added by chapter 566 of the laws of 1997, is amended to read as
18 follows:
19 (e) The following rules determine a "securities intermediary's juris-
20 diction" for purposes of this section:
21 (1) If an agreement between the securities intermediary and its enti-
22 tlement holder specifies that it is governed by the law of a particular
23 jurisdiction governing the securities account expressly provides that a
24 particular jurisdiction is the securities intermediary's jurisdiction
25 for purposes of this part, this article, or this act, that jurisdiction
26 is the securities intermediary's jurisdiction.
27 (2) If paragraph (1) does not apply and an agreement between the
28 securities intermediary and its entitlement holder governing the securi-
53 12020-01-1
1 ties account expressly provides that the agreement is governed by the
2 law of a particular jurisdiction, that jurisdiction is the securities
3 intermediary's jurisdiction.
4 (3) If neither paragraph (1) nor paragraph (2) apply and an agreement
5 between the securities intermediary and its entitlement holder does not
6 specify the governing law as provided in paragraph (1), but governing
7 the securities account expressly specifies provides that the securi-
8 ties account is maintained at an office in a particular jurisdiction,
9 that jurisdiction is the securities intermediary's jurisdiction.
10 (3) (4) If an agreement between the securities intermediary and its
11 entitlement holder does not specify a jurisdiction as provided in para-
12 graph (1) or (2) none of the preceding paragraphs apply, the securities
13 intermediary's jurisdiction is the jurisdiction in which is located
14 the office identified in an account statement as the office serving the
15 entitlement holder's account is located.
16 (4) (5) If an agreement between the securities intermediary and its
17 entitlement holder does not specify a jurisdiction as provided in para-
18 graph (1) or (2) and an account statement does not identify an office
19 serving the entitlement holder's account as provided in paragraph (3)
20 none of the preceding paragraphs apply, the securities intermediary's
21 jurisdiction is the jurisdiction in which is located the chief execu-
22 tive office of the securities intermediary is located.
23 § 28. Section 8-113 of the uniform commercial code is amended by
24 adding a new subsection (c) to read as follows:
25 (c) A contract or modification of a contract for the sale or purchase
26 of a cooperative interest is void unless the contract or some note or
27 memorandum thereof, expressing the consideration, is in writing,
54 12020-01-1
1 subscribed by the party to be charged, or by his lawful agent thereunto
2 authorized by writing.
3 § 29. Section 8-204 of the uniform commercial code, as added by chap-
4 ter 566 of the laws of 1997, is amended to read as follows:
5 Section 8--204. Effect of Issuer's Restriction on Transfer.
6 A restriction on transfer of a security imposed by the issuer, even if
7 otherwise lawful, is ineffective against a person without knowledge of
8 the restriction unless:
9 (1) the security is certificated and the restriction is noted
10 conspicuously on the security certificate; or
11 (2) the security is uncertificated and the registered owner has
12 been notified of the restriction; or
13 (3) the restriction is on the transfer of a cooperative interest
14 and the restriction is set forth in the cooperative record.
15 § 30. Section 8-209 of the uniform commercial code, as added by chap-
16 ter 566 of the laws of 1997, is amended to read as follows:
17 Section 8--209. Issuer's Lien.
18 A lien in favor of an issuer upon a certificated security is valid
19 against a purchaser only if the right of the issuer to the lien is noted
20 conspicuously on the security certificate or, in the case of a cooper-
21 ative interest, is set forth in the cooperative record.
22 § 31. Paragraph 3 of subsection (a) of section 8-301 of the uniform
23 commercial code, as added by chapter 566 of the laws of 1997, is amended
24 to read as follows:
25 (3) a securities intermediary acting on behalf of the purchaser
26 acquires possession of the security certificate, only if the
27 certificate is in registered form and has been is (i)
28 registered in the name of the purchaser, (ii) payable to the
55 12020-01-1
1 order of the purchaser, or (iii) specially indorsed to the
2 purchaser by an effective indorsement and has not been
3 indorsed to the securities intermediary or in blank.
4 § 32. Subsection (a) of section 8-302 of the uniform commercial code,
5 as added by chapter 566 of the laws of 1997, is amended to read as
6 follows:
7 (a) Except as otherwise provided in subsections (b) and (c), upon
8 delivery of a certificated or uncertificated security to a purchaser ,
9 the purchaser acquires all rights in the security that the transferor
10 had or had power to transfer.
11 § 33. Subsection (a) of section 8-510 of the uniform commercial code,
12 as added by chapter 566 of the laws of 1997, is amended to read as
13 follows:
14 (a) An In a case not covered by the priority rules in Article 9 or
15 the rules stated in subsection (c), an action based on an adverse claim
16 to a financial asset or security entitlement, whether framed in conver-
17 sion, replevin, constructive trust, equitable lien, or other theory, may
18 not be asserted against a person who purchases a security entitlement,
19 or an interest therein, from an entitlement holder if the purchaser
20 gives value, does not have notice of the adverse claim, and obtains
21 control.
22 § 34. Subsection (c) of section 8-510 of the uniform commercial code
23 is REPEALED and two new subsections (c) and (d) are added to read as
24 follows:
25 (c) In a case not covered by the priority rules in Article 9, a
26 purchaser for value of a security entitlement, or an interest therein,
27 who obtains control has priority over a purchaser of a security entitle-
28 ment, or an interest therein, who does not obtain control. Except as
56 12020-01-1
1 otherwise provided in subsection (d), purchasers who have control rank
2 according to priority in time of:
3 (1) the purchaser's becoming the person for whom the securities
4 account, in which the security entitlement is carried, is maintained, if
5 the purchaser obtained control under Section 8-106(d)(1);
6 (2) the securities intermediary's agreement to comply with the
7 purchaser's entitlement orders with respect to security entitlements
8 carried or to be carried in the securities account in which the security
9 entitlement is carried, if the purchaser obtained control under Section
10 8-106(d)(2); or
11 (3) if the purchaser obtained control through another person under
12 Section 8-106(d)(3), the time on which priority would be based under
13 this subsection if the other person were the secured party.
14 (d) A securities intermediary as purchaser has priority over a
15 conflicting purchaser who has control unless otherwise agreed by the
16 securities intermediary.
17 § 35. Article 9 of the uniform commercial code is REPEALED and a new
18 article 9 is added to read as follows:
19 ARTICLE 9
20 SECURED TRANSACTIONS
21 PART 1
22 GENERAL PROVISIONS
23 Section 9--101. Short Title.
24 9--102. Definitions and Index of Definitions.
25 9--103. Purchase-Money Security Interest; Application of
26 Payments; Burden of Establishing.
27 9--104. Control of Deposit Account.
28 9--105. Control of Electronic Chattel Paper.
57 12020-01-1
1 9--106. Control of Investment Property.
2 9--107. Control of Letter of Credit Right.
3 9--108. Sufficiency of Description.
4 9--109. Scope.
5 9--110. Security Interests Arising Under Article 2 or 2-A.
6 Section 9--101. Short Title.
7 This article may be cited as uniform commercial code secured trans-
8 actions.
9 Section 9--102. Definitions and Index of Definitions.
10 (a) Article 9 definitions. In this article:
11 (1) "Accession" means goods that are physically united with other
12 goods in such a manner that the identity of the original goods is not
13 lost.
14 (2) "Account", except as used in "account for", means a right to
15 payment of a monetary obligation, whether or not earned by performance,
16 (A) for property that has been or is to be sold, leased, licensed,
17 assigned, or otherwise disposed of, (B) for services rendered or to be
18 rendered, (C) for a policy of insurance issued or to be issued, (D) for
19 a secondary obligation incurred or to be incurred, (E) for energy
20 provided or to be provided, (F) for the use or hire of a vessel under a
21 charter or other contract, or (G) arising out of the use of a credit or
22 charge card or information contained on or for use with the card. The
23 term includes healthcare-insurance receivables. The term does not
24 include (A) rights to payment evidenced by chattel paper or an instru-
25 ment, (B) commercial tort claims, (C) deposit accounts, (D) investment
26 property, (E) letter of credit rights or letters of credit, or (F)
27 rights to payment for money or funds advanced or sold, other than rights
58 12020-01-1
1 arising out of the use of a credit or charge card or information
2 contained on or for use with the card.
3 (3) "Account debtor" means a person obligated on an account, chattel
4 paper, or general intangible. The term does not include persons obli-
5 gated to pay a negotiable instrument, even if the instrument constitutes
6 part of chattel paper.
7 (4) "Accounting", except as used in "accounting for", means a record:
8 (A) authenticated by a secured party;
9 (B) indicating the aggregate unpaid secured obligations as of a date
10 not more than thirty-five days earlier or thirty-five days later than
11 the date of the record; and
12 (C) identifying the components of the obligations in reasonable
13 detail.
14 (5) "Agricultural lien" means an interest, other than a security
15 interest, in farm products:
16 (A) which secures payment or performance of an obligation for:
17 (i) goods or services furnished in connection with a debtor's farming
18 operation; or
19 (ii) rent on real property leased by a debtor in connection with its
20 farming operation;
21 (B) which is created by statute in favor of a person that:
22 (i) in the ordinary course of its business furnished goods or services
23 to a debtor in connection with a debtor's farming operation; or
24 (ii) leased real property to a debtor in connection with the debtor's
25 farming operation; and
26 (C) whose effectiveness does not depend on the person's possession of
27 the personal property.
28 (6) "As-extracted collateral" means:
59 12020-01-1
1 (A) oil, gas, or other minerals that are subject to a security inter-
2 est that:
3 (i) is created by a debtor having an interest in the minerals before
4 extraction; and
5 (ii) attaches to the minerals as extracted; or
6 (B) accounts arising out of the sale at the wellhead or minehead of
7 oil, gas, or other minerals in which the debtor had an interest before
8 extraction.
9 (7) "Authenticate" means:
10 (A) to sign; or
11 (B) to execute or otherwise adopt a symbol, or encrypt or similarly
12 process a record in whole or in part, with the present intent of the
13 authenticating person to identify the person and adopt or accept a
14 record.
15 (8) "Bank" means an organization that is engaged in the business of
16 banking. The term includes savings banks, savings and loan associ-
17 ations, credit unions, and trust companies.
18 (9) "Cash proceeds" means proceeds that are money, checks, deposit
19 accounts, or the like.
20 (10) "Certificate of title" means a certificate of title with respect
21 to which a statute provides for the security interest in question to be
22 indicated on the certificate as a condition or result of the security
23 interest's obtaining priority over the rights of a lien creditor with
24 respect to the collateral.
25 (11) "Chattel paper" means a record or records that evidence both a
26 monetary obligation and a security interest in specific goods, a securi-
27 ty interest in specific goods and software used in the goods, a security
28 interest in specific goods and license of software used in the goods, a
60 12020-01-1
1 lease of specific goods, or a lease of specific goods and license of
2 software used in the goods. In this paragraph, "monetary obligation"
3 means a monetary obligation secured by the goods or owed under a lease
4 of the goods and includes a monetary obligation with respect to software
5 used in the goods. The term does not include charters or other
6 contracts involving the use or hire of a vessel. If a transaction is
7 evidenced by records that include an instrument or series of instru-
8 ments, the group of records taken together constitutes chattel paper.
9 (12) "Collateral" means the property subject to a security interest
10 or agricultural lien. The term includes:
11 (A) proceeds to which a security interest attaches;
12 (B) accounts, chattel paper, payment intangibles, and promissory notes
13 that have been sold; and
14 (C) goods that are the subject of a consignment.
15 (13) "Commercial tort claim" means a claim arising in tort with
16 respect to which:
17 (A) the claimant is an organization; or
18 (B) the claimant is an individual and the claim:
19 (i) arose in the course of the claimant's business or profession; and
20 (ii) does not include damages arising out of personal injury to or the
21 death of an individual.
22 (14) "Commodity account" means an account maintained by a commodity
23 intermediary in which a commodity contract is carried for a commodity
24 customer.
25 (15) "Commodity contract" means a commodity futures contract, an
26 option on a commodity futures contract, a commodity option, or another
27 contract if the contract or option is:
61 12020-01-1
1 (A) traded on or subject to the rules of a board of trade that has
2 been designated as a contract market for such a contract pursuant to
3 federal commodities laws; or
4 (B) traded on a foreign commodity board of trade, exchange, or market,
5 and is carried on the books of a commodity intermediary for a commodity
6 customer.
7 (16) "Commodity customer" means a person for which a commodity inter-
8 mediary carries a commodity contract on its books.
9 (17) "Commodity intermediary" means a person that:
10 (A) is registered as a futures commission merchant under federal
11 commodities law; or
12 (B) in the ordinary course of its business provides clearance or
13 settlement services for a board of trade that has been designated as a
14 contract market pursuant to federal commodities law.
15 (18) "Communicate" means:
16 (A) to send a written or other tangible record;
17 (B) to transmit a record by any means agreed upon by the persons send-
18 ing and receiving the record; or
19 (C) in the case of transmission of a record to or by a filing office,
20 to transmit a record by any means prescribed by filing office rule.
21 (19) "Consignee" means a merchant to which goods are delivered in a
22 consignment.
23 (20) "Consignment" means a transaction, regardless of its form, in
24 which a person delivers goods to a merchant for the purpose of sale:
25 (A) the merchant:
26 (i) deals in goods of that kind under a name other than the name of
27 the person making delivery;
28 (ii) is not an auctioneer; and
62 12020-01-1
1 (iii) is not generally known by its creditors to be substantially
2 engaged in selling the goods of others;
3 (B) with respect to each delivery, the aggregate value of the goods is
4 one thousand dollars or more at the time of delivery;
5 (C) the goods are not consumer goods immediately before delivery; and
6 (D) the transaction does not create a security interest that secures
7 an obligation.
8 (21) "Consignor" means a person that delivers goods to a consignee in
9 a consignment.
10 (22) "Consumer debtor" means a debtor in a consumer transaction.
11 (23) "Consumer goods" means goods that are used or bought for use
12 primarily for personal, family, or household purposes.
13 (24) "Consumer-goods transaction" means a consumer transaction in
14 which:
15 (A) an individual incurs an obligation primarily for personal, family,
16 or household purposes; and
17 (B) a security interest in consumer goods secures the obligation.
18 (25) "Consumer obligor" means an obligor who is an individual and who
19 incurred the obligation as part of a transaction entered into primarily
20 for personal, family, or household purposes.
21 (26) "Consumer transaction" means a transaction in which (A) an indi-
22 vidual incurs an obligation primarily for personal, family or household
23 purposes, (B) a security interest secures the obligation, and (C) the
24 collateral is held or acquired primarily for personal, family, or house-
25 hold purposes. The term includes consumer-goods transactions.
26 (27) "Continuation statement" means an amendment of a financing
27 statement which:
63 12020-01-1
1 (A) identifies, by its file number, the initial financing statement to
2 which it relates; and
3 (B) indicates that it is a continuation statement for, or that it is
4 filed to continue the effectiveness of, the identified financing state-
5 ment.
6 (27-a) "Cooperative addendum" means a record that satisfies Section
7 9-- 502(e).
8 (27-b) "Cooperative interest" means an ownership interest in a coop-
9 erative organization, which interest, when created, is coupled with
10 possessory rights of a proprietary nature in identified physical space
11 belonging to the cooperative organization. A subsequent termination of
12 the possessory rights shall not cause an ownership interest to cease
13 being a cooperative interest.
14 (27-c) "Cooperative organization" means an organization which has as
15 its principal asset an interest in real property in this state and in
16 which organization all ownership interests are cooperative interests.
17 (27-d) "Cooperative organization security interest" means a security
18 interest which is in a cooperative interest, is in favor of the cooper-
19 ative organization, is created by the cooperative record, and secures
20 only obligations incident to ownership of that cooperative interest.
21 (27-e) "Cooperative record" means those records which, as a whole,
22 evidence cooperative interests and define the mutual rights and obli-
23 gations of the owners of the cooperative interests and the cooperative
24 organization.
25 (27-f) "Cooperative unit" means the physical space associated with a
26 cooperative interest.
27 (28) "Debtor" means:
64 12020-01-1
1 (A) a person having an interest, other than a security interest or
2 other lien, in the collateral, whether or not the person is an obligor;
3 (B) a seller of accounts, chattel paper, payment intangibles, or prom-
4 issory notes; or
5 (C) a consignee.
6 (29) "Deposit account" means a demand, time, savings, passbook, or
7 similar account maintained with a bank. The term does not include
8 investment property or accounts evidenced by an instrument.
9 (30) "Document" means a document of title or a receipt of the type
10 described in Section 7-201(2).
11 (31) "Electronic chattel paper" means chattel paper evidenced by a
12 record or records consisting of information stored in an electronic
13 medium.
14 (32) "Encumbrance" means a right, other than an ownership interest,
15 in real property. The term includes mortgages and other liens on real
16 property.
17 (33) "Equipment" means goods other than inventory, farm products, or
18 consumer goods.
19 (34) "Farm products" means goods, other than standing timber, with
20 respect to which the debtor is engaged in a farming operation and which
21 are:
22 (A) crops grown, growing, or to be grown, including:
23 (i) crops produced on trees, vines, and bushes; and
24 (ii) aquatic goods produced in aquacultural operations;
25 (B) livestock, born or unborn, including aquatic goods produced in
26 aquacultural operations;
27 (C) supplies used or produced in a farming operation; or
28 (D) products of crops or livestock in their unmanufactured states.
65 12020-01-1
1 (35) "Farming operation" means raising, cultivating, propagating,
2 fattening, grazing, or any other farming, livestock, or aquacultural
3 operation.
4 (36) "File number" means the number assigned to an initial financing
5 statement pursuant to Section 9--519(a).
6 (37) "Filing office" means an office designated in Section 9--501 as
7 the place to file a financing statement.
8 (38) "Filing office rule" means a rule adopted pursuant to Section
9 9--526.
10 (39) "Financing statement" means a record or records composed of an
11 initial financing statement and any filed record relating to the initial
12 financing statement.
13 (40) "Fixture filing" means the filing of a financing statement
14 covering goods that are or are to become fixtures and satisfying Section
15 9--502(a) and (b). The term includes the filing of a financing state-
16 ment covering goods of a transmitting utility which are or are to become
17 fixtures.
18 (41) "Fixtures" means goods that have become so related to particular
19 real property that an interest in them arises under the real property
20 law.
21 (42) "General intangible" means any personal property, including
22 things in action, other than accounts, chattel paper, commercial tort
23 claims, deposit accounts, documents, goods, instruments, investment
24 property, letter of credit rights, letters of credit, money, oil, gas,
25 or other minerals. The term includes payment intangibles and software.
26 (43) "Good faith" means honesty in fact and the observance of reason-
27 able commercial standards of fair dealing.
66 12020-01-1
1 (44) "Goods" means all things that are movable when a security inter-
2 est attaches. The term includes (A) fixtures, (B) standing timber that
3 is to be cut and removed under a conveyance or contract for sale, (C)
4 the unborn young of animals, (D) crops grown, growing, or to be grown,
5 even if the crops are produced on trees, vines, or bushes, and (E) manu-
6 factured homes. The term also includes a computer program embedded in
7 goods and any supporting information provided in connection with a tran-
8 saction relating to the program if (F) the program is associated with
9 the goods in such a manner that it customarily is considered part of the
10 goods, or (G) by becoming the owner of the goods, a person acquires a
11 right to use the program in connection with the goods. The term does
12 not include a computer program embedded in goods that consist solely of
13 the medium in which the program is embedded. The term also does not
14 include accounts, chattel paper, commercial tort claims, cooperative
15 interests, deposit accounts, documents, general intangibles, instru-
16 ments, investment property, letter of credit rights, letters of credit,
17 money, oil, gas, or other minerals before extraction.
18 (45) "Governmental unit" means a subdivision, agency, department,
19 county, parish, municipality, or other unit of the government of the
20 United States, a state, or a foreign country. The term includes an
21 organization having a separate corporate existence if the organization
22 is eligible to issue debt on which interest is exempt from income taxa-
23 tion under the laws of the United States.
24 (46) "Health-care insurance receivable" means an interest in or claim
25 under a policy of insurance which is a right to payment of a monetary
26 obligation for healthcare goods or services provided.
27 (47) "Instrument" means a negotiable instrument or any other writing
28 that evidences a right to the payment of a monetary obligation, is not
67 12020-01-1
1 itself a security agreement or lease, and is of a type that in ordinary
2 course of business is transferred by delivery with any necessary
3 indorsement or assignment. The term does not include (A) investment
4 property, (B) letters of credit, or (C) writings that evidence a right
5 to payment arising out of the use of a credit or charge card or informa-
6 tion contained on or for use with the card.
7 (48) "Inventory" means goods, other than farm products, which:
8 (A) are leased by a person as lessor;
9 (B) are held by a person for sale or lease or to be furnished under a
10 contract of service;
11 (C) are furnished by a person under a contract of service; or
12 (D) consist of raw materials, work in process, or materials used or
13 consumed in a business.
14 (49) "Investment property" means a security, whether certificated or
15 uncertificated, security entitlement, securities account, commodity
16 contract, or commodity account.
17 (50) "Jurisdiction of organization", with respect to a registered
18 organization, means the jurisdiction under whose law the organization is
19 organized.
20 (51) "Letter of credit right" means a right to payment or performance
21 under a letter of credit, whether or not the beneficiary has demanded or
22 is at the time entitled to demand payment or performance. The term does
23 not include the right of a beneficiary to demand payment or performance
24 under a letter of credit.
25 (52) "Lien creditor" means:
26 (A) a creditor that has acquired a lien on the property involved by
27 attachment, levy, or the like;
28 (B) an assignee for benefit of creditors from the time of assignment;
68 12020-01-1
1 (C) a trustee in bankruptcy from the date of the filing of the peti-
2 tion; or
3 (D) a receiver in equity from the time of appointment.
4 (53) "Manufactured home" means a structure, transportable in one or
5 more sections, which in the traveling mode, is eight body feet or more
6 in width or forty body feet or more in length, or, when erected on site,
7 is three hundred twenty or more square feet, and which is built on a
8 permanent chassis and designed to be used as a dwelling with or without
9 a permanent foundation when connected to the required utilities, and
10 includes the plumbing, heating, air-conditioning, and electrical systems
11 contained therein. The term includes any structure that meets all of
12 the requirements of this paragraph except the size requirements and with
13 respect to which the manufacturer voluntarily files a certification
14 required by the United States Secretary of Housing and Urban Development
15 and complies with the standards established under Title 42 of the United
16 States Code.
17 (54) "Manufactured-home transaction" means a secured transaction:
18 (A) that creates a purchase-money security interest in a manufactured
19 home, other than a manufactured home held as inventory; or
20 (B) in which a manufactured home, other than a manufactured home held
21 as inventory, is the primary collateral.
22 (55) "Mortgage" means a consensual interest in real property, includ-
23 ing fixtures, which secures payment or performance of an obligation.
24 (56) "New debtor" means a person that becomes bound as debtor under
25 Section 9--203(d) by a security agreement previously entered into by
26 another person.
27 (57) "New value" means (A) money, (B) money's worth in property,
28 services, or new credit, or (C) release by a transferee of an interest
69 12020-01-1
1 in property previously transferred to the transferee. The term does not
2 include an obligation substituted for another obligation.
3 (58) "Noncash proceeds" means proceeds other than cash proceeds.
4 (59) "Obligor" means a person that, with respect to an obligation
5 secured by a security interest in, or an agricultural lien on the colla-
6 teral, (A) owes payment or other performance of the obligation, (B) has
7 provided property other than the collateral to secure payment or other
8 performance of the obligation, or (C) is otherwise accountable in whole
9 or in part for payment or other performance of the obligation. The term
10 does not include issuers or nominated persons under a letter of credit.
11 (60) "Original debtor" means a person that, as debtor, entered into a
12 security agreement to which a new debtor has become bound under Section
13 9--203(d).
14 (61) "Payment intangible" means a general intangible under which the
15 account debtor's principal obligation is a monetary obligation.
16 (62) "Person related to", with respect to an individual, means:
17 (A) the spouse of the individual;
18 (B) a brother, brother-in-law, sister, or sister-in-law of the indi-
19 vidual;
20 (C) an ancestor or lineal descendant of the individual or the individ-
21 ual's spouse; or
22 (D) any other relative, by blood or marriage, of the individual or the
23 individual's spouse who shares the same home with the individual.
24 (63) "Person related to", with respect to an organization, means:
25 (A) a person directly or indirectly controlling, controlled by, or
26 under common control with the organization;
27 (B) an officer or director of, or a person performing similar func-
28 tions with respect to, the organization;
70 12020-01-1
1 (C) an officer or director of, or a person performing similar func-
2 tions with respect to, a person described in subparagraph (A);
3 (D) the spouse of an individual described in subparagraph (A), (B) or
4 (C); or
5 (E) an individual who is related by blood or marriage to an individual
6 described in subparagraph (A), (B), (C) or (D) and shares the same home
7 with the individual.
8 (64) "Proceeds" means the following property:
9 (A) whatever is acquired upon the sale, lease, license, exchange, or
10 other disposition of collateral;
11 (B) whatever is collected on, or distributed on account of, collat-
12 eral;
13 (C) rights arising out of collateral;
14 (D) to the extent of the value of collateral, claims arising out of
15 the loss, nonconformity, or interference with the use of, defects or
16 infringement of rights in, or damage to the collateral; or
17 (E) to the extent of the value of collateral and to the extent payable
18 to the debtor or the secured party, insurance payable by reason of the
19 loss or nonconformity of, defects or infringement of rights in, or
20 damage to the collateral.
21 (65) "Promissory note" means an instrument that evidences a promise
22 to pay a monetary obligation, does not evidence an order to pay, and
23 does not contain an acknowledgment by a bank that the bank has received
24 for deposit a sum of money or funds.
25 (66) "Proposal" means a record authenticated by a secured party and
26 which includes the terms on which the secured party is willing to accept
27 collateral in full or partial satisfaction of the obligation it secures
28 pursuant to Sections 9--620, 9--621 and 9--622.
71 12020-01-1
1 (67) "Public-finance transaction" means a secured transaction in
2 connection with which:
3 (A) debt securities are issued;
4 (B) all or a portion of the securities issued have an initial stated
5 maturity of at least twenty years; and
6 (C) the debtor, obligor, secured party, account debtor or other person
7 obligated on collateral, assignor or assignee of a secured obligation,
8 or assignor or assignee of a security interest is a state or a govern-
9 mental unit of a state.
10 (68) "Pursuant to commitment", with respect to an advance made or
11 other value given by a secured party, means pursuant to the secured
12 party's obligation, whether or not a subsequent event of default or
13 other event not within the secured party's control has relieved or may
14 relieve the secured party from its obligation.
15 (69) "Record", except as used in "for record", "of record", "record or
16 legal title", and "record owner", means information that is inscribed on
17 a tangible medium or which is stored in an electronic or other medium
18 and is retrievable in perceivable form.
19 (70) "Registered organization" means an organization organized solely
20 under the law of a single state or the United States and as to which the
21 state or the United States must maintain a public record showing the
22 organization to have been organized.
23 (71) "Secondary obligor" means an obligor to the extent that:
24 (A) the obligor's obligation is secondary; or
25 (B) the obligor has a right of recourse with respect to an obligation
26 secured by collateral against the debtor, another obligor, or property
27 of either.
28 (72) "Secured party" means:
72 12020-01-1
1 (A) a person in whose favor a security interest is created or provided
2 for under a security agreement, whether or not any obligation to be
3 secured is outstanding;
4 (B) a person that holds an agricultural lien;
5 (C) a consignor;
6 (D) a person to which accounts, chattel paper, payment intangibles, or
7 promissory notes have been sold;
8 (E) a trustee, indenture trustee, agent, collateral agent, or other
9 representative in whose favor a security interest or agricultural lien
10 is created or provided for; or
11 (F) a person that holds a security interest arising under Section
12 2-401, 2-505, 2-711(3), 2-A-508(5), 4-210 or 5-117-a.
13 (73) "Security agreement" means an agreement that creates or provides
14 for a security interest. A cooperative record which provides that the
15 owner of a cooperative interest has an obligation to pay amounts to the
16 cooperative organization incident to ownership of that cooperative
17 interest and which states that the cooperative organization has a direct
18 remedy against that cooperative interest if such amounts are not paid,
19 is a security agreement creating a cooperative organization security
20 interest.
21 (74) "Send", in connection with a record or notification, means:
22 (A) to deposit in the mail, deliver for transmission, or transmit by
23 any other usual means of communication, with postage or cost of trans-
24 mission provided for, addressed to any address reasonable under the
25 circumstances; or
26 (B) to cause the record or notification to be received within the time
27 that it would have been received if properly sent under subparagraph
28 (A).
73 12020-01-1
1 (75) "Software" means a computer program and any supporting informa-
2 tion provided in connection with a transaction relating to the program.
3 The term does not include a computer program that is included in the
4 definition of goods.
5 (76) "State" means a state of the United States, the District of
6 Columbia, Puerto Rico, the United States Virgin Islands, or any territo-
7 ry or insular possession subject to the jurisdiction of the United
8 States.
9 (77) "Supporting obligation" means a letter of credit right or
10 secondary obligation that supports the payment or performance of an
11 account, chattel paper, a document, a general intangible, an instrument,
12 or investment property.
13 (78) "Tangible chattel paper" means chattel paper evidenced by a
14 record or records consisting of information that is inscribed on a
15 tangible medium.
16 (79) "Termination statement" means an amendment of a financing state-
17 ment which:
18 (A) identifies, by its file number, the initial financing statement to
19 which it relates; and
20 (B) indicates either that it is a termination statement or that the
21 identified financing statement is no longer effective.
22 (80) "Transmitting utility" means a person primarily engaged in the
23 business of:
24 (A) operating a railroad, subway, street railway, or trolley bus;
25 (B) transmitting communications electrically, electromagnetically, or
26 by light;
27 (C) transmitting goods by pipeline or sewer; or
74 12020-01-1
1 (D) transmitting or producing and transmitting electricity, steam,
2 gas, or water.
3 (b) Definitions in other articles. The following definitions in other
4 articles apply to this article:
5 "Applicant" Section 5-102
6 "Beneficiary" Section 5-102
7 "Broker" Section 8-102
8 "Certificated security" Section 8-102
9 "Check" Section 3-104
10 "Clearing corporation" Section 8-102
11 "Contract for sale" Section 2-106
12 "Customer" Section 4-104
13 "Entitlement holder" Section 8-102
14 "Financial asset" Section 8-102
15 "Holder in due course" Section 3-302
16 "Issuer" (with respect to a letter of Section 5-102
17 credit or letter-of-credit right)
18 "Issuer" (with respect to a security) Section 8-201.
19 "Lease" Section 2-A-103
20 "Lease agreement" Section 2-A-103
21 "Lease contract" Section 2-A-103
22 "Leasehold interest" Section 2-A-103
23 "Lessee" Section 2-A-103
24 "Lessee in ordinary course of business" Section 2-A-103
25 "Lessor" Section 2-A-103
26 "Lessor's residual interest" Section 2-A-103
27 "Letter of credit" Section 5-102
28 "Merchant" Section 2-104
75 12020-01-1
1 "Negotiable instrument" Section 3-104
2 "Nominated person" Section 5-102
3 "Note" Section 3-104
4 "Proceeds of a letter of credit" Section 5-114
5 "Prove" Section 3-103
6 "Sale" Section 2-106
7 "Securities account" Section 8-501
8 "Securities intermediary" Section 8-102
9 "Security" Section 8-102
10 "Security certificate" Section 8-102
11 "Security entitlement" Section 8-102
12 "Uncertificated security" Section 8-102
13 (c) Article 1 definitions and principles. Article 1 contains general
14 definitions and principles of construction and interpretation applicable
15 throughout this article.
16 Section 9--103. Purchase-Money Security Interest; Application of
17 Payments; Burden of Establishing.
18 (a) Definitions. In this section:
19 (1) "purchase-money collateral" means goods or software that secures a
20 purchase-money obligation incurred with respect to that collateral; and
21 (2) "purchase-money obligation" means an obligation of an obligor
22 incurred as all or part of the price of the collateral or for value
23 given to enable the debtor to acquire rights in or the use of the colla-
24 teral if the value is in fact so used.
25 (b) Purchase-money security interests in goods. A security interest
26 in goods is a purchase-money security interest:
27 (1) to the extent that the goods are purchase-money collateral with
28 respect to that security interest;
76 12020-01-1
1 (2) if the security interest is in inventory that is or was purchase-
2 money collateral, also to the extent that the security interest secures
3 a purchase-money obligation incurred with respect to other inventory in
4 which the secured party holds or held a purchase-money security inter-
5 est; and
6 (3) also to the extent that the security interest secures a purchase-
7 money obligation incurred with respect to software in which the secured
8 party holds or held a purchase-money security interest.
9 (c) Purchase-money security interest in software. A security interest
10 in software is a purchase-money security interest to the extent that the
11 security interest also secures a purchase-money obligation incurred with
12 respect to goods in which the secured party holds or held a purchase-mo-
13 ney security interest if:
14 (1) the debtor acquired its interest in the software in an integrated
15 transaction in which it acquired an interest in the goods; and
16 (2) the debtor acquired its interest in the software for the principal
17 purpose of using the software in the goods.
18 (d) Consignor's inventory purchase-money security interest. The secu-
19 rity interest of a consignor in goods that are the subject of a consign-
20 ment is a purchase-money security interest in inventory.
21 (e) Application of payment in non-consumer-goods transactions. In a
22 transaction other than a consumer goods transaction, if the extent to
23 which a security interest is a purchase-money security interest depends
24 on the application of a payment to a particular obligation, the payment
25 must be applied:
26 (1) in accordance with any reasonable method of application to which
27 the parties agree;
77 12020-01-1
1 (2) in the absence of the parties' agreement to a reasonable method,
2 in accordance with any intention of the obligor manifested at or before
3 the time of payment; or
4 (3) in the absence of an agreement to a reasonable method and a timely
5 manifestation of the obligor's intention, in the following order:
6 (A) to obligations that are not secured; and
7 (B) if more than one obligation is secured, to obligations secured by
8 purchase-money security interests in the order in which those obli-
9 gations were incurred.
10 (f) No loss of status of purchase-money security interest in non-
11 consumers-goods transactions. In a transaction other than a consumer
12 goods transaction, a purchase-money security interest does not lose its
13 status as such, even if:
14 (1) the purchase-money collateral also secures an obligation that is
15 not a purchase-money obligation;
16 (2) collateral that is not purchase-money collateral also secures the
17 purchase-money obligations; or
18 (3) the purchase-money obligation has been renewed, refinanced,
19 consolidated, or restructured.
20 (g) Burden of proof in non-consumer-goods transactions. In a trans-
21 action other than a consumer goods transaction, a secured party claiming
22 a purchase-money security interest has the burden of establishing the
23 extent to which the security interest is a purchase-money security
24 interest.
25 (h) Non-consumer-goods transactions; no inference. The limitation of
26 the rules in subsections (e), (f) and (g) to transactions other than
27 consumer goods transactions is intended to leave to the court the deter-
28 mination of the proper rules in consumer goods transactions. The court
78 12020-01-1
1 may not infer from that limitation the nature of the proper rule in
2 consumer-goods transactions and may continue to apply established
3 approaches.
4 Section 9--104. Control of Deposit Account.
5 (a) Requirements for control. A secured party has control of a depos-
6 it account if:
7 (1) the secured party is the bank with which the deposit account is
8 maintained;
9 (2) the debtor, secured party, and bank have agreed in an authenticat-
10 ed record that the bank will comply with instructions originated by the
11 secured party directing disposition of the funds in the deposit account
12 without further consent by the debtor; or
13 (3) the secured party becomes the bank's customer with respect to the
14 deposit account.
15 (b) Debtor's right to direct disposition. A secured party that has
16 satisfied subsection (a) has control, even if the debtor retains the
17 right to direct the disposition of funds from the deposit account.
18 Section 9--105. Control of Electronic Chattel Paper.
19 A secured party has control of electronic chattel paper if the record
20 or records comprising the chattel paper are created, stored, and
21 assigned in such a manner that:
22 (a) a single authoritative copy of the record or records exists which
23 is unique, identifiable and, except as otherwise provided in subsections
24 (d), (e) and (f), unalterable;
25 (b) the authoritative copy identifies the secured party as the assig-
26 nee of the record or records;
27 (c) the authoritative copy is communicated to and maintained by the
28 secured party or its designated custodian;
79 12020-01-1
1 (d) copies or revisions that add or change an identified assignee of
2 the authoritative copy can be made only with the participation of the
3 secured party;
4 (e) each copy of the authoritative copy and any copy of a copy is
5 readily identifiable as a copy that is not the authoritative copy; and
6 (f) any revision of the authoritative copy is readily identifiable as
7 an authorized or unauthorized revision.
8 Section 9--106. Control of Investment Property.
9 (a) Control under Section 8-106. A person has control of a certif-
10 icated security, uncertificated security, or security entitlement as
11 provided in Section 8-106.
12 (b) Control of commodity contract. A secured party has control of a
13 commodity contract if:
14 (1) the secured party is the commodity intermediary with which the
15 commodity contract is carried; or
16 (2) the commodity customer, secured party, and commodity intermediary
17 have agreed that the commodity intermediary will apply any value
18 distributed on account of the commodity contract as directed by the
19 secured party without further consent by the commodity customer.
20 (c) Effect of control of securities account or commodity account. A
21 secured party having control of all security entitlements or commodity
22 contracts carried in a securities account or commodity account has
23 control over the securities account or commodity account.
24 Section 9--107. Control of Letter of Credit Right.
25 A secured party has control of a letter of credit right to the extent
26 of any right to payment or performance by the issuer or any nominated
27 person if the issuer or nominated person has consented to an assignment
80 12020-01-1
1 of proceeds of the letter of credit under Section 5-102(a)(10) or other-
2 wise applicable law or practice.
3 Section 9--108. Sufficiency of Description.
4 (a) Sufficiency of description. Except as otherwise provided in
5 subsections (c), (d) and (e), a description of personal or real property
6 is sufficient, whether or not it is specific, if it reasonably identi-
7 fies what is described.
8 (b) Examples of reasonable identifications. Except as otherwise
9 provided in Section 9--502 and subsection (d), a description of collat-
10 eral reasonably identifies the collateral if it identifies the collat-
11 eral by:
12 (1) specific listing;
13 (2) category;
14 (3) except as otherwise provided in subsection (e), a type of collat-
15 eral defined in this chapter;
16 (4) quantity;
17 (5) computational or allocational formula or procedure; or
18 (6) except as otherwise provided in subsection (c), any other method,
19 if the identity of the collateral is objectively determinable.
20 (c) Supergeneric description not sufficient. A description of collat-
21 eral as "all the debtor's assets" or "all the debtor's personal proper-
22 ty" or using words of similar import does not reasonably identify the
23 collateral.
24 (d) Investment property. Except as otherwise provided in subsection
25 (e), a description of a security entitlement, securities account, or
26 commodity account is sufficient if it describes:
27 (1) the collateral by those terms or as investment property; or
28 (2) the underlying financial asset or commodity contract.
81 12020-01-1
1 (e) When description by type insufficient. A description only by type
2 of collateral defined in this chapter:
3 (1) a commercial tort claim;
4 (2) in a consumer transaction, consumer goods, a security entitlement,
5 a securities account, or a commodity account; or
6 (3) a cooperative interest.
7 Section 9--109. Scope.
8 (a) General scope of article. Except as otherwise provided in
9 subsections (c) and (d), this article applies to:
10 (1) a transaction, regardless of its form, that creates a security
11 interest in personal property or fixtures by contract;
12 (2) an agricultural lien;
13 (3) a sale of accounts, chattel paper, payment intangibles, or promis-
14 sory notes;
15 (4) a consignment;
16 (5) a security interest arising under Section 2-401, 2-505, 2-711(3)
17 or 2-A-508(5), as provided in Section 9--110;
18 (6) a security interest arising under Section 4-210 or 5-117-a; and
19 (7) a security interest in a cooperative interest.
20 (b) Security interest in secured obligations. The application of this
21 article to a security interest in a secured obligation is not affected
22 by the fact that the obligation is itself secured by a transaction or
23 interest to which this article does not apply.
24 (c) Extent to which article does not apply. This article does not
25 apply to the extent that:
26 (1) a statute, regulation, or treaty of the United States preempts
27 this article;
82 12020-01-1
1 (2) another statute of this state expressly governs the creation,
2 perfection, priority, or enforcement of security interest created by
3 this state or a governmental unit of this state;
4 (3) a statute of another state, a foreign country, or a governmental
5 unit of another state or a foreign country, other than a statute gener-
6 ally applicable to security interests, expressly governs creation,
7 perfection, priority, or enforcement of a security interest created by
8 the state, country, or governmental unit; or
9 (4) the rights of a transferee beneficiary or nominated person under a
10 letter of credit are independent and superior under Section 5-114.
11 (d) Inapplicability of article. This article does not apply to:
12 (1) a landlord's lien, other than an agricultural lien or a security
13 interest in a cooperative interest;
14 (2) a lien, other than an agricultural lien, given by statute or other
15 rule of law for services or materials, but Section 9--333 applies with
16 respect to priority of the lien;
17 (3) an assignment of a claim for wages, salary, or other compensation
18 of an employee;
19 (4) a sale of accounts, chattel paper, payment intangibles, or promis-
20 sory notes as part of a sale of the business out of which they arose;
21 (5) an assignment of accounts, chattel paper, payment intangibles, or
22 promissory notes which is for the purpose of collection only;
23 (6) an assignment of a right to payment under a contract to an assig-
24 nee that is also obligated to perform under the contract;
25 (7) an assignment of a single account, payment intangible, or promis-
26 sory note to an assignee in full or partial satisfaction of a preexist-
27 ing indebtedness;
83 12020-01-1
1 (8) a transfer of an interest in or an assignment of a claim under a
2 policy of insurance or contract for an annuity including a variable
3 annuity other than an assignment by or to a health care provider of a
4 health care insurance receivable and any subsequent assignment of the
5 right to payment, but Sections 9--315 and 9--322 apply with respect to
6 proceeds and priorities in proceeds;
7 (9) an assignment of a right represented by a judgment, other than a
8 judgment taken on a right to payment that was collateral;
9 (10) a right of recoupment or set-off, but:
10 (A) Section 9--340 applies with respect to the effectiveness of rights
11 of recoupment or set-off against deposit accounts; and
12 (B) Section 9--404 applies with respect to defenses or claims of an
13 account debtor;
14 (11) the creation or transfer of an interest in or lien on real prop-
15 erty, including a lease or rents thereunder, except to the extent that
16 provision is made for:
17 (A) liens on real property in Sections 9--203 and 9--308;
18 (B) fixtures in Section 9--334;
19 (C) fixture filings in Sections 9--501, 9--502, 9--512, 9--516, and
20 9--519;
21 (D) security agreements covering personal and real property in Section
22 9--604; and
23 (E) security interests in a cooperative interests;
24 (12) an assignment of a claim arising in tort, other than a commercial
25 tort claim, but Sections 9--315 and 9--322 apply with respect to
26 proceeds and priorities in proceeds; or
84 12020-01-1
1 (13) an assignment of a deposit account in a consumer transaction,
2 except that Sections 9--315 and 9--322 apply with respect to proceeds
3 and priorities in proceeds.
4 Section 9--110. Security Interests Arising Under Article 2 or 2-A.
5 A security interest arising under Section 2-401, 2-505, 2-711(3) or 2-
6 A-508(5) is subject to this article. However, until the debtor obtains
7 possession of the goods:
8 (1) the security interest is enforceable, even if Section 9--203(b)(3)
9 has not been satisfied;
10 (2) filing is not required to perfect the security interest;
11 (3) the rights of the secured party after default by the debtor are
12 governed by Article 2 or 2-A; and
13 (4) the security interest has priority over a conflicting security
14 interest created by the debtor.
15 PART 2
16 EFFECTIVENESS OF SECURITY AGREEMENT;
17 ATTACHMENT OF SECURITY INTEREST;
18 RIGHTS OF PARTIES TO SECURITY AGREEMENT
19 Section 9--201. General Effectiveness of Security Agreement.
20 9--202. Title to Collateral Immaterial.
21 9--203. Attachment and Enforceability of Security Interests
22 Proceeds; Supporting Obligations; Formal Requisites.
23 9--204. After-Acquired Property; Future Advances.
24 9--205. Use or Disposition of Collateral Permissible.
25 9--206. Security Interest Arising in Purchase or Delivery of
26 Financial Asset.
27 9--207. Rights and Duties of Secured Party Having Possession or
28 Control of Collateral.
85 12020-01-1
1 9--208. Additional Duties of Secured Party Having Control of
2 Collateral.
3 9--209. Duties of Secured Party if Account Debtor has been Noti-
4 fied of Assignment.
5 9--210. Request for Accounting; Request Regarding List of Colla-
6 teral or Statement of Account.
7 Section 9--201. General Effectiveness of Security Agreement.
8 (a) General effectiveness. Except as otherwise provided in this chap-
9 ter a security agreement is effective according to its terms between the
10 parties, against purchasers of the collateral, and against creditors.
11 (b) Applicable consumer laws and other laws. A transaction subject to
12 this article is subject to any applicable rule of law which establishes
13 a different rule for consumers and (A) to any other statute or regu-
14 lation that regulates the rates, charges, agreements, and practices for
15 loans, credit sales, or other extensions of credit and (B) any consum-
16 er-protection state or regulation.
17 (c) Other applicable law controls. In case of conflict between this
18 article and a rule of law, statute, or regulation described in
19 subsection (b) the rule of law, statute, or regulation controls. Fail-
20 ure to comply with a statute or regulation described in subsection (b)
21 has only the effect the statute or regulation specifies.
22 (d) Further deference to other applicable law. This article does not:
23 (1) validate any rate, charge, agreement, or practice that violates a
24 rule of law, statute, or regulation described in subsection (b); or
25 (2) extend the application of the rule of law, statute, or regulation
26 to a transaction not otherwise subject to it.
27 Section 9--202. Title to Collateral Immaterial.
86 12020-01-1
1 Except as otherwise provided with respect to consignments or sales of
2 accounts, chattel paper, payment intangibles, or promissory notes, the
3 provisions of this article with regard to rights and obligations apply
4 whether title to collateral is in the secured party or the debtor.
5 Section 9--203. Attachment and Enforceability of Security Interests
6 Proceeds; Supporting Obligations; Formal Requisites.
7 (a) Attachment. A security interest attaches to collateral when it
8 becomes enforceable against the debtor with respect to the collateral,
9 unless an agreement expressly postpones the time of attachment.
10 (b) Enforceability. Except as otherwise provided in subsections (c)
11 through (i), a security interest is enforceable against the debtor and
12 third parties with respect to the collateral only if:
13 (1) value has been given;
14 (2) the debtor has rights in the collateral or the power to transfer
15 rights in the collateral to a secured party; and
16 (3) one of the following conditions is met:
17 (A) the debtor has authenticated a security agreement that provides a
18 description of the collateral and, if the security interest covers
19 timber to be cut, a description of the land concerned;
20 (B) the collateral is not a certificated security and is in the
21 possession of the secured party under Section 9--313 pursuant to the
22 debtor's security agreement;
23 (C) the collateral is a certificated security in registered form and
24 the security certificate has been delivered to the secured party under
25 Section 8-301 pursuant to the debtor's security agreement; or
26 (D) the collateral is deposit accounts, electronic chattel paper,
27 investment property, or letter of credit rights, and the secured party
87 12020-01-1
1 has control under Section 9--104, 9--105, 9--106 or 9--107 pursuant to
2 the debtor's security agreement.
3 (c) Other UCC provisions. Subsection (b) is subject to Section 4-210
4 on the security interest of a collecting bank, Section 5-117-a on the
5 security interest of a letter of credit issuer or nominated person,
6 Section 9--110 on a security interest arising under Article 2 or 2-A,
7 and Section 9--206 on security interests in investment property.
8 (d) When person becomes bound by another person's security agreement.
9 A person becomes bound as debtor by a security agreement entered into by
10 another person if, by operation of law other than this article or by
11 contract:
12 (1) the security agreement becomes effective to create a security
13 interest in the person's property; or
14 (2) the person becomes generally obligated for the obligations of the
15 other person, including the obligation secured under the security agree-
16 ment, and acquires or succeeds to all or substantially all of the assets
17 of the other person.
18 (e) Effect of new debtor becoming bound. If a new debtor becomes
19 bound as debtor by a security agreement entered into by another person:
20 (1) the agreement satisfies subsection (b)(3) with respect to existing
21 or after-acquired property of the new debtor to the extent the property
22 is described in the agreement; and
23 (2) another agreement is not necessary to make a security interest in
24 the property enforceable.
25 (f) Proceeds and supporting obligations. The attachment of a security
26 interest in collateral gives the secured party the rights to proceeds
27 provided by Section 9--315 and is also attachment of a security interest
28 in a supporting obligation for the collateral.
88 12020-01-1
1 (g) Lien securing right to payment. The attachment of a security
2 interest in a right to payment or performance secured by a security
3 interest or other lien on personal or real property is also attachment
4 of a security interest in the security interest, mortgage, or other
5 lien.
6 (h) Security entitlement carried in securities account. The attach-
7 ment of a security interest in a securities account is also attachment
8 of a security interest in the security entitlements carried in the secu-
9 rities account.
10 (i) Commodity contracts carried in commodity account. The attachment
11 of a security interest in a commodity account is also attachment of a
12 security interest in the commodity contracts carried in the commodity
13 account.
14 Section 9--204. After-Acquired Property; Future Advances.
15 (a) After-acquired collateral. Except as otherwise provided in
16 subsection (b), a security agreement may create or provide for a securi-
17 ty interest in after-acquired collateral.
18 (b) When after-acquired property clause not effective. A security
19 interest does not attach under a term constituting an after-acquired
20 property clause to:
21 (1) consumer goods, other than an accession when given as additional
22 security, unless the debtor acquires rights in them within ten days
23 after the secured party gives value; or
24 (2) a commercial tort claim.
25 (c) Future advances and other value. A security agreement may provide
26 that collateral secures, or that accounts, chattel paper, payment intan-
27 gibles, or promissory notes are sold in connection with, future advances
89 12020-01-1
1 or other value, whether or not the advances or value are given pursuant
2 to commitment.
3 Section 9--205. Use or Disposition of Collateral Permissible.
4 (a) When security interest not invalid or fraudulent. A security
5 interest is not valid or fraudulent against creditors solely because:
6 the debtor has the right or ability to:
7 (A) use, commingle or dispose of all or part of the collateral,
8 including returned or repossessed goods;
9 (B) collect, compromise, enforce or otherwise deal with collateral;
10 (C) accept the return of collateral or make repossessions; or
11 (D) use, commingle or dispose of proceeds.
12 (b) Requirements of possession not relaxed. This section does not
13 relax the requirements of possession if attachment, perfection or
14 enforcement of a security interest depends upon possession of the colla-
15 teral by the secured party.
16 Section 9--206. Security Interest Arising in Purchase or Delivery of
17 Financial Asset.
18 (a) Security interest when a person buys through securities interme-
19 diary. A security interest in favor of a securities intermediary
20 attaches to a person's security entitlement if:
21 (1) the person buys a financial asset through the securities interme-
22 diary in a transaction in which the person is obligated to pay the
23 purchase price to the securities intermediary at the time of the
24 purchase; and
25 (2) the securities intermediary credits the financial asset to the
26 buyer's securities account before the buyer pays the securities interme-
27 diary.
90 12020-01-1
1 (b) Security interest secures obligation to pay for financial asset.
2 The security interest described in subsection (a) secures the person's
3 obligation to pay for the financial asset.
4 (c) Security interest in payment against delivery transactions. A
5 security interest in favor of a person that delivers a certificated
6 security or other financial asset represented by a writing attaches to
7 the security or other financial asset if:
8 (1) the security or other financial asset:
9 (A) in the ordinary course of business is transferred by delivery with
10 any necessary indorsement or assignment; and
11 (B) is delivered under an agreement between persons in the business of
12 dealing with such securities or financial assets; and
13 (2) the agreement calls for delivery against payment.
14 (d) Security interest secures obligation to pay for delivery. The
15 security interest described in subsection (c) secures the obligation to
16 make payment for the delivery.
17 Section 9--207. Rights and Duties of Secured Party Having Possession or
18 Control of Collateral.
19 (a) Duty of care when secured party in possession. Except as other-
20 wise provided in subsection (d), a secured party shall use reasonable
21 care in the custody and preservation of collateral in the secured
22 party's possession. In the case of chattel paper or an instrument,
23 reasonable care includes taking necessary steps to preserve rights
24 against prior parties unless otherwise agreed.
25 (b) Expenses, risks, duties and rights when secured party in
26 possession. Except as otherwise provided in subsection (d), if a
27 secured party has possession of collateral:
91 12020-01-1
1 (1) reasonable expenses, including the cost of insurance and payment
2 of taxes or other charges, incurred in the custody, preservation, use or
3 operation of the collateral are chargeable to the debtor and are secured
4 by the collateral;
5 (2) the risk of accidental loss or damage is on the debtor to the
6 extent of a deficiency in any effective insurance coverage;
7 (3) the secured party shall keep the collateral identifiable, but
8 fungible collateral may be commingled; and
9 (4) the secured party may use or operate the collateral:
10 (A) for the purpose of preserving the collateral or its value;
11 (B) as permitted by an order of a court having competent jurisdiction;
12 or
13 (C) except in the case of consumer goods, in the manner and to the
14 extent agreed by the debtor.
15 (c) Duties and rights when secured party in possession or control.
16 Except as otherwise provided in subsection (d), a secured party having
17 possession of collateral or control of collateral under Section 9--104,
18 9--105, 9--106 or 9--107:
19 (1) may hold as additional security any proceeds, except money or
20 funds, received from the collateral;
21 (2) shall apply money or funds received from the collateral to reduce
22 the secured obligation, unless remitted to the debtor; and
23 (3) may create a security interest in the collateral.
24 (d) Buyer of certain rights to payment. If the secured party is a
25 buyer of accounts, chattel paper, payment intangibles, or promissory
26 notes or a consignor:
27 (1) subsection (a) does not apply unless the secured party is entitled
28 under an agreement:
92 12020-01-1
1 (A) to charge back uncollected collateral; or
2 (B) otherwise to full or limited recourse against the debtor or a
3 secondary obligor based on the nonpayment or other default of an account
4 debtor or other obligor on the collateral; and
5 (2) subsections (b) and (c) do not apply.
6 Section 9--208. Additional Duties of Secured Party Having Control of
7 Collateral.
8 (a) Applicability of section. This section applies to cases in which
9 there is no outstanding secured obligation and the secured party is not
10 committed to make advances, incur obligations, or otherwise give value.
11 (b) Duties of secured party after receiving demand from debtor. With-
12 in ten days after receiving an authenticated demand by the debtor:
13 (1) a secured party having control of a deposit account under Section
14 9--104(a)(2) shall send to the bank with which the deposit account is
15 maintained an authenticated statement that releases the bank from any
16 further obligation to comply with instructions originated by the secured
17 party;
18 (2) a secured party having control of a deposit account under Section
19 9--104(a)(3) shall:
20 (A) pay the debtor the balance on deposit in the deposit account; or
21 (B) transfer the balance on deposit into a deposit account in the
22 debtor's name;
23 (3) a secured party, other than a buyer, having control of electronic
24 chattel paper under Section 9--105 shall:
25 (A) communicate the authoritative copy of the electronic chattel paper
26 to the debtor or its designated custodian;
27 (B) if the debtor designates a custodian that is the designated custo-
28 dian with which the authoritative copy of the electronic chattel paper
93 12020-01-1
1 is maintained for the secured party, communicate to the custodian an
2 authenticated record releasing the designated custodian from any further
3 obligation to comply with instructions originated by the secured party
4 and instructing the custodian to comply with instructions originated by
5 the debtor; and
6 (C) take appropriate action to enable the debtor or its designated
7 custodian to make copies of or revisions to the authoritative copy which
8 add or change an identified assignee of the authoritative copy without
9 the consent of the secured party;
10 (4) a secured party having control of investment property under
11 Section 8-106(d)(2) or 9--106(b) shall send to the securities interme-
12 diary or commodity intermediary with which the security entitlement or
13 commodity contract is maintained an authenticated record that releases
14 the securities intermediary or commodity intermediary from any further
15 obligation to comply with entitlement orders or directions originated by
16 the secured party; and
17 (5) a secured party having control of a letter of credit right under
18 Section 9--107 shall send to each person having an unfulfilled obli-
19 gation to pay or deliver proceeds of the letter of credit to the secured
20 party an authenticated release from any further obligation to pay or
21 deliver proceeds of the letter of credit to the secured party.
22 Section 9--209. Duties of Secured Party if Account Debtor has been Noti-
23 fied of Assignment.
24 (a) Applicability of section. Except as otherwise provided in
25 subsection (c), this section applies if:
26 (1) there is no outstanding secured obligation; and
27 (2) the secured party is not committed to make advances, incur obli-
28 gations, or otherwise give value.
94 12020-01-1
1 (b) Duties of secured party after receiving demand from debtor. With-
2 in ten days after receiving an authenticated demand by the debtor, a
3 secured party shall send to an account debtor that has received notifi-
4 cation of an assignment to the secured party as assignee under Section
5 9--406(a) an authenticated record that releases the account debtor from
6 any further obligation to the secured party.
7 (c) Inapplicability to sales. This section does not apply to an
8 assignment constituting the sale of an account, chattel paper, or
9 payment intangible.
10 Section 9--210. Request for Accounting; Request Regarding List of Colla-
11 teral or Statement of Account.
12 (a) Definitions. In this section:
13 (1) "Request" means a record of a type described in paragraph (2),
14 (3), or (4).
15 (2) "Request for an accounting" means a record authenticated by a
16 debtor requesting that the recipient provide an accounting of the unpaid
17 obligations secured by collateral and reasonably identifying the trans-
18 action or relationship that is the subject of the request.
19 (3) "Request regarding a list of collateral" means a record authenti-
20 cated by a debtor requesting that the recipient approve or correct a
21 list of what the debtor believes to be the collateral securing an obli-
22 gation and reasonably identifying the transaction or relationship that
23 is the subject of the request.
24 (4) "Request regarding a statement of account" means a record authen-
25 ticated by a debtor requesting that the recipient approve or correct a
26 statement indicating what the debtor believes to be the aggregate amount
27 of unpaid obligations secured by collateral as of a specified date and
95 12020-01-1
1 reasonably identifying the transaction or relationship that is the
2 subject of the request.
3 (b) Duty to respond to requests. Subject to subsections (c), (d), (e)
4 and (f), a secured party, other than a buyer of accounts, chattel paper,
5 payment intangibles, or promissory notes or a consignor, shall comply
6 with a request within fourteen days after receipt:
7 (1) in the case of a request for an accounting, by authenticating and
8 sending to the debtor an accounting; and
9 (2) in the case of a request regarding a list of collateral or a
10 request regarding a statement of account, by authenticating and sending
11 to the debtor an approval or correction.
12 (c) Request regarding list of collateral; statement concerning type of
13 collateral. A secured party that claims a security interest in all of a
14 particular type of collateral owned by the debtor may comply with a
15 request regarding a list of collateral by sending to the debtor an
16 authenticated record including a statement to that effect within four-
17 teen days after receipt.
18 (d) Request regarding list of collateral; no interest claimed. A
19 person that receives a request regarding a list of collateral, claims no
20 interest in the collateral when it receives the request, and claimed an
21 interest in the collateral at an earlier time shall comply with the
22 request within fourteen days after receipt by sending to the debtor an
23 authenticated record:
24 (1) disclaiming any interest in the collateral; and
25 (2) if known to the recipient, providing the name and mailing address
26 of any assignee of or successor to the recipient's interest in the
27 collateral.
96 12020-01-1
1 (e) Request for accounting or regarding statement of account; no
2 interest in obligation claimed. A person that receives a request for an
3 accounting or a request regarding a statement of account, claims no
4 interest in the obligations when it receives the request, and claimed an
5 interest in the obligations at an earlier time shall comply with the
6 request within fourteen days after receipt by sending to the debtor an
7 authenticated record:
8 (1) disclaiming any interest in the obligations; and
9 (2) if known to the recipient, providing the name and mailing address
10 of any assignee of or successor to the recipient's interest in the obli-
11 gations.
12 (f) Charges for responses. A debtor is entitled without charge to one
13 response to a request under this section during any six-month period.
14 The secured party may require payment of a charge not exceeding twenty-
15 five dollars for each additional response.
16 PART 3
17 PERFECTION AND PRIORITY
18 Section 9--301. Law Governing Perfection and Priority of Security Inter-
19 ests.
20 9--302. Law Governing Perfection and Priority of Agricultural
21 Liens.
22 9--303. Law Governing Perfection and Priority of Security Inter-
23 ests in Goods Covered by a Certificate of Title.
24 9--304. Law Governing Perfection and Priority of Security Inter-
25 ests in Deposit Accounts.
26 9--305. Law Governing Perfection and Priority of Security Inter-
27 ests in Investment Property.
97 12020-01-1
1 9--306. Law Governing Perfection and Priority of Security Inter-
2 ests in Letter of Credit Rights.
3 9--307. Location of Debtor.
4 9--308. When Security Interest or Agricultural Lien is
5 Perfected; Continuity of Perfection.
6 9--309. Security Interest Perfected upon Attachment.
7 9--310. When Filing Required to Perfect Security Interest or
8 Agricultural Lien; Security Interests and Agricultural
9 Liens to which Filing Provisions Do Not Apply.
10 9--311. Perfection of Security Interests in Property Subject to
11 Certain Statutes, Regulations and Treaties.
12 9--312. Perfection of Security Interests in Chattel Paper,
13 Deposit Accounts, Documents, Goods Covered by Docu-
14 ments, Instruments, Investment Property, Letter of
15 Credit Rights and Money; Perfection by Permissive
16 Filing; Temporary Perfection Without Filing of Trans-
17 fer of Possession.
18 9--313. When Possession by or Delivery to Secured Party Perfects
19 Security Interest Without Filing.
20 9--314. Perfection by Control.
21 9--315. Secured Party's Rights on Disposition of Collateral and
22 in Proceeds.
23 9--316. Continued Perfection of Security Interest Following
24 Change in Governing Law.
25 9--317. Interests that Take Priority over or Take Free of Secu-
26 rity Interest or Agricultural Lien.
98 12020-01-1
1 9--318. No Interest Retained in Right to Payment that is Sold;
2 Rights and Title of Seller of Account or Chattel Paper
3 with Respect to Creditors and Purchasers.
4 9--319. Rights and Title of Consignee with Respect to Creditors
5 and Purchasers.
6 9--320. Buyer of Goods.
7 9--321. Licensee of General Intangible and Lessee of Goods in
8 Ordinary Course of Business.
9 9--322. Priorities among Conflicting Security Interests in and
10 Agricultural Liens on Same Collateral.
11 9--323. Future Advances.
12 9--324. Priority of Purchase-money Security Interests.
13 9--325. Priority of Security Interests in Transferred Collat-
14 eral.
15 9--326. Priority of Security Interests Created by New Debtor.
16 9--327. Priority of Security Interests in Deposit Account.
17 9--328. Priority of Security Interests in Investment Property.
18 9--329. Priority of Security Interests in Letter of Credit
19 Right.
20 9--330. Priority of Purchaser of Chattel Paper or Instrument.
21 9--331. Priority of Rights of Purchasers of Instruments, Docu-
22 ments and Securities under Other Articles; Priority of
23 Interests in Financial Assets and Security Entitle-
24 ments under Article 8.
25 9--332. Transfer of Money; Transfer of Funds from Deposit
26 Account.
27 9--333. Priority of Certain Liens Arising by Operation of Law.
28 9--334. Priority of Security Interests in Fixtures and Crops.
99 12020-01-1
1 9--335. Accessions.
2 9--336. Commingled Goods.
3 9--337. Priority of Security Interests in Goods Covered by
4 Certificate of Title.
5 9--338. Priority of Security Interest or Agricultural Lien
6 Perfected by Filed Financing Statement Providing
7 Certain Incorrect Information.
8 9--339. Priority Subject to Subordination.
9 9--340. Effectiveness of Right of Recoupment or Set-Off Against
10 Deposit Account.
11 9--341. Bank's Rights and Duties with Respect to Deposit
12 Account.
13 9--342. Bank's Right to Refuse to Enter into or Disclose Exist-
14 ence of Control Agreement.
15 Section 9--301. Law Governing Perfection and Priority of Security Inter-
16 ests.
17 Except as otherwise provided in Sections 9--303 through 9--306, the
18 following rules determine the law governing perfection, the effect of
19 perfection or nonperfection and the priority of a security interest in
20 collateral:
21 (a) Except as otherwise provided in this section, while a debtor is
22 located in a jurisdiction, the local law of that jurisdiction governs
23 perfection, the effect of perfection or nonperfection and the priority
24 of a security interest in collateral.
25 (b) While collateral is located in a jurisdiction, the local law of
26 that jurisdiction governs perfection, the effect of perfection or
27 nonperfection and the priority of a possessory security interest in that
28 collateral.
100 12020-01-1
1 (c) Except as otherwise provided in paragraph (d), while negotiable
2 documents, goods, instruments, money or tangible chattel paper is
3 located in a jurisdiction, the local law of that jurisdiction governs:
4 (A) perfection of a security interest in the goods by filing a fixture
5 filing;
6 (B) perfection of a security interest in timber to be cut; and
7 (C) the effect of perfection or nonperfection and the priority of a
8 nonpossessory security interest.
9 (d) The local law of the jurisdiction in which the wellhead or mine-
10 head is located governs perfection, the effect of perfection or nonper-
11 fection, and the priority of a security interest in as-extracted collat-
12 eral.
13 (e) When collateral is a cooperative interest, the law of this State
14 governs perfection, the effect of perfection or nonperfection, and the
15 priority of the security interest in such collateral.
16 Section 9--302. Law Governing Perfection and Priority of Agricultural
17 Liens.
18 While farm products are located in a jurisdiction, the local law of
19 that jurisdiction governs perfection, the effect of perfection or
20 nonperfection and the priority of an agricultural lien on the farm
21 products.
22 Section 9--303. Law Governing Perfection and Priority of Security Inter-
23 ests in Goods Covered by a Certificate of Title.
24 (a) Applicability of section. This section applies to goods covered
25 by a certificate of title, even if there is no other relationship
26 between the jurisdiction under whose certificate of title the goods are
27 covered and the goods or the debtor.
101 12020-01-1
1 (b) When goods covered by certificate of title. Goods become covered
2 by a certificate of title when a valid application for the certificate
3 of title and the applicable fee are delivered to the appropriate author-
4 ity. Goods cease to be covered by a certificate of title at the earlier
5 of the time the certificate of title ceases to be effective under the
6 law of the issuing jurisdiction or the time the goods become covered
7 subsequently by a certificate of title issued by another jurisdiction.
8 (c) Applicable law. The local law of the jurisdiction under whose
9 certificate of title the goods are covered governs perfection, the
10 effect of perfection or nonperfection, and the priority of a security
11 interest in goods covered by a certificate of title from the time the
12 goods become covered by the certificate of title until the goods cease
13 to be covered by the certificate of title.
14 Section 9--304. Law Governing Perfection and Priority of Security Inter-
15 ests in Deposit Accounts.
16 (a) Law of banks' jurisdiction governs. The local law of a bank's
17 jurisdiction governs perfection, the effect of perfection or nonper-
18 fection and the priority of a security interest in a deposit account
19 maintained with that bank.
20 (b) Bank's jurisdiction. The following rules determine a bank's
21 jurisdiction for purposes of this part:
22 (1) If an agreement between the bank and the debtor governing the
23 deposit account expressly provides that a particular jurisdiction is the
24 bank's jurisdiction for purposes of this part, this article, or this
25 chapter, that jurisdiction is the bank's jurisdiction.
26 (2) If paragraph (1) does not apply and an agreement between the bank
27 and its customer governing the deposit account expressly provides that
102 12020-01-1
1 the agreement is governed by the law of a particular jurisdiction, that
2 jurisdiction is the bank's jurisdiction.
3 (3) If neither paragraph (1) nor paragraph (2) applies and an agree-
4 ment between the bank and its customer governing the deposit account
5 expressly provides that the deposit account is maintained at an office
6 in a particular jurisdiction, that jurisdiction is the bank's jurisdic-
7 tion.
8 (4) If none of the preceding paragraphs apply, the bank's jurisdic-
9 tion is the jurisdiction in which the office identified in an account
10 statement as the office serving the customer's account is located.
11 (5) If none of the preceding paragraphs apply, the bank's jurisdic-
12 tion is the jurisdiction in which the chief executive office of the bank
13 is located.
14 Section 9--305. Law Governing Perfection and Priority of Security Inter-
15 ests in Investment Property.
16 (a) Governing law: general rules. Except as otherwise provided in
17 subsection (c) and (d), the following rules apply:
18 (1) While a security certificate is located in a jurisdiction, the
19 local law of that jurisdiction governs perfection, the effect of
20 perfection or nonperfection and the priority of a security interest in
21 the certificated security represented thereby.
22 (2) The local law of the issuer's jurisdiction as specified in
23 Section 8-110(d) governs perfection, the effect of perfection or nonper-
24 fection, and the priority of a security interest in an uncertificated
25 security.
26 (3) The local law of the securities intermediary's jurisdiction as
27 specified in Section 8-110(e) governs perfection, the effect of
103 12020-01-1
1 perfection or nonperfection, and the priority of a security interest in
2 a security entitlement or securities account.
3 (4) The local law of the commodity intermediary's jurisdiction
4 governs perfection, the effect of perfection or nonperfection, and the
5 priority of a security interest in a commodity contract or commodity
6 account.
7 (b) Commodity intermediary's jurisdiction. The following rules deter-
8 mine a commodity intermediary's jurisdiction for purposes of this part:
9 (1) If an agreement between the commodity intermediary and commodity
10 customer governing the commodity account expressly provides that a
11 particular jurisdiction is the commodity intermediary's jurisdiction for
12 purposes of this part, this article, or this chapter, that jurisdiction
13 is the commodity intermediary's jurisdiction.
14 (2) If paragraph (1) does not apply and an agreement between the
15 commodity intermediary and commodity customer governing the commodity
16 account expressly provides that the agreement is governed by the law of
17 a particular jurisdiction, that jurisdiction is the commodity interme-
18 diary's jurisdiction.
19 (3) If neither paragraph (1) nor paragraph (2) applies and an agree-
20 ment between the commodity intermediary and commodity customer governing
21 the commodity account expressly provides that the commodity account is
22 maintained at an office in a particular jurisdiction, that jurisdiction
23 is the commodity intermediary's jurisdiction.
24 (4) If none of the preceding paragraphs applies, the commodity inter-
25 mediary's jurisdiction is the jurisdiction in which the office identi-
26 fied in an account statement as the office serving the commodity custom-
27 er's account is located.
104 12020-01-1
1 (5) If none of the preceding paragraphs applies, the commodity inter-
2 mediary's jurisdiction is the jurisdiction in which the chief executive
3 office of the commodity intermediary is located.
4 (c) When perfection governed by law of jurisdiction where debtor
5 located. The local law of the jurisdiction in which the debtor is
6 located governs:
7 (1) perfection of a security interest in investment property by
8 filing;
9 (2) automatic perfection of a security interest in investment property
10 created by a broker or securities intermediary; and
11 (3) automatic perfection of a security interest in a commodity
12 contract or commodity account granted by a commodity intermediary.
13 (d) Cooperative interests. This section does not apply to cooperative
14 interests.
15 Section 9--306. Law Governing Perfection and Priority of Security Inter-
16 ests in Letter of Credit Rights.
17 (a) Governing law: issuer's or nominated person's jurisdiction.
18 Subject to subsection (c), the local law of the issuer's jurisdiction or
19 a nominated person's jurisdiction governs perfection, the effect of
20 perfection or nonperfection and the priority of a security interest in a
21 letter of credit right if the issuer's jurisdiction or nominated
22 person's jurisdiction is a state.
23 (b) Issuer's or nominated person's jurisdiction. For purposes of this
24 part, an issuer's jurisdiction or nominated person's jurisdiction is the
25 jurisdiction whose law governs the liability of the issuer or nominated
26 person with respect to the letter of credit right as provided in Section
27 5-114.
105 12020-01-1
1 (c) When section not applicable. This section does not apply to a
2 security interest that is perfected only under Section 9--308(d).
3 Section 9--307. Location of Debtor.
4 (a) "Place of business." In this section, "place of business" means a
5 place where a debtor conducts its affairs.
6 (b) Debtor's location: general rules. Except as otherwise provided in
7 this section, the following rules determine a debtor's location:
8 (1) A debtor who is an individual is located at the individual's
9 principal residence.
10 (2) A debtor that is an organization and has only one place of busi-
11 ness is located at its place of business.
12 (3) A debtor that is an organization and has more than one place of
13 business is located at its chief executive office.
14 (c) Limitation of applicability of subsection (b). Subsection (b)
15 applies only if a debtor's residence, place of business or chief execu-
16 tive office, as applicable, is located in a jurisdiction whose law
17 generally requires information concerning the existence of a nonposses-
18 sory security interest to be made generally available in a filing,
19 recording or registration system as a condition or result of the securi-
20 ty interest's obtaining priority over the rights of a lien creditor with
21 respect to the collateral. If subsection (b) does not apply, the debtor
22 is located in the District of Columbia.
23 (d) Continuation of location: cessation of existence, etc. A person
24 that ceases to exist, have a residence, or have a place of business
25 continues to be located in the jurisdiction specified by subsections (b)
26 and (c).
106 12020-01-1
1 (e) Location of registered organization organized under state law. A
2 registered organization that is organized under the law of a state is
3 located in that state.
4 (f) Location of registered organization organized under federal law:
5 bank branches and agencies. Except as otherwise provided in subsection
6 (i), registered organization that is organized under the law of the
7 United States and a branch or agency of a bank that is not organized
8 under the law of the United States or a state are located:
9 (1) the state that the law of the United States designates, if the law
10 designates a state of location;
11 (2) the state that the registered organization, branch or agency
12 designates, if the law of the United States authorizes the registered
13 organization, branch or agency to designate its state of location; or
14 (3) in the District of Columbia, if neither paragraph (1) nor para-
15 graph (2) applies.
16 (g) Continuation of location: change in status of registered organiza-
17 tion. A registered organization continues to be located in the juris-
18 diction specified by subsection (e) or (f) notwithstanding:
19 (1) the suspension, revocation, forfeiture or lapse of the registered
20 organization's status as such in its jurisdiction of organization; or
21 (2) the dissolution, winding up or cancellation of the existence of
22 the registered organization.
23 (h) Location of United States. The United States is located in the
24 District of Columbia.
25 (i) Location of foreign bank branch or agency if licensed in only one
26 state. A branch or agency of a bank that is not organized under the law
27 of the United States or a state is located in the state in which the
107 12020-01-1
1 branch or agency is licensed, if all branches and agencies of the bank
2 are licensed in only one state.
3 (j) Location of foreign air carrier. A foreign air carrier under the
4 Federal Aviation Act of 1958, as amended, is located at the designated
5 office of the agent upon which service of process may be made on behalf
6 of the carrier.
7 (k) Section applies only to this part. This section applies only for
8 purposes of this part.
9 Section 9--308. When Security Interest or Agricultural Lien Is
10 Perfected; Continuity of Perfection.
11 (a) Perfection of security interest. Except as otherwise provided in
12 this section and Section 9--309, a security interest is perfected if it
13 has attached and all of the applicable requirements for perfection in
14 Sections 9--310 through 9--316 have been satisfied. A security interest
15 is perfected when it attaches if the applicable requirements are satis-
16 fied before the security interest attaches.
17 (b) Perfection of agricultural lien. An agricultural lien is
18 perfected if it has become effective and all of the applicable require-
19 ments for perfection in Section 9--310 have been satisfied. An agricul-
20 tural lien is perfected when it becomes effective if the applicable
21 requirements are satisfied before the agricultural lien becomes effec-
22 tive.
23 (c) Continuous perfection; perfection by different methods. A securi-
24 ty interest or agricultural lien is perfected continuously if it is
25 originally perfected by one method under this article and is later
26 perfected by another method under this article, without an intermediate
27 period when it was unperfected.
108 12020-01-1
1 (d) Supporting obligation. Perfection of a security interest in
2 collateral also perfects a security interest in a supporting obligation
3 for the collateral.
4 (e) Lien securing right to payment. Perfection of a security interest
5 in a right to payment or performance also perfects a security interest
6 in a security interest, mortgage or other lien on personal or real prop-
7 erty securing the right.
8 (f) Security entitlement carried in securities account. Perfection of
9 a security interest in a securities account also perfects a security
10 interest in the security entitlements carried in the securities account.
11 (g) Commodity contract carried in commodity account. Perfection of a
12 security interest in a commodity account also perfects a security inter-
13 est in the commodity contracts carried in the commodity account.
14 (h) Cooperative organization security interest. A cooperative organ-
15 ization security interest becomes perfected when the cooperative inter-
16 est first comes into existence and remains perfected so long as the
17 cooperative interest exists.
18 Section 9--309. Security Interest Perfected upon Attachment.
19 The following security interests are perfected when they attach:
20 (a) a purchase-money security interest in consumer goods, except as
21 otherwise provided in Section 9--311(b) with respect to consumer goods
22 that are subject to a statute or treaty described in Section 9--311(a);
23 (b) an assignment of accounts or payment intangibles which does not by
24 itself or in conjunction with other assignments to the same assignee
25 transfer a significant part of the assignor's outstanding accounts or
26 payment intangibles;
27 (c) a sale of a payment intangible;
28 (d) a sale of a promissory note;
109 12020-01-1
1 (e) a security interest created by the assignment of a health-care-in-
2 surance receivable to the provider of the healthcare goods or services;
3 (f) a security interest arising under Section 2-401, 2-505, 2-711(3)
4 or 2-A-508(5), until the debtor obtains possession of the collateral;
5 (g) a security interest of a collecting bank arising under Section
6 4-210;
7 (h) a security interest of an issuer or nominated person arising under
8 Section 5-117-a
9 (i) a security interest arising in the delivery of a financial asset
10 under Section 9--206(c);
11 (j) a security interest in investment property created by a broker or
12 securities intermediary;
13 (k) a security interest in a commodity contract or a commodity account
14 created by a commodity intermediary;
15 (l) an assignment for the benefit of all creditors of the transferor
16 and subsequent transfers by the assignee thereunder; and
17 (m) a security interest created by an assignment of a beneficial
18 interest in a decedent's estate.
19 Section 9--310. When Filing Required to Perfect Security Interest or
20 Agricultural Lien; Security Interests and Agricultural
21 Liens to which Filing Provisions Do Not Apply.
22 (a) General rule: perfection by filing. Except as otherwise provided
23 in subsection (b) and Section 9--312(b), a financing statement must be
24 filed to perfect all security interests and agricultural liens.
25 (b) Exceptions: filing not necessary. Except as provided in
26 subsection (d), the filing of a financing statement is not necessary to
27 perfect a security interest:
28 (1) that is perfected under Section 9--308(d), (e), (f) or (g);
110 12020-01-1
1 (2) that is perfected under Section 9--309 when it attaches;
2 (3) in property subject to a statute, regulation, or treaty described
3 in Section 9--311(a);
4 (4) in goods in possession of a bailee which is perfected under
5 Section 9--312(d)(1) or (2);
6 (5) in certificated securities, documents, goods or instruments which
7 is perfected without filing or possession under Section 9--312(e), (f)
8 or (g);
9 (6) in collateral in the secured party's possession under Section
10 9--313;
11 (7) in a certificated security which is perfected by delivery of the
12 security certificate to the secured party under Section 9--313;
13 (8) in deposit accounts, electronic chattel paper, investment proper-
14 ty, or letter of credit rights which is perfected by control under
15 Section 9--314;
16 (9) in proceeds which is perfected under Section 9--315;
17 (10) that is perfected under Section 9--316; or
18 (11) that is a cooperative organization security interest.
19 (c) Assignment of perfected security interest. If a secured party
20 assigns a perfected security interest or agricultural lien, a filing
21 under this article is not required to continue the perfected status of
22 the security interest against creditors of and transferees from the
23 original debtor.
24 (d) Special rule for cooperative interests. Except for a cooperative
25 organization security interest, a security interest in a cooperative
26 interest may be perfected only by filing a financing statement.
27 Section 9--311. Perfection of Security Interests in Property Subject to
28 Certain Statutes, Regulations and Treaties.
111 12020-01-1
1 (a) Security interest subject to other law. Except as otherwise
2 provided in subsection (d), the filing of a financing statement is not
3 necessary or effective to perfect a security interest in property
4 subject to:
5 (1) a statute, regulation or treaty of the United States whose
6 requirements for a security interest's obtaining priority over the
7 rights of a lien creditor with respect to the property preempt Section
8 9--310(a);
9 (2) section two thousand one hundred eighteen of the vehicle and traf-
10 fic law and section one hundred eighty-four of the lien law; or
11 (3) a certificate of title statute of another jurisdiction which
12 provides for a security interest to be indicated on the certificate as a
13 condition or result of the security interest's obtaining priority over
14 the rights of a lien creditor with respect to the property.
15 (b) Compliance with other law. Compliance with the requirements of a
16 statute, regulation, or treaty described in subsection (a) for obtaining
17 priority over the rights of a lien creditor is equivalent to the filing
18 of a financing statement under this article. Except as otherwise
19 provided in subsection (d) and Sections 9--313 and 9--316(d) and (e) for
20 goods covered by a certificate of title, a security interest in property
21 subject to a statute, regulation or treaty described in subsection (a)
22 may be perfected only by compliance with those requirements, and a secu-
23 rity interest so perfected remains perfected notwithstanding a change in
24 the use or transfer of possession of the collateral.
25 (c) Duration and renewal of perfection. Except as otherwise provided
26 in subsection (d) and Section 9--316(d) and (e), duration and renewal of
27 perfection of a security interest perfected by compliance with the
28 requirements prescribed by a statute, regulation, or treaty described in
112 12020-01-1
1 subsection (a) are governed by the statute, regulation, or treaty. In
2 other respects the security interest is subject to this article.
3 (d) Inapplicability to certain inventory. During any period in which
4 collateral is inventory held for sale or lease by a person or leased by
5 that person as lessor and that person is in the business of selling or
6 leasing goods of that kind, this section does not apply to a security
7 interest in that collateral created by that person as debtor.
8 Section 9--312. Perfection of Security Interests in Chattel Paper,
9 Deposit Accounts, Documents, Goods Covered by Docu-
10 ments, Instruments, Investment Property, Letter of
11 Credit Rights and Money; Perfection by Permissive
12 Filing; Temporary Perfection Without Filing or Trans-
13 fer of Possession.
14 (a) Perfection by filing permitted. A security interest in chattel
15 paper, negotiable documents, instruments, or investment property may be
16 perfected by filing.
17 (b) Control or possession of certain collateral. Except as otherwise
18 provided in Section 9--315(c) and (d) for proceeds:
19 (1) a security interest in a deposit account may be perfected only by
20 control under Section 9--314;
21 (2) and, except as otherwise provided in Section 9--308(d); a security
22 interest in a letter of credit right may be perfected only by control
23 under Section 9--314, and
24 (3) a security interest in money may be perfected only by the secured
25 party's taking possession under Section 9--313.
26 (c) Goods covered by negotiable documents. While goods are in the
27 possession of a bailee that has issued a negotiable document covering
28 the goods:
113 12020-01-1
1 (1) a security interest in the goods may be perfected by perfecting a
2 security interest in the document; and
3 (2) a security interest perfected in the document has priority over
4 any security interest that becomes perfected in the goods by another
5 method during that time.
6 (d) Goods covered by nonnegotiable documents. While goods are in the
7 possession of a bailee that has issued a nonnegotiable document covering
8 the goods, a security interest in the goods may be perfected by:
9 (1) issuance of a document in the name of the secured party;
10 (2) the bailee's receipt of notification of the secured party's inter-
11 est; or
12 (3) filing as to the goods.
13 (e) Temporary perfection: new value. A security interest in certif-
14 icated securities, negotiable documents, or instruments is perfected
15 without filing or the taking of possession for a period of twenty days
16 from the time it attaches to the extent that it arises for new value
17 given under an authenticated security agreement.
18 (f) Temporary perfection: goods or documents made available to debtor.
19 A perfected security interest in a negotiable document or goods in
20 possession of a bailee, other than one that has issued a negotiable
21 document for the goods, remains perfected for twenty days without filing
22 if the secured party makes available to the debtor the goods or docu-
23 ments representing the goods for the purpose of:
24 (1) ultimate sale or exchange; or
25 (2) loading, unloading, storing, shipping, transshipping, manufactur-
26 ing, processing or otherwise dealing with them in a manner preliminary
27 to their sale or exchange.
114 12020-01-1
1 (g) Temporary perfection: delivery of security certificate or instru-
2 ment to debtor. A perfected security interest in a certificated securi-
3 ty or instrument remains perfected for twenty days without filing if the
4 secured party delivers the security certificate or instrument to the
5 debtor for the purpose of:
6 (1) ultimate sale or exchange; or
7 (2) presentation, collection, enforcement, renewal, or registration of
8 transfer.
9 (h) Expiration of temporary perfection. After the twenty-day period
10 specified in subsection (e), (f) or (g) expires, perfection depends upon
11 compliance with this article.
12 (i) Cooperative interests. This section does not apply to cooperative
13 interests.
14 Section 9--313. When Possession by or Delivery to Secured Party
15 Perfects Security Interest Without Filing.
16 (a) Perfection by possession or delivery. Except as otherwise
17 provided in subsection (b), a secured party may perfect a security
18 interest in negotiable documents, goods, instruments, money or tangible
19 chattel paper by taking possession of the collateral. A secured party
20 may perfect a security interest in certificated securities by taking
21 delivery of the certificated securities under Section 8-301.
22 (b) Goods covered by certificate of title. With respect to goods
23 covered by a certificate of title issued by this State, a secured party
24 may perfect a security interest in the goods by taking possession of the
25 goods only in the circumstances described in Section 9--316(d).
26 (c) Collateral in possession of person other than debtor. With
27 respect to collateral other than certificated securities and goods
28 covered by a document, a secured party takes possession of collateral in
115 12020-01-1
1 the possession of a person other than the debtor, the secured party or a
2 lessee of the collateral from the debtor in the ordinary course of the
3 debtor's business, when:
4 (1) the person in possession authenticates a record acknowledging that
5 it holds possession of the collateral for the secured party's benefit;
6 or
7 (2) the person takes possession of the collateral after having authen-
8 ticated a record acknowledging that it will hold possession of collat-
9 eral for the secured party's benefit.
10 (d) Time of perfection by possession; continuation of perfection. If
11 perfection of a security interest depends upon possession of the collat-
12 eral by a secured party, perfection occurs no earlier than the time the
13 secured party takes possession and continues only while the secured
14 party retains possession.
15 (e) Time of perfection by delivery; continuation of perfection. A
16 security interest in a certificated security in registered form is
17 perfected by delivery when delivery of the certificated security occurs
18 under Section 8-301 and remains perfected by delivery until the debtor
19 obtains possession of the security certificate.
20 (f) Acknowledgment not required. A person in possession of collateral
21 is not required to acknowledge that it holds possession for a secured
22 party's benefit.
23 (g) Effectiveness of acknowledgment; no duties or confirmation. If a
24 person acknowledges that it holds possession for the secured party's
25 benefit:
26 (1) the acknowledgment is effective under subsection (c) or Section
27 8-301(a), even if the acknowledgment violates the rights of a debtor;
28 and
116 12020-01-1
1 (2) unless the person otherwise agrees or law other than this article
2 otherwise provides, the person does not owe any duty to the secured
3 party and is not required to confirm the acknowledgment to another
4 person.
5 (h) Secured party's delivery to person other than debtor. A secured
6 party having possession of collateral does not relinquish possession by
7 delivering the collateral to a person other than the debtor or a lessee
8 of the collateral from the debtor in the ordinary course of the debtor's
9 business if the person was instructed before the delivery or is
10 instructed contemporaneously with the delivery:
11 (1) to hold possession of the collateral for the secured party's bene-
12 fit; or
13 (2) to redeliver the collateral to the secured party.
14 (i) Effect of delivery under subsection (h); no duties or confirma-
15 tion. A secured party does not relinquish possession, even if a deliv-
16 ery under subsection (h) violates the rights of a debtor. A person to
17 which collateral is delivered under subsection (h) does not owe any duty
18 to the secured party and is not required to confirm the delivery to
19 another person unless the person otherwise agrees or law other than this
20 article otherwise provides.
21 (j) Cooperative interests. This section does not apply to cooperative
22 interests.
23 Section 9--314. Perfection by Control.
24 (a) Perfection by control. A security interest in investment proper-
25 ty, deposit accounts, letter of credit rights or electronic chattel
26 paper may be perfected by control of the collateral under Section
27 9--104, 9--105, 9--106 or 9--107.
117 12020-01-1
1 (b) Specified collateral: time of perfection by control; continuation
2 of perfection. A security interest in deposit accounts, electronic
3 chattel paper or a letter of credit rights is perfected by control under
4 Section 9--104, 9--105 or 9--107 when the secured party obtains control
5 and remains perfected by control only while the secured party retains
6 control.
7 (c) Investment property: time of perfection by control; continuation
8 of perfection. A security interest in investment property is perfected
9 by control under Section 9--106 from the time the secured party obtains
10 control and remains perfected by control until:
11 (1) the secured party does not have control; and
12 (2) one of the following occurs:
13 (A) if the collateral is a certificated security, the debtor has or
14 acquires possession of the security certificate;
15 (B) if the collateral is an uncertificated security, the issuer has
16 registered or registers the debtor as the registered owner; or
17 (C) if the collateral is a security entitlement, the debtor is or
18 becomes the entitlement holder.
19 (d) Cooperative interests. This section does not apply to cooper-
20 ative interests.
21 Section 9--315. Secured Party's Rights on Disposition of Collateral and
22 in Proceeds.
23 (a) Disposition of collateral: continuation of security interest or
24 agricultural lien; proceeds. Except as otherwise provided in this arti-
25 cle and in Section 2-403(2):
26 (1) a security interest or agricultural lien continues in collateral
27 notwithstanding sale, lease, license, exchange or other disposition
118 12020-01-1
1 thereof unless the secured party authorized the disposition free of the
2 security interest or agricultural lien; and
3 (2) a security interest attaches to any identifiable proceeds of
4 collateral.
5 (b) When commingled proceeds identifiable. Proceeds that are commin-
6 gled with other property are identifiable proceeds:
7 (1) if the proceeds are goods, to the extent provided by Section
8 9--336; and
9 (2) if the proceeds are not goods, to the extent that the secured
10 party identifies the proceeds by a method of tracing, including applica-
11 tion of equitable principles, that is permitted under law other than
12 this article with respect to commingled property of the type involved.
13 (c) Perfection of security interest in proceeds. A security interest
14 in proceeds is a perfected security interest if the security interest in
15 the original collateral was perfected.
16 (d) Continuation of perfection. A perfected security interest in
17 proceeds becomes unperfected on the twenty-first day after the security
18 interest attaches to the proceeds unless:
19 (1) the following conditions are satisfied:
20 (A) a filed financing statement covers the original collateral;
21 (B) the proceeds are collateral in which a security interest may be
22 perfected by filing in the office in which the financing statement has
23 been filed; and
24 (C) the proceeds are not acquired with cash proceeds;
25 (2) the proceeds are identifiable cash proceeds; or
26 (3) the security interest in the proceeds is perfected other than
27 under subsection (c) when the security interest attaches to the proceeds
28 or within twenty days thereafter.
119 12020-01-1
1 (e) When perfected security interest in proceeds becomes unperfected.
2 If a filed financing statement covers the original collateral, a securi-
3 ty interest in proceeds which remains perfected under subsection (d)(1)
4 becomes unperfected at the later of:
5 (1) when the effectiveness of the filed financing statement lapses
6 under Section 9--515 or is terminated under Section 9--513; or
7 (2) the twenty-first day after the security interest attaches to the
8 proceeds.
9 Section 9--316. Continued Perfection of Security Interest Following
10 Change in Governing Law.
11 (a) General rule: effect on perfection of change in governing law. A
12 security interest perfected pursuant to the law of the jurisdiction
13 designated in Section 9--301(a) or 9--305(c) remains perfected until the
14 earliest of:
15 (1) the time perfection would have ceased under the law of that juris-
16 diction;
17 (2) the expiration of four months after a change of the debtor's
18 location to another jurisdiction;
19 (3) the expiration of one year after a transfer of collateral to a
20 person that thereby becomes a debtor and is located in another jurisdic-
21 tion.
22 (b) Security interest perfected or unperfected under law of new juris-
23 diction. If a security interest described in subsection (a) becomes
24 perfected under the law of the other jurisdiction before the earliest
25 time or event described in such subsection, it remains perfected there-
26 after. If the security interest does not become perfected under the law
27 of the other jurisdiction before the earliest time or event, it becomes
120 12020-01-1
1 unperfected and is deemed never to have been perfected as against a
2 purchaser of the collateral for value.
3 (c) Possessory security interest in collateral moved to new jurisdic-
4 tion. A possessory security interest in collateral, other than goods
5 covered by a certificate of title and as extracted collateral consisting
6 of goods, remains continuously perfected if:
7 (1) the collateral is located in one jurisdiction and subject to a
8 security interest perfected under the law of that jurisdiction;
9 (2) thereafter the collateral is brought into another jurisdiction;
10 and
11 (3) upon entry into the other jurisdiction, the security interest is
12 perfected under the law of the other jurisdiction.
13 (d) Goods covered by certificate of title from this state. Except as
14 otherwise provided in subsection (e), a security interest in goods
15 covered by a certificate of title which is perfected by any method under
16 the law of another jurisdiction when the goods become covered by a
17 certificate of title from this state remains perfected until the securi-
18 ty interest would have become unperfected under the law of the other
19 jurisdiction had the goods not become so covered.
20 (e) When subsection (d) security interests becomes unperfected against
21 purchasers. A security interest described in subsection (d) becomes
22 unperfected as against a purchaser of the goods for value and is deemed
23 never to have been perfected as against a purchaser of the goods for
24 value if the applicable requirements for perfection under Section
25 9--311(b) or 9--313 are not satisfied before the earlier of:
26 (1) the time the security interest would have become unperfected under
27 the law of the other jurisdiction had the goods not become covered by a
28 certificate of title from this state; or
121 12020-01-1
1 (2) the expiration of four months after the goods had become so
2 covered.
3 (f) Change in jurisdiction of bank, issuer, nominated person, securi-
4 ties intermediary or commodity intermediary. A security interest in
5 deposit accounts, letter of credit rights or investment property which
6 is perfected under the law of the bank's jurisdiction, the issuer's
7 jurisdiction, a nominated person's jurisdiction, the securities interme-
8 diary's jurisdiction or the commodity intermediary's jurisdiction, as
9 applicable, remains perfected until the earlier of:
10 (1) the time the security interest would have become unperfected under
11 the law of that jurisdiction; or
12 (2) the expiration of four months after a change of the applicable
13 jurisdiction to another jurisdiction.
14 (g) Subsection (f) security interest perfected or unperfected under
15 law of new jurisdiction. If a security interest described in subsection
16 (f) becomes perfected under the law of the other jurisdiction before the
17 earlier of the time or the end of the period described in such
18 subsection, it remains perfected thereafter. If the security interest
19 does not become perfected under the law of the other jurisdiction before
20 the earlier of that time or the end of that period, it becomes unper-
21 fected and is deemed never to have been perfected as against a purchaser
22 of the collateral for value.
23 Section 9--317. Interests that Take Priority over or Take Free of Secu-
24 rity Interest or Agricultural Lien.
25 (a) Conflicting security interests and rights of lien creditors. A
26 security interest or agricultural lien is subordinate to the rights of:
27 (1) a person entitled to priority under Section 9--322; and
122 12020-01-1
1 (2) except as otherwise provided in subsection (e), a person that
2 becomes a lien creditor before the earlier of the time the security
3 interest or agricultural lien is perfected or a financing statement
4 covering the collateral is filed.
5 (b) Buyers that receive delivery. Except as otherwise provided in
6 subsection (e), a buyer, other than a secured party, of tangible chattel
7 paper, documents, goods, instruments or a security certificate takes
8 free of a security interest or agricultural lien if the buyer gives
9 value and receives delivery of the collateral without knowledge of the
10 security interest or agricultural lien and before it is perfected.
11 (c) Lessees that receive delivery. Except as otherwise provided in
12 subsection (e), a lessee of goods takes free of a security interest or
13 agricultural lien if the lessee gives value and receives delivery of the
14 collateral without knowledge of the security interest or agricultural
15 lien and before it is perfected.
16 (d) Licensees and buyers of certain collateral. A licensee of a
17 general intangible or a buyer, other than a secured party, of accounts,
18 electronic chattel paper, general intangibles or investment property
19 other than a certificated security takes free of a security interest if
20 the licensee or buyer gives value without knowledge of the security
21 interest and before it is perfected.
22 (e) Purchase-money security interest. Except as otherwise provided in
23 Sections 9--320 and 9--321, if a person files a financing statement with
24 respect to a purchase-money security interest before or within twenty
25 days after the debtor receives delivery of the collateral, the security
26 interest takes priority over the rights of a buyer, lessee or lien cred-
27 itor which arise between the time the security interest attaches and the
123 12020-01-1
1 time of filing. This subsection does not apply to cooperative inter-
2 ests.
3 Section 9--318. No Interest Retained in Right to Payment that is Sold;
4 Rights and Title of Seller of Account or Chattel Paper
5 with Respect to Creditors and Purchasers.
6 (a) Seller retains no interest. A debtor that has sold an account,
7 chattel paper, payment intangible or promissory note does not retain a
8 legal or equitable interest in the collateral sold.
9 (b) Deemed rights of debtor if buyer's security interest unperfected.
10 For purposes of determining the rights of creditors of, and purchasers
11 for value of an account or chattel paper from a debtor that has sold an
12 account or chattel paper, while the buyer's security interest is unper-
13 fected, the debtor is deemed to have rights and title to the account or
14 chattel paper identical to those the debtor sold.
15 Section 9--319. Rights and Title of Consignee with Respect to Creditors
16 and Purchasers.
17 (a) Consignee has consignor's rights. Except as otherwise provided in
18 subsection (b), for purposes of determining the rights of creditors of,
19 and purchasers for value of goods from, a consignee, while the goods are
20 in the possession of the consignee, the consignee is deemed to have
21 rights and title to the goods identical to those the consignor had or
22 had power to transfer.
23 (b) Applicability of other law. For purposes of determining the
24 rights of a creditor of a consignee, law other than this article deter-
25 mines the rights and title of a consignee while goods are in the
26 consignee's possession if, under this part, a perfected security inter-
27 est held by the consignor would have priority over the rights of the
28 creditor.
124 12020-01-1
1 Section 9--320. Buyer of Goods.
2 (a) Buyers in ordinary course of business. Except as otherwise
3 provided in subsection (e), a buyer in ordinary course of business,
4 other than a person buying farm products from a person engaged in farm-
5 ing operations, takes free of a security interest created by the buyer's
6 seller, even if the security interest is perfected and the buyer knows
7 of its existence.
8 (b) Buyer of consumer goods. Except as otherwise provided in
9 subsection (e), a buyer of goods from a person who used or bought the
10 goods for use primarily for personal, family or household purposes takes
11 free of a security interest, even if perfected, if the buyer buys:
12 (1) without knowledge of the security interest;
13 (2) for value;
14 (3) primarily for the buyer's personal, family or household purposes;
15 and
16 (4) before the filing of a financing statement covering the goods.
17 (c) Effectiveness of filing for subsection (b). To the extent that it
18 affects the priority of a security interest over a buyer of goods under
19 subsection (b), the period of effectiveness of a filing made in the
20 jurisdiction in which the seller is located is governed by Section
21 9--316(a) and (b).
22 (d) Buyer in ordinary course of business at wellhead or minehead. A
23 buyer in ordinary course of business buying oil, gas or other minerals
24 at the wellhead or minehead or after extraction takes free of an inter-
25 est arising out of an encumbrance.
26 (e) Possessory security interest not affected. Subsections (a) and
27 (b) do not affect a security interest in goods in the possession of the
28 secured party under Section 9--313.
125 12020-01-1
1 Section 9--321. Licensee of General Intangible and Lessee of Goods in
2 Ordinary Course of Business.
3 (a) Licensee in ordinary course of business. In this section, "licen-
4 see in ordinary course of business" means a person that becomes a licen-
5 see of a general intangible in good faith, without knowledge that the
6 license violates the rights of another person in the general intangible,
7 and in the ordinary course from a person in the business of licensing
8 general intangibles of that kind. A person becomes a licensee in the
9 ordinary course if the license to the person comports with the usual or
10 customary practices in the kind of business in which the licensor is
11 engaged or with the licensor's own usual or customary practices.
12 (b) Rights of licensee in ordinary course of business. A licensee in
13 ordinary course of business takes its rights under a nonexclusive
14 license free of a security interest in the general intangible created by
15 the licensor, even if the security interest is perfected and the licen-
16 see knows of its existence.
17 (c) Rights of lessee in ordinary course of business. A lessee in
18 ordinary course of business takes its leasehold interest free of a secu-
19 rity interest in the goods created by the lessor, even if the security
20 interest is perfected and the lessee knows of its existence.
21 Section 9--322. Priorities among Conflicting Security Interests in and
22 Agricultural Liens on Same Collateral.
23 (a) General priority rules. Except as otherwise provided in this
24 section, priority among conflicting security interests and agricultural
25 liens in the same collateral is determined according to the following
26 rules:
27 (1) Conflicting perfected security interests and agricultural liens
28 rank according to priority in time of filing or perfection. Priority
126 12020-01-1
1 dates from the earlier of the time a filing covering the collateral is
2 first made or the security interest or agricultural lien is first
3 perfected, if there is no period thereafter when there is neither filing
4 nor perfection.
5 (2) A perfected security interest or agricultural lien has priority
6 over a conflicting unperfected security interest or agricultural lien.
7 (3) The first security interest or agricultural lien to attach or
8 become effective has priority if conflicting security interests and
9 agricultural liens are unperfected.
10 (b) Time of perfection: proceeds and supporting obligations. For the
11 purposes of subsection (a)(1):
12 (1) the time of filing or perfection as to a security interest in
13 collateral is also the time of filing or perfection as to a security
14 interest in proceeds; and
15 (2) the time of filing or perfection as to a security interest in
16 collateral supported by a supporting obligation is also the time of
17 filing or perfection as to a security interest in the supporting obli-
18 gation.
19 (c) Special priority rules: proceeds and supporting obligations.
20 Except as otherwise provided in subsection (f), a security interest in
21 collateral which qualifies for priority over a conflicting security
22 interest under Section 9--327, 9--328, 9--329, 9--330 or 9--331 also has
23 priority over a conflicting security interest in:
24 (1) any supporting obligation for the collateral; and
25 (2) proceeds of the collateral if:
26 (A) the security interest in proceeds is perfected;
27 (B) the proceeds are:
28 (i) cash proceeds;
127 12020-01-1
1 (ii) or of the same type as the collateral; and
2 (C) in the case of proceeds that are proceeds of proceeds, all inter-
3 vening proceeds are cash proceeds, proceeds of the same type as the
4 collateral, or an account relating to the collateral.
5 (d) First-to-file priority rule for certain collateral. Subject to
6 subsection (e) and except as otherwise provided in subsection (f), if a
7 security interest in chattel paper, deposit accounts, negotiable docu-
8 ments, instruments, investment property or letter of credit rights is
9 perfected by a method other than filing, conflicting perfected security
10 interests in proceeds of the collateral rank according to priority in
11 time of filing.
12 (e) Applicability of subsection (d). Subsection (d) applies only if
13 the proceeds of the collateral are not cash proceeds, chattel paper,
14 negotiable documents, instruments, investment property or letter of
15 credit rights.
16 (f) Limitations on subsections (a) through (e). Subsections (a)
17 through (e) are subject to:
18 (1) subsection (g) and the other provisions of this part;
19 (2) Section 4-210 with respect to a security interest of a collecting
20 bank;
21 (3) Section 5-117-a with respect to a security interest of an issuer
22 or nominated person; and
23 (4) Section 9--110 with respect to a security interest arising under
24 Article 2 or 2-A.
25 (g) Priority under agricultural lien statute. A perfected agricul-
26 tural lien on collateral has priority over a conflicting security inter-
27 est in or agricultural lien on the same collateral if the statute creat-
28 ing the agricultural lien so provides.
128 12020-01-1
1 (h) Priority of cooperative organization security interest. A cooper-
2 ative organization security interest has priority over every other secu-
3 rity interest in the cooperative interest.
4 Section 9--323. Future Advances.
5 (a) When priority based on time of advance. Except as otherwise
6 provided in subsection (c) and (h), for purposes of determining the
7 priority of a perfected security interest under Section 9--322(a)(1),
8 perfection of the security interest dates from the time an advance is
9 made to the extent that the security interest secures an advance that:
10 (1) is made while the security interest is perfected only:
11 (A) under Section 9--309 when it attaches; or
12 (B) temporarily under Section 9--312(e), (f) or (g); and
13 (2) is not made pursuant to a commitment entered into before or while
14 the security interest is perfected by a method other than under Section
15 9--309 or 9--312(e), (f) or (g).
16 (b) Lien creditor. Except as otherwise provided in subsection (c) and
17 (h), a security interest is subordinate to the rights of a person that
18 becomes a lien creditor to the extent that the security interest secures
19 an advance made more than forty-five days after the person becomes a
20 lien creditor unless the advance is made:
21 (1) without knowledge of the lien; or
22 (2) pursuant to a commitment entered into without knowledge of the
23 lien.
24 (c) Buyer of receivables. Subsections (a) and (b) do not apply to a
25 security interest held by a secured party that is a buyer of accounts,
26 chattel paper, payment intangibles or promissory notes or a consignor.
27 (d) Buyer of goods. Except as otherwise provided in subsection (e), a
28 buyer of goods other than a buyer in ordinary course of business takes
129 12020-01-1
1 free of a security interest to the extent that it secures advances made
2 after the earlier of:
3 (1) the time the secured party acquires knowledge of the buyer's
4 purchase; or
5 (2) forty five days after the purchase.
6 (e) Advances made pursuant to commitment: priority of buyer of goods.
7 Subsection (d) does not apply if the advance is made pursuant to a
8 commitment entered into without knowledge of the buyer's purchase and
9 before the expiration of the forty-five day period.
10 (f) Lessee of goods. Except as otherwise provided in subsection (g),
11 a lessee of goods, other than a lessee in ordinary course of business,
12 takes the leasehold interest free of a security interest to the extent
13 that it secures advances made after the earlier of:
14 (1) the time the secured party acquires knowledge of the lease; or
15 (2) forty-five days after the lease contract becomes enforceable.
16 (g) Advances made pursuant to commitment: priority of lessee of goods.
17 Subsection (f) does not apply if the advance is made pursuant to a
18 commitment entered into without knowledge of the lease and before the
19 expiration of the forty-five day period.
20 (h) Advances made pursuant to commitment: Priority with respect to
21 cooperative interests.
22 (1) Except as provided in paragraphs (2) and (3), to the extent that a
23 security interest in a cooperative interest secures an advance made
24 after the time the security interest is first perfected, the priority of
25 the advance dates from the time of the advance.
26 (2) Paragraph (1) does not apply to the priority of future advances
27 secured by a cooperative organization security interest.
130 12020-01-1
1 (3) Paragraph (1) does not apply to the priority of future advances
2 made pursuant to commitment where all of the following are true:
3 (A) The maximum amount to be advanced is stated in the security agree-
4 ment;
5 (B) The advance plus the sum of all outstanding prior advances is not
6 more than the maximum amount to be advanced as stated in the security
7 agreement; and
8 (C) The cooperative addendum discloses that the security agreement
9 provides for future advances.
10 (4) The priority of an advance made after a modification of the maxi-
11 mum amount to be advanced stated in the security agreement that would
12 adversely affect a perfected subordinate security interest in the same
13 cooperative interest shall be established at the time the advance is
14 made.
15 Section 9--324. Priority of Purchase-money Security Interests.
16 (a) General rule: purchase-money priority. Except as otherwise
17 provided in subsection (g), a perfected purchase-money security interest
18 in inventory goods other than inventory or livestock has priority over a
19 conflicting security interest in the same goods, and, except as other-
20 wise provided in Section 9--327, a perfected security interest in its
21 identifiable proceeds also has priority if the purchase-money security
22 interest is perfected when the debtor receives possession of the collat-
23 eral or within twenty days thereafter.
24 (b) Inventory purchase-money priority. Subject to subsection (c) and
25 except as otherwise provided in subsection (g), a perfected purchase-mo-
26 ney security interest in inventory has priority over a conflicting secu-
27 rity interest in chattel paper or an instrument constituting proceeds of
28 the inventory and in proceeds of the chattel paper, if so provided in
131 12020-01-1
1 Section 9--330, and, except as otherwise provided in Section 9--327,
2 also has priority in identifiable cash proceeds of the inventory to the
3 extent the identifiable cash proceeds are received on or before the
4 delivery of the inventory to the buyer, if:
5 (1) the purchase-money security interest is perfected when the debtor
6 receives possession of the inventory;
7 (2) the purchase-money secured party sends an authenticated notifica-
8 tion to the holder of the conflicting security interest;
9 (3) the holder of the conflicting security interest receives the
10 notification within five years before the debtor receives possession of
11 the inventory; and
12 (4) the notification states that the person sending the notification
13 is or expects to acquire a purchase-money security interest in inventory
14 of the debtor and describes the inventory.
15 (c) Holders of conflicting inventory security interests to be noti-
16 fied. Subsection (b)(2) through (4) apply only if the holder of the
17 conflicting security interest had filed a financing statement covering
18 the same types of inventory;
19 (1) if the purchase-money security interest is perfected by filing,
20 before the date of the filing; or,
21 (2) if the purchase-money security interest is temporarily perfected
22 without filing or possession under Section 9--312(f), before the begin-
23 ning of the twenty day period thereunder.
24 (d) Livestock purchase-money priority. Subject to subsection (e) and
25 except as otherwise provided in subsection (g), a perfected purchase-mo-
26 ney security interest in livestock that are farm products has priority
27 over a conflicting security interest in the same livestock, and, except
28 as otherwise provided in Section 9--327, a perfected security interest
132 12020-01-1
1 in their identifiable proceeds and identifiable products in their unman-
2 ufactured states also has priority, if:
3 (1) the purchase-money security interest is perfected when the debtor
4 receives possession of the livestock;
5 (2) the purchase-money secured party sends an authenticated notifica-
6 tion to the holder of the conflicting security interest;
7 (3) the holder of the conflicting security interest receives the
8 notification within six months before the debtor receives possession of
9 the livestock; and
10 (4) the notification states that the person sending the notification
11 has or expects to acquire a purchase-money security interest in live-
12 stock of the debtor and describes the livestock.
13 (e) Holders of conflicting livestock security interests to be noti-
14 fied. Subsection (d)(2) through (4) apply only if the holder of the
15 conflicting security interest had filed a financing statement covering
16 the same types of livestock:
17 (1) if the purchase-money security interest is perfected by filing,
18 before the date of the filing, or
19 (2) if the purchase-money security interest is temporary perfected
20 without filing or possession under Section 9--312(f), before the begin-
21 ning of the twenty-day period thereunder.
22 (f) Software purchase-money priority. Except as otherwise provided in
23 subsection (g), a perfected purchase-money security interest in software
24 has priority over a conflicting security interest in the same collat-
25 eral, and, except as otherwise provided in Section 9--327, a perfected
26 security interest in its identifiable proceeds also has priority, to the
27 extent that the purchase-money security interest in the goods in which
133 12020-01-1
1 the software was acquired for use has priority in the goods and proceeds
2 of the goods under this section.
3 (g) Conflicting purchase-money security interests. If more than one
4 security interest qualifies for priority in the same collateral under
5 subsection (a), (b), (d) or (f):
6 (1) a security interest securing an obligation incurred as all or part
7 of the price of the collateral has priority over a security interest
8 securing an obligation incurred for value given to enable the debtor to
9 acquire rights in or the use of collateral; and
10 (2) in all other cases, Section 9--322(a) applies to the qualifying
11 security interests.
12 Section 9--325. Priority of Security Interests in Transferred Collat-
13 eral.
14 (a) Subordination of security interest in transferred collateral.
15 Except as otherwise provided in subsection (b), a security interest
16 created by a debtor is subordinate to a security interest in the same
17 collateral created by another person if:
18 (1) the debtor acquired the collateral subject to the security inter-
19 est created by the other person;
20 (2) the security interest created by the other person was perfected
21 when the debtor acquired the collateral; and
22 (3) there is no period thereafter when the security interest is unper-
23 fected.
24 (b) Limitation of subsection (a) subordination. Subsection (a) subor-
25 dinates a security interest only if the security interest:
26 (1) otherwise would have priority solely under Section 9--322(a) or
27 9--324; or
28 (2) arose solely under Section 2-711(3) or 2-A-508(5).
134 12020-01-1
1 Section 9--326. Priority of Security Interests Created by New Debtor.
2 (a) Subordination of security interest created by new debtor. Subject
3 to subsection (b), a security interest created by a new debtor which is
4 perfected by a filed financing statement that is effective solely under
5 Section 9--508 in collateral in which a new debtor has or acquires
6 rights is subordinate to a security interest in the same collateral
7 which is perfected other than by a filed financing statement that is
8 effective solely under Section 9--508.
9 (b) Priority under other provisions; multiple original debtors. The
10 other provisions of this part determine the priority among conflicting
11 security interests in the same collateral perfected by filed financing
12 statements that are effective solely under Section 9--508. However, if
13 the security agreements to which a new debtor became bound as a debtor
14 were not entered into by the same original debtor, the conflicting secu-
15 rity interests rank according to priority in time of the new debtor's
16 having become bound.
17 Section 9--327. Priority of Security Interests in Deposit Account.
18 The following rules govern priority among conflicting security inter-
19 ests in the same deposit account:
20 (a) A security interest held by a secured party having control of the
21 deposit account under Section 9--104 has priority over a conflicting
22 security interest held by a secured party that does not have control.
23 (b) Except as otherwise provided in subsections (c) and (d), security
24 interests perfected by control under Section 9--314 rank according to
25 priority in time of obtaining control.
26 (c) Except as otherwise provided in subsection (d), a security inter-
27 est held by the bank with which the deposit account is maintained has
135 12020-01-1
1 priority over a conflicting security interest held by another secured
2 party.
3 (d) A security interest perfected by control under Section
4 9--104(a)(3) has priority over a security interest held by the bank with
5 which the deposit account is maintained.
6 Section 9--328. Priority of Security Interests in Investment Property.
7 The following rules govern priority among conflicting security inter-
8 ests in the same investment property:
9 (a) A security interest held by a secured party having control of
10 investment property under Section 9--106 has priority over a security
11 interest held by a secured party that does not have control of the
12 investment property.
13 (b) Except as otherwise provided in subsections (c) and (d),
14 conflicting security interests held by secured parties each of which has
15 control under Section 9--106 rank according to priority in time of:
16 (1) if the collateral is a security, obtaining control;
17 (2) if the collateral is a security entitlement carried in a securi-
18 ties account:
19 (A) if the secured party obtained control under Section 8-106(d)(1),
20 the secured party's becoming the person for which the securities account
21 is maintained;
22 (B) if the secured party obtained control under Section 8-106(d)(2),
23 the securities intermediary's agreement to comply with the secured
24 party's entitlement orders with respect to security entitlements carried
25 or to be carried in the securities account; or
26 (C) if the secured party obtained control through another person under
27 Section 8-106(d)(3), the time on which priority would be based under
28 this paragraph if the other person were the security party; or
136 12020-01-1
1 (3) if the collateral is a commodity contract carried with a commodity
2 intermediary, the satisfaction of the requirement for control specified
3 in Section 9--106(b)(2) with respect to commodity contracts carried or
4 to be carried with the commodity intermediary.
5 (c) A security interest held by a securities intermediary in a securi-
6 ty entitlement or a securities account maintained with the securities
7 intermediary has priority over a conflicting security interest held by
8 another secured party.
9 (d) A security interest held by a commodity intermediary in a commod-
10 ity contract or a commodity account maintained with the commodity inter-
11 mediary has priority over a conflicting interest held by another secured
12 party.
13 (e) A security interest in a certificated security in registered form
14 which is perfected by taking delivery under Section 9--313(a) and not by
15 control under Section 9--314 has priority over a conflicting security
16 interest perfected by a method other than control.
17 (f) Conflicting security interests created by a broker, securities
18 intermediary, or commodity intermediary which are perfected without
19 control under Section 9--106 rank equally.
20 (g) In all other cases, priority among conflicting security interests
21 in investment property is governed by Sections 9--322 and 9--323.
22 (h) This section does not apply to cooperative interests.
23 Section 9--329. Priority of Security Interests in Letter of Credit
24 Right.
25 The following rules govern priority among conflicting security inter-
26 ests in the same letter of credit right:
27 (a) A security interest held by a secured party having control of the
28 letter of credit right under Section 9--107 has priority to the extent
137 12020-01-1
1 of its control over a conflicting security interest held by a secured
2 party that does not have control.
3 (b) Security interests perfected by control under Section 9--314 rank
4 according to priority in time of obtaining control.
5 Section 9--330. Priority of Purchaser of Chattel Paper or Instrument.
6 (a) Purchaser's priority; security interest claimed merely as
7 proceeds: A purchaser of chattel paper has priority over a security
8 interest in the chattel paper which is claimed merely as proceeds of
9 inventory subject to a security interest if:
10 (1) in good faith and in the ordinary course of the purchaser's busi-
11 ness, the purchaser gives new value and takes possession of the chattel
12 paper or obtains control of the chattel paper under Section 9--105; and
13 (2) the chattel paper does not indicate that it has been assigned to
14 an identified assignee other than the purchaser.
15 (b) Purchaser's priority: other security interests. A purchaser of
16 chattel paper has priority over a security interest in the chattel paper
17 which is claimed other than merely as proceeds of inventory subject to a
18 security interest if the purchaser gives new value and takes possession
19 of the chattel paper or obtains control of the chattel paper under
20 Section 9--105 in good faith, in the ordinary course of the purchaser's
21 business, and without knowledge that the purchase violates the rights of
22 the secured party.
23 (c) Chattel paper purchaser's priority in proceeds. Except as other-
24 wise provided in Section 9--327, a purchaser having priority in chattel
25 paper under subsection (a) or (b) also has priority in proceeds of the
26 chattel paper to the extent that:
27 (1) Section 9--322 provides for priority in the proceeds; or
138 12020-01-1
1 (2) the proceeds consist of the specific goods covered by the chattel
2 paper or cash proceeds of the specific goods, even if the purchaser's
3 security interest in the proceeds is unperfected.
4 (d) Instrument purchaser's priority. Except as otherwise provided in
5 Section 9--331(a), a purchaser of an instrument has priority over a
6 security interest in the instrument perfected by a method other than
7 possession if the purchaser gives value and takes possession of the
8 instrument in good faith and without knowledge that the purchase
9 violates the rights of the secured party.
10 (e) Holder of purchase-money security interest gives new value. For
11 purposes of subsections (a) and (b), the holder of a purchase-money
12 security interest in inventory gives new value for chattel paper consti-
13 tuting proceeds of the inventory.
14 (f) Indication of assignment gives knowledge. For purposes of
15 subsections (b) and (d), if chattel paper or an instrument indicates
16 that it has been assigned to an identified secured party other than the
17 purchaser, a purchaser of the chattel paper or instrument has knowledge
18 that the purchase violates the rights of the secured party.
19 Section 9--331. Priority of Rights of Purchasers of Instruments, Docu-
20 ments and Securities under Other Articles; Priority of
21 Interests in Financial Assets and Security Entitle-
22 ments under Article 8.
23 (a) Rights under Articles 3, 7 and 8, not limited. This article does
24 not limit the rights of a holder in due course of a negotiable instru-
25 ment, a holder to which a negotiable document of title has been duly
26 negotiated, or a protected purchaser of a security. These holders or
27 purchasers take priority over an earlier security interest, even if
28 perfected, to the extent provided in Articles 3, 7 and 8.
139 12020-01-1
1 (b) Protection under Article 8. This article does not limit the
2 rights of or impose liability on a person to the extent that the person
3 is protected against the assertion of a claim under Article 8.
4 (c) Filing not notice. Filing under this article does not constitute
5 notice of a claim or defense to the holders, or purchasers, or persons
6 described in subsections (a) and (b).
7 Section 9--332. Transfer of Money; Transfer of Funds from Deposit
8 Account.
9 (a) Transferee of money. A transferee of money takes the money free
10 of a security interest unless the transferee acts in collusion with the
11 debtor in violating the rights of the secured party.
12 (b) Transferee of funds from deposit account. A transferee of funds
13 from a deposit account takes the funds free of a security interest in
14 the deposit account unless the transferee acts in collusion with the
15 debtor in violating the rights of the secured party.
16 Section 9--333. Priority of Certain Liens Arising by Operation of Law.
17 (a) Possessory lien. In this section, "possessory lien" means an
18 interest, other than a security interest or an agricultural lien:
19 (1) which secures payment or performance of an obligation for services
20 or materials furnished with respect to goods by a person in the ordinary
21 course of the person's business;
22 (2) which is created by statute or rule of law in favor of the person;
23 and
24 (3) whose effectiveness depends on the person's possession of the
25 goods.
26 (b) Priority of possessory lien. A possessory lien on goods has
27 priority over a security interest in the goods unless the lien is
28 created by a statute that expressly provides otherwise.
140 12020-01-1
1 Section 9--334. Priority of Security Interests in Fixtures and Crops.
2 (a) Security interest in fixtures under this article. A security
3 interest under this article may be created in goods that are fixtures or
4 may continue in goods that become fixtures. A security interest does
5 not exist under this article in ordinary building materials incorporated
6 into an improvement on land.
7 (b) Security interest in fixtures under the real property law. This
8 article does not prevent creation of an encumbrance upon fixtures under
9 the real property law.
10 (c) General rule: subordination of security interest in fixtures. In
11 cases not governed by subsections (d) through (h), a security interest
12 in fixtures is subordinate to a conflicting interest of an encumbrancer
13 or owner of the related real property other than the debtor.
14 (d) Fixtures purchase-money priority. Except as otherwise provided in
15 subsection (h), a perfected security interest in fixtures has priority
16 over a conflicting interest of an encumbrancer or owner of the real
17 property if the debtor has an interest of record in or is in possession
18 of the real property and:
19 (1) the security interest is a purchase-money security interest;
20 (2) the interest of the encumbrancer or owner arises before the goods
21 become fixtures; and
22 (3) the security interest is perfected by a fixture filing before the
23 goods become fixtures or within twenty days thereafter.
24 (e) Priority of security interest in fixtures over interest in real
25 property. A perfected security interest in fixtures has priority over a
26 conflicting interest of an encumbrancer or owner of the real property
27 if:
141 12020-01-1
1 (1) the debtor has an interest of record in the real property or is in
2 possession of the real property and the security interest:
3 (A) is perfected by a fixture filing before the interest of the encum-
4 brancer or owner is of record; and
5 (B) has priority over any conflicting interest of a predecessor in
6 title of the encumbrancer or owner;
7 (2) before the goods become fixtures, the security interest is
8 perfected by any method permitted by this article and the fixtures are
9 readily removable:
10 (A) factory or office machines;
11 (B) equipment that is not primarily used or leased for use in the
12 operation of the real property; or
13 (C) replacements of domestic appliances that are consumer goods;
14 (3) the conflicting interest is a lien on the real property obtained
15 by legal or equitable proceedings after the security interest was
16 perfected by any method permitted by this article; or
17 (4) the security interest is:
18 (A) created in a manufactured home in a manufactured-home transaction;
19 and
20 (B) perfected pursuant to a statute described in Section 9--311(a)(2).
21 (f) Priority based on consent, disclaimer, or right to remove. A
22 security interest in fixtures, whether or not perfected, has priority
23 over a conflicting interest of an encumbrancer or owner of the real
24 property if:
25 (1) the encumbrancer or owner has, in an authenticated record,
26 consented to the security interest or disclaimed an interest in the
27 goods as fixtures; or
142 12020-01-1
1 (2) the debtor has a right to remove the goods as against the encum-
2 brancer or owner.
3 (g) Continuation of subsection (f)(2) priority. The priority of the
4 security interest under subsection (f)(2) continues for a reasonable
5 time if the debtor's right to remove the goods as against the encum-
6 brancer or owner terminates.
7 (h) Priority of construction mortgage. A mortgage is a construction
8 mortgage to the extent that it secures an obligation incurred for the
9 construction of an improvement on land, including the acquisition cost
10 of the land, if a recorded record so indicates. Except as otherwise
11 provided in subsections (e) and (f), a security interest in fixtures is
12 subordinate to a construction mortgage if a record of the mortgage is
13 recorded before the goods become fixtures and the goods become fixtures
14 before the completion of the construction. A mortgage has this priority
15 to the same extent as a construction mortgage to the extent that it is
16 given to refinance a construction mortgage.
17 (i) Priority of security interest in crops. A perfected security
18 interest in crops growing on real property has priority over a conflict-
19 ing interest of an encumbrancer or owner of the real property if the
20 debtor has an interest of record in or is in possession of the real
21 property.
22 (j) Subsection (i) prevails. Subsection (i) prevails over any incon-
23 sistent provisions with this article or any other chapter of law.
24 Section 9--335. Accessions.
25 (a) Creation of security interest in accession. A security interest
26 may be created in an accession and continues in collateral that becomes
27 an accession.
143 12020-01-1
1 (b) Perfection of security interest. If a security interest is
2 perfected when the collateral becomes an accession, the security inter-
3 est remains perfected in the collateral.
4 (c) Priority of security interest. Except as otherwise provided in
5 subsection (d), the other provisions of this part determine the priority
6 of a security interest in an accession.
7 (d) Compliance with certificate of title statute. A security interest
8 in an accession is subordinate to a security interest in the whole which
9 is perfected by compliance with the requirements of a certificate of
10 title statute under Section 9--311(d).
11 (e) Removal of accession after default. After default, subject to
12 Part 6, a secured party may remove an accession from other goods if the
13 security interest in the accession has priority over the claims of every
14 person having an interest in the whole.
15 (f) Reimbursement following removal. A secured party that removes an
16 accession from other goods under this subsection shall promptly reim-
17 burse any holder of a security interest or other lien on, or owner of,
18 the whole or of the other goods, other than the debtor, for the cost of
19 repair of any physical injury to the whole or the other goods. The
20 secured party need not reimburse the holder or owner for any diminution
21 in value of the whole or the other goods caused by the absence of the
22 accession removed or by any necessity for replacing it. A person enti-
23 tled to reimbursement may refuse permission to remove until the secured
24 party gives adequate assurance for the performance of the obligation to
25 reimburse.
26 Section 9--336. Commingled Goods.
144 12020-01-1
1 (a) Commingled goods. In this section, "commingled goods" means goods
2 that are physically united with other goods in such a manner that their
3 identity is lost in a product or mass.
4 (b) No security interest in commingled goods as such. A security
5 interest does not exist in commingled goods as such. However, a securi-
6 ty interest may attach to a product or mass that results when goods
7 become commingled goods.
8 (c) Attachment of security interest to product or mass. If collateral
9 becomes commingled goods, a security interest attaches to the product or
10 mass.
11 (d) Perfection of security interest. If a security interest in colla-
12 teral is perfected before the collateral becomes commingled goods, the
13 security interest that attaches to the product or mass under subsection
14 (c) is perfected.
15 (e) Priority of security interest. Except as otherwise provided in
16 subsection (f), the other provisions of this part determine the priority
17 of a security interest that attaches to the product or mass under
18 subsection (c).
19 (f) Conflicting security interests in product or mass. If more than
20 one security interest attaches to the product or mass under subsection
21 (c), the following rules determine priority:
22 (1) A security interest that is perfected under subsection (d) has
23 priority over a security interest that is unperfected at the time the
24 collateral becomes commingled goods.
25 (2) If more than one security interest is perfected under subsection
26 (d), the security interests rank equally in proportion to the value of
27 the collateral at the time it became commingled goods.
145 12020-01-1
1 Section 9--337. Priority of Security Interests in Goods Covered by
2 Certificate of Title.
3 If, while a security interest in goods is perfected by any method
4 under the law of another jurisdiction, this state issues a certificate
5 of title that does not show that the goods are subject to the security
6 interest or contain a statement that they may be subject to security
7 interests not shown on the certificate:
8 (a) a buyer of the goods, other than a person that is in the business
9 of selling goods of that kind, takes free of the security interest if
10 the buyer gives value and receives delivery of the goods after issuance
11 of the certificate and without knowledge of the security interest; and
12 (b) the security interest is subordinate to a conflicting security
13 interest in the goods that attaches, and is perfected under Section
14 9--311(d), after issuance of the certificate and without the conflicting
15 secured party's knowledge of the security interest.
16 Section 9--338. Priority of Security Interest or Agricultural Lien
17 Perfected by Filed Financing Statement Providing
18 Certain Incorrect Information.
19 If a security interest or agricultural lien is perfected by a filed
20 financing statement providing information described in Section
21 9--516(b)(5) which is incorrect at the time the financing statement is
22 filed:
23 (a) the security interest or agricultural lien is subordinate to a
24 conflicting perfected security interest in the collateral to the extent
25 that the holder of the conflicting security interest gives value in
26 reasonable reliance upon the incorrect information; and
27 (b) a purchaser, other than a secured party, of the collateral takes
28 free of the security interest or agricultural lien to the extent that,
146 12020-01-1
1 in reasonable reliance upon the incorrect information, the purchaser
2 gives value and, in the case of chattel paper, documents, goods, instru-
3 ments, or a security certificate, receives delivery of the collateral.
4 Section 9--339. Priority Subject to Subordination.
5 This article does not preclude subordination by agreement by a person
6 entitled to priority.
7 Section 9--340. Effectiveness of Right of Recoupment or Set-Off Against
8 Deposit Account.
9 (a) Exercise of recoupment or set-off. Except as otherwise provided
10 in subsection (c), a bank with which a deposit account is maintained may
11 exercise any right of recoupment or set-off against a secured party that
12 holds a security interest in the deposit account.
13 (b) Recoupment or set-off not affected by security interest. Except
14 as otherwise provided in subsection (c), the application of this article
15 to a security interest in a deposit account does not affect a right of
16 recoupment or set-off of the secured party as to a deposit account main-
17 tained with the secured party.
18 (c) When set-off ineffective. The exercise by a bank of a set-off
19 against a deposit account is ineffective against a secured party that
20 holds a security interest in the deposit account which is perfected by
21 control under Section 9--104(a)(3), if the set-off is based on a claim
22 against the debtor.
23 Section 9--341. Bank's Rights and Duties with Respect to Deposit
24 Account.
25 Except as otherwise provided in Section 9--340(c), and unless the bank
26 otherwise agrees in an authenticated record, a bank's rights and duties
27 with respect to a deposit account maintained with the bank are not
28 terminated, suspended, or modified by:
147 12020-01-1
1 (a) the creation, attachment, or perfection of a security interest in
2 the deposit account;
3 (b) the bank's knowledge of the security interest; or
4 (c) the bank's receipt of instructions from the secured party.
5 Section 9--342. Bank's Right to Refuse to Enter into or Disclose Exist-
6 ence of Control Agreement.
7 This article does not require a bank to enter into an agreement of the
8 kind described in Section 9--104(a)(2), even if its customer so requests
9 or directs. A bank that has entered into such an agreement is not
10 required to confirm the existence of the agreement to another person
11 unless requested to do so by its customer.
12 PART 4
13 RIGHTS OF THIRD PARTIES
14 Section 9--401. Alienability of Debtor's Rights.
15 9--402. Secured Party Not Obligated on Contract of Debtor or in
16 Tort.
17 9--403. Agreement Not to Assert Defenses Against Assignee.
18 9--404. Rights Acquired by Assignee; Claims and Defenses Against
19 Assignee.
20 9--405. Modification of Assigned Contract.
21 9--406. Discharge of Account Debtor; Notification of Assignment;
22 Identification and Proof of Assignment; Restrictions
23 on Assignment of Accounts, Chattel Paper, Payment
24 Intangibles and Promissory Notes Ineffective.
25 9--407. Restrictions on Creation or Enforcement of Security
26 Interest in Leasehold Interest or in Lessor's Residual
27 Interest.
148 12020-01-1
1 9--408. Restrictions on Assignment of Promissory Notes, Health-
2 Care- Insurance Receivables and Certain General Intan-
3 gibles Ineffective.
4 9--409. Restrictions on Assignment of Letter of Credit Rights
5 Ineffective.
6 Section 9--401. Alienability of Debtor's Rights.
7 (a) Other law governs alienability; exceptions. Except as otherwise
8 provided in subsection (b) and Sections 9--406, 9--407, 9--408 and
9 9--409, whether a debtor's rights in collateral may be voluntarily or
10 involuntarily transferred is governed by law other than this article.
11 (b) Agreement does not prevent transfer. An agreement between the
12 debtor and secured party which prohibits a transfer of the debtor's
13 rights in collateral or makes the transfer a default does not prevent
14 the transfer from taking effect.
15 Section 9--402. Secured Party Not Obligated on Contract of Debtor or in
16 Tort.
17 The existence of a security interest, agricultural lien or authority
18 given to a debtor to dispose of or use collateral, without more, does
19 not subject a secured party liability in contract or tort for the
20 debtor's acts or omissions.
21 Section 9--403. Agreement Not to Assert Defenses Against Assignee.
22 (a) Value. In this section, "value" has the meaning provided in
23 Section 3-303(a).
24 (b) Agreement not to assert claim or defense. Except as otherwise
25 provided in this section, an agreement between an account debtor and an
26 assignor not to assert against an assignee any claim or defense that the
27 account debtor may have against the assignor is enforceable by an assig-
28 nee that takes an assignment:
149 12020-01-1
1 (1) for value;
2 (2) in good faith;
3 (3) without notice of a claim of a property or possessory right to the
4 property assigned; and
5 (4) without notice of a defense or claim in recoupment of the type
6 that may be asserted against a person entitled to enforce a negotiable
7 instrument under Section 3-305(2)(a).
8 (c) When subsection (b) not applicable. Subsection (b) does not apply
9 to defenses of a type that may be asserted against a holder in due
10 course of a negotiable instrument under Section 3-305(2)(b).
11 (d) Omission of required statement in consumer transaction. In a
12 consumer transaction, if a record evidences the account debtor's obli-
13 gation, law other than this article requires that the record provide a
14 statement to the effect that the rights of an assignee are subject to
15 claims or defenses that the account debtor could assert against the
16 original obligee, and the record does not include such a statement:
17 (1) the record has the same effect as if the record included such a
18 statement; and
19 (2) the account debtor may assert against an assignee those claims and
20 defenses that would have been available if the record included such a
21 statement.
22 (e) Rules for individual under other law. This section is subject to
23 law other than this article which establishes a different rule for an
24 account debtor who is an individual and who incurred the obligation
25 primarily for personal, family or household purposes.
26 (f) Other law not displaced. Except as otherwise provided in
27 subsection (d), this section does not displace law other than this arti-
150 12020-01-1
1 cle which gives effect to an agreement by an account debtor not to
2 assert a claim or defense against an assignee.
3 Section 9--404. Rights Acquired by Assignee; Claims and Defenses Against
4 Assignee.
5 (a) Assignee's rights subject to terms, claims, and defenses;
6 exceptions. Unless an account debtor has made an enforceable agreement
7 not to assert defenses or claims, and subject to subsections (b) through
8 (e), the rights of an assignee are subject to:
9 (1) all terms of the agreement between the account debtor and assignor
10 and any defense or claim in recoupment arising from the transaction that
11 gave rise to the contract; and
12 (2) any other defense or claim of the account debtor against the
13 assignor which accrues before the account debtor receives a notification
14 of the assignment authenticated by the assignor or the assignee.
15 (b) Account debtor's claim reduces amount owed to assignee. Subject
16 to subsection (c) and except as otherwise provided in subsection (d),
17 the claim of an account debtor against an assignor may be asserted
18 against an assignee under subsection (a) only to reduce the amount the
19 account debtor owes.
20 (c) Rules for individual under other law. This section is subject to
21 law other than this article which establishes a different rule for an
22 account debtor who is an individual and who incurred the obligation
23 primarily for personal, family or household purposes.
24 (d) Omission of required statement in consumer transactions. In a
25 consumer transaction, if a record evidences the account debtor's obli-
26 gation, law other than this article requires that the record provide a
27 statement to the effect that the account debtor's recovery against an
28 assignee with respect to claims and defenses against the assignor may
151 12020-01-1
1 not exceed amounts paid by the account debtor under the record, and the
2 record does not provide such a statement, the extent to which a claim of
3 an account debtor against the assignor may be asserted against an assig-
4 nee is determined as if the record provided such a statement.
5 (e) Inapplicability to health care insurance receivables. This
6 section does not apply to an assignment of a health care insurance
7 receivable.
8 Section 9--405. Modification of Assigned Contract.
9 (a) Effect of modification on assignee. A modification of or substi-
10 tution for an assigned contract is effective against an assignee if made
11 in good faith. The assignee acquires corresponding rights under the
12 modified or substituted contract. The assignment may provide that the
13 modification or substitution is a breach of contract by the assignor.
14 This subsection is subject to subsections (b) through (d).
15 (b) Applicability of subsection (a). Subsection (a) applies to the
16 extent that:
17 (1) the right to payment or a part thereof under an assigned contract
18 has not been fully earned by performance; or
19 (2) the right to payment or a part thereof has been fully earned by
20 performance and the account debtor has not received notification of the
21 assignment under Section 9--406(a).
22 (c) Rule for individual under other law. This section is subject to
23 law other than this article which establishes a different rule for an
24 account debtor who is an individual and who incurred the obligation
25 primarily for personal, family, or household purposes.
26 (d) In applicability to health care insurance receivables. This
27 section does not apply to an assignment of a health care insurance
28 receivable.
152 12020-01-1
1 Section 9--406. Discharge of Account Debtor; Notification of Assignment;
2 Identification and Proof of Assignment; Restrictions
3 on Assignment of Accounts, Chattel Paper, Payment
4 Intangibles and Promissory Notes Ineffective.
5 (a) Discharge of account debtor; effect of notification. Subject to
6 subsections (b) through (i), an account debtor on an account, chattel
7 paper or a payment intangible may discharge its obligation by paying the
8 assignor until, but not after, the account debtor receives a notifica-
9 tion, authenticated by the assignor or the assignee, that the amount due
10 or to become due has been assigned and that payment is to be made to the
11 assignee. After receipt of the notification, the account debtor may
12 discharge its obligation by paying the assignee and may not discharge
13 the obligation by paying the assignor.
14 (b) When notification ineffective. Subject to subsection (h), notifi-
15 cation is ineffective under subsection (a):
16 (1) if it does not reasonably identify the rights assigned;
17 (2) to the extent that an agreement between an account debtor and a
18 seller of a payment intangible limits the account debtor's duty to pay a
19 person other than the seller and the limitation is effective under law
20 other than this article; or
21 (3) at the option of an account debtor, if the notification notifies
22 the account debtor to make less than the full amount of any installment
23 or other periodic payment to the assignee, even if:
24 (A) only a portion of the account, chattel paper or general intangible
25 has been assigned to that assignee;
26 (B) a portion has been assigned to another assignee; or
27 (C) the account debtor knows that the assignment to that assignee is
28 limited.
153 12020-01-1
1 (c) Proof of assignment. Subject to subsection (h), if requested by
2 the account debtor, an assignee shall reasonably furnish reasonable
3 proof that the assignment has been made. Unless the assignee complies,
4 the account debtor may discharge its obligation by paying the assignor,
5 even if the account debtor has received a notification under subsection
6 (a).
7 (d) Term restricting assignment generally ineffective. Except as
8 otherwise provided in subsection (e) and Sections 2-A-303 and 9--407,
9 and subject to subsection (h), a term in an agreement between an account
10 debtor and an assignor or in a promissory note is ineffective to the
11 extent that it:
12 (1) prohibits, restricts or requires the consent of the account debtor
13 or person obligated on the promissory note to the assignment or transfer
14 of, or the creation, attachment, perfection or enforcement of a security
15 interest in, an account, chattel paper, payment intangible or promissory
16 note; or
17 (2) provides that the assignment or transfer or the creation, attach-
18 ment, perfection or enforcement of the security interest may give rise
19 to a default, breach, right of recoupment, claim, defense, termination,
20 right of termination or remedy under the account, chattel paper, payment
21 intangible or promissory note.
22 (e) Inapplicability of subsection (d) to certain sales. Subsection
23 (d) does not apply to the sale of a payment intangible or promissory
24 note.
25 (f) Legal restrictions on assignment generally ineffective. Except as
26 otherwise provided in Sections 2-A-303 and 9--407 and subject to
27 subsections (h) and (i), a rule of law, statute or regulation that
28 prohibits, restricts or requires the consent of a government, govern-
154 12020-01-1
1 mental body or official, or account debtor to the assignment or transfer
2 of, or creation of a security interest in, an account or chattel paper
3 is ineffective to the extent that the rule of law, statute or regu-
4 lation:
5 (1) prohibits, restricts or requires the consent of the government,
6 governmental body or official, or account debtor to the assignment or
7 transfer of, or the creation, attachment, perfection, or enforcement of
8 a security interest in the account or chattel paper; or
9 (2) provides that the assignment or transfer or the creation, attach-
10 ment, perfection or enforcement of the security interest may give rise
11 to a default, breach, right or recoupment, claim, defense, termination,
12 right of termination or remedy under the account or chattel paper.
13 (g) Subsection (b)(3) not waivable. Subject to subsection (d), an
14 account debtor may not waive or vary its option under subsection (b)(3).
15 (h) Rule for individual under other law. This section is subject to
16 law other than this article which establishes a different rule for an
17 account debtor who is an individual and who incurred the obligation
18 primarily for personal, family or household purposes.
19 (i) Inapplicability. This section does not apply to:
20 (1) an assignment of a health care insurance receivable to the extent
21 such assignment conflicts with other law or the parties have otherwise
22 agreed in writing that such receivable is non-assignable,
23 (2) a claim or right to receive compensation for injuries or sickness
24 as described in 26 U.S.C. § 104(a) (1), as amended from time to time, or
25 (3) a claim or right to receive benefits under a special needs trust
26 as described in 42 U.S.C. § 1396p (d)(4), as amended from time to time.
27 (j) Section prevails over inconsistent law. Except as otherwise
28 provided in subsection (i), this section prevails over any inconsistent
155 12020-01-1
1 provision of an existing or future statute, rule or regulation of this
2 state unless the provision is contained in a statute of this State,
3 refers expressly to this section and states that the provision prevails
4 over this section.
5 Section 9--407. Restrictions on Creation or Enforcement of Security
6 Interest in Leasehold Interest or in Lessor's Residual
7 Interest.
8 (a) Term restricting assignment generally ineffective. Except as
9 otherwise provided in subsection (b), a term in a lease agreement is
10 ineffective to the extent that it:
11 (1) prohibits, restricts or requires the consent of a party to the
12 lease to the assignment or transfer of, or the creation, attachment,
13 perfection or enforcement of a security interest in, an interest of a
14 party under the lease contract or in the lessor's residual interest in
15 the goods; or
16 (2) provides that the assignment or transfer or the creation, attach-
17 ment, perfection, or enforcement of the security interest may give rise
18 to a default, breach, right of recoupment, claim, defense, termination,
19 right of termination or remedy under the lease.
20 (b) Effectiveness of certain terms. Except as otherwise provided in
21 Section 2-A-303(7), a term described in subsection (a)(2) is effective
22 to the extent that there is:
23 (1) a transfer by the lessee of the lessee's right of possession or
24 use of the goods in violation of the term; or
25 (2) a delegation of a material performance of either party to the
26 lease contract in violation of the term.
27 (c) Security interest not material impairment. The creation, attach-
28 ment, perfection or enforcement of a security interest in the lessor's
156 12020-01-1
1 interest under the lease contract or the lessor's residual interest in
2 the goods is not a transfer that materially impairs the lessee's pros-
3 pect of obtaining return performance by, materially changes the duty of,
4 or materially increases the burden or risk imposed on, the lessee within
5 the purview of Section 2-A-303(4) unless, and then only to the extent
6 that, enforceability actually results in a delegation of material
7 performance of the lessor. Even in that event, the creation, attach-
8 ment, perfection and enforcement of the security interest remain effec-
9 tive.
10 Section 9--408. Restrictions on Assignment of Promissory Notes, Health-
11 Care-Insurance Receivables and Certain General Intan-
12 gibles Ineffective.
13 (a) Term restricting assignment generally ineffective. Except as
14 otherwise provided in subsection (b), a term in a promissory note or in
15 an agreement between an account debtor and a debtor which relates to a
16 health-care-insurance receivable or a general intangible, including a
17 contract, permit, license or franchise, and which term prohibits,
18 restricts or requires the consent of the person obligated on the promis-
19 sory note or the account debtor to, the assignment or transfer of, or
20 creation, attachment or perfection of a security interest in, the prom-
21 issory note, health-care- insurance receivable or general intangible, is
22 ineffective to the extent that the term:
23 (1) would impair the creation, attachment or perfection of a security
24 interest; or
25 (2) provides that the assignment or transfer or the creation, attach-
26 ment or perfection of the security interest may give rise to a default,
27 breach, right of recoupment, claim, defense, termination, right of
157 12020-01-1
1 termination or remedy under the promissory note, health-care-insurance
2 receivables or general intangible.
3 (b) Applicability of subsection (a) to sales of certain rights to
4 payment. Subsection (a) applies to a security interest in a payment
5 intangible or promissory note only if the security interest arises out
6 of a sale of the payment intangible or promissory note.
7 (c) Legal restrictions on assignment generally ineffective. A rule of
8 law, statute or regulation that prohibits, restricts or requires the
9 consent of a government, governmental body or official, person obligated
10 on a promissory note, or account debtor to the assignment or transfer
11 of, or creation of a security interest in, a promissory note, health-
12 care-insurance receivable or general intangible, including a contract,
13 permit, license or franchise between an account debtor and a debtor, is
14 ineffective to the extent that the rule of law, statute or regulation:
15 (1) would impair the creation, attachment or perfection of a security
16 interest; or
17 (2) provides that the assignment or transfer or the creation, attach-
18 ment or perfection of the security interest may give rise to a default,
19 breach, right of recoupment, claim, defense, termination, right of
20 termination or remedy under the promissory note, health-care-insurance
21 receivable or general intangible.
22 (d) Limitation on ineffectiveness under subsections (a) and (c). To
23 the extent that a term in a promissory note or in an agreement between
24 an account debtor and a debtor which relates to a health care insurance
25 receivable or general intangible or a rule of law described in
26 subsection (c) would be effective under law other than this article but
27 is ineffective under subsection (a) or (c), the creation, attachment or
158 12020-01-1
1 perfection of a security interest in the promissory note, health care
2 insurance receivable or general intangible:
3 (1) is not enforceable against the person obligated on the promissory
4 note or the account debtor;
5 (2) does not impose a duty or obligation on the person obligated on
6 the promissory note or the account debtor;
7 (3) does not require the person obligated on the promissory note or
8 the account debtor to recognize the security interest, pay or render
9 performance to the secured party, or accept payment or performance from
10 the secured party;
11 (4) does not entitle the secured party to use or assign the debtor's
12 rights under the promissory note, health care insurance receivable or
13 general intangible, including any related information or materials
14 furnished to the debtor in the transaction giving rise to the promissory
15 note, health care insurance receivable, or general intangible;
16 (5) does not entitle the secured party to use, assign, possess or have
17 access to any trade secrets or confidential information of the person
18 obligated on the promissory note or the account debtor; and
19 (6) does not entitle the secured party to enforce the security inter-
20 est in the promissory note, health care insurance receivable or general
21 intangible.
22 (e) Section prevails over inconsistent law. Except as otherwise
23 provided in subsection (f), this section prevails over any inconsistent
24 provisions of an existing or future statute, rule or regulation of this
25 state unless the provision is contained in a statute of this state,
26 refers expressly to this section and states that the provision prevails
27 over this section.
28 (f) Inapplicability. This section does not apply to:
159 12020-01-1
1 (1) a claim or right to receive compensation for injuries or sickness
2 as described in 26 U.S.C. § 104 (a)(1), as amended from time to time; or
3 (2) a claim or right to receive benefits under a special needs trust
4 as described in 42 U.S.C. § 1396p (d)(4), as amended from time to time.
5 Section 9--409. Restrictions on Assignment of Letter of Credit Rights
6 Ineffective.
7 (a) Term or law restricting assignment generally ineffective. A term
8 in a letter of credit or a rule of law, statute, regulation, custom or
9 practice applicable to the letter of credit which prohibits, restricts
10 or requires the consent of an applicant, issuer or nominated person to a
11 beneficiary's assignment of or creation of a security interest in a
12 letter of credit right is ineffective to the extent that the term or
13 rule of law, statute, regulation, custom or practice:
14 (1) would impair the creation, attachment or perfection of a security
15 interest in the letter of credit right; or
16 (2) provides that the assignment or the creation, attachment or
17 perfection of the security interest may give rise to a default, breach,
18 right of recoupment, claim, defense, termination, right of termination
19 or remedy under the letter of credit right.
20 (b) Limitation on ineffectiveness under subsection (a). To the extent
21 that a term in a letter of credit is ineffective under subsection (a)
22 but would be effective under law other than this article or a custom or
23 practice applicable to the letter of credit, to the transfer of a right
24 to draw or otherwise demand performance under the letter of credit, or
25 to the assignment of a right to proceeds of the letter of credit, the
26 creation, attachment or perfection of a security interest in the letter
27 of credit right:
160 12020-01-1
1 (1) is not enforceable against the applicant, issuer, nominated person
2 or transferee beneficiary;
3 (2) imposes no duties or obligations on the applicant, issuer, nomi-
4 nated person or transferee beneficiary; and
5 (3) does not require the applicant, issuer, nominated person, or
6 transferee beneficiary to recognize the security interest, pay or render
7 performance to the secured party, or accept payment or other performance
8 from the secured party.
9 PART 5
10 FILING OFFICE; CONTENTS AND
11 EFFECTIVENESS OF FINANCING STATEMENT
12 Section 9--501. Filing Office.
13 9--502. Contents of Financing Statement; Record of Mortgage as
14 Financing Statement; Time of Filing Financing State-
15 ment; Contents of Cooperative Addendum.
16 9--503. Name of Debtor and Secured Party.
17 9--504. Indication of Collateral.
18 9--505. Filing and Compliance with Other Statutes and Treaties
19 for Consignments, Leases, Other Bailments and Other
20 Transactions.
21 9--506. Effect of Errors or Omissions.
22 9--507. Effect of Certain Events on Effectiveness of Financing
23 Statement.
24 9--508. Effectiveness of Financing Statement If New Debtor
25 Becomes Bound by Security Agreement.
26 9--509. Persons Entitled to File a Record.
27 9--510. Effectiveness of Filed Record.
28 9--511. Secured Party of Record.
161 12020-01-1
1 9--512. Amendment of Financing Statement.
2 9--513. Termination Statement or Partial Release.
3 9--514. Assignment of Powers of Secured Party of Record.
4 9--515. Duration and Effectiveness of Financing Statement;
5 Effect of Lapsed Financing Statement.
6 9--516. What Constitutes Filing; Effectiveness of Filing.
7 9--517. Effect of Indexing Errors.
8 9--518. Claim Concerning Inaccurate or Wrongfully Filed Record.
9 9--519. Numbering, Maintaining and Indexing Records; Communicat-
10 ing Information Provided in Records.
11 9--520. Acceptance and Refusal to Accept Record.
12 9--521. Uniform Form of Written Financing Statement and, Amend-
13 ment and Cooperative Addendum.
14 9--522. Maintenance and Destruction of Records.
15 9--523. Information from Filing Office; Sale or License of
16 Records.
17 9--524. Delay by Filing Office.
18 9--525. Fees.
19 9--526. Filing Office Rules.
20 Section 9--501. Filing Office.
21 (a) Filing offices. Except as otherwise provided in subsection (b),
22 if the local law of this state governs perfection of a security interest
23 or agricultural lien, the office in which to file a financing statement
24 to perfect the security interest or agricultural lien is:
25 (1) the office designated for the filing or recording of a record of a
26 mortgage on the related real property, if:
27 (A) the collateral is as extracted collateral or timber to be cut; or
162 12020-01-1
1 (B) the financing statement is filed as a fixture filing and the
2 collateral is goods that are or are to become fixtures; or
3 (C) the collateral is a cooperative interest; or
4 (2) the office of secretary of state, in all other cases, including a
5 case in which the collateral is goods that are or are to become fixtures
6 and the financing statement is not filed as a fixture filing.
7 (b) Filing office for transmitting utilities. The office in which to
8 file a financing statement to perfect a security interest in collateral,
9 including fixtures, of a transmitting utility is the office of secretary
10 of state. The financing statement also constitutes a fixture filing as
11 to the collateral indicated in the financing statement which is or is to
12 become fixtures.
13 (c) The term "filing officer" or "recording officer" means the county
14 clerk of the county, except in the counties of Bronx, Kings, New York
15 and Queens where it means the city register in the county; and the term
16 "filing officer" includes the secretary of state where a filing is made
17 in the department of state.
18 Section 9--502. Contents of Financing Statement; Record of Mortgage as
19 Financing Statement; Time of Filing Financing State-
20 ment; Contents of Cooperative Addendum.
21 (a) Sufficiency of financing statement. Subject to subsection (b), a
22 financing statement is sufficient only if it:
23 (1) provides the name of the debtor;
24 (2) provides the name of the secured party or a representative of the
25 secured party;
26 (3) indicates the collateral covered by the financing statement; and
27 (4) in the case of a cooperative interest, indicates the number or
28 other designation and the street address of the cooperative unit.
163 12020-01-1
1 (b) Real-property-related financing statements. Except as otherwise
2 provided in Section 9--501(b), to be sufficient, a financing statement
3 that covers as extracted collateral or timber to be cut, or which is
4 filed as a fixture filing and covers goods that are or are to become
5 fixtures, or unless a cooperative addendum is filed, which covers a
6 cooperative interest, must satisfy subsection (a) and also:
7 (1) indicate that it covers this type of collateral;
8 (2) indicate that it is to be filed for record in the real property
9 records;
10 (3) provide a description of the real property to which the collateral
11 is related to include the location of the real estate by reference to a
12 book and page number in a deed or mortgage index maintained in the coun-
13 ty clerk's office in the county where the property is situate or by
14 street and number and town or city, or, if the real estate is in the
15 city of New York, by county is a sufficient description, except that if
16 the real estate is in the city of New York or counties of Nassau or
17 Onondaga, where the block system of recording or registering and index-
18 ing conveyances is in use, the statement must also specify the block in
19 which the real estate is situated; and
20 (4) if the debtor does not have an interest of record in the real
21 property, provide the name of a record owner.
22 (c) Record of mortgage as financing statement. A record mortgage is
23 effective, from the date of recording as a financing statement filed as
24 a fixture filing or as a financing statement covering as extracted
25 collateral or timber to be cut only if:
26 (1) the record indicates the goods or accounts that it covers;
27 (2) the goods are or are to become fixtures related to the real prop-
28 erty described in the record or the collateral is related to the real
164 12020-01-1
1 property described in the record and is as extracted collateral or
2 timber to be cut;
3 (3) the record satisfies the requirements for a financing statement in
4 this section other than an indication that it is to be filed in the real
5 property records; and
6 (4) the record is recorded.
7 (d) Filing before security agreement or attachment. A financing
8 statement may be filed before a security agreement is made or a security
9 interest otherwise attaches.
10 (e) Contents of Cooperative Addendum. A cooperative addendum is
11 sufficient only if it satisfies subsection (a) and also:
12 (1) if not filed simultaneously with the initial financing statement,
13 identifies, by its file number, the initial financing statement to which
14 the addendum relates;
15 (2) indicates the street address of the cooperative unit;
16 (3) indicates the county in which the cooperative unit is located;
17 (4) indicates the city, town or village in which the cooperative unit
18 is located;
19 (5) indicates the real property tax designation associated with the
20 real property in which the cooperative unit is located as assigned by
21 the local real property tax assessing authority; and
22 (6) indicates the name of the cooperative organization.
23 Section 9--503. Name of Debtor and Secured Party.
24 (a) Sufficiency of debtor's name. A financing statement sufficiently
25 provides the name of the debtor:
26 (1) if the debtor is a registered organization, only if the financing
27 statement provides the name of the debtor indicated on the public record
165 12020-01-1
1 of the debtor's jurisdiction of organization which shows the debtor to
2 have been organized;
3 (2) if the debtor is a decedent's estate, only if the financing state-
4 ment provides the name of the decedent and indicates that the debtor is
5 an estate;
6 (3) if the debtor is a trust or a trustee acting with respect to prop-
7 erty held in trust, only if the financing statement:
8 (A) provides the name specified for the trust in its organic documents
9 or, if no name is specified, provides the name of the settlor and addi-
10 tional information sufficient to distinguish the debtor from other
11 trusts having one or more of the same settlors; and
12 (B) indicates, in the debtor's name or otherwise, that the debtor is a
13 trust or is a trustee acting with respect to property held in trust; and
14 (4) in other cases:
15 (A) if the debtor has a name, only if it provides the individual or
16 organizational name of the debtor; and
17 (B) if the debtor does not have a name, only if it provides the names
18 of the partners, members, associates or other persons comprising the
19 debtor.
20 (b) Additional debtor-related information. A financing statement that
21 provides the name of the debtor in accordance with subsection (a) is not
22 rendered ineffective by the absence of:
23 (1) a trade name or other name of the debtor; or
24 (2) unless required under subsection (a)(4)(B), names of partners,
25 members, associates or other persons comprising the debtor.
26 (c) Debtor's trade name insufficient. A financing statement that
27 provides only the debtor's trade name does not sufficiently provide the
28 name of the debtor.
166 12020-01-1
1 (d) Representative capacity. Failure to indicate the representative
2 capacity of a secured party or representative of a secured party does
3 not affect the sufficiency of a financing statement.
4 (e) Multiple debtors and secured parties. A financing statement may
5 provide the name of more than one debtor and the name of more than one
6 secured party.
7 Section 9--504. Indication of Collateral.
8 A financing statement sufficiently indicates the collateral that it
9 covers if the financing statement provides:
10 (a) a description of the collateral pursuant to Section 9--108; or
11 (b) an indication that the financing statement covers all assets or
12 all personal property.
13 Section 9--505. Filing and Compliance with Other Statutes and Treaties
14 for Consignments, Leases, Other Bailments and Other
15 Transactions.
16 (a) Use of terms other than "debtor" and "secured party". A consig-
17 nor, lessor, or other bailor of goods, a licensor, or a buyer of a
18 payment intangible or promissory note may file a financing statement, or
19 may comply with a statute or treaty described in Section 9--311(a) using
20 the terms "consignor", "consignee", "lessor", "lessee", "bailor",
21 "bailee", "licensor", "licensee", "owner", "registered owner", "buyer",
22 "seller" or words of similar import, instead of the terms "secured
23 party" and "debtor".
24 (b) Effect of financing statement under subsection (a). This part
25 applies to the filing of a financing statement under subsection (a) and,
26 as appropriate, to compliance that is equivalent to filing a financing
27 statement under Section 9--311(b), but the filing or compliance is not
28 of itself a factor in determining whether the collateral secures an
167 12020-01-1
1 obligation. If it is determined for another reason that the collateral
2 secures an obligation, a security interest held by the consignor,
3 lessor, bailor, licensor, owner or buyer which attaches to the collat-
4 eral is perfected by the filing or compliance.
5 Section 9--506. Effect of Errors or Omissions.
6 (a) Minor errors and omissions. A financing statement substantially
7 satisfying the requirements of this part is effective, even if it has
8 minor errors or omissions, unless the errors or omissions make the
9 financing statement seriously misleading.
10 (b) Financing statement seriously misleading. Except as otherwise
11 provided in subsection (c), a financing statement that fails sufficient-
12 ly to provide the name of the debtor in accordance with Section
13 9--503(a) is seriously misleading.
14 (c) Financing statement not seriously misleading. If a search of the
15 records of the filing office under the debtor's correct name, using the
16 filing office's standard search logic, if any, would disclose a financ-
17 ing statement that fails sufficiently to provide the name of the debtor
18 in accordance with Section 9--503(a), the name provided does not make
19 the financing statement seriously misleading.
20 (d) "Debtor's correct name". For purposes of Section 9--508(b), the
21 "debtor's correct name" in subsection (c) means the correct name of the
22 new debtor.
23 Section 9--507. Effect of Certain Events on Effectiveness of Financing
24 Statement.
25 (a) Disposition. A filed financing statement remains effective with
26 respect to collateral that is sold, exchanged, leased, licensed or
27 otherwise disposed of and in which a security interest or agricultural
168 12020-01-1
1 lien continues, even if the secured party knows of or consents to the
2 disposition.
3 (b) Information becoming seriously misleading. Except as otherwise
4 provided in subsection (c) and Section 9--508, a financing statement is
5 not rendered ineffective if, after the financing statement is filed, the
6 information provided in the financing statement becomes seriously
7 misleading under Section 9--506.
8 (c) Changes in debtor's name. If a debtor so changes its name that a
9 filed financing statement becomes seriously misleading under Section
10 9--506:
11 (1) the financing statement is effective to perfect a security inter-
12 est in collateral acquired by the debtor before, or within four months
13 after, the change; and
14 (2) the financing statement is not effective to perfect a security
15 interest in collateral acquired by the debtor more than four months
16 after the change, unless an amendment to the financing statement which
17 renders the financing statement not seriously misleading is filed within
18 four months after the change.
19 Section 9--508. Effectiveness of Financing Statement if New Debtor
20 Becomes Bound by Security Agreement.
21 (a) Except as otherwise provided in this section, a filed financing
22 statement naming an original debtor is effective to perfect a security
23 interest in collateral in which a new debtor has or acquires rights to
24 the extent that the financing statement would have been effective had
25 the original debtor acquired rights in the collateral.
26 (b) Financing statement becoming seriously misleading. If the differ-
27 ence between the name of the original debtor and that of the new debtor
169 12020-01-1
1 causes a filed financing statement that is effective under subsection
2 (a) to be seriously misleading under Section 9--506:
3 (1) the financing statement is effective to perfect a security inter-
4 est in collateral acquired by the new debtor before, and within four
5 months after, the new debtor becomes bound under Section 9--203(d); and
6 (2) the financing statement is not effective to perfect a security
7 interest in collateral acquired by the new debtor more than four months
8 after the new debtor becomes bound under Section 9--203(d) unless an
9 initial financing statement providing the name of the new debtor is
10 filed before the expiration of that time.
11 (c) When section not applicable. This section does not apply to
12 collateral as to which a filed financing statement remains effective
13 against the new debtor under Section 9--507(a).
14 Section 9--509. Persons Entitled to File a Record.
15 (a) Person entitled to file record. A person may file an initial
16 financing statement, amendment that adds collateral covered by a financ-
17 ing statement or amendment that adds a debtor to a financing statement
18 only if:
19 (1) the debtor authorizes the filing in an authenticated record; or
20 (2) the person holds an agricultural lien that has become effective at
21 the time of filing and the financing statement covers only collateral in
22 which the person holds an agricultural lien.
23 (b) Security agreement as authorization. By authenticating or becom-
24 ing bound as debtor by a security agreement, a debtor or new debtor
25 authorizes the filing of an initial financing statement, and an amend-
26 ment, covering:
27 (1) the collateral described in the security agreement; and
170 12020-01-1
1 (2) property that becomes collateral under Section 9--315(a)(2),
2 whether or not the security agreement expressly covers proceeds.
3 (c) Person entitled to file certain amendments. A person may file an
4 amendment other than an amendment that adds collateral covered by a
5 financing statement or an amendment that adds a debtor to a financing
6 statement only if:
7 (1) the secured party of record authorizes the filing; or
8 (2) the amendment is a termination statement for a financing statement
9 as to which the secured party of record has failed to file or send a
10 termination statement as required by Section 9--513(a) or (c), the
11 debtor authorizes the filing and the termination statement indicates
12 that the debtor authorized it to be filed.
13 (d) Multiple secured parties of record. If there is more than one
14 secured party of record for a financing statement, each secured party of
15 record may authorize the filing of an amendment under subsection (c).
16 Section 9--510. Effectiveness of Filed Record.
17 (a) Filed record effective if authorized. A filed record is effective
18 only to the extent that it was filed by a person that may file it under
19 Section 9--509.
20 (b) Authorization by one secured party of record. A record authorized
21 by one secured party of record does not affect the financing statement
22 with respect to another secured party of record.
23 (c) Continuation statement not timely filed. A continuation statement
24 that is not filed within the six-month period prescribed by Section
25 9--515(d) is ineffective.
26 Section 9--511. Secured Party of Record.
27 (a) Secured party of record. A secured party of record with respect
28 to a financing statement is a person whose name is provided as the name
171 12020-01-1
1 of the secured party or a representative of the secured party in an
2 initial financing statement that has been filed. If an initial financ-
3 ing statement is filed under Section 9--514(a), the assignee named in
4 the initial financing statement is the secured party of record with
5 respect to the financing statement.
6 (b) Amendment naming secured party of record. If an amendment of a
7 financing statement which provides the name of a person as a secured
8 party or a representative of a secured party is filed, the person named
9 in the amendment is a secured party of record. If an amendment is filed
10 under Section 9--514(b), the assignee named in the amendment is a
11 secured party of record.
12 (c) Amendment deleting secured party of record. A person remains a
13 secured party of record until the filing of an amendment of the financ-
14 ing statement which deletes the person.
15 Section 9--512. Amendment of Financing Statement.
16 (a) Amendment of information in financing statement. Subject to
17 Section 9--509, a person may add or delete collateral covered by,
18 continue or terminate the effectiveness of, or, subject to subsection
19 (e), otherwise amend the information provided in, a financing statement
20 by filing an amendment that:
21 (1) identifies, by its file number, the initial financing statement to
22 which the amendment relates; and
23 (2) if the amendment relates to an initial financing statement filed
24 or recorded in a filing office described in Section 9--501(a)(1),
25 provides the date and time that the initial financing statement was
26 filed or recorded and the information specified in Section 9--502(b).
172 12020-01-1
1 (b) Period of effectiveness not affected. Except as otherwise
2 provided in Section 9--515, the filing of an amendment does not extend
3 the period of effectiveness of the financing statement.
4 (c) Effectiveness of amendment adding collateral. A financing state-
5 ment that is amended by an amendment that adds collateral is effective
6 as to the added collateral only from the date of the filing of the
7 amendment.
8 (d) Effectiveness of amendment adding debtor. A financing statement
9 that is amended by an amendment that adds a debtor is effective as to
10 the added debtor only from the date of the filing of the amendment.
11 (e) Certain amendments ineffective. An amendment is ineffective to
12 the extent it:
13 (1) purports to delete all debtors and fails to provide the name of a
14 debtor to be covered by the financing statement; or
15 (2) purports to delete all secured parties of record and fails to
16 provide the name of a new secured party of record.
17 Section 9--513. Termination Statement or Partial Release.
18 (a) Consumer goods. A secured party shall cause the secured party of
19 record for a financing statement to file a termination statement for the
20 financing statement if the financing statement covers consumer goods
21 and:
22 (1) there is no obligation secured by the collateral covered by the
23 financing statement and no commitment to make an advance, incur an obli-
24 gation or otherwise give value; or
25 (2) the debtor did not authorize the filing of the initial financing
26 statement.
173 12020-01-1
1 (b) Time for compliance with subsection (a). To comply with
2 subsection (a), a secured party shall cause the secured party of record
3 to file the termination statement:
4 (1) within one month after there is no obligation secured by the
5 collateral covered by the financing statement and no commitment to make
6 an advance, incur an obligation or otherwise give value; or
7 (2) if earlier, within twenty days after the secured party receives an
8 authenticated demand from a debtor.
9 (c) Other collateral. In cases not governed by subsection (a), within
10 twenty days after a secured party receives an authenticated demand from
11 a debtor, the secured party shall cause the secured party of record for
12 a financing statement to send to the debtor a termination statement for
13 the financing statement or file the termination statement in the filing
14 office if:
15 (1) except in the case of a financing statement covering accounts or
16 chattel paper that has been sold or goods that are the subject of a
17 consignment, there is no obligation secured by the collateral covered by
18 the financing statement and no commitment to make an advance, incur an
19 obligation, or otherwise give value;
20 (2) the financing statement covers accounts or chattel paper that has
21 been sold but as to which the account debtor or other person obligated
22 has discharged its obligation;
23 (3) the financing statement covers goods that were the subject of a
24 consignment to the debtor but are not in the debtor's possession; or
25 (4) the debtor did not authorize the filing of the initial financing
26 statement.
27 (d) Effect of filing termination statement. Except as otherwise
28 provided in Section 9--510, upon the filing of a termination statement
174 12020-01-1
1 with the filing office, the financing statement to which the termination
2 statement relates ceases to be effective.
3 (e) Cooperative Interests.
4 (1) "Cooperative interest settlement" means the time and place at
5 which an owner of a cooperative interest transfers the cooperative
6 interest, or refinances or pays off the debt secured by the cooperative
7 interest.
8 (2) Upon an authenticated demand with sufficient notice by a debtor,
9 the secured party shall deliver to a cooperative interest settlement a
10 termination statement or partial release and any component of the coop-
11 erative record of which it took possession, which shall be released to
12 the debtor upon payment of the debt secured by the cooperative interest
13 and the discharge of any obligation of the secured party to make further
14 advances. Unless the secured party has agreed otherwise or the cooper-
15 ative interest settlement takes place at the offices of the secured
16 party, the secured party or its agent shall be entitled to a reasonable
17 fee for attendance at the cooperative interest settlement.
18 (3) Upon payment of the debt secured by a cooperative interest other
19 than at a cooperative interest settlement and the discharge of any obli-
20 gation of the secured party to make further advances, the secured party
21 shall arrange for a termination statement or partial release to be filed
22 within one month of receipt of the payment or discharge of the obli-
23 gation to make further advances, whichever is later, and shall send to
24 the debtor any component of the cooperative record of which it took
25 possession.
26 (f) Effect of filing partial release. Except as otherwise provided in
27 Sections 9--510 and 9--512, upon the filing of a partial release with
28 the filing office, the financing statement will continue to remain
175 12020-01-1
1 effective as to the non-released collateral, but shall cease to be
2 effective as to the released collateral.
3 Section 9--514. Assignment of Powers of Secured Party of Record.
4 (a) Assignment reflected on initial financing statement. Except as
5 otherwise provided in subsection (c), an initial financing statement may
6 reflect an assignment of all of the secured party's power to authorize
7 an amendment to the financing statement by providing the name and mail-
8 ing address of the assignee as the name and address of the secured
9 party.
10 (b) Assignment of filed financing statement. Except as otherwise
11 provided in subsection (c), a secured party of record may assign or
12 record all or part of its power to authorize an amendment to a financing
13 statement by filing in the filing office an amendment of the financing
14 statement which:
15 (1) identifies, by its file number, the initial financing statement to
16 which it relates;
17 (2) provides the name of the assignor; and
18 (3) provides the name and mailing address of the assignee.
19 (c) Assignment of record of mortgage. An assignment of record of a
20 security interest in a fixture covered by a record of a mortgage which
21 is effective as a financing statement filed as a fixture filing under
22 Section 9--502(c) may be made only by an assignment of record of the
23 mortgage in the manner provided by law of this state other than this
24 chapter.
25 Section 9--515. Duration and Effectiveness of Financing Statement;
26 Effect of Lapsed Financing Statement.
176 12020-01-1
1 (a) Five-year effectiveness. Except as otherwise provided in
2 subsections (b), (e), (f), (g) and (h), a filed financing statement is
3 effective for a period of five years after the date of filing.
4 (b) Public finance or manufactured home transaction. Except as other-
5 wise provided in subsections (e), (f), (g) and (h), an initial financing
6 statement filed in connection with a public finance transaction or manu-
7 factured-home transaction is effective for a period of thirty years
8 after the date of filing if it indicates that it is filed in connection
9 with a public finance transaction or manufactured-home transaction.
10 (c) Lapse and continuation of financing statement. The effectiveness
11 of a filed financing statement lapses on the expiration of the period of
12 its effectiveness unless before the lapse a continuation statement is
13 filed pursuant to subsection (d). Upon lapse, a financing statement
14 ceases to be effective and any security interest or agricultural lien
15 that was perfected by the financing statement becomes unperfected,
16 unless the security interest is perfected otherwise. If the security
17 interest or agricultural lien becomes unperfected upon lapse, it is
18 deemed never to have been perfected as against a purchaser of the colla-
19 teral for value.
20 (d) When continuation statement may be filed. A continuation state-
21 ment may be filed only within six months before the expiration of the
22 five-year period specified in subsection (a) or the thirty-year period
23 specified in subsection (b) or the fifty-year period specified in
24 subsection (h), whichever is applicable.
25 (e) Effect of filing continuation statement. Except as otherwise
26 provided in Section 9--510, upon timely filing of a continuation state-
27 ment, the effectiveness of the initial financing statement continues for
28 a period of five years commencing on the day on which the financing
177 12020-01-1
1 statement would have become ineffective in the absence of the filing.
2 Upon the expiration of the five-year period, the financing statement
3 lapses in the same manner as provided in subsection (c), unless, before
4 the lapse, another continuation statement is filed pursuant to
5 subsection (d). Succeeding continuation statements may be filed in the
6 same manner to continue the effectiveness of the initial financing
7 statement.
8 (f) Transmitting utility financing statement. If a debtor is a trans-
9 mitting utility and a filed financing statement so indicates, the
10 financing statement is effective until a termination statement is filed.
11 (g) Record of mortgage as financing statement. A record of a mortgage
12 that is effective as a financing statement filed as a fixture filing
13 under Section 9--502(c) remains effective as a financing statement filed
14 as a fixture filing until the mortgage is released or satisfied of
15 record or its effectiveness otherwise terminates as to the real proper-
16 ty.
17 (h) Cooperative interest transaction. An initial financing statement
18 covering a cooperative interest is effective for a period of fifty years
19 after the date of filing if a cooperative addendum is filed simultane-
20 ously or is later filed before the initial financing statement lapses.
21 Section 9--516. What Constitutes Filing; Effectiveness of Filing.
22 (a) What constitutes filing. Except as otherwise provided in
23 subsection (b), communication of a record to a filing office and tender
24 of the filing fee or acceptance of the record by the filing office
25 constitutes filing.
26 (b) Refusal to accept record; filing does not occur. Filing does not
27 occur with respect to a record that a filing office refuses to accept
28 because:
178 12020-01-1
1 (1) the record is not communicated by a method or medium of communi-
2 cation authorized by the filing office;
3 (2) an amount equal to or greater than the applicable filing fee is
4 not tendered;
5 (3) the filing office is unable to index the record because:
6 (A) in the case of an initial financing statement, the record does not
7 provide a name for the debtor;
8 (B) in the case of an amendment or correction statement, the record:
9 (i) does not identify the initial financing statement as required by
10 Section 9--512 or 9--518, as applicable; or
11 (ii) identifies an initial financing statement whose effectiveness has
12 lapsed under Section 9--515;
13 (C) in the case of an initial financing statement that provides the
14 name of a debtor identified as an individual or an amendment that
15 provides a name of a debtor identified as an individual which was not
16 previously provided in the financing statement to which the record
17 relates, the record does not identify the debtor's last name; or
18 (D) in the case of a record filed in the filing office described in
19 Section 9--501(a)(1), the record does not provide a sufficient
20 description of the real property to which it relates;
21 (4) in the case of an initial financing statement or an amendment that
22 adds a secured party of record, the record does not provide a name and
23 mailing address for the secured party of record;
24 (5) in the case of an initial financing statement or an amendment that
25 provides a name of a debtor which was not previously provided in the
26 financing statement to which the amendment relates, the record does not:
27 (A) provide a mailing address for the debtor;
179 12020-01-1
1 (B) indicate whether the debtor is an individual or an organization;
2 or
3 (C) if the financing statement indicates that the debtor is an organ-
4 ization, provide:
5 (i) a type of organization for the debtor;
6 (ii) a jurisdiction of organization for the debtor; or
7 (iii) an organizational identification number for the debtor or indi-
8 cate that the debtor has none;
9 (6) in the case of an assignment reflected in an initial financing
10 statement under Section 9--514(a) or an amendment filed under Section
11 9--514(b), the record does not provide a name and mailing address for
12 the assignee; or
13 (7) in the case of a continuation statement, the record is not filed
14 within the six-month period prescribed by Section 9--515(d).
15 (c) Rules applicable to subsection (b). For purposes of subsection
16 (b):
17 (1) a record does not provide information if the filing office is
18 unable to read or decipher the information; and
19 (2) a record that does not indicate that it is an amendment or identi-
20 fy an initial financing statement to which it relates, as required by
21 Section 9--512, 9--514 or 9--518, is an initial financing statement.
22 (d) Refusal to accept record; record effective as filed record. A
23 record that is communicated to the filing office with tender of the
24 filing fee, but which the filing office refuses to accept for a reason
25 other than one set forth in subsection (b), is effective as a filed
26 record except as against a purchaser of the collateral which gives value
27 in reasonable reliance upon the absence of the record from the files.
180 12020-01-1
1 (e) Special rule for cooperative interests; record effective as
2 notice. A filed record including a cooperative addendum covering a
3 cooperative interest constitutes notice of the existence of the security
4 interest in the cooperative interest as the date of filing of the coop-
5 erative addendum, except as against a purchaser of the collateral which
6 gives value in reasonable reliance upon the absence of the record from
7 the files.
8 Section 9--517. Effect of Indexing Errors.
9 The failure of the filing office to index a record correctly does not
10 affect the effectiveness of the filed record.
11 Section 9--518. Claim Concerning Inaccurate or Wrongfully Filed Record.
12 (a) Correction statement. A person may file in the filing office a
13 correction statement with respect to a record indexed there under the
14 person's name if the person believes that the record is inaccurate or
15 was wrongfully filed.
16 (b) Sufficiency of correction statement. A correction statement must:
17 (1) identify the record to which it relates by:
18 (A) the file number assigned to the initial financing statement to
19 which the record relates; and
20 (B) if the correction statement relates to a record filed or recorded
21 in a filing office described in Section 9--501(a)(2), the date and time
22 that the initial financing statement was filed or recorded and the
23 information specified in Section 9--502(b);
24 (2) indicate that it is a correction statement; and
25 (3) provide the basis for the person's belief that the record is inac-
26 curate and indicate the manner in which the person believes the record
27 should be amended to cure any inaccuracy or provide the basis for the
28 person's belief that the record was wrongfully filed.
181 12020-01-1
1 (c) Record not affected by correction statement. The filing of a
2 correction statement does not affect the effectiveness of an initial
3 financing statement or other filed record.
4 Section 9--519. Numbering, Maintaining and Indexing Records; Communicat-
5 ing Information Provided in Records.
6 (a) Filing office duties. For each record filed in a filing office,
7 the filing office shall:
8 (1) assign a unique number to the filed record;
9 (2) create a record that bears the number assigned to the filed record
10 and the date and time of filing;
11 (3) maintain the filed record for public inspection; and
12 (4) index the filed record in accordance with subsections (c), (d) and
13 (e).
14 (b) File number. A file number must include a digit that:
15 (1) is mathematically derived from or related to the other digits of
16 the file number; and
17 (2) enables the filing office to detect whether a number communicated
18 as the file number includes a single-digit or transpositional error.
19 (c) Indexing: general. Except as otherwise provided in subsections
20 (d) and (e), the filing office shall:
21 (1) index an initial financing statement according to the name of the
22 debtor and index all filed records relating to the initial financing
23 statement in a manner that associates with one another an initial
24 financing statement and all filed records relating to the initial
25 financing statement; and
26 (2) index a record that provides a name of a debtor which was not
27 previously provided in the financing statement to which the record
28 relates also according to the name that was not previously provided.
182 12020-01-1
1 (d) Indexing: real-property-related financing statement. If a financ-
2 ing statement is filed as a fixture filing or covers as-extracted colla-
3 teral, timber to be cut or a cooperative interest, it must be filed for
4 record and the filing office shall index it:
5 (1) under the names of the debtor and of each owner of record shown on
6 the financing statement as if they were the mortgagors under a mortgage
7 of the real property described; and
8 (2) to the extent that the law of this state provides for indexing of
9 records of mortgages under the name of the mortgagee, under the name of
10 the secured party as if the secured party were the mortgagee thereunder,
11 or, if indexing is by description, as if the financing statement were a
12 mortgage of the real property described.
13 (3) if the real estate is in the City of New York or in Nassau, Onon-
14 daga, or any other county where the block system of recording or regis-
15 tering and indexing conveyances is in use, according to the block in
16 which the real estate is situated; the filing officer may index such
17 statements according to the names of the record owners of the real
18 estate in a single consolidated index installed and maintained by him
19 pursuant to section five hundred twenty-nine of the county law.
20 (e) Indexing: real-property-related assignment. If a financing state-
21 ment is filed as a fixture filing or covers as-extracted collateral,
22 timber to be cut or a cooperative interest, the filing office shall
23 index an assignment filed under Section 9--514(a) or an amendment filed
24 under Section 9--514(b):
25 (1) under the name of the assignor as grantor; and
26 (2) to the extent that the law of this state provides for indexing a
27 record of the assignment of a mortgage under the name of the assignee,
28 under the name of the assignee; and
183 12020-01-1
1 (f) Retrieval and association capability. The filing office shall
2 maintain a capability:
3 (1) to retrieve a record by the name of the debtor and:
4 (A) if the filing office is described in Section 9--501(a)(1), by the
5 file number assigned to the initial financing statement to which the
6 record relates and the date and time that the record was filed or
7 recorded; or
8 (B) if the filing office is described in Section 9--501(a)(2), by the
9 file number assigned to the initial financing statement to which the
10 record relates; and
11 (2) to associate and retrieve with one another an initial financing
12 statement and each filed record relating to the initial financing state-
13 ment; and
14 (3) to retrieve a record by the description of the real property to
15 which the collateral is related.
16 (g) Removal of debtor's name. The filing office may not remove a
17 debtor's name from the index until one year after the effectiveness of a
18 financing statement naming the debtor lapses under Section 9--515 with
19 respect to all secured parties of record.
20 (h) Timeliness of filing office performance. The filing office shall
21 perform the acts required by subsections (a) through (e) at the time and
22 in the manner prescribed by filing office rule, but not later than two
23 business days after the filing office receives the record in question.
24 (i) Subsections (b) and (h) do not apply to a filing office described
25 in Section 9--501(a)(1).
26 Section 9--520. Acceptance and Refusal to Accept Record.
27 (a) Mandatory refusal to accept record. A filing office shall refuse
28 to accept a record for filing for a reason set forth in Section
184 12020-01-1
1 9--516(b) and may refuse to accept a record for filing only for a reason
2 set forth in Section 9--516(b).
3 (b) Communication concerning refusal. If a filing office refuses to
4 accept a record for filing, it shall communicate to the person that
5 presented the record the fact of and reason for the refusal and the date
6 and time the record would have been filed had the filing office accepted
7 it. The communication must be made at the time and in the manner
8 prescribed by filing office rule but in the case of a filing office
9 described in Section 9--501(a)(2), in no event more than two business
10 days after the filing office receives the record.
11 (c) When filed financing statement effective. A filed financing
12 statement satisfying Section 9--502(a) and (b) is effective, even if the
13 filing office is required to refuse to accept it for filing under
14 subsection (a). However, Section 9--338 applies to a filed financing
15 statement providing information described in Section 9--516(b)(5) which
16 is incorrect at the time the financing statement is filed.
17 Section 9--521. Uniform Form of Written Financing Statement, Amendment
18 and Cooperative Addendum.
19 (a) Initial financing statement form. A filing office that accepts
20 written records may not refuse to accept a written initial or amended
21 financing statement for a reason set forth in Section 9--516(b).
22 (b) Amendment form. A filing office that accepts written records may
23 not refuse to accept an amended financing statement except for a reason
24 set forth in Section 9--516(b).
25 (c) Cooperative Addendum form. A filing office that accepts written
26 records may not refuse to accept a written cooperative addendum except
27 for a reason set forth in Section 9--516(b).
28 Section 9--522. Maintenance and Destruction of Records.
185 12020-01-1
1 (a) Post lapse maintenance and retrieval of information. The filing
2 office shall maintain a record of the information provided in a filed
3 financing statement for at least one year after the effectiveness of the
4 financing statement has lapsed under Section 9--515 with respect to all
5 secured parties of record. The record must be retrievable by using the
6 name of the debtor and:
7 (1) if the record was filed or recorded in the filing office described
8 in Section 9--501(a)(1), by using:
9 (A) the file number assigned to the initial financing statement to
10 which the record relates and the date and time that the record was
11 filed; and
12 (B) in the case of collateral which is a cooperative interest, indi-
13 cates the real property tax designation associated with the real proper-
14 ty in which the cooperative unit is located as assigned by the local
15 real property tax assessing authority; or
16 (2) if the record was filed in the filing office described in Section
17 9--501(a)(2), by using the file number assigned to the initial financing
18 statement to which the record relates.
19 (b) Destruction of written records. Except to the extent that a stat-
20 ute governing disposition of public records provides otherwise, the
21 filing office immediately may destroy any written records evidencing a
22 financing statement. However, if the filing office destroys a written
23 record, it shall maintain another record of the financing statement
24 which complies with subsection (a).
25 Section 9--523. Information from Filing Office; Sale or License of
26 Records.
27 (a) Acknowledgment of filing written record. If a person that files a
28 written record requests an acknowledgment of the filing, the filing
186 12020-01-1
1 office shall send to the person an image of the record showing the
2 number assigned to the record pursuant to Section 9--519(a)(1) and the
3 date and time of the filing of the record. However, if the person
4 furnishes a copy of the record to the filing office, the filing office
5 may instead:
6 (1) note upon the copy the number assigned to the record pursuant to
7 Section 9--519(a)(1) and the date and time of the filing of the record;
8 and
9 (2) send the copy to the person.
10 (b) Acknowledgment of filing other record. If a person files a record
11 other than a written record, the filing office shall communicate to the
12 person an acknowledgment that provides:
13 (1) the information in the record;
14 (2) the number assigned to the record pursuant to Section
15 9--519(a)(1); and
16 (3) the date and time of the filing of the record.
17 (c) Communication of requested information. The filing office shall
18 communicate or otherwise make available in a record the following infor-
19 mation to any person that requests it:
20 (1) whether there is on file on a date and time specified by the
21 filing office, but not a date earlier than three business days before
22 the filing office receives the request, any financing statement that:
23 (A) designates a particular debtor or, if the request so states,
24 designates a particular debtor at the address specified in the request;
25 (B) has not lapsed under Section 9--515 with respect to all secured
26 parties of record;
187 12020-01-1
1 (C) if the request so states, has lapsed under Section 9--515 and a
2 record of which is maintained by the filing office under Section
3 9--522(a); and
4 (D) is filed in the filing office described in Section 9--501(a)(1),
5 if the request indicates the real property tax designation associated
6 with the real property as assigned by the local real property tax
7 assessing authority.
8 (2) the date and time of filing of each financing statement; and
9 (3) the information provided in each financing statement.
10 (d) Medium for communicating information or otherwise making informa-
11 tion available. In complying with its duty under subsection (c), the
12 filing office may communicate information in any medium or otherwise
13 make information available in any medium. However, if requested, the
14 filing office shall communicate information by issuing its written
15 certificate.
16 (e) Timeliness of filing office performance. The filing office,
17 except by a filing office described in Section 9--501(a)(1), shall
18 perform the acts required by subsections (a) through (d) at the time and
19 in the manner prescribed by filing office rule, but not later than two
20 business days after the filing office receives the request.
21 (f) Public availability of records. At least weekly, the secretary of
22 state shall offer to sell or license to the public on a nonexclusive
23 basis, in bulk, copies of all records filed in it under this part, in
24 every medium from time to time available to the filing office.
25 (g) Written Certificate of title insurance, abstract or searching
26 company. A written certificate of a title insurance, abstract or
27 searching company, organized under the laws of this state, or authorized
28 or qualified to do business in this state, setting forth information
188 12020-01-1
1 made available by a filing officer pursuant to subsection (c), when made
2 and certified to by such title insurance, abstract or searching company,
3 may be used in place of, and with the same legal effect as, a written
4 certificate of such filing officer.
5 Section 9--524. Delay by Filing Office.
6 Delay by the filing office beyond a time limit prescribed by this part
7 is excused if:
8 (a) the delay is caused by interruption of communication or computer
9 facilities, war, emergency conditions, failure of equipment, or other
10 circumstances beyond control of the filing office; and
11 (b) the filing office exercises reasonable diligence under the circum-
12 stances.
13 Section 9--525. Fees.
14 Initial financing statement; general. Fees for filing and services
15 under this chapter shall be determined in accordance with section nine-
16 ty-six-a of the executive law.
17 Section 9--526. Filing Office Rules.
18 (a) Adoption of filing office rules. The secretary of state shall
19 adopt and publish rules to carry out the provisions of this article.
20 (b) Harmonization of rules. To keep the filing office rules and prac-
21 tices of the filing office in harmony with the rules and practices of
22 filing offices in other jurisdictions that enact substantially this
23 part, and to keep the technology used by the filing office compatible
24 with the technology used by filing offices in other jurisdictions that
25 enact substantially this part, the secretary of state so far as is
26 consistent with the purposes, policies, and provisions of this article,
27 in adopting, amending, and repealing filing office rules shall:
189 12020-01-1
1 (1) consult with filing offices in other jurisdictions that enact
2 substantially this part; and
3 (2) consult the most recent version of the model rules promulgated by
4 the international association of corporate administrators or any succes-
5 sor organization; and
6 (3) take into consideration the rules and practices of, and the tech-
7 nology used by, filing offices in other jurisdictions that enact
8 substantially this part.
9 PART 6
10 DEFAULT
11 Section 9--601. Rights after Default; Judicial Enforcement; Consignor or
12 Buyer of Accounts, Chattel Paper, Payment Intangibles
13 or Promissory Notes.
14 9--602. Waiver and Variance of Rights and Duties.
15 9--603. Agreement on Standards Concerning Rights and Duties.
16 9--604. Procedure if Security Agreement Covers Real Property,
17 Fixtures or Cooperative Interests.
18 9--605. Unknown Debtor or Secondary Obligor.
19 9--606. Time of Default for Agricultural Lien.
20 9--607. Collection and Enforcement by Secured Party.
21 9--608. Application of Proceeds of Collection or Enforcement;
22 Liability for Deficiency and Right to Surplus.
23 9--609. Secured Party's Right to Take Possession after Default.
24 9--610. Disposition of Collateral after Default.
25 9--611. Notification Before Disposition of Collateral.
26 9--612. Timeliness of Notification Before Disposition of Collat-
27 eral.
190 12020-01-1
1 9--613. Contents and Form of Notification Before Disposition of
2 Collateral; General.
3 9--614. Contents and Form of Notification Before Disposition of
4 Collateral; Consumer Goods Transaction.
5 9--615. Application of Proceeds of Disposition; Liability for
6 Deficiency and Right to Surplus.
7 9--616. Explanation of Calculation of Surplus or Deficiency.
8 9--617. Rights of Transferee of Collateral.
9 9--618. Rights and Duties of Certain Secondary Obligors.
10 9--619. Transfer of Record or Legal Title.
11 9--620. Acceptance of Collateral in Full or Partial Satisfaction
12 of Obligation; Compulsory Disposition of Collateral.
13 9--621. Notification of Proposal to Accept Collateral.
14 9--622. Effect of Acceptance of Collateral.
15 9--623. Right to Redeem Collateral.
16 9--624. Waiver.
17 9--625. Remedies for Secured Party's Failure to Comply with
18 Article.
19 9--626. Action in Which Deficiency or Surplus is in Issue.
20 9--627. Determination of Whether Conduct Was Commercially
21 Reasonable.
22 9--628. Nonliability and Limitation on Liability of Secured
23 Party; Liability of Secondary Obligor.
24 Section 9--601. Rights after Default; Judicial Enforcement; Consignor or
25 Buyer of Accounts, Chattel Paper, Payment Intangibles
26 or Promissory Notes.
27 (a) Rights of secured party after default. After default, a secured
28 party has the rights provided in this part and, except as otherwise
191 12020-01-1
1 provided in Section 9--602, those provided by agreement of the parties.
2 A secured party:
3 (1) may reduce a claim to judgment or, except as to a cooperative
4 interest, foreclose or otherwise enforce the claim, security interest,
5 or agricultural lien by any available judicial procedure; and
6 (2) if the collateral is documents, may proceed either as to the docu-
7 ments or as to the goods they cover.
8 (b) Rights and duties of secured party in possession or control. A
9 secured party in possession of collateral or control of collateral under
10 Section 9--104, 9--105, 9--106 or 9--107 has the rights and duties
11 provided in Section 9--207.
12 (c) Rights cumulative; simultaneous exercise. The rights under
13 subsections (a) and (b) are cumulative and may be exercised simultane-
14 ously.
15 (d) Rights of debtor and obligator. Except as otherwise provided in
16 subsection (g) and Section 9--605, after default, a debtor and an obli-
17 gor have the rights provided in this part and by agreement of the
18 parties.
19 (e) Lien of levy after judgment. If a secured party has reduced its
20 claim to judgment, the lien of any levy that may be made upon the colla-
21 teral by virtue of an execution based upon the judgment relates back to
22 the earliest of:
23 (1) the date of perfection of the security interest or agricultural
24 lien in the collateral;
25 (2) the date of filing a financing statement covering the collateral;
26 or
27 (3) any date specified in a statute under which the agricultural lien
28 was created.
192 12020-01-1
1 (f) Execution sale. A sale pursuant to an execution is a foreclosure
2 of the security interest or agricultural lien by judicial procedure
3 within the meaning of this section. A secured party may purchase at the
4 sale and thereafter hold the collateral free of any other requirements
5 of this article.
6 (g) Consignor or buyer of certain rights to payment. Except as other-
7 wise provided in Section 9--607(c), this part imposes no duties upon a
8 secured party that is a consignor or is a buyer of accounts, chattel
9 paper, payment intangibles, or promissory notes.
10 Section 9--602. Waiver and Variance of Rights and Duties.
11 Except as otherwise provided in Section 9--624, to the extent that
12 they give rights to a debtor or obligor and impose duties on a secured
13 party, the debtor or obligor may not waive or vary the rules stated in
14 the following listed sections:
15 (a) Section 9--207(b)(4)(C), which deals with use and operation of the
16 collateral by the secured party;
17 (b) Section 9--210, which deals with requests for an accounting and
18 requests concerning a list of collateral and statement of account.
19 (c) Section 9--607(c), which deals with collection and enforcement of
20 collateral;
21 (d) Sections 9--608(a) and 9--615(c) to the extent that they deal with
22 application or payment of noncash proceeds of collection, enforcement,
23 or disposition;
24 (e) Sections 9--608(a) and 9--615(d) to the extent that they require
25 accounting for or payment of surplus proceeds of collateral;
26 (f) Section 9--609 to the extent that it imposes upon a secured party
27 that takes possession of collateral without judicial process the duty to
28 do so without breach of the peace;
193 12020-01-1
1 (g) Sections 9--610(b), 9--611, 9--613 and 9--614, which deal with
2 disposition of collateral;
3 (h) Section 9--615(f), which deals with calculation of a deficiency or
4 surplus when a disposition is made to the secured party, a person
5 related to the secured party, or a secondary obligor;
6 (i) Section 9--616, which deals with explanation of the calculation of
7 a surplus or deficiency;
8 (j) Section 9--620, 9--621 and 9--622, which deal with acceptance of
9 collateral in satisfaction of obligation;
10 (k) Section 9--623, which deals with redemption of collateral;
11 (l) Section 9--624, which deals with permissible waivers; and
12 (m) Sections 9--625 and 9--626, which deal with the secured party's
13 liability for failure to comply with this article.
14 Section 9--603. Agreement on Standards Concerning Rights and Duties.
15 (a) Agreed standards. The parties may determine by agreement the
16 standards measuring the fulfillment of the rights of a debtor or obligor
17 and the duties of a secured party under a rule stated in Section 9--602
18 if the standards are not manifestly unreasonable.
19 (b) Agreed standards inapplicable to breach of peace. Subsection (a)
20 does not apply to the duty under Section 9--609 to refrain from breach-
21 ing the peace.
22 Section 9--604. Procedure if Security Agreement Covers Real Property,
23 Fixtures or Cooperative Interests.
24 (a) Enforcement: personal and real property. If a security agreement
25 covers both personal and real property, a secured party may proceed:
26 (1) under this part as to the personal property without prejudicing
27 any rights with respect to the real property; or
194 12020-01-1
1 (2) as to both the personal property and the real property in accord-
2 ance with the rights with respect to the real property, in which case
3 the other provisions of this part do not apply.
4 (b) Enforcement: fixtures. Subject to subsection (c), if a security
5 agreement covers goods that are or become fixtures, a secured party may
6 proceed:
7 (1) under this part; or
8 (2) in accordance with the rights with respect to real property, in
9 which case the other provisions of this part do not apply.
10 (c) Removal of fixtures. Subject to the other provisions of this
11 part, if a secured party holding a security interest in fixtures has
12 priority over all owners and encumbrancers of the real property, the
13 secured party, after default, may remove the collateral from the real
14 property.
15 (d) Injury caused by removal. A secured party that removes collateral
16 shall promptly reimburse any encumbrancer or owner of the real property,
17 other than the debtor, for the cost of repair of any physical injury
18 caused by the removal. The secured party need not reimburse the encum-
19 brancer or owner for any diminution in value of the real property caused
20 by the absence of the goods removed or by any necessity of replacing
21 them. A person entitled to reimbursement may refuse permission to
22 remove until the secured party gives adequate assurance for the perform-
23 ance of the obligation to reimburse.
24 (e) Enforcement: cooperative interests. A security interest in a
25 cooperative interest may be enforced only:
26 (1) under this part; or
27 (2) by any available judicial procedure.
28 Section 9--605. Unknown Debtor or Secondary Obligor.
195 12020-01-1
1 A secured party does not owe a duty based on its status as secured
2 party:
3 (a) to a person that is a debtor or obligor unless the secured party
4 knows:
5 (1) that the person is a debtor or obligator;
6 (2) the identity of the person; and
7 (3) how to communicate with the person; or
8 (b) to a secured party or lienholder that has filed a financing state-
9 ment against a person, unless the secured party knows:
10 (1) that the person is a debtor; and
11 (2) the identity of the person.
12 Section 9--606. Time of Default for Agricultural Lien.
13 For purposes of this part, a default occurs in connection with an
14 agricultural lien at the time the secured party becomes entitled to
15 enforce the lien in accordance with the statute under which it was
16 created.
17 Section 9--607. Collection and Enforcement by Secured Party.
18 (a) Collection and enforcement generally. If so agreed, and in any
19 event after default, a secured party:
20 (1) may notify an account debtor or other person obligated on collat-
21 eral to make payment or otherwise render performance to or for the bene-
22 fit of the secured party;
23 (2) may take any proceeds to which the secured party is entitled under
24 Section 9--315;
25 (3) may enforce the obligations of an account debtor or other person
26 obligated on collateral and exercise the rights of the debtor with
27 respect to the obligation of the account debtor or other person obli-
28 gated on collateral to make payment or otherwise render performance to
196 12020-01-1
1 the debtor, and with respect to any property that secures the obli-
2 gations of the account debtor or other person obligated on the collat-
3 eral;
4 (4) if it holds a security interest in a deposit account perfected by
5 control under Section 9--104(a)(1), may apply the balance of the deposit
6 account to the obligation secured by the deposit account; and
7 (5) if it holds a security interest in a deposit account perfected by
8 control under Section 9--104(a)(2) or (3), may instruct the bank to pay
9 the balance of the deposit account to or for the benefit of the secured
10 party.
11 (b) Nonjudicial enforcement of mortgage. If necessary to enable a
12 secured party to exercise under subsection (a)(3) the right of a debtor
13 to enforce mortgage nonjudicially, the secured party may record in the
14 office in which a record of the mortgage is recorded:
15 (1) a copy of the security agreement that creates or provides for a
16 security interest in the obligation secured by the mortgage; and
17 (2) the secured party's sworn affidavit in recordable form stating
18 that:
19 (A) a default has occurred; and
20 (B) the secured party is entitled to enforce the mortgage nonjudicial-
21 ly.
22 (c) Commercially reasonable collection and enforcement. A secured
23 party shall proceed in a commercially reasonable manner if the secured
24 party:
25 (1) undertakes to collect from or enforce an obligation of an account
26 debtor or other person obligated on collateral; and
27 (2) is entitled to charge back uncollected collateral or otherwise to
28 full or limited recourse against the debtor or a secondary obligor.
197 12020-01-1
1 (d) Expenses of collection and enforcement. A secured party may
2 deduct from the collections made pursuant to subsection (c) reasonable
3 expenses of collection and enforcement, including reasonable attorney's
4 fees and legal expenses incurred by the secured party.
5 (e) Duties to secured party not affected. This section does not
6 determine whether an account debtor, bank, or other person obligated on
7 collateral owes a duty to a secured party.
8 Section 9--608. Application of Proceeds of Collection or Enforcement;
9 Liability for Deficiency and Right to Surplus.
10 (a) Application of proceeds, surplus, and deficiency if obligation
11 secured. If a security interest or agricultural lien secures payment or
12 performance of an obligation, the following rules apply:
13 (1) A secured party shall apply or pay over for application the cash
14 proceeds of collection or enforcement under this section in the follow-
15 ing order to:
16 (A) the reasonable expenses of collection and enforcement and, to the
17 extent provided for by agreement and not prohibited by law, reasonable
18 attorney's fees and legal expenses incurred by the secured party;
19 (B) the satisfaction of obligations secured by the security interest
20 or agricultural lien under which the collection or enforcement is made;
21 and
22 (C) the satisfaction of obligations secured by any subordinate securi-
23 ty interest in or other lien on the collateral subject to the security
24 interest or agricultural lien under which the collection or enforcement
25 is made if the secured party receives an authenticated demand for
26 proceeds before distribution of the proceeds is completed.
27 (2) If requested by a secured party, a holder of a subordinate secu-
28 rity interest or other lien shall furnish reasonable proof of the inter-
198 12020-01-1
1 est or lien within a reasonable time. Unless the holder complies, the
2 secured party need not comply with the holder's demand under paragraph
3 (1)(C).
4 (3) A secured party need not apply or pay over for application
5 noncash proceeds of collection and enforcement under this section unless
6 the failure to do so would be commercially unreasonable. A secured
7 party that applies or pays over for application noncash proceeds shall
8 do so in a commercially reasonable manner.
9 (4) A secured party shall account to and pay a debtor for any
10 surplus, and the obligor is liable for any deficiency.
11 (b) No surplus or deficiency in sales of certain rights to payment.
12 If the underlying transaction is a sale of accounts, chattel paper,
13 payment intangibles, or promissory notes, the debtor is not entitled to
14 any surplus, and the obligor is not liable for any deficiency.
15 Section 9--609. Secured Party's Right to Take Possession after Default.
16 (a) Possession; rendering equipment unusable; disposition on debtor's
17 premises. After default, a secured party:
18 (1) may take possession of collateral: and
19 (2) without removal, may render equipment unusable and dispose of
20 collateral on a debtor's premises under Section 9--610.
21 (b) Judicial and nonjudicial process. A secured party may proceed
22 under subsection (a):
23 (1) pursuant to judicial process, or
24 (2) without judicial process, if the proceeds without breach of the
25 peace.
26 (c) Assembly of collateral. If so agreed, and in any event after
27 default, a secured party may require the debtor to assemble the collat-
28 eral and make it available to the secured party at a place to be desig-
199 12020-01-1
1 nated by the secured party which is reasonably convenient to both
2 parties.
3 Section 9--610. Disposition of Collateral after Default.
4 (a) Disposition after default. After default, a secured party after
5 default may sell, lease, license, or otherwise dispose of any or all of
6 the collateral in its present condition or following any commercially
7 reasonable preparation or processing.
8 (b) Commercially reasonable disposition. Every aspect of a disposi-
9 tion of collateral, including the method, manner, time, place, and other
10 terms, must be commercially reasonable. If commercially reasonable, a
11 secured party may dispose of collateral by public or private
12 proceedings, by one or more contracts, as a unit or in parcels, and at
13 any time and place and on any terms.
14 (c) Purchase of secured party. A secured party may purchase collat-
15 eral:
16 (1) at a public disposition; or
17 (2) at a private disposition only if the collateral is of a kind that
18 is customarily sold on a recognized market or the subject of widely
19 distributed standard price quotations.
20 (d) Warranties on disposition. A contract for sale, lease, license or
21 other disposition includes the warranties relating to title, possession,
22 quiet enjoyment, and the like which by operation of law accompany a
23 voluntary disposition of property of the kind subject to the contract.
24 (e) Disclaimer of warranties. A secured party may disclaim or modify
25 warranties under subsection (d):
26 (1) in a manner that would be effective to disclaim or modify the
27 warranties in a voluntary disposition of property of the kind subject to
28 the contract of disposition; or
200 12020-01-1
1 (2) by communicating to the purchaser a record evidencing the contract
2 for disposition and including an express disclaimer or modification of
3 the warranties.
4 (f) Record sufficient to disclaim warranties. A record is sufficient
5 to disclaim warranties under subsection (e) if it indicates "There is no
6 warranty relating to title, possession, quiet enjoyment, or the like in
7 this disposition" or uses words of similar import.
8 Section 9--611. Notification Before Disposition of Collateral.
9 (a) Notification Date. In this section, "notification date" means the
10 earlier of the date on which:
11 (1) a secured party sends to the debtor and any secondary obligor an
12 authenticated notification of disposition; or
13 (2) the debtor and any secondary obligor waive the right to notifica-
14 tion.
15 (b) Notification of disposition required. Except as otherwise
16 provided in subsection (d), a secured party that disposes of collateral
17 under Section 9--610 shall send to the persons specified in subsection
18 (c) a reasonable authenticated notification of disposition.
19 (c) Persons to be notified. To comply with subsection (b), the
20 secured party shall send an authenticated notification of disposition
21 to:
22 (1) the debtor;
23 (2) any secondary obligor; and
24 (3) if the collateral is other than consumer goods:
25 (A) any other person from which the secured party has received, before
26 the notification date, an authenticated notification of a claim of an
27 interest in the collateral;
201 12020-01-1
1 (B) any other secured party or lienholder that, ten days before the
2 notification date, held a security interest in or other lien on the
3 collateral perfected by the filing of a financing statement that
4 (i) identified the collateral;
5 (ii) was indexed under the debtor's name as of that date; and
6 (iii) was filed in the office in which to file a financing statement
7 against the debtor covering the collateral as of that date; and
8 (C) any other secured party that, ten days before the notification
9 date, held a security interest in the collateral perfected by compliance
10 with a statute, regulation, or treaty described in Section 9--311(a).
11 (d) Subsection (b) inapplicable: perishable collateral; recognized
12 market. Subsection (b) does not apply if the collateral is perishable
13 or threatens to decline speedily in value or is of a type customarily
14 sold on a recognized market.
15 (e) Compliance with subsection (c)(3)(B). A secured party complies
16 with the requirement for notification prescribed by subsection (c)(3)(B)
17 if:
18 (1) not later than twenty days or earlier than thirty days before the
19 notification date, the secured party requests, in a commercially reason-
20 able manner, information concerning financing statements indexed under
21 the debtor's name in the office indicated in subsection (c)(3)(B); and:
22 (2) before the notification date, the secured party:
23 (A) did not receive a response to the request for information; or
24 (B) received a response to the request for information and sent an
25 authenticated notification of disposition to each secured party named in
26 that response whose financing statement covered the collateral.
27 Section 9--612. Timeliness of Notification Before Disposition of Collat-
28 eral.
202 12020-01-1
1 (a) Reasonable time is question of fact. Except as otherwise provided
2 in subsection (b), whether a notification is sent within a reasonable
3 time is a question of fact.
4 (b) Ten-day period sufficient in non-consumer transaction. In a tran-
5 saction other than a consumer transaction, a notification of disposition
6 sent after default and ten days or more before the earliest time of
7 disposition set forth in the notification is sent within a reasonable
8 time before the disposition.
9 Section 9--613. Contents and Form of Notification Before Disposition of
10 Collateral: General.
11 Except in a consumer goods transaction, the following rules apply:
12 (a) The contents of a notification of disposition are sufficient if
13 the notification:
14 (1) describes the debtor and the secured party;
15 (2) describes the collateral that is the subject of the intended
16 disposition;
17 (3) states the method of intended disposition;
18 (4) states that the debtor is entitled to an accounting of the unpaid
19 indebtedness and states the charge, if any for an accounting; and
20 (5) states the time and place of a public sale or the time after which
21 any other disposition is to be made.
22 (b) Whether the contents of a notification that lacks any of the
23 information prescribed in subsection (a) are nevertheless sufficient is
24 a question of fact.
25 (c) The contents of a notification providing substantially the infor-
26 mation specified in subsection (a) are sufficient, even if the notifica-
27 tion includes:
28 (1) information not specified by subsection (a); or
203 12020-01-1
1 (2) minor errors that are not seriously misleading.
2 (d) A particular phrasing of the notification is not required.
3 (e) The following form of notification and the form appearing in
4 Section 9--614(c), when completed, each provides sufficient information:
5 Notification of Disposition of Collateral
6 To: (Name of debtor, obligor, or other person to which the notifica-
7 tion is sent)
8 From: (Name, address, and telephone number of secured party)
9 Name of Debtor(s):
10 (Include only if debtor(s) are not an addressee)
11 (For a public disposition:)
12 We will sell (or lease or license, as applicable) the (describe
13 collateral) (to the highest qualified bidder) in public as follows:
14 Day and Date:
15 Time: ________________________________________________________________
16 Place: _______________________________________________________________
17 (For a private disposition:)
18 We will sell (or lease or license, as applicable) the (describe
19 collateral) privately sometime after (day and date) .
20 You are entitled to an accounting of the unpaid indebtedness secured
21 by the property that we intend to sell (or lease or license, as applica-
22 ble) (for a charge of $ ). You may request an accounting
23 by calling us at
24 (telephone number)
25 Section 9--614. Contents and Form of Notification Before Disposition of
26 Collateral; Consumer Goods Transaction.
27 In a consumer goods transaction, the following rules apply:
204 12020-01-1
1 (a) A notification of disposition must provide the following informa-
2 tion:
3 (1) the information specified in Section 9--613(a)(1);
4 (2) a description of any liability for a deficiency of the person to
5 which the notification is sent;
6 (3) a telephone number from which the amount that must be paid to the
7 secured party to redeem the collateral under Section 9--623 is avail-
8 able; and
9 (4) a telephone number or mailing address from which additional infor-
10 mation concerning the disposition and the obligation secured is avail-
11 able.
12 (b) A particular phrasing of the notification is not required.
13 (c) The following form of notification, when completed, provides
14 sufficient information:
15 (Name and address of secured party)
16 (Date)
17 Notice of Our Plan to Sell Property
18 (Name and address of any obligor who is also a debtor)
19 Subject: (Identification of Transaction)
20 We have your (describe collateral) , because you broke prom-
21 ises in our agreement.
22 (For a public disposition:)
23 We will sell (describe collateral) at public sale. A sale
24 could include a lease or license. The sale will be held as follows:
25 Date: ________________________________________________________________
26 Time: ________________________________________________________________
27 Place: _______________________________________________________________
28 You may attend the sale and bring bidders if you want.
205 12020-01-1
1 (For a private disposition:)
2 We will sell (describe collateral) at private sale sometime
3 after (date) . A sale could include a lease or license.
4 The money that we get from the sale (after paying our costs) will
5 reduce the amount you owe. If we get less money than you owe,
6 you (will or will not, as applicable) still owe us the differ-
7 ence. If we get more money than you owe, you will get the extra money,
8 unless we must pay it to someone else.
9 You can get the property back at any time before we sell it by paying
10 us the full amount you owe (not just the past due payments), including
11 our expenses. To learn the exact amount you must pay, call us at (tele-
12 phone number) .
13 If you want us to explain to you in writing how we have figured the
14 amount that you owe us, you may call us at (telephone number) (or
15 write us at (secured party's address) ) and request a written
16 explanation. (We will charge you $ for the explanation if we
17 sent you another written explanation of the amount you owe us within the
18 last six months.)
19 If you need more information about the sale call us at (telephone
20 number) (or write us at (secured party's address) ).
21 We are sending this notice to the following other people who have an
22 interest in (describe collateral) or who owe money under your
23 agreement:
24 (Names of all other debtors and obligors, if any)
25 (d) A notification in the form of subsection (c) is sufficient, even
26 if additional information appears at the end of the form.
27 (e) A notification in the form of subsection (c) is sufficient, even
28 if it includes errors in information not required by subsection (a),
206 12020-01-1
1 unless the error is misleading with respect to rights arising under this
2 article.
3 (f) If a notification under this section is not in the form of
4 subsection (c), law other than this article determines the effect of
5 including information not required by subsection (a).
6 Section 9--615. Application of Proceeds of Disposition; Liability for
7 Deficiency and Right to Surplus.
8 (a) Application of proceeds. A secured party shall apply or pay over
9 for application the cash proceeds of disposition under Section 9--610 in
10 the following order to:
11 (1) in the case of a cooperative organization security interest; the
12 holder thereof in the amount secured thereby;
13 (2) the reasonable expenses of retaking, holding, preparing for dispo-
14 sition, processing, and disposing, and, to the extent provided for by
15 agreement and not prohibited by law, reasonable attorney's fees and
16 legal expenses incurred by the secured party;
17 (3) the satisfaction of obligations secured by the security interest
18 or agricultural lien under which the disposition is made;
19 (4) the satisfaction of obligations secured by any subordinate securi-
20 ty interest in or other subordinate lien on the collateral if:
21 (A) the secured party receives from the holder of the subordinate
22 security interest or other lien an authenticated demand for proceeds
23 before distribution of the proceeds is completed; and
24 (B) in a case in which a consignor has an interest in the collateral,
25 the subordinate security interest or lien is senior to the interest of
26 the consignor; and
207 12020-01-1
1 (5) a secured party that is a consignor of the collateral if the
2 secured party receives from the consignor an authenticated demand for
3 proceeds before distribution of the proceeds is completed.
4 (b) Proof of subordinate interest. If requested by a secured party, a
5 holder of a subordinate security interest or other lien shall furnish
6 reasonable proof of the interest or lien within a reasonable time.
7 Unless the holder does so, the secured party need not comply with the
8 holder's demand under subsection (a)(3).
9 (c) Application of noncash proceeds. A secured party need not apply
10 or pay over for application noncash proceeds of disposition under this
11 section unless the failure to do so would be commercially unreasonable.
12 A secured party that applies or pays over for application noncash
13 proceeds shall do so in a commercially reasonable manner.
14 (d) Surplus or deficiency if obligation secured. If the security
15 interest under which a disposition is made secures payment or perform-
16 ance of an obligation, after making the payments and applications
17 required by subsection (a) and permitted by subsection (c):
18 (1) unless subsection (a)(4) requires the secured party to apply or
19 pay over cash proceeds to a consignor, the secured party shall account
20 to and pay a debtor for any surplus; and
21 (2) the obligor is liable for any deficiency.
22 (e) No surplus or deficiency in sales of certain rights to payment.
23 If the underlying transaction is a sale of accounts, chattel paper,
24 payment intangibles, or promissory notes:
25 (1) the debtor is not entitled to any surplus; and
26 (2) the obligor is not liable for any deficiency.
27 (f) Calculation of surplus or deficiency in disposition to person
28 related to secured party. The surplus or deficiency following a dispo-
208 12020-01-1
1 sition is calculated based on the amount of proceeds that would have
2 been realized in a disposition complying with this part to a transferee
3 other than the secured party, a person related to the secured party, or
4 a secondary obligor if:
5 (1) the transferee in the disposition is the secured party, a person
6 related to the secured party, or a secondary obligor; and
7 (2) the amount of proceeds of the disposition is significantly below
8 the range of proceeds that a complying disposition to a person other
9 than the secured party, a person related to the secured party, or a
10 secondary obligor would have brought.
11 (g) Cash proceeds received by junior secured party. A secured party
12 that receives cash proceeds of a disposition in good faith and without
13 knowledge that the receipt violates the rights of the holder of a secu-
14 rity interest or other lien that is not subordinate to the security
15 interest or agricultural lien under which the disposition is made:
16 (1) takes the cash proceeds free of the security interest or other
17 lien;
18 (2) is not obligated to apply the proceeds of the disposition to the
19 satisfaction of obligations secured by the security interest or other
20 lien; and
21 (3) is not obligated to account to or pay the holder of the security
22 interest or other lien for any surplus.
23 Section 9--616. Explanation of Calculation of Surplus or Deficiency.
24 (a) Definitions. In this section:
25 (1) "Explanation" means a writing that:
26 (A) states the amount of the surplus or deficiency;
27 (B) provides an explanation in accordance with subsection (c) of how
28 the secured party calculated the surplus or deficiency;
209 12020-01-1
1 (C) states, if applicable, that future debits, credits, charges,
2 including additional credit service charges or interest rebates and
3 expenses may affect the amount of the surplus or deficiency; and
4 (D) provides a telephone number or mailing address from which addi-
5 tional information concerning the transaction is available.
6 (2) "Request" means a record:
7 (A) authenticated by a debtor or consumer obligor;
8 (B) requesting that the recipient provide an explanation; and
9 (C) sent after disposition of the collateral under Section 9--610.
10 (b) Explanation of calculation. In a consumer goods transaction in
11 which the debtor is entitled to a surplus or a consumer obligor is
12 liable for a deficiency under Section 9--615, the secured party shall:
13 (1) send an explanation to the debtor or consumer obligor, as applica-
14 ble, after the disposition and:
15 (A) before or when the secured party accounts to the debtor and pays
16 any surplus or first makes written demand on the consumer obligor after
17 the disposition for payment of the deficiency; and
18 (B) within fourteen days after receipt of a request; or
19 (2) in the case of a consumer obligor who is liable for a deficiency,
20 within fourteen days after receipt of a request, send to the consumer
21 obligor a record waiving the secured party's right to a deficiency.
22 (c) Required information. To comply with subsection (a)(1)(B), a
23 writing must provide the following information in the following order:
24 (1) the aggregate amount of obligations secured by the security inter-
25 est under which the disposition was made, and, if the amount reflects a
26 rebate of unearned interest or credit service charge, an indication of
27 that fact, calculated as of a specified date:
210 12020-01-1
1 (A) if the secured party takes or receives possession of the collat-
2 eral after default, not more than thirty-five days before the secured
3 party takes or receives possession; or
4 (B) if the secured party takes or receives possession of the collat-
5 eral before default or does not take possession of the collateral, not
6 more than thirty-five days before the disposition;
7 (2) the amount of proceeds of the disposition;
8 (3) the aggregate amount of the obligations after deducting the amount
9 of proceeds;
10 (4) the amount, in the aggregate or by type, and types of expenses,
11 including expenses of retaking, holding, preparing for disposition,
12 processing, and disposing of the collateral, and attorney's fees secured
13 by the collateral which are known to the secured party and relate to the
14 current disposition;
15 (5) the amount, in the aggregate or by type, and types of credits,
16 including rebates of interest or credit service charges, to which the
17 obligor is known to be entitled and which are not reflected in the
18 amount in paragraph (1); and
19 (6) the amount of the surplus or deficiency.
20 (d) Substantial compliance. A particular phrasing of the explanation
21 is not required. An explanation complying substantially with the
22 requirements of subsection (a) is sufficient, even if it includes minor
23 errors that are not seriously misleading.
24 (e) Charges for responses. A debtor or consumer obligor is entitled
25 without charge to one response to a request under this section during
26 any six-month period in which the secured party did not send to the
27 debtor or consumer obligor an explanation pursuant to subsection (b)(1).
211 12020-01-1
1 The secured party may require payment of a charge not exceeding twenty-
2 five dollars for each additional response.
3 Section 9--617. Rights of Transferee of Collateral.
4 (a) Effects of disposition. A secured party's disposition of collat-
5 eral after default:
6 (1) transfers to a transferee for value all of the debtor's rights in
7 the collateral;
8 (2) discharges the security interest under which the disposition is
9 made; and
10 (3) discharges any subordinate security interest or other subordinate
11 lien other than liens created under any law of this state that are not
12 discharged.
13 (b) Rights of good faith transferee. A transferee that acts in good
14 faith takes free of the rights and interests described in subsection
15 (a), even if the secured party fails to comply with this article or the
16 requirements of any judicial proceeding.
17 (c) Rights of other transferee. If a transferee does not take free of
18 the rights and interests described in subsection (a), the transferee
19 takes the collateral subject to:
20 (1) the debtor's rights in the collateral;
21 (2) the security interest or agricultural lien under which the dispo-
22 sition is made; and
23 (3) any other security interest or other lien.
24 Section 9--618. Rights and Duties of Certain Secondary Obligors.
25 (a) Rights and duties of secondary obligor. A secondary obligor
26 acquires the rights and becomes obligated to perform the duties of the
27 secured party after the secondary obligor:
212 12020-01-1
1 (1) receives an assignment of a secured obligation from the secured
2 party;
3 (2) receives a transfer of collateral from the secured party and
4 agrees to accept the rights and assume the duties of the secured party;
5 or
6 (3) is subrogated to the rights of a secured party with respect to
7 collateral.
8 (b) Effect of assignment, transfer, or subrogation. An assignment,
9 transfer, or subrogation described in subsection (a):
10 (1) is not a disposition of collateral under Section 9--610; and
11 (2) relieves the secured party of further duties under this article.
12 Section 9--619. Transfer of Record or Legal Title.
13 (a) "Transfer statement". In this section, "transfer statement" means
14 a record authenticated by a secured party stating:
15 (1) that the debtor has defaulted in connection with an obligation
16 secured by specified collateral;
17 (2) that the secured party has exercised its post default remedies
18 with respect to the collateral;
19 (3) that, by reason of the exercise, a transferee has acquired the
20 rights of the debtor in the collateral; and
21 (4) the name and mailing address of the secured party, debtor, and
22 transferee.
23 (b) Effect of transfer statement. A transfer statement entitles the
24 transferee to the transfer of record of all rights of the debtor in the
25 collateral specified in the statement in any official filing, recording,
26 registration or certificate of title system covering the collateral. If
27 a transfer statement is presented with the applicable fee and request
213 12020-01-1
1 form to the official or office responsible for maintaining the system,
2 the official or office shall:
3 (1) accept the transfer statement;
4 (2) promptly amend its records to reflect the transfer; and
5 (3) if applicable, issue a new appropriate certificate of title in the
6 name of the transferee.
7 (c) Transfer not a disposition; no relief of secured party's duties.
8 A transfer of the record or legal title to collateral to a secured party
9 under subsection (b) or otherwise is not of itself a disposition of
10 collateral under this article and does not of itself relieve the secured
11 party of its duties under this article.
12 Section 9--620. Acceptance of Collateral in Full or Partial Satisfaction
13 of Obligation; Compulsory Disposition of Collateral.
14 (a) Conditions to acceptance in satisfaction. Except as otherwise
15 provided in subsection (g), a secured party may accept collateral in
16 full or partial satisfaction of the obligation it secures only if:
17 (1) the debtor consents to the acceptance under subsection (c);
18 (2) the secured party does not receive, within the time set forth in
19 subsection (d), a notification of objection to the proposal authenticat-
20 ed by:
21 (A) a person to which the secured party was required to send a
22 proposal under Section 9--621; or
23 (B) any other person, other than the debtor, holding an interest in
24 the collateral subordinate to the security interest that is the subject
25 of the proposal;
26 (3) if the collateral is consumer goods, the collateral is not in the
27 possession of the debtor when the debtor consents to the acceptance; and
214 12020-01-1
1 (4) subsection (e) does not require the secured party to dispose of
2 the collateral.
3 (b) Purported acceptance ineffective. A purported or apparent accept-
4 ance of collateral under this section is ineffective unless:
5 (1) the secured party consents to the acceptance in an authenticated
6 record or sends a proposal to the debtor; and
7 (2) the conditions of subsection (a) are met.
8 (c) Debtor's consent. For purposes of this section:
9 (1) a debtor consents to an acceptance of collateral in partial satis-
10 faction of the obligation it secures only if the debtor agrees to the
11 terms of the acceptance in a record authenticated after default; and
12 (2) a debtor consents to an acceptance of collateral in full satisfac-
13 tion of the obligation it secures only if the debtor agrees to the terms
14 of the acceptance in a record authenticated after default or the secured
15 party:
16 (A) sends to the debtor after default a proposal that is unconditional
17 or subject only to a condition that collateral not in the possession of
18 the secured party be preserved or maintained;
19 (B) in the proposal, proposes to accept collateral in full satisfac-
20 tion of the obligation it secures; and
21 (C) does not receive a notification of objection authenticated by the
22 debtor within twenty days after the proposal is sent.
23 (d) Effectiveness of notification. To be effective under subsection
24 (a)(2), a notification of objection must be received by the secured
25 party:
26 (1) in the case of a person to which the proposal was sent pursuant to
27 Section 9--621, within twenty days after notification was sent to that
28 person; and
215 12020-01-1
1 (2) in other cases:
2 (A) within twenty days after the last notification was sent pursuant
3 to Section 9--621; or
4 (B) if a notification was not sent, before the debtor consents to the
5 acceptance under subsection (c).
6 (e) Mandatory disposition of consumer goods. A secured party that has
7 taken possession of collateral shall dispose of the collateral pursuant
8 to Section 9--610 within the time specified in subsection (f) if:
9 (1) sixty percent of the cash price has been paid in the case of a
10 purchase-money security interest in consumer goods; or
11 (2) sixty percent of the principal amount of the obligation secured
12 has been paid in the case of a nonpurchase-money security interest in
13 consumer goods.
14 (f) Compliance with mandatory disposition requirements. To comply
15 with subsection (e), the secured party shall dispose of the collateral:
16 (1) within ninety days after taking possession; or
17 (2) within any longer period to which the debtor and all secondary
18 obligors have agreed in an agreement to that effect entered into and
19 authenticated after default.
20 (g) No partial satisfaction in consumer transactions. In a consumer
21 transaction, a secured party may not accept collateral in partial satis-
22 faction of the obligation it secures.
23 Section 9--621. Notification of Proposal to Accept Collateral.
24 (a) Persons to which proposal to be sent. A secured party that
25 desires to accept collateral in full or partial satisfaction of the
26 obligation it secures shall send its proposal to:
216 12020-01-1
1 (1) any person from which the secured party has received, before the
2 debtor consented to the acceptance, an authenticated notification of a
3 claim of an interest in the collateral;
4 (2) any other secured party or lienholder that, ten days before the
5 debtor consented to the acceptance, held a security interest in or other
6 lien on the collateral perfected by the filing of a financing statement
7 that:
8 (A) identified the collateral;
9 (B) was indexed under the debtor's name as of that date; and
10 (C) was filed in the office or offices in which to file a financing
11 statement against the debtor covering the collateral as of that date;
12 and
13 (3) any other secured party that, ten days before the debtor consented
14 to the acceptance, held a security interest in the collateral perfected
15 by compliance with a statute, regulation or treaty described in Section
16 9--311(a).
17 (b) Proposal to be sent to secondary obligor in partial satisfaction.
18 A secured party that desires to accept collateral in partial satisfac-
19 tion of the obligation it secures shall send its proposal to any second-
20 ary obligor in addition to the persons described in subsection (a).
21 Section 9--622. Effect of Acceptance of Collateral.
22 (a) Effect of acceptance. A secured party's acceptance of collateral
23 in full or partial satisfaction of the obligation it secures:
24 (1) discharges the obligation to the extent consented to by the
25 debtor;
26 (2) transfers to the secured party all of a debtor's rights in the
27 collateral;
217 12020-01-1
1 (3) discharges the security interest or agricultural lien that is the
2 subject of the debtor's consent and any subordinate security interest or
3 other subordinate lien; and
4 (4) terminates any other subordinate interest.
5 (b) Discharge of subordinate interest notwithstanding noncompliance.
6 A subordinate interest is discharged or terminated under subsection (a),
7 even if the secured party fails to comply with this article.
8 Section 9--623. Right to Redeem Collateral.
9 (a) Persons that may redeem. A debtor, any secondary obligor, or any
10 other secured party or lienholder may redeem collateral.
11 (b) Requirement for redemption. To redeem collateral, a person shall
12 tender:
13 (1) fulfillment of all obligations secured by the collateral; and
14 (2) the reasonable expenses and attorney's fees described in Section
15 9--615(a)(1).
16 (c) When redemption may occur. A redemption may occur at any time
17 before a secured party:
18 (1) has collected collateral under Section 9--607;
19 (2) has disposed of collateral or entered into a contract for its
20 disposition under Section 9--610; or
21 (3) has accepted collateral in full or partial satisfaction of the
22 obligation it secures under Section 9--622.
23 Section 9--624. Waiver.
24 (a) Waiver of disposition notification. A debtor or secondary obligor
25 may waive the right to notification of disposition of collateral under
26 Section 9--611 only by an agreement to that effect entered into and
27 authenticated after default.
218 12020-01-1
1 (b) Waiver of mandatory disposition. A debtor may waive the right to
2 require disposition of collateral under Section 9--620(e) only by an
3 agreement to that effect entered into and authenticated after default.
4 (c) Waiver of redemption right. Except in a consumer goods trans-
5 action, a debtor or secondary obligator may waive the right to redeem
6 collateral under Section 9--623 only by an agreement to that effect
7 entered into and authenticated after default.
8 Section 9--625. Remedies for Secured Party's Failure to Comply with
9 Article.
10 (a) Judicial orders concerning noncompliance. If it is established
11 that a secured party is not proceeding in accordance with this article,
12 a court may order or restrain collection, enforcement, or disposition of
13 collateral on appropriate terms and conditions.
14 (b) Damages for noncompliance. Subject to subsections (c), (d) and
15 (f), a person is liable for damages in the amount of any loss caused by
16 a failure to comply with this article. Loss caused by a failure to
17 comply with a request under Section 9--210 may include loss resulting
18 from the debtor's inability to obtain, or increased costs of, alterna-
19 tive financing.
20 (c) Persons entitled to recover damages; statutory damages in consumer
21 goods transactions. Except as otherwise provided in Section 9--628:
22 (1) a person that, at the time of the failure, was a debtor, was an
23 obligor, or held a security interest in or other lien on the collateral
24 may recover damages under subsection (b) for its loss; and
25 (2) if the collateral is consumer goods, a person that was a debtor or
26 a secondary obligor at the time a secured party failed to comply with
27 this part may recover for that failure in any event an amount not less
28 than the credit service charge plus ten percent of the principal amount
219 12020-01-1
1 of the obligation or the time-price differential plus ten percent of the
2 cash price.
3 (d) Recovery when deficiency eliminated or reduced. A debtor whose
4 deficiency is eliminated under Section 9--626 may recover damages for
5 the loss of any surplus. However, a debtor or secondary obligor whose
6 deficiency is eliminated or reduced under Section 9--626 may not other-
7 wise recover under subsection (b) for noncompliance with the provisions
8 of this part relating to collection, enforcement, disposition, or
9 acceptance.
10 (e) Statutory damages: noncompliance with specified provisions. In
11 addition to any damages recoverable under subsection (b), the debtor,
12 consumer obligor, or person named as a debtor in a filed record, as
13 applicable, may recover five hundred dollars in each case from a person
14 that:
15 (1) fails to comply with Section 9--208;
16 (2) fails to comply with Section 9--209;
17 (3) files a record that the person is not entitled to file under
18 Section 9--509(a);
19 (4) fails to cause the secured party of record to file or send a
20 termination statement as required by Section 9--513(a) or (c);
21 (5) fails to comply with Section 9--616(b)(1) and whose failure is
22 part of a pattern, or consistent with a practice, of noncompliance; or
23 (6) fails to comply with Section 9--616(b)(2).
24 (f) Statutory damages: compliance with Section 9--210. A debtor or
25 consumer obligor may recover damages under subsection (b) and, in addi-
26 tion, five hundred dollars in each case from a person that, without
27 reasonable cause, fails to comply with a request under Section 9--210.
28 A recipient of a request under Section 9--210 which never claimed an
220 12020-01-1
1 interest in the collateral or obligations that are the subject of a
2 request under that section has a reasonable excuse for failure to comply
3 with the request within the meaning of this subsection.
4 (g) Limitation of security interest: noncompliance with Section
5 9--210. If a secured party fails to comply with a request regarding a
6 list of collateral or a statement of account under Section 9--210, the
7 secured party may claim a security interest only as shown in the state-
8 ment included in the request as against a person that is reasonably
9 misled by the failure.
10 Section 9--626. Action in Which Deficiency or Surplus is in Issue.
11 (a) Applicable rules if amount of deficiency or surplus in issue. In
12 an action arising from a transaction, other than a consumer transaction,
13 in which the amount of a deficiency or surplus is in issue, the follow-
14 ing rules apply:
15 (1) A secured party need not prove compliance with the provisions of
16 this part relating to collection, enforcement, disposition, or accept-
17 ance unless the debtor or a secondary obligor places the secured party's
18 compliance in issue.
19 (2) If the secured party's compliance is placed in issue, the secured
20 party has the burden of establishing that the collection, enforcement,
21 disposition, or acceptance was conducted in accordance with this part.
22 (3) Except as otherwise provided in Section 9--628, if a secured
23 party fails to prove that the collection, enforcement, disposition, or
24 acceptance was conducted in accordance with the provisions of this part
25 relating to collection, enforcement, disposition, or acceptance, the
26 liability of a debtor or a secondary obligor for a deficiency is limited
27 to an amount by which the sum of the secured obligation, expenses, and
28 attorney's fees exceeds the greater of:
221 12020-01-1
1 (A) the proceeds of the collection, enforcement, disposition, or
2 acceptance; or
3 (B) the amount of proceeds that would have been realized had the
4 noncomplying secured party proceeded in accordance with the provisions
5 of this part relating to collection, enforcement, disposition, or
6 acceptance.
7 (4) For purposes of paragraph (3)(B), the amount of proceeds that
8 would have been realized is equal to the sum of the secured obligation,
9 expenses, and attorney's fees unless the secured party proves that the
10 amount is less than that sum.
11 (5) If a deficiency or surplus is calculated under Section 9--615(f),
12 the debtor or obligor has the burden of establishing that the amount of
13 proceeds of the disposition is significantly below the range of prices
14 that a complying disposition to a person other than the secured party, a
15 person related to the secured party, or a secondary obligor would have
16 brought.
17 (b) Non-consumer transactions; no inference. The limitation of the
18 rules in subsection (a) to transactions other than consumer transactions
19 is intended to leave to the court the determination of the proper rules
20 in consumer transactions. The court may not infer from that limitation
21 the nature of the proper rule in consumer transactions and may continue
22 to apply established approaches.
23 Section 9--627. Determination of Whether Conduct Was Commercially
24 Reasonable.
25 (a) Greater amount obtainable under other circumstances; no preclusion
26 of commercial reasonableness. The fact that a greater amount could have
27 been obtained by a collection, enforcement, disposition, or acceptance
28 at a different time or in a different method from that selected by the
222 12020-01-1
1 secured party is not of itself sufficient to preclude the secured party
2 from establishing that the collection, enforcement, disposition, or
3 acceptance was made in a commercially reasonable manner.
4 (b) Dispositions that are commercially reasonable. A disposition of
5 collateral is made in a commercially reasonable manner if the disposi-
6 tion is made:
7 (1) in the usual manner on any recognized market;
8 (2) at the price current in any recognized market at the time of the
9 disposition; or
10 (3) otherwise in conformity with reasonable commercial practices among
11 dealers in the type of property that was the subject of the disposition.
12 (c) Approval by court or on behalf of creditors. A collection,
13 enforcement, disposition, or acceptance is commercially reasonable if it
14 has been approved:
15 (1) in a judicial proceeding;
16 (2) by a bona fide creditors' committee;
17 (3) by a representative of creditors; or
18 (4) by an assignee for the benefit of creditors.
19 (d) Approval under subsection (c) not necessary; absence of approval
20 has no effect. Approval under subsection (c) need not be obtained, and
21 lack of approval does not mean that the collection, enforcement, dispo-
22 sition, or acceptance is not commercially reasonable.
23 Section 9--628. Nonliability and Limitation on Liability of Secured
24 Party; Liability of Secondary Obligor.
25 (a) Limitation of liability of secured party for noncompliance with
26 article. Unless a secured party knows that a person is a debtor or
27 obligor, knows the identity of the person, and knows how to communicate
28 with the person:
223 12020-01-1
1 (1) the secured party is not liable to the person, or to a secured
2 party or lienholder that has filed a financing statement against the
3 person, for failure to comply with this article; and
4 (2) the secured party's failure to comply with this article does not
5 affect the liability of the person for a deficiency.
6 (b) Limitation of liability based on status as secured party. A
7 secured party is not liable because of its status as secured party:
8 (1) to a person that is a debtor or obligor, unless the secured party
9 knows:
10 (A) that the person is a debtor or obligor;
11 (B) the identity of a person; and
12 (C) how to communicate with the person; or
13 (2) to a secured party or lienholder that has filed a financing state-
14 ment against a person, unless the secured party knows:
15 (A) that the person is a debtor; and
16 (B) the identity of the person.
17 (c) Limitation of liability if good faith belief that transaction not
18 a consumer goods transaction or consumer transaction. A secured party
19 is not liable to any person, and a person's liability for a deficiency
20 is not affected, because of any act or omission arising out of the
21 secured party's reasonable belief that a transaction is not a consumer
22 goods transaction or a consumer transaction or that goods are not
23 consumer goods, if the secured party's belief is based on:
24 (1) a debtor's representation concerning the purpose for which collat-
25 eral was to be used, acquired, or held; or
26 (2) an obligor's representation concerning the purpose for which a
27 secured obligation was incurred.
224 12020-01-1
1 (d) Limitation of liability for statutory damages. A secured party is
2 not liable to any person under Section 9--625(c)(2) for its failure to
3 comply with Section 9--616.
4 (e) Limitation of multiple liability for statutory damages. A secured
5 party is not liable under Section 9--625(c)(2) more than once with
6 respect to any one secured obligation.
7 PART 7
8 TRANSITION
9 Section 9--701. Effective Date.
10 9--702. Savings Clause.
11 9--703. Security Interest Perfected Before Effective Date.
12 9--704. Security Interest Unperfected Before Effective Date.
13 9--705. Effectiveness of Action Taken Before Effective Date.
14 9--706. When Initial Financing Statement Suffices to Continue
15 Effectiveness of Financing Statement.
16 9--707. Persons Entitled to File Initial Financing Statement or
17 Continuation Statement.
18 9--708. Priority.
19 Section 9--701. Effective Date.
20 This article takes effect July first, two thousand one.
21 Section 9--702. Savings Clause.
22 (a) Pre-effective date transactions or liens. Except as otherwise
23 provided in this part, this article applies to a transaction or lien
24 within its scope, even if the transaction or lien was entered into or
25 created before this article takes effect.
26 (b) Continuing validity. Except as otherwise provided in subsection
27 (c) and Sections 9--703 through 9--708:
225 12020-01-1
1 (1) transactions and liens that were not governed by former Article 9,
2 were validly entered into or created before this article takes effect,
3 and would be subject to this article if they had been entered into or
4 created after this article takes effect, and the rights, duties, and
5 interests flowing from those transactions and liens remain valid after
6 this article takes effect; and
7 (2) the transactions and liens may be terminated, completed, consum-
8 mated, and enforced as required or permitted by this article or by the
9 law that otherwise would apply if this article had not taken effect.
10 (c) Pre-effective date proceedings. This article does not affect an
11 action, case, or proceeding commenced before this article takes effect.
12 Section 9--703. Security Interest Perfected Before Effective Date.
13 (a) Continuing priority over lien creditor: perfection requirements
14 satisfied. If a security interest is enforceable immediately before this
15 article takes effect and would have priority over the rights of a person
16 that becomes a lien creditor at that time is perfected security interest
17 under this article if, when this article takes effect, the applicable
18 requirements for enforceability and perfection under this article are
19 satisfied without further action.
20 (b) Continuing priority over lien creditor: perfection requirements
21 not satisfied. Except as otherwise provided in Section 9--705 and
22 subsection (c), if, immediately before this article takes effect, a
23 security interest is enforceable and would have priority over the rights
24 of a person that becomes a lien creditor at that time, but the applica-
25 ble requirements for enforceability or perfection under this article are
26 not satisfied when this article takes effect, the security interest:
27 (1) is perfected security interest for one year after this article
28 takes effect;
226 12020-01-1
1 (2) remains enforceable thereafter only if the security interest
2 becomes enforceable under Section 9--203 before the year expires; and
3 (3) remains perfected thereafter only if the applicable requirements
4 for perfection under this article are satisfied before the year expires.
5 (c) Special rule for cooperative interests; perfection requirements
6 not satisfied. If, immediately before this article takes effect, a
7 security interest in a cooperative interest is enforceable and would
8 have priority over the rights of a person that becomes a lien creditor
9 at that time, but the applicable requirements for perfection under this
10 article are not satisfied when this article takes effect, the security
11 interest:
12 (1) is a perfected security interest for five years after this article
13 takes effect; and
14 (2) remains perfected thereafter only if the application requirements
15 for perfection under this article are satisfied before the five years
16 expire.
17 Section 9--704. Security Interest Unperfected Before Effective Date.
18 A security interest that is enforceable immediately before this arti-
19 cle takes effect but which would be subordinate to the rights of a
20 person that becomes a lien creditor at that time:
21 (a) remains an enforceable security interest for one year after this
22 article takes effect;
23 (b) remains enforceable thereafter if the security interest becomes
24 enforceable under Section 9--203 when this article takes effect or with-
25 in one year thereafter; and
26 (c) becomes perfected:
227 12020-01-1
1 (1) without further action, when this article takes effect if the
2 applicable requirements for perfection under this article are satisfied
3 before or at that time; or
4 (2) when the applicable requirements for perfection are satisfied if
5 the requirements are satisfied after that time.
6 Section 9--705. Effectiveness of Action Taken Before Effective Date.
7 (a) Pre-effective date action; one-year perfection period unless
8 reperfected. If action, other than the filing of a financing statement,
9 is taken before this article takes effect and the action would have
10 resulted in priority of a security interest over the rights of a person
11 that becomes a lien creditor had the security interest become enforcea-
12 ble before this article takes effect, the action is effective to perfect
13 a security interest that attaches under this article within one year
14 after this article takes effect. An attached security interest becomes
15 unperfected one year after this article takes effect unless the security
16 interest becomes a perfected security interest under this article before
17 the expiration of that period.
18 (b) Pre-effective date filing. The filing of a financing statement
19 before this article takes effect is effective to perfect a security
20 interest to the extent the filing would satisfy the applicable require-
21 ments for perfection under this article.
22 (c) Pre-effective date filing in jurisdiction formerly governing
23 perfection. This article does not render ineffective an effective
24 financing statement that, before this article takes effect, is filed and
25 satisfies the applicable requirements for perfection under the law of
26 the jurisdiction governing perfection as provided in former Section
27 9--103. However, except as otherwise provided in subsections (d) and
228 12020-01-1
1 (e) and Section 9--706, the financing statement ceases to be effective
2 at the earlier of:
3 (1) the time the financing statement would have ceased to be effective
4 under the law of the jurisdiction in which it is filed; or
5 (2) June thirtieth, two thousand six.
6 (d) Continuation statement. The filing of a continuation statement
7 filed after this article takes effect does not continue the effective-
8 ness of the financing statement filed before this article takes effect.
9 However, upon the timely filing of a continuation statement after this
10 article takes effect and in accordance with the law of the jurisdiction
11 governing perfection as provided in Part 3, the effectiveness of a
12 financing statement filed in the same office in that jurisdiction before
13 this article takes effect continues for the period provided by that
14 jurisdiction.
15 (e) Application of subsection (c)(2) to transmitting utility financing
16 statement. Subsection (c)(2) applies to a financing statement that,
17 before this article takes effect, is filed against a transmitting util-
18 ity and satisfies the applicable requirements for perfection under the
19 law of the jurisdiction governing perfection as provided in former
20 Section 9--103 only to the extent that Part 3 provides that the law of a
21 jurisdiction other than jurisdiction in which the financing statement is
22 filed governs perfection of a security interest in collateral covered by
23 the financing statement.
24 (f) Application of Part 5. A financing statement that includes a
25 financing statement filed before this article takes effect and a contin-
26 uation statement filed after this article takes effect is effective only
27 to the extent that it satisfies the requirement of Part 5 for an initial
28 financing statement.
229 12020-01-1
1 Section 9--706. When Initial Financing Statement Suffices to Continue
2 Effectiveness of Financing Statement.
3 (a) Initial financing statement in lieu of continuation statement.
4 The filing of an initial financing statement in the office specified in
5 Section 9--501 continues the effectiveness of a financing statement
6 filed before this article takes effect if:
7 (1) the filing of an financing statement in that office would be
8 effective to perfect a security interest under this article;
9 (2) the pre-effective date financing statement was filed in an office
10 in another state or another office in this State; and
11 (3) the initial financing statement satisfies subsection (c).
12 (b) Period of continued effectiveness. The filing of an initial
13 financing statement under subsection (a) continues the effectiveness of
14 the pre-effective date financing statement:
15 (1) if the initial financing statement is filed before this article
16 takes effect, for the period provided in former Section 9--403 with
17 respect to a financing statement; and
18 (2) if the initial financing statement is filed after this article
19 takes effect, for the period provided in Section 9--515 with respect to
20 an initial financing statement.
21 (c) Requirements for initial financing statement under subsection (a).
22 To be effective for purposes of subsection (a), an initial financing
23 statement must:
24 (1) satisfy the requirements of Part 5 for an initial financing state-
25 ment;
26 (2) identify the pre-effective date financing statement by indicating
27 the office in which the financing statement was filed and providing the
28 dates of filing and file numbers, if any, of the financing statement and
230 12020-01-1
1 of the most recent continuation statement filed with respect to the
2 financing statement; and
3 (3) indicate that the pre-effective date financing statement remains
4 effective.
5 Section 9--707. Persons Entitled to File Initial Financing Statement or
6 Continuation Statement.
7 A person may file an initial financing statement or a continuation
8 statement under this part if:
9 (a) the secured party of record authorizes the filing; and
10 (b) the filing is necessary under this part:
11 (1) to continue the effectiveness of a financing statement filed
12 before this article takes effect; or
13 (2) to perfect or continue the perfection of a security interest.
14 Section 9--708. Priority.
15 (a) Law governing priority. This article determines the priority of
16 conflicting claims to collateral. However, if the relative priorities
17 of the claims were established before this article takes effect, former
18 Article 9 determines priority.
19 (b) Priority if security interests become enforceable under Section
20 9--203. For purposes of Section 9--322(a), the priority of a security
21 interest that becomes enforceable under Section 9--203 of this article,
22 dates from the time this article takes effect if the security interest
23 is perfected under this article by the filing of a financing statement
24 before this article takes effect which would not have been effective to
25 perfect the security interest under former Article 9. This subsection
26 does not apply to conflicting security interests each of which is
27 perfected by the filing of such a financing statement.
231 12020-01-1
1 § 36. Rule 4525 of the civil practice law and rules, as added by chap-
2 ter 729 of the laws of 1965, is amended to read as follows:
3 Rule 4525. Copies of statements under article nine of the uniform
4 commercial code. A copy of a statement which is noted or certified by a
5 filing officer pursuant to section 9-407 (1) 9--523 of the uniform
6 commercial code and which states that the copy is a true copy is prima
7 facie evidence of the facts stated in the notation or certification and
8 that the copy is a true copy of a statement filed in the office of the
9 filing officer.
10 § 37. Subdivision (b) of section 5234 of the civil practice law and
11 rules, as amended by chapter 59 of the laws of 1993 and such section as
12 renumbered by chapter 315 of the laws of 1962, is amended to read as
13 follows:
14 (b) Priority among execution creditors. Where two or more executions
15 or orders of attachment are issued against the same judgment debtor or
16 obligor and delivered to the same enforcement officer or issued by the
17 support collection unit designated by the appropriate social services
18 district, they shall be satisfied out of the proceeds of personal prop-
19 erty or debt levied upon by the officer or by the support collection
20 unit in the order in which they were delivered, such executions for
21 child support shall have priority over any other assignment, levy or
22 process. Where two or more executions or orders of attachment are issued
23 against the same judgment debtor or obligor and delivered to different
24 enforcement officers, and personal property or debt is levied upon with-
25 in the jurisdiction of all of the officers, the proceeds shall be first
26 applied in satisfaction of the execution or order of attachment deliv-
27 ered to the officer who levied, and thereafter shall be applied in
28 satisfaction of the executions or orders of attachment delivered to
232 12020-01-1
1 those of the other officers who, before the proceeds are distributed,
2 make a demand upon the officer who levied, in the order of such demands,
3 except that such executions for child support shall have priority over
4 any other assignment, levy or process. Where there is more than one
5 past-due child support order, the proceeds shall be applied to the
6 orders in proportion to the amount each order's claim bears to the
7 combined total. Nothing herein shall be deemed to defeat or impair the
8 rights of any secured party as such term is defined in paragraph (m)
9 seventy-two of subsection one (a) of section 9-105 9-102 of the
10 uniform commercial code. An execution or order of attachment returned by
11 an officer before a levy or delivered to him after the proceeds of the
12 levy have been distributed shall not be satisfied out of those proceeds.
13 § 38. Paragraph (a) of section 13-2.2 of the estates, powers and
14 trusts law, as amended by chapter 686 of the laws of 1967, is amended to
15 read as follows:
16 (a) Every conveyance, assignment or other transfer of, and every mort-
17 gage, security interest in or other charge upon the interest, situated
18 in this state, of a person in the estate of a decedent, which is situ-
19 ated in this state, shall be in writing and acknowledged or proved in
20 the manner prescribed by the laws of this state for the recording of a
21 conveyance of real property. Any such instrument may be recorded as
22 hereinafter provided, and if not so recorded, it is void against any
23 subsequent purchaser or mortgagee of such interest, in good faith and
24 for valuable consideration, whose conveyance or mortgage is first duly
25 recorded. If such interest is entirely in the personal property of a
26 decedent, the conveyance or mortgage may be recorded in the office of
27 the surrogate granting letters on such decedent's estate or, if no such
28 letters have been granted, in the office of the surrogate having juris-
233 12020-01-1
1 diction to grant them. If a security interest, subject to article 9 of
2 the uniform commercial code, is created by a transaction described in
3 this paragraph, a financing statement shall be filed as required by
4 section 9-401 9-526 of such code. If such interest is in both the
5 personal and the real property of a decedent, the conveyance or mortgage
6 may be recorded in the office of such surrogate and in the office of the
7 recording official of the county in which the real property is situated
8 and, if a security interest in personal property is created, a financing
9 statement shall be filed in accordance with section 9-401 of the uniform
10 commercial code. Such a conveyance or mortgage, when so recorded, shall
11 be indexed under the name of the decedent in a book to be kept for that
12 purpose by each recording officer.
13 § 39. Section 25 of the general business law, as amended by chapter
14 552 of the laws of 1962, is amended to read as follows:
15 § 25. Records to be kept by auctioneers. Every auctioneer or person
16 engaged in the business of selling goods at auction, whether acting in
17 his own behalf or as the officer, agent or representative of another,
18 shall, upon the receipt or acceptance by him of any goods for the
19 purpose of sale at auction, and before offering the same or any part
20 thereof for sale at auction, write or cause to be written in a book to
21 be kept by him for the purpose, the name and address of the person who
22 employed him to sell such goods at auction, the name and address of the
23 person for whose benefit, behalf or account such goods are to be sold at
24 auction; the name and address of the person from whom such auctioneer
25 received or accepted such goods; the name and address of the person who
26 was the owner, the authorized agent of the owner or the consignor of
27 such goods immediately prior to the receipt or acceptance for the
28 purpose of sale at auction of the same by such auctioneer; the location,
234 12020-01-1
1 with street and number, if any, of such goods immediately prior to the
2 receipt or acceptance of the same by such auctioneer for the purpose of
3 sale at auction; the date of the receipt or acceptance by such auctio-
4 neer of such goods for the purpose of sale at auction; the place, with
5 street and number, if any, in which such goods are to be held, kept or
6 stored until sold or offered for sale at auction; the place, with street
7 and number, if any, in which such goods are to be sold or offered for
8 sale at auction; a description of such goods, the quantity thereof and
9 the distinctive marks thereon, if any; the terms and conditions upon
10 which such auctioneer receives or accepts such goods for sale at
11 auction. The expression "goods" as used in this section signifies any
12 goods, wares, works of art, commodity, compound or thing, chattels,
13 merchandise or personal property which may be lawfully kept or offered
14 for sale, but shall not include goods damaged at sea or by fire and sold
15 or to be sold for the benefit of the owners, insurers or for the account
16 of whom it may concern or goods sold by virtue of judicial decree. The
17 word "person" as used in this section includes a corporation, joint-
18 stock association or copartnership. Nothing herein shall apply to the
19 sale of real property at auction. The foregoing records shall be in
20 addition to any other records required to be kept pursuant to section
21 6-108 of the uniform commercial code.
22 § 40. Subdivision 1 of section 84 of the general business law, as
23 amended by chapter 562 of the laws of 2000, is amended to read as
24 follows:
25 1. It is unlawful for the holder of a license, issued under this arti-
26 cle, or for any employee of such licensee, knowingly to commit any of
27 the following acts within or without the state of New York: to incite,
28 encourage, or aid in the incitement or encouragement of any person or
235 12020-01-1
1 persons who have become a party to any strike, to do unlawful acts
2 against the person or property of any one, or to incite, stir up, create
3 or aid in the inciting of discontent or dissatisfaction among the
4 employees of any person, firm, limited liability company or corporation
5 with the intention of having them strike; to interfere or prevent lawful
6 and peaceful picketing during strikes; to interfere with, restrain, or
7 coerce employees in the exercise of their right to form, join or assist
8 any labor organization of their own choosing; to interfere or hinder the
9 lawful or peaceful collective bargaining between employees and employ-
10 ers; to pay, offer, or give any money, gratuity, favor, consideration,
11 or other thing of value, directly or indirectly, to any person for any
12 verbal or written report of the lawful activities of employees in the
13 exercise of their right of self-organization, to form, join, or assist
14 labor organizations and to bargain collectively through representatives
15 of their own choosing; to advertise for, recruit, furnish or replace or
16 offer to furnish or replace for hire or reward, within or without the
17 state of New York, any help or labor, skilled or unskilled, or to
18 furnish or offer to furnish armed guards, other than armed guards there-
19 tofore regularly employed for the protection of payrolls, property or
20 premises, for service upon property which is being operated in antic-
21 ipation of or during the course or existence of a strike, or furnish
22 armed guards upon the highways, for persons involved in labor disputes
23 or to furnish or offer to furnish to employers or their agents, any
24 arms, munitions, tear gas implements, or any other weapons; or to send
25 letters or literature to employers offering to eliminate labor unions or
26 distribute or circulate any list of members of a labor organization, or
27 to advise any person of the membership of an individual in a labor
28 organization for the express purpose of preventing those so listed or
236 12020-01-1
1 named from obtaining or retaining employment. The violation of any of
2 the provisions of this section shall constitute a misdemeanor and shall
3 be punishable by a fine of not less than five hundred dollars, or one
4 year's imprisonment or both. It is unlawful for the holder of a license
5 to collect or offer or attempt to collect or directly or indirectly
6 engage in the business of collecting of debts or claims of any kind,
7 excepting that the taking possession, on behalf of a secured party
8 having the right to do so under section 9-503 9-609 of the uniform
9 commercial code, of property in the possession of a debtor who has
10 defaulted in the performance of a security agreement secured by such
11 property, shall not be considered a violation of this section and
12 excepting further that the secretary of state may grant exemption from
13 this prohibition in the collection of debts to licensees who are princi-
14 pally engaged in the business of credit investigation and credit report-
15 ing. It is unlawful for the holder of a license to furnish or perform
16 any services described in subdivisions one and two of section seventy-
17 one of this article on a contingent or percentage basis or to make or
18 enter into any agreement for furnishing services of any kind or charac-
19 ter, by the terms or conditions of which agreement the compensation to
20 be paid for such services to the holder of a license is partially or
21 wholly contingent or based upon a percentage of the amount of money or
22 property recovered or dependent in any way upon the result achieved. It
23 shall be unlawful for a holder of a license to use, display, cause to be
24 printed or distributed, cards, letter-heads, circulars, brochures or any
25 other advertising material or advertisement in which any name or indicia
26 of the license status of the licensee is set forth in any manner other
27 than the name under which the licensee is duly licensed. It is unlawful
28 for a licensed private investigator or bail enforcement agent to own,
237 12020-01-1
1 have or possess or in any manner to wear, exhibit or display, a shield
2 or badge of any material, kind, nature or description, in the perform-
3 ance of any of the activities as private investigator or bail enforce-
4 ment agent, as distinguished from watch, guard or patrol agency, under
5 this article. It is unlawful for a licensed private investigator or bail
6 enforcement agent to issue to any person employed by such licensee, a
7 badge or shield of any material, kind, nature or description, and it is
8 unlawful for any person employed by such licensee to possess, carry or
9 display a badge or shield of any description provided that any licensed
10 private investigator or bail enforcement agent who also engages in the
11 business of watch, guard or patrol agency may possess, use or display or
12 issue to employees in the conduct of such business, a rectangular metal
13 or woven insignia to be worn on the outer clothing and approved by the
14 department of state, which insignia shall not be larger than three inch-
15 es high or four inches wide with an inscription thereon containing the
16 word "watchman", "guard", "patrol" or "special service" and the name of
17 the licensee. It shall be unlawful for any licensee to publish or cause
18 to be published any advertisement, letter-head, circular, statement or
19 phrase of any sort which suggests that the licensee is an official
20 police or investigative agency or any other agency instrumentality of
21 the state of New York or any of its political subdivisions. It shall be
22 unlawful for any licensee to make any statement which would reasonably
23 cause another person to believe that the licensee is a police officer or
24 official investigator of the state of New York or any of its political
25 subdivisions. It shall be unlawful for a licensee to offer, by radio,
26 television, newspaper advertisement or any other means of communication,
27 to perform services at any location which is merely the location of a
238 12020-01-1
1 telephone answer service unless full disclosure of that fact is made in
2 the advertisement.
3 § 41. Subdivision 3 of section 5-526 of the general obligations law,
4 as added by chapter 844 of the laws of 1984, is amended to read as
5 follows:
6 3. For purposes of this section, the loan or forbearance transaction
7 must either (a) create a security interest as set forth in section
8 9-102 9-103 of the uniform commercial code and must be filed pursuant
9 to article nine of such code unless filing is not required pursuant to
10 section 9-302 9-310 of such code, or (b) must create a security inter-
11 est set forth in subdivision (a) of section 9-104 9-110 of such
12 code.
13 § 42. Subdivision 1-c of section 7-101 of the general obligations law,
14 as added by chapter 451 of the laws of 1998, is amended to read as
15 follows:
16 1-c. This section shall apply to money deposited or advanced on
17 contracts for the use or rental of personal property as security for
18 performance of the contract or to be applied to payments upon such
19 contract when due, only if (a) such contract is governed by the laws of
20 this state as the result of a choice of law provision in such contract,
21 in accordance with section 1-105 of the uniform commercial code (subject
22 to the limitations on choice of law by the parties to a consumer lease
23 under section 2-A-106 of the uniform commercial code), or such contract
24 is otherwise governed by the laws of this state in accordance with
25 applicable conflict of laws rules, and (b) the lessee under such
26 contract is located within this state, within the meaning of paragraph
27 (d) of subdivision three of section 9-103 of the uniform commercial
28 code (with respect to the location of debtors), except that a foreign
239 12020-01-1
1 air carrier under the Federal Aviation Act of 1958, as amended, shall
2 not be deemed located in this state solely as a result of having a
3 designated office of an agent upon whom service of process may be made
4 located in this state.
5 § 43. Section 140 of the lien law, as amended by chapter 552 of the
6 laws of 1962, is amended to read as follows:
7 § 140. Lien for labor performed in quarrying, mining, dressing and
8 cutting stone. A person employed in a quarry, mine, yard or dock at
9 excavating, quarrying, mining, dressing or cutting sandstone, granite,
10 cement stone, limestone, bluestone or marble, may have a lien on such
11 sandstone, cement stone, granite, limestone, bluestone or marble, for
12 the amount due for the labor expended thereon, upon filing a notice of
13 lien in each office of each filing officer as section 9-401 9-526 of
14 the uniform commercial code requires to perfect a security interest in
15 such sandstone, cement stone, granite, limestone, bluestone or marble.
16 Such notice must be filed within thirty days after the completion of
17 such labor and must state the amount due therefor, the name and resi-
18 dence of the lienor, and the name of the person for whom the labor was
19 performed, the quantity and description of the sandstone, cement stone,
20 granite, bluestone, limestone or mable marble against which the claim
21 is made. Such notice of lien shall be marked, filed and indexed by the
22 filing officer in the same manner as a financing statement, and the same
23 fees shall be charged therefor. A copy of the notice so filed shall be
24 served upon the owner of such sandstone, cement stone, granite, lime-
25 stone, bluestone or marble or upon the person in charge of the quarry,
26 mine, yards or docks wherein such services were performed within five
27 days after the filing thereof.
240 12020-01-1
1 § 44. Section 160 of the lien law, as amended by chapter 751 of the
2 laws of 1963, is amended to read as follows:
3 § 160. Lien on mare and foal, or on cow and calf. On complying with
4 the provisions of this article, the owner of a stallion or bull shall
5 have a lien on each mare or cow served together with the foal or calf of
6 such mare or cow from such service, for the amount agreed on at the time
7 of service, or if no agreement was made, for the amount specified in the
8 statement hereinafter required to be filed, if within twenty months
9 after such service he files a notice of such lien with the proper offi-
10 cers and in the same manner as is required to perfect a security inter-
11 est under paragraph (a) of subsection (1) of section 9-401 9-526 of
12 the uniform commercial code. Such notice of lien shall be in writing,
13 specifying the person against whom the claim is made, the amount of the
14 same and a description of the property upon which the lien is claimed,
15 and such lien shall terminate at the end of eighteen months from the
16 date of such filing, unless within that time an action is commenced for
17 the enforcement thereof, as provided in sections two hundred and six
18 to two hundred and ten, both inclusive, of this chapter, for the fore-
19 closure of a lien on chattels.
20 § 45. Section 190 of the lien law, as amended by chapter 476 of the
21 laws of 1964, is amended to read as follows:
22 § 190. Corporate mortgages against real and personal property. 1. A
23 mortgage creating a lien upon real and personal property, executed by a
24 corporation as security for the payment of bonds, notes or other
25 evidences of indebtedness, issued by such corporation or any other
26 corporation, or executed by any telegraph, telephone, electric light,
27 railroad, street railway or omnibus corporation, and recorded as a mort-
28 gage of real property in each county where such real property is located
241 12020-01-1
1 or through which the line or route of such telegraph, telephone, elec-
2 tric light, railroad, street railway or omnibus corporation runs, need
3 not be filed or refiled as a chattel mortgage or perfected by filing in
4 accordance with part four five of article nine of the uniform commer-
5 cial code in any county where the mortgage is recorded, but filing in
6 accordance with that part in the department of state only is required to
7 perfect a security interest in the personal property or fixtures covered
8 by such a mortgage hereafter recorded.
9 2. When any such original mortgage provides or provided for the inclu-
10 sion of property, either personal, or real and personal, thereafter
11 acquired, a mortgage of such after-acquired property supplemental to
12 such mortgage may be recorded as a mortgage of real property in each
13 county where the original mortgage is recorded and in each county where
14 such after-acquired real property is located and when so recorded need
15 not be filed or refiled as a chattel mortgage or perfected by filing in
16 accordance with part four five of article nine of the uniform commer-
17 cial code in any county where both the original and the supplemental
18 mortgage are recorded, but filing in accordance with that part in the
19 department of state only is required to perfect a security interest in
20 the personal property or fixtures covered by such a supplemental mort-
21 gage hereafter recorded.
22 3. This section does not require the recording of a supplemental mort-
23 gage or filing in accordance with part four five of article nine of
24 the uniform commercial code in the department of state to perfect a
25 mortgage of or security interest in after-acquired property when any
26 such original mortgage provides or provided for the inclusion of such
27 after-acquired property and decisional law prior to the enactment or
28 amendment of this section, or of former section two hundred thirty-one
242 12020-01-1
1 of this chapter, recognized the validity or enforceability of such a
2 provision in such an original mortgage without the execution or record-
3 ing of a supplemental mortgage covering such after-acquired property,
4 nor does subsection (4) of section 9-302 9-301 of the uniform
5 commercial code require the perfection of a security interest in railway
6 rolling stock under section twenty-c of title forty-nine of the United
7 States code (as added by the act of July sixteenth, nineteen hundred
8 fifty-two, chapter eight hundred eighty-one, 66 Stat. 724) as now in
9 force or as hereafter amended.
10 § 46. Subdivision 1 of section 241 of the lien law, as amended by
11 chapter 561 of the laws of 1990, is amended to read as follows:
12 1. When a notice of federal lien or a notice of revocation of any
13 certificate described in subdivision one of section two hundred forty-
14 two is presented to the secretary of state for filing, he or she shall
15 cause such notice to be marked, held and indexed in accordance with the
16 provisions of subsection four of section 9-403 9-512 of the uniform
17 commercial code as if such notice were a financing statement within the
18 meaning of the uniform commercial code; provided however that an accept-
19 able alternative to filing such notice in a paper format shall be the
20 filing of such notice by computerized methods established by the secre-
21 tary of state such that each notice shall constitute a unique computer-
22 ized informational record and each such record shall be assigned a
23 consecutive file number, held and indexed in accordance with subsection
24 four of section 9-403 9-512 of the uniform commercial code.
25 § 47. Section 315 of the personal property law, as added by chapter
26 602 of the laws of 1971, is amended to read as follows:
27 § 315. Claim for deficiency after default and repossession. If a
28 buyer defaults on any instalment of the time sale price and the holder
243 12020-01-1
1 obtains possession of the motor vehicle and disposes of it as provided
2 by section 9-504 9-610 of the uniform commercial code, the buyer shall
3 be liable to the holder for any deficiency to the extent provided in
4 that section; provided, however, that in calculating such deficiency
5 there shall be deducted from the amount thereof as prescribed by such
6 section 9-504 9-610, an amount equal to that portion of the refund
7 credit to which the buyer would have been entitled under section three
8 hundred five of this chapter if, at the time the holder disposed of the
9 motor vehicle, the buyer had not been in default and had prepaid in full
10 the balance of the time sale price as the amount realized upon the
11 disposition of the motor vehicle bears to the balance of the time sale
12 price.
13 § 48. Subdivision 3-a of section 413 of the personal property law, as
14 added by chapter 566 of the laws of 1997, is amended to read as follows:
15 3-a. No retail instalment credit agreement or guarantee of a retail
16 instalment credit agreement shall provide for a security interest in any
17 investment property, as defined in paragraph (f) forty-nine of
18 subsection one (a) of section 9-115 9-102 of the uniform commercial
19 code, that is pledged as collateral, unless (a) the contract either
20 specifically identifies the investment property as collateral or (b) the
21 secured party is a securities intermediary, as defined in paragraph
22 fourteen of subsection (a) of section 8-102 of the uniform commercial
23 code, or commodity intermediary, as defined in paragraph (d) seventeen
24 of subsection one (a) of section 9-115 9-102 of the uniform commer-
25 cial code, with respect to the investment property. The identification
26 of an account shall include the name of the holder, account number, and
27 name of the entity holding the investment property. In the event that a
244 12020-01-1
1 retail instalment credit agreement or guarantee does not comply with
2 this section, the security interest in the investment property is void.
3 § 49. Paragraph (c) of subdivision 12 of section 413 of the personal
4 property law, as added by chapter 485 of the laws of 1996, is amended to
5 read as follows:
6 (c) Except for motor vehicles as defined in article nine of this chap-
7 ter, or goods which the seller knows or reasonably should know are or
8 are likely to be so affixed to a motor vehicle or to realty as to become
9 a part thereof, a retail seller, or financing agency which enters into a
10 retail installment credit agreement with a retail buyer on behalf of a
11 retail seller named in the agreement, may take or retain a purchase
12 money security interest, as that term is defined in section 9-107
13 9-103 of the uniform commercial code, in any item of merchandise
14 purchased at a price of not less than two hundred dollars pursuant to a
15 retail installment credit agreement until the purchase price of such
16 merchandise is fully paid, but in no event shall any purchase money
17 security interest created hereunder be valid or enforceable for a period
18 greater than five years from the date a purchase is posted to any
19 account which may be used to purchase an item of merchandise at a price
20 less than two hundred dollars. In the event such a purchase money secu-
21 rity interest is taken or retained by a retail seller or financing agen-
22 cy, payments shall be applied to the purchase in the order such
23 purchases are posted to the account after such payments are first
24 applied to any finance, late, or other charges imposed by the retail
25 seller or financing agency. Notwithstanding the provisions of section
26 9-503 9-609 of the uniform commercial code, repossession of merchan-
27 dise subject to a purchase money security interest permitted under this
28 subdivision shall be prohibited unless and until payment on the account
245 12020-01-1
1 shall be in default for a period of at least thirty days and thereafter
2 a notice of default be mailed to the buyer providing an additional thir-
3 ty days time in which to cure the default on the account. In the event
4 of repossession without judicial process, a substantially contemporane-
5 ous writing signed by the buyer indicating the buyer's agreement to such
6 repossession shall be required.
7 § 50. Section 422 of the personal property law, as added by chapter
8 602 of the laws of 1971, is amended to read as follows:
9 § 422. Claim for deficiency after default and repossession. If a buyer
10 defaults on any instalment of the time sale price under a retail instal-
11 ment contract, and the holder obtains possession of the goods which are
12 the subject matter of such contract and disposes of such goods as
13 provided by section 9-504 9--610 of the uniform commercial code, the
14 buyer shall be liable to the holder for any deficiency to the extent
15 provided in that section; provided, however, that in calculating such
16 deficiency there shall be deducted from the amount thereof as prescribed
17 by such section 9-504 9--610, an amount equal to that portion of the
18 refund credit to which the buyer would have been entitled under section
19 four hundred eight of this chapter if, at the time the holder disposed
20 of such goods, the buyer had not been in default and had prepaid in full
21 the balance of the time sale price as the amount realized upon the
22 disposition of the goods bears to the balance of the time sale price.
23 § 51. Subdivision 3 of section 472 of the private housing finance law,
24 as added by chapter 786 of the laws of 1987, is amended to read as
25 follows:
26 3. The agency in its discretion may require that the owner-occupant
27 execute, acknowledge and deliver a uniform commercial code financing
28 statement for the real property improvement to be in such form as the
246 12020-01-1
1 agency shall specify and in accordance with the requirements of section
2 9-402 9--502l of the uniform commercial code of the state of New York.
3 Said financing statement shall be filed or recorded without charge in
4 accordance with the provisions of section 9-401 9--526 of the uniform
5 commercial code, and from the date of such filing the municipality shall
6 have a lien against said real property improvement for the amount
7 advanced or so much thereof as remains unpaid together with the interest
8 thereon. Upon payment of all sums advanced by the municipality and
9 interest thereon, and upon demand of the then record owner of the real
10 property, the agency shall deliver a copy of the financing statement
11 with an endorsement thereon that the lien is satisfied. Upon filing of
12 such copy in the office where the financing statement was filed and upon
13 payment of the proper fee therefor, the lien of such financing statement
14 shall be discharged.
15 § 52. Section 63 of the rural elective cooperative law, as amended by
16 chapter 552 of the laws of 1962, is amended to read as follows:
17 § 63. Recordation of mortgages; effect thereof. In case of conflict
18 between this section and article nine of the uniform commercial code,
19 the provisions of this section shall control. Any mortgage, deed of
20 trust or other instrument executed by a cooperative or foreign corpo-
21 ration doing business in this state pursuant to this chapter, which
22 affects real and personal property and which is recorded in the real
23 property records in any county in which such property is located or is
24 to be located, shall have the same force and effect as if the security
25 interest created by such mortgage in the personal property thereby
26 affected, had been perfected by filing in accordance with section
27 9--401 9--526 of the uniform commercial code. All after-acquired prop-
28 erty of such cooperative or foreign corporation described or referred to
247 12020-01-1
1 as being mortgaged or pledged in any such mortgage, deed of trust or
2 other instrument, shall become subject to the lien thereof immediately
3 upon the acquisition of such property by such cooperative or foreign
4 corporation, whether or not such property was in existence at the time
5 of the execution of such mortgage, deed of trust or other instrument.
6 Recordation of any such mortgage, deed of trust or other instrument
7 shall constitute notice and otherwise have the same effect with respect
8 to such after-acquired property as it has under the laws relating to
9 recordation, with respect to property owned by such cooperative or
10 foreign corporation at the time of the execution of such mortgage, deed
11 of trust or other instrument and therein described or referred to as
12 being mortgaged or pledged thereby.
13 The security interest in personal property created by any such mort-
14 gage, deed of trust or other instrument shall, after recordation there-
15 of, continue perfected and of record without the filing of any continua-
16 tion statement as required by section 9--403 9--512 of the uniform
17 commercial code.
18 § 53. Subsection 39 of section 1-201 of the uniform commercial code,
19 as amended by chapter 1003 of the laws of 1963, is amended to read as
20 follows:
21 (39) "Signed" includes any symbol executed or adopted by a party with
22 present intention to authenticate a writing. Without limiting the gener-
23 ality of the preceding sentence, any financing or other statement or
24 security agreement filed pursuant to Part 4 5 of Article 9 which
25 contains a copy, however made, of the signature of a secured party or
26 his representative, or of a debtor or his representative, is "signed" by
27 the secured party or the debtor, as the case may be.
248 12020-01-1
1 § 54. Subsections 2 and 3 of section 2-A-307 of the uniform commercial
2 code, as added by chapter 114 of the laws of 1994, are amended to read
3 as follows:
4 (2) Except as otherwise provided in subsections (3) and (4) and in
5 Sections 2-A-306 and 2-A-308, a creditor of a lessor takes subject to
6 the lease contract unless:
7 (a) the creditor holds a lien that attached to the goods before the
8 lease contract became enforceable;
9 (b) the creditor holds a security interest in the goods and the lessee
10 did not give value and receive delivery of the goods without knowledge
11 of the security interest; or
12 (c) the creditor holds a security interest in the goods that was
13 perfected (Section 9-303 9--301) before the lease contract became
14 enforceable.
15 (3) A lessee in the ordinary course of business takes the leasehold
16 interest free of a security interest in the goods created by the lessor
17 even though the security interest is perfected (Section 9-303 9--301)
18 and the lessee knows of its existence.
19 § 55. Paragraph (b) of subsection 1 of section 2-A-309 of the uniform
20 commercial code, as added by chapter 114 of the laws of 1994, is amended
21 to read as follows:
22 (b) A "fixture filing" is the filing, in the office where a mortgage
23 on the real estate would be filed or recorded, of a financing statement
24 covering goods that are or are to become fixtures and conforming to the
25 requirements of Section 9-402(5) 9--502;
26 § 56. Paragraph (a) of subsection 1 of section 7--503 of the uniform
27 commercial code is amended to read as follows:
249 12020-01-1
1 (a) delivered or entrusted them or any document of title covering
2 them to the bailor or his nominee with actual or apparent authority to
3 ship, store or sell or with power to obtain delivery under this Article
4 (Section 7--403) or with power of disposition under this Act (Sections
5 2--403 and 9--307 9--320) or other statute or rule of law; nor
6 § 57. Paragraph (c) of subsection 2 and paragraph (e) of subsection 3
7 of section 13-102 of the uniform commercial code, paragraph (c) as
8 amended and paragraph (e) of subsection 3 as added by chapter 868 of the
9 laws of 1965 and such section as renumbered by chapter 866 of the laws
10 of 1977, are amended to read as follows:
11 (c) which was perfected when this Act takes effect without any filing,
12 refiling or recording, and for the perfection of which the filing of a
13 financing statement would be required if this Act applied, continues
14 until and will lapse twelve months after this Act takes effect if the
15 security interest is in accounts or, otherwise, thirty-six months after
16 this Act takes effect;
17 unless, in each case, a continuation statement is filed by the secured
18 party before the perfection of the security interest would otherwise
19 lapse. Any such continuation statement must be signed by the secured
20 party, identify the security agreement, statement or notice, however
21 denominated in any statute or other law repealed or modified by this
22 Act, state the office where and the date when the last filing, refiling
23 or recording, if any, was made with respect thereto, and the filing
24 number, if any, or book and page, if any, of recording and further state
25 that the security agreement, statement or notice, however, denominated
26 in any statute or other law repealed or modified by this Act, is still
27 effective. Section 9-401(1) 9--501 determines the proper place to file
28 such a continuation statement. Except as specified in this subsection
250 12020-01-1
1 and except that the perfection of the security interest will lapse five
2 years after the filing of a continuation statement in accordance with
3 this subsection unless another continuation statement is filed within
4 six months prior to such lapse, the provisions of Section 9--403(3)
5 9--515 apply to such a continuation statement.
6 (e) A security interest which was perfected when this Act took effect
7 and the perfection of which was or is continued by the filing of a
8 continuation statement in accordance with subsection (2) is a perfected
9 security interest for the purposes of subsection (2) of Section
10 9--302 9--310.
11 § 58. Subdivision (e) of section 2118 of the vehicle and traffic law,
12 as added by chapter 322 of the laws of 1993, is amended to read as
13 follows:
14 (e) After a certificate of title has been issued in this state for a
15 vehicle which is a mobile home or a manufactured home, and as long as
16 the vehicle which is a mobile home or a manufactured home is subject to
17 any security interest perfected pursuant to this section, the commis-
18 sioner shall not revoke the certificate of title, and, in any event, the
19 validity and priority of any security interest perfected pursuant to
20 this section shall continue, notwithstanding the provision of any other
21 law, including but not limited to paragraph (d) of subsection one of
22 section 9-302 9--303 and section 9-313 of the uniform commercial code.
23 § 59. This act shall take effect July 1, 2001.
24 PART M
25 Section 1. Section 807-b of the education law, as added by chapter 766
26 of the laws of 1964, subdivision 1 as amended by chapter 16 of the laws
251 12020-01-1
1 of 1970, subdivision 2 as amended by chapter 258 of the laws of 1983,
2 subparagraphs 4 and 5 of paragraph a of subdivision 3 and subdivision 12
3 as amended by chapter 264 of the laws of 1971, paragraph b of subdivi-
4 sion 3 and subdivisions 5 and 6 as amended by chapter 465 of the laws of
5 1979, subdivision 4 as amended by chapter 225 of the laws of 1979 and
6 subdivision 7 as amended by chapter 40 of the laws of 1965, is amended
7 to read as follows:
8 § 807-b. College fire inspections. 1. It shall be the duty of the
9 college authorities in general charge of the operation of any public or
10 private independent college to cause the buildings under the jurisdic-
11 tion of such college containing classroom, dormitory, fraternities,
12 sororities, laboratory, physical education, dining or recreational
13 facilities for student use to be inspected at least annually for fire
14 hazards which might endanger the lives of students, teachers and employ-
15 ees therein. Inspections of all public and independent college build-
16 ings, with the exception of those within a city having a population of
17 one million or more, shall be conducted by the state office of fire
18 prevention and control or a designee of the state fire administrator. An
19 inspection report shall be produced by the inspecting agency for each
20 building inspected.
21 2. The annual fire inspection for public and independent colleges
22 shall be made between the first day of January and the first day of
23 June of every year, and the reports thereof shall be filed by the
24 college authorities in the places required by subdivision five of this
25 section no later than the sixteenth day of June of each year. The annual
26 fire inspection for public colleges shall be made between the first day
27 of June and the last day of May of every year, and the reports thereof
28 shall be filed by the college authorities in the places required by
252 12020-01-1
1 subdivision five of this section no later than ninety days after the
2 date of the fire inspection when the college is in session.
3 3. a. The college authorities shall cause any fire inspection pursu-
4 ant to this section to be made by one of the following methods, or any
5 combination of such methods:
6 (1) Employing, either regularly or specially, persons who, in the
7 judgment of the college authorities, are qualified to make such an
8 inspection or any phase thereof.
9 (2) Contracting for the making of such inspections, or any phase ther-
10 eof, by persons who, in the judgment of the college authorities, are
11 qualified.
12 (3) Requesting inspection by the fire department of any city, town,
13 village or fire district in which the building is located.
14 (4) Requesting inspection by a fire corporation which is subject to
15 the provisions of section fourteen hundred two of the not-for-profit
16 corporation law, if such building is located within the area described
17 in the certificate of incorporation of any such corporation.
18 (5) Requesting inspection by the county fire coordinator, or the offi-
19 cer performing the powers and duties of a county fire coordinator pursu-
20 ant to a local law, of the county in which the building is located, or
21 by any deputy county fire coordinator or deputy of such other officer so
22 performing the powers and duties of a county fire coordinator designated
23 to make the inspection by the county fire coordinator or such other
24 officer so performing the powers and duties of a county fire coordina-
25 tor, if the building is located outside a city, town, village, or fire
26 district, which has its own fire department and outside the area
27 described in the certificate of incorporation of any fire corporation
253 12020-01-1
1 which is subject to the provisions of section fourteen hundred two of
2 the not-for-profit corporation law.
3 b. No such inspection, or phase thereof, is to be made by either of
4 the methods specified in subparagraphs (1) and (2) of paragraph a of
5 this subdivision, until after the college authorities have requested a
6 fire inspection by the methods of subparagraph (3), (4) or (5) of para-
7 graph a of this subdivision and the persons or agencies empowered to
8 perform such inspections pursuant to those subparagraphs have failed to
9 do so within a reasonable time after such request was made and the
10 college authorities shall give reasonable notice of the date and time
11 such inspection is to be made to the chief, or other comparable officer,
12 of any fire department, or fire corporation, which has the regular duty
13 of fighting fire in the building to be inspected. Such officer, or any
14 subordinate designated by him, may be present during the inspection and
15 may also file a report of inspection in the manner provided in this
16 section. The provisions of this subdivision shall not apply to college
17 authorities of public colleges which are annually inspected by the divi-
18 sion of fire prevention and control within the department of state.
19 c. If any fire department or fire corporation described in subpara-
20 graphs (3) and (4) of paragraph a of this subdivision shall fail or
21 refuse to make a fire inspection promptly after having been requested to
22 do so by the college authorities, the college authorities may request
23 the county fire coordinator, or the officer performing the powers and
24 duties of a county fire coordinator pursuant to a local law, of the
25 county in which the building is located to make such inspection. If such
26 county fire coordinator or such other officer so performing the powers
27 and duties of a county fire coordinator shall fail or refuse to make a
28 fire inspection promptly after having been requested to do so by the
254 12020-01-1
1 college authorities, it shall be the duty of the college authorities to
2 cause such fire inspection to be made by either method described in
3 subparagraph (1) or (2) of paragraph a of this subdivision.
4 d. Regardless of the method or methods used to accomplish the
5 inspection required by this section, the person making the inspection
6 shall file the report thereof with the college authorities no later than
7 the first day of June. The office of fire prevention and control is
8 authorized to adopt rules and regulations establishing minimum standards
9 for the content and frequency of such inspections in order to ensure
10 compliance with applicable fire safety standards. In the event
11 violations of applicable codes, rules and regulations pertaining to fire
12 safety are found during inspections, the office of fire prevention and
13 control is authorized to take appropriate actions to ensure that
14 violations are promptly remedied.
15 4. The state fire administrator shall prescribe the form format of
16 the fire inspection report and the commissioner of education shall
17 furnish a supply of such form to college authorities . In prescribing
18 such form format the state fire administrator shall consider standards
19 for fire safety set forth in the state building construction code, the
20 state building conservation and fire prevention uniform fire prevention
21 and building code and other applicable fire safety standards.
22 5. The Within ninety days of completing such inspection, the office
23 of fire prevention and control or its designee shall file a copy of the
24 report of any fire inspection shall be filed in with the office of the
25 college authorities and with the commissioner of education. All such
26 reports so filed in any public office shall be kept as public
27 records for at least three years after which period they may be
28 destroyed. In the case of fire reports prepared by persons making such
255 12020-01-1
1 inspections pursuant to paragraph b of subdivision three of this
2 section, one A copy of such report shall also be filed with the divi-
3 sion of fire prevention and control, one copy with the county fire coor-
4 dinator and one copy with the chief, or other comparable officer, of
5 any fire department or fire corporation which has the regular duty of
6 fighting fire in the building inspected.
7 6. It shall be the duty of the commissioner of education to ascertain
8 annually whether the inspections of buildings under the jurisdiction of
9 a college required by this section have been made and the reports of the
10 inspection have been filed in their respective offices. The commission-
11 er of education shall review the reports of inspection filed pursuant to
12 this section and may The office of fire prevention and control or its
13 designee shall make recommendations to the college authorities with
14 respect to any problems relating to building fire safety noted in such
15 reports. The commissioner of education may inspect or cause to be
16 inspected at any reasonable time for fire prevention and fire protection
17 purposes the buildings required to be inspected by this section. The
18 commissioner of education may impose a fine of up to five hundred
19 dollars per day upon any public or independent college which fails to
20 timely comply with the filing requirements of this section remedy, to
21 the satisfaction of the office of fire prevention and control, any
22 violation noted in a report within thirty days of receiving a copy of
23 such report.
24 7. Every public or private independent college building required to
25 be inspected as hereinabove provided by the office of fire prevention
26 and control or its designee may also be inspected examined for fire
27 prevention and fire protection purposes at any reasonable time by
256 12020-01-1
1 a. the chief of the fire department of the city, town, village or fire
2 district in which the college building is located,
3 b. the chief of a fire corporation having its headquarters outside a
4 village or fire district, if the college building is located in the area
5 described in the certificate of incorporation of such company,
6 c. the chief of the fire department or fire company affording fire
7 protection to a fire district, fire protection district, or fire alarm
8 district pursuant to a contract, if the college building is located in
9 any such district,
10 d. the member of any fire department or fire company listed in para-
11 graphs a, b or c of this subdivision assigned by the chief thereof the
12 duty of inspecting college buildings .
13 8. Any person, or any public or other corporation for which any such
14 persons acts, shall not be liable for any error, omission or lack of
15 thoroughness in the making of the inspection and report required or
16 permitted by this section.
17 9. The term "college authorities", as used in this section, means the
18 board of trustees, board of directors, or other governing board in
19 general charge of the operation of any such college.
20 10. The term "public college" shall means mean and include "state-
21 operated institutions", "statutory or contract colleges" and "community
22 colleges" as defined in section three hundred fifty of this chapter.
23 11. The term " private independent college" shall mean colleges other
24 than those included within subdivision ten of this section.
25 12. This section shall not apply to buildings under the jurisdiction
26 of a college located in the cities of New York, Buffalo, Rochester,
27 Syracuse, Yonkers and Albany.
257 12020-01-1
1 § 2. The executive law is amended by adding a new section 156-d to
2 read as follows:
3 § 156-d. College fire safety. 1. Notwithstanding the provisions of any
4 law to the contrary, the office of fire prevention and control, by and
5 through the state fire administrator or their duly authorized officers
6 and employees, shall have the responsibility to annually inspect build-
7 ings under the jurisdiction of public colleges and independent colleges,
8 as these terms are defined in section eight hundred seven-b of the
9 education law, for compliance with and violations of the uniform fire
10 prevention and building code; or any other applicable code, rule or
11 regulation pertaining to fire safety. Buildings subject to inspection
12 are all buildings under the jurisdiction of such colleges used for
13 classroom, dormitory, fraternity, sorority, laboratory, physical educa-
14 tion, dining, recreational or other purposes.
15 2. a. The office of fire prevention and control shall have the power
16 to issue a notice of violation and orders requiring the remedying of any
17 condition found to exist in, on or about any such building which
18 violates the uniform fire prevention and building code, or any other
19 code, rule or regulation pertaining to fire safety, fire safety equip-
20 ment and fire safety devices. Such office is further authorized to
21 promulgate regulations regarding the issuance of violations, compliance
22 with orders, and providing for time for compliance, reinspection proce-
23 dures, and issuance of certificates of conformance.
24 b. Where any college authority in general charge of the operation of
25 any public or independent college buildings is served personally or by
26 registered or certified mail with an order of the office of fire
27 prevention and control to remedy any violation and fails to comply with
28 such order immediately or within such other time as specified in the
258 12020-01-1
1 order, the office of fire prevention and control may avail itself of any
2 or all of the following remedies: (1) assess a civil penalty of up to
3 five hundred dollars per day until the violation is corrected; (2) order
4 immediate closure of the building, buildings or parts thereof where a
5 violation exists that poses an imminent threat to public health and
6 safety; (3) exercise all of the authority conferred upon the secretary
7 of state pursuant to article eighteen of this chapter to obtain compli-
8 ance with its orders; or (4) refer violations to the appropriate local
9 government authorities for enforcement pursuant to article eighteen of
10 this chapter.
11 c. The office of fire prevention and control by and through the secre-
12 tary of state is authorized to commence necessary proceedings in a court
13 of competent jurisdiction seeking enforcement of any of its orders and
14 payment of assessed penalties.
15 3. a. Except as provided herein, any county, city, town or village,
16 pursuant to resolution of their respective legislative bodies, may apply
17 to the office of fire prevention and control for delegation of all or
18 part of the duties, rights and powers conferred upon the office of fire
19 prevention and control by this section and section eight hundred seven-b
20 of the education law. Upon acceptable demonstration of adequate capa-
21 bility, resources and commitment on the part of the applicant local
22 government, the office of fire prevention and control may make such
23 delegation, in which case the local government shall also have all of
24 the rights, duties and powers provided to local governments in article
25 eighteen of this chapter and in any city charter or code. The authority
26 granted in this section to assess civil penalties, order closure of
27 buildings and take action possessed by the secretary of state under
28 article eighteen of this chapter, shall not be delegated to the local
259 12020-01-1
1 government. Such powers shall continue in the office of fire prevention
2 and control which may exercise them in the case of violations, on its
3 own volition or at the request of the delegee local government. The
4 delegation shall expire after three years, and may be renewed at the
5 discretion of the office of fire prevention and control. All inspection
6 reports conducted pursuant to a delegation of authority shall be prompt-
7 ly filed with the office of fire prevention and control. In the event
8 any such report is not filed or reasonable grounds exist to believe that
9 inspections or enforcement are inadequate or ineffective, the office of
10 fire prevention and control may revoke the delegation or continue it
11 subject to terms and conditions specified by the office of fire
12 prevention and control.
13 b. The authorities in a city having a population of one million or
14 more shall exercise all of the rights, powers and duties pertaining to
15 inspection of independent and public college buildings and enforcement
16 provided in this section and section eight hundred and seven-b of the
17 education law, without impairing any existing authority of such city. A
18 copy of all inspection reports shall be filed with the office of fire
19 prevention and control by the authorities conducting inspections.
20 § 3. The penal law is amended by adding three new sections 145.75,
21 145.80 and 145.85 to read as follows:
22 § 145.75 Tampering with a fire protection device; fire protection device
23 defined.
24 For the purposes of sections 145.80 and 145.85 of this article, "fire
25 protection device" means any apparatus that is designed to detect a
26 fire, activate a fire alarm, extinguish or control a fire, control or
27 manage smoke or products of a fire, or any combination thereof, includ-
28 ing, but not limited to, an alarm bell, alarm sounding device, pull
260 12020-01-1
1 station or other manual alarm initiating device, single station fire,
2 smoke or carbon monoxide detector, integrated fire or smoke detector
3 system, individual sprinkler head, integrated sprinkler system, stand
4 pipe, stand pipe system, portable fire extinguisher, fire emergency
5 hose, fire hydrant, fire hydrant system, fire warning, directional or
6 assistive sign or light.
7 § 145.80 Tampering with a fire protection device in the second degree.
8 A person is guilty of tampering with a fire protection device in the
9 second degree when, having no right to do so nor any reasonable ground
10 to believe that he or she has such right, such person knowingly damages,
11 alters or removes a fire protection device or a component thereof, under
12 circumstances evincing knowledge that such conduct may increase a risk
13 of physical injury to, or damage to the property of, another person.
14 Tampering with a fire protection device in the second degree is a
15 class A misdemeanor.
16 § 145.85 Tampering with a fire protection device in the first degree.
17 A person is guilty of tampering with a fire protection device in the
18 first degree when he or she commits the crime of tampering with a fire
19 protection device in the second degree and:
20 1. has previously been convicted of the crime of tampering with a fire
21 protection device in the first or second degree or a crime defined in
22 section 120.20, 120.25, 145.00, 145.05, 145.10, 145.12, 150.05, 150.10,
23 150.15 or 150.20 of this chapter; or
24 2. another person is physically injured as a result thereof; or
25 3. the property of another person is damaged in an amount exceeding
26 two hundred fifty dollars as a result thereof.
27 Tampering with a fire protection device in the first degree is a class
28 E felony.
261 12020-01-1
1 § 4. This act shall take effect January 1, 2002, provided that the
2 office of fire prevention and control shall have the authority to adopt
3 such rules and regulations and take any actions in advance of such date
4 which are necessary to implement the provisions of this act.
5 PART N
6 Section 1. Section 3 of chapter 428 of the laws of 1999 amending the
7 executive law and the criminal procedure law, relating to expanding the
8 geographic area of employment of certain police officers, is amended to
9 read as follows:
10 § 3. This act shall take effect on the first day of November next
11 succeeding the date on which it shall have become a law , and shall
12 remain in effect until the first day of November, 2001, when it shall
13 expire and be deemed repealed .
14 § 2. This act shall take effect immediately.
15 PART O
16 Section 1. Section 54 of the state finance law is amended by adding a
17 new subdivision 9 to read as follows:
18 9. a. Notwithstanding any inconsistent provision of this section or of
19 any other provision of law to the contrary, the payment of general
20 purpose local government aid for the support of local government for the
21 state fiscal year commencing April first, two thousand one and every
22 fiscal year thereafter, shall be paid from an appropriation made for
23 such purposes pursuant to the general government budget in a manner
24 consistent with this subdivision. Subdivisions one through eight of
25 this section shall not be applicable to the payment of per capita state
26 aid for the support of local government.
262 12020-01-1
1 b. Notwithstanding any inconsistent provision of article five of the
2 general construction law, in the fiscal year of the state commencing
3 April first, two thousand one and every fiscal year thereafter, any city
4 having a population of one million or more shall be entitled to receive
5 the same amount of general purpose local government aid that it received
6 for such purpose pursuant to chapter fifty of the laws of two thousand,
7 constituting the general government budget, and section fifty-four of
8 the state finance law, as added by section twelve of chapter four
9 hundred thirty of the laws of nineteen hundred ninety-seven, as if the
10 provisions of such section fifty-four were in full force and effect for
11 the entire state fiscal year commencing April first, two thousand one
12 and every fiscal year thereafter. Except as provided in paragraph c of
13 this subdivision, each city, other than any city having a population of
14 one million or more, town and village that was appropriated general
15 purpose local government aid pursuant to chapter fifty of the laws of
16 two thousand shall be entitled to receive a total of one hundred five
17 percent of the amount of aid that it would be entitled to receive under
18 section fifty-four of the state finance law, as added by section twelve
19 of chapter four hundred thirty of the laws of nineteen hundred ninety-
20 seven, as if the provisions of such section fifty-four were in full
21 force and effect for the entire state fiscal year commencing April
22 first, two thousand one and every fiscal year thereafter. Such aid
23 shall be paid in the same "on or before month and day" manner as speci-
24 fied in chapter fifty of the laws of nineteen hundred ninety-six,
25 constituting the general government budget.
26 c. Consolidations, mergers, or dissolutions - entitlement to general
27 purpose local government aid. In the case where any city, town, or
28 village consolidates, merges or dissolves, and the resulting successor
263 12020-01-1
1 government has filed with the office of the state comptroller a certif-
2 icate of any such consolidation, merger, or dissolution, such successor
3 government shall be entitled to receive any payments of general purpose
4 local government aid which would have been otherwise payable to the
5 individual cities, towns, or villages who were party to such consol-
6 idation, merger, or dissolution in addition to the general purpose local
7 government aid such successor government is entitled to receive had no
8 such consolidation, merger, or dissolution occurred. The annual amount
9 of general purpose local government aid any city, town, or village in
10 which a municipality has consolidated, merged, or dissolved shall be
11 eligible to receive on the date such city, town, or village is consol-
12 idated, merged, or dissolved shall continue to be paid for the first
13 state fiscal year following the date of such consolidation, merger, or
14 dissolution and payments shall thereafter continue to be paid for an
15 additional four state fiscal years in reduced amounts as follows: in the
16 second year following consolidation, merger, or dissolution, eighty
17 percent of such annual amount; in the third year, sixty percent; in the
18 fourth year, forty percent; in the fifth year, twenty percent; and ther-
19 eafter such payments shall cease to be paid. In instances where only a
20 portion of a city, town, or village is party to a consolidation, merger,
21 or dissolution, general purpose local government aid payable to the
22 resulting successor government shall include only a pro rata share of
23 the aid otherwise due and payable to such city, town, or village. Such
24 pro rata share shall be based on a ratio of the nineteen hundred ninety
25 federal decennial census population of the portion consolidated, merged,
26 or dissolved as compared to the total nineteen hundred ninety federal
27 decennial census population of the city, town, or village party to such
28 consolidation, merger, or dissolution.
264 12020-01-1
1 § 2. This act shall take effect immediately and shall be deemed to
2 have been in full force and effect on and after April 1, 2001.
3 PART P
4 Section 1. Subdivisions 6, 7, 8, 9, 10 and 11 of section 92-i of the
5 state finance law, subdivisions 6, 8, 10 and 11, as added by chapter 878
6 of the laws of 1977, subparagraph 1 of paragraph (a) of subdivision 6,
7 as amended by chapter 789 of the laws of 1978 and subdivisions 7 and 9,
8 as amended by chapter 724 of the laws of 1979, are amended to read as
9 follows:
10 6. (a) (1) For the period beginning August first, nineteen hundred
11 seventy-eight and ending June thirtieth, nineteen hundred seventy-nine,
12 on the last business day of each of the months of September, December,
13 March and June, the commissioner of taxation and finance shall certify
14 to the comptroller the amount of the tax imposed by this article
15 collected during the three month period ending on each such last busi-
16 ness day, except that on September thirtieth, nineteen hundred seventy-
17 eight, the commissioner shall certify only the amount of such tax
18 collected on and after August first, nineteen hundred seventy-eight. The
19 state comptroller shall pay forthwith an amount equal to one-half of
20 twenty-five percent of the amount so certified from the general fund of
21 the state of New York to the extent that moneys have been appropriated
22 and made available therefor; provided, however, that in no event shall
23 the amount so paid exceed sixteen million dollars in the state fiscal
24 year beginning April first, nineteen hundred seventy-eight.
25 (2) Upon receipt of each certification of the commissioner of taxation
26 and finance provided for in subdivision four of this section, on and
27 after December thirty-first, nineteen hundred seventy-nine and on or
28 before September thirtieth, nineteen hundred eighty, the state comp-
265 12020-01-1
1 troller shall forthwith pay an amount equal to one-half of the amount
2 certified by such commissioner as rebates allowable under the provisions
3 of clause (i) of subdivision three of this section from the general fund
4 of the state of New York to the fund created pursuant to this section,
5 to the extent that moneys have been appropriated and made available
6 therefor. Upon receipt of the certification of the commissioner of taxa-
7 tion and finance provided for in subdivision four of this section, on
8 and after October first, nineteen hundred eighty, the state comptroller
9 shall forthwith pay an amount equal to one-half of the amounts certified
10 by such commissioner as rebates allowable under the provisions of claus-
11 es (i) and (ii) of subdivision three of this section from the general
12 fund of the state of New York, to the fund created pursuant to this
13 section to the extent that moneys have been appropriated and made avail-
14 able therefor.
15 (b) Provided, however, that the amounts paid from the general fund of
16 the state of New York under paragraph (a) of this subdivision in the
17 state fiscal year beginning April first, nineteen hundred seventy-nine
18 shall not exceed fifty million dollars; and in the state fiscal year
19 beginning April first, nineteen hundred eighty such amounts shall not
20 exceed ninety million dollars and in the state fiscal year beginning
21 April first, nineteen hundred eighty-one and in every state fiscal year
22 thereafter such amounts shall not exceed one hundred twenty million
23 dollars.
24 (c) Notwithstanding the provisions of paragraph (b) of this subdivi-
25 sion, the The state comptroller shall , in addition to the payments to
26 be made under paragraph (a) of this subdivision, also pay from the
27 general fund to the credit of the fund created pursuant to this section
28 an amount equal to one-half of the costs deducted by such the
266 12020-01-1
1 commissioner of taxation and finance for the costs of the state tax
2 commission in administering and making distributions in accordance with
3 the provisions of subdivision four of section ninety-two-b of this chap-
4 ter.
5 7. If on the day the commissioner of taxation and finance makes the
6 determinations required under subdivision three of this section, he
7 determines that, as a result of the payments made into the stock trans-
8 fer incentive fund pursuant to subdivisions five and six of this
9 section, the amounts in such fund exceed the amounts determined pursuant
10 to clauses (i), (ii) and (iii) of subdivision three of this section for
11 the three calendar months ending on the next-to-the-last business day of
12 the month in which such determination is made, the amount of such excess
13 shall be paid forthwith to the chief fiscal officer of the city of New
14 York for support of local government.
15 8. Notwithstanding any provision of general or special law to the
16 contrary, all moneys of such fund shall be deposited by the commissioner
17 of taxation and finance in any responsible bank, banking house or trust
18 company as may be approved by the comptroller. All amounts so deposited
19 shall be kept separate and apart and shall not be commingled with any
20 other moneys in the custody of the commissioner of taxation and finance.
21 All deposits of moneys of such fund shall be secured by obligations of
22 the United States or of the state having a market value equal at all
23 times to the amount of the deposit and all banks and trust companies are
24 authorized to give security for such deposits. Any such moneys deposited
25 in such fund may, in the discretion of the commissioner of taxation and
26 finance, be invested in obligations of the United States or of the state
27 or in other obligations, the principal of and interest on which are
28 guaranteed by the United States or by the state.
267 12020-01-1
1 9. 8. Out of such moneys deposited in the fund created by this
2 section, the commissioner of taxation and finance shall, except for
3 rebates payable in the manner described in subdivision six of section
4 two hundred eighty-a of the tax law, make the payments required to be
5 paid on claims for rebates made pursuant to section two hundred eighty-a
6 of the tax law, but in no event shall such rebates be paid prior to the
7 last business day of each of the months of September, December, March
8 and June with respect to taxes paid during the period of three calendar
9 months ending on each such last business day and in no event shall the
10 rebates allowable under subdivision two-a of section two hundred eight-
11 y-a of the tax law, be paid prior to the last day of June with respect
12 to taxes paid during the preceding October first to September thirtieth
13 period except with respect to the period April seventeenth, nineteen
14 hundred seventy-eight through September thirtieth, nineteen hundred
15 seventy-eight such rebates allowable under such subdivision two-a shall
16 not be paid prior to the last day of June, nineteen hundred seventy-nine
17 preceding such last day. Out of moneys deposited in the fund created by
18 this section, the commissioner of taxation and finance shall pay to each
19 exchange, affiliated clearing corporation or authorized agency which
20 shall have remitted amounts to the tax commission commissioner, in the
21 manner set forth in subdivision six of section two hundred eighty-a of
22 the tax law, the rebate payable pursuant to subdivisions one and two of
23 such section, the rebates payable in the manner described in subdivision
24 six of section two hundred eighty-a of the tax law not later than the
25 day after the day the tax equal to the amount of such rebates is remit-
26 ted to the tax commission commissioner under such subdivision and paid
27 to the fund created by this section from the stock transfer tax fund
268 12020-01-1
1 pursuant to section ninety-two-b of this chapter. Upon such payment the
2 liability of the state therefor shall be fully discharged.
3 10. In the event that moneys deposited in the fund created by this
4 section are insufficient to pay such rebates, the city of New York shall
5 pay any such deficiency to such fund in accordance with local law.
6 11. 9. The commissioner of taxation and finance shall not be held
7 liable for any inaccuracy in any certification under this section.
8 § 2. This act shall take effect April 1, 2001.
9 PART Q
10 Section 1. The state comptroller is hereby authorized and directed to
11 loan money in accordance with the provisions set forth in subdivision 5
12 of section 4 of the state finance law to the following funds and/or
13 accounts:
14 1. Tuition reimbursement fund (050):
15 a. Proprietary vocational school supervision account (02).
16 2. Local government records management improvement fund (052).
17 3. Health facilities capital improvement fund (071).
18 4. Dedicated highway and bridge trust fund (072).
19 5. State parks infrastructure trust fund (076).
20 6. Clean water/clean air implementation fund (079).
21 7. State lottery fund (160).
22 8. Medicaid management information system escrow fund (179).
23 9. Federal USDA-food and nutrition services fund (261):
24 a. 2000 child and adult food care grant account.
25 b. 2001 child and adult food care grant account.
26 c. 2000 federal food and nutrition services account.
27 d. 2001 federal food and nutrition services account.
28 10. Federal health and human services fund (265):
269 12020-01-1
1 a. Miscellaneous agencies (80).
2 b. 2000 children's health insurance account (4W).
3 c. 2001 children's health insurance account.
4 11. Federal block grant fund (269):
5 a. 2000 community services block grant (M6).
6 b. 2001 community services block grant (N6).
7 c. 2002 community services block grant.
8 d. 2000 maternal and child health services block grant (M4).
9 e. 2001 maternal and child health services block grant.
10 f. 2000 preventive health and human services block grant (M5).
11 g. 2001 preventive health and human services block grant.
12 h. 2000 abstinence education grant (M8).
13 i. 2001 abstinence education grant.
14 j. 2000 individuals with disabilities education act-part c (52).
15 k. 2001 individuals with disabilities education act-part c.
16 12. Federal operating grants fund (290):
17 a. National recreation trail act grants (07).
18 b. State side land and water conservation act (08).
19 c. Historic preservation grants (13).
20 d. Division of human rights federal housing assistance (19).
21 e. Division of military and naval affairs training sites (30).
22 f. Division of military and naval affairs army and national guard
23 contract (35).
24 g. Division of military and naval affairs air national guard contract
25 (36).
26 h. Division of military and naval affairs air national guard security
27 guards (38).
270 12020-01-1
1 i. Division of military and naval affairs emergency management account
2 (72).
3 j. HUD - emergency shelter grants (75).
4 k. Federal library services technology act account (90).
5 l. Federal energy management account - state heating oil program (AE).
6 m. State side marine & recreational vehicle program (AJ).
7 n. HUD - HOPWA automated (AK).
8 o. Federal McKinney homeless grant program (AY).
9 p. National park rehab (A1).
10 q. Encon ISTEA (A9).
11 r. Division of veterans' affairs - veterans' education account (B5).
12 s. FTA program management account (FT).
13 t. Division of human rights federal equal opportunity (G1).
14 u. Land and water conservation act grants (H6)
15 v. National community service fund (JA).
16 w. Rural and small urban transit aid account (L2).
17 x. Federal housing and urban development account-local planning (L3).
18 y. Urban mass transportation administration account-local planning
19 (L4).
20 z. Federal fund for pipeline safety account - 1983 pipeline safety
21 grant (L8).
22 aa. Foster care and adoption (W6).
23 bb. Encon Agriculture (Y1).
24 cc. Encon commerce (Y2).
25 dd. Wildlife restoration (Y3).
26 ee. Encon EPA (Y4).
27 ff. Interior non wildlife (Y7).
28 gg. Air pollution control (Y8).
271 12020-01-1
1 hh. Hazardous waste (Y9).
2 ii. Army (YO).
3 jj. COPSMORE 98 grant (2P).
4 kk. 1999 Safe drinking water (2Q).
5 ll. 2000 Safe drinking water (2U).
6 mm. 2001 Safe drinking water.
7 nn. 1999 State indoor radon (2R).
8 oo. 2000 State indoor radon (2V).
9 pp. 2001 State indoor radon.
10 qq. 1999 Asbestos compliance monitoring (2T).
11 rr. 2000 Asbestos compliance monitoring (2W).
12 ss. 2001 Asbestos compliance monitoring.
13 tt. 2000 pollution prevention for the health care industry.
14 uu. 2001 pollution prevention for the health care industry.
15 vv. 2000 hazardous air pollutants and acute asthma in urban areas.
16 ww. 2001 hazardous air pollutants and acute asthma in urban areas.
17 xx. 2000 summer food grant.
18 yy. 2001 summer food grant.
19 zz. OCA - federal grants for drug court accounts.
20 aaa. HUD small cities community development.
21 bbb. Lead based paint program account (CH).
22 ccc. Manufacturing extension partnership account.
23 ddd. Violent offender incarceration and truth in sentencing account.
24 13. Federal capital projects fund (291).
25 14. Environmental conservation special revenue fund (301):
26 a. Hazardous bulk storage account (F7).
27 b. Utility environmental regulation account (H4).
28 c. Low level radioactive waste siting account (K5).
272 12020-01-1
1 d. Recreation account (K6).
2 e. Conservationist magazine account (S4).
3 f. Environmental regulatory account (S5).
4 g. Mined land reclamation program account (XB).
5 15. Environmental protection and oil spill compensation fund (303).
6 16. Hazardous waste remedial fund (312):
7 a. Site investigation and construction account (12).
8 17. Clean air fund (314).
9 18. Centralized services account (323).
10 19. Suburban transportation fund (327).
11 20. Agency enterprise fund (331):
12 a. OGS convention center account (55).
13 21. Agencies internal service fund (334).
14 22. Miscellaneous special revenue fund (339):
15 a. Adoption information registry account (01).
16 b. Statewide planning and research cooperative system account (03).
17 c. Energy office utility conservation activities account (06).
18 d. New York state thruway authority account (08).
19 e. Office of mental retardation and developmental disabilities nonper-
20 sonal service patient income account (10).
21 f. Empire state plaza arts center corporation account (12).
22 g. Civic center account (14).
23 h. Financial control board account (15).
24 i. Tri-state federal account (17).
25 j. Food assistance program account (19).
26 k. Quality of care account (20).
27 l. Continuing care retirement community account (28).
28 m. Surplus commodity container account (40).
273 12020-01-1
1 n. Hospital and nursing home management account (44).
2 o. State university dormitory income reimbursable account (47).
3 p. Energy research account (60).
4 q. Criminal justice improvement account (62).
5 r. New York fire academy account (72).
6 s. Environmental laboratory reference fee account (81).
7 t. Clinical laboratory reference fee account (90).
8 u. Minority and women's business development account (91).
9 v. Public employment relations board account (93).
10 w. Radiological health protection account (95).
11 x. Legal technology account (A1).
12 y. Teacher certification program account (A4).
13 z. Banking department account (A5).
14 aa. Cable television account (A6).
15 bb. Small business administration account (A8).
16 cc. Hospital based grants program account (AF).
17 dd. Indirect cost recovery account (AH).
18 ee. High school equivalency program account (AI).
19 ff. DOH administration account (AP).
20 gg. Rail safety inspection account (AQ).
21 hh. Administrative reimbursement account (AR).
22 ii. Insurance department account (B6).
23 jj. Workers' compensation account (B7).
24 kk. Bell jar account (BJ).
25 ll. Industry and utility service account (BK).
26 mm. Energy efficient rebate account (BL).
27 nn. Auditing services refund account (BN).
28 oo. Real property disposition account (BP).
274 12020-01-1
1 pp. Parking account (BQ).
2 qq. Procurement revenue account (BR).
3 rr. Asbestos safety training program account (BW).
4 ss. Improvement of real property tax administration account (BZ).
5 tt. Public service account (C3).
6 uu. State central register account (CY).
7 vv. Plant industry account (CZ).
8 ww. Batavia school for the blind account (D9).
9 xx. Surplus property account (DE).
10 yy. Financial oversight account (DI).
11 zz. Medicaid fraud control account (DL).
12 aaa. Regulation of indian gaming account (DT).
13 bbb. Special conservation activities account (DU).
14 ccc. Office of the professions account (E3).
15 ddd. Rome school for the deaf account (E6).
16 eee. Seized assets account (E8).
17 fff. Administrative adjudication account (E9).
18 ggg. Federal salary sharing account (EC).
19 hhh. Transportation regulation account (F1).
20 iii. Local services account (G3).
21 jjj. Division of housing and community renewal housing information
22 systems special revenue account (H1).
23 kkk. Housing special revenue account (H2).
24 lll. Triplicate prescription forms account (H5).
25 mmm. Department of motor vehicles compulsory insurance account (H7).
26 nnn. Housing credit agency application fee account (J5).
27 ooo. EPIC premium account (J6).
28 ppp. Adult cystic fibrosis program account (L5).
275 12020-01-1
1 qqq. Federal gasoline and diesel fuel excise tax account (L6).
2 rrr. Administrative reimbursement account (L7).
3 sss. Maternal and child HIV services account (LC).
4 ttt. Low income housing credit monitoring fee account (NG).
5 uuu. Procurement opportunities newsletter account (P4).
6 vvv. Corporation administration account (P6).
7 www. Excelsior capital corporation reimbursement account (R1).
8 xxx. Motor fuel quality account (R4).
9 yyy. Weights and measures account (R5).
10 zzz. Deferred compensation administration account (R7).
11 aaaa. Batavia medicaid income account (S1).
12 bbbb. Rent revenue account (S8).
13 cccc. Rent revenue other account.
14 dddd. Transportation safety account (T1).
15 eeee. Transportation aviation account (T5).
16 ffff. Solid waste management account (W3).
17 gggg. Occupational health clinics account (W4).
18 hhhh. Examination and miscellaneous revenue account.
19 iiii. State student financial aid audit account.
20 jjjj. Montrose veteran's home account (Q6).
21 kkkk. Child support incentive revenue account (AX).
22 llll. Telemarketer do not call account.
23 mmmm. Margaret Chapman closedown account.
24 nnnn. Small cities community development program account.
25 23. State university income fund (345):
26 a. State university general income offset account (11).
27 24. State police and motor vehicle law enforcement fund (354):
28 a. State police motor vehicle law enforcement account (02).
276 12020-01-1
1 25. Youth facilities improvement fund (357).
2 26. Highway safety program fund (362).
3 27. Drinking water program management and administration fund (366).
4 28. New York city county clerks offset fund (368).
5 29. Housing assistance fund (374).
6 30. Housing program fund (376).
7 31. Department of transportation - engineering services fund (380).
8 32. Miscellaneous capital projects fund (387):
9 a. Clean air capital account (08).
10 33. CUNY capital projects fund (388).
11 34. Mental hygiene facilities capital improvement fund (389).
12 35. Joint/labor management administration fund (394):
13 a. Joint labor/management administration fund (01).
14 36. Audit and control revolving fund (395):
15 a. Executive direction internal audit account (04).
16 37. Health insurance internal service fund (396).
17 38. Correctional industries revolving fund (397).
18 39. Correctional facilities capital improvement fund (399).
19 § 2. The comptroller is authorized and directed to deposit to the
20 general fund - state purposes account reimbursements from moneys appro-
21 priated or reappropriated to the correctional facilities improvement
22 fund (399) by a chapter of the laws of 2001. Reimbursements shall be
23 available for spending from appropriations made to the department of
24 correctional services in the general fund - state purposes account by a
25 chapter of the laws of 2001 for costs associated with the administration
26 and security of capital projects and for other costs which are attribut-
27 able, according to a plan, to such capital projects.
277 12020-01-1
1 § 3. Section 97-rrr of the state finance law, as added by section 7-a
2 of part A of chapter 56 of the laws of 1998, is amended by adding a new
3 subdivision 5 to read as follows:
4 5. Notwithstanding the provisions of section one hundred seventy-one-a
5 of the tax law or any other provisions of law to the contrary, during
6 each fiscal year the state comptroller is hereby authorized and directed
7 to deposit into the school tax relief fund created pursuant to this
8 section from amounts collected pursuant to article twenty-two of the tax
9 law the amounts necessary to meet the purposes of such fund for each
10 fiscal year pursuant to a schedule submitted by the director of the
11 budget.
12 § 4. Subdivision 1 of section 94 of the state finance law, as amended
13 by chapter 62 of the laws of 1988, is amended to read as follows:
14 1. There is hereby established in the joint custody of the state comp-
15 troller and the commissioner of taxation and finance a special revenue
16 fund to be known as the "court facilities incentive aid fund."
17 Within such fund there is hereby established a special account for
18 each political subdivision of the state to which state assistance is
19 apportioned and payable pursuant to section fifty-four-j of this chap-
20 ter.
21 § 5. Subdivision 1 of section 94-a of the state finance law, as added
22 by chapter 55 of the laws of 1992, is amended to read as follows:
23 1. There is hereby established in the joint custody of the state comp-
24 troller and the commissioner of taxation and finance a special revenue
25 fund to be known as the "New York city county clerks' operations offset
26 fund."
27 § 6. Subdivision 1 of section 94-b of the state finance law, as added
28 by chapter 55 of the laws of 1992, is amended to read as follows:
278 12020-01-1
1 1. There is hereby established in the joint custody of the state comp-
2 troller and the commissioner of taxation and finance a special revenue
3 fund to be known as the "judiciary data processing offset fund."
4 § 7. Subdivision 1 of section 94-d of the state finance law, as added
5 by chapter 205 of the laws of 1996, is amended to read as follows:
6 1. There is hereby established in the joint custody of the state comp-
7 troller and the commissioner of taxation and finance a special revenue
8 fund to be known as the "New York state collectible series fund."
9 § 8. Subdivision 1 of section 97-h of the state finance law, as added
10 by chapter 617 of the laws of 1987, is amended to read as follows:
11 1. There is hereby established in the custody of the state comptroller
12 a special revenue fund to be known as the Lake George park trust fund.
13 § 9. Subdivision 1 of section 97-l of the state finance law, as added
14 by chapter 565 of the laws of 1989, is amended to read as follows:
15 1. There is hereby established in the joint custody of the state comp-
16 troller and the commissioner of taxation and finance a special revenue
17 fund to be known as the "sewage treatment program management and admin-
18 istration fund".
19 § 10. Subdivision 1 of section 97-bb of the state finance law, as
20 added by chapter 62 of the laws of 1989, is amended to read as follows:
21 1. There is hereby established in the joint custody of the state comp-
22 troller and the commissioner of the department of taxation and finance a
23 special revenue fund to be known as the "criminal justice improvement
24 account".
25 § 11. Subdivision 1 of section 97-mm of the state finance law, as
26 added by chapter 55 of the laws of 1992, is amended to read as follows:
27 1. There is hereby established in the joint custody of the state comp-
28 troller and the commissioner of taxation and finance a miscellaneous
279 12020-01-1
1 special revenue fund to be known as the "state police motor vehicle law
2 enforcement account".
3 § 12. Subdivision 1 of section 97-oo of the state finance law, as
4 added by chapter 554 of the laws of 1993, is amended to read as follows:
5 1. There is hereby established in the joint custody of the state comp-
6 troller and the commissioner of taxation and finance a special revenue
7 fund to be known as the biodiversity stewardship and research fund which
8 shall consist of a state land biodiversity stewardship account and a
9 biodiversity research account.
10 § 13. Subdivision 1 of section 97-qq of the state finance law, as
11 added by section 37 of part E of chapter 58 of the laws of 1998, is
12 amended to read as follows:
13 1. There is hereby established in the custody of the state comptroller
14 a special revenue fund to be known as the "New York state wireless
15 telephone emergency service account".
16 § 14. Subdivision 1 of section 97-ss of the state finance law, as
17 added by chapter 309 of the laws of 1996, is amended to read as follows:
18 1. There is hereby established in the joint custody of the state comp-
19 troller and the commissioner of the department of taxation and finance a
20 special revenue fund to be known as the "tax proceedings fee account".
21 § 15. Subdivision 1 of section 97-ddd of the state finance law, as
22 added by chapter 432 of the laws of 1997, is amended to read as follows:
23 1. There is hereby established in joint custody of the state comp-
24 troller and the commissioner of taxation and finance a special revenue
25 fund to be known as the "drinking water program management and adminis-
26 tration fund".
27 § 16. Subdivision 1 of section 97-eee of the state finance law, as
28 added by chapter 432 of the laws of 1997, is amended to read as follows:
280 12020-01-1
1 1. There is hereby established in joint custody of the state comp-
2 troller and the commissioner of taxation and finance a special revenue
3 fund to be known as the "clean water/clean air implementation fund."
4 § 17. Subdivision 1 of section 97-lll of the state finance law, as
5 added by section 88 of part A of chapter 436 of the laws of 1997, is
6 amended to read as follows:
7 1. There is hereby established in the joint custody of the state
8 comptroller and the commissioner of the department of taxation and
9 finance a special revenue fund to be known as the vocational rehabili-
10 tation fund.
11 § 18. Subdivision 1 of section 99-d of the state finance law, as added
12 by chapter 309 of the laws of 1996, is amended to read as follows:
13 1. There is hereby established in the joint custody of the state comp-
14 troller and the commissioner of taxation and finance an account in the
15 miscellaneous special revenue fund to be known as the city university
16 stabilization account.
17 § 19. Subdivision 1 of section 99-f of the state finance law, as
18 amended by chapter 612 of the laws of 1999, is amended to read as
19 follows:
20 1. There is hereby established in the joint custody of the state comp-
21 troller and the commissioner of taxation and finance a special revenue
22 fund to be known as the "spinal cord injury research trust fund".
23 § 20. Subdivision 2 of section 550 of the labor law, as amended by
24 chapter 460 of the laws of 1971, is amended to read as follows:
25 2. Custodian of funds. The state commissioner of taxation and finance
26 and the state comptroller shall be the custodian custodians of the
27 funds received upon requisition by the industrial commissioner from the
28 unemployment trust fund and, subject to audit by the state comptroller,
281 12020-01-1
1 the industrial commissioner shall direct the disbursement thereof. The
2 state commissioner of taxation and finance, notwithstanding any other
3 provision of law, may for the purpose of such disbursement authorize any
4 depository of the fund to make payments out of any moneys therein upon
5 drafts on the fund issued by the industrial commissioner and counter-
6 signed by the state comptroller. The state commissioner of taxation and
7 finance may deposit any portion of such funds which he deems not needed
8 for immediate use in the manner and subject to all the provisions of law
9 respecting the deposit of other state funds by him. Interest earned by
10 such portion of such funds deposited by the state commissioner of taxa-
11 tion and finance shall be collected by him and placed to the credit of
12 the fund.
13 § 21. Section 96 of the state finance law is REPEALED.
14 § 22. Paragraph (b) of subdivision 3-a of section 378 of the education
15 law is REPEALED.
16 § 23. Section 92-m of the state finance law is REPEALED.
17 § 24. Section 94-c of the state finance law is REPEALED.
18 § 25. Section 97-o of the state finance law is REPEALED.
19 § 26. Section 97-n of the state finance law is REPEALED.
20 § 27. (1) Pursuant to various chapters of the laws of 2001 making
21 appropriations for capital projects, such appropriations shall be deemed
22 to provide all costs necessary and pertinent to accomplish the intent of
23 the appropriation including apportionments to departments, agencies or
24 corporations for the purposes of the specific appropriation or for
25 payment to the construction management account of the centralized
26 services fund of the New York state office of general services for the
27 preparation and review of plans, specifications, estimates, services,
28 construction management and supervision, inspection, studies,
282 12020-01-1
1 appraisals, surveys, testing and environmental statements relating to
2 existing or proposed facilities.
3 Appropriations from the capital projects fund, the city university of
4 New York capital projects fund, the mental hygiene capital improvement
5 fund, the department of health facilities capital improvement fund, the
6 correctional facilities capital improvement fund, the youth facilities
7 improvement fund, the housing assistance fund, the housing program fund,
8 the engineering services fund, the dedicated highway and bridge trust
9 fund, the suburban transportation fund, the state parks infrastructure
10 fund, the passenger facility charge fund, the state university residence
11 hall rehabilitation fund, the state university capital projects fund,
12 the New York state canal system development fund, the financial security
13 fund, the natural resources damages fund, the federal capital projects
14 fund, and the regional aviation fund are appropriated in accordance with
15 the provisions of section 93 of the state finance law. Moneys appropri-
16 ated from each such fund type for CCP's, for agency purposes within
17 CCP's, and for projects sharing the same agency purpose within a CCP may
18 be transferred among projects within a CCP in accordance with paragraphs
19 (a) through (g) of subdivision 4 of section 93 of the state finance law
20 and may be transferred among purposes within a CCP subject to the limi-
21 tations of paragraph (e) of subdivision 4 of section 93 of the state
22 finance law.
23 Notwithstanding the provisions of any general or special law, the
24 provisions of paragraphs (a) through (g) of subdivision 4 of section 93
25 of the state finance law which relate to the transfer of a portion of a
26 capital appropriation to another capital appropriation shall be applica-
27 ble to appropriations from each fund.
283 12020-01-1
1 (2) The following funds are eligible to be reimbursed from miscella-
2 neous receipts or the proceeds of notes or bonds sold by public authori-
3 ties, as specified in this subdivision:
4 (a) the health facilities capital improvement fund, from the proceeds
5 of the sale of notes or bonds issued by the New York state dormitory
6 authority;
7 (b) the dedicated highway and bridge trust fund, from miscellaneous
8 receipts or the proceeds of the sale of notes or bonds issued by the New
9 York state thruway authority;
10 (c) the youth facilities improvement fund and the correctional facili-
11 ties capital improvement fund, from the proceeds of the sale of notes or
12 bonds issued by the New York state urban development corporation;
13 (d) the housing assistance fund and the housing program fund, from the
14 proceeds of the sale of notes or bonds issued by the housing finance
15 agency;
16 (e) the mental hygiene capital facilities improvement fund, from
17 miscellaneous receipts or the proceeds of the sale of notes or bonds
18 issued by the New York state dormitory authority as successor to the
19 medical care facilities financing agency pursuant to chapter 83 of the
20 laws of 1995;
21 The comptroller shall receive such reimbursements for deposit in the
22 funds so specified.
23 (3) The comptroller is hereby authorized and directed to deposit
24 moneys received, as specified below:
25 (a) the engineering services fund shall receive reimbursements from
26 various capital appropriations;
284 12020-01-1
1 (b) the financial security fund shall receive moneys recovered in
2 accordance with various required financial security arrangements for
3 environmental projects;
4 (c) the natural resources damages fund shall receive moneys recovered
5 from successful natural resource damage claims and related settlements;
6 and
7 (d) the regional aviation fund shall receive moneys from the lease of
8 Stewart Airport, including any payments due to the state from related
9 settlements or agreements.
10 (4) The comptroller shall certify monthly to the director of the budg-
11 et and the chairs of the senate finance and assembly ways and means
12 committees, the total disbursements from the correctional facilities
13 capital improvement fund (399), the department of health facilities
14 capital improvement fund (071), the housing assistance fund (374), the
15 youth facilities improvement fund (357), the housing program fund (376),
16 and the mental hygiene capital improvement fund (389), the total
17 reimbursements to such funds from bond proceeds, and the amount of
18 disbursements from such funds remaining to be financed with bond
19 proceeds. Once a year, as soon as practicable after March 31, the comp-
20 troller shall certify to the director of the budget and the chairs of
21 the senate finance and assembly ways and means committees, for the
22 fiscal year just ended, total disbursements from the correctional facil-
23 ities capital improvement fund, the department of health facilities
24 capital improvement fund, the youth facilities improvement fund, the
25 housing assistance fund, the housing program fund, and the mental
26 hygiene capital improvement fund any amounts transferred from the capi-
27 tal projects fund to such funds for nonbondable disbursements, the total
28 reimbursements to such funds from bond proceeds, and the amount of
285 12020-01-1
1 disbursements from such funds remaining to be financed with bond
2 proceeds.
3 (5) The dormitory authority of the state of New York and the depart-
4 ment of health shall report quarterly to the director of the budget the
5 amounts expended from appropriations in the capital projects fund which
6 are eligible for reimbursement from the proceeds of the bonds. The
7 housing finance agency in conjunction with the affordable housing corpo-
8 ration, the homeless housing assistance corporation and the commissioner
9 of the office of temporary and disability assistance, and the housing
10 trust fund corporation shall report quarterly to the director of the
11 budget on the amounts disbursed from appropriations in the housing
12 program fund and the housing assistance fund which are eligible for
13 repayment from the proceeds of the bonds. The dormitory authority of the
14 state of New York, as successor to the facilities development corpo-
15 ration pursuant to chapter 83 of the laws of 1995 and the office of
16 mental health, the office of mental retardation and developmental disa-
17 bilities, and the office of alcoholism and substance abuse services
18 shall report quarterly to the director of the budget on the amounts
19 disbursed from appropriations in the mental hygiene capital improvement
20 fund which are eligible for reimbursement from the proceeds of the
21 bonds. Such reports shall be submitted to the director of the budget no
22 later than July 30, October 31, January 30, and April 30 of each state
23 fiscal year. The director of the budget shall review these reports and
24 then certify to the comptroller amounts expended from these appropri-
25 ations which are reimbursable from bond proceeds. Until such time as the
26 director of the budget determines that the amounts disbursed from such
27 funds are not reimbursable from bond proceeds, all such disbursements
28 shall be considered to be reimbursable from bond proceeds. Upon such
286 12020-01-1
1 certifications for the housing assistance fund, the housing program
2 fund, and the mental hygiene capital improvement fund, the comptroller
3 is hereby authorized to transfer from the capital projects fund, pursu-
4 ant to an appropriation, an amount equal to the amount of disbursements
5 from these appropriations which have not been certified as repayable
6 from bond proceeds.
7 § 28. Notwithstanding any other law, rule or regulation to the contra-
8 ry, the comptroller is hereby authorized and directed to deposit to the
9 credit of the capital projects fund reimbursement from the proceeds of
10 notes and bonds issued by the environmental facilities corporation for a
11 capital appropriation for $27,452,000 authorized by chapter 55 of the
12 laws of 1996 to the department of environmental conservation for a
13 payment of a portion of the state's match for federal capitalization
14 grants for the water pollution control revolving loan fund.
15 § 29. Notwithstanding any other law, rule or regulation to the contra-
16 ry, the comptroller is hereby authorized and directed to deposit to the
17 credit of the capital projects fund reimbursement from the proceeds of
18 notes and bonds issued by the environmental facilities corporation for a
19 capital appropriation for $29,960,000 authorized by chapter 55 of the
20 laws of 1997 to the department of environmental conservation for a
21 payment of a portion of the state's match for federal capitalization
22 grants for the water pollution control revolving loan fund.
23 § 30. Notwithstanding any other law, rule or regulation to the contra-
24 ry, the comptroller is hereby authorized and directed to deposit to the
25 credit of the capital projects fund, reimbursement from the proceeds of
26 notes and bonds issued by the environmental facilities corporation for a
27 capital appropriation for $20,241,000 authorized by chapter 55 of the
28 laws of 1998 to the department of environmental conservation for a
287 12020-01-1
1 payment of a portion of the state's match for federal capitalization
2 grants for the water pollution control revolving loan fund.
3 § 31. Notwithstanding any other law, rule or regulation to the contra-
4 ry, the comptroller is hereby authorized and directed to deposit to the
5 credit of the capital projects fund, reimbursement from the proceeds of
6 notes and bonds issued by the environmental facilities corporation for a
7 capital appropriation for $22,404,000 authorized by chapter 55 of the
8 laws of 1999 to the department of environmental conservation for payment
9 of a portion of the state's match for federal capitalization grants for
10 the water pollution control revolving loan fund, reimbursements for
11 spending from various appropriations for projects related to the New
12 York City Watershed, reimbursement from the proceeds of notes and bonds
13 issued by the environmental facilities corporation for a capital appro-
14 priation for $22,500,000 authorized by chapter 55 of the laws of 1999 to
15 the environmental facilities corporation for payment for the jobs two
16 thousand pipeline for jobs program, reimbursement from the proceeds of
17 notes and bonds issued by the dormitory authority of the state of New
18 York for a capital appropriation for $47,500,000 authorized by chapter
19 55 of the laws of 1999 to the office of science, technology and academic
20 research for payment for the jobs two thousand capital facilities
21 program, reimbursement from the proceeds of notes and bonds issued by
22 the dormitory authority of the state of New York for a capital appropri-
23 ation for $145,000,000 authorized by chapter 53 of the laws of 1999 to
24 the state education department for payment of capital construction
25 grants to school districts pursuant to the rebuilding schools to uphold
26 education program, reimbursement from the proceeds of notes and bonds
27 issued by the urban development corporation for a capital appropriation
28 for $25,000,000 authorized by chapter 55 of the laws of 1999 to all
288 12020-01-1
1 state agencies for payment of costs related to economic development,
2 land acquisition, and heritage trail projects, and for reimbursement
3 from the proceeds of notes and bonds issued by the dormitory authority
4 of the state of New York for a capital appropriation for $15,000,000
5 authorized by chapter 53 of the laws of 1999 to the office of children
6 and family services for payment of costs related to the child care
7 facilities development program.
8 § 32. Notwithstanding any other law, rule or regulation to the contra-
9 ry, the comptroller is hereby authorized and directed to deposit to the
10 credit of the capital projects fund, reimbursement from the proceeds of
11 notes or bonds issued by the environmental facilities corporation for a
12 capital appropriation for $43,383,000 authorized by chapter 55 of the
13 laws of 2000 to the department of environmental conservation for payment
14 of a portion of the state's match for federal capitalization grants for
15 the water pollution control revolving loan fund, to reimburse spending
16 from various appropriations for certain projects related to the New York
17 City Watershed, and reimbursement from the proceeds of notes and bonds
18 issued by the urban development corporation or other financing source
19 for a capital appropriation for $25,000,000 authorized by chapter 50 of
20 the laws of 2000 to the office of general services for payment of capi-
21 tal construction costs for the department of transportation region one
22 headquarters building located in the city of Schenectady, reimbursement
23 from the proceeds of notes and bonds issued by the urban development
24 corporation for a capital appropriation for $15,000,000 authorized by
25 chapter 55 of the laws of 2000 to the urban development corporation for
26 payment of costs related to a sports facility in the city of Rochester,
27 reimbursement from the proceeds of notes and bonds issued by the urban
28 development corporation of the state of New York for a capital appropri-
289 12020-01-1
1 ation for $50,000,000 authorized by chapter 55 of the laws of 2000 to
2 the urban development corporation for payment of costs related to
3 economic development projects in the downtown Buffalo or the Buffalo
4 inner harbor area, reimbursement from proceeds of notes and bonds issued
5 by the urban development corporation, the environmental facilities
6 corporation or the dormitory authority, of the state of New York for a
7 capital appropriation for $225,000,000 authorized by chapter 55 of the
8 laws of 2000 to all state agencies for payment of costs related to the
9 strategic investment program, reimbursement from the proceeds of notes
10 and bonds issued by the dormitory authority of the state of New York for
11 a capital appropriation for $50,000,000 authorized by chapter 53 of the
12 laws of 2000 to the state education department for payment of capital
13 construction grants to school districts pursuant to the rebuilding
14 schools to uphold education program, for reimbursement from the proceeds
15 of notes and bonds issued by the dormitory authority of the state of New
16 York for a capital appropriation for $15,000,000 authorized by chapter
17 53 of the laws of 2000 to the office of children and family services for
18 payment of costs related to the child care facilities development
19 program, and for reimbursement from the proceeds of notes and bonds
20 issued by the dormitory authority of the state of New York for a capital
21 appropriation for $10,000,000 authorized by chapter 55 of the laws of
22 2000 to the office of science, technology and academic research for
23 payment of costs related to biomedical research and/or manufacturing
24 facilities.
25 § 33. Notwithstanding any other law, rule or regulation to the contra-
26 ry, the comptroller is hereby authorized and directed to deposit to the
27 credit of the capital projects fund, reimbursement from the proceeds of
28 notes or bonds issued by the environmental facilities corporation for a
290 12020-01-1
1 capital appropriation for $29,772,000 authorized by a chapter of the
2 laws of 2001 to the department of environmental conservation for payment
3 of a portion of the state's match for federal capitalization grants for
4 the water pollution control revolving loan fund, reimbursement from the
5 proceeds of notes and bonds issued by the urban development corporation
6 for a capital appropriation for $100,000,000 authorized by a chapter of
7 the laws of 2001 to the urban development corporation for economic
8 development projects and reimbursement from the proceeds of notes and
9 bonds issued by the urban development corporation or other financing
10 source for a capital appropriation for $68,000,000 authorized by a chap-
11 ter of the laws of 2001 to the office of general services for payment of
12 capital construction costs for the Alfred E. Smith office building
13 located in the city of Albany.
14 § 34. Notwithstanding any other law, rule or regulation to the contra-
15 ry, the state comptroller is hereby authorized and directed to use any
16 balance remaining in the mental health services fund debt service appro-
17 priation, after payment by the state comptroller of all obligations of
18 the facilities development corporation, or any successor agency,
19 required pursuant to any lease, sublease or other financing arrangement
20 between the facilities development corporation, the dormitory authority
21 of the state of New York as successor to the New York state medical care
22 facilities financing agency and the facilities development corporation
23 pursuant to chapter 83 of the laws of 1995 and the department of mental
24 hygiene for the purpose of making payments to such agency for the amount
25 of the earnings for the investment of monies deposited in the mental
26 health services fund that such agency determines will or may have to be
27 rebated to the federal government pursuant to the provisions of the
28 internal revenue code of 1986, as amended, in order to enable such agen-
291 12020-01-1
1 cy to maintain the exemption from federal income taxation on the inter-
2 est paid to the holders of such agency's mental services facilities
3 improvement revenue bonds. On or before June 30, 2002, such agency
4 shall certify to the state comptroller, its determination of the amounts
5 received in the mental health services fund as a result of the invest-
6 ment of monies deposited therein that will or may have to be rebated to
7 the federal government pursuant to the provisions of the internal reven-
8 ue code of 1986, as amended.
9 § 35. Section 66-b of the state finance law is amended by adding a new
10 subdivision 9 to read as follows:
11 9. The maximum amount of certificates of participation or similar
12 instruments representing periodic payments due from the state of New
13 York, issued on behalf of state departments and agencies, the city
14 university of New York and any other state entity otherwise specified
15 after March thirty-first, two thousand one, shall be three hundred
16 million dollars. Such amount shall be exclusive of certificates of
17 participation or similar instruments issued to fund a reserve fund or
18 funds, costs of issuance and to refund outstanding certificates of
19 participation.
20 § 36. Pursuant to article 5-A of the state finance law, the total
21 amount of certificates of participation to be issued in the state fiscal
22 year beginning April 1, 2001, to finance and, where appropriate to refi-
23 nance, personal property purposes including the cost of issuance and
24 related costs, shall not exceed $140,425,000 for installment purchases
25 and/or lease purchases of all state departments and agencies, units of
26 the state university of New York and city university of New York, and
27 the unified court system.
292 12020-01-1
1 § 37. Pursuant to article 5-A of the state finance law, the total
2 amount of certificates of participation to be issued in the state fiscal
3 year beginning April 1, 2001, to finance and, where appropriate to refi-
4 nance, personal property purposes including the cost of issuance and
5 related costs, shall not exceed $167,075,000 for installment purchases
6 and/or lease purchases of the office of children and family services,
7 the department of labor, the office of temporary and disability assist-
8 ance, and the department of health.
9 § 38. 1. Notwithstanding any other law, rule, or regulation to the
10 contrary, the state comptroller shall at the commencement of each month
11 certify to the director of the budget, the commissioner of environmental
12 conservation, the chair of the senate finance committee, and the chair
13 of the assembly ways and means committee the amounts disbursed from all
14 appropriations for hazardous waste site remediation disbursements for
15 the month preceding such certification.
16 2. Notwithstanding any law to the contrary, prior to the issuance by
17 the comptroller of bonds authorized pursuant to subdivision a of section
18 4 of the environmental quality bond act of nineteen hundred eighty-six,
19 as enacted by chapter 511 of the laws of 1986, disbursements from all
20 appropriations for that purpose shall first be reimbursed from moneys
21 credited to the hazardous waste remedial fund, site investigation and
22 construction account, to the extent moneys are available in such
23 account. For purposes of determining moneys available in such account,
24 the commissioner of environmental conservation shall certify to the
25 comptroller the amounts required for administration of the hazardous
26 waste remedial program.
27 3. The comptroller is hereby authorized and directed to transfer any
28 balance above the amounts certified by the commissioner of environmental
293 12020-01-1
1 conservation to reimburse disbursements pursuant to all appropriations
2 from such site investigation and construction account, provided, howev-
3 er, that if such transfers are determined by the comptroller to be
4 insufficient to assure that interest paid to holders of state obli-
5 gations issued for hazardous waste purposes pursuant to the environ-
6 mental quality bond act of nineteen hundred eighty-six, as enacted by
7 chapter 511 of the laws of 1986, is exempt from federal income taxation,
8 the comptroller is hereby authorized and directed to transfer from such
9 site investigation and construction account to the general fund, the
10 amount necessary to redeem bonds in an amount necessary to assure the
11 continuation of such tax exempt status. Prior to the making of any such
12 transfers, the comptroller shall notify the director of the budget of
13 the amount of such transfers.
14 § 39. Subdivision 1 of section 16 of part D of chapter 389 of the laws
15 of 1997, relating to the financing of the correctional facilities
16 improvement fund and the youth facility improvement fund, as amended by
17 section 30 of part H of chapter 56 of the laws of 2000, is amended to
18 read as follows:
19 1. Notwithstanding the provisions of section 18 of chapter 174 of the
20 laws of 1968, the New York state urban development corporation is hereby
21 authorized to issue bonds, notes and other obligations in an aggregate
22 principal amount not to exceed four billion five hundred fifty million
23 six hundred ninety-three thousand dollars ($4,550,693,000) four billion
24 seven hundred seventy-eight million five hundred ninety-three thousand
25 dollars ($4,778,593,000), and shall include all bonds, notes and other
26 obligations issued pursuant to chapter 56 of the laws of 1983, as
27 amended or supplemented. The proceeds of such bonds, notes or other
28 obligations shall be paid to the state, for deposit in the correctional
294 12020-01-1
1 facilities capital improvement fund to pay for all or any portion of the
2 amount or amounts paid by the state from appropriations or reappropri-
3 ations made to the department of correctional services from the correc-
4 tional facilities capital improvement fund for capital projects. The
5 aggregate amount of bonds, notes or other obligations authorized to be
6 issued pursuant to this section shall exclude bonds, notes or other
7 obligations issued to refund or otherwise repay bonds, notes or other
8 obligations theretofore issued, the proceeds of which were paid to the
9 state for all or a portion of the amounts expended by the state from
10 appropriations or reappropriations made to the department of correction-
11 al services; provided, however, that upon any such refunding or repay-
12 ment the total aggregate principal amount of outstanding bonds, notes or
13 other obligations may be greater than four billion five hundred fifty
14 million six hundred ninety-three thousand dollars ($4,550,693,000) four
15 billion seven hundred seventy-eight million five hundred ninety-three
16 thousand dollars ($4,778,593,000), only if the present value of the
17 aggregate debt service of the refunding or repayment bonds, notes or
18 other obligations to be issued shall not exceed the present value of the
19 aggregate debt service of the bonds, notes or other obligations so to be
20 refunded or repaid. For the purposes hereof, the present value of the
21 aggregate debt service of the refunding or repayment bonds, notes or
22 other obligations and of the aggregate debt service of the bonds, notes
23 or other obligations so refunded or repaid, shall be calculated by
24 utilizing the effective interest rate of the refunding or repayment
25 bonds, notes or other obligations, which shall be that rate arrived at
26 by doubling the semi-annual interest rate (compounded semi-annually)
27 necessary to discount the debt service payments on the refunding or
28 repayment bonds, notes or other obligations from the payment dates ther-
295 12020-01-1
1 eof to the date of issue of the refunding or repayment bonds, notes or
2 other obligations and to the price bid including estimated accrued
3 interest or proceeds received by the corporation including estimated
4 accrued interest from the sale thereof.
5 § 40. Paragraph (a) of subdivision 2 of section 47-e of the private
6 housing finance law, as amended by section 39 of part H of chapter 56 of
7 the laws of 2000, is amended to read as follows:
8 (a) In order to enhance and encourage the promotion of housing
9 programs and thereby achieve the stated purposes and objectives of such
10 housing programs, the agency shall have the power and is hereby author-
11 ized from time to time to issue negotiable housing program bonds and
12 notes in such principal amount as shall be necessary to provide suffi-
13 cient funds for the repayment of amounts disbursed pursuant to a chapter
14 of the laws of two thousand one making capital appropriations or reap-
15 propriations for the purposes of the housing program, provided, however,
16 that the agency may issue such bonds and notes in an aggregate principal
17 amount not exceeding one billion two hundred thirty-five eighty-five
18 million dollars, plus a principal amount of bonds issued to fund the
19 debt service reserve fund in accordance with the debt service reserve
20 fund requirement established by the agency and to fund any other
21 reserves that the agency reasonably deems necessary for the security or
22 marketability of such bonds and to provide for the payment of fees and
23 other charges and expenses, including underwriters' discount, trustee
24 and rating agency fees, bond insurance, credit enhancement and liquidity
25 enhancement related to the issuance of such bonds and notes. No reserve
26 fund securing the housing program bonds shall be entitled or eligible to
27 receive state funds apportioned or appropriated to maintain or restore
28 such reserve fund at or to a particular level, except to the extent of
296 12020-01-1
1 any deficiency resulting directly or indirectly from a failure of the
2 state to appropriate or pay the agreed amount under any of the contracts
3 provided for in subdivision four of this section.
4 § 41. Paragraph (a) of subdivision 5 of section 47-e of the private
5 housing finance law, as amended by section 40 of part H of chapter 56 of
6 the laws of 2000, is amended to read as follows:
7 (a) Upon the issuance of housing program bonds or notes, the agency
8 shall apply such amount of the proceeds thereof as shall be designated
9 and specified in the bond or note resolution or resolutions authorizing
10 the issuance of such bonds or notes to the specific funds and/or
11 accounts of one or more housing programs. The bond resolution or resol-
12 utions authorizing the issuance of such bonds or notes shall only allo-
13 cate net proceeds of bonds or notes to a particular fund or account of a
14 housing program if the legislature has authorized in a chapter of the
15 laws of two thousand one an advance to such fund or account and the
16 amount of such bond or note proceeds so allocated to such fund or
17 account shall not exceed the total amount so authorized to be advanced.
18 Such proceeds shall be disbursed to such a fund or account in accordance
19 with such allocation only for application to the repayment of advances
20 previously or thereupon made and not previously repaid. Such proceeds
21 may not be transferred from an entity authorized to administer a housing
22 program to the state or a fund of the state except in repayment of such
23 advances. Except in the case of refunding bonds or notes authorized
24 hereunder, any net proceeds not so allocated or disbursed shall be
25 utilized first to pay debt service on the applicable bonds or notes in
26 the current or the succeeding fiscal year and second to the redemption
27 of such bonds, provided that such application may be adjusted to comply
28 with applicable federal law as to federal tax exemption. For purposes of
297 12020-01-1
1 this paragraph, earnings from the investment of net proceeds shall be
2 treated as net proceeds.
3 § 42. Section 17 of part D of chapter 389 of the laws of 1997, relat-
4 ing to the financing of the correctional facilities improvement fund and
5 the youth facility improvement fund, as amended by section 41 of part H
6 of chapter 56 of the laws of 2000, is amended to read as follows:
7 § 17. Youth facilities bond program. 1. Notwithstanding the provisions
8 of section 18 of chapter 174 of the laws of 1968, the New York state
9 urban development corporation is hereby authorized to issue bonds, notes
10 and other obligations in an aggregate principal amount not to exceed
11 three hundred twenty-eight million five hundred fifteen thousand
12 dollars ($328,515,000) three hundred thirty-nine million sixty-eight
13 thousand dollars ($339,068,000), which authorization increases the
14 aggregate principal amount of bonds, notes and other obligations author-
15 ized by section 40 of chapter 309 of the laws of 1996, and shall include
16 all bonds, notes and other obligations issued pursuant to chapter 211 of
17 the laws of 1990, as amended or supplemented. The proceeds of such
18 bonds, notes or other obligations shall be paid to the state, for depos-
19 it in the youth facilities improvement fund, to pay for all or any
20 portion of the amount or amounts paid by the state from appropriations
21 or reappropriations made to the office of children and family services
22 from the youth facilities improvement fund for capital projects. The
23 aggregate amount of bonds, notes and other obligations authorized to be
24 issued pursuant to this section shall exclude bonds, notes or other
25 obligations issued to refund or otherwise repay bonds, notes or other
26 obligations theretofore issued, the proceeds of which were paid to the
27 state for all or a portion of the amounts expended by the state from
28 appropriations or reappropriations made to the office of children and
298 12020-01-1
1 family services; provided, however, that upon any such refunding or
2 repayment the total aggregate principal amount of outstanding bonds,
3 notes or other obligations may be greater than three hundred twenty-
4 eight million five hundred fifteen thousand dollars ($328,515,000)
5 three hundred thirty-nine million sixty-eight thousand dollars
6 ($339,068,000), only if the present value of the aggregate debt service
7 of the refunding or repayment bonds, notes or other obligations to be
8 issued shall not exceed the present value of the aggregate debt service
9 of the bonds, notes or other obligations so to be refunded or repaid.
10 For the purposes hereof, the present value of the aggregate debt service
11 of the refunding or repayment bonds, notes or other obligations and of
12 the aggregate debt service of the bonds, notes or other obligations so
13 refunded or repaid, shall be calculated by utilizing the effective
14 interest rate of the refunding or repayment bonds, notes or other obli-
15 gations, which shall be that rate arrived at by doubling the semi-annual
16 interest rate (compounded semi-annually) necessary to discount the debt
17 service payments on the refunding or repayment bonds, notes or other
18 obligations from the payment dates thereof to the date of issue of the
19 refunding or repayment bonds, notes or other obligations and to the
20 price bid including estimated accrued interest or proceeds received by
21 the corporation including estimated accrued interest from the sale ther-
22 eof.
23 2. For purposes of this section, the following provisions shall apply
24 to powers in connection with financing and refinancing of the design,
25 acquisition, construction, reconstruction, rehabilitation and improve-
26 ment of facilities for the office of children and family services by the
27 New York state urban development corporation.
299 12020-01-1
1 (a) The New York state office of general services shall be responsible
2 for the undertaking of studies, planning, site acquisition, design,
3 construction, reconstruction, renovation and development of youth facil-
4 ities, including the making of any purchases therefor, on behalf of the
5 New York state office of children and family services.
6 (b) Notwithstanding the provisions of any general or special law to
7 the contrary, and subject to the making of annual appropriations there-
8 for by the legislature, in order to assist the New York state urban
9 development corporation in the financing and refinancing of the design,
10 acquisition, construction, reconstruction, rehabilitation and improve-
11 ment of facilities for the office of children and family services, the
12 director of the budget is authorized in any state fiscal year to enter
13 into one or more service contracts, none of which shall exceed thirty
14 years in duration, with the New York state urban development corpo-
15 ration, upon such terms as the director of the budget and the New York
16 state urban development corporation agree;
17 (c) Any service contract entered into pursuant to paragraph (a) of
18 this subdivision or any payments made or to be made thereunder may be
19 assigned and pledged by the New York state urban development corporation
20 as security for its bonds and notes;
21 (d) Any such service contract shall provide that the obligation of the
22 director of the budget or of the state to fund or to pay the amounts
23 therein provided for shall not constitute a debt of the state within the
24 meaning of any constitutional or statutory provision in the event the
25 New York state urban development corporation assigns or pledges service
26 contract payments as security for its bonds or notes and shall be deemed
27 executory only to the extent moneys are available and that no liability
28 shall be incurred by the state beyond the moneys available for the
300 12020-01-1
1 purpose, and that such obligation is subject to annual appropriation by
2 the legislature;
3 (e) Any service contract or contracts for projects entered into pursu-
4 ant to this subdivision shall provide for state commitments to provide
5 annually to the New York state urban development corporation a sum or
6 sums, upon such terms and conditions as shall be deemed appropriate by
7 the director of the budget, to fund, or to fund the debt service
8 requirements of, any bonds or notes, including bonds issued to fund any
9 required debt service reserve requirement for bonds, of the New York
10 state urban development corporation issued to pay to the state all or a
11 portion of the amounts expended by the state from appropriations or
12 reappropriations made to the office of children and family services for
13 capital projects.
14 3. (a) The provisions of section 17 of the public officers law shall
15 apply to directors, officers, employees and agents of the New York state
16 urban development corporation in connection with any and all claims,
17 demands, suits, actions or proceedings which may be made or brought
18 against any of them arising out of any determinations made or actions
19 taken or omitted to be taken in compliance with any obligations under or
20 pursuant to the terms of this section. The provisions of this subdivi-
21 sion shall be in addition to and shall not supplant any indemnification
22 or other benefits heretofore or hereafter conferred upon directors,
23 officers and employees of the corporation by subdivision 3-a of section
24 4 of chapter 174 of the laws of 1968, as amended by action of such
25 corporation, or otherwise.
26 (b) The state shall and hereby agrees to and does indemnify and save
27 harmless the New York state urban development corporation from and
28 against any and all liability, loss, damage, interest, judgments and
301 12020-01-1
1 liens, and any and all costs and expenses (including, but not limited
2 to, counsel fees and disbursements) arising out of or incurred in
3 connection with any and all claims, demands, suits, actions or
4 proceedings which may be made or brought against such corporation (1)
5 arising out of any determinations made or actions taken or omitted to be
6 taken or compliance with any obligations under or pursuant to the terms
7 of this act, or (2) for or in relation to any injuries, including death
8 at any time resulting therefrom, sustained by a person or persons, or on
9 account of damage to or loss of property, through theft or otherwise, to
10 the extent the same arises out of or in consequence of the design,
11 acquisition, construction, reconstruction, rehabilitation and improve-
12 ment of facilities for the office of children and family services,
13 including the furnishing and equipping thereof, but in each such case
14 only to the extent that such corporation is not otherwise compensated
15 therefor by insurance.
16 § 43. Subdivision 2 of section 219-a of the judiciary law, as added by
17 chapter 613 of the laws of 1999, is amended to read as follows:
18 2. The chief administrator of the courts may enter into an agreement
19 jointly with the dormitory authority and with any other person, firm,
20 association, corporation or agency pursuant to which facilities for such
21 institute shall be constructed or otherwise provided and thereafter
22 maintained. The maximum amount of bonds that may be issued for such
23 institute is sixteen million one hundred five thousand dollars, exclu-
24 sive of bonds issued to fund any reserve fund or funds, pay costs of
25 issuance and refund bonds. Expenses of the unified court system in
26 relation to this agreement shall be paid out of funds appropriated from
27 the court facilities incentive aid fund to the judiciary for that
28 purpose.
302 12020-01-1
1 § 44. Paragraph e of subdivision 27 of section 1680 of the public
2 authorities law, as added by chapter 202 of the laws of 1990, is amended
3 to read as follows:
4 e. The dormitory authority shall not issue obligations for the
5 provision of a facility for the education department unless a certif-
6 icate of availability has been approved by the director of the budget
7 and an appropriation for such facility has been enacted. Except for
8 notes or bonds issued to refund outstanding bonds, no notes or bonds
9 shall be issued for the purposes authorized by this subdivision after
10 the thirty-first day of March, nineteen hundred ninety-nine.
11 § 45. Subdivision 1 of section 1290 of the public authorities law is
12 amended by adding a new paragraph (e) to read as follows:
13 (e) Notwithstanding any other law to the contrary, the corporation
14 shall not issue any notes or bonds on behalf of any state department or
15 agency to fund the removal, disposal and remediation of petroleum stor-
16 age tanks and the remediation of the sites thereof or for the making of
17 loans for purposes of section twelve hundred eighty-five-j of this
18 title, after the thirty-first day of March, nineteen hundred ninety-six.
19 This limitation shall not apply to bonds and notes issued to refund
20 bonds issued for such purposes.
21 § 46. Subdivision 2 of section 1680 of the public authorities law is
22 amended by adding a new paragraph j to read as follows:
23 j. The maximum amount of bonds and notes to be issued after March
24 thirty-first, two thousand one for a housing unit for the use of
25 students at a state-operated institution or statutory or contract
26 college under the jurisdiction of the state university of New York shall
27 be four hundred five million dollars. Such amount shall be exclusive of
28 bonds and notes issued to fund any reserve fund or funds, costs of issu-
303 12020-01-1
1 ance, and to refund any outstanding bonds and notes relating to a hous-
2 ing unit under the jurisdiction of the state university of New York.
3 § 47. Section 1680 of the public authorities law is amended by adding
4 a new subdivision 10-a to read as follows:
5 10-a. Notwithstanding any other provision of the law to the contrary,
6 the maximum amount of bonds and notes to be issued after March thirty-
7 first, two thousand one, on behalf of the state, in relation to any
8 locally sponsored community college, shall be one hundred seventy-five
9 million dollars. Such amount shall be exclusive of bonds and notes
10 issued to fund any reserve fund or funds, costs of issuance and to
11 refund any outstanding bonds and notes, issued on behalf of the state,
12 relating to a locally sponsored community college.
13 § 48. Subdivision 2-b of section 376 of the public authorities law, as
14 amended by chapter 55 of the laws of 1992, is amended to read as
15 follows:
16 2-b. From time to time to enter into agreements with the commissioner
17 of transportation to finance the capital costs of projects authorized
18 pursuant to section eighty-eight-b of the state finance law, and to
19 issue bonds and notes for capital projects approved by metropolitan
20 planning organizations or transportation coordinating committees pursu-
21 ant to the provisions of such section eighty-eight-b. All the provisions
22 of this title relating to bonds and notes which are not inconsistent
23 with the provisions of this section shall apply to the bonds and notes
24 authorized by this section. No bonds or notes shall be issued for the
25 purposes authorized by this subdivision after the thirty-first day of
26 March, two thousand.
27 § 49. Chapter 152 of the laws of 1964 relating to authorizing the
28 commissioner of general services to contract on behalf of the state with
304 12020-01-1
1 counties in the state of New York for the construction of buildings and
2 other public improvements in such counties is amended by adding a new
3 section 8-a to read as follows:
4 § 8-a. The state commissioner of general services shall not enter into
5 a contract with any county in the state as authorized by this chapter,
6 after the thirty-first day of March, two thousand.
7 § 50. Section 97-rrr of the state finance law, as amended by section
8 45 of part H of chapter 56 of the laws of 2000, is amended to read as
9 follows:
10 § 97-rrr. Debt reduction reserve fund. 1. There is hereby established
11 in the joint custody of the comptroller and the commissioner of taxation
12 and finance a fund to be known as the debt reduction reserve fund. Such
13 fund shall be established as a capital projects debt service fund.
14 2. Such fund shall consist of all monies credited or transferred ther-
15 eto from the general fund or from any other fund or sources pursuant to
16 law.
17 3. The monies in such fund, following appropriation by the legislature
18 and allocation by the director of the budget, shall be available for the
19 following purposes:
20 (a) for the payment of principal, interest, and related expenses on
21 general obligation bonds, lease purchase payments, or special contractu-
22 al obligation payments, or for the purposes of retiring or defeasing
23 bonds previously issued, including any accrued interest thereon, for any
24 state-supported bonding program or programs, and;
25 (b) for the funding of capital projects, equipment acquisitions, or
26 similar expenses which have been authorized by law to be financed
27 through the issuance of bonds, notes, or other obligations.
305 12020-01-1
1 § 51. (a) Notwithstanding the provisions of section 18 of the New York
2 state urban development corporation act, the urban development corpo-
3 ration is hereby authorized to issue bonds or notes in one or more
4 series in an aggregate principal amount not to exceed $72,000,000,
5 excluding bonds issued to fund one or more debt service reserve funds,
6 to pay costs of issuance of such bonds, and bonds or notes issued to
7 refund or otherwise repay such bonds or notes previously issued, for the
8 purpose of financing the Alfred E. Smith office building located in the
9 city of Albany, including the reimbursement of any disbursements made
10 from the state capital projects fund. Such bonds and notes of the corpo-
11 ration shall not be a debt of the state, and the state shall not be
12 liable thereon, nor shall they be payable out of any funds other than
13 those appropriated by the state to the corporation for debt service and
14 related expenses pursuant to any service contracts executed pursuant to
15 subdivision (b) of this section and such bonds and notes shall contain
16 on the face of thereof a statement to such effect. Except for purposes
17 of complying with the internal revenue code, any interest income earned
18 on bond proceeds shall only be used to pay debt service on such bonds.
19 (b) Notwithstanding any provisions of law to the contrary, in order to
20 assist the corporation in undertaking the administration and financing
21 of the project authorized pursuant to subdivision (a) of this section,
22 the director of the budget is hereby authorized to enter into one or
23 more service contracts with the corporation, none of which shall exceed
24 more than thirty years in duration, upon such terms and conditions as
25 the director of the budget and the corporation agree, so as to annually
26 provided to the corporation in the aggregate, a sum not to exceed the
27 annual debt service payments and related expenses required for the bonds
28 and notes issued pursuant to this section. Any service contract entered
306 12020-01-1
1 into pursuant to this subdivision shall provide that the obligation of
2 the state to pay the amount therein provided shall not constitute a debt
3 of the state within the meaning of any constitutional or statutory
4 provision and shall be deemed executory only to the extent of monies
5 available and that no liability shall be incurred by the state beyond
6 the monies available for such purposes, subject to annual appropriation
7 by the legislature. Any such contract or any payments made or to be made
8 thereunder may be assigned and pledged by the corporation as security
9 for its bonds and notes, as authorized by this section.
10 § 52. Paragraphs a and b of subdivision 4 of section 57 of the state
11 finance law, paragraph a as amended by chapter 219 of the laws of 1999
12 and paragraph b as amended by section 21 of part F of chapter 405 of the
13 laws of 1999, are amended to read as follows:
14 a. Such bonds shall be sold at par, at par plus a premium not to
15 exceed five percent in the case of refunding bonds or five-tenths of one
16 percent in the case of all other bonds, or at a discount to the bidder
17 offering the lowest interest cost to the state, taking into consider-
18 ation any premium or discount and, in the case of refunding bonds, the
19 bona fide initial public offering price, not less than four nor more
20 than fifteen days, Sundays excepted, after a notice of such sale has
21 been published at least once in a definitive trade publication of the
22 municipal bond industry published on each business day in the state of
23 New York which is generally available to participants in the municipal
24 bond industry, which notice shall state the terms of the sale. The
25 comptroller may not change the terms of the sale unless notice of such
26 change is sent via a definitive trade wire service of the municipal bond
27 industry which, in general, makes available information regarding activ-
28 ity and sales of municipal bonds and is generally available to partic-
307 12020-01-1
1 ipants in the municipal bond industry, at least one day prior to the
2 date of the sale as set forth in the original notice of sale. In so
3 changing the terms or conditions of a sale the comptroller may send
4 notice by such wire service that the sale will be delayed by up to thir-
5 ty days, provided that wire notice of the new sale date will be given at
6 least one business day prior to the new time when bids will be accepted.
7 In such event, no new notice of sale shall be required to be published.
8 Notwithstanding the provisions of section one hundred five of the state
9 technology law or any other law, if the notice of sale contains a
10 provision that bids will only be accepted electronically in the manner
11 provided in such notice of sale, the comptroller shall not be required
12 to accept non-electronic bids in any form. Advertisements shall contain
13 a provision to the effect that the state comptroller, in his discretion,
14 may reject any or all bids made in pursuance of such advertisements, and
15 in the event of such rejection, the state comptroller is authorized to
16 negotiate a private sale or readvertise for bids in the form and manner
17 above described as many times as, in his judgment, may be necessary to
18 effect a satisfactory sale. Notwithstanding the foregoing provisions of
19 this paragraph, whenever in the judgment of the comptroller the inter-
20 ests of the state will be served thereby, he may sell state bonds at
21 private sale at par, at par plus a premium not to exceed five percent in
22 the case of refunding bonds or five-tenths of one percent in the case of
23 all other bonds, or at a discount. The comptroller shall promulgate
24 regulations governing the terms and conditions of any such private
25 sales, which regulations shall include a provision that he give notice
26 to the governor, the temporary president of the senate, and the speaker
27 of the assembly, of his intention to conduct a private sale of obli-
308 12020-01-1
1 gations pursuant to this section not less than five days prior to such
2 sale or the execution of any binding agreement to effect such sale.
3 b. Notwithstanding paragraph a of this subdivision, whenever in the
4 judgment of the comptroller the interests of the state will be served
5 thereby, such bonds may be sold at public or private sale in accordance
6 with the procedures set forth in paragraph a of this subdivision, with
7 interest rates that vary in accordance with a formula or procedure set
8 forth or referred to in the bonds and may provide the holders thereof
9 with such rights to require the state or other persons to purchase or
10 redeem such bonds or renewals thereof from the proceeds of the resale
11 thereof or otherwise from time to time prior to the final maturity of
12 such bonds as the comptroller may determine and the state may resell, at
13 any time prior to final maturity, any such bonds acquired as a result of
14 the exercise of such rights, provided, however, that as of the initial
15 date of each issuance of such bonds with interest rates that vary the
16 total principal amount of bonds then outstanding pursuant to this para-
17 graph and paragraph (b) of subdivision four of section sixty shall not
18 exceed twenty percent of the total principal amount of all bonds then
19 outstanding which carry the full faith and credit of the state.
20 Notwithstanding the foregoing, the The holders of bonds sold pursuant
21 to this paragraph shall not may be provided with the right to require
22 the state to repurchase or redeem the bonds prior to the final maturity
23 thereof unless if the state has entered into one or more letter of
24 credit agreements or other liquidity facility agreements entered into
25 for the express purposes of such sale and which shall require a finan-
26 cially responsible party or parties to the agreement or agreements,
27 other than which may be the state, to purchase or redeem all or any
28 portion of such bonds tendered by the holders thereof for repurchase or
309 12020-01-1
1 redemption prior to the final maturity of such bonds. Such requirement
2 to purchase or redeem bonds shall continue until such time as the right
3 of the holders of such bonds to require repurchase or redemption of such
4 bonds prior to the final maturity thereof shall cease. A financially
5 responsible party or parties, for purposes of this paragraph, shall mean
6 a person or persons determined by the comptroller to have sufficient net
7 worth and liquidity to purchase and pay for on a timely basis all of the
8 bonds which may be tendered for repurchase or redemption by the holders
9 thereof.
10 § 53. Paragraphs (a) and (b) of subdivision 4 of section 60 of the
11 state finance law, paragraph (a) as amended by chapter 219 of the laws
12 of 1999 and paragraph (b) as amended by section 22 of part F of chapter
13 405 of the laws of 1999, are amended to read as follows:
14 (a) Such bonds shall be sold at par, at par plus a premium not to
15 exceed five percent in the case of refunding bonds or five-tenths of one
16 percent in the case of all other bonds, or at a discount to the bidder
17 offering the lowest interest cost to the state, taking into consider-
18 ation any premium or discount and, in the case of refunding bonds, the
19 bona fide initial public offering price, not less than four nor more
20 than fifteen days, Sundays excepted, after a notice of such sale has
21 been published at least once in a definitive trade publication of the
22 municipal bond industry published on each business day in the state of
23 New York which is generally available to participants in the municipal
24 bond industry, which notice shall state the terms of the sale. The
25 comptroller may not change the terms of the sale unless notice of such
26 change is sent via a definitive trade wire service of the municipal bond
27 industry which, in general, makes available information regarding activ-
28 ity and sales of municipal bonds and is generally available to partic-
310 12020-01-1
1 ipants in the municipal bond industry, at least one day prior to the
2 date of the sale as set forth in the original notice of sale. In so
3 changing the terms or conditions of a sale the comptroller may send
4 notice by such wire service that the sale will be delayed by up to thir-
5 ty days, provided that wire notice of the new sale date will be given at
6 least one business day prior to the new time when bids will be accepted.
7 In such event, no new notice of sale shall be required to be published.
8 Notwithstanding the provisions of section one hundred five of the state
9 technology law or any other law, if the notice of sale contains a
10 provision that bids will only be accepted electronically in the manner
11 provided in such notice of sale, the comptroller shall not be required
12 to accept non-electronic bids in any form. Advertisements shall contain
13 a provision to the effect that the state comptroller, in his discretion,
14 may reject any or all bids made in pursuance of such advertisements, and
15 in the event of such rejection, the state comptroller is authorized to
16 negotiate a private sale or readvertise for bids in the form and manner
17 above described as many times as, in his judgment, may be necessary to
18 effect a satisfactory sale. Notwithstanding the foregoing provisions of
19 this subdivision, whenever in the judgment of the comptroller the inter-
20 ests of the state will be served thereby, he may sell state bonds at
21 private sale at par, at par plus a premium not to exceed five percent in
22 the case of refunding bonds or five-tenths of one percent in the case of
23 all other bonds, or at a discount. The comptroller shall promulgate
24 regulations governing the terms and conditions of any such private
25 sales, which regulations shall include a provision that he give notice
26 to the governor, the temporary president of the senate, and the speaker
27 of the assembly of his intention to conduct a private sale of obli-
311 12020-01-1
1 gations pursuant to this section not less than five days prior to such
2 sale or the execution of any binding agreement to effect such sale.
3 (b) Notwithstanding paragraph (a) of this subdivision, whenever in the
4 judgment of the comptroller the interests of the state will be served
5 thereby, such bonds may be sold at public or private sale in accordance
6 with the procedures set forth in paragraph (a) of this subdivision, with
7 interest rates that vary in accordance with a formula or procedure set
8 forth or referred to in the bonds and may provide the holders thereof
9 with such rights to require the state or other persons to purchase or
10 redeem such bonds or renewals thereof from the proceeds of the resale
11 thereof or otherwise from time to time prior to the final maturity of
12 such bonds as the comptroller may determine and the state may resell, at
13 any time prior to final maturity, any such bonds acquired as a result of
14 the exercise of such rights, provided, however, that as of the initial
15 date of each issuance of such bonds with interest rates that vary the
16 total principal amount of bonds then outstanding pursuant to this para-
17 graph and paragraph b of subdivision four of section fifty-seven shall
18 not exceed twenty percent of the total principal of all bonds then
19 outstanding which carry the full faith and credit of the state.
20 Notwithstanding the foregoing, the The holders of bonds sold pursuant
21 to this paragraph shall not may be provided with the right to require
22 the state to repurchase or redeem the bonds prior to the final maturity
23 thereof unless if the state has entered into one or more letter of
24 credit agreements or other liquidity facility agreements entered into
25 for the express purpose of such sale and which shall require a finan-
26 cially responsible party or parties to the agreement or agreements,
27 other than which may be the state, to purchase or redeem all or any
28 portion of such bonds tendered by the holders thereof for repurchase or
312 12020-01-1
1 redemption prior to the final maturity of such bonds. Such requirement
2 to purchase or redeem bonds shall continue until such time as the right
3 of the holders of such bonds to require repurchase or redemption of such
4 bonds prior to the final maturity thereof shall cease. A financially
5 responsible party or parties, for purposes of this paragraph, shall mean
6 a person or persons determined by the comptroller to have sufficient net
7 worth and liquidity to purchase and pay for on a timely basis all of the
8 bonds which may be tendered for repurchase or redemption by the holders
9 thereof.
10 § 54. Section 51 of the public authorities law is amended by adding a
11 new subdivision 1-a to read as follows:
12 1-a. Board approval shall not be required for indebtedness incurred by
13 a public benefit corporation subject to the provisions of this section,
14 for the purpose of refunding state supported debt, as defined by section
15 sixty-seven-a of the state finance law, issued to finance a project
16 previously approved by the board.
17 § 55. Notwithstanding any law to the contrary, and in accordance with
18 section 4 of the state finance law, the comptroller is hereby authorized
19 and directed to transfer moneys, in the first instance, from the state
20 university collection fund (344), SUNY Stony Brook hospital account,
21 SUNY Brooklyn hospital account and SUNY Syracuse hospital account to the
22 state university income fund (345), state university hospitals income
23 reimbursable account (22) in the event sufficient funds are not avail-
24 able in the state university income fund (345), state university hospi-
25 tals income reimbursable account (22) to transfer moneys, in amounts
26 sufficient to permit the full transfer of moneys authorized for trans-
27 fer, to the general debt service fund (311) for payment of debt service
28 related to the SUNY hospitals. Notwithstanding any law to the contrary,
313 12020-01-1
1 the comptroller is also hereby authorized and directed to transfer
2 moneys from the state university income fund (345) to the state univer-
3 sity income fund (345), state university hospitals income reimbursable
4 account (22) in the event insufficient funds are available in the state
5 university income fund (345), state university hospitals income reim-
6 bursable account (22) to pay hospital operating costs or to transfer
7 moneys, in amounts sufficient to permit the full transfer of moneys
8 authorized for transfer, to the general debt service fund (311) for
9 payment of debt service related to the SUNY hospitals.
10 § 56. Notwithstanding any provision of law to the contrary, the dormi-
11 tory authority of the state of New York is hereby authorized and
12 directed, upon request of the director of the budget, to pay $28,000,000
13 to the state comptroller. Upon receipt from the dormitory authority of
14 the state of New York, the state comptroller is authorized and directed
15 to deposit $15,200,000 to the credit of the state university income fund
16 (345), state university general income offset account (11) for the first
17 installment of the state's share of repayment of the STIP loan and
18 $12,800,000 to the credit of the state university income fund (345),
19 state university hospitals income reimbursable account (22) for costs
20 attributable to the SUNY hospitals' state agency status.
21 § 57. The state finance law is amended by adding a new section 97-xxx
22 to read as follows:
23 § 97-xxx. Additional mass transportation assistance fund. 1. There is
24 hereby established in the joint custody of the state comptroller and the
25 commissioner of tax and finance a fund to be known as the additional
26 mass transportation assistance fund.
27 2. Moneys in the additional mass transportation assistance fund shall
28 be used for the payment of operating assistance to the metropolitan
314 12020-01-1
1 transportation authority for the operating expenses of the Long Island
2 rail road company and the Metro-North commuter railroad company which
3 includes the New York state portion of Harlem, Hudson, Port Jervis,
4 Pascack, and the New Haven commuter railroad services regardless of
5 whether the services are provided directly or pursuant to joint service
6 agreements.
7 § 58. Paragraph (b) of subdivision 2 of section 94 of the state
8 finance law, as amended by section 18 of part H of chapter 56 of the
9 laws of 2000, is amended to read as follows:
10 (b) Notwithstanding the foregoing, moneys in the fund in excess of the
11 amount credited to the accounts established for political subdivisions
12 pursuant to paragraph (a) of this subdivision shall be (1) transferred
13 by the state comptroller to the general debt service fund for payment of
14 the judiciary's expenses in relation to the New York state judicial
15 institute as provided in the agreement specified in subdivision two of
16 section two hundred nineteen-a of the judiciary law provided, however,
17 that such transfer shall not exceed amounts actually paid for such
18 expenses; and (2) available, subject to appropriation, for payments by
19 the judiciary for operation and maintenance expenses related to the New
20 York state judicial institute.
21 § 59. Notwithstanding any law to the contrary, the New York state
22 housing finance agency is directed to pay to the comptroller and the
23 comptroller is directed to deposit, on or before March 31, 2002, up to
24 $1,000,000 to the miscellaneous special revenue fund (339) federal small
25 cities community development program account.
26 § 60. Severability. If any clause, sentence, paragraph, subdivision,
27 section or part of this act shall be adjudged by any court of competent
28 jurisdiction to be invalid, such judgement shall not affect, impair, or
315 12020-01-1
1 invalidate the remainder thereof, but shall be confined in its operation
2 to the clause, sentence, paragraph, subdivision, section or part thereof
3 directly involved in the controversy in which such judgement shall have
4 been rendered. It is hereby declared to be the intent of the legisla-
5 ture that this act would have been enacted even if such invalid
6 provisions had not been included herein.
7 § 61. This act shall take effect immediately and shall be deemed to
8 have been in full force and effect on and after April 1, 2001, provided,
9 however, that sections one through two, twenty-seven through thirty-
10 four, thirty-six through thirty-eight and fifty-nine of this act shall
11 be deemed in full force and effect through March 31, 2002, when upon
12 such date such sections shall expire and be deemed repealed.
13 PART R
14 Section 1. The state finance law is amended by adding a new section
15 92-z to read as follows:
16 § 92-z. Revenue bond tax fund. 1. There is hereby established in the
17 joint custody of the state comptroller and the commissioner of taxation
18 and finance a fund within the general debt service fund to be known as
19 the revenue bond tax fund.
20 2. Such fund shall consist of twenty-five percent of receipts deposit-
21 ed to the general fund pursuant to section one hundred seventy-one-a of
22 the tax law from the imposition of personal income taxes pursuant to
23 article twenty-two of the tax law.
24 3. On or before the twelfth day of each month, the commissioner of
25 taxation and finance shall certify to the state comptroller the amounts
26 specified in subdivision two of this section relating to the preceding
27 month and, in addition, no later than March thirty-first of each fiscal
28 year the commissioner of taxation and finance shall certify such amounts
316 12020-01-1
1 relating to the last month of such fiscal year. The amounts so certified
2 shall be deposited by the state comptroller in the revenue bond tax
3 fund.
4 4. Moneys in the revenue bond tax fund shall be kept separate and
5 shall not be commingled with any other moneys in the custody of the
6 state comptroller and the commissioner of taxation and finance. All
7 deposits of such revenues shall, if required by the state comptroller,
8 be secured by obligations of the United States or of the state having a
9 market value equal at all times to the amount of such deposits and all
10 banks and trust companies are authorized to give security for such
11 deposits. Any such moneys in such fund may, in the discretion of the
12 state comptroller, be invested in obligations in which the state comp-
13 troller is authorized to invest pursuant to section ninety-eight-a of
14 this article.
15 5. (a) The state comptroller shall from time to time, but in no event
16 later than the fifteenth day of each month (other than the last month of
17 the fiscal year) and no later than the thirty-first day of the last
18 month of each fiscal year, pay over and distribute to the credit of the
19 general fund of the state treasury all moneys in the revenue bond tax
20 fund, if any, in excess of the aggregate amount required to be set aside
21 for the payment of cash requirements pursuant to paragraph (b) of this
22 subdivision, provided that an appropriation has been made to pay all
23 amounts specified in any certificate or certificates delivered by the
24 director of the budget pursuant to paragraph (b) of this subdivision as
25 being required by each authorized issuer as such term is defined in
26 section sixty-eight-a of this chapter for the payment of cash require-
27 ments of such issuers for such fiscal year. Subject to the rights of
28 holders of debt of the state, in no event shall the state comptroller
317 12020-01-1
1 pay over and distribute any moneys on deposit in the revenue bond tax
2 fund to any person other than an authorized issuer pursuant to such
3 certificate or certificates (i) unless and until the aggregate of all
4 cash requirements certified to the state comptroller as required by such
5 authorized issuers to be set aside pursuant to paragraph (b) of this
6 subdivision for such fiscal year shall have been appropriated to such
7 authorized issuers in accordance with the schedule specified in the
8 certificate or certificates filed by the director of the budget or (ii)
9 if, after having been so certified and appropriated, any payment
10 required to be made pursuant to paragraph (b) of this subdivision has
11 not been made to the authorized issuers which was required to have been
12 made pursuant to such certificate or certificates; provided, however,
13 that no person, including such authorized issuers or the holders of
14 revenue bonds, shall have any lien on moneys on deposit in the revenue
15 bond tax fund. Any agreement entered into pursuant to section sixty-
16 eight-c of this chapter related to any payment authorized by this
17 section shall be executory only to the extent of such revenues available
18 to the state in such fund. Notwithstanding any other provision of law,
19 if the state has appropriated and paid to the authorized issuers the
20 amounts necessary for the authorized issuers to meet their requirements
21 for the current fiscal year pursuant to the certificate or certificates
22 submitted by the director of the budget pursuant to paragraph (b) of
23 this section, the state comptroller shall, on the last day of each
24 fiscal year, pay to the general fund of the state all sums remaining in
25 the revenue bond tax fund on such date except such amounts as the direc-
26 tor of the budget may certify are needed to meet the cash requirements
27 of authorized issuers during the subsequent fiscal year.
318 12020-01-1
1 (b) No later than thirty days after the submission of the executive
2 budget in accordance with article seven of the constitution, the direc-
3 tor of the budget shall prepare a certificate of the amount of receipts
4 anticipated to be deposited pursuant to subdivision two of this section
5 during the fiscal year beginning April first of that year together with
6 the monthly amounts necessary to be set aside from the receipts of such
7 fund, as shall be sufficient to meet the total cash requirements of
8 authorized issuers, as defined by section sixty-eight-a of this chapter
9 during such fiscal year, based on information that shall be provided by
10 such authorized issuers. Such monthly set asides shall equal not less
11 than the cumulative amount of one-twelfth of the total amount estimated
12 by the director of the budget as necessary to meet such requirements
13 during the fiscal year multiplied by the number of months since the
14 start of such fiscal year. The state comptroller shall set aside all
15 such moneys as received in the revenue bond tax fund until the amount
16 set aside is equal to the monthly amount of cash requirements, as certi-
17 fied by the director of the budget. Notwithstanding subdivision three
18 of section seventy-two of this article or any other provision of law,
19 all moneys set aside in the revenue debt tax fund to meet the annual
20 cash requirements of authorized issuers pursuant to a certificate or
21 certificates as required in this paragraph shall remain in the revenue
22 debt tax fund until needed for payment to authorized issuers, as
23 provided in this section. For the purpose of meeting any required
24 payment on any issue of revenue bonds of an authorized issuer that is
25 due on a monthly or more frequent basis, the state comptroller shall set
26 aside all receipts deposited pursuant to subdivision three of this
27 section as received until the amount so set aside is, in accordance with
28 the schedule set forth for such purpose by the director of the budget,
319 12020-01-1
1 sufficient to pay the required payment on such issue and any other such
2 issue with a payment date on or before such payment date. In the event
3 that the amount set aside by the state comptroller pursuant to this
4 paragraph is not sufficient to meet the cash requirements required
5 pursuant to a certificate or certificates submitted by the director of
6 the budget, the state comptroller shall immediately transfer from the
7 general fund to the revenue bond tax fund an amount which, when combined
8 with the amount set aside pursuant to this paragraph, shall be suffi-
9 cient to meet the payment required pursuant to such certificate or
10 certificates. The director of the budget may revise such certification
11 at such times as shall be necessary, provided, however, that the direc-
12 tor of the budget shall, as necessary, revise such certification not
13 later than thirty days after the issuance of any revenue bonds, includ-
14 ing refunding bonds, and after the adoption of any interest rate
15 exchange or other financial arrangement affecting the cash requirements
16 of the authorized issuers. In no event shall the state comptroller be
17 held liable for the failure to set aside an amount sufficient to pay any
18 required payment of an authorized issuer.
19 6. All payments of moneys from the revenue bond tax fund shall be made
20 on the audit and warrant of the state comptroller.
21 7. Notwithstanding sections eight, seventy, seventy-one, seventy-one-a
22 and seventy-five of this chapter, and any other law to the contrary, for
23 accounting purposes only, the state comptroller shall consider (a) all
24 moneys deposited in the revenue bond tax fund as revenues of the general
25 fund, and (b) all moneys necessary to meet the cash requirements of
26 authorized issuers as provided for in this section as transfers from the
27 general fund to the general debt service fund.
320 12020-01-1
1 § 2. The state finance law is amended by adding a new article 5-C to
2 read as follows:
3 ARTICLE 5-C
4 REVENUE BOND FINANCING PROGRAM
5 Section 68-a. Definitions.
6 68-b. Issuance of bonds and notes.
7 68-c. Payments to authorized issuers.
8 § 68-a. Definitions. 1. "Authorized issuer" shall mean the following
9 public authorities and public benefit corporations, and any successors
10 thereto:
11 (a) the dormitory authority of the state of New York;
12 (b) the urban development corporation;
13 (c) the New York state thruway authority;
14 (d) the New York state environmental facilities corporation;
15 (e) the New York state housing finance agency;
16 2. "Authorized purpose" for purposes of this article and section nine-
17 ty-two-z of this chapter shall mean any purposes for which state-sup-
18 ported debt, as defined by section sixty-seven-a of this chapter, may or
19 has been issued except debt for which the state is constitutionally
20 obligated thereunder to pay debt service and related expenses, and
21 except (a) as authorized in paragraph (b) of subdivision one of section
22 three hundred eighty-five of the public authorities law, (b) as author-
23 ized for the department of health of the state of New York facilities as
24 specified in paragraph a of subdivision two of section sixteen hundred
25 eighty of the public authorities law, (c) state university of New York
26 dormitory facilities as specified in subdivision eight of section
27 sixteen hundred seventy-eight of the public authorities law, and (d) as
321 12020-01-1
1 authorized for mental health services facilities by section nine-a of
2 section one of chapter three hundred ninety-two of the laws of nineteen
3 hundred seventy-three constituting the New York state medical care
4 facilities financing act.
5 3. "Revenue bonds" for the purposes of this article and section nine-
6 ty-two-z of this chapter shall mean any bonds, notes or obligations
7 issued or incurred pursuant to section sixty-eight-b of this article.
8 § 68-b. Issuance of bonds and notes. 1. (a) Authorized issuers shall
9 have the power and are hereby authorized from time to time to issue
10 revenue bonds, in such principal amount or amounts, subject to subdivi-
11 sion eight of this section and as the director of the budget shall
12 determine to be necessary, to provide sufficient funds for authorized
13 purposes, the establishment of reserves to secure such revenue bonds,
14 the payment of amounts required under revenue bonds or agreements relat-
15 ing thereto, and the payment of all costs of issuance of their revenue
16 bonds.
17 (b) The authorized issuers shall have the power and are hereby author-
18 ized from time to time to issue (i) revenue bonds to renew notes, (ii)
19 revenue bonds to pay notes, and (iii) whenever it deems refunding expe-
20 dient, to refund any bonds, notes, or other obligations issued for an
21 authorized purpose or purposes, by the issuance of new revenue bonds,
22 including bonds, notes, or other obligations that were issued prior to
23 the enactment of this article, whether the bonds, notes, or other obli-
24 gations to be refunded have or have not matured, and to issue revenue
25 bonds in part to refund bonds, notes, or other obligations then
26 outstanding and in part for any of its other authorized purposes. The
27 refunding revenue bonds may be exchanged for bonds, notes, or other
28 obligations to be refunded, or sold and the proceeds applied to the
322 12020-01-1
1 purchase, redemption or payment of such bonds, notes, or other obli-
2 gations.
3 (c) Except as may otherwise be expressly provided by an authorized
4 issuer, every issue of revenue bonds of an authorized issuer pursuant to
5 this section shall be special obligations of the authorized issuer paya-
6 ble solely out of any revenues paid over to such authorized issuer from
7 the revenue bond tax fund, established pursuant to section ninety-two-z
8 of this chapter.
9 (d) All of the provisions of the enabling acts of the authorized
10 issuers relating to bonds and notes, which are not inconsistent with the
11 provisions of this section, may, at the discretion of the authorized
12 issuer, apply to revenue bonds authorized by this section.
13 (e) The revenue bonds of the authorized issuers authorized by this
14 section shall not be a debt of the state and the state shall not be
15 liable thereon, nor shall they be payable out of any funds other than
16 those of the authorized issuers pledged therefor; and such revenue bonds
17 shall contain on the face thereof a statement to such effect. In addi-
18 tion, any agreements entered into by any entity pursuant to sections
19 sixty-eight-c and ninety-two-z of this chapter on behalf of the state to
20 effect the implementation of any of the activities financed in whole or
21 in part with proceeds of the revenue bonds of the authorized issuers
22 authorized in this section do not constitute or create a debt of the
23 state, nor a contractual obligation in excess of the amounts appropri-
24 ated therefor, and the state has no continuing legal or moral obligation
25 to appropriate money for payments due under any such agreement.
26 (f) (i) Revenue bonds shall be authorized by resolution of the author-
27 ized issuers, be in such denominations, bear such date or dates and
323 12020-01-1
1 mature at such time or times, as such resolution or other agreement may
2 provide.
3 (ii) Revenue bonds shall be subject to such terms of redemption, bear
4 interest at such rate or rates, be payable at such times, be in such
5 form, either coupon, registered or book entry form, carry such registra-
6 tion privileges, be executed in such manner, be payable in such medium
7 of payment at such place or places, and be subject to such terms and
8 conditions as such resolution may provide.
9 (g) Revenue bonds authorized hereunder shall be sold by authorized
10 issuers, at public or private sale, at such price or prices as the
11 authorized issuers may determine. Revenue bonds of the authorized
12 issuers shall not be sold by the authorized issuers at private sales
13 unless such sale and the terms thereof have been approved by the state
14 comptroller.
15 2. Consistent with the provisions of this article, and subject to the
16 approval of the director of the budget, any resolution or other agree-
17 ment authorizing revenue bonds or any issue thereof may contain
18 provisions, which shall be a part of the contract with the holders ther-
19 eof, as to:
20 (a) pledging all or any part of the revenues received by the author-
21 ized issuers pursuant to section sixty-eight-c of this article to secure
22 the payment of the bonds or notes or of any issue thereof, subject to
23 such agreements with holders of revenue bonds as may then exist;
24 (b) pledging all or any part of the assets of the authorized issuers
25 to secure the payment of the revenue bonds or of any issue of revenue
26 bonds subject to such agreements with holders of revenue bonds as may
27 then exist;
324 12020-01-1
1 (c) the setting aside of reserves or sinking funds and the regulation
2 and disposition thereof;
3 (d) limitations on the purposes to which the proceeds of sale of
4 revenue bonds, may be applied and pledging such proceeds to secure the
5 payment of the revenue bonds or of any issue thereof;
6 (e) limitations on the issuance of additional revenue bonds the terms
7 upon which additional revenue bonds may be issued and secured and the
8 refunding of outstanding or other revenue bonds;
9 (f) the procedure, if any, by which the terms of any contract with
10 holders of revenue bonds may be amended or abrogated, the amount of
11 revenue bonds the holders of which must consent thereto and the manner
12 in which such consent may be given;
13 (g) vesting in a trustee, as described in subdivision six of this
14 section, such property, rights, powers and duties in trust as the
15 authorized issuers may determine, which may include any or all of the
16 rights, powers and duties of the trustee appointed by the holders of
17 revenue bonds of the respective authorized issuers pursuant to this
18 article, and limiting or abrogating the right of such revenue bond hold-
19 ers to appoint a trustee under this title or limiting the rights,
20 powers, and duties of such trustee;
21 (h) the acts or omissions to act which shall constitute a default in
22 the obligations and duties of the authorized issuers to the holders of
23 the revenue bonds and providing for the rights and remedies of the hold-
24 ers of the revenue bonds in event of such default, including the right
25 to appointment of a receiver; provided, however, that such rights and
26 remedies shall not be inconsistent with the other provisions of this
27 article;
325 12020-01-1
1 (i) any other matters, of like or different character, which in any
2 way affect the security or protection of the holders of the revenue
3 bonds; and
4 (j) the application of any of the foregoing provisions to any provider
5 of any applicable bond, note or other financial facility.
6 Notwithstanding the foregoing, the authorized issuers shall not be
7 authorized to make any covenant, pledge, promise, or agreement purport-
8 ing to bind the state except as otherwise specifically authorized by
9 this article.
10 3. Any pledge made by the respective authorized issuers shall be valid
11 and binding from the time when the pledge is made. The revenues or prop-
12 erty so pledged and thereafter received by the respective authorized
13 issuers shall immediately be subject to the lien of such pledge without
14 any physical delivery thereof or further act, and the lien of any such
15 pledge shall be valid and binding as against all parties having claims
16 of any kind in tort, contract or otherwise against the respective
17 authorized issuers, irrespective of whether such parties have notice
18 thereof. Neither the resolution nor any other instrument by which a
19 pledge is created need be recorded or filed to protect such pledge.
20 4. Neither the directors or members of the authorized issuers nor any
21 other person executing the revenue bonds of the authorized issuers shall
22 be liable personally thereon or be subject to any personal liability or
23 accountability solely by reason of the issuance thereof.
24 5. The authorized issuers, subject to such agreements with holders of
25 revenue bonds as may then exist, or with the providers of any applicable
26 bond or note or other financial or agreement facility, shall have power
27 out of any funds available therefor to purchase revenue bonds of the
326 12020-01-1
1 authorized issuers, which may or may not thereupon be canceled, at a
2 price not exceeding:
3 (a) if the revenue bonds are then redeemable, the redemption price
4 then applicable, including any accrued interest;
5 (b) if the revenue bonds are not then redeemable, the redemption price
6 and accrued interest applicable on the first date after such purchase
7 upon which the revenue bonds become subject to redemption.
8 6. In the discretion of the authorized issuers, the revenue bonds may
9 be secured by a trust indenture by and between the authorized issuers
10 and a corporate trustee, or a corporate trustee may be appointed under
11 the resolution as provided in subdivision two of this section.
12 7. Whether or not the revenue bonds are of such form and character as
13 to be negotiable instruments under the terms of the uniform commercial
14 code, the revenue bonds are hereby made negotiable instruments within
15 the meaning of and for all the purposes of the uniform commercial code,
16 subject only to the provisions of the revenue bonds for registration or
17 any book-entry-only system.
18 8. Revenue bonds may only be issued for authorized purposes, as
19 defined in section sixty-eight-a of this article. Notwithstanding the
20 foregoing, any authorized issuer may issue revenue bonds in place of (a)
21 housing program bonds or notes as authorized by section forty-seven-e of
22 the private housing finance law, (b) bonds to finance the state match
23 for federal capitalization grants for the purpose of the water pollution
24 control revolving fund as authorized by paragraph (a) of subdivision one
25 of section twelve hundred ninety of the public authorities law and (c)
26 certificates of participation as authorized by article five-a of this
27 chapter. The authorized issuers shall not issue any revenue bonds in an
28 amount in excess of statutory authorizations for such authorized
327 12020-01-1
1 purposes. Authorizations for such authorized purposes shall be reduced
2 in an amount equal to the amount of revenue bonds issued for such
3 authorized purposes under this article. Such reduction shall not be made
4 in relation to revenue bonds issued to fund reserve funds, if any, and
5 costs of issuance, if these items are not counted under existing author-
6 izations, nor shall revenue bonds issued to refund bonds issued under
7 existing authorizations reduce the amount of such authorizations.
8 9. Except upon the amendment of the New York state constitution allow-
9 ing the issuance or assumption of bonds, notes or other obligations
10 secured by revenues, which may include the revenues securing revenue
11 bonds of authorized issuers, and the affirmative assumption of such
12 bonds, notes or other obligations by the state, the revenue bonds of the
13 authorized issuers authorized by this section shall not be a debt of the
14 state and the state shall not be liable thereon, nor shall they be paya-
15 ble out of any funds other than those of the authorized issuers pledged
16 therefor; and such revenue bonds shall contain on the face thereof a
17 statement to such effect. In addition, any agreements entered into by
18 any entity pursuant to sections sixty-eight-c and ninety-two-z of this
19 chapter on behalf of the state to effect the implementation of any of
20 the activities financed in whole or in part with proceeds of the obli-
21 gations of the authorized issuers authorized in this section do not
22 constitute or create a debt of the state, nor a contractual obligation
23 in excess of the amounts appropriated therefor and the state has no
24 continuing legal or moral obligation to appropriate money for payments
25 due under any such agreement.
26 10. Nothing in this article shall affect the authority of each of the
27 authorized issuers to issue or incur indebtedness for any purposes
28 otherwise authorized by law and nothing in this article shall be deemed
328 12020-01-1
1 to alter or affect the rights of outstanding bondholders or noteholders
2 of any authorized issuer.
3 11. The authorization, sale and issuance of revenue bonds pursuant to
4 this section shall not be deemed an action as such term is defined in
5 article eight of the environmental conservation law for the purposes of
6 such article. Such exemption shall be strictly limited in its applica-
7 tion to such financing activities of the authorized issuers hereunder
8 and does not exempt any other entity from compliance with such article.
9 § 68-c. Payments to authorized issuers. 1. The state, acting through
10 the director of the budget, and authorized issuers may enter into,
11 amend, modify, or rescind one or more financing agreements providing for
12 the specific manner, timing, and amount of payments to be made under
13 this section, but only in conformity with this section.
14 2. No later than October first of each year, the authorized issuers
15 shall certify to the director of the budget the anticipated cash
16 requirements related to revenue bonds during the subsequent state fiscal
17 year in such detail as the director may require.
18 3. Upon receipt of a voucher from any authorized issuer requesting
19 payment for such amount or amounts certified by the director of the
20 budget pursuant to paragraph (a) of subdivision five of section ninety-
21 two-z of this chapter, the state comptroller shall pay such amount or
22 amounts to the authorized issuer from appropriations for such purpose.
23 4. The agreement of the state contained in this section shall be
24 deemed executory only to the extent of appropriations available for
25 payments under this section, and no liability on account of any such
26 payment shall be incurred by the state beyond such appropriations.
27 5. Nothing contained in this article shall be deemed to restrict the
28 right of the state to amend, repeal, modify or otherwise alter statutes
329 12020-01-1
1 imposing or relating to the taxes imposed pursuant to article twenty-two
2 of the tax law. The authorized issuers shall not include within any
3 resolution, contract or agreement with holders of the revenue bonds
4 issued under this article any provision which provides that a default
5 occurs as a result of the state exercising its right to amend, repeal,
6 modify or otherwise alter the taxes imposed pursuant to article twenty-
7 two of the tax law.
8 6. Any resolution or other agreement authorizing revenue bonds under
9 this article shall reserve the right of the state, upon amendment of the
10 New York state constitution allowing the issuance or assumption of
11 bonds, notes or other obligations secured by revenues, which may include
12 the revenues securing revenue bonds of authorized issuers (a) to assume,
13 in whole or in part, revenue bonds of the authorized issuers, (b) to
14 extinguish the existing lien of such resolution, or other agreement and
15 (c) to substitute security for the revenue bonds of the authorized
16 issuers, in each case only so long as such assumption, extinguishment or
17 substitution is done in accordance with such resolution or other agree-
18 ment.
19 § 3. This act shall take effect immediately.
20 § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
21 sion, section or part of this act shall be adjudged by any court of
22 competent jurisdiction to be invalid, such judgment shall not affect,
23 impair, or invalidate the remainder thereof, but shall be confined in
24 its operation to the clause, sentence, paragraph, subdivision, section
25 or part thereof directly involved in the controversy in which such judg-
26 ment shall have been rendered. It is hereby declared to be the intent of
27 the legislature that this act would have been enacted even if such
28 invalid provisions had not been included herein.
330 12020-01-1
1 § 3. This act shall take effect immediately provided, however, that
2 the applicable effective date of Parts A through R of this act shall be
3 as specifically set forth in the last section of such Parts.