BUSINESS & COMMERCE CODE
CHAPTER 9. SECURED TRANSACTIONS
SUBCHAPTER A. SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS
§ 9.101. SHORT TITLE. This chapter may be cited as
Uniform Commercial Code--Secured Transactions.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
this chapter:
(1) "Accession" means goods that are physically united
with other goods in such a manner that the identity of the original
goods is not lost.
(2) "Account," except as used in "account for," means
a right to payment of a monetary obligation, whether or not earned
by performance, (i) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (ii) for
services rendered or to be rendered, (iii) for a policy of insurance
issued or to be issued, (iv) for a secondary obligation incurred or
to be incurred, (v) for energy provided or to be provided, (vi) for
the use or hire of a vessel under a charter or other contract, (vii)
arising out of the use of a credit or charge card or information
contained on or for use with the card, or (viii) as winnings in a
lottery or other game of chance operated or sponsored by a state,
governmental unit of a state, or person licensed or authorized to
operate the game by a state or governmental unit of a state. The
term includes health-care-insurance receivables. The term does not
include (i) rights to payment evidenced by chattel paper or an
instrument, (ii) commercial tort claims, (iii) deposit accounts,
(iv) investment property, (v) letter-of-credit rights or letters of
credit, or (vi) rights to payment for money or funds advanced or
sold, other than rights arising out of the use of a credit or charge
card or information contained on or for use with the card.
(3) "Account debtor" means a person obligated on an
account, chattel paper, or general intangible. The term does not
include persons obligated to pay a negotiable instrument, even if
the instrument constitutes part of chattel paper.
(4) "Accounting," except as used in "accounting for,"
means a record:
(A) authenticated by a secured party;
(B) indicating the aggregate unpaid secured
obligations as of a date not more than 35 days earlier or 35 days
later than the date of the record; and
(C) identifying the components of the
obligations in reasonable detail.
(5) "Agricultural lien" means an interest in farm
products:
(A) that secures payment or performance of an
obligation for:
(i) goods or services furnished in
connection with a debtor's farming operation; or
(ii) rent on real property leased by a
debtor in connection with its farming operation;
(B) that is created by statute in favor of a
person that:
(i) in the ordinary course of its business
furnished goods or services to a debtor in connection with a
debtor's farming operation; or
(ii) leased real property to a debtor in
connection with the debtor's farming operation; and
(C) whose effectiveness does not depend on the
person's possession of the personal property.
(6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject
to a security interest that:
(i) is created by a debtor having an
interest in the minerals before extraction; and
(ii) attaches to the minerals as extracted;
or
(B) accounts arising out of the sale at the
wellhead or minehead of oil, gas, or other minerals in which the
debtor had an interest before extraction.
(7) "Authenticate" means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or
encrypt or similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the person
and adopt or accept a record.
(8) "Bank" means an organization that is engaged in
the business of banking. The term includes savings banks, savings
and loan associations, credit unions, and trust companies.
(9) "Cash proceeds" means proceeds that are money,
checks, deposit accounts, or the like.
(10) "Certificate of title" means a certificate of
title with respect to which a statute provides for the security
interest in question to be indicated on the certificate as a
condition or result of the security interest's obtaining priority
over the rights of a lien creditor with respect to the collateral.
(11) "Chattel paper" means a record or records that
evidence both a monetary obligation and a security interest in
specific goods, a security interest in specific goods and software
used in the goods, a security interest in specific goods and license
of software used in the goods, a lease of specific goods, or a lease
of specific goods and license of software used in the goods. In
this subdivision, "monetary obligation" means a monetary
obligation secured by the goods or owed under a lease of the goods
and includes a monetary obligation with respect to software used in
the goods. The term does not include (i) charters or other
contracts involving the use or hire of a vessel or (ii) records that
evidence a right to payment arising out of the use of a credit or
charge card or information contained on or for use with the card.
If a transaction is evidenced by records that include an instrument
or series of instruments, the group of records taken together
constitutes chattel paper.
(12) "Collateral" means the property subject to a
security interest or agricultural lien. The term includes:
(A) proceeds to which a security interest
attaches;
(B) accounts, chattel paper, payment
intangibles, and promissory notes that have been sold; and
(C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in
tort with respect to which:
(A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's
business or profession; and
(ii) does not include damages arising out
of personal injury to or the death of an individual.
(14) "Commodity account" means an account maintained
by a commodity intermediary in which a commodity contract is
carried for a commodity customer.
(15) "Commodity contract" means a commodity futures
contract, an option on a commodity futures contract, a commodity
option, or another contract if the contract or option is:
(A) traded on or subject to the rules of a board
of trade that has been designated as a contract market for such a
contract pursuant to federal commodities laws; or
(B) traded on a foreign commodity board of trade,
exchange, or market and is carried on the books of a commodity
intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a
commodity intermediary carries a commodity contract on its books.
(17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission
merchant under federal commodities law; or
(B) in the ordinary course of its business
provides clearance or settlement services for a board of trade that
has been designated as a contract market pursuant to federal
commodities law.
(18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon
by the persons sending and receiving the record; or
(C) in the case of transmission of a record to or
by a filing office, to transmit a record by any means prescribed by
filing-office rule.
(19) "Consignee" means a merchant to which goods are
delivered in a consignment.
(20) "Consignment" means a transaction, regardless of
its form, in which a person delivers goods to a merchant for the
purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name
other than the name of the person making delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its
creditors to be substantially engaged in selling the goods of
others;
(B) with respect to each delivery, the aggregate
value of the goods is $1,000 or more at the time of delivery;
(C) the goods are not consumer goods immediately
before delivery;
(D) the transaction does not create a security
interest that secures an obligation; and
(E) the transaction does not involve delivery of
a work of art to an art dealer, as provided by Chapter 2101,
Occupations Code.
(21) "Consignor" means a person that delivers goods to
a consignee in a consignment.
(22) "Consumer debtor" means a debtor in a consumer
transaction.
(23) "Consumer goods" means goods that are used or
bought for use primarily for personal, family, or household
purposes.
(24) "Consumer-goods transaction" means a consumer
transaction in which:
(A) an individual incurs an obligation primarily
for personal, family, or household purposes; and
(B) a security interest in consumer goods secures
the obligation.
(25) "Consumer obligor" means an obligor who is an
individual and who incurred the obligation as part of a transaction
entered into primarily for personal, family, or household purposes.
(26) "Consumer transaction" means a transaction in
which (i) an individual incurs an obligation primarily for
personal, family, or household purposes, (ii) a security interest
secures the obligation, and (iii) the collateral is held or
acquired primarily for personal, family, or household purposes.
The term includes consumer-goods transactions.
(27) "Continuation statement" means an amendment of a
financing statement that:
(A) identifies, by its file number, the initial
financing statement to which it relates; and
(B) indicates that it is a continuation statement
for, or that it is filed to continue the effectiveness of, the
identified financing statement.
(28) "Debtor" means:
(A) a person having an interest, other than a
security interest or other lien, in the collateral, whether or not
the person is an obligor;
(B) a seller of accounts, chattel paper, payment
intangibles, or promissory notes; or
(C) a consignee.
(29) "Deposit account" means a demand, time, savings,
passbook, or similar account maintained with a bank. The term
includes a nonnegotiable certificate of deposit. The term does not
include investment property or accounts evidenced by an instrument.
(30) "Document" means a document of title or a receipt
of the type described in Section 7.201(b).
(31) "Electronic chattel paper" means chattel paper
evidenced by a record or records consisting of information stored
in an electronic medium.
(32) "Encumbrance" means a right, other than an
ownership interest, in real property. The term includes mortgages
and other liens on real property.
(33) "Equipment" means goods other than inventory,
farm products, or consumer goods.
(34) "Farm products" means goods, other than standing
timber, with respect to which the debtor is engaged in a farming
operation and which are:
(A) crops grown, growing, or to be grown,
including:
(i) crops produced on trees, vines, and
bushes; and
(ii) aquatic goods produced in aquacultural
operations;
(B) livestock, born or unborn, including aquatic
goods produced in aquacultural operations;
(C) supplies used or produced in a farming
operation; or
(D) products of crops or livestock in their
unmanufactured states.
(35) "Farming operation" means raising, cultivating,
propagating, fattening, grazing, or any other farming, livestock,
or aquacultural operation.
(36) "File number" means the number assigned to an
initial financing statement pursuant to Section 9.519(a).
(37) "Filing office" means an office designated in
Section 9.501 as the place to file a financing statement.
(38) "Filing-office rule" means a rule adopted
pursuant to Section 9.526.
(39) "Financing statement" means a record or records
composed of an initial financing statement and any filed record
relating to the initial financing statement.
(40) "Fixture filing" means the filing of a financing
statement covering goods that are or are to become fixtures and
satisfying Sections 9.502(a) and (b). The term includes the filing
of a financing statement covering goods of a transmitting utility
that are or are to become fixtures.
(41) "Fixtures" means goods that have become so
related to particular real property that an interest in them arises
under the real property law of the state in which the real property
is situated.
(42) "General intangible" means any personal
property, including things in action, other than accounts, chattel
paper, commercial tort claims, deposit accounts, documents, goods,
instruments, investment property, letter-of-credit rights, letters
of credit, money, and oil, gas, or other minerals before
extraction. The term includes payment intangibles and software.
(43) Reserved.
(44) "Goods" means all things that are movable when a
security interest attaches. The term includes (i) fixtures, (ii)
standing timber that is to be cut and removed under a conveyance or
contract for sale, (iii) the unborn young of animals, (iv) crops
grown, growing, or to be grown, even if the crops are produced on
trees, vines, or bushes, and (v) manufactured homes. The term also
includes a computer program embedded in goods and any supporting
information provided in connection with a transaction relating to
the program if (i) the program is associated with the goods in such
a manner that it customarily is considered part of the goods, or
(ii) by becoming the owner of the goods, a person acquires a right
to use the program in connection with the goods. The term does not
include a computer program embedded in goods that consist solely of
the medium in which the program is embedded. The term also does not
include accounts, chattel paper, commercial tort claims, deposit
accounts, documents, general intangibles, instruments, investment
property, letter-of-credit rights, letters of credit, money, or
oil, gas, or other minerals before extraction.
(45) "Governmental unit" means a subdivision, agency,
department, county, parish, municipality, or other unit of the
government of the United States, a state, or a foreign country. The
term includes an organization having a separate corporate existence
if the organization is eligible to issue debt on which interest is
exempt from income taxation under the laws of the United States.
(46) "Health care insurance receivable" means an
interest in or claim under a policy of insurance that is a right to
payment of a monetary obligation for health care goods or services
provided or to be provided.
(47) "Instrument" means a negotiable instrument or any
other writing that evidences a right to the payment of a monetary
obligation, is not itself a security agreement or lease, and is of a
type that in ordinary course of business is transferred by delivery
with any necessary indorsement or assignment. The term does not
include (i) investment property, (ii) letters of credit, (iii)
writings that evidence a right to payment arising out of the use of
a credit or charge card or information contained on or for use with
the card, or (iv) nonnegotiable certificates of deposit.
(48) "Inventory" means goods, other than farm
products, that:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to
be furnished under a contract of service;
(C) are furnished by a person under a contract of
service; or
(D) consist of raw materials, work in process, or
materials used or consumed in a business.
(49) "Investment property" means a security, whether
certificated or uncertificated, security entitlement, securities
account, commodity contract, or commodity account.
(50) "Jurisdiction of organization," with respect to a
registered organization, means the jurisdiction under whose law the
organization is organized.
(51) "Letter-of-credit right" means a right to payment
or performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand
payment or performance. The term does not include the right of a
beneficiary to demand payment or performance under a letter of
credit.
(52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the
property involved by attachment, levy, or the like;
(B) an assignee for benefit of creditors from the
time of assignment;
(C) a trustee in bankruptcy from the date of the
filing of the petition; or
(D) a receiver in equity from the time of
appointment.
(53) "Manufactured home" means a structure,
transportable in one or more sections, that, in the traveling mode,
is eight body feet or more in width or 40 body feet or more in
length, or, when erected on site, is 320 or more square feet, and
that is built on a permanent chassis and designed to be used as a
dwelling with or without a permanent foundation when connected to
the required utilities, and includes the plumbing, heating,
air-conditioning, and electrical systems contained therein. The
term includes any structure that meets all of the requirements of
this subdivision except the size requirements and with respect to
which the manufacturer voluntarily files a certification required
by the United States secretary of housing and urban development and
complies with the standards established under Title 42 of the
United States Code.
(54) "Manufactured-home transaction" means a secured
transaction:
(A) that creates a purchase-money security
interest in a manufactured home, other than a manufactured home
held as inventory; or
(B) in which a manufactured home, other than a
manufactured home held as inventory, is the primary collateral.
(55) "Mortgage" means a consensual interest in real
property, including fixtures, that secures payment or performance
of an obligation.
(56) "New debtor" means a person that becomes bound as
debtor under Section 9.203(d) by a security agreement previously
entered into by another person.
(57) "New value" means (i) money, (ii) money's worth in
property, services, or new credit, or (iii) release by a transferee
of an interest in property previously transferred to the
transferee. The term does not include an obligation substituted
for another obligation.
(58) "Noncash proceeds" means proceeds other than cash
proceeds.
(59) "Nonnegotiable certificate of deposit" means a
writing signed by a bank that:
(A) states on its face that it is a certificate of
deposit, as defined in Section 3.104, or receipt for a book entry;
(B) contains an acknowledgement that a sum of
money has been received by the bank, with an express or implied
agreement that the bank will repay the sum of money; and
(C) is not a negotiable instrument.
(60) "Obligor" means a person that, with respect to an
obligation secured by a security interest in or an agricultural
lien on the collateral, (i) owes payment or other performance of the
obligation, (ii) has provided property other than the collateral to
secure payment or other performance of the obligation, or (iii) is
otherwise accountable in whole or in part for payment or other
performance of the obligation. The term does not include issuers or
nominated persons under a letter of credit.
(61) "Original debtor," except as used in Section
9.310(c), means a person that, as debtor, entered into a security
agreement to which a new debtor has become bound under Section
9.203(d).
(62) "Payment intangible" means a general intangible
under which the account debtor's principal obligation is a monetary
obligation.
(63) "Person related to," with respect to an
individual, means:
(A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or
sister-in-law of the individual;
(C) an ancestor or lineal descendant of the
individual or the individual's spouse; or
(D) any other relative, by blood or marriage, of
the individual or the individual's spouse who shares the same home
with the individual.
(64) "Person related to," with respect to an
organization, means:
(A) a person directly or indirectly controlling,
controlled by, or under common control with the organization;
(B) an officer or director of, or a person
performing similar functions with respect to, the organization;
(C) an officer or director of, or a person
performing similar functions with respect to, a person described in
Paragraph (A);
(D) the spouse of an individual described in
Paragraph (A), (B), or (C); or
(E) an individual who is related by blood or
marriage to an individual described in Paragraph (A), (B), (C), or
(D) and shares the same home with the individual.
(65) "Proceeds," except as used in Section 9.609(b),
means the following property:
(A) whatever is acquired upon the sale, lease,
license, exchange, or other disposition of collateral;
(B) whatever is collected on, or distributed on
account of, collateral;
(C) rights arising out of collateral;
(D) to the extent of the value of collateral,
claims arising out of the loss, nonconformity, or interference with
the use of, defects or infringement of rights in, or damage to the
collateral; or
(E) to the extent of the value of collateral and
to the extent payable to the debtor or the secured party, insurance
payable by reason of the loss or nonconformity of, defects or
infringement of rights in, or damage to the collateral.
(66) "Promissory note" means an instrument that
evidences a promise to pay a monetary obligation, does not evidence
an order to pay, and does not contain an acknowledgement by a bank
that the bank has received for deposit a sum of money or funds.
(67) "Proposal" means a record authenticated by a
secured party that includes the terms on which the secured party is
willing to accept collateral in full or partial satisfaction of the
obligation it secures pursuant to Sections 9.620, 9.621, and 9.622.
(68) "Public-finance transaction" means a secured
transaction in connection with which:
(A) debt securities are issued;
(B) all or a portion of the securities issued
have an initial stated maturity of at least 20 years; and
(C) the debtor, obligor, secured party, account
debtor or other person obligated on collateral, assignor or
assignee or a secured obligation, or assignor or assignee of a
security interest is a state or a governmental unit of a state.
(69) "Pursuant to commitment," with respect to an
advance made or other value given by a secured party, means pursuant
to the secured party's obligation, whether or not a subsequent
event of default or other event not within the secured party's
control has relieved or may relieve the secured party from its
obligation.
(70) "Record," except as used in "for record," "of
record," "record or legal title," and "record owner," means
information that is inscribed on a tangible medium or that is stored
in an electronic or other medium and is retrievable in perceivable
form.
(71) "Registered organization" means an organization
organized solely under the law of a single state or the United
States and as to which the state or the United States must maintain
a public record showing the organization to have been organized.
(72) "Secondary obligor" means an obligor to the
extent that:
(A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with
respect to an obligation secured by collateral against the debtor,
another obligor, or property of either.
(73) "Secured party" means:
(A) a person in whose favor a security interest
is created or provided for under a security agreement, whether or
not any obligation to be secured is outstanding;
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper,
payment intangibles, or promissory notes have been sold;
(E) a trustee, indenture trustee, agent,
collateral agent, or other representative in whose favor a security
interest or agricultural lien is created or provided for; or
(F) a person that holds a security interest
arising under Section 2.401, 2.505, 2.711(c), 2A.508(e), 4.210, or
5.118.
(74) "Security agreement" means an agreement that
creates or provides for a security interest.
(75) "Send," in connection with a record or
notification, means:
(A) to deposit in the mail, deliver for
transmission, or transmit by any other usual means of
communication, with postage or cost of transmission provided for,
addressed to any address reasonable under the circumstances; or
(B) to cause the record or notification to be
received within the time that it would have been received if
properly sent under Paragraph (A).
(76) "Software" means a computer program and any
supporting information provided in connection with a transaction
relating to the program. The term does not include a computer
program that is included in the definition of "goods."
(77) "State" means a state of the United States, the
District of Columbia, Puerto Rico, the United States Virgin
Islands, or any territory or insular possession subject to the
jurisdiction of the United States.
(78) "Supporting obligation" means a letter-of-credit
right or secondary obligation that supports the payment or
performance of an account, chattel paper, a document, a general
intangible, an instrument, or investment property.
(79) "Tangible chattel paper" means chattel paper
evidenced by a record or records consisting of information that is
inscribed on a tangible medium.
(80) "Termination statement" means an amendment of a
financing statement that:
(A) identifies, by its file number, the initial
financing statement to which it relates; and
(B) indicates either that it is a termination
statement or that the identified financing statement is no longer
effective.
(81) "Transmitting utility" means a person primarily
engaged in the business of:
(A) operating a railroad, subway, street
railway, or trolley bus;
(B) transmitting communications electrically,
electromagnetically, or by light;
(C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting
electricity, steam, gas, or water.
(b) The following definitions in other chapters apply to
this chapter:
"Applicant" Section 5.102.
"Beneficiary" Section 5.102.
"Broker" Section 8.102.
"Certificated security" Section 8.102.
"Check" Section 3.104.
"Clearing corporation" Section 8.102.
"Contract for sale" Section 2.106.
"Customer" Section 4.104.
"Entitlement holder" Section 8.102.
"Financial asset" Section 8.102.
"Holder in due course" Section 3.302.
"Issuer" (with respect to a letter of credit or
letter-of-credit right)Section 5.102.
"Issuer" (with respect to a security)Section 8.201.
"Lease" Section 2A.103.
"Lease agreement" Section 2A.103.
"Lease contract" Section 2A.103.
"Leasehold interest" Section 2A.103.
"Lessee" Section 2A.103.
"Lessee in ordinary course of business"Section 2A.103.
"Lessor" Section 2A.103.
"Lessor's residual interest" Section 2A.103.
"Letter of credit" Section 5.102.
"Merchant" Section 2.104.
"Negotiable instrument" Section 3.104.
"Nominated person" Section 5.102.
"Note" Section 3.104.
"Proceeds of a letter of credit" Section 5.114.
"Prove" Section 3.103.
"Sale" Section 2.106.
"Securities account" Section 8.501.
"Securities intermediary" Section 8.102.
"Security" Section 8.102.
"Security certificate" Section 8.102.
"Security entitlement" Section 8.102.
"Uncertificated security" Section 8.102.
(c) Chapter 1 contains general definitions and principles
of construction and interpretation applicable throughout this
chapter.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2001, 77th Leg., ch. 705, § 1, eff. June 13, 2001;
Acts 2001, 77th Leg., ch. 1420, § 14.728, eff. Sept. 1, 2001;
Acts 2003, 78th Leg., ch. 542, § 19, eff. Sept. 1, 2003; Acts
2003, 78th Leg., ch. 917, § 1, 2, eff. Sept. 1, 2003.
§ 9.103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION
OF PAYMENTS; BURDEN OF ESTABLISHING. (a) In this section:
(1) "Purchase-money collateral" means goods or
software that secures a purchase-money obligation incurred with
respect to that collateral.
(2) "Purchase-money obligation" means an obligation
of an obligor incurred as all or part of the price of the collateral
or for value given to enable the debtor to acquire rights in or the
use of the collateral if the value is in fact so used.
(b) A security interest in goods is a purchase-money
security interest:
(1) to the extent that the goods are purchase-money
collateral with respect to that security interest;
(2) if the security interest is in inventory that is or
was purchase-money collateral, also to the extent that the security
interest secures a purchase-money obligation incurred with respect
to other inventory in which the secured party holds or held a
purchase-money security interest; and
(3) also to the extent that the security interest
secures a purchase-money obligation incurred with respect to
software in which the secured party holds or held a purchase-money
security interest.
(c) A security interest in software is a purchase-money
security interest to the extent that the security interest also
secures a purchase-money obligation incurred with respect to goods
in which the secured party holds or held a purchase-money security
interest if:
(1) the debtor acquired its interest in the software
in an integrated transaction in which it acquired an interest in the
goods; and
(2) the debtor acquired its interest in the software
for the principal purpose of using the software in the goods.
(d) The security interest of a consignor in goods that are
the subject of a consignment is a purchase-money security interest
in inventory.
(e) In a transaction other than a consumer-goods
transaction, if the extent to which a security interest is a
purchase-money security interest depends on the application of a
payment to a particular obligation, the payment must be applied:
(1) in accordance with any reasonable method of
application to which the parties agree;
(2) in the absence of the parties' agreement to a
reasonable method, in accordance with any intention of the obligor
manifested at or before the time of payment; or
(3) in the absence of an agreement to a reasonable
method and a timely manifestation of the obligor's intention, in
the following order:
(A) to obligations that are not secured; and
(B) if more than one obligation is secured, to
obligations secured by purchase-money security interests in the
order in which those obligations were incurred.
(f) In a transaction other than a consumer-goods
transaction, a purchase-money security interest does not lose its
status as such, even if:
(1) the purchase-money collateral also secures an
obligation that is not a purchase-money obligation;
(2) collateral that is not purchase-money collateral
also secures the purchase-money obligation; or
(3) the purchase-money obligation has been renewed,
refinanced, consolidated, or restructured.
(g) In a transaction other than a consumer-goods
transaction, a secured party claiming a purchase-money security
interest has the burden of establishing the extent to which the
security interest is a purchase-money security interest.
(h) The limitation of the rules in Subsections (e), (f), and
(g) to transactions other than consumer-goods transactions is
intended to leave to the court the determination of the proper rules
in consumer-goods transactions. The court may not infer from that
limitation the nature of the proper rule in consumer-goods
transactions and may continue to apply established approaches.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.104. CONTROL OF DEPOSIT ACCOUNT. (a) A secured
party has control of a deposit account if:
(1) the secured party is the bank with which the
deposit account is maintained;
(2) the debtor, secured party, and bank have agreed in
an authenticated record that the bank will comply with instructions
originated by the secured party directing disposition of the funds
in the deposit account without further consent by the debtor; or
(3) the secured party becomes the bank's customer with
respect to the deposit account.
(b) A secured party that has satisfied Subsection (a) has
control, even if the debtor retains the right to direct the
disposition of funds from the deposit account.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2001, 77th Leg., ch. 705, § 2, eff. June 13, 2001.
§ 9.105. CONTROL OF ELECTRONIC CHATTEL PAPER. A secured
party has control of electronic chattel paper if the record or
records comprising the chattel paper are created, stored, and
assigned in such a manner that:
(1) a single authoritative copy of the record or
records exists that is unique, identifiable and, except as
otherwise provided in Subdivisions (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the secured
party as the assignee of the record or records;
(3) the authoritative copy is communicated to and
maintained by the secured party or its designated custodian;
(4) copies or revisions that add or change an
identified assignee of the authoritative copy can be made only with
the participation of the secured party;
(5) each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the
authoritative copy; and
(6) any revision of the authoritative copy is readily
identifiable as an authorized or unauthorized revision.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.106. CONTROL OF INVESTMENT PROPERTY. (a) A person
has control of a certificated security, uncertificated security, or
security entitlement as provided in Section 8.106.
(b) A secured party has control of a commodity contract if:
(1) the secured party is the commodity intermediary
with which the commodity contract is carried; or
(2) the commodity customer, secured party, and
commodity intermediary have agreed that the commodity intermediary
will apply any value distributed on account of the commodity
contract as directed by the secured party without further consent
by the commodity customer.
(c) A secured party having control of all security
entitlements or commodity contracts carried in a securities account
or commodity account has control over the securities account or
commodity account.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.107. CONTROL OF LETTER-OF-CREDIT RIGHT. A secured
party has control of a letter-of-credit right to the extent of any
right to payment or performance by the issuer or any nominated
person if the issuer or nominated person has consented to an
assignment of proceeds of the letter of credit under Section
5.114(c) or otherwise applicable law or practice.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.108. SUFFICIENCY OF DESCRIPTION. (a) Except as
otherwise provided in Subsections (c), (d), and (e), a description
of personal or real property is sufficient, whether or not it is
specific, if it reasonably identifies what is described.
(b) Except as otherwise provided in Subsection (d), a
description of collateral reasonably identifies the collateral if
it identifies the collateral by:
(1) specific listing;
(2) category;
(3) except as otherwise provided in Subsection (e), a
type of collateral defined in this title;
(4) quantity;
(5) computational or allocational formula or
procedure; or
(6) except as otherwise provided in Subsection (c),
any other method, if the identity of the collateral is objectively
determinable.
(c) A description of collateral as "all the debtor's assets"
or "all the debtor's personal property" or using words of similar
import does not reasonably identify the collateral.
(d) Except as otherwise provided in Subsection (e), a
description of a security entitlement, securities account, or
commodity account is sufficient if it describes:
(1) the collateral by those terms or as investment
property; or
(2) the underlying financial asset or commodity
contract.
(e) A description only by type of collateral defined in this
title is an insufficient description of:
(1) a commercial tort claim; or
(2) in a consumer transaction, consumer goods, a
security entitlement, a securities account, or a commodity account.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.109. SCOPE. (a) Except as otherwise provided in
Subsections (c), (d), and (e), this chapter applies to:
(1) a transaction, regardless of its form, that
creates a security interest in personal property or fixtures by
contract;
(2) an agricultural lien;
(3) a sale of accounts, chattel paper, payment
intangibles, or promissory notes;
(4) a consignment;
(5) a security interest arising under Section 2.401,
2.505, 2.711(c), or 2A.508(e), as provided in Section 9.110; and
(6) a security interest arising under Section 4.210 or
5.118.
(b) The application of this chapter to a security interest
in a secured obligation is not affected by the fact that the
obligation is itself secured by a transaction or interest to which
this chapter does not apply.
(c) This chapter does not apply to the extent that:
(1) a statute, regulation, or treaty of the United
States preempts this chapter;
(2) another statute of this state expressly governs
the creation, perfection, priority, or enforcement of a security
interest created by this state or a governmental unit of this state;
(3) a statute of another state, a foreign country, or a
governmental unit of another state or a foreign country, other than
a statute generally applicable to security interests, expressly
governs creation, perfection, priority, or enforcement of a
security interest created by the state, country, or governmental
unit; or
(4) the rights of a transferee beneficiary or
nominated person under a letter of credit are independent and
superior under Section 5.114.
(d) This chapter does not apply to:
(1) a landlord's lien, other than an agricultural
lien;
(2) a lien, other than an agricultural lien, given by
statute or other rule of law for services or materials, but Section
9.333 applies with respect to priority of the lien;
(3) an assignment of a claim for wages, salary, or
other compensation of an employee;
(4) a sale of accounts, chattel paper, payment
intangibles, or promissory notes as part of a sale of the business
out of which they arose;
(5) an assignment of accounts, chattel paper, payment
intangibles, or promissory notes that is for the purpose of
collection only;
(6) an assignment of a right to payment under a
contract to an assignee that is also obligated to perform under the
contract;
(7) an assignment of a single account, payment
intangible, or promissory note to an assignee in full or partial
satisfaction of a preexisting indebtedness;
(8) a transfer of an interest in or an assignment of a
claim under a policy of insurance, other than an assignment by or to
a health care provider of a health-care-insurance receivable and
any subsequent assignment of the right to payment, but Sections
9.315 and 9.322 apply with respect to proceeds and priorities in
proceeds;
(9) an assignment of a right represented by a
judgment, other than a judgment taken on a right to payment that was
collateral;
(10) a right of recoupment or set-off, but:
(A) Section 9.340 applies with respect to the
effectiveness of rights of recoupment or set-off against deposit
accounts; and
(B) Section 9.404 applies with respect to
defenses or claims of an account debtor;
(11) the creation or transfer of an interest in or lien
on real property, including a lease or rents thereunder, the
interest of a vendor or vendee in a contract for deed to purchase an
interest in real property, or the interest of an optionor or
optionee in an option to purchase an interest in real property,
except to the extent that provision is made for:
(A) liens on real property in Sections 9.203 and
9.308;
(B) fixtures in Section 9.334;
(C) fixture filings in Sections 9.501, 9.502,
9.512, 9.516, and 9.519; and
(D) security agreements covering personal and
real property in Section 9.604;
(12) an assignment of a claim arising in tort, other
than a commercial tort claim, but Sections 9.315 and 9.322 apply
with respect to proceeds and priorities in proceeds; or
(13) an assignment of a deposit account, other than a
nonnegotiable certificate of deposit, in a consumer transaction,
but Sections 9.315 and 9.322 apply with respect to proceeds and
priorities in proceeds.
(e) The application of this chapter to the sale of accounts,
chattel paper, payment intangibles, or promissory notes is not to
recharacterize that sale as a transaction to secure indebtedness
but to protect purchasers of those assets by providing a notice
filing system. For all purposes, in the absence of fraud or
intentional misrepresentation, the parties' characterization of a
transaction as a sale of such assets shall be conclusive that the
transaction is a sale and is not a secured transaction and that
title, legal and equitable, has passed to the party characterized
as the purchaser of those assets regardless of whether the secured
party has any recourse against the debtor, whether the debtor is
entitled to any surplus, or any other term of the parties'
agreement.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.110. SECURITY INTERESTS ARISING UNDER CHAPTER 2 OR
2A. A security interest arising under Section 2.401, 2.505,
2.711(c), or 2A.508(e) is subject to this chapter. However, until
the debtor obtains possession of the goods:
(1) the security interest is enforceable, even if
Section 9.203(b)(3) has not been satisfied;
(2) filing is not required to perfect the security
interest;
(3) the rights of the secured party after default by
the debtor are governed by Chapter 2 or 2A; and
(4) the security interest has priority over a
conflicting security interest created by the debtor.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
SUBCHAPTER B. EFFECTIVENESS OF SECURITY AGREEMENT; ATTACHMENT OF
SECURITY INTEREST; RIGHTS OF PARTIES TO SECURITY AGREEMENT
§ 9.201. GENERAL EFFECTIVENESS OF SECURITY
AGREEMENT. (a) Except as otherwise provided by this title, a
security agreement is effective according to its terms between the
parties, against purchasers of the collateral, and against
creditors.
(b) A transaction subject to this chapter is subject to any
applicable rule of law that establishes a different rule for
consumers and to:
(1) Title 4, Finance Code; and
(2) Subchapter E, Chapter 17.
(c) In case of conflict between this chapter and a rule of
law, statute, or regulation described in Subsection (b), the rule
of law, statute, or regulation controls. Failure to comply with a
statute or regulation described in Subsection (b) has only the
effect the statute or regulation specifies.
(d) This chapter does not:
(1) validate any rate, charge, agreement, or practice
that violates a rule of law, statute, or regulation described in
Subsection (b); or
(2) extend the application of the rule of law,
statute, or regulation to a transaction not otherwise subject to
it.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.202. TITLE TO COLLATERAL IMMATERIAL. Except as
otherwise provided with respect to consignments or sales of
accounts, chattel paper, payment intangibles, or promissory notes,
the provisions of this chapter with regard to rights and
obligations apply whether title to collateral is in the secured
party or the debtor.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.203. ATTACHMENT AND ENFORCEABILITY OF SECURITY
INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL
REQUISITES. (a) A security interest attaches to collateral when
it becomes enforceable against the debtor with respect to the
collateral, unless an agreement expressly postpones the time of
attachment.
(b) Except as otherwise provided in Subsections (c)-(j), a
security interest is enforceable against the debtor and third
parties with respect to the collateral only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the
power to transfer rights in the collateral to a secured party; and
(3) one of the following conditions is met:
(A) the debtor has authenticated a security
agreement that provides a description of the collateral and, if the
security interest covers timber to be cut, a description of the land
concerned;
(B) the collateral is not a certificated security
and is in the possession of the secured party under Section 9.313
pursuant to the debtor's security agreement;
(C) the collateral is a certificated security in
registered form and the security certificate has been delivered to
the secured party under Section 8.301 pursuant to the debtor's
security agreement; or
(D) the collateral is deposit accounts,
electronic chattel paper, investment property, or letter-of-credit
rights, and the secured party has control under Section 9.104,
9.105, 9.106, or 9.107 pursuant to the debtor's security agreement.
(c) Subsection (b) is subject to Section 4.210 on the
security interest of a collecting bank, Section 5.118 on the
security interest of a letter-of-credit issuer or nominated person,
Section 9.110 on a security interest arising under Chapter 2 or 2A,
and Section 9.206 on security interests in investment property.
(d) A person becomes bound as debtor by a security agreement
entered into by another person if, by operation of law other than
this chapter or by contract:
(1) the security agreement becomes effective to create
a security interest in the person's property; or
(2) the person becomes generally obligated for the
obligations of the other person, including the obligation secured
under the security agreement, and acquires or succeeds to all or
substantially all of the assets of the other person.
(e) If a new debtor becomes bound as debtor by a security
agreement entered into by another person:
(1) the agreement satisfies Subsection (b)(3) with
respect to existing or after-acquired property of the new debtor to
the extent the property is described in the agreement; and
(2) another agreement is not necessary to make a
security interest in the property enforceable.
(f) The attachment of
a security interest in collateral gives the secured party the
rights to proceeds provided by Section 9.315 and is also attachment
of a security interest in a supporting obligation for the
collateral.
(g) The attachment of a security interest in a right to
payment or performance secured by a security interest or other lien
on personal or real property is also attachment of a security
interest in the security interest, mortgage, or other lien.
(h) The attachment of a security interest in a securities
account is also attachment of a security interest in the security
entitlements carried in the securities account.
(i) The attachment of a security interest in a commodity
account is also attachment of a security interest in the commodity
contracts carried in the commodity account.
(j) If a secured party holds a security interest that
applies under this chapter to minerals, including oil and gas, upon
their extraction and the security interest also qualifies under
applicable law as a lien on those minerals before their extraction,
the security interest before and after production is a single
continuous and uninterrupted lien on the property. This subsection
is a statement of the law of this state as it existed before the
effective date of this subsection and applies with respect to
minerals, including oil and gas, regardless of when the minerals
were extracted.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.204. AFTER-ACQUIRED PROPERTY; FUTURE
ADVANCES. (a) Except as provided in Subsection (b), a security
agreement may create or provide for a security interest in
after-acquired collateral.
(b) A security interest does not attach under a term
constituting an after-acquired property clause to:
(1) consumer goods, other than an accession when given
as additional security, unless the debtor acquires rights in them
within 10 days after the secured party gives value; or
(2) a commercial tort claim.
(c) A security agreement may provide that collateral
secures, or that accounts, chattel paper, payment intangibles, or
promissory notes are sold in connection with, future advances or
other value, whether or not the advances or value are given pursuant
to commitment.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.205. USE OR DISPOSITION OF COLLATERAL
PERMISSIBLE. (a) A security interest is not invalid or
fraudulent against creditors solely because:
(1) the debtor has the right or ability to:
(A) use, commingle, or dispose of all or part of
the collateral, including returned or repossessed goods;
(B) collect, compromise, enforce, or otherwise
deal with collateral;
(C) accept the return of collateral or make
repossessions; or
(D) use, commingle, or dispose of proceeds; or
(2) the secured party fails to require the debtor to
account for proceeds or replace collateral.
(b) This section does not relax the requirements of
possession if attachment, perfection, or enforcement of a security
interest depends upon possession of the collateral by the secured
party.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.206. SECURITY INTEREST ARISING IN PURCHASE OR
DELIVERY OF FINANCIAL ASSET. (a) A security interest in favor of
a securities intermediary attaches to a person's security
entitlement if:
(1) the person buys a financial asset through the
securities intermediary in a transaction in which the person is
obligated to pay the purchase price to the securities intermediary
at the time of the purchase; and
(2) the securities intermediary credits the financial
asset to the buyer's securities account before the buyer pays the
securities intermediary.
(b) The security interest described in Subsection (a)
secures the person's obligation to pay for the financial asset.
(c) A security interest in favor of a person that delivers a
certificated security or other financial asset represented by a
writing attaches to the security or other financial asset if:
(1) the security or other financial asset:
(A) in the ordinary course of business is
transferred by delivery with any necessary indorsement or
assignment; and
(B) is delivered under an agreement between
persons in the business of dealing with such securities or
financial assets; and
(2) the agreement calls for delivery against payment.
(d) The security interest described in Subsection (c)
secures the obligation to make payment for the delivery.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.207. RIGHTS AND DUTIES OF SECURED PARTY HAVING
POSSESSION OR CONTROL OF COLLATERAL. (a) Except as otherwise
provided in Subsection (d), a secured party shall use reasonable
care in the custody and preservation of collateral in the secured
party's possession. In the case of chattel paper or an instrument,
reasonable care includes taking necessary steps to preserve rights
against prior parties unless otherwise agreed.
(b) Except as otherwise provided in Subsection (d), if a
secured party has possession of collateral:
(1) reasonable expenses, including the cost of
insurance and payment of taxes or other charges, incurred in the
custody, preservation, use, or operation of the collateral are
chargeable to the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the
debtor to the extent of any deficiency in any effective insurance
coverage;
(3) the secured party shall keep the collateral
identifiable, but fungible collateral may be commingled; and
(4) the secured party may use or operate the
collateral:
(A) for the purpose of preserving the collateral
or its value;
(B) as permitted by an order of a court having
competent jurisdiction; or
(C) except in the case of consumer goods, in the
manner and to the extent agreed by the debtor.
(c) Except as otherwise provided in Subsection (d), a
secured party having possession of collateral or control of
collateral under Section 9.104, 9.105, 9.106, or 9.107:
(1) may hold as additional security any proceeds,
except money or funds, received from the collateral;
(2) shall apply money or funds received from the
collateral to reduce the secured obligation, unless remitted to the
debtor; and
(3) may create a security interest in the collateral.
(d) If the secured party is a buyer of accounts, chattel
paper, payment intangibles, or promissory notes or a consignor:
(1) Subsection (a) does not apply unless the secured
party is entitled under an agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against
the debtor or a secondary obligor based on the nonpayment or other
default of an account debtor or other obligor on the collateral;
and
(2) Subsections (b) and (c) do not apply.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.208. ADDITIONAL DUTIES OF SECURED PARTY HAVING
CONTROL OF COLLATERAL. (a) This section applies to cases in which
there is no outstanding secured obligation and the secured party is
not committed to make advances, incur obligations, or otherwise
give value.
(b) Within 10 days after receiving an authenticated demand
by the debtor:
(1) a secured party having control of a deposit
account under Section 9.104(a)(2) shall send to the bank with which
the deposit account is maintained an authenticated statement that
releases the bank from any further obligation to comply with
instructions originated by the secured party;
(2) a secured party having control of a deposit
account under Section 9.104(a)(3) shall:
(A) pay the debtor the balance on deposit in the
deposit account; or
(B) transfer the balance on deposit into a
deposit account in the debtor's name;
(3) a secured party, other than a buyer, having
control of electronic chattel paper under Section 9.105 shall:
(A) communicate the authoritative copy of the
electronic chattel paper to the debtor or its designated custodian;
(B) if the debtor designates a custodian that is
the designated custodian with which the authoritative copy of the
electronic chattel paper is maintained for the secured party,
communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with
instructions originated by the secured party and instructing the
custodian to comply with instructions originated by the debtor;
and
(C) take appropriate action to enable the debtor
or its designated custodian to make copies of or revisions to the
authoritative copy that add or change an identified assignee of the
authoritative copy without the consent of the secured party;
(4) a secured party having control of investment
property under Section 8.106(d)(2) or 9.106(b) shall send to the
securities intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained an
authenticated record that releases the securities intermediary or
commodity intermediary from any further obligation to comply with
entitlement orders or directions originated by the secured party;
and
(5) a secured party having control of a
letter-of-credit right under Section 9.107 shall send to each
person having an unfulfilled obligation to pay or deliver proceeds
of the letter of credit to the secured party an authenticated
release from any further obligation to pay or deliver proceeds of
the letter of credit to the secured party.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS
BEEN NOTIFIED OF ASSIGNMENT. (a) Except as otherwise provided in
Subsection (c), this section applies if:
(1) there is no outstanding secured obligation; and
(2) the secured party is not committed to make
advances, incur obligations, or otherwise give value.
(b) Within 10 days after receiving an authenticated demand
by the debtor, a secured party shall send to an account debtor that
has received notification of an assignment to the secured party as
assignee under Section 9.406(a) an authenticated record that
releases the account debtor from any further obligation to the
secured party.
(c) This section does not apply to an assignment
constituting the sale of an account, chattel paper, or payment
intangible.
Added by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.210. REQUEST FOR ACCOUNTING; REQUEST REGARDING LIST
OF COLLATERAL OR STATEMENT OF ACCOUNT. (a) In this section:
(1) "Request" means a record of a type described in
Subdivision (2), (3), or (4).
(2) "Request for an accounting" means a record
authenticated by a debtor requesting that the recipient provide an
accounting of the unpaid obligations secured by collateral and
reasonably identifying the transaction or relationship that is the
subject of the request.
(3) "Request regarding a list of collateral" means a
record authenticated by a debtor requesting that the recipient
approve or correct a list of what the debtor believes to be the
collateral securing an obligation and reasonably identifying the
transaction or relationship that is the subject of the request.
(4) "Request regarding a statement of account" means a
record authenticated by a debtor requesting that the recipient
approve or correct a statement indicating what the debtor believes
to be the aggregate amount of unpaid obligations secured by
collateral as of a specified date and reasonably identifying the
transaction or relationship that is the subject of the request.
(b) Subject to Subsections (c), (d), (e), and (f), a secured
party, other than a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor, shall comply with
a request within 14 days after receipt:
(1) in the case of a request for an accounting, by
authenticating and sending to the debtor an accounting; and
(2) in the case of a request regarding a list of
collateral or a request regarding a statement of account, by
authenticating and sending to the debtor an approval or correction.
(c) A secured party that claims a security interest in all
of a particular type of collateral owned by the debtor may comply
with a request regarding a list of collateral by sending to the
debtor an authenticated record including a statement to that effect
within 14 days after receipt.
(d) A person that receives a request regarding a list of
collateral, claims no interest in the collateral when it receives
the request, and claimed an interest in the collateral at an earlier
time shall comply with the request within 14 days after receipt by
sending to the debtor an authenticated record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the recipient's
interest in the collateral.
(e) A person that receives a request for an accounting or a
request regarding a statement of account, claims no interest in the
obligations when it receives the request, and claimed an interest
in the obligations at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor an
authenticated record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the recipient's
interest in the obligations.
(f) A debtor is entitled without charge to one response to a
request under this section during any six-month period. The
secured party may require payment of a charge not exceeding $25 for
each additional response.
Added by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001. Amended by Acts 2001, 77th Leg., ch. 705, § 3, eff. June
13, 2001.
SUBCHAPTER C. PERFECTION AND PRIORITY
§ 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS. Except as otherwise provided in Sections
9.303 through 9.306, the following rules determine the law
governing perfection, the effect of perfection or nonperfection,
and the priority of a security interest in collateral:
(1) Except as otherwise provided in this section,
while a debtor is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in
collateral.
(2) While collateral is located in a jurisdiction, the
local law of that jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a possessory
security interest in that collateral.
(3) Except as otherwise provided in Subdivision (4),
while negotiable documents, goods, instruments, money, or tangible
chattel paper is located in a jurisdiction, the local law of that
jurisdiction governs:
(A) perfection of a security interest in the
goods by filing a fixture filing;
(B) perfection of a security interest in timber
to be cut; and
(C) the effect of perfection or nonperfection and
the priority of a nonpossessory security interest in the
collateral.
(4) The local law of the jurisdiction in which the
wellhead or minehead is located governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in as-extracted collateral.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.302. LAW GOVERNING PERFECTION AND PRIORITY OF
AGRICULTURAL LIENS. While farm products are located in a
jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the
priority of an agricultural lien on the farm products.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.303. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF
TITLE. (a) This section applies to goods covered by a certificate
of title, even if there is no other relationship between the
jurisdiction under whose certificate of title the goods are covered
and the goods or the debtor.
(b) Goods become covered by a certificate of title when a
valid application for the certificate of title and the applicable
fee are delivered to the appropriate authority. Goods cease to be
covered by a certificate of title at the earlier of the time the
certificate of title ceases to be effective under the law of the
issuing jurisdiction or the time the goods become covered
subsequently by a certificate of title issued by another
jurisdiction.
(c) The local law of the jurisdiction under whose
certificate of title the goods are covered governs perfection, the
effect of perfection or nonperfection, and the priority of a
security interest in goods covered by a certificate of title from
the time the goods become covered by the certificate of title until
the goods cease to be covered by the certificate of title.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.304. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN DEPOSIT ACCOUNTS. (a) The local law of a
bank's jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a deposit
account maintained with that bank.
(b) The following rules determine a bank's jurisdiction for
purposes of this subchapter:
(1) If an agreement between the bank and its customer
governing the deposit account expressly provides that a particular
jurisdiction is the bank's jurisdiction for purposes of this
subchapter, this chapter, or this title, that jurisdiction is the
bank's jurisdiction.
(2) If Subdivision (1) does not apply and an agreement
between the bank and its customer governing the deposit account
expressly provides that the agreement is governed by the law of a
particular jurisdiction, that jurisdiction is the bank's
jurisdiction.
(3) If neither Subdivision (1) nor Subdivision (2)
applies and an agreement between the bank and its customer
governing the deposit account expressly provides that the deposit
account is maintained at an office in a particular jurisdiction,
that jurisdiction is the bank's jurisdiction.
(4) If none of the preceding subdivisions applies, the
bank's jurisdiction is the jurisdiction in which the office
identified in an account statement as the office serving the
customer's account is located.
(5) If none of the preceding subdivisions applies, the
bank's jurisdiction is the jurisdiction in which the chief
executive office of the bank is located.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2003, 78th Leg., ch. 917, § 3, eff. Sept. 1, 2003.
§ 9.305. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN INVESTMENT PROPERTY. (a) Except as
otherwise provided in Subsection (c), the following rules apply:
(1) While a security certificate is located in a
jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the
priority of a security interest in the certificated security
represented thereby.
(2) The local law of the issuer's jurisdiction as
specified in Section 8.110(d) governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in an uncertificated security.
(3) The local law of the securities intermediary's
jurisdiction as specified in Section 8.110(e) governs perfection,
the effect of perfection or nonperfection, and the priority of a
security interest in a security entitlement or securities account.
(4) The local law of the commodity intermediary's
jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a
commodity contract or commodity account.
(b) The following rules determine a commodity
intermediary's jurisdiction for purposes of this subchapter:
(1) If an agreement between the commodity intermediary
and commodity customer governing the commodity account expressly
provides that a particular jurisdiction is the commodity
intermediary's jurisdiction for purposes of this subchapter, this
chapter, or this title, that jurisdiction is the commodity
intermediary's jurisdiction.
(2) If Subdivision (1) does not apply and an agreement
between the commodity intermediary and commodity customer
governing the commodity account expressly provides that the
agreement is governed by the law of a particular jurisdiction, that
jurisdiction is the commodity intermediary's jurisdiction.
(3) If neither Subdivision (1) nor Subdivision (2)
applies and an agreement between the commodity intermediary and
commodity customer governing the commodity account expressly
provides that the commodity account is maintained at an office in a
particular jurisdiction, that jurisdiction is the commodity
intermediary's jurisdiction.
(4) If none of the preceding subdivisions applies, the
commodity intermediary's jurisdiction is the jurisdiction in which
the office identified in an account statement as the office serving
the commodity customer's account is located.
(5) If none of the preceding subdivisions applies, the
commodity intermediary's jurisdiction is the jurisdiction in which
the chief executive office of the commodity intermediary is
located.
(c) The local law of the jurisdiction in which the debtor is
located governs:
(1) perfection of a security interest in investment
property by filing;
(2) automatic perfection of a security interest in
investment property created by a broker or securities intermediary;
and
(3) automatic perfection of a security interest in a
commodity contract or commodity account created by a commodity
intermediary.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.306. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS. (a) Subject to
Subsection (c), the local law of the issuer's jurisdiction or a
nominated person's jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in a letter-of-credit right if the issuer's jurisdiction
or nominated person's jurisdiction is a state.
(b) For purposes of this subchapter, an issuer's
jurisdiction or nominated person's jurisdiction is the
jurisdiction whose law governs the liability of the issuer or
nominated person with respect to the letter-of-credit right as
provided in Section 5.116.
(c) This section does not apply to a security interest that
is perfected only under Section 9.308(d).
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.307. LOCATION OF DEBTOR. (a) In this section,
"place of business" means a place where a debtor conducts its
affairs.
(b) Except as otherwise provided in this section, the
following rules determine a debtor's location:
(1) A debtor who is an individual is located at the
individual's principal residence.
(2) A debtor that is an organization and has only one
place of business is located at its place of business.
(3) A debtor that is an organization and has more than
one place of business is located at its chief executive office.
(c) Subsection (b) applies only if a debtor's residence,
place of business, or chief executive office, as applicable, is
located in a jurisdiction whose law generally requires information
concerning the existence of a nonpossessory security interest to be
made generally available in a filing, recording, or registration
system as a condition or result of the security interest's
obtaining priority over the rights of a lien creditor with respect
to the collateral. If Subsection (b) does not apply, the debtor is
located in the District of Columbia.
(d) A person that ceases to exist, have a residence, or have
a place of business continues to be located in the jurisdiction
specified by Subsections (b) and (c).
(e) A registered organization that is organized under the
law of a state is located in that state.
(f) Except as otherwise provided in Subsection (i), a
registered organization that is organized under the law of the
United States and a branch or agency of a bank that is not organized
under the law of the United States or a state are located:
(1) in the state that the law of the United States
designates, if the law designates a state of location;
(2) in the state that the registered organization,
branch, or agency designates, if the law of the United States
authorizes the registered organization, branch, or agency to
designate its state of location; or
(3) in the District of Columbia, if neither
Subdivision (1) nor Subdivision (2) applies.
(g) A registered organization continues to be located in the
jurisdiction specified by Subsection (e) or (f) notwithstanding:
(1) the suspension, revocation, forfeiture, or lapse
of the registered organization's status as such in its jurisdiction
of organization; or
(2) the dissolution, winding up, or cancellation of
the existence of the registered organization.
(h) The United States is located in the District of
Columbia.
(i) A branch or agency of a bank that is not organized under
the law of the United States or a state is located in the state in
which the branch or agency is licensed, if all branches and agencies
of the bank are licensed in only one state.
(j) A foreign air carrier under the Federal Aviation Act of
1958, as amended, is located at the designated office of the agent
upon which service of process may be made on behalf of the carrier.
(k) This section applies only for purposes of this
subchapter.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS
PERFECTED; CONTINUITY OF PERFECTION. (a) Except as otherwise
provided in this section and Section 9.309, a security interest is
perfected if it has attached and all of the applicable requirements
for perfection in Sections 9.310 through 9.316 have been satisfied.
A security interest is perfected when it attaches if the applicable
requirements are satisfied before the security interest attaches.
(b) An agricultural lien is perfected if it has become
effective and all of the applicable requirements for perfection in
Section 9.310 have been satisfied. An agricultural lien is
perfected when it becomes effective if the applicable requirements
are satisfied before the agricultural lien becomes effective.
(c) A security interest or agricultural lien is perfected
continuously if it is originally perfected by one method under this
chapter and is later perfected by another method under this
chapter, without an intermediate period when it was unperfected.
(d) Perfection of a security interest in collateral also
perfects a security interest in a supporting obligation for the
collateral.
(e) Perfection of a security interest in a right to payment
or performance also perfects a security interest in a security
interest, mortgage, or other lien on personal or real property
securing the right.
(f) Perfection of a security interest in a securities
account also perfects a security interest in the security
entitlements carried in the securities account.
(g) Perfection of a security interest in a commodity account
also perfects a security interest in the commodity contracts
carried in the commodity account.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.309. SECURITY INTEREST PERFECTED UPON
ATTACHMENT. The following security interests are perfected when
they attach:
(1) a purchase money security interest in consumer
goods, except as otherwise provided in Section 9.311(b) with
respect to consumer goods that are subject to a statute or treaty
described in Section 9.311(a);
(2) an assignment of accounts or payment intangibles
that does not by itself or in conjunction with other assignments to
the same assignee transfer a significant part of the assignor's
outstanding accounts or payment intangibles;
(3) a sale of a payment intangible;
(4) a sale of a promissory note;
(5) a security interest created by the assignment of a
health-care-insurance receivable to the provider of the health care
goods or services;
(6) a security interest arising under Section 2.401,
2.505, 2.711(c), or 2A.508(e), until the debtor obtains possession
of the collateral;
(7) a security interest of a collecting bank arising
under Section 4.210;
(8) a security interest of an issuer or nominated
person arising under Section 5.118;
(9) a security interest arising in the delivery of a
financial asset under Section 9.206(c);
(10) a security interest in investment property
created by a broker or securities intermediary;
(11) a security interest in a commodity contract or a
commodity account created by a commodity intermediary;
(12) an assignment for the benefit of all the
creditors of the transferor and subsequent transfers by the
assignee thereunder;
(13) a security interest created by an assignment of a
beneficial interest in a decedent's estate; and
(14) a sale by an individual of an account that is a
right to payment of winnings in a lottery or other game of chance.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2003, 78th Leg., ch. 917, § 4, eff. Sept. 1, 2003.
§ 9.310. WHEN FILING REQUIRED TO PERFECT SECURITY
INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL
LIENS TO WHICH FILING PROVISIONS DO NOT APPLY. (a) Except as
otherwise provided in Subsection (b) and Section 9.312(b), a
financing statement must be filed to perfect all security interests
and agricultural liens.
(b) The filing of a financing statement is not necessary to
perfect a security interest:
(1) that is perfected under Section 9.308(d), (e),
(f), or (g);
(2) that is perfected under Section 9.309 when it
attaches;
(3) in property subject to a statute, regulation, or
treaty described in Section 9.311(a);
(4) in goods in possession of a bailee that is
perfected under Section 9.312(d)(1) or (2);
(5) in certificated securities, documents, goods, or
instruments which is perfected without filing or possession under
Section 9.312(e), (f), or (g);
(6) in collateral in the secured party's possession
under Section 9.313;
(7) in a certificated security that is perfected by
delivery of the security certificate to the secured party under
Section 9.313;
(8) in deposit accounts, electronic chattel paper,
investment property, or letter-of-credit rights that is perfected
by control under Section 9.314;
(9) in proceeds that is perfected under Section 9.315;
(10) that is perfected under Section 9.316; or
(11) in oil or gas production or their proceeds under
Section 9.343.
(c) If a secured party assigns a perfected security interest
or agricultural lien, a filing under this Chapter is not required to
continue the perfected status of the security interest against
creditors of and transferees from the original debtor.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.311. PERFECTION OF SECURITY INTERESTS IN PROPERTY
SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND
TREATIES. (a) Except as otherwise provided in Subsection (d),
the filing of a financing statement is not necessary or effective to
perfect a security interest in property subject to:
(1) a statute, regulation, or treaty of the United
States whose requirements for a security interest's obtaining
priority over the rights of a lien creditor with respect to the
property preempt Section 9.310(a);
(2) the following statutes of this state: Chapter
501, Transportation Code, relating to the certificates of title
for motor vehicles; Subchapter B-1, Chapter 31, Parks and Wildlife
Code, relating to the certificates of title for vessels and
outboard motors; Chapter 1201, Occupations Code, relating to the
documents of title for manufactured homes; or Subchapter A,
Chapter 35, relating to utility security instruments; or
(3) a certificate of title statute of another
jurisdiction that provides for a security interest to be indicated
on the certificate as a condition or result of the security
interest's obtaining priority over the rights of a lien creditor
with respect to the property.
(b) Compliance with the requirements of a statute,
regulation, or treaty described in Subsection (a) for obtaining
priority over the rights of a lien creditor is equivalent to the
filing of a financing statement under this Chapter. Except as
otherwise provided in Subsection (d) and Sections 9.313 and
9.316(d) and (e) for goods covered by a certificate of title, a
security interest in property subject to a statute, regulation, or
treaty described in Subsection (a) may be perfected only by
compliance with those requirements, and a security interest so
perfected remains perfected notwithstanding a change in the use or
transfer of possession of the collateral.
(c) Except as otherwise provided in Subsection (d) and
Sections 9.316(d) and (e), duration and renewal of perfection of a
security interest perfected by compliance with the requirements
prescribed by a statute, regulation, or treaty described in
Subsection (a) are governed by the statute, regulation, or treaty.
In other respects, the security interest is subject to this
Chapter.
(d) During any period in which collateral subject to a
statute specified in Subsection (a)(2) is inventory held for sale
or lease by a person or leased by that person as lessor and that
person is in the business of selling goods of that kind, this
section does not apply to a security interest in that collateral
created by that person.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2001, 77th Leg., ch. 705, § 4, eff. June 13, 2001;
Acts 2003, 78th Leg., ch. 1276, § 14A.754, eff. Sept. 1, 2003.
§ 9.312. PERFECTION OF SECURITY INTERESTS IN CHATTEL
PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, AND GOODS COVERED BY DOCUMENTS,
INSTRUMENTS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS, AND
MONEY; PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION
WITHOUT FILING OR TRANSFER OF POSSESSION. (a) A security
interest in chattel paper, negotiable documents, instruments, or
investment property may be perfected by filing.
(b) Except as otherwise provided in Sections 9.315(c) and
(d) for proceeds:
(1) a security interest in a deposit account may be
perfected only by control under Section 9.314;
(2) and except as otherwise provided in Section
9.308(d), a security interest in a letter-of-credit right may be
perfected only by control under Section 9.314; and
(3) a security interest in money may be perfected only
by the secured party's taking possession under Section 9.313.
(c) While goods are in the possession of a bailee that has
issued a negotiable document covering the goods:
(1) a security interest in the goods may be perfected
by perfecting a security interest in the document; and
(2) a security interest perfected in the document has
priority over any security interest that becomes perfected in the
goods by another method during that time.
(d) While goods are in the possession of a bailee that has
issued a nonnegotiable document covering the goods, a security
interest in the goods may be perfected by:
(1) issuance of a document in the name of the secured
party;
(2) the bailee's receipt of notification of the
secured party's interest; or
(3) filing as to the goods.
(e) A security interest in certificated securities,
negotiable documents, or instruments is perfected without filing or
the taking of possession for a period of 20 days from the time it
attaches to the extent that it arises for new value given under an
authenticated security agreement.
(f) A perfected security interest in a negotiable document
or goods in possession of a bailee, other than one that has issued a
negotiable document for the goods, remains perfected for 20 days
without filing if the secured party makes available to the debtor
the goods or documents representing the goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping,
transshipping, manufacturing, processing, or otherwise dealing
with them in a manner preliminary to their sale or exchange.
(g) A perfected security interest in a certificated
security or instrument remains perfected for 20 days without filing
if the secured party delivers the security certificate or
instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal,
or registration of transfer.
(h) After the 20-day period specified in Subsection (e),
(f), or (g) expires, perfection depends upon compliance with this
chapter.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.313. WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY
PERFECTS SECURITY INTEREST WITHOUT FILING. (a) Except as
otherwise provided in Subsection (b), a secured party may perfect a
security interest in negotiable documents, goods, instruments,
money, or tangible chattel paper by taking possession of the
collateral. A secured party may perfect a security interest in
certificated securities by taking delivery of the certificated
securities under Section 8.301.
(b) With respect to goods covered by a certificate of title
issued by this state, a secured party may perfect a security
interest in the goods by taking possession of the goods only in the
circumstances described in Section 9.316(d).
(c) With respect to collateral other than certificated
securities and goods covered by a document, a secured party takes
possession of collateral in the possession of a person other than
the debtor, the secured party, or a lessee of the collateral from
the debtor in the ordinary course of the debtor's business when:
(1) the person in possession authenticates a record
acknowledging that it holds possession of the collateral for the
secured party's benefit; or
(2) the person takes possession of the collateral
after having authenticated a record acknowledging that it will hold
possession of collateral for the secured party's benefit.
(d) If perfection of a security interest depends upon
possession of the collateral by a secured party, perfection occurs
no earlier than the time the secured party takes possession and
continues only while the secured party retains possession.
(e) A security interest in a certificated security in
registered form is perfected by delivery when delivery of the
certificated security occurs under Section 8.301 and remains
perfected by delivery until the debtor obtains possession of the
security certificate.
(f) A person in possession of collateral is not required to
acknowledge that it holds possession for a secured party's benefit.
(g) If a person acknowledges that it holds possession for
the secured party's benefit:
(1) the acknowledgment is effective under Subsection
(c) or Section 8.301(a), even if the acknowledgment violates the
rights of a debtor; and
(2) unless the person otherwise agrees or law other
than this chapter otherwise provides, the person does not owe any
duty to the secured party and is not required to confirm the
acknowledgment to another person.
(h) A secured party having possession of collateral does not
relinquish possession by delivering the collateral to a person
other than the debtor or a lessee of the collateral from the debtor
in the ordinary course of the debtor's business if the person was
instructed before the delivery or is instructed contemporaneously
with the delivery:
(1) to hold possession of the collateral for the
secured party's benefit; or
(2) to redeliver the collateral to the secured party.
(i) A secured party does not relinquish possession, even if
a delivery under Subsection (h) violates the rights of a debtor. A
person to which collateral is delivered under Subsection (h) does
not owe any duty to the secured party and is not required to confirm
the delivery to another person unless the person otherwise agrees
or law other than this chapter otherwise provides.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.314. PERFECTION BY CONTROL. (a) A security
interest in investment property, deposit accounts,
letter-of-credit rights, or electronic chattel paper may be
perfected by control of the collateral under Section 9.104, 9.105,
9.106, or 9.107.
(b) A security interest in deposit accounts, electronic
chattel paper, or letter-of-credit rights is perfected by control
under Section 9.104, 9.105, or 9.107 when the secured party obtains
control and remains perfected by control only while the secured
party retains control.
(c) A security interest in investment property is perfected
by control under Section 9.106 from the time the secured party
obtains control and remains perfected by control until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security,
the debtor has or acquires possession of the security certificate;
(B) if the collateral is an uncertificated
security, the issuer has registered or registers the debtor as the
registered owner; or
(C) if the collateral is a security entitlement,
the debtor is or becomes the entitlement holder.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.315. SECURED PARTY'S RIGHTS ON DISPOSITION OF
COLLATERAL AND IN PROCEEDS. (a) Except as otherwise provided in
this chapter and Section 2.403(b):
(1) a security interest or agricultural lien continues
in collateral notwithstanding sale, lease, license, exchange, or
other disposition thereof unless the secured party authorized the
disposition free of the security interest or agricultural lien;
and
(2) a security interest attaches to any identifiable
proceeds of collateral.
(b) Proceeds that are commingled with other property are
identifiable proceeds:
(1) if the proceeds are goods, to the extent provided
by Section 9.336; and
(2) if the proceeds are not goods, to the extent that
the secured party identifies the proceeds by a method of tracing,
including application of equitable principles, that is permitted
under law other than this chapter with respect to commingled
property of the type involved.
(c) A security interest in proceeds is a perfected security
interest if the interest in the original collateral was perfected.
(d) A perfected security interest in proceeds becomes
unperfected on the 21st day after the security interest attaches to
receipt of the proceeds unless:
(1) the following conditions are satisfied:
(A) a filed financing statement covers the
original collateral;
(B) the proceeds are collateral in which a
security interest may be perfected by filing in the office in which
the financing statement has been filed; and
(C) the proceeds are not acquired with cash
proceeds;
(2) the proceeds are identifiable cash proceeds; or
(3) the security interest in the proceeds is perfected
other than under Subsection (c) when the security interest attaches
to the proceeds or within 20 days thereafter.
(e) If a filed financing statement covers the original
collateral, a security interest in proceeds that remains perfected
under Subsection (d)(1) becomes unperfected at the later of:
(1) when the effectiveness of the filed financing
statement lapses under Section 9.515 or is terminated under Section
9.513; or
(2) the 21st day after the security interest attaches
to the proceeds.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.316. CONTINUED PERFECTION OF SECURITY INTEREST
FOLLOWING CHANGE IN GOVERNING LAW. (a) A security interest
perfected pursuant to the law of the jurisdiction designated in
Section 9.301(1) or 9.305(c) remains perfected until the earliest
of:
(1) the time perfection would have ceased under the
law of that jurisdiction;
(2) the expiration of four months after a change of the
debtor's location to another jurisdiction; or
(3) the expiration of one year after a transfer of
collateral to a person that thereby becomes a debtor and is located
in another jurisdiction.
(b) If a security interest described in Subsection (a)
becomes perfected under the law of the other jurisdiction before
the earliest time or event described in that subsection, it remains
perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the
earliest time or event, it becomes unperfected and is deemed never
to have been perfected as against a purchaser of the collateral for
value.
(c) A possessory security interest in collateral, other
than goods covered by a certificate of title and as-extracted
collateral consisting of goods, remains continuously perfected if:
(1) the collateral is located in one jurisdiction and
subject to a security interest perfected under the law of that
jurisdiction;
(2) thereafter the collateral is brought into another
jurisdiction; and
(3) upon entry into the other jurisdiction, the
security interest is perfected under the law of the other
jurisdiction.
(d) Except as otherwise provided in Subsection (e), a
security interest in goods covered by a certificate of title that is
perfected by any method under the law of another jurisdiction when
the goods become covered by a certificate of title from this state
remains perfected until the security interest would have become
unperfected under the law of the other jurisdiction had the goods
not become so covered.
(e) A security interest described in Subsection (d) becomes
unperfected as against a purchaser of the goods for value and is
deemed never to have been perfected as against a purchaser of the
goods for value if the applicable requirements for perfection under
Section 9.311(b) or 9.313 are not satisfied before the earlier of:
(1) the time the security interest would have become
unperfected under the law of the other jurisdiction had the goods
not become covered by a certificate of title from this State; or
(2) the expiration of four months after the goods had
become so covered.
(f) A security interest in deposit accounts,
letter-of-credit rights, or investment property that is perfected
under the law of the bank's jurisdiction, the issuer's
jurisdiction, a nominated person's jurisdiction, the securities
intermediary's jurisdiction, or the commodity intermediary's
jurisdiction, as applicable, remains perfected until the earlier
of:
(1) the time the security interest would have become
unperfected under the law of that jurisdiction; or
(2) the expiration of four months after a change of the
applicable jurisdiction to another jurisdiction.
(g) If a security interest described in Subsection (f)
becomes perfected under the law of the other jurisdiction before
the earlier of the time or the end of the period described in that
subsection, it remains perfected thereafter. If the security
interest does not become perfected under the law of the other
jurisdiction before the earlier of that time or the end of that
period, it becomes unperfected and is deemed never to have been
perfected as against a purchaser of the collateral for value.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE
OF SECURITY INTEREST OR AGRICULTURAL LIEN. (a) A security
interest or agricultural lien is subordinate to the rights of:
(1) a person entitled to priority under Section 9.322;
and
(2) except as otherwise provided in Subsection (e), a
person that becomes a lien creditor before the earlier of the time:
(A) the security interest or agricultural lien is
perfected; or
(B) one of the conditions specified in Section
9.203(b)(3) is met and a financing statement covering the
collateral is filed.
(b) Except as otherwise provided in Subsection (e), a buyer,
other than a secured party, of tangible chattel paper, documents,
goods, instruments, or a security certificate takes free of a
security interest or agricultural lien if the buyer gives value and
receives delivery of the collateral without knowledge of the
security interest or agricultural lien and before it is perfected.
(c) Except as otherwise provided in Subsection (e), a lessee
of goods takes free of a security interest or agricultural lien if
the lessee gives value and receives delivery of the collateral
without knowledge of the security interest or agricultural lien and
before it is perfected.
(d) A licensee of a general intangible or a buyer, other
than a secured party, of accounts, electronic chattel paper,
general intangibles, or investment property other than a
certificated security takes free of a security interest if the
licensee or buyer gives value without knowledge of the security
interest and before it is perfected.
(e) Except as otherwise provided in Sections 9.320 and
9.321, if a person files a financing statement with respect to a
purchase-money security interest before or within 20 days after the
debtor receives delivery of the collateral, the security interest
takes priority over the rights of a buyer, lessee, or lien creditor
that arise between the time the security interest attaches and the
time of filing.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001; Acts 2001, 77th Leg., ch. 705, § 6, eff. June 13, 2001.
§ 9.318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS
SOLD; RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH
RESPECT TO CREDITORS AND PURCHASERS. (a) A debtor that has sold
an account, chattel paper, payment intangible, or promissory note
does not retain a legal or equitable interest in the collateral
sold.
(b) For purposes of determining the rights of creditors of,
and purchasers for value of an account or chattel paper from, a
debtor that has sold an account or chattel paper, while the buyer's
security interest is unperfected, the debtor is deemed to have
rights and title to the account or chattel paper identical to those
the debtor sold.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO
CREDITORS AND PURCHASERS. (a) Except as otherwise provided in
Subsection (b), for purposes of determining the rights of creditors
of, and purchasers for value of goods from, a consignee, while the
goods are in the possession of the consignee, the consignee is
deemed to have rights and title to the goods identical to those the
consignor had or had power to transfer.
(b) For purposes of determining the rights of a creditor of
a consignee, law other than this chapter determines the rights and
title of a consignee while goods are in the consignee's possession
if, under this subchapter, a perfected security interest held by
the consignor would have priority over the rights of the creditor.
Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.320. BUYERS OF GOODS. (a) Except as otherwise
provided by Subsection (e), a buyer in ordinary course of business,
other than a person buying farm products from a person engaged in
farming operations, takes free of a security interest created by
the buyer's seller, even if the security interest is perfected and
the buyer knows of its existence.
(b) Except as otherwise provided in Subsection (e), a buyer
of goods from a person who used or bought the goods for use
primarily for personal, family, or household purposes takes free of
a security interest, even if perfected, if the buyer buys:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer's personal, family, or
household purposes; and
(4) before the filing of a financing statement
covering the goods.
(c) To the extent that it affects the priority of a security
interest over a buyer of goods under Subsection (b), the period of
effectiveness of a filing made in the jurisdiction in which the
seller is located is governed by Sections 9.316(a) and (b).
(d) A buyer in ordinary course of business buying oil, gas,
or other minerals at the wellhead or minehead or after extraction
takes free of an interest arising out of an encumbrance.
(e) Subsections (a) and (b) do not affect a security
interest in goods in the possession of the secured party under
Section 9.313.
Added by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.321. LICENSEE OF GENERAL INTANGIBLE AND LESSEE OF
GOODS IN ORDINARY COURSE OF BUSINESS. (a) In this section,
"licensee in ordinary course of business" means a person that
becomes a licensee of a general intangible in good faith, without
knowledge that the license violates the rights of another person in
the general intangible, and in the ordinary course from a person in
the business of licensing general intangibles of that kind. A
person becomes a licensee in the ordinary course if the license to
the person comports with the usual or customary practices in the
kind of business in which the licensor is engaged or with the
licensor's own usual or customary practices.
(b) A licensee in ordinary course of business takes its
rights under a nonexclusive license free of a security interest in
the general intangible created by the licensor, even if the
security interest is perfected and the licensee knows of its
existence.
(c) A lessee in ordinary course of business takes its
leasehold interest free of a security interest in the goods created
by the lessor, even if the security interest is perfected and the
lessee knows of its existence.
Added by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1,
2001.
§ 9.322. PRIORITIES AMONG CONFLICTING SECURITY
INTERESTS IN AND AGRICULTURAL LIENS ON SAME
COLLATERAL. (a) Except as otherwise provided in this section,
priority among conflicting security interests and agricultural
liens in the same collateral is determined according to the
following rules:
(1) Conflicting perfected security interests and
agricultural liens rank according to priority in time of filing or
perfection. Priority dates from the earlier of the time a filing
covering the collateral is first made or the security interest or
agricultural lien is first perfected, if there is no period
thereafter when there is neither filing nor perfection.
(2) A perfected security interest or agricultural lien
has priority over a conflicting unperfected security interes
