Bill Text: IA HF2445 | 2021-2022 | 89th General Assembly | Enrolled

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Bill Title: A bill for an act relating to the uniform commercial code by providing for controllable electronic records. (Formerly HSB 678.) Effective date: 07/01/2022.

Spectrum: Committee Bill

Status: (Passed) 2022-06-13 - Signed by Governor. H.J. 944. [HF2445 Detail]

Download: Iowa-2021-HF2445-Enrolled.html

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House File 2445 - Enrolled
House File 2445
AN ACT
RELATING TO THE UNIFORM COMMERCIAL CODE BY PROVIDING FOR
CONTROLLABLE ELECTRONIC RECORDS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
CONTROLLABLE ELECTRONIC RECORDS
Section 1. NEW SECTION . 554.14101 Short title.
This Article may be cited as the Uniform Commercial Code ——
Controllable Electronic Records.
Sec. 2. NEW SECTION . 554.14102 Definitions.
1. Article 14 definitions. In this Article:
a. “Controllable electronic record” means a record stored
in an electronic medium that can be subjected to control
under section 554.14105. The term does not include a deposit
account, electronic chattel paper, electronic copy of a
record evidencing chattel paper, electronic document of title,
electronic money, investment property, or a transferable
record.
b. “Qualifying purchaser” means a purchaser of a
controllable electronic record or an interest in the
controllable electronic record that obtains control of the
controllable electronic record for value, in good faith,
and without notice of a claim of a property right in the
controllable electronic record.

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c. “Transferable record” means:
(1) “Transferable record” , as defined in the federal
Electronic Signatures in Global and National Commerce Act, 15
U.S.C. §7021(a)(1), as amended.
(2) “Transferable record” as defined in the uniform
electronic transactions Act, section 554D.118, subsection 1.
d. “Value” has the meaning provided in section 554.3303,
subsection 1.
2. Definitions in Article 9. The definitions in Article
9 of “account debtor” , “authenticate” , “controllable account” ,
“controllable payment intangible” , “chattel paper” , “deposit
account” , “electronic chattel paper” , “electronic money” , and
“investment property” apply to this Article.
Sec. 3. NEW SECTION . 554.14103 Scope.
1. Article 9 governs in case of conflict. If there is
conflict between this Article and Article 9, Article 9 governs.
2. Applicable consumer law and other laws. A transaction
subject to this Article is subject to:
a. any applicable rule of law that establishes a different
rule for consumers, including as provided in chapter 537 and
any other consumer protection statute or regulation of this
state; and
b. any other statute or regulation of this state that
regulates the rates, charges, agreements, and practices for
loans, credit sales, or other extensions of credit or credit
transactions, including as provided in chapter 535.
Sec. 4. NEW SECTION . 554.14104 Rights in controllable
account, controllable electronic record, and controllable payment
intangible.
1. Applicability of section to controllable account and
controllable payment intangible. This section applies to the
acquisition and purchase of rights in a controllable account
or controllable payment intangible, including the rights of
a purchaser and a qualifying purchaser and under subsections
3, 4, and 6, and in the same manner this section applies to a
controllable electronic record.
2. Applicability of other law to acquisition of
rights. Except as provided in this section, law other than
this Article determines whether a person acquires a right in

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a controllable electronic record and the right the person
acquires.
3. Shelter principle and purchase of limited interest. A
purchaser of a controllable electronic record acquires
all rights in the controllable electronic record that the
transferor had or had power to transfer, except that a
purchaser of a limited interest in a controllable electronic
record acquires rights only to the extent of the interest
purchased.
4. Rights of qualifying purchaser. A qualifying purchaser
acquires its rights in the controllable electronic record free
of a claim of a property right in the controllable electronic
record.
5. Limitation of rights of qualifying purchaser in other
property. Except as provided in subsections 1 and 4 for
controllable accounts and controllable payment intangibles or
law other than this Article, a qualifying purchaser takes a
right to payment, right to performance, or interest in property
evidenced by the controllable electronic record subject to a
claim of a property right in the right to payment, right to
performance, or other interest in property.
6. No-action protection for qualifying purchaser. An action
shall not be asserted against a qualifying purchaser based on
both a purchase by the qualifying purchaser of a controllable
electronic record and a claim of a property right in another
controllable electronic record, whether framed in conversion,
replevin, constructive trust, equitable lien, or other theory.
7. Filing notice. Filing of a financing statement under
Article 9 is not notice of a claim of a property right in a
controllable electronic record.
Sec. 5. NEW SECTION . 554.14105 Control of controllable
electronic record.
1. General rule —— control of controllable electronic
record. A person has control of a controllable electronic
record if:
a. the electronic record, a record attached to or logically
associated with the electronic record, or a system in which the
electronic record is recorded gives the person:
(1) the power to avail itself of substantially all the

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benefit from the electronic record; and
(2) exclusive power, subject to subsection 2, to:
(a) prevent others from availing themselves of
substantially all the benefit from the electronic record; and
(b) transfer control of the electronic record to another
person or cause another person to obtain control of another
controllable electronic record as a result of the transfer of
the electronic record; and
b. the electronic record, a record attached to or logically
associated with the electronic record, or a system in which
the electronic record is recorded enables the person readily
to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having
the powers specified in paragraph “a” .
2. Control through another person. A person has control of
a controllable electronic record if another person, other than
the transferor of an interest in the electronic record:
a. has control of the electronic record and acknowledges
that it has control on behalf of the person, or
b. obtains control of the electronic record after having
acknowledged that it will obtain control of the electronic
record on behalf of the person.
3. Meaning of exclusive. A power specified in subsection 1,
paragraph “a” , subparagraph (2), is exclusive, even if:
a. the controllable electronic record or a system in
which the electronic record is recorded limits the use of
the electronic record or has a protocol programmed to cause
a change, including a transfer or loss of control or a
modification of benefits afforded by the electronic record; or
b. the person has agreed to share the power with another
person.
Sec. 6. NEW SECTION . 554.14106 Discharge of account debtor
on controllable account or controllable payment intangible.
1. Discharge of account debtor. An account debtor on a
controllable account or controllable payment intangible may
discharge its obligation by paying:
a. the person having control of the controllable electronic
record that evidences the controllable account or controllable
payment intangible; or

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b. except as provided in subsection 2, a person that
formerly had control of the controllable electronic record.
2. Effect of notification. Subject to subsection 4, an
account debtor shall not discharge its obligation by paying a
person that formerly had control of the controllable electronic
record if the account debtor receives a notification that:
a. is authenticated by a person that formerly had control or
the person to which control was transferred;
b. reasonably identifies the controllable account or
controllable payment intangible;
c. notifies the account debtor that control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible was transferred;
d. identifies the transferee, in any reasonable way,
including by name, identifying number, cryptographic key,
office, or account number; and
e. provides a commercially reasonable method by which the
account debtor is to pay the transferee.
3. Discharge following effective notification. After
receipt of a notification that complies with subsection 2, the
account debtor may discharge its obligation only by paying in
accordance with the notification and shall not discharge the
obligation by paying a person that formerly had control.
4. When notification ineffective. Notification is
ineffective under subsection 2:
a. unless, before the notification is sent, an account
debtor and the person that, at that time, had control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible agree in an
authenticated record to a commercially reasonable method by
which a person must furnish reasonable proof that control has
been transferred;
b. to the extent an agreement between an account debtor and
seller of a payment intangible limits the account debtor’s duty
to pay a person other than the seller and the limitation is
effective under law other than this Article; or
c. at the option of an account debtor, if the notification
notifies the account debtor to:
(1) divide a payment;

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(2) make less than the full amount of any installment or
other periodic payment; or
(3) pay any part of a payment by more than one method or to
more than one person.
5. Proof of transfer of control. If requested by the
account debtor, the person giving the notification seasonably
shall furnish reasonable proof, using the agreed method,
that control of the controllable electronic record has been
transferred. Unless the person complies with the request, the
account debtor may discharge its obligation by paying a person
that formerly had control, even if the account debtor has
received a notification under subsection 2.
6. What constitutes reasonable proof. A person furnishes
reasonable proof that control has been transferred if the
person demonstrates, using the agreed method, that the
transferee has the power to:
a. avail itself of substantially all the benefit from the
controllable electronic record;
b. prevent others from availing themselves of substantially
all the benefit from the controllable electronic record; and
c. transfer the powers mentioned in paragraphs “a” and “b”
to another person.
7. Rights not waivable. An account debtor shall not waive
or vary its rights under subsection 4, paragraph “a” , and
subsection 5 or its option under subsection 4, paragraph “c” .
Sec. 7. NEW SECTION . 554.14107 Governing law.
Unless otherwise agreed to by the parties, the laws of this
state shall govern any actions taken pursuant to this Article.
This Article and the local law of this state shall apply to
any transaction involving a controllable account, controllable
electronic record, or controllable payment intangible if
under section 554.9306A, the local law of this state governs
perfection, the effect of perfection or nonperfection, and the
priority of a security interest in such controllable account,
controllable electronic record, or controllable payment
intangible.
Sec. 8. NEW SECTION . 554.14108 Applicability.
This Article applies to any transaction involving a
controllable electronic record that arises on or after the

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effective date of this Article. This Article does not apply to
any transaction involving a controllable electronic record that
arises before the effective date of this Article even if the
transaction would be subject to this Article if the transaction
had arisen on or after the effective date of this Article.
This Article does not apply to a right of action with regard to
any transaction involving a controllable electronic record that
has accrued before the effective date of this Article.
Sec. 9. NEW SECTION . 554.14109 Savings clause.
Any transaction involving a controllable electronic record
that arose before the effective date of this Article and
the rights, obligations, and interests flowing from that
transaction are governed by any statute or other rule amended
or repealed by this Article as if such amendment or repeal had
not occurred and may be terminated, completed, consummated, or
enforced under that statute or other rule.
DIVISION II
CORRESPONDING CHANGES
PART A
GENERAL PROVISIONS
Sec. 10. Section 554.1201, subsection 2, Code 2022, is
amended by adding the following new paragraph:
NEW PARAGRAPH . 0q. “Electronic” means relating to
technology having electrical, digital, magnetic, wireless,
optical, electromagnetic, or similar capabilities.
Sec. 11. Section 554.1201, subsection 2, paragraph x, Code
2022, is amended to read as follows:
x. “Money” means a medium of exchange that:
(1) is currently authorized or adopted by a domestic or
foreign government , by an intergovernmental organization, or
pursuant to an agreement between two or more governments; and
(2) was initially issued, created, or distributed by
a domestic or foreign government, by an intergovernmental
organization, or pursuant to an agreement between two or
more governments . The term includes a monetary unit of
account established by an intergovernmental organization or by
agreement between two or more countries.
Sec. 12. Section 554.1204, unnumbered paragraph 1, Code
2022, is amended to read as follows:

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Except as otherwise provided in Articles 3 , 4 , and 5 , and 14 ,
a person gives value for rights if the person acquires them:
PART B
SECURED TRANSACTIONS
Sec. 13. Section 554.9102, subsection 1, paragraphs b and
bi, Code 2022, are amended to read as follows:
b. “Account” , except as used in “account for” , “on account
of” , and paragraph “ac” , 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 controllable
accounts and health care insurance receivables. The term
does not include rights to payment evidenced by chattel paper
or an instrument, (i) chattel paper, (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 , or (vii)
rights to payment evidenced by an instrument .
bi. “Payment intangible” means a general intangible
under which the account debtor’s principal obligation is a
monetary obligation. The term includes a controllable payment
intangible.
Sec. 14. Section 554.9102, subsection 1, Code 2022, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . 0ab. “Controllable account” means an account
evidenced by a controllable electronic record that provides
that the account debtor undertakes to pay the person that under

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section 554.14105 has control of the controllable electronic
record.
NEW PARAGRAPH . 00ab. “Controllable payment intangible” means
a payment intangible evidenced by a controllable electronic
record that provides that the account debtor undertakes to pay
the person that under section 554.14105 has control of the
controllable electronic record.
NEW PARAGRAPH . 0af. “Electronic money” means money that is
in an electronic form.
NEW PARAGRAPH . 0bc. “Money” has the meaning provided in
section 554.1201, subsection 2, paragraph “x” , but does not
include a deposit account.
NEW PARAGRAPH . 0cb. “Tangible money” means money in a
tangible form.
Sec. 15. Section 554.9102, subsection 2, Code 2022, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . 0i. “Controllable electronic
record” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 554.14102.
NEW PARAGRAPH . 0ae. “Qualifying
purchaser” . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 554.14102.
Sec. 16. NEW SECTION . 554.9105A Control of electronic
money.
1. General rule —— control of electronic money. A person has
control of electronic money if:
a. the electronic money or a system in which the electronic
money is recorded gives the person:
(1) the power to avail itself of substantially all the
benefit from the electronic money; and
(2) exclusive power, subject to subsection 2, to:
(a) prevent others from availing themselves of
substantially all the benefit from the electronic money; and
(b) transfer control of the electronic money to another
person or cause another person to obtain control of other
electronic money as a result of the transfer of the electronic
money; and
b. the electronic money, a record attached to or logically
associated with the electronic money, or a system in which
the electronic money is recorded enables the person readily
to identify itself in any way, including by name, identifying

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number, cryptographic key, office, or account number, as having
the powers under paragraph “a” .
2. Control through another person. A person has control of
electronic money if another person, other than the transferor
of an interest in the electronic money:
a. has control of the electronic money and acknowledges that
it has control on behalf of the person, or
b. obtains control of the electronic money after having
acknowledged that it will obtain control of the electronic
money on behalf of the person.
3. Meaning of exclusive. A power is exclusive under
subsection 1, paragraph “a” , subparagraph (2), even if:
a. the electronic money or a system in which the electronic
money is recorded limits the use of the electronic money or has
a protocol programmed to transfer control; or
b. the person has agreed to share the power with another
person.
Sec. 17. NEW SECTION . 554.9107A Control of controllable
account, controllable electronic record, or controllable payment
intangible.
1. Control under section 554.14105. A secured party has
control of a controllable electronic record as provided in
section 554.14105.
2. Control of controllable account and controllable payment
intangible. A secured party has control of a controllable
account or controllable payment intangible if the secured
party has control of the controllable electronic record that
evidences the controllable account or controllable payment
intangible.
Sec. 18. Section 554.9203, subsection 2, Code 2022, is
amended to read as follows:
2. Enforceability. Except as otherwise provided in
subsections 3 through 9 10 , a security interest is enforceable
against the debtor and third parties with respect to the
collateral only if:
a. value has been given;
b. the debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party; and
c. one of the following conditions is met:

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(1) 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;
(2) the collateral is not a certificated security and is
in the possession of the secured party under section 554.9313
pursuant to the debtor’s security agreement;
(3) the collateral is a certificated security in registered
form and the security certificate has been delivered to the
secured party under section 554.8301 pursuant to the debtor’s
security agreement; or
(4) the collateral is controllable accounts, controllable
electronic records, controllable payment intangibles, deposit
accounts, electronic chattel paper, electronic documents,
electronic money, investment property, or letter-of-credit
rights, or electronic documents, and the secured party has
control under section 554.7106 , 554.9104 , 554.9105 , 554.9105A,
554.9106 , or 554.9107 , or 554.9107A pursuant to the debtor’s
security agreement.
Sec. 19. Section 554.9203, Code 2022, is amended by adding
the following new subsection:
NEW SUBSECTION . 10. Controllable account or controllable
payment intangible. The attachment of a security interest in a
controllable electronic record that evidences a controllable
account or controllable payment intangible is also attachment
of a security interest in the controllable account or
controllable payment intangible.
Sec. 20. Section 554.9207, subsection 3, Code 2022, is
amended to read as follows:
3. Duties and rights when secured party in possession or
control. Except as otherwise provided in subsection 4 , a
secured party having possession of collateral or control
of collateral under section 554.7106 , 554.9104 , 554.9105 ,
554.9105A, 554.9106 , or 554.9107 , or 554.9107A :
a. may hold as additional security any proceeds, except
money or funds, received from the collateral;
b. shall apply money or funds received from the collateral
to reduce the secured obligation, unless remitted to the
debtor; and

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c. may create a security interest in the collateral.
Sec. 21. Section 554.9208, subsection 2, paragraphs e and f,
Code 2022, are amended to read as follows:
e. a secured party having control of a letter-of-credit
right under section 554.9107 shall send to each person having
an unfulfilled obligation to pay or deliver proceeds of the
letter of credit to the secured party an authenticated release
from any further obligation to pay or deliver proceeds of the
letter of credit to the secured party; and
f. a secured party having control of an electronic document
shall:
(1) give control of the electronic document to the debtor or
its designated custodian;
(2) if the debtor designates a custodian that is the
designated custodian with which the authoritative copy of
the electronic document is maintained for the secured party,
communicate to the custodian an authenticated record releasing
the designated custodian from any further obligation to
comply with instructions originated by the secured party
and instructing the custodian to comply with instructions
originated by the debtor; and
(3) take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee
of the authoritative copy without the consent of the secured
party . ; and
Sec. 22. Section 554.9208, subsection 2, Code 2022, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . g. a secured party having control under
section 554.9105A of electronic money shall transfer control
of the electronic money to the debtor or a person designated
by the debtor; and
NEW PARAGRAPH . h. a secured party having control under
section 554.14105 of a controllable electronic record shall
transfer control of the controllable electronic record to the
debtor or a person designated by the debtor.
Sec. 23. Section 554.9301, subsection 3, Code 2022, is
amended to read as follows:
3. Except as otherwise provided in subsection 4 , while

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tangible negotiable documents, goods, instruments, tangible
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.
Sec. 24. NEW SECTION . 554.9306A Law governing perfection
and priority of security interests in controllable accounts,
controllable electronic records, and controllable payment
intangibles.
The local law of this state governs perfection, the effect
of perfection or nonperfection, and the priority of a security
interest in a controllable account, controllable electronic
record, or controllable payment intangible granted by a debtor
located in this state at the time the security interest becomes
enforceable against the debtor with respect to the collateral
under section 554.9203.
Sec. 25. Section 554.9308, Code 2022, is amended by adding
the following new subsection:
NEW SUBSECTION . 8. Controllable account or payment
intangible. Perfection of a security interest in a controllable
electronic record that evidences a controllable account or
controllable payment intangible also perfects a security
interest in the controllable account or controllable payment
intangible.
Sec. 26. Section 554.9310, subsection 2, paragraph h, Code
2022, is amended to read as follows:
h. in controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts,
electronic chattel paper, electronic documents, investment
property, or letter-of-credit rights which is perfected by
control under section 554.9314 ;
Sec. 27. Section 554.9312, Code 2022, is amended to read as
follows:
554.9312 Perfection of security interests in controllable

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accounts, controllable electronic records, controllable payment
intangibles, chattel paper, deposit accounts, documents,
goods covered by documents, instruments, investment property,
letter-of-credit rights, and money —— perfection by permissive
filing —— temporary perfection without filing or transfer of
possession.
1. Perfection by filing permitted. A security interest
in controllable accounts, controllable electronic records,
controllable payment intangibles, chattel paper, negotiable
documents, instruments, or investment property may be perfected
by filing.
2. Control or possession of certain collateral. Except as
otherwise provided in section 554.9315, subsections 3 and 4 ,
for proceeds:
a. a security interest in a deposit account may be perfected
only by control under section 554.9314 ;
b. and except as otherwise provided in section 554.9308,
subsection 4 , a security interest in a letter-of-credit right
may be perfected only by control under section 554.9314 ; and
c. a security interest in tangible money may be perfected
only by the secured party’s taking possession under section
554.9313 ; and
d. a security interest in electronic money may be perfected
only by control under section 554.9314 .
3. Goods covered by negotiable document. While goods are
in the possession of a bailee that has issued a negotiable
document covering the goods:
a. a security interest in the goods may be perfected by
perfecting a security interest in the document; and
b. a security interest perfected in the document has
priority over any security interest that becomes perfected in
the goods by another method during that time.
4. Goods covered by nonnegotiable document. While goods are
in the possession of a bailee that has issued a nonnegotiable
document covering the goods, a security interest in the goods
may be perfected by:
a. issuance of a document in the name of the secured party;
b. the bailee’s receipt of notification of the secured
party’s interest; or

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c. filing as to the goods.
5. Temporary perfection —— new value. A security
interest in certificated securities, negotiable documents,
or instruments is perfected without filing or the taking of
possession or control for a period of twenty days from the time
it attaches to the extent that it arises for new value given
under an authenticated security agreement.
6. Temporary perfection —— goods or documents made available
to debtor. A perfected security interest in a negotiable
document or goods in possession of a bailee, other than one
that has issued a negotiable document for the goods, remains
perfected for twenty days without filing if the secured
party makes available to the debtor the goods or documents
representing the goods for the purpose of:
a. ultimate sale or exchange; or
b. loading, unloading, storing, shipping, transshipping,
manufacturing, processing, or otherwise dealing with them in a
manner preliminary to their sale or exchange.
7. Temporary perfection —— delivery of security certificate
or instrument to debtor. A perfected security interest in
a certificated security or instrument remains perfected for
twenty days without filing if the secured party delivers the
security certificate or instrument to the debtor for the
purpose of:
a. ultimate sale or exchange; or
b. presentation, collection, enforcement, renewal, or
registration of transfer.
8. Expiration of temporary perfection. After the twenty-day
period specified in subsection 5, 6, or 7 expires, perfection
depends upon compliance with this Article .
Sec. 28. Section 554.9313, subsection 1, Code 2022, is
amended to read as follows:
1. Perfection by possession or delivery. Except as otherwise
provided in subsection 2 , a secured party may perfect a
security interest in tangible negotiable documents, goods,
instruments, tangible money, or tangible chattel paper by
taking possession of the collateral. A secured party may
perfect a security interest in certificated securities by
taking delivery of the certificated securities under section

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554.8301 .
Sec. 29. Section 554.9314, subsections 1 and 2, Code 2022,
are amended to read as follows:
1. Perfection by control. A security interest in investment
property, deposit accounts, letter-of-credit rights, electronic
chattel paper, or electronic documents controllable accounts,
controllable electronic records, controllable payment
intangibles, deposit accounts, electronic chattel paper,
electronic documents, electronic money, investment property,
or letter-of-credit rights, may be perfected by control of
the collateral under section 554.7106 , 554.9104 , 554.9105 ,
554.9105A, 554.9106 , or 554.9107 , or 554.9107A .
2. Specified collateral —— time of perfection by control ——
continuation of perfection. A security interest in deposit
accounts, electronic chattel paper, letter-of-credit rights,
or electronic documents controllable accounts, controllable
electronic records, controllable payment intangibles, deposit
accounts, electronic chattel paper, electronic documents,
electronic money, or letter-of-credit rights, is perfected by
control under section 554.7106 , 554.9104 , 554.9105 , 554.9105A
or 554.9107 , or 554.9107A when the secured party obtains
control and remains perfected by control only while the secured
party retains control.
Sec. 30. NEW SECTION . 554.9326A Priority of security
interests in controllable account, controllable electronic
record, and controllable payment intangible.
A security interest in a controllable account, controllable
electronic record, or controllable payment intangible held by a
secured party having control of the account, electronic record,
or payment intangible has priority over a conflicting security
interest held by a secured party that does not have control.
Sec. 31. Section 554.9331, Code 2022, is amended to read as
follows:
554.9331 Priority of rights of purchasers of instruments,
controllable accounts, controllable records, controllable payment
intangibles, documents, instruments, and securities under other
articles Articles —— priority of interests in financial assets
and security entitlements and protections against assertions of
claims under Article Articles 8 and 14 .

House File 2445, p. 17
1. Rights under Articles 3 , 7 , and 8 , and 14 not
limited. This Article does not limit the rights of a holder
in due course of a negotiable instrument, a holder to which a
negotiable document of title has been duly negotiated, or a
protected purchaser of a security , or a qualifying purchaser
of a controllable account, controllable electronic record, or
controllable payment intangible . These holders or purchasers
take priority over an earlier security interest, even if
perfected, to the extent provided in Articles 3 , 7 , and 8 , and
14 .
2. Protection under Article Articles 8 and 14 . This Article
does not limit the rights of or impose liability on a person to
the extent that the person is protected against the assertion
of a claim under Article 8 or 14 .
3. Filing not notice. Filing under this Article does not
constitute notice of a claim or defense to the holders, or
purchasers, or persons described in subsections 1 and 2 .
Sec. 32. Section 554.9332, Code 2022, is amended to read as
follows:
554.9332 Transfer of money —— transfer of funds from deposit
account.
1. Transferee of tangible money. A transferee of tangible
money takes the money free of a security interest unless the
transferee acts in the money if the transferee when receiving
delivery of the money does not act in collusion with the debtor
in violating the rights of the secured party.
2. Transferee of electronic money. A transferee of
electronic money takes the money free of a security interest
in the money if the transferee when obtaining control of the
money does not act in collusion with the debtor in violating
the rights of the secured party.
2. 3. Transferee of funds from deposit account. A
transferee of funds from a deposit account takes the funds
free of a security interest in the deposit account unless the
transferee acts if the transferee when receiving the funds does
not act in collusion with the debtor in violating the rights of
the secured party.
Sec. 33. Section 554.9406, subsections 1, 2, and 3, Code
2022, are amended to read as follows:

House File 2445, p. 18
1. Discharge of account debtor —— effect of
notification. Subject to subsections 2 through 9 and
11 , an account debtor on an account, chattel paper, or a
payment intangible may discharge its obligation by paying the
assignor until, but not after, the account debtor receives a
notification, authenticated by the assignor or the assignee,
that the amount due or to become due has been assigned and that
payment is to be made to the assignee. After receipt of the
notification, the account debtor may discharge its obligation
by paying the assignee and may not discharge the obligation by
paying the assignor.
2. When notification ineffective. Subject to subsection
subsections 8 and 11 , notification is ineffective under
subsection 1 :
a. if it does not reasonably identify the rights assigned;
b. to the extent that an agreement between an account
debtor and a seller of a payment intangible limits the account
debtor’s duty to pay a person other than the seller and the
limitation is effective under law other than this Article ; or
c. at the option of an account debtor, if the notification
notifies the account debtor to make less than the full amount
of any installment or other periodic payment to the assignee,
even if:
(1) only a portion of the account, chattel paper, or payment
intangible has been assigned to that assignee;
(2) a portion has been assigned to another assignee; or
(3) the account debtor knows that the assignment to that
assignee is limited.
3. Proof of assignment. Subject to subsection subsections
8 and 11 , if requested by the account debtor, an assignee shall
seasonably furnish reasonable proof that the assignment has
been made. Unless the assignee complies, the account debtor
may discharge its obligation by paying the assignor, even if
the account debtor has received a notification under subsection
1 .
Sec. 34. Section 554.9406, Code 2022, is amended by adding
the following new subsection:
NEW SUBSECTION . 11. Inapplicability of certain
subsections. Subsections 1 through 3 and 7 do not apply to a

House File 2445, p. 19
controllable account or controllable payment intangible.
Sec. 35. Section 554.9601, subsection 2, Code 2022, is
amended to read as follows:
2. Rights and duties of secured party in possession or
control. A secured party in possession of collateral or control
of collateral under section 554.7106 , 554.9104 , 554.9105 ,
554.9105A, 554.9106 , or 554.9107 , or 554.9107A has the rights
and duties provided in section 554.9207 .
Sec. 36. Section 554.9605, Code 2022, is amended to read as
follows:
554.9605 Unknown debtor or secondary obligor.
1. Duties to unknown persons —— general rule. A Except as
provided in subsection 2, a secured party does not owe a duty
based on its status as secured party:
1. a. to a person that is a debtor or obligor, unless the
secured party knows:
a. (1) that the person is a debtor or obligor;
b. (2) the identity of the person; and
c. (3) how to communicate with the person; or
2. b. to a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
a.
(1) that the person is a debtor; and
b. (2) the identity of the person.
2. When secured party owes duty to debtor notwithstanding
subsection 1. A secured party owes a duty based on its status
as a secured party to a person that is a debtor if, at the time
the secured party obtains control of a controllable account,
controllable electronic record, or controllable payment
intangible, the secured party has knowledge that the nature of
the collateral or a system in which the collateral is recorded
would prevent the secured party from acquiring the knowledge
specified in subsection 1, paragraph “a” , subparagraph (1),
(2), or (3).
Sec. 37. Section 554.9628, subsection 2, Code 2022, is
amended to read as follows:
2. Limitation of liability based on status as secured
party. A Subject to subsection 6, a secured party is not liable
because of its status as secured party:

House File 2445, p. 20
a. to a person that is a debtor or obligor, unless the
secured party knows:
(1) that the person is a debtor or obligor;
(2) the identity of the person; and
(3) how to communicate with the person; or
b. to a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
(1) that the person is a debtor; and
(2) the identity of the person.
Sec. 38. Section 554.9628, Code 2022, is amended by adding
the following new subsection:
NEW SUBSECTION . 6. When secured party owes duty to debtor
notwithstanding subsection 2. A secured party owes a duty
based on its status as a secured party to a person that is
a debtor if, at the time the secured party obtains control
of a controllable account, controllable electronic record,
or controllable payment intangible, the secured party has
knowledge that the nature of the collateral or a system in
which the collateral is recorded would prevent the secured
party from acquiring the knowledge specified in subsection 2,
paragraph “a” , subparagraph (1), (2), or (3).
______________________________ ______________________________
PAT GRASSLEY JAKE CHAPMAN
Speaker of the House President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2445, Eighty-ninth General Assembly.
______________________________
MEGHAN NELSON
Chief Clerk of the House
Approved _______________, 2022 ______________________________
KIM REYNOLDS
Governor