Bill Text: PA HB2159 | 2011-2012 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Revising secured transaction provisions relating to definitions, to control of electronic chattel paper, to location of debtor, to perfection of security interests in property subject to certain statutes, regulations and treaties, to continued perfection of security interest following change in governing law, to interests which take priority over or take free of security interest or agricultural lien, to priority of security interests created by new debtor, to discharge of account debtor, notification of assignment, identification and proof of assignment, restrictions on assignment of accounts, chattel paper, payment intangibles and promissory notes ineffective, to restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective, to contents of financing statement, record of mortgage as financing statement, time of filing financing statement, to name of debtor and secured party, to effect of certain events on effectiveness of financing statement, to duration and effectiveness of financing statement, effect of lapsed financing statement, to what constitutes filing, effectiveness of filing, to claim concerning inaccurate or wrongfully filed record and to collection and enforcement by secured party; providing for transition provisions for 2012 amendments; imposing duties upon the Department of State and the Department of Transportation; and making editorial changes.

Spectrum: Moderate Partisan Bill (Republican 28-8)

Status: (Engrossed - Dead) 2012-10-02 - Re-referred to APPROPRIATIONS [HB2159 Detail]

Download: Pennsylvania-2011-HB2159-Introduced.html

  

 

    

PRINTER'S NO.  3143

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2159

Session of

2012

  

  

INTRODUCED BY GRELL, AUMENT, BAKER, BARBIN, BEAR, BRENNAN, BUXTON, CAUSER, CREIGHTON, CUTLER, DENLINGER, EVERETT, GEIST, GIBBONS, GINGRICH, GROVE, HARPER, HARRIS, HELM, HESS, HORNAMAN, HUTCHINSON, M. K. KELLER, MANN, MARSHALL, PETRI, REED, SAINATO, SAYLOR, SONNEY, WATSON, MILLER, SCHRODER AND HICKERNELL, FEBRUARY 29, 2012

  

  

REFERRED TO COMMITTEE ON JUDICIARY, FEBRUARY 29, 2012  

  

  

  

AN ACT

  

1

Amending Titles 13 (Commercial Code), 30 (Fish) and 75

2

(Vehicles) of the Pennsylvania Consolidated Statutes,

3

revising secured transaction provisions relating to

4

definitions, to control of electronic chattel paper, to

5

location of debtor, to perfection of security interests in

6

property subject to certain statutes, regulations and

7

treaties, to continued perfection of security interest

8

following change in governing law, to interests which take

9

priority over or take free of security interest or

10

agricultural lien, to priority of security interests created

11

by new debtor, to discharge of account debtor, notification

12

of assignment, identification and proof of assignment,

13

restrictions on assignment of accounts, chattel paper,

14

payment intangibles and promissory notes ineffective, to

15

restrictions on assignment of promissory notes, health-care-

16

insurance receivables and certain general intangibles

17

ineffective, to contents of financing statement, record of

18

mortgage as financing statement, time of filing financing

19

statement, to name of debtor and secured party, to effect of

20

certain events on effectiveness of financing statement, to

21

duration and effectiveness of financing statement, effect of

22

lapsed financing statement, to what constitutes filing,

23

effectiveness of filing, to claim concerning inaccurate or

24

wrongfully filed record and to collection and enforcement by

25

secured party; providing for transition provisions for 2012

26

amendments; imposing duties upon the Department of State and

27

the Department of Transportation; and making editorial

28

changes.

29

The General Assembly of the Commonwealth of Pennsylvania

 


1

hereby enacts as follows:

2

Section 1.  The definitions of "authenticate," "certificate

3

of title," "jurisdiction of organization" and "registered

4

organization" in section 9102(a) of Title 13 of the Pennsylvania

5

Consolidated Statutes are amended and the subsection is amended

6

by adding a definition to read:

7

§ 9102.  Definitions and index of definitions.

8

(a)  Division 9 definitions.--The following words and phrases

9

when used in this division shall have the meanings given to them

10

in this subsection:

11

* * *

12

"Authenticate."  To:

13

(i)  sign; or

14

(ii)  [execute or otherwise adopt a symbol, or

15

encrypt or similarly process a record in whole or in

16

part,] with [the] present intent [of the authenticating

17

person to identify the person and] to adopt or accept a

18

record, attach to or logically associate with the record

19

an electrical sound, symbol or process.

20

* * *

21

"Certificate of title."  A certificate of title with respect

22

to which a statute provides for the security interest in

23

question to be indicated on the certificate as a condition or

24

result of the security interest's obtaining priority over the

25

rights of a lien creditor with respect to the collateral. The

26

term includes another record maintained as an alternative to a

27

certificate of title by the governmental unit that issues

28

certificates of title if a statute permits the security interest

29

in question to be indicated on the record as a condition or

30

result of the security interest's obtaining priority over the

- 2 -

 


1

rights of a lien creditor with respect to the collateral.

2

* * *

3

"Jurisdiction of organization."  With respect to a registered

4

organization, the jurisdiction under whose law the organization

5

is formed or organized.

6

* * *

7

"Public organic record."  A record that is available to the

8

public for inspection and is:

9

(1)  a record consisting of the record initially filed

10

with or issued by a state or the United States to form or

11

organize an organization and any record filed with or issued

12

by the state or the United States which amends or restates

13

the initial record;

14

(2)  an organic record of a business trust consisting of

15

the record initially filed with a state and any record filed

16

with the state which amends or restates the initial record,

17

if a statute of the state governing business trusts requires

18

that the record be filed with the state; or

19

(3)  a record consisting of legislation enacted by the

20

legislature of a state or the Congress of the United States

21

which forms or organizes an organization, any record amending

22

the legislation, and any record filed with or issued by the

23

state or the United States which amends or restates the name

24

of the organization.

25

* * *

26

"Registered organization."  An organization formed or

27

organized solely under the law of a single state or the United

28

States [and as to which the state or the United States must

29

maintain a public record showing the organization to have been

30

organized.] by the filing of a public organic record, with the

- 3 -

 


1

issuance of a public organic record by, or the enactment of

2

legislation by the state or the United States. The term includes

3

a business trust that is formed or organized under the law of a

4

single state if a statute of the state governing business trusts

5

requires that a business trust's organic record be filed with

6

the state.

7

* * *

8

Section 2.  Sections 9105, 9307(f)(2), 9308(a), 9310(b)(10),

9

9311(a)(2) and (3) and (b) and 9313(b) of Title 13 are amended

10

to read:

11

§ 9105.  Control of electronic chattel paper.

12

(a)  General rule; control of electronic chattel paper.--A

13

secured party has control of electronic chattel paper if a

14

system employed for evidencing the transfer of interests in the

15

chattel paper reliably establishes the secured party as the

16

person to which the chattel paper was assigned.

17

(b)  Specific facts giving control.--A system satisfies

18

subsection (a) if the record or records comprising the chattel

19

paper are created, stored and assigned in such a manner that:

20

(1)  a single authoritative copy of the record or records

21

exists which is unique, identifiable and, except as otherwise

22

provided in paragraphs (4), (5) and (6), unalterable;

23

(2)  the authoritative copy identifies the secured party

24

as the assignee of the record or records;

25

(3)  the authoritative copy is communicated to and

26

maintained by the secured party or its designated custodian;

27

(4)  copies or [revisions] amendments which add or change

28

an identified assignee of the authoritative copy can be made

29

only with the [participation] consent of the secured party;

30

(5)  each copy of the authoritative copy and any copy of

- 4 -

 


1

a copy is readily identifiable as a copy which is not the

2

authoritative copy; and

3

(6)  any [revision] amendment of the authoritative copy

4

is readily identifiable as [an] authorized or unauthorized

5

[revision].

6

§ 9307.  Location of debtor.

7

* * *

8

(f)  Location of registered organization organized under

9

Federal law; bank branches and agencies.--Except as otherwise

10

provided in subsection (i), a registered organization which is

11

organized under the law of the United States and a branch or

12

agency of a bank which is not organized under the law of the

13

United States or a state are located:

14

* * *

15

(2)  in the state which the registered organization,

16

branch or agency designates, if the law of the United States

17

authorizes the registered organization, branch or agency to

18

designate its state of location, including by designating its

19

main office, home office or other comparable office; or

20

* * *

21

§ 9308.  When security interest or agricultural lien is

22

perfected; continuity of perfection.

23

(a)  Perfection of security interest.--Except as otherwise

24

provided in this section and section 9309 (relating to security

25

interest perfected upon attachment), a security interest is

26

perfected if it has attached and all of the applicable

27

requirements for perfection in sections 9310 (relating to when

28

filing required to perfect security interest or agricultural

29

lien; security interests and agricultural liens to which filing

30

provisions do not apply) through 9316 (relating to [continued

- 5 -

 


1

perfection of security interest following] effect of change in

2

governing law) have been satisfied. A security interest is

3

perfected when it attaches if the applicable requirements are

4

satisfied before the security interest attaches.

5

* * *

6

§ 9310.  When filing required to perfect security interest or

7

agricultural lien; security interests and

8

agricultural liens to which filing provisions do not

9

apply.

10

* * *

11

(b)  Exceptions: filing not necessary.--The filing of a

12

financing statement is not necessary to perfect a security

13

interest:

14

* * *

15

(10)  which is perfected under section 9316 (relating to

16

[continued perfection of security interest following] effect

17

of change in governing law).

18

* * *

19

§ 9311.  Perfection of security interests in property subject to

20

certain statutes, regulations and treaties.

21

(a)  Security interest subject to other law.--Except as

22

otherwise provided in subsection (d), the filing of a financing

23

statement is not necessary or effective to perfect a security

24

interest in property subject to:

25

* * *

26

(2)  a [certificate-of-title] statute of this

27

Commonwealth or regulations promulgated thereunder, to the

28

extent such statute or regulations provide for a security

29

interest to be indicated on [the] certificate of title as a

30

condition or result of perfection; or

- 6 -

 


1

(3)  a [certificate-of-title] statute of another

2

jurisdiction which provides for a security interest to be

3

indicated on [the] a certificate of title as a condition or

4

result of the security interest's obtaining priority over the

5

rights of a lien creditor with respect to the property.

6

(b)  Compliance with other law.--Compliance with the

7

requirements of a statute, regulation or treaty described in

8

subsection (a) for obtaining priority over the rights of a lien

9

creditor is equivalent to the filing of a financing statement

10

under this division. Except as otherwise provided in subsection

11

(d) and sections 9313 (relating to when possession by or

12

delivery to secured party perfects security interest without

13

filing) and 9316(d) and (e) (relating to [continued perfection

14

of security interest following] effect of change in governing

15

law) for goods covered by a certificate of title, a security

16

interest in property subject to a statute, regulation or treaty

17

described in subsection (a) may be perfected only by compliance

18

with those requirements, and a security interest so perfected

19

remains perfected notwithstanding a change in the use or

20

transfer of possession of the collateral.

21

* * *

22

§ 9313.  When possession by or delivery to secured party

23

perfects security interest without filing.

24

* * *

25

(b)  Goods covered by certificate of title.--With respect to

26

goods covered by a certificate of title issued by the

27

Commonwealth, a secured party may perfect a security interest in

28

the goods by taking possession of the goods only in the

29

circumstances described in section 9316(d) (relating to

30

[continued perfection of security interest following] effect of 

- 7 -

 


1

change in governing law).

2

* * *

3

Section 3.  Section 9316 heading of Title 13 is amended and

4

the section is amended by adding subsections to read:

5

§ 9316.  [Continued perfection of security interest following]

6

Effect of change in governing law.

7

* * *

8

(h)  Effect on filed financing statement of change in

9

governing law.--The following rules apply to collateral to which

10

a security interest attaches within four months after the debtor

11

changes its location to another jurisdiction:

12

(1)  A financing statement filed before the change

13

pursuant to the law of the jurisdiction designated in section

14

9301(a) or 9305(c) is effective to perfect a security

15

interest in the collateral if the financing statement would

16

have been effective to perfect a security interest in the

17

collateral had the debtor not changed its location.

18

(2)  If a security interest perfected by a financing

19

statement that is effective under paragraph (1) becomes

20

perfected under the law of the other jurisdiction before the

21

earlier of the time the financing statement would have become

22

ineffective under the law of the jurisdiction designated in

23

section 9301(a) or 9305(c) or the expiration of the four-

24

month period, it remains perfected thereafter. If the

25

security interest does not become perfected under the law of

26

the other jurisdiction before the earlier time or event, it

27

becomes unperfected and is deemed never to have been

28

perfected as against a purchaser of the collateral for value.

29

(i)  Effect of change in governing law on financing statement

30

filed against original debtor.--If a financing statement naming

- 8 -

 


1

an original debtor is filed pursuant to the law of the

2

jurisdiction designated in section 9301(a) or 9305(c) and the

3

new debtor is located in another jurisdiction, the following

4

rules apply:

5

(1) The financing statement is effective to perfect a

6

security interest in collateral acquired by the new debtor

7

before, and within four months after, the new debtor becomes

8

bound under section 9203(d) (relating to attachment and

9

enforceability of security interest; proceeds; supporting

10

obligations; formal requisites), if the financing statement

11

would have been effective to perfect a security interest in

12

the collateral had the collateral been acquired by the

13

original debtor.

14

(2)  A security interest perfected by the financing

15

statement and which becomes perfected under the law of the

16

other jurisdiction before the earlier of the time the

17

financing statement would have become ineffective under the

18

law of the jurisdiction designated in section 9301(a) or

19

9305(c) or the expiration of the four-month period remains

20

perfected thereafter. A security interest that is perfected

21

by the financing statement but which does not become

22

perfected under the law of the other jurisdiction before the

23

earlier time or event becomes unperfected and is deemed never

24

to have been perfected as against a purchaser of the

25

collateral for value.

26

Section 4.  Sections 9317(b) and (d), 9320(c), 9326, 9406(e),

27

9408(b) and 9502(c) of Title 13 are amended to read:

28

§ 9317.  Interests which take priority over or take free of

29

security interest or agricultural lien.

30

* * *

- 9 -

 


1

(b)  Buyers that receive delivery.--Except as otherwise

2

provided in subsection (e), a buyer, other than a secured party,

3

of tangible chattel paper, tangible documents, goods,

4

instruments or a [security certificate] certificated security 

5

takes free of a security interest or agricultural lien if the

6

buyer gives value and receives delivery of the collateral

7

without knowledge of the security interest or agricultural lien

8

and before it is perfected.

9

* * *

10

(d)  Licensees and buyers of certain collateral.--A licensee

11

of a general intangible or a buyer, other than a secured party,

12

of [accounts, electronic chattel paper, electronic documents,

13

general intangibles or investment property] collateral other

14

than tangible chattel paper, tangible documents, goods,

15

instruments or a certificated security takes free of a security

16

interest if the licensee or buyer gives value without knowledge

17

of the security interest and before it is perfected.

18

* * *

19

§ 9320.  Buyer of goods.

20

* * *

21

(c)  Effectiveness of filing for subsection (b).--To the

22

extent that it affects the priority of a security interest over

23

a buyer of goods under subsection (b), the period of

24

effectiveness of a filing made in the jurisdiction in which the

25

seller is located is governed by section 9316(a) and (b)

26

(relating to [continued perfection of security interest

27

following] effect of change in governing law).

28

* * *

29

§ 9326.  Priority of security interests created by new debtor.

30

(a)  Subordination of security interest created by new

- 10 -

 


1

debtor.--Subject to subsection (b), a security interest that is 

2

created by a new debtor [which is] in collateral in which the

3

new debtor has or acquires rights and is perfected solely by a

4

filed financing statement which [is effective solely under

5

section 9508 (relating to effectiveness of financing statement

6

if new debtor becomes bound by security agreement) in collateral

7

in which a new debtor has or acquires rights] would be

8

ineffective to perfect the security interest but for the

9

application of section 9316(i)(1) (relating to effect of change

10

in governing law) or 9508 (relating to effectiveness of

11

financing statement if new debtor becomes bound by security

12

agreement) is subordinate to a security interest in the same

13

collateral which is perfected other than by such a filed

14

financing statement [which is effective solely under section

15

9508].

16

(b)  Priority under other provisions; multiple original

17

debtors.--The other provisions of this chapter determine the

18

priority among conflicting security interests in the same

19

collateral perfected by filed financing statements [which are

20

effective solely under section 9508] described in subsection

21

(a). However, if the security agreements to which a new debtor

22

became bound as debtor were not entered into by the same

23

original debtor, the conflicting security interests rank

24

according to priority in time of the new debtor's having become

25

bound.

26

§ 9406.  Discharge of account debtor; notification of

27

assignment; identification and proof of assignment;

28

restrictions on assignment of accounts, chattel

29

paper, payment intangibles and promissory notes

30

ineffective.

- 11 -

 


1

* * *

2

(e)  Inapplicability of subsection (d) to certain sales.--

3

Subsection (d) does not apply to the sale of a payment

4

intangible or promissory note, other than a sale pursuant to a

5

disposition under section 9610 (relating to disposition of

6

collateral after default) or an acceptance of collateral under

7

section 9620 (relating to acceptance of collateral in full or

8

partial satisfaction of obligation; compulsory disposition of

9

collateral).

10

* * *

11

§ 9408.  Restrictions on assignment of promissory notes, health-

12

care-insurance receivables and certain general

13

intangibles ineffective.

14

* * *

15

(b)  Applicability of subsection (a) to sales of certain

16

rights to payment.--Subsection (a) applies to a security

17

interest in a payment intangible or promissory note only if the

18

security interest arises out of a sale of the payment intangible

19

or promissory note, other than a sale pursuant to a disposition

20

under section 9610 (relating to disposition of collateral after

21

default) or an acceptance of collateral under section 9620

22

(relating to acceptance of collateral in full or partial

23

satisfaction of obligation; compulsory disposition of

24

collateral).

25

* * *

26

§ 9502.  Contents of financing statement; record of mortgage as

27

financing statement; time of filing financing

28

statement.

29

* * *

30

(c)  Record of mortgage as financing statement.--A record of

- 12 -

 


1

a mortgage is effective, from the date of recording, as a

2

financing statement filed as a fixture filing or as a financing

3

statement covering as-extracted collateral or timber to be cut

4

only if all of the following apply:

5

(1)  [the] The record indicates the goods or accounts

6

which it covers[;].

7

(2)  [the] The goods are or are to become fixtures

8

related to the real property described in the record, or the

9

collateral is related to the real property described in the

10

record and is as-extracted collateral or timber to be cut[;].

11

(3)  [the] The record satisfies the requirements for a

12

financing statement in this section [other than an

13

indication] subject to the following:

14

(i)  The record need not indicate that it is to be

15

filed in the real property records[; and].

16

(ii)  The record sufficiently provides the name of a

17

debtor who is an individual if it provides the individual

18

name of the debtor or the surname and first personal name

19

of the debtor, even if the debtor is an individual to

20

whom section 9503(a)(4)(relating to name of debtor and

21

secured party) applies.

22

(4)  [the] The record is duly recorded.

23

* * *

24

Section 5.  Section 9503(a) and (b)(2) of Title 13 are

25

amended and the section is amended by adding subsections to

26

read: 

27

§ 9503.  Name of debtor and secured party.

28

(a)  Sufficiency of debtor's name.--A financing statement

29

sufficiently provides the name of the debtor:

30

(1)  [If] Except as otherwise provided in paragraph (3),

- 13 -

 


1

if the debtor is a registered organization or the collateral

2

is held in a trust that is a registered organization, only if

3

the financing statement provides the name [of the debtor

4

indicated] that is stated to be the registered organization's

5

name on the public organic record [of] most recently filed

6

with or issued or enacted by the [debtor's] registered

7

organization's jurisdiction of organization which [shows the

8

debtor to have been organized] purports to state, amend or

9

restate the registered organization's name.

10

(2)  [If] Subject to subsection (f), if the [debtor is a

11

decedent's estate] collateral is being administered by the

12

personal representative of a decedent, only if the financing

13

statement provides, as the name of the debtor, the name of

14

the decedent and, in a separate part of the financing

15

statement, indicates that the [debtor is an estate]

16

collateral is being administered by a personal

17

representative.

18

(3)  If the [debtor is a trust or a trustee acting with

19

respect to property held in trust, only if the financing

20

statement:

21

(i)  provides the name specified for the trust in its

22

organic documents or, if no name is specified, provides

23

the name of the settlor and additional information

24

sufficient to distinguish the debtor from other trusts

25

having one or more of the same settlors; and

26

(ii)  indicates, in the debtor's name or otherwise,

27

that the debtor is a trust or is a trustee acting with

28

respect to property held in trust; and] collateral is

29

held in a trust that is not a registered organization,

30

only if the financing statement:

- 14 -

 


1

(A)  provides, as the name of the debtor:

2

(I)  if the organic record of the trust

3

specifies a name for the trust, the name

4

specified; or

5

(II)  if the organic record of the trust does

6

not specify a name for the trust, the name of the

7

settlor or testator; and

8

(B)  in a separate part of the financing

9

statement:

10

(I)  if the name is provided under clause

11

(A)(I), indicates that the collateral is held in

12

a trust; or

13

(II)  if the name is provided under clause

14

(A)(II), provides additional information

15

sufficient to distinguish the trust from other

16

trusts having one or more of the same settlors or

17

the same testator and indicates that the

18

collateral is held in a trust, unless the

19

additional information so indicates.

20

(4)  Subject to subsection (g), if the debtor is an

21

individual to whom the Department of Transportation has

22

issued a driver’s license which has not expired under 75

23

Pa.C.S. § 1510(a) (relating to issuance and content of

24

driver's license) or an identification card under 75 Pa.C.S.

25

§ 1510(b), only if the financing statement provides the name

26

of the individual which is indicated on:

27

(i)  except as set forth in subparagraph (ii), the

28

driver’s license; or

29

(ii)  if there is no driver's license, the

30

identification card.

- 15 -

 


1

(5)  If the debtor is an individual to whom paragraph (4)

2

does not apply, only if the financing statement provides the

3

individual name of the debtor or the surname and first

4

personal name of the debtor.

5

[(4)] (6) In other cases:

6

(i)  if the debtor has a name, only if [it] the

7

financing statement provides the [individual or]

8

organizational name of the debtor; and

9

(ii)  if the debtor does not have a name, only if

10

[it] the financing statement provides the names of the

11

partners, members, associates or other persons comprising

12

the debtor, in a manner that each name provided would be

13

sufficient if the person named were the debtor.

14

(b)  Additional debtor-related information.--A financing

15

statement which provides the name of the debtor in accordance

16

with subsection (a) is not rendered ineffective by the absence

17

of:

18

* * *

19

(2)  unless required under subsection [(a)(4)(ii)] (a)(6)

20

(ii), names of partners, members, associates or other persons

21

comprising the debtor.

22

* * *

23

(f)  Name of decedent.--The name of the decedent indicated on

24

the order appointing the personal representative of the decedent

25

issued by the court having jurisdiction over the collateral is

26

sufficient as the name of the decedent under subsection (a)(2).

27

(g)  Multiple driver’s licenses.--If the department has

28

issued to an individual more than one driver's license or

29

identification card of a kind described in subsection (a)(4),

30

the one that was issued most recently is the one to which

- 16 -

 


1

subsection (a)(4) refers.

2

(h)  Definition.--As used in this section, the term "name of

3

the settlor or testator" means:

4

(1)  if the settlor is a registered organization, the

5

name that is stated to be the settlor’s name on the public

6

organic record most recently filed with or issued or enacted

7

by the settlor's jurisdiction of organization which purports

8

to state, amend or restate the settlor's name; or

9

(2)  in other cases, the name of the settlor or testator

10

indicated in the trust's organic record.

11

Section 6.  Sections 9507(c), 9515(f) and 9516(b)(3)(ii)

12

introductory paragraph and (iii) and (5)(ii) and (iii) of Title

13

13 are amended to read:

14

§ 9507.  Effect of certain events on effectiveness of financing

15

statement.

16

* * *

17

(c)  Change in debtor's name.--If [a debtor so changes its]

18

the name that a filed financing statement provides for a debtor

19

becomes insufficient as the name of the debtor under section

20

9503(a) (relating to name of a debtor and secured party) so that

21

the financing statement becomes seriously misleading under

22

section 9506:

23

(1)  the financing statement is effective to perfect a

24

security interest in collateral acquired by the debtor

25

before, or within four months after, the [change] filed

26

financing statement becomes seriously misleading; and

27

(2)  the financing statement is not effective to perfect

28

a security interest in collateral acquired by the debtor more

29

than four months after the [change] filed financing statement

30

becomes seriously misleading, unless an amendment to the

- 17 -

 


1

financing statement which renders the financing statement not

2

seriously misleading is filed within four months after the

3

[change] financing statement became seriously misleading.

4

§ 9515.  Duration and effectiveness of financing statement;

5

effect of lapsed financing statement.

6

* * *

7

(f)  Transmitting utility financing statement.--If a debtor

8

is a transmitting utility and a filed initial financing

9

statement so indicates, the financing statement is effective

10

until a termination statement is filed.

11

* * *

12

§ 9516.  What constitutes filing; effectiveness of filing.

13

* * *

14

(b)  Refusal to accept record; filing does not occur.--Filing

15

does not occur with respect to a record which a filing office

16

refuses to accept because one of the following paragraphs

17

applies:

18

* * *

19

(3)  The filing office is unable to index the record

20

because of a reason stated in one of the following

21

subparagraphs:

22

* * *

23

(ii)  In the case of an amendment or [correction]

24

information statement, the record:

25

* * *

26

(iii)  In the case of an initial financing statement

27

which provides the name of a debtor identified as an

28

individual or an amendment which provides a name of a

29

debtor identified as an individual which was not

30

previously provided in the financing statement to which

- 18 -

 


1

the record relates, the record does not identify the

2

debtor's [last name] surname.

3

* * *

4

(5)  In the case of an initial financing statement or an

5

amendment which provides a name of a debtor which was not

6

previously provided in the financing statement to which the

7

amendment relates, the record does not do [one or more] both 

8

of the following:

9

* * *

10

(ii)  Indicate whether the name provided as the name

11

of the debtor is the name of an individual or an

12

organization.

13

[(iii)  If the financing statement indicates that the

14

debtor is an organization, provide:

15

(A)  a type of organization for the debtor;

16

(B)  a jurisdiction of organization for the

17

debtor; or

18

(C)  an organizational identification number for

19

the debtor or indicate that the debtor has none.]

20

* * *

21

Section 7.  Section 9518(a), (b)(2), (c) and (d)(1)(i) of

22

Title 13 are amended and the section is amended by adding

23

subsections to read:

24

§ 9518.  Claim concerning inaccurate or wrongfully filed record.

25

(a)  [Correction statement] Statement with respect to record

26

indexed under person's name.--A person may file in the filing

27

office [a correction] an information statement with respect to a

28

record indexed there under the person's name if the person

29

believes that the record is inaccurate or was wrongfully filed.

30

(b)  [Sufficiency] Contents of [correction] statement under

- 19 -

 


1

subsection (a).--[A correction] An information statement under

2

subsection (a) must:

3

* * *

4

(2)  indicate that it is [a correction] an information 

5

statement; and

6

* * *

7

(c)  Statement by secured party of record.--A person may file

8

in the filing office an information statement with respect to a

9

record filed there if the person is a secured party of record

10

with respect to the financing statement to which the record

11

relates and believes that the person that filed the record was

12

not entitled to do so under section 9509(d) (relating to persons

13

entitled to file a record).

14

(d)  Contents of statement under subsection (c).--An

15

information statement under subsection (c) must:

16

(1)  identify the record to which it relates by the file

17

number assigned to the initial financing statement to which

18

the record relates;

19

(2)  indicate that it is an information statement; and

20

(3)  provide the basis for the person’s belief that the

21

person that filed the record was not entitled to do so under

22

section 9509(d).

23

[(c)] (e)  Record not affected by correction statement.--

24

Except as provided in subsection [(d)] (f), the filing of a

25

correction statement does not affect the effectiveness of an

26

initial financing statement or other filed record.

27

[(d)] (f) Fraudulent financing statements.--

28

(1)  The Department of State may conduct an

29

administrative hearing to determine if an initial financing

30

statement was fraudulently filed in accordance with the

- 20 -

 


1

following:

2

(i)  The hearing shall be conducted in accordance

3

with 2 Pa.C.S. (relating to Administrative Law and

4

Procedure). The department shall determine the initial

5

financing statement to be fraudulently filed for purposes

6

of this subsection if it determines that no rational

7

basis exists under section 9509 [(relating to persons

8

entitled to file a record)] entitling the person to file

9

the initial financing statement and it appears that the

10

person filed the initial financing statement with intent

11

to annoy, harass or harm the debtor.

12

* * *

13

Section 8.  Section 9607(b)(2)(i) of Title 13 is amended to

14

read:

15

§ 9607.  Collection and enforcement by secured party.

16

* * *

17

(b)  Nonjudicial enforcement of mortgage.--If necessary to

18

enable a secured party to exercise under subsection (a)(3) the

19

right of a debtor to enforce a mortgage nonjudicially, the

20

secured party may record in the office in which a record of the

21

mortgage is recorded:

22

* * *

23

(2)  The secured party's sworn affidavit in recordable

24

form stating that:

25

(i)  a default has occurred with respect to the

26

obligation secured by the mortgage; and

27

* * *

28

Section 9.  Title 13 is amended by adding a chapter to read:

29

CHAPTER 98

30

TRANSITION PROVISIONS FOR 2012 AMENDMENTS

- 21 -

 


1

Sec.

2

9800.  Definitions.

3

9801.  Effective date.

4

9802.  Savings clause.

5

9803.  Security interest perfected before effective date.

6

9804.  Security interest unperfected before effective date.

7

9805.  Effectiveness of action taken before effective date.

8

9806.  When initial financing statement suffices to continue

9

effectiveness of financing statement.

10

9807.  Amendment of pre-effective-date financing statement.

11

9808.  Person entitled to file initial financing statement or

12

continuation statement.

13

9809.  Priority.

14

§ 9800.  Definitions.

15

The following words and phrases when used in this chapter

16

shall have the meanings given to them in this section unless the

17

context clearly indicates otherwise:

18

"2012 Revision."  The amendments which:

19

(1)  affect this division; and

20

(2)  are made by the act of     , 2012 (P.L.    ,

21

No.    ) entitled "An act amending Titles 13 (Commercial

22

Code), 30 (Fish) and 75 (Vehicles) of the Pennsylvania

23

Consolidated Statutes, revising secured transaction

24

provisions relating to definitions, to control of electronic

25

chattel paper, to location of debtor, to perfection of

26

security interests in property subject to certain statutes,

27

regulations and treaties, to continued perfection of security

28

interest following change in governing law, to interests

29

which take priority over or take free of security interest or

30

agricultural lien, to priority of security interests created

- 22 -

 


1

by new debtor, to discharge of account debtor, notification

2

of assignment, identification and proof of assignment,

3

restrictions on assignment of accounts, chattel paper,

4

payment intangibles and promissory notes ineffective, to

5

restrictions on assignment of promissory notes, health-care-

6

insurance receivables and certain general intangibles

7

ineffective, to contents of financing statement, record of

8

mortgage as financing statement, time of filing financing

9

statement, to name of debtor and secured party, to effect of

10

certain events on effectiveness of financing statement, to

11

duration and effectiveness of financing statement, effect of

12

lapsed financing statement, to what constitutes filing,

13

effectiveness of filing, to claim concerning inaccurate or

14

wrongfully filed record; to collection and enforcement by

15

secured party; providing for transition provisions for 2012

16

amendments; imposing duties upon the Department of State and

17

the Department of Transportation; and making editorial

18

changes."

19

§ 9801.  Effective date.

20

The 2012 Revision takes effect July 1, 2013.

21

§ 9802.  Savings clause.

22

(a)  Pre-effective-date transactions or liens.--Except as

23

otherwise provided in this part, the 2012 Revision applies to a

24

transaction or lien within its scope, even if the transaction or

25

lien was entered into or created before the 2012 Revision takes

26

effect.

27

(b)  Pre-effective-date proceedings.--The 2012 Revision does

28

not affect an action, case, or proceeding commenced before the

29

2012 Revision takes effect.

30

§ 9803.  Security interest perfected before effective date.

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1

(a)  Continuing perfection; perfection requirements

2

satisfied.--A security interest that is a perfected security

3

interest immediately before the 2012 Revision takes effect is a

4

perfected security interest under this division as amended by

5

the 2012 Revision if, when the 2012 Revision takes effect, the

6

applicable requirements for attachment and perfection under this

7

division as amended by the 2012 Revision are satisfied without

8

further action.

9

(b)  Continuing perfection: perfection requirements not

10

satisfied.--Except as otherwise provided in section 9805

11

(relating to effectiveness of action before effective date), if,

12

immediately before the 2012 Revision takes effect, a security

13

interest is a perfected security interest, but the applicable

14

requirements for perfection under this division as amended by

15

the 2012 Revision are not satisfied when the 2012 Revision takes

16

effect, the security interest remains perfected thereafter only

17

if the applicable requirements for perfection under this

18

division as amended by the 2012 Revision are satisfied within

19

one year after the 2012 Revision takes effect.

20

§ 9804.  Security interest unperfected before effective date.

21

A security interest that is an unperfected security interest

22

immediately before the 2012 Revision takes effect becomes a

23

perfected security interest:

24

(1)  without further action, when the 2012 Revision takes

25

effect if the applicable requirements for perfection under

26

this division as amended by the 2012 Revision are satisfied

27

before or at that time; or

28

(2)  when the applicable requirements for perfection are

29

satisfied if the requirements are satisfied after that time.

30

§ 9805.  Effectiveness of action taken before effective date.

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1

(a)  Pre-effective-date filing effective.--The filing of a

2

financing statement before the 2012 Revision takes effect is

3

effective to perfect a security interest to the extent the

4

filing would satisfy the applicable requirements for perfection

5

under this division as amended by the 2012 Revision.

6

(b)  When pre-effective-date filing becomes ineffective.--The

7

2012 Revision does not render ineffective an effective financing

8

statement that, before the 2012 Revision takes effect, is filed

9

and satisfies the applicable requirements for perfection under

10

the law of the jurisdiction governing perfection as provided in

11

this division as it existed before amendment by the 2012

12

Revision. However, except as otherwise provided in subsections

13

(c) and (d) and section 9806 (relating to when initial financing

14

statement suffices to continue effectiveness of financing

15

statement), the financing statement ceases to be effective:

16

(1)  if the financing statement is filed in this

17

Commonwealth, at the time the financing statement would have

18

ceased to be effective had the 2012 Revision not taken

19

effect; or

20

(2)  if the financing statement is filed in another

21

jurisdiction, at the earlier of:

22

(i)  the time the financing statement would have

23

ceased to be effective under the law of that

24

jurisdiction; or

25

(ii)  June 30, 2018.

26

(c)  Continuation statement.--The filing of a continuation

27

statement after the 2012 Revision takes effect does not continue

28

the effectiveness of a financing statement filed before the 2012

29

Revision takes effect. However, upon the timely filing of a

30

continuation statement after the 2012 Revision takes effect and

- 25 -

 


1

in accordance with the law of the jurisdiction governing

2

perfection as provided in this division as amended by the 2012

3

Revision, the effectiveness of a financing statement filed in

4

the same office in that jurisdiction before the 2012 Revision

5

takes effect continues for the period provided by the law of

6

that jurisdiction.

7

(d)  Application of subsection (b)(2)(ii) to transmitting

8

utility financing statement.--Subsection (b)(2)(ii) applies to a

9

financing statement that, before the 2012 Revision takes effect,

10

is filed against a transmitting utility and satisfies the

11

applicable requirements for perfection under the law of the

12

jurisdiction governing perfection as provided in this division

13

as it existed before amendment by the 2012 Revision, only to the

14

extent that this division as amended by the 2012 Revision

15

provides that the law of a jurisdiction other than the

16

jurisdiction in which the financing statement is filed governs

17

perfection of a security interest in collateral covered by the

18

financing statement.

19

(e)  Application of Chapter 95.--A financing statement that

20

includes a financing statement filed before the 2012 Revision

21

takes effect and a continuation statement filed after the 2012

22

Revision takes effect is effective only to the extent that it

23

satisfies the requirements of Chapter 95 (relating to filing) as

24

amended by the 2012 Revision for an initial financing statement.

25

A financing statement that indicates that the debtor is a

26

decedent's estate indicates that the collateral is being

27

administered by a personal representative within the meaning of

28

section 9503(a)(2) (relating to name of debtor and secured

29

party) as amended by the 2012 Revision. A financing statement

30

that indicates that the debtor is a trust or is a trustee acting

- 26 -

 


1

with respect to property held in trust indicates that the

2

collateral is held in a trust within the meaning of section

3

9503(a)(3) as amended by the 2012 Revision.

4

§ 9806.  When initial financing statement suffices to continue

5

effectiveness of financing statement.

6

(a)  Initial financing statement in lieu of continuation

7

statement.--The filing of an initial financing statement in the

8

office specified in section 9501 (relating to filing office)

9

continues the effectiveness of a financing statement filed

10

before the 2012 Revision takes effect if:

11

(1)  the filing of an initial financing statement in that

12

office would be effective to perfect a security interest

13

under this division as amended by the 2012 Revision;

14

(2)  the pre-effective-date financing statement was filed

15

in an office in another state; and

16

(3)  the initial financing statement satisfies subsection

17

(c).

18

(b)  Period of continued effectiveness.--The filing of an

19

initial financing statement under subsection (a) continues the

20

effectiveness of the pre-effective-date financing statement:

21

(1)  if the initial financing statement is filed before

22

the 2012 Revision takes effect, for the period provided in

23

section 9515(a) through (e) and (g) (relating to duration and

24

effectiveness of financing statement; effect of lapsed

25

financing statement) with respect to an initial financing

26

statement; and

27

(2)  if the initial financing statement is filed after

28

the 2012 Revision takes effect, for the period provided in

29

section 9515(f) as amended by the 2012 Revision with respect

30

to an initial financing statement.

- 27 -

 


1

(c)  Requirements for initial financing statement under

2

subsection (a).--To be effective for purposes of subsection (a),

3

an initial financing statement must:

4

(1)  satisfy the requirements of Chapter 95 (relating to

5

filing) as amended by the 2012 Revision for an initial

6

financing statement;

7

(2)  identify the pre-effective-date financing statement

8

by indicating the office in which the financing statement was

9

filed and providing the dates of filing and file numbers, if

10

any, of the financing statement and of the most recent

11

continuation statement filed with respect to the financing

12

statement; and

13

(3)  indicate that the pre-effective-date financing

14

statement remains effective.

15

§ 9807.  Amendment of pre-effective-date financing statement.

16

(a)  Definitions.--Refer to subsection (f).

17

(b)  Applicable law.--After the 2012 Revision takes effect, a

18

person may add or delete collateral covered by, continue or

19

terminate the effectiveness of, or otherwise amend the

20

information provided in, a pre-effective-date financing

21

statement only in accordance with the law of the jurisdiction

22

governing perfection as provided in this division as amended by

23

the 2012 Revision. However, the effectiveness of a pre-

24

effective-date financing statement also may be terminated in

25

accordance with the law of the jurisdiction in which the

26

financing statement is filed.

27

(c)  Method of amending: general rule.-- Except as otherwise

28

provided in subsection (d), if the law of this Commonwealth

29

governs perfection of a security interest, the information in a

30

pre-effective-date financing statement may be amended after the

- 28 -

 


1

2012 Revision takes effect only if:

2

(1)  the pre-effective-date financing statement and an

3

amendment are filed in the office specified in section 9501

4

(relating to filing office);

5

(2)  an amendment is filed in the office specified in

6

section 9501 concurrently with, or after the filing in that

7

office of, an initial financing statement that satisfies

8

section 9806(c) (relating to when initial filing statement

9

suffices to continue effectiveness of financing statement);

10

or

11

(3)  an initial financing statement that provides the

12

information as amended and satisfies section 9806(c) is filed

13

in the office specified in section 9501.

14

(d)  Method of amending: continuation.--If the law of this

15

Commonwealth governs perfection of a security interest, the

16

effectiveness of a pre-effective-date financing statement may be

17

continued only under section 9805(c) and (e) (relating to

18

effectiveness of action taken before effective date) or 9806.

19

(e)  Method of amending: additional termination rule.--

20

Whether or not the law of this Commonwealth governs perfection

21

of a security interest, the effectiveness of a pre-effective-

22

date financing statement filed in this Commonwealth may be

23

terminated after the 2012 Revision takes effect by filing a

24

termination statement in the office in which the pre-effective-

25

date financing statement is filed, unless an initial financing

26

statement that satisfies section 9806(c) has been filed in the

27

office specified by the law of the jurisdiction governing

28

perfection as provided in this division as amended by the 2012

29

Revision as the office in which to file a financing statement.

30

(f)  Definition.--As used in this section, the term "pre-

- 29 -

 


1

effective-date financing statement" means a financing statement

2

filed before the 2012 Revision takes effect.

3

§ 9808.  Person entitled to file initial financing statement or

4

continuation statement.

5

A person may file an initial financing statement or a

6

continuation statement under this part if:

7

(1)  the secured party of record authorizes the filing;

8

and

9

(2)  the filing is necessary under this part:

10

(i)  to continue the effectiveness of a financing

11

statement filed before the 2012 Revision takes effect; or

12

(ii)  to perfect or continue the perfection of a

13

security interest.

14

§ 9809.  Priority.

15

The 2012 Revision determines the priority of conflicting

16

claims to collateral. However, if the relative priorities of the

17

claims were established before the 2012 Revision takes effect,

18

this division as it existed before amendment determines

19

priority.

20

Section 10.  Section 5323(b) of Title 30 is amended to read:

21

§ 5323.  Content and effect of certificate of title.

22

* * *

23

(b)  Certificate as evidence and notice.--A certificate of

24

title issued by the commission is prima facie evidence of the

25

facts appearing on the certificate. Except as otherwise provided

26

in 13 Pa.C.S. §§ 9311(d) (relating to perfection of security

27

interests in property subject to certain statutes, regulations

28

and treaties), 9315(c) and (d) (relating to secured party's

29

rights on disposition of collateral and in proceeds) and 9316(d)

30

and (e) (relating to [continued perfection of security interest

- 30 -

 


1

following] effect of change in governing law), the certificate

2

shall be adequate notice to the Commonwealth, creditors,

3

subsequent lienholders and purchasers that a lien against the

4

boat exists.

5

Section 11.  Sections 1137 and 7712.8(a) of Title 75 are

6

amended to read:

7

§ 1137.  Subchapter exclusive for perfecting security interest.

8

The method provided in this subchapter for perfecting and

9

giving notice of security interests is exclusive, except as

10

otherwise provided in 13 Pa.C.S. §§ 9315 (relating to secured

11

party's rights on disposition of collateral and in proceeds) and

12

9316(d) and (e) (relating to [continued perfection of security

13

interest following] effect of change in governing law).

14

§ 7712.8.  Perfection of security interest in a snowmobile or

15

ATV.

16

(a)  Applicability of section.--Except as otherwise provided

17

in 13 Pa.C.S. §§ 9311(d) (relating to perfection of security

18

interests in property subject to certain statutes, regulations

19

and treaties), 9315(c) and (d) (relating to secured party's

20

rights on disposition of collateral and in proceeds) and 9316(d)

21

and (e) (relating to [continued perfection of security interest

22

following] effect of change in governing law), this section

23

provides the exclusive method of perfecting a security interest

24

in a snowmobile or ATV for which a certificate of title is

25

required under this subchapter.

26

* * *

27

Section 12.  In order to implement the amendment of 13

28

Pa.C.S. § 9503, the Department of State and the Department of

29

Transportation shall coordinate development and maintenance of

30

electronic systems for entering and searching data.

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1

Section 13.  This act shall take effect July 1, 2013.

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