HB 677 -- Uniform Commercial Code

Co-Sponsors:  Monaco, Lograsso, Mayer, Burcham, Crowell, Hosmer,
Johnson (90)

This bill substantially revises Article 9 of the Uniform
Commercial Code regulating secured transactions.  In its main
provisions, the bill:

(1)  Expands the scope of Article 9 to include additional types
of property in which a security interest can be taken by a
creditor and additional kinds of collateral, including sales of
payment intangibles and promissory notes, security interests
created by governmental debtors, health insurance receivables,
consignments, and commercial tort claims;

(2)  Clarifies that filing a financing statement perfects a
security interest, even if another method of perfection exists;

(3)  Allows control as a method of perfection for letter of
credit rights and deposit accounts.  Current law authorizes
control, in which the debtor cannot transfer the property
without the creditor's consent, as the method of perfection for
only investment property;

(4)  Increases automatic perfection for a purchase money
security interest from the current 10 days to 20 days.
Attachment of a purchase money security interest is perfection
for the duration of the 20-day period, then another method of
perfection is necessary to continue the perfected security
interest.  A purchase money security interest in consumer goods,
however, remains perfected automatically for the duration of the
security interest;

(5)  Changes the choice of law rule as to which state's law
governs perfection, its effect, and a creditor's priority.
Under current law, it is the state in which the collateral is
found.  The bill chooses the state that is the location of the
debtor.  If the debtor is an entity created by state
registration, the location of the debtor is the location in
which the entity is created by registration.  If the entity is a
corporation, the location of the debtor is the state in which
the corporate charter is filed or registered;

(6)  Allows the transition from paper filing to electronic
filing.  The only local filing of financing statements occurs in
the real estate records for fixtures; all other filings are
centralized with the Secretary of State's office.  The Secretary
of State must distribute to the counties the filing fees each
county would have received had the filing been made there
pursuant to the law as it existed prior to July 1, 2002;

(7)  Changes certain aspects of enforcing a security interest
that is included in a consumer transaction.  A consumer cannot
waive redemption rights in a financing agreement; a consumer is
entitled to disclosure of the amount of any deficiency assessed
against him or her; a consumer buyer of goods who prepays in
whole or in part has an enforceable interest in the purchased
goods and may obtain the goods as a remedy; and a secured
creditor cannot accept collateral as partial satisfaction of a
consumer obligation; and

(8)  Provides new rules for guarantors for the interests of
subordinate creditors with security interests in the same
property and for aspects of enforcement when the debtor is a
consumer debtor.

The repeal of the existing Article 9 provisions and the
enactment of the new provisions take effect July 1, 2002.

Missouri House of Representatives
Last Updated September 13, 2001 at 2:03 pm