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


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-Amended.html

  

 

PRIOR PRINTER'S NO. 3143

PRINTER'S NO.  3777

  

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, HICKERNELL, DELOZIER AND CALTAGIRONE, FEBRUARY 29, 2012

  

  

AS REPORTED FROM COMMITTEE ON JUDICIARY, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 19, 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.

 


1

The General Assembly of the Commonwealth of Pennsylvania

2

hereby enacts as follows:

3

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

4

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

5

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

6

Consolidated Statutes are amended and the subsection is amended

7

by adding a definition to read:

8

§ 9102.  Definitions and index of definitions.

9

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

10

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

11

in this subsection:

12

* * *

13

"Authenticate."  To:

14

(i)  sign; or

15

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

16

encrypt or similarly process a record in whole or in

17

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

18

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

19

record, attach to or logically associate with the record

20

an electrical sound, symbol or process.

21

* * *

22

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

23

to which a statute provides for the security interest in

24

question to be indicated on the certificate as a condition or

25

result of the security interest's obtaining priority over the

26

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

27

term includes another record maintained as an alternative to a

28

certificate of title by the governmental unit that issues

29

certificates of title if a statute permits the security interest

30

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

- 2 -

 


1

result of the security interest's obtaining priority over the

2

rights of a lien creditor with respect to the collateral.

3

* * *

4

"Jurisdiction of organization."  With respect to a registered

5

organization, the jurisdiction under whose law the organization

6

is formed or organized.

7

* * *

8

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

9

public for inspection and is:

10

(1)  a record consisting of the record initially filed

11

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

12

organize an organization and any record filed with or issued

13

by the state or the United States which amends or restates

14

the initial record;

15

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

16

the record initially filed with a state and any record filed

17

with the state which amends or restates the initial record,

18

if a statute of the state governing business trusts requires

19

that the record be filed with the state; or

20

(3)  a record consisting of legislation enacted by the

21

legislature of a state or the Congress of the United States

22

which forms or organizes an organization, any record amending

23

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

24

state or the United States which amends or restates the name

25

of the organization.

26

* * *

27

"Registered organization."  An organization formed or

28

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

29

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

30

maintain a public record showing the organization to have been

- 3 -

 


1

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

2

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

3

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

4

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

5

single state if a statute of the state governing business trusts

6

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

7

the state.

8

* * *

9

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

10

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

11

to read:

12

§ 9105.  Control of electronic chattel paper.

13

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

14

secured party has control of electronic chattel paper if a

15

system employed for evidencing the transfer of interests in the

16

chattel paper reliably establishes the secured party as the

17

person to which the chattel paper was assigned.

18

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

19

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

20

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

21

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

22

exists which is unique, identifiable and, except as otherwise

23

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

24

(2)  the authoritative copy identifies the secured party

25

as the assignee of the record or records;

26

(3)  the authoritative copy is communicated to and

27

maintained by the secured party or its designated custodian;

28

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

29

an identified assignee of the authoritative copy can be made

30

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

- 4 -

 


1

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

2

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

3

authoritative copy; and

4

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

5

is readily identifiable as [an] authorized or unauthorized

6

[revision].

7

§ 9307.  Location of debtor.

8

* * *

9

(f)  Location of registered organization organized under

10

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

11

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

12

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

13

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

14

United States or a state are located:

15

* * *

16

(2)  in the state which the registered organization,

17

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

18

authorizes the registered organization, branch or agency to

19

designate its state of location, including by designating its

20

main office, home office or other comparable office; or

21

* * *

22

§ 9308.  When security interest or agricultural lien is

23

perfected; continuity of perfection.

24

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

25

provided in this section and section 9309 (relating to security

26

interest perfected upon attachment), a security interest is

27

perfected if it has attached and all of the applicable

28

requirements for perfection in sections 9310 (relating to when

29

filing required to perfect security interest or agricultural

30

lien; security interests and agricultural liens to which filing

- 5 -

 


1

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

2

perfection of security interest following] effect of change in

3

governing law) have been satisfied. A security interest is

4

perfected when it attaches if the applicable requirements are

5

satisfied before the security interest attaches.

6

* * *

7

§ 9310.  When filing required to perfect security interest or

8

agricultural lien; security interests and

9

agricultural liens to which filing provisions do not

10

apply.

11

* * *

12

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

13

financing statement is not necessary to perfect a security

14

interest:

15

* * *

16

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

17

[continued perfection of security interest following] effect

18

of change in governing law).

19

* * *

20

§ 9311.  Perfection of security interests in property subject to

21

certain statutes, regulations and treaties.

22

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

23

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

24

statement is not necessary or effective to perfect a security

25

interest in property subject to:

26

* * *

27

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

28

Commonwealth or regulations promulgated thereunder, to the

29

extent such statute or regulations provide for a security

30

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

- 6 -

 


1

condition or result of perfection; or

2

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

3

jurisdiction which provides for a security interest to be

4

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

5

result of the security interest's obtaining priority over the

6

rights of a lien creditor with respect to the property.

7

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

8

requirements of a statute, regulation or treaty described in

9

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

10

creditor is equivalent to the filing of a financing statement

11

under this division. Except as otherwise provided in subsection

12

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

13

delivery to secured party perfects security interest without

14

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

15

of security interest following] effect of change in governing

16

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

17

interest in property subject to a statute, regulation or treaty

18

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

19

with those requirements, and a security interest so perfected

20

remains perfected notwithstanding a change in the use or

21

transfer of possession of the collateral.

22

* * *

23

§ 9313.  When possession by or delivery to secured party

24

perfects security interest without filing.

25

* * *

26

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

27

goods covered by a certificate of title issued by the

28

Commonwealth, a secured party may perfect a security interest in

29

the goods by taking possession of the goods only in the

30

circumstances described in section 9316(d) (relating to

- 7 -

 


1

[continued perfection of security interest following] effect of 

2

change in governing law).

3

* * *

4

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

5

the section is amended by adding subsections to read:

6

§ 9316.  [Continued perfection of security interest following]

7

Effect of change in governing law.

8

* * *

9

(h)  Effect on filed financing statement of change in

10

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

11

a security interest attaches within four months after the debtor

12

changes its location to another jurisdiction:

13

(1)  A financing statement filed before the change

14

pursuant to the law of the jurisdiction designated in section

15

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

16

interest in the collateral if the financing statement would

17

have been effective to perfect a security interest in the

18

collateral had the debtor not changed its location.

19

(2)  If a security interest perfected by a financing

20

statement that is effective under paragraph (1) becomes

21

perfected under the law of the other jurisdiction before the

22

earlier of the time the financing statement would have become

23

ineffective under the law of the jurisdiction designated in

24

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

25

month period, it remains perfected thereafter. If the

26

security interest does not become perfected under the law of

27

the other jurisdiction before the earlier time or event, it

28

becomes unperfected and is deemed never to have been

29

perfected as against a purchaser of the collateral for value.

30

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

- 8 -

 


1

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

2

an original debtor is filed pursuant to the law of the

3

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

4

new debtor is located in another jurisdiction, the following

5

rules apply:

6

(1) The financing statement is effective to perfect a

7

security interest in collateral acquired by the new debtor

8

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

9

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

10

enforceability of security interest; proceeds; supporting

11

obligations; formal requisites), if the financing statement

12

would have been effective to perfect a security interest in

13

the collateral had the collateral been acquired by the

14

original debtor.

15

(2)  A security interest perfected by the financing

16

statement and which becomes perfected under the law of the

17

other jurisdiction before the earlier of the time the

18

financing statement would have become ineffective under the

19

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

20

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

21

perfected thereafter. A security interest that is perfected

22

by the financing statement but which does not become

23

perfected under the law of the other jurisdiction before the

24

earlier time or event becomes unperfected and is deemed never

25

to have been perfected as against a purchaser of the

26

collateral for value.

27

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

28

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

29

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

30

security interest or agricultural lien.

- 9 -

 


1

* * *

2

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

3

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

4

of tangible chattel paper, tangible documents, goods,

5

instruments or a [security certificate] certificated security 

6

takes free of a security interest or agricultural lien if the

7

buyer gives value and receives delivery of the collateral

8

without knowledge of the security interest or agricultural lien

9

and before it is perfected.

10

* * *

11

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

12

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

13

of [accounts, electronic chattel paper, electronic documents,

14

general intangibles or investment property] collateral other

15

than tangible chattel paper, tangible documents, goods,

16

instruments or a certificated security takes free of a security

17

interest if the licensee or buyer gives value without knowledge

18

of the security interest and before it is perfected.

19

* * *

20

§ 9320.  Buyer of goods.

21

* * *

22

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

23

extent that it affects the priority of a security interest over

24

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

25

effectiveness of a filing made in the jurisdiction in which the

26

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

27

(relating to [continued perfection of security interest

28

following] effect of change in governing law).

29

* * *

30

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

- 10 -

 


1

(a)  Subordination of security interest created by new

2

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

3

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

4

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

5

filed financing statement which [is effective solely under

6

section 9508 (relating to effectiveness of financing statement

7

if new debtor becomes bound by security agreement) in collateral

8

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

9

ineffective to perfect the security interest but for the

10

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

11

in governing law) or 9508 (relating to effectiveness of

12

financing statement if new debtor becomes bound by security

13

agreement) is subordinate to a security interest in the same

14

collateral which is perfected other than by such a filed

15

financing statement [which is effective solely under section

16

9508].

17

(b)  Priority under other provisions; multiple original

18

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

19

priority among conflicting security interests in the same

20

collateral perfected by filed financing statements [which are

21

effective solely under section 9508] described in subsection

22

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

23

became bound as debtor were not entered into by the same

24

original debtor, the conflicting security interests rank

25

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

26

bound.

27

§ 9406.  Discharge of account debtor; notification of

28

assignment; identification and proof of assignment;

29

restrictions on assignment of accounts, chattel

30

paper, payment intangibles and promissory notes

- 11 -

 


1

ineffective.

2

* * *

3

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

4

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

5

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

6

disposition under section 9610 (relating to disposition of

7

collateral after default) or an acceptance of collateral under

8

section 9620 (relating to acceptance of collateral in full or

9

partial satisfaction of obligation; compulsory disposition of

10

collateral).

11

* * *

12

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

13

care-insurance receivables and certain general

14

intangibles ineffective.

15

* * *

16

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

17

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

18

interest in a payment intangible or promissory note only if the

19

security interest arises out of a sale of the payment intangible

20

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

21

under section 9610 (relating to disposition of collateral after

22

default) or an acceptance of collateral under section 9620

23

(relating to acceptance of collateral in full or partial

24

satisfaction of obligation; compulsory disposition of

25

collateral).

26

* * *

27

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

28

financing statement; time of filing financing

29

statement.

30

* * *

- 12 -

 


1

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

2

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

3

financing statement filed as a fixture filing or as a financing

4

statement covering as-extracted collateral or timber to be cut

5

only if all of the following apply:

6

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

7

which it covers[;].

8

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

9

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

10

collateral is related to the real property described in the

11

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

12

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

13

financing statement in this section [other than an

14

indication] subject to the following:

15

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

16

filed in the real property records[; and].

17

(ii)  The record sufficiently provides the name of a

18

debtor who is an individual if it provides the individual

19

name of the debtor or the surname and first personal name

20

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

21

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

22

secured party) applies.

23

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

24

* * *

25

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

26

amended and the section is amended by adding subsections to

27

read: 

28

§ 9503.  Name of debtor and secured party.

29

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

30

sufficiently provides the name of the debtor:

- 13 -

 


1

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

2

if the debtor is a registered organization or the collateral

3

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

4

the financing statement provides the name [of the debtor

5

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

6

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

7

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

8

organization's jurisdiction of organization which [shows the

9

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

10

restate the registered organization's name.

11

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

12

decedent's estate] collateral is being administered by the

13

personal representative of a decedent, only if the financing

14

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

15

the decedent and, in a separate part of the financing

16

statement, indicates that the [debtor is an estate]

17

collateral is being administered by a personal

18

representative.

19

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

20

respect to property held in trust, only if the financing

21

statement:

22

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

23

organic documents or, if no name is specified, provides

24

the name of the settlor and additional information

25

sufficient to distinguish the debtor from other trusts

26

having one or more of the same settlors; and

27

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

28

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

29

respect to property held in trust; and] collateral is

30

held in a trust that is not a registered organization,

- 14 -

 


1

only if the financing statement:

2

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

3

(I)  if the organic record of the trust

4

specifies a name for the trust, the name

5

specified; or

6

(II)  if the organic record of the trust does

7

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

8

settlor or testator; and

9

(B)  in a separate part of the financing

10

statement:

11

(I)  if the name is provided under clause

12

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

13

a trust; or

14

(II)  if the name is provided under clause

15

(A)(II), provides additional information

16

sufficient to distinguish the trust from other

17

trusts having one or more of the same settlors or

18

the same testator and indicates that the

19

collateral is held in a trust, unless the

20

additional information so indicates.

21

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

22

individual to whom the Department of Transportation has

23

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

24

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

25

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

26

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

27

of the individual which is indicated on:

28

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

29

driver’s license; or

30

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

- 15 -

 


1

identification card.

2

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

3

does not apply, only if the financing statement provides the

4

individual name of the debtor or the surname and first

5

personal name of the debtor.

6

[(4)] (6) In other cases:

7

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

8

financing statement provides the [individual or]

9

organizational name of the debtor; and

10

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

11

[it] the financing statement provides the names of the

12

partners, members, associates or other persons comprising

13

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

14

sufficient if the person named were the debtor.

15

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

16

statement which provides the name of the debtor in accordance

17

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

18

of:

19

* * *

20

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

21

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

22

comprising the debtor.

23

* * *

24

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

25

the order appointing the personal representative of the decedent

26

issued by the court having jurisdiction over the collateral is

27

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

28

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

29

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

30

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

- 16 -

 


1

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

2

subsection (a)(4) refers.

3

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

4

the settlor or testator" means:

5

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

6

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

7

organic record most recently filed with or issued or enacted

8

by the settlor's jurisdiction of organization which purports

9

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

10

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

11

indicated in the trust's organic record.

12

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

13

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

14

13 are amended to read:

15

§ 9507.  Effect of certain events on effectiveness of financing

16

statement.

17

* * *

18

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

19

the name that a filed financing statement provides for a debtor

20

becomes insufficient as the name of the debtor under section

21

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

22

the financing statement becomes seriously misleading under

23

section 9506:

24

(1)  the financing statement is effective to perfect a

25

security interest in collateral acquired by the debtor

26

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

27

financing statement becomes seriously misleading; and

28

(2)  the financing statement is not effective to perfect

29

a security interest in collateral acquired by the debtor more

30

than four months after the [change] filed financing statement

- 17 -

 


1

becomes seriously misleading, unless an amendment to the

2

financing statement which renders the financing statement not

3

seriously misleading is filed within four months after the

4

[change] financing statement became seriously misleading.

5

§ 9515.  Duration and effectiveness of financing statement;

6

effect of lapsed financing statement.

7

* * *

8

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

9

is a transmitting utility and a filed initial financing

10

statement so indicates, the financing statement is effective

11

until a termination statement is filed.

12

* * *

13

§ 9516.  What constitutes filing; effectiveness of filing.

14

* * *

15

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

16

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

17

refuses to accept because one of the following paragraphs

18

applies:

19

* * *

20

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

21

because of a reason stated in one of the following

22

subparagraphs:

23

* * *

24

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

25

information statement, the record:

26

* * *

27

(iii)  In the case of an initial financing statement

28

which provides the name of a debtor identified as an

29

individual or an amendment which provides a name of a

30

debtor identified as an individual which was not

- 18 -

 


1

previously provided in the financing statement to which

2

the record relates, the record does not identify the

3

debtor's [last name] surname.

4

* * *

5

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

6

amendment which provides a name of a debtor which was not

7

previously provided in the financing statement to which the

8

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

9

of the following:

10

* * *

11

(ii)  Indicate whether the name provided as the name

12

of the debtor is the name of an individual or an

13

organization.

14

[(iii)  If the financing statement indicates that the

15

debtor is an organization, provide:

16

(A)  a type of organization for the debtor;

17

(B)  a jurisdiction of organization for the

18

debtor; or

19

(C)  an organizational identification number for

20

the debtor or indicate that the debtor has none.]

21

* * *

22

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

<--

23

Title 13 are amended and the section is amended by adding

24

subsections to read:

25

Section 7.  In section 9518 of Title 13, subsection (a) and

<--

26

subsection (b) heading, introductory paragraph and (2) are

27

amended, subsections are added, subsection (c) is relettered and

28

amended and subsection (d) is relettered and paragraphs (1)(i),

29

(ii) introductory paragraph, (iii), (v) introductory paragraph

30

and (A), (vi) and (2) are amended to read:

- 19 -

 


1

§ 9518.  Claim concerning inaccurate or wrongfully filed record.

2

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

3

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

4

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

5

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

6

believes that the record is inaccurate or was wrongfully filed.

7

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

8

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

9

subsection (a) must:

10

* * *

11

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

12

statement; and

13

* * *

14

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

15

in the filing office an information statement with respect to a

16

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

17

with respect to the financing statement to which the record

18

relates and believes that the person that filed the record was

19

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

20

entitled to file a record).

21

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

22

information statement under subsection (c) must:

23

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

24

number assigned to the initial financing statement to which

25

the record relates;

26

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

27

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

28

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

29

section 9509(d).

30

[(c)] (e)  Record not affected by [correction] information 

<--

- 20 -

 


1

statement.--Except as provided in subsection [(d)] (f), the

2

filing of [a correction] an information statement does not

<--

3

affect the effectiveness of an initial financing statement or

4

other filed record.

5

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

6

(1)  The Department of State may conduct an

7

administrative hearing to determine if an initial financing

8

statement was fraudulently filed in accordance with the

9

following:

10

(i)  The hearing shall be conducted in accordance

11

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

12

Procedure). The department shall determine the initial

13

financing statement to be fraudulently filed for purposes

14

of this subsection if it determines that no rational

15

basis exists under section 9509 [(relating to persons

16

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

17

the initial financing statement and it appears that the

18

person filed the initial financing statement with intent

19

to annoy, harass or harm the debtor.

20

* * *

<--

21

(ii)  If the department determines that the initial

<--

22

financing statement was fraudulently filed and no timely

23

appeal of the determination was filed, the department

24

shall file [a correction] an information statement with

25

respect to the initial financing statement indexed there.

26

In addition to complying with the requirements of

27

subsection (b), the [correction] information statement

28

filed by the department under this paragraph shall state

29

all of the following:

30

* * *

- 21 -

 


1

(iii)  [A correction] An information statement filed

2

by the department in accordance with paragraph (ii)

3

creates a rebuttable presumption that the initial

4

financing statement found to be fraudulently filed is

5

ineffective.

6

* * *

7

(v)  If the department determines that the initial

8

financing statement was fraudulently filed and the

9

determination is appealed to Commonwealth Court, the

10

department shall file [a correction] an information 

11

statement with respect to the initial financing statement

12

indexed there only upon affirmation by the court of its

13

determination. In addition to complying with the

14

requirements of subsection (b), the [correction]

15

information statement shall state all of the following:

16

(A)  the [correction] information statement was

17

filed by the department under this subsection;

18

* * *

19

(vi)  If the department files [a correction] an

20

information statement with respect to the initial

21

financing statement indexed there under this subsection,

22

it shall refer the matter for criminal prosecution to the

23

Office of Attorney General pursuant to 18 Pa.C.S. § 4911 

24

(relating to tampering with public records or

25

information).

26

(2)  Nothing in this subsection limits the rights or

27

remedies the debtor may have with respect to an initial

28

financing statement that has been fraudulently filed. Nothing

29

in this subsection limits the effectiveness of [a] any 

30

termination or [correction] information statement filed by a

- 22 -

 


1

debtor under sections 9509(d)(2) and 9513 (relating to

2

termination statement) or the rights of a debtor under

3

section 9625 (relating to remedies for secured party's

4

failure to comply with division).

5

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

6

read:

7

§ 9607.  Collection and enforcement by secured party.

8

* * *

9

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

10

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

11

right of a debtor to enforce a mortgage nonjudicially, the

12

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

13

mortgage is recorded:

14

* * *

15

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

16

form stating that:

17

(i)  a default has occurred with respect to the

18

obligation secured by the mortgage; and

19

* * *

20

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

21

CHAPTER 98

22

TRANSITION PROVISIONS FOR 2012 AMENDMENTS

23

Sec.

24

9800.  Definitions.

25

9801.  Effective date.

26

9802.  Savings clause.

27

9803.  Security interest perfected before effective date.

28

9804.  Security interest unperfected before effective date.

29

9805.  Effectiveness of action taken before effective date.

30

9806.  When initial financing statement suffices to continue

- 23 -

 


1

effectiveness of financing statement.

2

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

3

9808.  Person entitled to file initial financing statement or

4

continuation statement.

5

9809.  Priority.

6

§ 9800.  Definitions.

7

The following words and phrases when used in this chapter

8

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

9

context clearly indicates otherwise:

10

"2012 Revision."  The amendments which:

11

(1)  affect this division; and

12

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

13

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

14

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

15

Consolidated Statutes, revising secured transaction

16

provisions relating to definitions, to control of electronic

17

chattel paper, to location of debtor, to perfection of

18

security interests in property subject to certain statutes,

19

regulations and treaties, to continued perfection of security

20

interest following change in governing law, to interests

21

which take priority over or take free of security interest or

22

agricultural lien, to priority of security interests created

23

by new debtor, to discharge of account debtor, notification

24

of assignment, identification and proof of assignment,

25

restrictions on assignment of accounts, chattel paper,

26

payment intangibles and promissory notes ineffective, to

27

restrictions on assignment of promissory notes, health-care-

28

insurance receivables and certain general intangibles

29

ineffective, to contents of financing statement, record of

30

mortgage as financing statement, time of filing financing

- 24 -

 


1

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

2

certain events on effectiveness of financing statement, to

3

duration and effectiveness of financing statement, effect of

4

lapsed financing statement, to what constitutes filing,

5

effectiveness of filing, to claim concerning inaccurate or

6

wrongfully filed record; to collection and enforcement by

7

secured party; providing for transition provisions for 2012

8

amendments; imposing duties upon the Department of State and

9

the Department of Transportation; and making editorial

10

changes."

11

§ 9801.  Effective date.

12

The 2012 Revision takes effect July 1, 2013.

13

§ 9802.  Savings clause.

14

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

15

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

16

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

17

lien was entered into or created before the 2012 Revision takes

18

effect.

19

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

20

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

21

2012 Revision takes effect.

22

§ 9803.  Security interest perfected before effective date.

23

(a)  Continuing perfection; perfection requirements

24

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

25

interest immediately before the 2012 Revision takes effect is a

26

perfected security interest under this division as amended by

27

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

28

applicable requirements for attachment and perfection under this

29

division as amended by the 2012 Revision are satisfied without

30

further action.

- 25 -

 


1

(b)  Continuing perfection: perfection requirements not

2

satisfied.--Except as otherwise provided in section 9805

3

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

4

immediately before the 2012 Revision takes effect, a security

5

interest is a perfected security interest, but the applicable

6

requirements for perfection under this division as amended by

7

the 2012 Revision are not satisfied when the 2012 Revision takes

8

effect, the security interest remains perfected thereafter only

9

if the applicable requirements for perfection under this

10

division as amended by the 2012 Revision are satisfied within

11

one year after the 2012 Revision takes effect.

12

§ 9804.  Security interest unperfected before effective date.

13

A security interest that is an unperfected security interest

14

immediately before the 2012 Revision takes effect becomes a

15

perfected security interest:

16

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

17

effect if the applicable requirements for perfection under

18

this division as amended by the 2012 Revision are satisfied

19

before or at that time; or

20

(2)  when the applicable requirements for perfection are

21

satisfied if the requirements are satisfied after that time.

22

§ 9805.  Effectiveness of action taken before effective date.

23

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

24

financing statement before the 2012 Revision takes effect is

25

effective to perfect a security interest to the extent the

26

filing would satisfy the applicable requirements for perfection

27

under this division as amended by the 2012 Revision.

28

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

29

2012 Revision does not render ineffective an effective financing

30

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

- 26 -

 


1

and satisfies the applicable requirements for perfection under

2

the law of the jurisdiction governing perfection as provided in

3

this division as it existed before amendment by the 2012

4

Revision. However, except as otherwise provided in subsections

5

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

6

statement suffices to continue effectiveness of financing

7

statement), the financing statement ceases to be effective:

8

(1)  if the financing statement is filed in this

9

Commonwealth, at the time the financing statement would have

10

ceased to be effective had the 2012 Revision not taken

11

effect; or

12

(2)  if the financing statement is filed in another

13

jurisdiction, at the earlier of:

14

(i)  the time the financing statement would have

15

ceased to be effective under the law of that

16

jurisdiction; or

17

(ii)  June 30, 2018.

18

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

19

statement after the 2012 Revision takes effect does not continue

20

the effectiveness of a financing statement filed before the 2012

21

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

22

continuation statement after the 2012 Revision takes effect and

23

in accordance with the law of the jurisdiction governing

24

perfection as provided in this division as amended by the 2012

25

Revision, the effectiveness of a financing statement filed in

26

the same office in that jurisdiction before the 2012 Revision

27

takes effect continues for the period provided by the law of

28

that jurisdiction.

29

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

30

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

- 27 -

 


1

financing statement that, before the 2012 Revision takes effect,

2

is filed against a transmitting utility and satisfies the

3

applicable requirements for perfection under the law of the

4

jurisdiction governing perfection as provided in this division

5

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

6

extent that this division as amended by the 2012 Revision

7

provides that the law of a jurisdiction other than the

8

jurisdiction in which the financing statement is filed governs

9

perfection of a security interest in collateral covered by the

10

financing statement.

11

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

12

includes a financing statement filed before the 2012 Revision

13

takes effect and a continuation statement filed after the 2012

14

Revision takes effect is effective only to the extent that it

15

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

16

amended by the 2012 Revision for an initial financing statement.

17

A financing statement that indicates that the debtor is a

18

decedent's estate indicates that the collateral is being

19

administered by a personal representative within the meaning of

20

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

21

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

22

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

23

with respect to property held in trust indicates that the

24

collateral is held in a trust within the meaning of section

25

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

26

§ 9806.  When initial financing statement suffices to continue

27

effectiveness of financing statement.

28

(a)  Initial financing statement in lieu of continuation

29

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

30

office specified in section 9501 (relating to filing office)

- 28 -

 


1

continues the effectiveness of a financing statement filed

2

before the 2012 Revision takes effect if:

3

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

4

office would be effective to perfect a security interest

5

under this division as amended by the 2012 Revision;

6

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

7

in an office in another state; and

8

(3)  the initial financing statement satisfies subsection

9

(c).

10

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

11

initial financing statement under subsection (a) continues the

12

effectiveness of the pre-effective-date financing statement:

13

(1)  if the initial financing statement is filed before

14

the 2012 Revision takes effect, for the period provided in

15

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

16

effectiveness of financing statement; effect of lapsed

17

financing statement) with respect to an initial financing

18

statement; and

19

(2)  if the initial financing statement is filed after

20

the 2012 Revision takes effect, for the period provided in

21

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

22

to an initial financing statement.

23

(c)  Requirements for initial financing statement under

24

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

25

an initial financing statement must:

26

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

27

filing) as amended by the 2012 Revision for an initial

28

financing statement;

29

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

30

by indicating the office in which the financing statement was

- 29 -

 


1

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

2

any, of the financing statement and of the most recent

3

continuation statement filed with respect to the financing

4

statement; and

5

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

6

statement remains effective.

7

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

8

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

9

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

10

person may add or delete collateral covered by, continue or

11

terminate the effectiveness of, or otherwise amend the

12

information provided in, a pre-effective-date financing

13

statement only in accordance with the law of the jurisdiction

14

governing perfection as provided in this division as amended by

15

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

16

effective-date financing statement also may be terminated in

17

accordance with the law of the jurisdiction in which the

18

financing statement is filed.

19

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

20

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

21

governs perfection of a security interest, the information in a

22

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

23

2012 Revision takes effect only if:

24

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

25

amendment are filed in the office specified in section 9501

26

(relating to filing office);

27

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

28

section 9501 concurrently with, or after the filing in that

29

office of, an initial financing statement that satisfies

30

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

- 30 -

 


1

suffices to continue effectiveness of financing statement);

2

or

3

(3)  an initial financing statement that provides the

4

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

5

in the office specified in section 9501.

6

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

7

Commonwealth governs perfection of a security interest, the

8

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

9

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

10

effectiveness of action taken before effective date) or 9806.

11

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

12

Whether or not the law of this Commonwealth governs perfection

13

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

14

date financing statement filed in this Commonwealth may be

15

terminated after the 2012 Revision takes effect by filing a

16

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

17

date financing statement is filed, unless an initial financing

18

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

19

office specified by the law of the jurisdiction governing

20

perfection as provided in this division as amended by the 2012

21

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

22

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

23

effective-date financing statement" means a financing statement

24

filed before the 2012 Revision takes effect.

25

§ 9808.  Person entitled to file initial financing statement or

26

continuation statement.

27

A person may file an initial financing statement or a

28

continuation statement under this part if:

29

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

30

and

- 31 -

 


1

(2)  the filing is necessary under this part:

2

(i)  to continue the effectiveness of a financing

3

statement filed before the 2012 Revision takes effect; or

4

(ii)  to perfect or continue the perfection of a

5

security interest.

6

§ 9809.  Priority.

7

The 2012 Revision determines the priority of conflicting

8

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

9

claims were established before the 2012 Revision takes effect,

10

this division as it existed before amendment determines

11

priority.

12

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

13

§ 5323.  Content and effect of certificate of title.

14

* * *

15

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

16

title issued by the commission is prima facie evidence of the

17

facts appearing on the certificate. Except as otherwise provided

18

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

19

interests in property subject to certain statutes, regulations

20

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

21

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

22

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

23

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

24

shall be adequate notice to the Commonwealth, creditors,

25

subsequent lienholders and purchasers that a lien against the

26

boat exists.

27

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

28

amended to read:

29

§ 1137.  Subchapter exclusive for perfecting security interest.

30

The method provided in this subchapter for perfecting and

- 32 -

 


1

giving notice of security interests is exclusive, except as

2

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

3

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

4

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

5

interest following] effect of change in governing law).

6

§ 7712.8.  Perfection of security interest in a snowmobile or

7

ATV.

8

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

9

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

10

interests in property subject to certain statutes, regulations

11

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

12

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

13

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

14

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

15

provides the exclusive method of perfecting a security interest

16

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

17

required under this subchapter.

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* * *

19

Section 12.  In order to implement the amendment of 13

20

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

21

Transportation shall coordinate development and maintenance of

22

electronic systems for entering and searching data.

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

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