Law:Division 9. Secured Transactions (California)

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Contents

Chapter 1. General Provisions

Ca Codes (com:9101-9110) Commercial Code Section 9101-9110



9101. This division may be cited as the Uniform Commercial Code-Secured Transactions.


9102. (a) In this division: (1) "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost. (2) "Account," except as used in "account for," means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by a state or governmental unit of a state. The term includes health care insurance receivables. The term does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card. (3) "Account debtor" means a person obligated on an account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. (4) "Accounting," except as used in "accounting for," means a record that is all of the following: (A) Authenticated by a secured party. (B) Indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record. (C) Identifying the components of the obligations in reasonable detail. (5) "Agricultural lien" means an interest in farm products that meets all of the following conditions: (A) It secures payment or performance of an obligation for either of the following: (i) Goods or services furnished in connection with a debtor's farming operation. (ii) Rent on real property leased by a debtor in connection with its farming operation. (B) It is created by statute in favor of a person that does either of the following: (i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation. (ii) Leased real property to a debtor in connection with the debtor's farming operation. (C) Its effectiveness does not depend on the person's possession of the personal property. (6) "As-extracted collateral" means either of the following: (A) Oil, gas, or other minerals that are subject to a security interest that does both of the following: (i) Is created by a debtor having an interest in the minerals before extraction. (ii) Attaches to the minerals as extracted. (B) Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction. (7) "Authenticate" means to do either of the following: (A) To sign. (B) To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record. (8) "Bank" means an organization that is engaged in the business of banking. The term includes savings banks, savings and loan associations, credit unions, and trust companies. (9) "Cash proceeds" means proceeds that are money, checks, deposit accounts, or the like. (10) "Certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. (11) "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include (i) charters or other contracts involving the use or hire of a vessel or (ii) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper. (12) "Collateral" means the property subject to a security interest or agricultural lien. The term includes all of the following: (A) Proceeds to which a security interest attaches. (B) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold. (C) Goods that are the subject of a consignment. (13) "Commercial tort claim" means a claim arising in tort with respect to which either of the following conditions is satisfied: (A) The claimant is an organization. (B) The claimant is an individual and both of the following conditions are satisfied regarding the claim: (i) It arose in the course of the claimant's business or profession. (ii) It does not include damages arising out of personal injury to or the death of an individual. (14) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer. (15) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is either of the following: (A) Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws. (B) Traded on a foreign commodity board of trade, exchange, or market, and is carried on the books of a commodity intermediary for a commodity customer. (16) "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books. (17) "Commodity intermediary" means a person that is either of the following: (A) Is registered as a futures commission merchant under federal commodities law. (B) In the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law. (18) "Communicate" means to do any of the following: (A) To send a written or other tangible record. (B) To transmit a record by any means agreed upon by the persons sending and receiving the record. (C) In the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule. (19) "Consignee" means a merchant to which goods are delivered in a consignment. (20) "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and all of the following conditions are satisfied: (A) The merchant satisfies all of the following conditions: (i) He or she deals in goods of that kind under a name other than the name of the person making delivery. (ii) He or she is not an auctioneer. (iii) He or she is not generally known by its creditors to be substantially engaged in selling the goods of others. (B) With respect to each delivery, the aggregate value of the goods is one thousand dollars ($1,000) or more at the time of delivery. (C) The goods are not consumer goods immediately before delivery. (D) The transaction does not create a security interest that secures an obligation. (21) "Consignor" means a person that delivers goods to a consignee in a consignment. (22) "Consumer debtor" means a debtor in a consumer transaction. (23) "Consumer goods" means goods that are used or bought for use primarily for personal, family, or household purposes. (24) "Consumer-goods transaction" means a consumer transaction in which both of the following conditions are satisfied: (A) An individual incurs an obligation primarily for personal, family, or household purposes. (B) A security interest in consumer goods secures the obligation. (25) "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes. (26) "Consumer transaction" means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer-goods transactions. (27) "Continuation statement" means an amendment of a financing statement which does both of the following: (A) Identifies, by its file number, the initial financing statement to which it relates. (B) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement. (28) "Debtor" means any of the following: (A) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor. (B) A seller of accounts, chattel paper, payment intangibles, or promissory notes. (C) A consignee. (29) "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument. (30) "Document" means a document of title or a receipt of the type described in subdivision (b) of Section 7201. (31) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium. (32) "Encumbrance" means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property. (33) "Equipment" means goods other than inventory, farm products, or consumer goods. (34) "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are any of the following: (A) Crops grown, growing, or to be grown, including both of the following: (i) Crops produced on trees, vines, and bushes. (ii) Aquatic goods produced in aquacultural operations. (B) Livestock, born or unborn, including aquatic goods produced in aquacultural operations. (C) Supplies used or produced in a farming operation. (D) Products of crops or livestock in their unmanufactured states. (35) "Farming operation" means raising, cultivating, propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation. (36) "File number" means the number assigned to an initial financing statement pursuant to subdivision (a) of Section 9519. (37) "Filing office" means an office designated in Section 9501 as the place to file a financing statement. (38) "Filing-office rule" means a rule adopted pursuant to Section 9526. (39) "Financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement. (40) "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying subdivisions (a) and (b) of Section 9502. The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures. (41) "Fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law. (42) "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and software. (43) �Reserved) (44) "Goods" means all things that are movable when a security interest attaches. The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured homes. The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction. (45) "Governmental unit" means a subdivision, agency, department, county, parish, municipality, or other unit of the government of the United States, a state, or a foreign country. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States. (46) "Health care insurance receivable" means an interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health care goods or services provided or to be provided. (47) "Instrument" means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include (i) investment property, (ii) letters of credit, or (iii) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. (48) "Inventory" means goods, other than farm products, which are any of the following: (A) Leased by a person as lessor. (B) Held by a person for sale or lease or to be furnished under a contract of service. (C) Furnished by a person under a contract of service. (D) Consist of raw materials, work in process, or materials used or consumed in a business. (49) "Investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account. (50) "Jurisdiction of organization," with respect to a registered organization, means the jurisdiction under whose law the organization is organized. (51) "Letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. The term does not include the right of a beneficiary to demand payment or performance under a letter of credit. (52) (A) "Lien creditor" means any of the following: (i) A creditor that has acquired a lien on the property involved by attachment, levy, or the like. (ii) An assignee for benefit of creditors from the time of assignment. (iii) A trustee in bankruptcy from the date of the filing of the petition. (iv) A receiver in equity from the time of appointment. (B) "Lien creditor" does not include a creditor who by filing a notice with the Secretary of State has acquired only an attachment or judgment lien on personal property, or both. (53) "Manufactured home" means a structure, transportable in one or more sections, which, in the traveling mode, is eight body-feet or more in width or 40 body-feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code. (54) "Manufactured home transaction" means a secured transaction that satisfies either of the following: (A) It creates a purchase money security interest in a manufactured home, other than a manufactured home held as inventory. (B) It is a secured transaction in which a manufactured home, other than a manufactured home held as inventory, is the primary collateral. (55) "Mortgage" means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation. (56) "New debtor" means a person that becomes bound as debtor under subdivision (d) of Section 9203 by a security agreement previously entered into by another person. (57) "New value" means (i) money, (ii) money's worth in property, services, or new credit, or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation. (58) "Noncash proceeds" means proceeds other than cash proceeds. (59) "Obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit. (60) "Original debtor," except as used in subdivision (c) of Section 9310, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subdivision (d) of Section 9203. (61) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation. (62) "Person related to," with respect to an individual, means any of the following: (A) The spouse of the individual. (B) A brother, brother-in-law, sister, or sister-in-law of the individual. (C) An ancestor or lineal descendant of the individual or the individual's spouse. (D) Any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual. (63) "Person related to," with respect to an organization, means any of the following: (A) A person directly or indirectly controlling, controlled by, or under common control with the organization. (B) An officer or director of, or a person performing similar functions with respect to, the organization. (C) An officer or director of, or a person performing similar functions with respect to, a person described in subparagraph (A). (D) The spouse of an individual described in subparagraph (A), (B), or (C). (E) An individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C), or (D) and shares the same home with the individual. (64) "Proceeds," except as used in subdivision (b) of Section 9609, means any of the following property: (A) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral. (B) Whatever is collected on, or distributed on account of, collateral. (C) Rights arising out of collateral. (D) To the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral. (E) To the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral. (65) "Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds. (66) "Proposal" means a record authenticated by a secured party that includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to Sections 9620, 9621, and 9622. (67) "Public finance transaction" means a secured transaction in connection with which all of the following conditions are satisfied: (A) Debt securities are issued. (B) All or a portion of the securities issued have an initial stated maturity of at least 20 years. (C) The debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state. (68) "Pursuant to commitment," with respect to an advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation. (69) "Record," except as used in "for record," "of record," "record or legal title," and "record owner," means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form. (70) "Registered organization" means an organization organized solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized. (71) "Secondary obligor" means an obligor to the extent that either of the following conditions are satisfied: (A) The obligor's obligation is secondary. (B) The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor, or property of either. (72) "Secured party" means any of the following: (A) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding. (B) A person that holds an agricultural lien. (C) A consignor. (D) A person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold. (E) A trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for. (F) A person that holds a security interest arising under Section 2401, 2505, 4210, or 5118, or under subdivision (3) of Section 2711 or subdivision (5) of Section 10508. (73) "Security agreement" means an agreement that creates or provides for a security interest. (74) "Send," in connection with a record or notification, means to do either of the following: (A) To deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances. (B) To cause the record or notification to be received within the time that it would have been received if properly sent under subparagraph (A). (75) "Software" means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods. (76) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. (77) "Supporting obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, document, general intangible, instrument, or investment property. (78) "Tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium. (79) "Termination statement" means an amendment of a financing statement that does both of the following: (A) Identifies, by its file number, the initial financing statement to which it relates. (B) Indicates either that it is a termination statement or that the identified financing statement is no longer effective. (80) "Transmitting utility" means a person primarily engaged in the business of any of the following: (A) Operating a railroad, subway, street railway, or trolley bus. (B) Transmitting communications electrically, electromagnetically, or by light. (C) Transmitting goods by pipeline or sewer. (D) Transmitting or producing and transmitting electricity, steam, gas, or water. (b) The following definitions in other divisions apply to this division: "Applicant" Section 5102. "Beneficiary" Section 5102. "Broker" Section 8102. "Certificated security" Section 8102. "Check" Section 3104. "Clearing corporation" Section 8102. "Contract for sale" Section 2106. "Control" Section 7106. "Customer" Section 4104. "Entitlement holder" Section 8102. "Financial asset" Section 8102. "Holder in due course" Section 3302. "Issuer" (with respect to a letter of credit Section 5102. or letter-of-credit right) "Issuer" (with respect to a Section 8201. security) "Issuer" (with respect to Section 7102. documents of title) "Lease" Section 10103. "Lease agreement" Section 10103. "Lease contract" Section 10103. "Leasehold interest" Section 10103. "Lessee" Section 10103. "Lessee in ordinary course of Section 10103. business" "Lessor" Section 10103. "Lessor's residual interest" Section 10103. "Letter of credit" Section 5102. "Merchant" Section 2104. "Negotiable instrument" Section 3104. "Nominated person" Section 5102. "Note" Section 3104. "Proceeds of a letter of credit" Section 5114. "Prove" Section 3103. "Sale" Section 2106. "Securities account" Section 8501. "Securities intermediary" Section 8102. "Security" Section 8102. "Security certificate" Section 8102. "Security entitlement" Section 8102. "Uncertificated security" Section 8102. (c) Division 1 (commencing with Section 1101) contains general definitions and principles of construction and interpretation applicable throughout this division.


9103. (a) In this section: (1) "Purchase money collateral" means goods or software that secures a purchase money obligation incurred with respect to that collateral. (2) "Purchase money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used. (b) A security interest in goods is a purchase money security interest as follows: (1) To the extent that the goods are purchase money collateral with respect to that security interest. (2) If the security interest is in inventory that is or was purchase money collateral, also to the extent that the security interest secures a purchase money obligation incurred with respect to other inventory in which the secured party holds or held a purchase money security interest. (3) Also to the extent that the security interest secures a purchase money obligation incurred with respect to software in which the secured party holds or held a purchase money security interest. (c) A security interest in software is a purchase money security interest to the extent that the security interest also secures a purchase money obligation incurred with respect to goods in which the secured party holds or held a purchase money security interest if both of the following conditions are satisfied: (1) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods. (2) The debtor acquired its interest in the software for the principal purpose of using the software in the goods. (d) The security interest of a consignor in goods that are the subject of a consignment is a purchase money security interest in inventory. (e) In a transaction other than a consumer-goods transaction, if the extent to which a security interest is a purchase money security interest depends on the application of a payment to a particular obligation, the payment must be applied as follows: (1) In accordance with any reasonable method of application to which the parties agree. (2) In the absence of the parties' agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment. (3) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order: (A) To obligations that are not secured. (B) If more than one obligation is secured, to obligations secured by purchase money security interests in the order in which those obligations were incurred. (f) In a transaction other than a consumer-goods transaction, a purchase money security interest does not lose its status as such, even if any of the following conditions are satisfied: (1) The purchase money collateral also secures an obligation that is not a purchase money obligation. (2) Collateral that is not purchase money collateral also secures the purchase money obligation. (3) The purchase money obligation has been renewed, refinanced, consolidated, or restructured. (g) In a transaction other than a consumer-goods transaction, a secured party claiming a purchase money security interest has the burden of establishing the extent to which the security interest is a purchase money security interest. (h) The limitation of the rules in subdivisions (e), (f), and (g) to transactions other than consumer-goods transactions is intended to leave to the court the determination of the proper rules in consumer-goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer-goods transactions and may continue to apply established approaches.


9104. (a) A secured party has control of a deposit account if any of the following conditions is satisfied: (1) The secured party is the bank with which the deposit account is maintained. (2) The debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor. (3) The secured party becomes the bank's customer with respect to the deposit account. (b) A secured party that has satisfied subdivision (a) has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.


9105. A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that each of the following conditions is satisfied: (1) A single authoritative copy of the record or records exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable. (2) The authoritative copy identifies the secured party as the assignee of the record or records. (3) The authoritative copy is communicated to and maintained by the secured party or its designated custodian. (4) Copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the participation of the secured party. (5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy. (6) Any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.


9106. (a) A person has control of a certificated security, uncertificated security, or security entitlement as provided in Section 8106. (b) A secured party has control of a commodity contract if either of the following conditions is satisfied: (1) The secured party is the commodity intermediary with which the commodity contract is carried. (2) The commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. (c) A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.


9107. A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under subdivision (c) of Section 5114 or otherwise applicable law or practice.


9108. (a) Except as otherwise provided in subdivisions (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. (b) Except as otherwise provided in subdivision (d), a description of collateral reasonably identifies the collateral if it identifies the collateral by any of the following: (1) Specific listing. (2) Category. (3) Except as otherwise provided in subdivision (e), a type of collateral defined in this code. (4) Quantity. (5) Computational or allocational formula or procedure. (6) Except as otherwise provided in subdivision (c), any other method, if the identity of the collateral is objectively determinable. (c) A description of collateral as "all the debtor's assets" or "all the debtor's personal property" or using words of similar import does not reasonably identify the collateral. (d) Except as otherwise provided in subdivision (e), a description of a security entitlement, securities account, or commodity account is sufficient if it describes either of the following: (1) The collateral by those terms or as investment property. (2) The underlying financial asset or commodity contract. (e) A description only by type of collateral defined in this code is an insufficient description of either of the following: (1) A commercial tort claim. (2) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account. (f) A description of investment property collateral also shall meet the applicable requirements of Section 1799.103 of the Civil Code. A description of consumer goods also shall meet the applicable requirements of Section 1799.100 of the Civil Code.


9109. (a) Except as otherwise provided in subdivisions (c) and (d), this division applies to each of the following: (1) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract. (2) An agricultural lien. (3) A sale of accounts, chattel paper, payment intangibles, or promissory notes. (4) A consignment. (5) A security interest arising under Section 2401 or 2505, or under subdivision (3) of Section 2711, or subdivision (5) of Section 10508, as provided in Section 9110. (6) A security interest arising under Section 4210 or 5118. (b) The application of this division to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this division does not apply. (c) This division does not apply to the extent that either of the following conditions is satisfied: (1) A statute, regulation, or treaty of the United States preempts this division. (2) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 5114. (d) This division does not apply to any of the following: (1) A landlord's lien, other than an agricultural lien. (2) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Section 9333 applies with respect to priority of the lien. (3) An assignment of a claim for wages, salary, or other compensation of an employee. (4) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose. (5) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only. (6) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract. (7) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness. (8) Any loan made by an insurance company pursuant to the provisions of a policy or contract issued by it and upon the sole security of the policy or contract. (9) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral. (10) A right of recoupment or setoff, provided that both of the following sections apply: (A) Section 9340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts. (B) Section 9404 applies with respect to defenses or claims of an account debtor. (11) The creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for each of the following: (A) Liens on real property in Sections 9203 and 9308. (B) Fixtures in Section 9334. (C) Fixture filings in Sections 9501, 9502, 9512, 9516, and 9519. (D) Security agreements covering personal and real property in Section 9604. (12) An assignment of a claim arising in tort, other than a commercial tort claim, but Sections 9315 and 9322 apply with respect to proceeds and priorities in proceeds. (13) An assignment of a deposit account in a consumer transaction, but Sections 9315 and 9322 apply with respect to proceeds and priorities in proceeds. (14) Any security interest created by the assignment of the benefits of any public construction contract under the Improvement Act of 1911 (Division 7 (commencing with Section 5000) of the Streets and Highways Code). (15) Transition property, as defined in Section 840 of the Public Utilities Code, except to the extent that the provisions of this division are referred to in Article 5.5 (commencing with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, and recovery property, as defined in Section 848 of the Public Utilities Code, except to the extent that the provisions of this division are referred to in Article 5.6 (commencing with Section 848) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code. (16) A claim or right of an employee or employee's dependents to receive workers' compensation under Division 1 (commencing with Section 50) or Division 4 (commencing with Section 3200) of the Labor Code. (17) A transfer by a government or governmental unit.


9110. A security interest arising under Section 2401 or 2505, or under subdivision (3) of Section 2711, or subdivision (e) of Section 10508 is subject to this division. However, until the debtor obtains possession of the goods, all of the following apply: (1) The security interest is enforceable, even if paragraph (3) of subdivision (b) of Section 9203 has not been satisfied. (2) Filing is not required to perfect the security interest. (3) The rights of the secured party after default by the debtor are governed by Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101). (4) The security interest has priority over a conflicting security interest created by the debtor.


Chapter 2. Effectiveness Of Security Agreement: Attachment Of Security Interest: Rights Of Parties To Security

Agreement Ca Codes (com:9201-9210) Commercial Code Section 9201-9210



9201. (a) Except as otherwise provided in this code, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors. (b) A transaction subject to this division is subject to any applicable rule of law which establishes a different rule for consumers; to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code; Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code; the Retail Installment Sales Act, Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3 of the Civil Code; the Automobile Sales Finance Act, Chapter 2b (commencing with Section 2981) of Title 14 of Part 4 of Division 3 of the Civil Code; Part 4 (commencing with Section 1738) of Division 3 of the Civil Code, with respect to the applicable provisions of Titles 1 (commencing with Section 1738), 1.3 (commencing with Section 1747), 1.3A (commencing with Section 1748.10), 1.3B (commencing with Section 1748.20), 1.4 (commencing with Section 1749), 1.5 (commencing with Section 1750), 1.6 (commencing with Section 1785.1), 1.61 (commencing with Section 1785.41), 1.6A (commencing with Section 1786), 1.6B (commencing with Section 1787.1), 1.6C (commencing with Section 1788), 1.6D (commencing with Section 1789), 1.6E (commencing with Section 1789.10), 1.6F (commencing with Section 1789.30), 1.7 (commencing with Section 1790), 1.8 (commencing with Section 1798), 1.83 (commencing with Section 1799.5), 1.84 (commencing with Section 1799.8), 1.85 (commencing with Section 1799.90), 1.86 (commencing with Section 1799.200), 2 (commencing with Section 1801), 2.4 (commencing with Section 1812.50), 2.5 (commencing with Section 1812.80), 2.6 (commencing with Section 1812.100), 2.7 (commencing with Section 1812.200), 2.8 (commencing with Section 1812.300), 2.9 (commencing with Section 1812.400), 2.95 (commencing with Section 1812.600), 2.96 (commencing with Section 1812.620), 3 (commencing with Section 1813), 4 (commencing with Section 1884), and 14 (commencing with Section 2872); the Industrial Loan Law, Division 7 (commencing with Section 18000) of the Financial Code; the Pawnbroker Law, Division 8 (commencing with Section 21000) of the Financial Code; the California Finance Lenders Law, Division 9 (commencing with Section 22000) of the Financial Code; and the Mobilehomes-Manufactured Housing Act of 1980, Part 2 (commencing with Section 18000) of Division 13 of the Health and Safety Code; and to any applicable consumer protection statute, regulation, or law. (c) In case of conflict between this division and a rule of law, statute, or regulation described in subdivision (b), the rule of law, statute, or regulation controls. Failure to comply with a statute or regulation described in subdivision (b) has only the effect the statute or regulation specifies. (d) This division does not do either of the following: (1) Validate any rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in subdivision (b). (2) Extend the application of the rule of law, statute, or regulation to a transaction not otherwise subject to it.


9202. Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.


9203. (a) A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment. (b) Except as otherwise provided in subdivisions (c) to (i), inclusive, a security interest is enforceable against the debtor and third parties with respect to the collateral only if each of the following conditions is satisfied: (1) Value has been given. (2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party. (3) One of the following conditions is met: (A) The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned. (B) The collateral is not a certificated security and is in the possession of the secured party under Section 9313 pursuant to the debtor's security agreement. (C) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under Section 8301 pursuant to the debtor's security agreement. (D) The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents and the secured party has control under Section 7106, 9104, 9105, 9106, or 9107 pursuant to the debtor's security agreement. (c) Subdivision (b) is subject to Section 4210 on the security interest of a collecting bank, Section 5118 on the security interest of a letter-of-credit issuer or nominated person, Section 9110 on a security interest arising under Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101), and Section 9206 on security interests in investment property. (d) A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this division or by contract, either of the following conditions is satisfied: (1) The security agreement becomes effective to create a security interest in the person's property. (2) The person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person. (e) If a new debtor becomes bound as debtor by a security agreement entered into by another person, both of the following apply: (1) The agreement satisfies paragraph (3) of subdivision (b) with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement. (2) Another agreement is not necessary to make a security interest in the property enforceable. (f) The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 9315 and is also attachment of a security interest in a supporting obligation for the collateral. (g) The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien. (h) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account. (i) The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.


9204. (a) Except as otherwise provided in subdivision (b), a security agreement may create or provide for a security interest in after-acquired collateral. (b) A security interest does not attach under a term constituting an after-acquired property clause to either of the following: (1) Consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value. (2) A commercial tort claim. (c) A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to commitment.

9205. (a) A security interest is not invalid or fraudulent against creditors solely because either of the following applies: (1) The debtor has the right or ability to do any of the following: (A) Use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods. (B) Collect, compromise, enforce, or otherwise deal with collateral. (C) Accept the return of collateral or make repossessions. (D) Use, commingle, or dispose of proceeds. (2) The secured party fails to require the debtor to account for proceeds or replace collateral. (b) This section does not relax the requirements of possession if attachment, perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party.


9206. (a) A security interest in favor of a securities intermediary attaches to a person's security entitlement if both of the following conditions are satisfied: (1) The person buys a financial asset through the securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase. (2) The securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary. (b) The security interest described in subdivision (a) secures the person's obligation to pay for the financial asset. (c) A security interest in favor of a person that delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if both of the following conditions are satisfied: (1) The security or other financial asset satisfies both of the following: (A) In the ordinary course of business it is transferred by delivery with any necessary endorsement or assignment. (B) It is delivered under an agreement between persons in the business of dealing with those securities or financial assets. (2) The agreement calls for delivery against payment. (d) The security interest described in subdivision (c) secures the obligation to make payment for the delivery.


9207. (a) Except as otherwise provided in subdivision (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed. (b) Except as otherwise provided in subdivision (d), if a secured party has possession of collateral, all of the following apply: (1) Reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral. (2) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage. (3) The secured party shall keep the collateral identifiable, but fungible collateral may be commingled. (4) The secured party may use or operate the collateral for any of the following purposes: (A) For the purpose of preserving the collateral or its value. (B) As permitted by an order of a court having competent jurisdiction. (C) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor. (c) Except as otherwise provided in subdivision (d), a secured party having possession of collateral or control of collateral under Section 7106, 9104, 9105, 9106, or 9107 may or shall, as the case may be, do all of the following: (1) May hold as additional security any proceeds, except money or funds, received from the collateral. (2) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor. (3) May create a security interest in the collateral. (d) If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor, both of the following apply: (1) Subdivision (a) does not apply unless the secured party is entitled under an agreement to either of the following: (A) To charge back uncollected collateral. (B) Otherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral. (2) Subdivisions (b) and (c) do not apply.


9208. (a) This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value. (b) Within 10 days after receiving an authenticated demand by the debtor, all of the following apply: (1) A secured party having control of a deposit account under paragraph (2) of subdivision (a) of Section 9104 shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party. (2) A secured party having control of a deposit account under paragraph (3) of subdivision (a) of Section 9104 shall do either of the following: (A) Pay the debtor the balance on deposit in the deposit account. (B) Transfer the balance on deposit into a deposit account in the debtor's name. (3) A secured party, other than a buyer, having control of electronic chattel paper under Section 9105 shall do all of the following: (A) Communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian. (B) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor. (C) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party. (4) A secured party having control of investment property under paragraph (2) of subdivision (d) of Section 8106 or under subdivision (b) of Section 9106 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party. (5) A secured party having control of a letter-of-credit right under Section 9107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party. (6) A secured party having control of an electronic document under Section 7106 shall: (A) give control of the electronic document to the debtor or its designated custodian; (B) if the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and (C) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.


9209. (a) Except as otherwise provided in subdivision (c), this section applies if both of the following conditions are satisfied: (1) There is no outstanding secured obligation. (2) The secured party is not committed to make advances, incur obligations, or otherwise give value. (b) Within 10 days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under subdivision (a) of Section 9406 an authenticated record that releases the account debtor from any further obligation to the secured party. (c) This section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.


9210. (a) In this section: (1) "Request" means a record of a type described in paragraph (2), (3), or (4). (2) "Request for an accounting" means a record authenticated by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request. (3) "Request regarding a list of collateral" means a record authenticated by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request. (4) "Request regarding a statement of account" means a record authenticated by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship that is the subject of the request. (b) Subject to subdivisions (c), (d), (e), and (f), a secured party, other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after receipt as follows: (1) In the case of a request for an accounting, by authenticating and sending to the debtor an accounting. (2) In the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction. (c) A secured party that claims a security interest in all of a particular type of collateral owned by the debtor may comply with a request regarding a list of collateral by sending to the debtor an authenticated record including a statement to that effect within 14 days after receipt. (d) A person that receives a request regarding a list of collateral, claims no interest in the collateral when it receives the request, and claimed an interest in the collateral at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor an authenticated record that contains both of the following: (1) It disclaims any interest in the collateral. (2) If known to the recipient, it provides the name and mailing address of any assignee of or successor to the recipient's interest in the collateral. (e) A person that receives a request for an accounting or a request regarding a statement of account, claims no interest in the obligations when it receives the request, and claimed an interest in the obligations at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor an authenticated record that contains both of the following: (1) It disclaims any interest in the obligations. (2) If known to the recipient, it provides the name and mailing address of any assignee of or successor to the recipient's interest in the obligations. (f) A debtor is entitled without charge to one response to a request under this section during any six-month period. The secured party may require payment of a charge not exceeding twenty-five dollars ($25) for each additional response.


Chapter 3. Perfection And Priority

Ca Codes (com:9301-9342) Commercial Code Section 9301-9342



9301. Except as otherwise provided in Sections 9303 to 9306, inclusive, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral: (1) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral. (2) While collateral is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a possessory security interest in that collateral. (3) Except as otherwise provided in paragraph (4), while negotiable tangible documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs all of the following: (A) Perfection of a security interest in the goods by filing a fixture filing. (B) Perfection of a security interest in timber to be cut. (C) The effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral. (4) The local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.

9302. While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

9303. (a) This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor. (b) Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction. (c) The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title.


9304. (a) The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank. (b) The following rules determine a bank's jurisdiction for purposes of this chapter: (1) If an agreement between the bank and its customer governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this chapter, this division, or this code, that jurisdiction is the bank's jurisdiction. (2) If paragraph (1) does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction. (3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank' s jurisdiction. (4) If none of the preceding paragraphs applies, the bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located. (5) If none of the preceding paragraphs applies, the bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.


9305. (a) Except as otherwise provided in subdivision (c), the following rules apply: (1) While a security certificate is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby. (2) The local law of the issuer's jurisdiction as specified in subdivision (d) of Section 8110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security. (3) The local law of the securities intermediary's jurisdiction as specified in subdivision (e) of Section 8110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account. (4) The local law of the commodity intermediary's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account. (b) The following rules determine a commodity intermediary's jurisdiction for purposes of this chapter: (1) If an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this chapter, this division, or this code, that jurisdiction is the commodity intermediary's jurisdiction. (2) If paragraph (1) does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction. (3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction. (4) If none of the preceding paragraphs applies, the commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located. (5) If none of the preceding paragraphs applies, the commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located. (c) The local law of the jurisdiction in which the debtor is located governs all of the following: (1) Perfection of a security interest in investment property by filing. (2) Automatic perfection of a security interest in investment property created by a broker or securities intermediary. (3) Automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.


9306. (a) Subject to subdivision (c), the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state. (b) For purposes of this chapter, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in Section 5116. (c) This section does not apply to a security interest that is perfected only under subdivision (d) of Section 9308.


9307. (a) In this section, "place of business" means a place where a debtor conducts its affairs. (b) Except as otherwise provided in this section, the following rules determine a debtor's location: (1) A debtor who is an individual is located at the individual's principal residence. (2) A debtor that is an organization and has only one place of business is located at its place of business. (3) A debtor that is an organization and has more than one place of business is located at its chief executive office. (c) Subdivision (b) applies only if a debtor's residence, place of business, or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording, or registration system as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. If subdivision (b) does not apply, the debtor is located in the District of Columbia. (d) A person that ceases to exist, have a residence, or have a place of business continues to be located in the jurisdiction specified by subdivisions (b) and (c). (e) A registered organization that is organized under the law of a state is located in that state. (f) Except as otherwise provided in subdivision (i), a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located in any of the following jurisdictions: (1) In the state that the law of the United States designates, if the law designates a state of location. (2) In the state that the registered organization, branch, or agency designates, if the law of the United States authorizes the registered organization, branch, or agency to designate its state of location. (3) In the District of Columbia, if neither paragraph (1) nor paragraph (2) applies. (g) A registered organization continues to be located in the jurisdiction specified by subdivision (e) or (f) notwithstanding either of the following: (1) The suspension, revocation, forfeiture, or lapse of the registered organization's status as such in its jurisdiction of organization. (2) The dissolution, winding up, or cancellation of the existence of the registered organization. (h) The United States is located in the District of Columbia. (i) A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed, if all branches and agencies of the bank are licensed in only one state. (j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier. (k) This section applies only for purposes of this chapter.


9308. (a) Except as otherwise provided in this section and in Section 9309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Sections 9310 to 9316, inclusive, have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches. (b) An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in Section 9310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective. (c) A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this division and is later perfected by another method under this division, without an intermediate period when it was unperfected. (d) Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral. (e) Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right. (f) Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account. (g) Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.


9309. The following security interests are perfected when they attach: (1) A purchase money security interest in consumer goods, except as otherwise provided in subdivision (b) of Section 9311 with respect to consumer goods that are subject to a statute or treaty described in subdivision (a) of Section 9311. (2) An assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles. (3) A sale of a payment intangible. (4) A sale of a promissory note. (5) A security interest created by the assignment of a health care insurance receivable to the provider of the health care goods or services. (6) A security interest arising under Section 2401 or 2505, under subdivision (3) of Section 2711, or under subdivision (5) of Section 10508, until the debtor obtains possession of the collateral. (7) A security interest of a collecting bank arising under Section 4210. (8) A security interest of an issuer or nominated person arising under Section 5118. (9) A security interest arising in the delivery of a financial asset under subdivision (c) of Section 9206. (10) A security interest in investment property created by a broker or securities intermediary. (11) A security interest in a commodity contract or a commodity account created by a commodity intermediary. (12) An assignment for the benefit of all creditors of the transferor and subsequent transfers by the assignee thereunder. (13) A security interest created by an assignment of a beneficial interest in a decedent's estate. (14) A sale by an individual of an account that is a right to payment of winnings in a lottery or other game of chance.


9310. (a) Except as otherwise provided in subdivision (b) and in subdivision (b) of Section 9312, a financing statement must be filed to perfect all security interests and agricultural liens. (b) The filing of a financing statement is not necessary to perfect a security interest that satisfies any of the following conditions: (1) It is perfected under subdivision (d), (e), (f), or (g) of Section 9308. (2) It is perfected under Section 9309 when it attaches. (3) It is a security interest in property subject to a statute, regulation, or treaty described in subdivision (a) of Section 9311. (4) It is a security interest in goods in possession of a bailee which is perfected under paragraph (1) or (2) of subdivision (d) of Section 9312. (5) It is a security interest in certificated securities, documents, goods, or instruments which is perfected without filing, control, or possession under subdivision (e), (f), or (g) of Section 9312. (6) It is a security interest in collateral in the secured party's possession under Section 9313. (7) It is a security interest in a certificated security which is perfected by delivery of the security certificate to the secured party under Section 9313. (8) It is a security interest in deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights which is perfected by control under Section 9314. (9) It is a security interest in proceeds which is perfected under Section 9315. (10) It is perfected under Section 9316. (11) It is a security interest in, or claim in or under, any policy of insurance including unearned premiums which is perfected by written notice to the insurer under paragraph (4) of subdivision (b) of Section 9312. (c) If a secured party assigns a perfected security interest or agricultural lien, a filing under this division is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.


9311. (a) Except as otherwise provided in subdivision (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to any of the following: (1) A statute, regulation, or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt subdivision (a) of Section 9310. (2) (A) The provisions of the Vehicle Code which require registration of a vehicle or boat. (B) The provisions of the Health and Safety Code which require registration of a mobilehome or commercial coach, except that during any period in which collateral is inventory, the filing provisions of Chapter 5 (commencing with Section 9501) apply to a security interest in that collateral. (C) The provisions of the Health and Safety Code which require registration of all interests in approved air contaminant emission reductions (Sections 40709 to 40713, inclusive, of the Health and Safety Code). (3) A certificate of title statute of another jurisdiction which provides for a security interest to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property. (b) Compliance with the requirements of a statute, regulation, or treaty described in subdivision (a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this division. Except as otherwise provided in subdivision (d), in Section 9313, and in subdivisions (d) and (e) of Section 9316 for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subdivision (a) may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral. (c) Except as otherwise provided in subdivision (d) and in subdivisions (d) and (e) of Section 9316, duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in subdivision (a) are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this division. (d) During any period in which collateral subject to a statute specified in paragraph (2) of subdivision (a) is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person.


9312. (a) A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing. (b) Except as otherwise provided in subdivisions (c) and (d) of Section 9315 for proceeds, all of the following apply: (1) A security interest in a deposit account may be perfected only by control under Section 9314. (2) Except as otherwise provided in subdivision (d) of Section 9308, a security interest in a letter-of-credit right may be perfected only by control under Section 9314. (3) A security interest in money may be perfected only by the secured party's taking possession under Section 9313. (4) A security interest in, or claim in or under, any policy of insurance, including unearned premiums, may be perfected only by giving written notice of the security interest or claim to the insurer. This paragraph does not apply to a health care insurance receivable. A security interest in a health care insurance receivable may be perfected only as otherwise provided in this division. (c) While goods are in the possession of a bailee that has issued a negotiable document covering the goods, both of the following apply: (1) A security interest in the goods may be perfected by perfecting a security interest in the document. (2) A security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time. (d) While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by any of the following methods: (1) Issuance of a document in the name of the secured party. (2) The bailee's receipt of notification of the secured party's interest. (3) Filing as to the goods. (e) A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement. (f) A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of either of the following: (1) Ultimate sale or exchange. (2) Loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange. (g) A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of either of the following: (1) Ultimate sale or exchange. (2) Presentation, collection, enforcement, renewal, or registration of transfer. (h) After the 20-day period specified in subdivision (e), (f), or (g) expires, perfection depends upon compliance with this division.


9313. (a) Except as otherwise provided in subdivision (b), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under Section 8301. (b) With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in subdivision (d) of Section 9316. (c) With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtor's business, when either of the following conditions is satisfied: (1) The person in possession authenticates a record acknowledging that it holds possession of the collateral for the secured party's benefit. (2) The person takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit. (d) If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession. (e) A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Section 8301 and remains perfected by delivery until the debtor obtains possession of the security certificate. (f) A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit. (g) If a person acknowledges that it holds possession for the secured party's benefit, both of the following apply: (1) The acknowledgment is effective under subdivision (c) or under subdivision (a) of Section 8301, even if the acknowledgment violates the rights of a debtor. (2) Unless the person otherwise agrees or law other than this division otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person. (h) A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery to do either of the following: (1) To hold possession of the collateral for the secured party's benefit. (2) To redeliver the collateral to the secured party. (i) A secured party does not relinquish possession, even if a delivery under subdivision (h) violates the rights of a debtor. A person to which collateral is delivered under subdivision (h) does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this division otherwise provides.


9314. (a) A security interest in investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Section 7106, 9104, 9105, 9106, or 9107. (b) A security interest in deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents is perfected by control under Section 7106, 9104, 9105, or 9107 when the secured party obtains control and remains perfected by control only while the secured party retains control. (c) A security interest in investment property is perfected by control under Section 9106 from the time the secured party obtains control and remains perfected by control until both of the following conditions are satisfied: (1) The secured party does not have control. (2) One of the following occurs: (A) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate. (B) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner. (C) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.


9315. (a) Except as otherwise provided in this division and in subdivision (2) of Section 2403, both of the following apply: (1) A security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien. (2) A security interest attaches to any identifiable proceeds of collateral. (b) Proceeds that are commingled with other property are identifiable proceeds as follows: (1) If the proceeds are goods, to the extent provided by Section 9336. (2) If the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this division with respect to commingled property of the type involved. (c) A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected. (d) A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless any of the following conditions is satisfied: (1) All of the following are satisfied: (A) A filed financing statement covers the original collateral. (B) The proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed. (C) The proceeds are not acquired with cash proceeds. (2) The proceeds are identifiable cash proceeds. (3) The security interest in the proceeds is perfected other than under subdivision (c) when the security interest attaches to the proceeds or within 20 days thereafter. (e) If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (1) of subdivision (d) becomes unperfected at the later of either of the following: (1) When the effectiveness of the filed financing statement lapses under Section 9515 or is terminated under Section 9513. (2) The 21st day after the security interest attaches to the proceeds. (f) Cash proceeds retain their character as cash proceeds while in the possession of a levying officer pursuant to Title 6.5 (commencing with Section 481.010) or Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure.


9316. (a) A security interest perfected pursuant to the law of the jurisdiction designated in subdivision (1) of Section 9301 or in subdivision (c) of Section 9305 remains perfected until the earliest of any of the following: (1) The time perfection would have ceased under the law of that jurisdiction. (2) The expiration of four months after a change of the debtor's location to another jurisdiction. (3) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction. (b) If a security interest described in subdivision (a) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subdivision, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value. (c) A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if all of the following conditions are satisfied: (1) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction. (2) Thereafter the collateral is brought into another jurisdiction. (3) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction. (d) Except as otherwise provided in subdivision (e), a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered. (e) A security interest described in subdivision (d) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under subdivision (b) of Section 9311 or under Section 9313 are not satisfied before the earlier of either of the following: (1) The time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state. (2) The expiration of four months after the goods had become so covered. (f) A security interest in deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of the following: (1) The time the security interest would have become unperfected under the law of that jurisdiction. (2) The expiration of four months after a change of the applicable jurisdiction to another jurisdiction. (g) If a security interest described in subdivision (f) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subdivision, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.


9317. (a) A security interest or agricultural lien is subordinate to the rights of both of the following: (1) A person entitled to priority under Section 9322. (2) Except as otherwise provided in subdivision (e), a person that becomes a lien creditor before the earlier of the time the security interest or agricultural lien is perfected, or one of the conditions specified in paragraph (3) of subdivision (b) of Section 9203 is met and a financing statement covering the collateral is filed. (b) Except as otherwise provided in subdivision (e), a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected. (c) Except as otherwise provided in subdivision (e), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected. (d) A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, electronic documents, general intangibles, or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected. (e) Except as otherwise provided in Sections 9320 and 9321, if a person files a financing statement with respect to a purchase money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.


9318. (a) A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold. (b) For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.


9319. (a) Except as otherwise provided in subdivision (b), for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer. (b) For purposes of determining the rights of a creditor of a consignee, law other than this division determines the rights and title of a consignee while goods are in the consignee's possession if, under this chapter, a perfected security interest held by the consignor would have priority over the rights of the creditor.


9320. (a) Except as otherwise provided in subdivision (e), a buyer in ordinary course of business takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence. (b) Except as otherwise provided in subdivision (e), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if all of the following conditions are satisfied: (1) The buyer buys without knowledge of the security interest. (2) The buyer buys for value. (3) The buyer buys primarily for the buyer's personal, family, or household purposes. (4) The buyer buys before the filing of a financing statement covering the goods. (c) To the extent that it affects the priority of a security interest over a buyer of goods under subdivision (b), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subdivisions (a) and (b) of Section 9316. (d) A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance. (e) Subdivisions (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9313.


9321. (a) In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices. (b) A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence. (c) A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence. (d) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.

9321. (a) A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence. (b) This section shall become operative on January 1, 2013.


9322. (a) Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules: (1) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection. (2) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien. (3) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected. (b) For the purposes of paragraph (1) of subdivision (a), the following rules apply: (1) The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds. (2) The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation. (c) Except as otherwise provided in subdivision (f), a security interest in collateral which qualifies for priority over a conflicting security interest under Section 9327, 9328, 9329, 9330, or 9331 also has priority over a conflicting security interest in both of the following: (1) Any supporting obligation for the collateral. (2) Proceeds of the collateral if all of the following conditions are satisfied: (A) The security interest in proceeds is perfected. (B) The proceeds are cash proceeds or of the same type as the collateral. (C) In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral. (d) Subject to subdivision (e) and except as otherwise provided in subdivision (f), if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing. (e) Subdivision (d) applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights. (f) Subdivisions (a) to (e), inclusive, are subject to all of the following: (1) Subdivision (g) and the other provisions of this chapter. (2) Section 4210 with respect to a security interest of a collecting bank. (3) Section 5118 with respect to a security interest of an issuer or nominated person. (4) Section 9110 with respect to a security interest arising under Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101). (g) A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.


9323. (a) Except as otherwise provided in subdivision (c), for purposes of determining the priority of a perfected security interest under paragraph (1) of subdivision (a) of Section 9322, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that satisfies both of the following conditions: (1) It is made while the security interest is perfected only under either of the following: (A) Under Section 9309 when it attaches. (B) Temporarily under subdivision (e), (f), or (g) of Section 9312. (2) It is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under Section 9309 or under subdivision (e), (f), or (g) of Section 9312. (b) Except as otherwise provided in subdivision (c), a security interest is subordinate to the rights of a person who becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless either of the following conditions is satisfied: (1) The advance is made without knowledge of the lien. (2) The advance is made pursuant to a commitment entered into without knowledge of the lien. (c) Subdivisions (a) and (b) do not apply to a security interest held by a secured party who is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor. (d) Except as otherwise provided in subdivision (e), a buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of the following: (1) The time the secured party acquires knowledge of the buyer's purchase. (2) Forty-five days after the purchase. (e) Subdivision (d) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the 45-day period. (f) Except as otherwise provided in subdivision (g), a lessee of goods, other than a lessee in the ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of either of the following: (1) The time the secured party acquires knowledge of the lease. (2) Forty-five days after the lease contract becomes enforceable. (g) Subdivision (f) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.


9324. (a) Except as otherwise provided in subdivision (g), a perfected purchase money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 9327, a perfected security interest in its identifiable proceeds also has priority, if the purchase money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter. (b) Subject to subdivision (c) and except as otherwise provided in subdivision (g), a perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in Section 9330, and, except as otherwise provided in Section 9327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if all of the following conditions are satisfied: (1) The purchase money security interest is perfected when the debtor receives possession of the inventory. (2) The purchase money secured party sends an authenticated notification to the holder of the conflicting security interest. (3) The holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory. (4) The notification states that the person sending the notification has or expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. (c) Paragraphs (2) to (4), inclusive, of subdivision (b) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory as follows: (1) If the purchase money security interest is perfected by filing, before the date of the filing. (2) If the purchase money security interest is temporarily perfected without filing or possession under subdivision (f) of Section 9312, before the beginning of the 20-day period thereunder. (d) Subject to subdivision (e) and except as otherwise provided in subdivision (g), a perfected purchase money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in Section 9327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if all of the following conditions are satisfied: (1) The purchase money security interest is perfected when the debtor receives possession of the livestock. (2) The purchase money secured party sends an authenticated notification to the holder of the conflicting security interest. (3) The holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock. (4) The notification states that the person sending the notification has or expects to acquire a purchase money security interest in livestock of the debtor and describes the livestock. (e) Paragraphs (2) to (4), inclusive, of subdivision (d) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock as follows: (1) If the purchase money security interest is perfected by filing, before the date of the filing. (2) If the purchase money security interest is temporarily perfected without filing or possession under subdivision (f) of Section 9312, before the beginning of the 20-day period thereunder. (f) Except as otherwise provided in subdivision (g), a perfected purchase money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 9327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section. (g) If more than one security interest qualifies for priority in the same collateral under subdivision (a), (b), (d), or (f), the following rules apply: (1) A security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in, or the use of, collateral. (2) In all other cases, subdivision (a) of Section 9322 applies to the qualifying security interests.


9325. (a) Except as otherwise provided in subdivision (b), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if all of the following apply: (1) The debtor acquired the collateral subject to the security interest created by the other person. (2) The security interest created by the other person was perfected when the debtor acquired the collateral. (3) There is no period thereafter when the security interest is unperfected. (b) Subdivision (a) subordinates a security interest only if either of the following conditions is satisfied: (1) The security interest otherwise would have priority solely under subdivision (a) of Section 9322 or under Section 9324. (2) The security interest arose solely under subdivision (3) of Section 2711 or subdivision (5) of Section 10508.


9326. (a) Subject to subdivision (b), a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under Section 9508 in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under Section 9508. (b) The other provisions of this chapter determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under Section 9508. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.


9327. The following rules govern priority among conflicting security interests in the same deposit account: (1) A security interest held by a secured party having control of the deposit account under Section 9104 has priority over a conflicting security interest held by a secured party that does not have control. (2) Except as otherwise provided in subdivisions (3) and (4), security interests perfected by control under Section 9314 rank according to priority in time of obtaining control. (3) Except as otherwise provided in subdivision (4), a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party. (4) A security interest perfected by control under paragraph (3) of subdivision (a) of Section 9104 has priority over a security interest held by the bank with which the deposit account is maintained.

9328. The following rules govern priority among conflicting security interests in the same investment property: (1) A security interest held by a secured party having control of investment property under Section 9106 has priority over a security interest held by a secured party that does not have control of the investment property. (2) Except as otherwise provided in subdivisions (3) and (4), conflicting security interests held by secured parties each of which has control under Section 9106 rank according to priority in time of one of the following: (A) If the collateral is a security, obtaining control. (B) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control under paragraph (1) of subdivision (d) of Section 8106, the secured party's becoming the person for which the securities account is maintained. (C) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control under paragraph (2) of subdivision (d) of Section 8106, the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried, or to be carried, in the securities account. (D) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control through another person under paragraph (3) of subdivision (d) of Section 8106, the time on which priority would be based under this paragraph if the other person were the secured party. (E) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in paragraph (2) of subdivision (b) of Section 9106 with respect to commodity contracts carried, or to be carried, with the commodity intermediary. (3) A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party. (4) A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party. (5) A security interest in a certificated security in registered form which is perfected by taking delivery under subdivision (a) of Section 9313 and not by control under Section 9314 has priority over a conflicting security interest perfected by a method other than control. (6) Conflicting security interests created by a broker, securities intermediary, or commodity intermediary which are perfected without control under Section 9106 rank equally. (7) In all other cases, priority among conflicting security interests in investment property is governed by Sections 9322 and 9323.

9329. The following rules govern priority among conflicting security interests in the same letter-of-credit right: (1) A security interest held by a secured party having control of the letter-of-credit right under Section 9107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control. (2) Security interests perfected by control under Section 9314 rank according to priority in time of obtaining control.


9330. (a) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if both of the following conditions are satisfied: (1) In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 9105. (2) The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser. (b) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 9105 in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party. (c) Except as otherwise provided in Section 9327, a purchaser having priority in chattel paper under subdivision (a) or (b) also has priority in proceeds of the chattel paper to the extent that either of the following applies: (1) Section 9322 provides for priority in the proceeds. (2) The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected. (d) Except as otherwise provided in subdivision (a) of Section 9331, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party. (e) For purposes of subdivisions (a) and (b), the holder of a purchase money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory. (f) For purposes of subdivisions (b) and (d), if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.


9331. (a) This division does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Division 3 (commencing with Section 3101), Division 7 (commencing with Section 7101), and Division 8 (commencing with Section 8101). (b) This division does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Division 8 (commencing with Section 8101). (c) Filing under this division does not constitute notice of a claim or defense to the holders, purchasers, or persons described in subdivisions (a) and (b).


9332. (a) A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party. (b) A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.


9333. (a) In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien which satisfies all of the following conditions: (1) It secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business. (2) It is created by statute or rule of law in favor of the person. (3) Its effectiveness depends on the person's possession of the goods. (b) A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.


9334. (a) A security interest under this division may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this division in ordinary building materials incorporated into an improvement on land. (b) This division does not prevent creation of an encumbrance upon fixtures under real property law. (c) In cases not governed by subdivisions (d) to (h), inclusive, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor. (d) Except as otherwise provided in subdivision (h), a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and all of the following conditions are satisfied: (1) The security interest is a purchase money security interest. (2) The interest of the encumbrancer or owner arises before the goods become fixtures. (3) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter. (e) A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if any of the following conditions is satisfied: (1) The debtor has an interest of record in the real property or is in possession of the real property and both of the following conditions are satisfied: (A) The security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record. (B) The security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner. (2) The fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances that are consumer goods. (3) The conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this division. (4) The security interest is both of the following: (A) Created in a manufactured home in a manufactured home transaction. (B) Perfected pursuant to a statute described in paragraph (2) of subdivision (a) of Section 9311. (f) A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if either of the following conditions is satisfied: (1) The encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures. (2) The debtor has a right to remove the goods as against the encumbrancer or owner. (g) The priority of the security interest under paragraph (2) of subdivision (f) continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates. (h) A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise provided in subdivisions (e) and (f), a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage. (i) A perfected security interest in crops growing on real property has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in, or is in possession of, the real property.


9335. (a) A security interest may be created in an accession and continues in collateral that becomes an accession. (b) If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral. (c) Except as otherwise provided in subdivision (d), the other provisions of this chapter determine the priority of a security interest in an accession. (d) A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate of title statute under subdivision (b) of Section 9311. (e) After default, subject to Chapter 6 (commencing with subdivision 9601), a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole. (f) A secured party that removes an accession from other goods under subdivision (e) shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of any physical injury to the whole or the other goods. The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

9336. (a) In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass. (b) A security interest does not exist in commingled goods as such. However, a security interest may attach to a product or mass that results when goods become commingled goods. (c) If collateral becomes commingled goods, a security interest attaches to the product or mass. (d) If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under subdivision (c) is perfected. (e) Except as otherwise provided in subdivision (f), the other provisions of this chapter determine the priority of a security interest that attaches to the product or mass under subdivision (c). (f) If more than one security interest attaches to the product or mass under subdivision (c), the following rules determine priority: (1) A security interest that is perfected under subdivision (d) has priority over a security interest that is unperfected at the time the collateral becomes commingled goods. (2) If more than one security interest is perfected under subdivision (d), the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods.


9337. If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate both of the following apply: (1) A buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest. (2) The security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under subdivision (b) of Section 9311, after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.


9338. If a security interest or agricultural lien is perfected by a filed financing statement providing information described in paragraph (5) of subdivision (b) of Section 9516 which is incorrect at the time the financing statement is filed, both of the following apply: (1) The security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information. (2) A purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral.


9339. This division does not preclude subordination by agreement by a person entitled to priority.


9340. (a) Except as otherwise provided in subdivision (c), a bank with which a deposit account is maintained may exercise any right of recoupment or setoff against a secured party that holds a security interest in the deposit account. (b) Except as otherwise provided in subdivision (c), the application of this division to a security interest in a deposit account does not affect a right of recoupment or setoff of the secured party as to a deposit account maintained with the secured party. (c) The exercise by a bank of a setoff against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under paragraph (3) of subdivision (a) of Section 9104, if the setoff is based on a claim against the debtor.

9341. Except as otherwise provided in subdivision (c) of Section 9340, and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by any of the following: (1) The creation, attachment, or perfection of a security interest in the deposit account. (2) The bank's knowledge of the security interest. (3) The bank's receipt of instructions from the secured party.


9342. This division does not require a bank to enter into an agreement of the kind described in paragraph (2) of subdivision (a) of Section 9104, even if its customer so requests or directs. A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer.


Chapter 4. Rights Of Third Parties

Ca Codes (com:9401-9409) Commercial Code Section 9401-9409



9401. (a) Except as otherwise provided in subdivision (b) and in Sections 9406, 9407, 9408, and 9409, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this division. (b) An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

9402. The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions.


9403. (a) In this section, "value" has the meaning provided in subdivision (a) of Section 3303. (b) Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment that satisfies all of the following conditions: (1) It is taken for value. (2) It is taken in good faith. (3) It is taken without notice of a claim of a property or possessory right to the property assigned. (4) It is taken without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under subdivision (a) of Section 3305. (c) Subdivision (b) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subdivision (b) of Section 3305. (d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than this division requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and the record does not include such a statement, then both of the following apply: (1) The record has the same effect as if the record included such a statement. (2) The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement. (e) This section is subject to law other than this division which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes. (f) Except as otherwise provided in subdivision (d), this section does not displace law other than this division which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.


9404. (a) Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subdivisions (b) to (e), inclusive, the rights of an assignee are subject to both of the following: (1) All terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract. (2) Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee. (b) Subject to subdivision (c) and except as otherwise provided in subdivision (d), the claim of an account debtor against an assignor may be asserted against an assignee under subdivision (a) only to reduce the amount the account debtor owes. (c) This section is subject to law other than this division which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes. (d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than this division requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement. (e) This section does not apply to an assignment of a health care insurance receivable.

9405. (a) A modification of or substitution for an assigned contract is effective against an assignee if made in good faith. The assignee acquires corresponding rights under the modified or substituted contract. The assignment may provide that the modification or substitution is a breach of contract by the assignor. This subdivision is subject to subdivisions (b) to (d), inclusive. (b) Subdivision (a) applies to the extent that either of the following apply: (1) The right to payment or a part thereof under an assigned contract has not been fully earned by performance. (2) The right to payment or a part thereof has been fully earned by performance and the account debtor has not received notification of the assignment under subdivision (a) of Section 9406. (c) This section is subject to law other than this division which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes. (d) This section does not apply to an assignment of a health care insurance receivable.

9406. (a) Subject to subdivisions (b) to (i), inclusive, an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor. (b) Subject to subdivision (h), notification is ineffective under subdivision (a) as follows: (1) If it does not reasonably identify the rights assigned. (2) To the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this division. (3) At the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if any of the following conditions is satisfied: (A) Only a portion of the account, chattel paper, or payment intangible has been assigned to that assignee. (B) A portion has been assigned to another assignee. (C) The account debtor knows that the assignment to that assignee is limited. (c) Subject to subdivision (h), if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subdivision (a). (d) Except as otherwise provided in subdivision (e) and in Sections 9407 and 10303, and subject to subdivision (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it does either of the following: (1) Prohibits, restricts, or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory note. (2) Provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account, chattel paper, payment intangible, or promissory note. (e) Subdivision (d) does not apply to the sale of a payment intangible or promissory note. (f) Except as otherwise provided in Sections 9407 and 10303, and subject to subdivisions (h) and (i), a rule of law, statute, or regulation, that prohibits, restricts, or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation does either of the following: (1) Prohibits, restricts, or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account or chattel paper. (2) Provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper. (g) Subject to subdivision (h), an account debtor may not waive or vary its option under paragraph (3) of subdivision (b). (h) This section is subject to law other than this division which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes. (i) This section does not apply to an assignment of a health care insurance receivable. (j) Subdivision (f) does not apply to an assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, a claim or right to receive compensation for injuries or sickness as described in paragraph (1) or (2) of subdivision (a) of Section 104 of Title 26 of the United States Code, as amended, or a claim or right to receive benefits under a special needs trust as described in paragraph (4) of subdivision (d) of Section 1396p of Title 42 of the United States Code, as amended, to the extent that subdivision (f) is inconsistent with those laws.


9407. (a) Except as otherwise provided in subdivision (b), a term in a lease agreement is ineffective to the extent that it does either of the following: (1) Prohibits, restricts, or requires the consent of a party to the lease to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor's residual interest in the goods. (2) Provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease. (b) Except as otherwise provided in subdivision (g) of Section 10303, a term described in paragraph (2) of subdivision (a) is effective to the extent that there is either of the following: (1) A transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term. (2) A delegation of a material performance of either party to the lease contract in violation of the term. (c) The creation, attachment, perfection, or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of subdivision (d) of Section 10303 unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.


9408. (a) Except as otherwise provided in subdivision (b), a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health care insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or the creation, attachment, or perfection of a security interest in, the promissory note, health care insurance receivable, or general intangible, is ineffective to the extent that the term does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest. (2) It provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health care insurance receivable, or general intangible. (b) Subdivision (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note. (c) A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or the creation of a security interest in, a promissory note, health care insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest. (2) It provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health care insurance receivable, or general intangible. (d) To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health care insurance receivable or general intangible or a rule of law, statute, or regulation described in subdivision (c) would be effective under law other than this division but is ineffective under subdivision (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health care insurance receivable, or general intangible is subject to all of the following rules: (1) It is not enforceable against the person obligated on the promissory note or the account debtor. (2) It does not impose a duty or obligation on the person obligated on the promissory note or the account debtor. (3) It does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party. (4) It does not entitle the secured party to use or assign the debtor's rights under the promissory note, health care insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health care insurance receivable, or general intangible. (5) It does not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor. (6) It does not entitle the secured party to enforce the security interest in the promissory note, health care insurance receivable, or general intangible. (e) Subdivision (c) does not apply to an assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, a claim or right to receive compensation for injuries or sickness as described in paragraph (1) or (2) of subdivision (a) of Section 104 of Title 26 of the United States Code, as amended, or a claim or right to receive benefits under a special needs trust as described in paragraph (4) of subdivision (d) of Section 1396p of Title 42 of the United States Code, as amended, to the extent that subdivision (c) is inconsistent with those laws.


9409. (a) A term in a letter of credit or a rule of law, statute, regulation, custom, or practice applicable to the letter of credit which prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom, or practice does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right. (2) It provides that the assignment or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right. (b) To the extent that a term in a letter of credit is ineffective under subdivision (a) but would be effective under law other than this division or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, all of the following rules apply with respect to the creation, attachment, or perfection of a security interest in the letter-of-credit right: (1) It is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary. (2) It imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary. (3) It does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.


Chapter 5. Filing

Ca Codes (com:9501-9528) Commercial Code Section 9501-9528



9501. (a) Except as otherwise provided in subdivision (b), if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is either of the following: (1) The office designated for the filing or recording of a record of a mortgage on the related real property, if either of the following conditions is satisfied: (A) The collateral is as-extracted collateral or timber to be cut. (B) The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures. (2) The office of the Secretary of State in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing. (b) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

9502. (a) Subject to subdivision (b), a financing statement is sufficient only if it satisfies all of the following conditions: (1) It provides the name of the debtor. (2) It provides the name of the secured party or a representative of the secured party. (3) It indicates the collateral covered by the financing statement. (b) Except as otherwise provided in subdivision (b) of Section 9501, to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subdivision (a) and also satisfy all of the following conditions: (1) Indicate that it covers this type of collateral. (2) Indicate that it is to be recorded in the real property records. (3) Provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in a record of the mortgage of the real property. (4) If the debtor does not have an interest of record in the real property, provide the name of a record owner. (c) A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if all of the following conditions are satisfied: (1) The record indicates the goods or accounts that it covers. (2) The goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut. (3) The record satisfies the requirements for a financing statement in this section other than an indication that it is to be filed in the real property records. (4) The record is duly recorded. (d) A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.


9503. (a) A financing statement sufficiently provides the name of the debtor only if it does so in accordance with the following rules: (1) If the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized. (2) If the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate. (3) If the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement satisfies both of the following conditions: (A) It provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors. (B) It indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust. (4) In other cases, according to the following rules: (A) If the debtor has a name, only if it provides the individual or organizational name of the debtor. (B) If the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor. (b) A financing statement that provides the name of the debtor in accordance with subdivision (a) is not rendered ineffective by the absence of either of the following: (1) A trade name or other name of the debtor. (2) Unless required under subparagraph (B) of paragraph (4) of subdivision (a), names of partners, members, associates, or other persons comprising the debtor. (c) A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor. (d) Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement. (e) A financing statement may provide the name of more than one debtor and the name of more than one secured party.


9504. A financing statement sufficiently indicates the collateral that it covers if the financing statement provides either of the following: (1) A description of the collateral pursuant to Section 9108. (2) An indication that the financing statement covers all assets or all personal property.

9505. (a) A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in subdivision (a) of Section 9311, using the terms "consignor," "consignee," "lessor," "lessee," "bailor," "bailee," "licensor," "licensee," "owner," "registered owner," "buyer," "seller," or words of similar import, instead of the terms "secured party" and "debtor." (b) This chapter applies to the filing of a financing statement under subdivision (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under subdivision (b) of Section 9311, but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.


9506. (a) A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading. (b) Except as otherwise provided in subdivision (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with subdivision (a) of Section 9503 is seriously misleading. (c) If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with subdivision (a) of Section 9503, the name provided does not make the financing statement seriously misleading. (d) For purposes of subdivision (b) of Section 9508, the "debtor's correct name" in subdivision (c) means the correct name of the new debtor.

9507. (a) A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition. (b) Except as otherwise provided in subdivision (c) and in Section 9508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9506. (c) If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 9506, the following rules apply: (1) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change. (2) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.


9508. (a) Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral. (b) If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subdivision (a) to be seriously misleading under Section 9506, the following rules apply: (1) The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under subdivision (d) of Section 9203. (2) The financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under subdivision (d) of Section 9203 unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time. (c) This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under subdivision (a) of Section 9507.


9509. (a) A person may file an initial financing statement, an amendment that adds collateral covered by a financing statement, or an amendment that adds a debtor to a financing statement only if either of the following conditions is satisfied: (1) The debtor authorizes the filing in an authenticated record or pursuant to subdivision (b) or (c). (2) The person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien. (b) By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering both of the following: (1) The collateral described in the security agreement. (2) Property that becomes collateral under paragraph (2) of subdivision (a) of Section 9315, whether or not the security agreement expressly covers proceeds. (c) By acquiring collateral in which a security interest or agricultural lien continues under paragraph (1) of subdivision (a) of Section 9315, a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under paragraph (2) of subdivision (a) of Section 9315. (d) A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if either of the following conditions is satisfied: (1) The secured party of record authorizes the filing. (2) The amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by subdivision (a) or (c) of Section 9513, the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed. (e) If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subdivision (d).


9510. (a) A filed record is effective only to the extent that it was filed by a person that may file it under Section 9509. (b) A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record. (c) A continuation statement that is not filed within the six-month period prescribed by subdivision (d) of Section 9515 is ineffective.


9511. (a) A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed. If an initial financing statement is filed under subdivision (a) of Section 9514, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement. (b) If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record. If an amendment is filed under subdivision (b) of Section 9514, the assignee named in the amendment is a secured party of record. (c) A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.


9512. (a) Subject to Section 9509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subdivision (e), otherwise amend the information provided in, a financing statement by filing an amendment that does both of the following: (1) Identifies, by its file number, the initial financing statement to which the amendment relates. (2) If the amendment relates to an initial financing statement filed or recorded in a filing office described in paragraph (1) of subdivision (a) of Section 9501, provides the date that the initial financing statement was filed or recorded and the information specified in subdivision (b) of Section 9502. (b) Except as otherwise provided in Section 9515, the filing of an amendment does not extend the period of effectiveness of the financing statement. (c) A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment. (d) A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment. (e) An amendment is ineffective to the extent that it does either of the following: (1) It purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement. (2) It purports to delete all secured parties of record and fails to provide the name of a new secured party of record.


9513. (a) A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and either of the following conditions is satisfied: (1) There is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value. (2) The debtor did not authorize the filing of the initial financing statement. (b) To comply with subdivision (a), a secured party shall cause the secured party of record to file the termination statement in accordance with either of the following rules: (1) Within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value. (2) If earlier, within 20 days after the secured party receives an authenticated demand from a debtor. (c) In cases not governed by subdivision (a), within 20 days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if any of the following conditions is satisfied: (1) Except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value. (2) The financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation. (3) The financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor's possession. (4) The debtor did not authorize the filing of the initial financing statement. (d) Except as otherwise provided in Section 9510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in Section 9510, for purposes of subdivision (g) of Section 9519, subdivision (a) of Section 9522, and subdivision (c) of Section 9523, the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.


9514. (a) Except as otherwise provided in subdivision (c), an initial financing statement may reflect an assignment of all of the secured party's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party. (b) Except as otherwise provided in subdivision (c), a secured party of record may assign all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which does all of the following: (1) Identifies, by its file number, the initial financing statement to which it relates. (2) Provides the name of the assignor. (3) Provides the name and mailing address of the assignee. (c) An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under subdivision (c) of Section 9502 may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than the Uniform Commercial Code.


9515. (a) Except as otherwise provided in subdivisions (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing. (b) Except as otherwise provided in subdivisions (e), (f), and (g), an initial financing statement filed in connection with a public finance transaction or manufactured home transaction is effective for a period of 30 years after the date of filing if it indicates that it is filed in connection with a public finance transaction or manufactured home transaction. (c) The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subdivision (d). Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value. (d) A continuation statement may be filed only within six months before the expiration of the five-year period specified in subdivision (a) or the 30-year period specified in subdivision (b), whichever is applicable. (e) Except as otherwise provided in Section 9510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subdivision (c), unless, before the lapse, another continuation statement is filed pursuant to subdivision (d). Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement. (f) If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed. (g) A record of a mortgage that is effective as a financing statement filed as a fixture filing under subdivision (c) of Section 9502 remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.


9516. (a) Except as otherwise provided in subdivision (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing. (b) Filing does not occur with respect to a record that a filing office refuses to accept because of any of the following: (1) The record is not communicated by a method or medium of communication authorized by the filing office. (2) An amount equal to or greater than the applicable filing fee is not tendered. (3) The filing office is unable to index the record because of any of the following: (A) In the case of an initial financing statement, the record does not provide a name for the debtor. (B) In the case of an amendment or correction statement, either of the following applies with respect to the record: (i) It does not identify the initial financing statement as required by Section 9512 or 9518, as applicable. (ii) It identifies an initial financing statement whose effectiveness has lapsed under Section 9515. (C) In the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor's last name. (D) In the case of a record filed or recorded in the filing office described in paragraph (1) of subdivision (a) of Section 9501, the record does not provide a sufficient description of the real property to which it relates. (4) In the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record. (5) In the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not do any of the following: (A) Provide a mailing address for the debtor. (B) Indicate whether the debtor is an individual or an organization. (C) If the financing statement indicates that the debtor is an organization, provide any of the following: (i) A type of organization for the debtor. (ii) A jurisdiction of organization for the debtor. (iii) An organizational identification number for the debtor or indicate that the debtor has none. (6) In the case of an assignment reflected in an initial financing statement under subdivision (a) of Section 9514 or an amendment filed under subdivision (b) of Section 9514, the record does not provide a name and mailing address for the assignee. (7) In the case of a continuation statement, the record is not filed within the six-month period prescribed by subdivision (d) of Section 9515. (c) For purposes of subdivision (b), both of the following rules apply: (1) A record does not provide information if the filing office is unable to read or decipher the information. (2) A record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by Section 9512, 9514, or 9518, is an initial financing statement. (d) A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subdivision (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.


9517. The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.


9518. (a) A person may file in the filing office a correction statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed. (b) A correction statement must do all of the following: (1) Identify the record to which it relates by both of the following: (A) The file number assigned to the initial financing statement to which the record relates. (B) If the correction statement relates to a record filed or recorded in a filing office described in paragraph (1) of subdivision (a) of Section 9501, the date that the initial financing statement was filed or recorded and the information specified in subdivision (b) of Section 9502. (2) Indicate that it is a correction statement. (3) Provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed. (c) The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

9519. (a) For each record filed in a filing office, the filing office shall do all of the following: (1) Assign a unique number to the filed record. (2) Create a record that bears the number assigned to the filed record and the date and time of filing. (3) Maintain the filed record for public inspection. (4) Index the filed record in accordance with subdivisions (c), (d), and (e). (b) Except as otherwise provided in subdivision (i), a file number assigned after January 1, 2002, must include a digit that: (1) Is mathematically derived from or related to the other digits of the file number. (2) Aids the filing office in determining whether a number communicated as the file number includes a single-digit or transpositional error. (c) Except as otherwise provided in subdivisions (d) and (e), the filing office shall do both of the following: (1) Index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement. (2) Index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided. (d) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, it must be recorded and the filing office shall index it in accordance with both of the following rules: (1) Under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described. (2) To the extent that the law of this state provides for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described. (e) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under subdivision (a) of Section 9514 or an amendment filed under subdivision (b) of Section 9514 in accordance with both of the following rules: (1) Under the name of the assignor as grantor. (2) To the extent that the law of this state provides for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee. (f) The filing office shall maintain a capability to do both of the following: (1) Retrieve a record by the name of the debtor and by either of the following: (A) If the filing office is described in paragraph (1) of subdivision (a) of Section 9501, by the file number assigned to the initial financing statement to which the record relates and the date that the record was filed or recorded. (B) If the filing office is described in paragraph (2) of subdivision (a) of Section 9501, by the file number assigned to the initial financing statement to which the record relates. (2) Associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement. (g) The filing office may not remove a debtor's name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under Section 9515 with respect to all secured parties of record. (h) Except as otherwise provided in subdivision (i), the filing office shall perform the acts required by subdivisions (a) to (e), inclusive, at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the record in question. (i) Subdivisions (b) and (h) do not apply to a filing office described in paragraph (1) of subdivision (a) of Section 9501.


9520. (a) A filing office shall refuse to accept a record for filing for a reason set forth in subdivision (b) of Section 9516 and may refuse to accept a record for filing only for a reason set forth in subdivision (b) of Section 9516. (b) If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it. The communication shall be made at the time and in the manner prescribed by filing-office rule, but in the case of a filing office described in paragraph (2) of subdivision (a) of Section 9501, in no event more than two business days after the filing office receives the record. (c) A filed financing statement satisfying subdivisions (a) and (b) of Section 9502 is effective, even if the filing office is required to refuse to accept it for filing under subdivision (a). However, Section 9338 applies to a filed financing statement providing information described in paragraph (5) of subdivision (b) of Section 9516 which is incorrect at the time the financing statement is filed. (d) If a record communicated to a filing office provides information that relates to more than one debtor, this chapter applies as to each debtor separately.


9521. (a) A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form and format or in the following form and format but lacking a space identified for the disclosure of the social security number of an individual except for a reason set forth in subdivision (b) of Section 9516:

NOTICE OF INCOMPLETE TEXT: The UCC Financing Statement form appears in the hard-copy publication of the chaptered bill. See Sec. 7 of Chapter 235, Statutes of 2003.

(b) A filing office that accepts written records may not refuse to accept a written record in the following form and format or in the following form and format but lacking a space identified for the disclosure of the social security number of an individual except for a reason set forth in subdivision (b) of Section 9516:

NOTICE OF INCOMPLETE TEXT: The UCC Financing Statement Amendment form appears in the hard-copy publication of the chaptered bill. See Sec. 7 of Chapter 235, Statutes of 2003.


9522. (a) The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under Section 9515 with respect to all secured parties of record. The record shall be retrievable by using the name of the debtor and either of the following: (1) If the record was filed or recorded in a filing office described in paragraph (1) of subdivision (a) of Section 9501, by using the file number assigned to the initial financing statement to which the record relates and the date the record was filed or recorded. (2) If the record was filed in a filing office described in paragraph (2) of subdivision (a) of Section 9501, by using the file number assigned to the initial financing statement to which the record relates. (b) Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement. However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subdivision (a).

9523. (a) If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to paragraph (1) of subdivision (a) of Section 9519 and the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing office, the filing office may instead do both of the following: (1) Note upon the copy the number assigned to the record pursuant to paragraph (1) of subdivision (a) of Section 9519 and the date and time of the filing of the record. (2) Send the copy to the person. (b) If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides all of the following information: (1) The information in the record. (2) The number assigned to the record pursuant to paragraph (1) of subdivision (a) of Section 9519. (3) The date and time of the filing of the record. (c) The filing office shall communicate or otherwise make available in a record all of the following information to any person that requests it: (1) Whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that satisfies all of the following conditions: (A) It designates a particular debtor or, if the request so states, designates a particular debtor at the address specified in the request. (B) It has not lapsed under Section 9515 with respect to all secured parties of record. (C) If the request so states, it has lapsed under Section 9515 and a record of which is maintained by the filing office under subdivision (a) of Section 9522. (2) The date and time of filing of each financing statement. (3) The information provided in each financing statement. (d) In complying with its duty under subdivision (c), the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing its written certificate. (e) The filing office described in paragraph (2) of subdivision (a) of Section 9501 shall perform the acts required by subdivisions (a) to (d), inclusive, at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the request. (f) At least weekly, the filing office described in paragraph (2) of subdivision (a) of Section 9501 shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this chapter, in every medium from time to time available to the filing office.


9524. Delay by the filing office beyond a time limit prescribed by this chapter is excused if both of the following conditions are satisfied: (1) The delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office. (2) The filing office exercises reasonable diligence under the circumstances.


9525. (a) Except as otherwise provided in subdivision (d), the fee for filing and indexing a record under this chapter is set forth in subdivisions (a), (b), and (c) of Section 12194 of the Government Code. (b) The number of names required to be indexed does not affect the amount of the fee in subdivision (a). (c) The fee for responding to a request for information from the filing office, including for issuing a certificate showing whether there is on file any financing statement naming a particular debtor, is as follows: (1) Ten dollars ($10) if the request is communicated in writing. (2) Five dollars ($5) if the request is communicated by another medium authorized by a rule adopted by the filing office. (d) This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under subdivision (c) of Section 9502. However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply.


9526. (a) The Secretary of State shall adopt and publish rules to implement this division. The filing-office rules shall be consistent with this division. (b) To keep the filing-office rules and practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this chapter, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this chapter, the Secretary of State, so far as is consistent with the purposes, policies, and provisions of this division, in adopting, amending, and repealing filing-office rules, shall do all of the following: (1) Consult with filing offices in other jurisdictions that enact substantially this chapter. (2) Consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization. (3) Take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this chapter.


9526.5. (a) For purposes of this section, the following terms have the following meanings: (1) "Official filing" means the permanent archival filing of all instruments, papers, records, and attachments as accepted for filing by a filing office. (2) "Public filing" means a filing that is an exact copy of an official filing except that any social security number contained in the copied filing is truncated. The public filing shall have the same legal force and effect as the official filing. (3) "Truncate" means to redact at least the first five digits of a social security number. (4) "Truncated social security number" means a social security number that displays no more than the last four digits of the number. (b) For every filing containing an untruncated social security number filed before August 1, 2007, a filing office shall create a public filing. (c) A filing office shall post a notice on its Internet Web site informing filers not to include social security numbers in any portion of their filings. A filing office's online filing system shall not contain a field requesting a social security number. (d) Beginning August 1, 2007, for every filing containing an untruncated social security number filed by means other than the filing office's Internet Web site, a filing office shall create a public filing. (e) When a public filing version of an official filing exists, both of the following shall apply: (1) Upon a request for inspection, copying, or other public disclosure of an official filing that is not exempt from disclosure, a filing office shall make available only the public filing version of that filing. (2) A filing office shall publicly disclose an official filing only in response to a subpoena or order of a court of competent jurisdiction. (3) This article does not restrict, delay, or modify access to an official filing, or modify existing agreements regarding access to an official filing, prior to the creation and availability of a public filing version of that official filing. (f) A filing office shall be deemed to be in compliance with the requirements of this section and shall not be liable for failure to truncate a social security number if the office uses due diligence to locate social security numbers in official records and truncate the social security numbers in the public filing version of those official filings. The use of an automated program with a high rate of accuracy shall be deemed to be due diligence. (g) In the event that a filing office fails to truncate a social security number contained in a record pursuant to subdivision (b) or (d), a person may request that the filing office truncate the social security number contained in that record. Notwithstanding that a filing office may be deemed to be in compliance with this section pursuant to subdivision (f), a filing office that receives a request that identifies the exact location of an untruncated social security number that is required to be truncated pursuant to subdivision (b) or (d) within a specifically identified record, shall truncate that number within 10 business days of receiving the request. The public filing with the truncated social security number shall replace the record with the untruncated number. (h) The Secretary of State shall not produce or make available financing statements in the form and format described in Section 9521 that provide a space identified for the disclosure of the social security number of an individual. (i) The Secretary of State shall produce and make available financing statements in the form and format described in Section 9521, except that the financing statements shall not provide a space identified for the disclosure of the social security number of an individual. (j) This section does not apply to a county recorder.


9527. The Secretary of State shall report annually on or before January 31 to the Legislature on the operation of the filing office. The report must contain a statement of the extent to which both of the following apply: (1) The filing-office rules are not in harmony with the rules of filing offices in other jurisdictions that enact substantially this chapter and the reasons for these variations. (2) The filing-office rules are not in harmony with the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators, or any successor organization, and the reasons for these variations.


9528. Upon the request of any person, the Secretary of State shall issue a combined certificate showing the information as to financing statements as specified in Section 9523, the information as to state tax liens as specified in Section 7226 of the Government Code, the information as to attachment liens as specified in Sections 488.375 and 488.405 of the Code of Civil Procedure, the information as to judgment liens as specified in Section 697.580 of the Code of Civil Procedure, and the information as to federal liens as specified in Section 2103 of the Code of Civil Procedure.


Chapter 6. Default

Ca Codes (com:9601-9629) Commercial Code Section 9601-9629



9601. (a) After default, a secured party has the rights provided in this chapter and, except as otherwise provided in Section 9602, those rights provided by agreement of the parties. A secured party may do both of the following: (1) Reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure. (2) If the collateral is documents, proceed either as to the documents or as to the goods they cover. (b) A secured party in possession of collateral or control of collateral under Section 7106, 9104, 9105, 9106, or 9107 has the rights and duties provided in Section 9207. (c) The rights under subdivisions (a) and (b) are cumulative and may be exercised simultaneously. (d) Except as otherwise provided in subdivision (g) and in Section 9605, after default, a debtor and an obligor have the rights provided in this chapter and by agreement of the parties. (e) If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of any of the following: (1) The date of perfection of the security interest or agricultural lien in the collateral. (2) The date of filing a financing statement covering the collateral. (3) Any date specified in a statute under which the agricultural lien was created. (f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this division. (g) Except as otherwise provided in subdivision (c) of Section 9607, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.


9602. Except as otherwise provided in Section 9624, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections: (1) Subparagraph (C) of paragraph (4) of subdivision (b) of Section 9207, which deals with use and operation of the collateral by the secured party. (2) Section 9210, which deals with requests for an accounting and requests concerning a list of collateral and statement of account. (3) Subdivision (c) of Section 9607, which deals with collection and enforcement of collateral. (4) Subdivision (a) of Section 9608 and subdivision (c) of Section 9615 to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition. (5) Subdivision (a) of Section 9608 and subdivision (d) of Section 9615 to the extent that they require accounting for or payment of surplus proceeds of collateral. (6) Section 9609 to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace. (7) Subdivision (b) of Section 9610, and Sections 9611, 9613, and 9614, which deal with disposition of collateral. (8) Subdivision (f) of Section 9615, which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor. (9) Section 9616, which deals with explanation of the calculation of a surplus or deficiency. (10) Section 9620, 9621, and 9622, which deal with acceptance of collateral in satisfaction of obligation. (11) Section 9623, which deals with redemption of collateral. (12) Section 9624, which deals with permissible waivers. (13) Sections 9625 and 9626, which deal with the existence of a deficiency and with the secured party's liability for failure to comply with this division.

9603. (a) The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in Section 9602 if the standards are not manifestly unreasonable. (b) Subdivision (a) does not apply to the duty under Section 9609 to refrain from breaching the peace.


9604. (a) If an obligation secured by a security interest in personal property or fixtures is also secured by an interest in real property or an estate therein: (1) The secured party may do any of the following: (A) Proceed, in any sequence, (i) in accordance with the secured party's rights and remedies in respect of real property as to the real property security, and (ii) in accordance with this chapter as to the personal property or fixtures. (B) Proceed in any sequence, as to both, some, or all of the real property and some or all of the personal property or fixtures in accordance with the secured party's rights and remedies in respect of the real property, by including the portion of the personal property or fixtures selected by the secured party in the judicial or nonjudicial foreclosure of the real property in accordance with the procedures applicable to real property. In proceeding under this subparagraph, (i) no provision of this chapter other than this subparagraph, subparagraph (C) of paragraph (4), and paragraphs (7) and (8) shall apply to any aspect of the foreclosure; (ii) a power of sale under the deed of trust or mortgage shall be exercisable with respect to both the real property and the personal property or fixtures being sold; and (iii) the sale may be conducted by the mortgagee under the mortgage or by the trustee under the deed of trust. The secured party shall not be deemed to have elected irrevocably to proceed as to both real property and personal property or fixtures as provided in this subparagraph with respect to any particular property, unless and until that particular property actually has been disposed of pursuant to a unified sale (judicial or nonjudicial) conducted in accordance with the procedures applicable to real property, and then only as to the property so sold. (C) Proceed, in any sequence, as to part of the personal property or fixtures as provided in subparagraph (A), and as to other of the personal property or fixtures as provided in subparagraph (B). (2) (A) Except as otherwise provided in paragraph (3), provisions and limitations of any law respecting real property and obligations secured by an interest in real property or an estate therein, including, but not limited to, Section 726 of the Code of Civil Procedure, provisions regarding acceleration or reinstatement of obligations secured by an interest in real property or an estate therein, prohibitions against deficiency judgments, limitations on deficiency judgments based on the value of the collateral, limitations on the right to proceed as to collateral, and requirements that a creditor resort either first or at all to its security, do not in any way apply to either (i) any personal property or fixtures other than personal property or fixtures as to which the secured party has proceeded or is proceeding under subparagraph (B) of paragraph (1), or (ii) the obligation. (B) Pursuant to, but without limiting subparagraph (A), in the event that an obligation secured by personal property or fixtures would otherwise become unenforceable by reason of Section 726 of the Code of Civil Procedure or any requirement that a creditor resort first to its security, then, notwithstanding that section or any similar requirement, the obligation shall nevertheless remain enforceable to the full extent necessary to permit a secured party to proceed against personal property or fixtures securing the obligation in accordance with the secured party's rights and remedies as permitted under this chapter. (3) (A) Paragraph (2) does not limit the application of Section 580b of the Code of Civil Procedure. (B) If the secured party commences an action, as defined in Section 22 of the Code of Civil Procedure, and the action seeks a monetary judgment on the debt, paragraph (2) does not prevent the assertion by the debtor or an obligor of any right to require the inclusion in the action of any interest in real property or an estate therein securing the debt. If a monetary judgment on the debt is entered in the action, paragraph (2) does not prevent the assertion by the debtor or an obligor of the subsequent unenforceability of the encumbrance on any interest in real property or an estate therein securing the debt and not included in the action. (C) Nothing in paragraph (2) shall be construed to excuse compliance with Section 2924c of the Civil Code as a prerequisite to the sale of real property, but that section has no application to the right of a secured party to proceed as to personal property or fixtures except, and then only to the extent that, the secured party is proceeding as to personal property or fixtures in a unified sale as provided in subparagraph (B) of paragraph (1). (D) Paragraph (2) does not deprive the debtor of the protection of Section 580d of the Code of Civil Procedure against a deficiency judgment following a sale of the real property collateral pursuant to a power of sale in a deed of trust or mortgage. (E) Paragraph (2) shall not affect, nor shall it determine the applicability or inapplicability of, any law respecting real property or obligations secured in whole or in part by real property with respect to a loan or a credit sale made to any individual primarily for personal, family, or household purposes. (F) Paragraph (2) does not deprive the debtor or an obligor of the protection of Section 580a of the Code of Civil Procedure following a sale of real property collateral. (G) If the secured party violates any statute or rule of law that requires a creditor who holds an obligation secured by an interest in real property or an estate therein to resort first to its security before resorting to any property of the debtor that does not secure the obligation, paragraph (2) does not prevent the assertion by the debtor or an obligor of any right to require correction of the violation, any right of the secured party to correct the violation, or the assertion by the debtor or an obligor of the subsequent unenforceability of the encumbrance on any interest in real property or an estate therein securing the obligation, or the assertion by the debtor or an obligor of the subsequent unenforceability of the obligation except to the extent that the obligation is preserved by subparagraph (B) of paragraph (2). (4) If the secured party realizes proceeds from the disposition of collateral that is personal property or fixtures, the following provisions shall apply: (A) The disposition of the collateral, the realization of the proceeds, the application of the proceeds, or any one or more of the foregoing shall not operate to cure any nonmonetary default. (B) The disposition of the collateral, the realization of the proceeds, the application of the proceeds, or any one or more of the foregoing shall not operate to cure any monetary default (although the application of the proceeds shall, to the extent of those proceeds, satisfy the secured obligation) so as to affect in any way the secured party's rights and remedies under this chapter with respect to any remaining personal property or fixtures collateral. (C) All proceeds so realized shall be applied by the secured party to the secured obligation in accordance with the agreement of the parties and applicable law. (5) An action by the secured party utilizing any available judicial procedure shall in no way be affected by omission of a prayer for a monetary judgment on the debt. Notwithstanding Section 726 of the Code of Civil Procedure, any prohibition against splitting causes of action or any other statute or rule of law, a judicial action which neither seeks nor results in a monetary judgment on the debt shall not preclude a subsequent action seeking a monetary judgment on the debt or any other relief. (6) As used in this subdivision, "monetary judgment on the debt" means a judgment for the recovery from the debtor of all or part of the principal amount of the secured obligation, including, for purposes of this subdivision, contractual interest thereon. "Monetary judgment on the debt" does not include a judgment which provides only for other relief (whether or not that other relief is secured by the collateral), such as one or more forms of nonmonetary relief, and monetary relief ancillary to any of the foregoing, such as attorneys' fees and costs incurred in seeking the relief. (7) If a secured party fails to comply with the procedures applicable to real property in proceeding as to both real and personal property under subparagraph (B) of paragraph (1), a purchaser for value of any interest in the real property at judicial or nonjudicial foreclosure proceedings conducted pursuant to subparagraph (B) of paragraph (1) takes that interest free from any claim or interest of another person, or any defect in title, based upon that noncompliance, unless: (A) The purchaser is the secured party and the failure to comply with this chapter occurred other than in good faith; or (B) The purchaser is other than the secured party and at the time of sale of the real property at that foreclosure the purchaser had knowledge of the failure to comply with this chapter and that the noncompliance occurred other than in good faith. Even if the purchaser at the foreclosure sale does not take his or her interest free of claims, interests, or title defects based upon that noncompliance with this chapter, a subsequent purchaser for value who acquires an interest in that real property from the purchaser at that foreclosure takes that interest free from any claim or interest of another person, or any defect in title, based upon that noncompliance, unless at the time of acquiring the interest the subsequent purchaser has knowledge of the failure to comply with this chapter and that the noncompliance occurred other than in good faith. (8) If a secured party proceeds by way of a unified sale under subparagraph (B) of paragraph (1), then, for purposes of applying Section 580a or subdivision (b) of Section 726 of the Code of Civil Procedure to any such unified sale, the personal property or fixtures included in the unified sale shall be deemed to be included in the "real property or other interest sold," as that term is used in Section 580a or subdivision (b) of Section 726 of the Code of Civil Procedure.

9605. A secured party does not owe a duty based on its status as secured party to either of the following persons: (1) To a person that is a debtor or obligor, unless the secured party knows all of the following: (A) That the person is a debtor or obligor. (B) The identity of the person. (C) How to communicate with the person. (2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following: (A) That the person is a debtor. (B) The identity of the person.


9606. For purposes of this chapter, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

9607. (a) If so agreed, and in any event after default, a secured party may do all of the following: (1) Notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party. (2) Take any proceeds to which the secured party is entitled under Section 9315. (3) Enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral. (4) If it holds a security interest in a deposit account perfected by control under paragraph (1) of subdivision (a) of Section 9104, apply the balance of the deposit account to the obligation secured by the deposit account. (5) If it holds a security interest in a deposit account perfected by control under paragraph (2) or (3) of subdivision (a) of Section 9104, instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party. (b) If necessary to enable a secured party to exercise under paragraph (3) of subdivision (a) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded both of the following: (1) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage. (2) The secured party's sworn affidavit in recordable form stating both of the following: (A) That a default has occurred. (B) That the secured party is entitled to enforce the mortgage nonjudicially. (c) A secured party shall proceed in a commercially reasonable manner if both of the following apply with respect to the secured party: (1) It undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral. (2) It is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor. (d) A secured party may deduct from the collections made pursuant to subdivision (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party. (e) This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

9608. (a) If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply: (1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under Section 9607 in the following order to: (A) The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party. (B) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made. (C) The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed. (2) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under subparagraph (C) of paragraph (1). (3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Section 9607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner. (4) A secured party shall account to and pay a debtor for any surplus, and except as otherwise provided in subdivision (b) of Section 9626, the obligor is liable for any deficiency. (b) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency. Subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds applies only if the security agreement provides that the debtor is entitled to any surplus.


9609. (a) After default, a secured party may do both of the following: (1) Take possession of the collateral. (2) Without removal, render equipment unusable and dispose of collateral on a debtor's premises under Section 9610. (b) A secured party may proceed under subdivision (a) in either of the following ways: (1) Pursuant to judicial process. (2) Without judicial process, if it proceeds without breach of the peace. (c) If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.


9610. (a) After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing. (b) Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms. (c) A secured party may purchase collateral at either of the following: (1) At a public disposition. (2) At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations. (d) A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract. (e) A secured party may disclaim or modify warranties under subdivision (d) in either of the following ways: (1) In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition. (2) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties. (f) A record is sufficient to disclaim warranties under subdivision (e) if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.


9611. (a) In this section, "notification date" means the earlier of the date on which: (1) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition. (2) The debtor and any secondary obligor waive the right to notification. (b) Except as otherwise provided in subdivision (d), a secured party that disposes of collateral under Section 9610 shall send to the persons specified in subdivision (c) a reasonable authenticated notification of disposition. (c) To comply with subdivision (b), the secured party shall send an authenticated notification of disposition to all of the following persons: (1) The debtor. (2) Any secondary obligor. (3) If the collateral is other than consumer goods to both of the following persons: (A) Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral. (B) Any other secured party or lienholder that, 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement with respect to which all of the following apply: (i) It identified the collateral. (ii) It was indexed under the debtor's name as of that date. (iii) It was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date. (C) Any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subdivision (a) of Section 9311. (d) Subdivision (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market. (e) A secured party complies with the requirement for notification prescribed in subparagraph (B) of paragraph (3) of subsection (c) if it satisfies both of the following conditions: (1) Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subparagraph (B) of paragraph (3) of subdivision (c). (2) Before the notification date, the secured party either: (A) Did not receive a response to the request for information. (B) Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.


9612. (a) Except as otherwise provided in subdivision (b), whether a notification is sent within a reasonable time is a question of fact. (b) In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.


9613. Except in a consumer-goods transaction, the following rules apply: (1) The contents of a notification of disposition are sufficient if the notification does all of the following: (A) It describes the debtor and the secured party. (B) It describes the collateral that is the subject of the intended disposition. (C) It states the method of intended disposition. (D) It states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting. (E) It states the time and place of a public disposition or the time after which any other disposition is to be made. (2) Whether the contents of a notification that lacks any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact. (3) The contents of a notification providing substantially the information specified in paragraph (1) are sufficient, even if the notification includes either of the following: (A) Information not specified by that paragraph. (B) Minor errors that are not seriously misleading. (4) A particular phrasing of the notification is not required. (5) The following form of notification and the form appearing in subdivision (3) of Section 9614, when completed, each provides sufficient information: NOTIFICATION OF DISPOSITION OF COLLATERAL To: _____________________________________________ (Name of debtor, obligor, or other person to which the notification is sent) From: ___________________________________________ (Name, address, and telephone number of secured party) Name of Debtor(s): ______________________________ (Include only if debtor(s) are not an addressee) (For a public disposition:) We will sell (or lease or license, as applicable) the ___________________________ (to the (describe collateral) highest qualified bidder in public as follows:) Day and Date: ________________________ Time: ________________________________ Place: _______________________________ (For a private disposition:) We will sell (or license, as applicable) the _______________________________ privately (describe collateral) sometime after ___________________ (day and ________________. date) You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $_____). You may request an accounting by calling us at _________________. (telephone number)


9614. In a consumer-goods transaction, the following rules apply: (1) A notification of disposition must provide all of the following information: (A) The information specified in subdivision (1) of Section 9613. (B) A description of any liability for a deficiency of the person to which the notification is sent. (C) A telephone number from which the amount that must be paid to the secured party to redeem the collateral under Section 9623 is available. (D) A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available. (2) A particular phrasing of the notification is not required. (3) The following form of notification, when completed, provides sufficient information: ____________________________________ Name and address of secured party) ____________________________________ (Date) NOTICE OF OUR PLAN TO SELL PROPERTY ______________________________________________ (Name and address of any obligor who is also __________ a debtor) Subject: _________________________________ (Identification of Transaction) We have your _______________________________, (describe collateral) because you broke promises in our agreement. (For a public disposition:) We will sell _______________________________, (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows: Date: ______ Time: ______ Place: ______ You may attend the sale and bring bidders if you want. (For a public disposition pursuant to Section 9614(7)(A) or (7)(B)): We will sell _________________________________ (describe type of motor vehicle beginning on ________ (date) by offering it for retail sale or lease to the general public through (select the applicable provision:) (A) Name of dealer ______________________________ Address of dealer _______________________________ You may inspect the motor vehicle and encourage people to purchase or lease it. (or) (B) Advertising it for sale to the general public to be purchased from ____________________________ (name of secured creditor) at _______________________________________ (address where vehicle is to be sold) You may inspect the motor vehicle and encourage people to purchase or lease it. (For a private disposition:) We will sell _________________________________ (describe collateral) at private sale sometime. after ______________. (date) A sale could include a lease or license. The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you _____________________________________ (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else. You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at ____________________ (telephone number) . If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at ______________________ (or write us at (telephone number) ___________________________) (secured party's address) and request a written explanation. (We will charge you $_____ for the explanation if we sent you another written explanation of the amount you owe us within the last six months.) If you need more information about the sale call us at ______________________ (or write us at (telephone number) __________________________). (secured party's address) We are sending this notice to the following other people who have an interest in _______________________ or who owe money under (describe collateral) your agreement: ______________________________ (Names of all other debtors ________________________ and obligors, if any) (4) A notification in the form of subdivision (3) is sufficient, even if additional information appears at the end of the form. (5) A notification in the form of subdivision (3) is sufficient, even if it includes errors in information not required by subdivision (1), unless the error is misleading with respect to rights arising under this division. (6) If a notification under this section is not in the form of subdivision (3), law other than this division determines the effect of including information not required by subdivision (1). (7) If the collateral is a motor vehicle, a public disposition includes, but is not limited to, the following defined categories: (A) Retail disposition by a retail seller of motor vehicles who offers the collateral for sale or lease to the general public in the same manner as goods that the seller disposes of on the seller's own behalf. (B) Retail disposition made subsequent to advertising in a publication with a recognized ability to attract retail motor vehicle buyers and lessees and in a manner designed to reach the retail buying and leasing public for vehicles of that type and condition. (8) For dispositions under subparagraphs (A) and (B) of paragraph (7), the secured creditor shall ensure that the consumer has reasonable access to the motor vehicle in question in order to be able to exercise the right to inspect the motor vehicle. (9) Nothing in this section shall be construed to alter or disturb any right to inspect a consumer good prior to sale under existing law.


9615. (a) A secured party shall apply or pay over for application the cash proceeds of disposition under Section 9610 in the following order to each of the following: (1) The reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party. (2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made. (3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral and to the satisfaction of any subordinate attachment lien or execution lien pursuant to subdivision (b) of Section 701.040 of the Code of Civil Procedure if both of the following conditions are satisfied: (A) The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds or notice of the levy of attachment or execution before distribution of the proceeds is completed. (B) In a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor. (4) A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed. (b) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under paragraph (3) of subdivision (a). (c) A secured party need not apply or pay over for application noncash proceeds of disposition under Section 9610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner. (d) If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subdivision (a) and permitted by subdivision (c), both of the following apply: (1) Unless paragraph (4) of subdivision (a) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus except as provided in Section 701.040 of the Code of Civil Procedure. (2) Subject to subdivision (b) of Section 9626, the obligor is liable for any deficiency. (e) (1) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, both of the following apply: (A) The debtor is not entitled to any surplus. (B) The obligor is not liable for any deficiency. (2) Subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds and the liability of the secured party applies only if the security agreement provides that the debtor is entitled to any surplus. (f) The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this chapter to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if both of the following apply: (1) The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor. (2) The amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought. (g) The following rules apply with respect to a secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made: (1) The secured party takes the cash proceeds free of the security interest or other lien. (2) The secured party is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien. (3) The secured party is not obligated to account to or pay the holder of the security interest or other lien for any surplus.


9616. (a) In this section: (1) "Explanation" means a writing that contains all of the following: (A) States the amount of the surplus or deficiency. (B) Provides an explanation in accordance with subdivision (c) of how the secured party calculated the surplus or deficiency. (C) States, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency. (D) Provides a telephone number or mailing address from which additional information concerning the transaction is available. (2) "Request" means a record that is all of the following: (A) Authenticated by a debtor or consumer obligor. (B) Requesting that the recipient provide an explanation. (C) Sent after disposition of the collateral under Section 9610. (b) In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 9615, the secured party shall do either of the following: (1) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and in accordance with both of the following: (A) Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency. (B) Within 14 days after receipt of a request. (2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency. (c) To comply with subparagraph (B) of paragraph (1) of subdivision (a), a writing must provide the following information in the following order: (1) The aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date in accordance with either of the following: (A) If the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession. (B) If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition. (2) The amount of proceeds of the disposition. (3) The aggregate amount of the obligations after deducting the amount of proceeds. (4) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition. (5) The amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1). (6) The amount of the surplus or deficiency. (d) A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of subdivision (a) is sufficient, even if it includes minor errors that are not seriously misleading. (e) A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to paragraph (1) of subdivision (b). The secured party may require payment of a charge not exceeding twenty-five dollars ($25) for each additional response.


9617. (a) A secured party's disposition of collateral after default does all of the following: (1) Transfers to a transferee for value all of the debtor's rights in the collateral. (2) Discharges the security interest under which the disposition is made. (3) Discharges any subordinate security interest or other subordinate lien. (b) A transferee that acts in good faith takes free of the rights and interests described in subdivision (a), even if the secured party fails to comply with this division or the requirements of any judicial proceeding. (c) If a transferee does not take free of the rights and interests described in subdivision (a), the transferee takes the collateral subject to all of the following: (1) The debtor's rights in the collateral. (2) The security interest or agricultural lien under which the disposition is made. (3) Any other security interest or other lien.


9618. (a) A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after any of the following occurs: (1) The secondary obligor receives an assignment of a secured obligation from the secured party. (2) The secondary obligor receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party. (3) The secondary obligor is subrogated to the rights of a secured party with respect to collateral. (b) Both of the following rules apply with respect to an assignment, transfer, or subrogation described in subdivision (a): (1) It is not a disposition of collateral under Section 9610. (2) It relieves the secured party of further duties under this division.

9619. (a) In this section, "transfer statement" means a record authenticated by a secured party stating all of the following: (1) That the debtor has defaulted in connection with an obligation secured by specified collateral. (2) That the secured party has exercised its postdefault remedies with respect to the collateral. (3) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral. (4) The name and mailing address of the secured party, debtor, and transferee. (b) A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate of title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall do all of the following: (1) Accept the transfer statement. (2) Promptly amend its records to reflect the transfer. (3) If applicable, issue a new appropriate certificate of title in the name of the transferee. (c) A transfer of the record or legal title to collateral to a secured party under subdivision (b) or otherwise is not of itself a disposition of collateral under this division and does not of itself relieve the secured party of its duties under this division.


9620. (a) Except as otherwise provided in subdivision (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if all of the following conditions are satisfied: (1) The debtor consents to the acceptance under subdivision (c). (2) The secured party does not receive, within the time set forth in subdivision (d), a notification of objection to the proposal authenticated by either of the following: (A) A person to which the secured party was required to send a proposal under Section 9621. (B) Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal. (3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance. (4) Subdivision (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 9624. (b) A purported or apparent acceptance of collateral under this section is ineffective unless both of the following conditions are satisfied: (1) The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor. (2) The conditions of subdivision (a) are met. (c) For purposes of this section both of the following rules apply: (1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default. (2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party does all of the following: (A) Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained. (B) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures. (C) Does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent. (d) To be effective under paragraph (2) of subdivision (a), a notification of objection must be received by the secured party as follows: (1) In the case of a person to which the proposal was sent pursuant to Section 9621, within 20 days after notification was sent to that person. (2) In other cases, in accordance with either of the following: (A) Within 20 days after the last notification was sent pursuant to Section 9621. (B) If a notification was not sent, before the debtor consents to the acceptance under subdivision (c). (e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 9610 within the time specified in subdivision (f) if either of the following conditions has been satisfied: (1) Sixty percent of the cash price has been paid in the case of a purchase money security interest in consumer goods. (2) Sixty percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods. (f) To comply with subdivision (e), the secured party shall dispose of the collateral within either of the following time periods: (1) Within 90 days after taking possession. (2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default. (g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.


9621. (a) A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to all of the following persons: (1) Any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral. (2) Any other secured party or lienholder that, 10 days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that satisfied all of the following conditions: (A) It identified the collateral. (B) It was indexed under the debtor's name as of that date. (C) It was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date. (3) Any other secured party that, 10 days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subdivision (a) of Section 9311. (b) A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subdivision (a).

9622. (a) A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures does all of the following: (1) It discharges the obligation to the extent consented to by the debtor. (2) It transfers to the secured party all of a debtor's rights in the collateral. (3) It discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien. (4) It terminates any other subordinate interest. (b) A subordinate interest is discharged or terminated under subdivision (a), even if the secured party fails to comply with this division.


9623. (a) A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral. (b) To redeem collateral, a person shall tender both of the following: (1) Fulfillment of all obligations secured by the collateral. (2) The reasonable expenses and attorney's fees described in paragraph (1) of subdivision (a) of Section 9615. (c) A redemption may occur at any time before a secured party has done any of the following: (1) Collected collateral under Section 9607. (2) Disposed of collateral or entered into a contract for its disposition under Section 9610. (3) Accepted collateral in full or partial satisfaction of the obligation it secures under Section 9622.


9624. (a) A debtor or secondary obligor may waive the right to notification of disposition of collateral under Section 9611 only by an agreement to that effect entered into and authenticated after default. (b) A debtor may waive the right to require disposition of collateral under subdivision (e) of Section 9620 only by an agreement to that effect entered into and authenticated after default. (c) Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under Section 9623 only by an agreement to that effect entered into and authenticated after default.

9625. (a) If it is established that a secured party is not proceeding in accordance with this division, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions. (b) Subject to subdivisions (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this division. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing. (c) Except as otherwise provided in Section 9628, a person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subdivision (b) for its loss. (d) A debtor whose deficiency is eliminated under Section 9626 may recover damages for the loss of any surplus. However, in a transaction other than a consumer transaction, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 9626 may not otherwise recover under subdivision (b) for noncompliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance. (e) In addition to any damages recoverable under subdivision (b), the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars ($500) in each case from any of the following persons: (1) A person that fails to comply with Section 9208. (2) A person that fails to comply with Section 9209. (3) A person that files a record that the person is not entitled to file under subdivision (a) of Section 9509. (4) A person that fails to cause the secured party of record to file or send a termination statement as required by subdivision (a) or (c) of Section 9513. (5) A person that fails to comply with paragraph (1) of subdivision (b) of Section 9616 and whose failure is part of a pattern, or consistent with a practice, of noncompliance. (6) A person that fails to comply with paragraph (2) of subdivision (b) of Section 9616. (f) A debtor or consumer obligor may recover damages under subdivision (b) and, in addition, five hundred dollars ($500) in each case from a person that, without reasonable cause, fails to comply with a request under Section 9210. A recipient of a request under Section 9210 which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subdivision. (g) If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 9210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.


9626. (a) In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply: (1) A secured party need not prove compliance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue. (2) If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this chapter. (3) Except as otherwise provided in Section 9628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of either of the following: (A) The proceeds of the collection, enforcement, disposition, or acceptance. (B) The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this chapter relating to collection, enforcement, disposition, or acceptance. (4) For purposes of subparagraph (B) of paragraph (3), the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney's fees unless the secured party proves that the amount is less than that sum. (5) If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought. (b) In a consumer transaction, the following rules apply: (1) In an action in which a deficiency or a surplus is an issue: (A) A secured party has the burden of proving compliance with the provisions of this chapter relating to collection, enforcement, disposition, and acceptance whether or not the debtor or a secondary obligor places the secured party's compliance in issue. (B) If a deficiency or surplus is calculated under subdivision (f) of Section 9615, the secured party has the burden of establishing that the amount of proceeds of the disposition is not significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought. (2) The debtor or any secondary obligor is liable for any deficiency only if all of the following conditions are met: (A) It is not otherwise agreed or otherwise provided in the Retail Installment Sales Act (Chapter 1 (commencing with Section 1801), Title 2, Part 4, Division 3, Civil Code), and, in particular, Section 1812.5 of the Civil Code or any other statute. (B) The debtor and obligor were given notice, in accordance with Sections 9611, 9612, and 9613, or Section 9614, as applicable, of the disposition of the collateral. (C) The collection, enforcement, disposition, and acceptance by the secured party were conducted in good faith and in a commercially reasonable manner. (3) Upon entry of a final judgment that the debtor or obligor is not liable for a deficiency by reason of paragraph (2) or subdivision (f) of Section 9615, the secured party may neither obtain a deficiency judgment nor retain a security interest in any other collateral of the debtor or obligor that secured the indebtedness for which the debtor or obligor is no longer liable. (4) If, subsequent to a disposition that does not satisfy any one or more of the conditions set forth in paragraph (2), or subsequent to a disposition that is subject to subdivision (f) of Section 9615, the secured party disposes pursuant to this section of other collateral securing the same indebtedness, the debtor or obligor may, to the extent he or she is no longer liable for a deficiency judgment by reason of paragraph (2) or subdivision (f) of Section 9615, recover the proceeds realized from the subsequent dispositions, as well as any damages to which the debtor may be entitled if the subsequent disposition is itself noncomplying or otherwise wrongful. (5) Nothing herein shall deprive the debtor of any right to recover damages from the secured party under subdivision (b) of Section 9625, or to offset any such damages against any claim by the secured party for a deficiency, or of any right or remedy to which the debtor may be entitled under any other law. A debtor or obligor in a consumer transaction shall not have any damages owed to it reduced by the amount of any deficiency that would have resulted had the disposition of the collateral by the secured party been conducted in conformity with this division. (6) The secured party shall account to the debtor for any surplus, except as provided in Section 701.040 of the Code of Civil Procedure.


9627. (a) The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner. (b) A disposition of collateral is made in a commercially reasonable manner if the disposition satisfies any of the following conditions: (1) It is made in the usual manner on any recognized market. (2) It is made at the price current in any recognized market at the time of the disposition. (3) It is made otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition. (c) A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved in or by any of the following: (1) In a judicial proceeding. (2) By a bona fide creditors' committee. (3) By a representative of creditors. (4) By an assignee for the benefit of creditors. (d) Approval under subdivision (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.


9628. (a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person both of the following rules apply: (1) The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this division. (2) The secured party's failure to comply with this division does not affect the liability of the person for a deficiency. (b) A secured party is not liable because of its status as secured party to either of the following persons: (1) To a person that is a debtor or obligor, unless the secured party knows all of the following: (A) That the person is a debtor or obligor. (B) The identity of the person. (C) How to communicate with the person. (2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows both of the following: (A) That the person is a debtor. (B) The identity of the person. (c) A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on either of the following representations: (1) A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held. (2) An obligor's representation concerning the purpose for which a secured obligation was incurred. (d) A secured party is not liable under paragraph (2) of subdivision (c) of Section 9625 more than once with respect to any one secured obligation.


9629. No renunciation or modification by the debtor of any of his or her rights under this chapter as to consumer goods shall be valid or enforceable unless the renunciation or modification is in consideration of a waiver by the secured party of any right to a deficiency on the debt.


Chapter 7. Transition

Ca Codes (com:9701-9709) Commercial Code Section 9701-9709



9701. This division shall become operative on July 1, 2001.


9702. (a) Except as otherwise provided in this chapter, this division applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before this division takes effect. (b) Except as otherwise provided in subdivision (c) and in Sections 9703 to 9709, inclusive, both of the following rules apply: (1) Transactions and liens that were not governed by former Division 9, were validly entered into or created before July 1, 2001, and would be subject to this act if they had been entered into or created after July 1, 2001, and the rights, duties, and interests flowing from those transactions and liens remain valid after July 1, 2001. (2) The transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by this division or by the law that otherwise would apply if this division had not taken effect. (c) This division does not affect an action, case, or proceeding commenced before July 1, 2001.


9703. (a) A security interest that is enforceable immediately before July 1, 2001, and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this division if, on July 1, 2001, the applicable requirements for enforceability and perfection under this division are satisfied without further action. (b) Except as otherwise provided in Section 9705, if, immediately before July 1, 2001, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this division are not satisfied on July 1, 2001, when all of the following rules apply with respect to the security interest: (1) It is a perfected security interest until July 1, 2002. (2) It remains enforceable thereafter only if the security interest becomes enforceable under Section 9203 before July 1, 2002. (3) It remains perfected thereafter only if the applicable requirements for perfection under this division are satisfied before July 1, 2002.


9704. All of the following rules apply with respect to a security interest that is enforceable immediately before July 1, 2001, but which would be subordinate to the rights of a person that becomes a lien creditor at that time: (1) It remains an enforceable security interest until July 1, 2002. (2) It remains enforceable thereafter if the security interest becomes enforceable under Section 9203 on July 1, 2001, or on July 1, 2002. (3) It becomes perfected in either of the following ways: (A) Without further action, on July 1, 2001, if the applicable requirements for perfection under this division are satisfied on or before that time. (B) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.


9705. (a) If action, other than the filing of a financing statement, is taken before July 1, 2001, and the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before July 1, 2001, the action is effective to perfect a security interest that attaches under this division on or before July 1, 2002. An attached security interest becomes unperfected on July 1, 2002, unless the security interest becomes a perfected security interest under this division before that date. (b) The filing of a financing statement before July 1, 2001, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this division. (c) This division does not render ineffective an effective financing statement that, before July 1, 2001, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9103. However, except as otherwise provided in subdivisions (d) and (e) and in Section 9706, the financing statement ceases to be effective at the earlier of either of the following: (1) The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed. (2) June 30, 2006. (d) The filing of a continuation statement after July 1, 2001, does not continue the effectiveness of the financing statement filed before July 1, 2001. However, upon the timely filing of a continuation statement after July 1, 2001, and in accordance with the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301), the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2001, continues for the period provided by the law of that jurisdiction. (e) Paragraph (2) of subdivision (c) applies to a financing statement that, before July 1, 2001, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9103 only to the extent that Chapter 3 (commencing with Section 9301) provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement. (f) A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed after July 1, 2001, is effective only to the extent that it satisfies the requirements of Chapter 5 (commencing with Section 9501) for an initial financing statement.


9706. (a) The filing of an initial financing statement in the office specified in Section 9501 continues the effectiveness of a financing statement filed before July 1, 2001, if all of the following conditions are satisfied: (1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this division. (2) The preeffective date financing statement was filed in an office in another state or another office in this state. (3) The initial financing statement satisfies subdivision (c). (b) The filing of an initial financing statement under subdivision (a) continues the effectiveness of the preeffective date financing statement for the following periods: (1) If the initial financing statement is filed before July 1, 2001, for the period provided in former Section 9403 with respect to a financing statement. (2) If the initial financing statement is filed after July 1, 2001, for the period provided in Section 9515 with respect to an initial financing statement. (c) To be effective for purposes of subdivision (a), an initial financing statement must do all of the following: (1) Satisfy the requirements of Chapter 5 (commencing with Section 9501) for an initial financing statement. (2) Identify the preeffective date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement. (3) Indicate that the preeffective date financing statement remains effective.

9707. (a) In this section, "pre-effective-date financing statement" means a financing statement filed before the date that this section becomes operative. (b) After the date this section becomes operative, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301). However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed. (c) Except as otherwise provided by subdivision (d), if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after the date this section becomes operative only if any of the following occur: (1) The pre-effective-date financing statement and an amendment are filed in the office specified in Section 9501. (2) An amendment is filed in the office specified in Section 9501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies subdivision (c) of Section 9706. (3) An initial financing statement that provides the information as amended and satisfies subdivision (c) of Section 9706 is filed in the office specified in Section 9501. (d) If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under subdivisions (d) and (f) of Section 9705 or Section 9706. (e) Whether or not the law of this state governs the perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after the date that this section becomes operative by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial filing statement that satisfies subdivision (c) of Section 9706 has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Chapter 3 (commencing with Section 9301) as the office in which to file a financing statement.


9708. A person may file an initial financing statement or a continuation statement under this chapter if both of the following conditions are satisfied: (1) The secured party of record authorizes the filing. (2) The filing is necessary under this chapter to do either of the following: (A) To continue the effectiveness of a financing statement filed before July 1, 2001. (B) To perfect or continue the perfection of a security interest.


9709. (a) This division determines priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2001, former Division 9 (commencing with Section 9101) determines priority. (b) For purposes of subdivision (a) of Section 9322, the priority of a security interest that becomes enforceable under Section 9203 dates from July 1, 2001, if the security interest is perfected under this division by the filing of a financing statement before July 1, 2001, which would not have been effective to perfect the security interest under former Division 9 (commencing with Section 9101). This subdivision does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.


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