What Is UCC 9-301?

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The UCC, also known as the Universal Commercial Code, is a set of laws governing commercial transactions in the United States. There are many articles and laws inside this system, each playing a valuable role. One section is UCC 9-301 - but what is covered in this portion of the Uniform Commercial Code?

Uniform Commercial Code 9-301 deals with the Law Governing Perfection And Priority Of Security Interest. In this section of the UCC, you will notice information about the perfection and priority of security interests, tangible and intangible.

If you’re interested in learning more about UCC 9-301, you’ve come to the right place. Whether you’re seeking to familiarize yourself with every aspect of the Uniform Commercial Code or a student studying for a test, it’s a good idea to understand various portions of the UCC. Let’s dive into UCC 9-301 and beyond.

What Is UCC 9-301?

UCC 9-301 deals with the Law Governing Perfection And Priority Of Security Interests. It’s the very first portion of the third section of Article 9. Here, you will find information about debtors, the location of collateral, local law, and further specifications.

According to Cornell Law School Legal Information Institute, here is the official definition of UCC 9-301:

(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 documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

(A) perfection of a security interest in the goods by filing a fixture filing;

(B) perfection of a security interest in timber to be cut; and

(C) the effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral.

(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.

What Is UCC 9-301 Simplified?

In the simplest terms, Uniform Commercial Code 9-301 deals with perfection when dealing with collateral in a tangible and intangible form. This perfection permits the lender to ensure their secure interest in one of these assets is binding.

UCC 9-301 is a section that kicks off the third portion of the third portion of UCC Article 9. It clarifies everything as it relates to perfection and how it handles associated collateral.

What Is Intangible Collateral?

When dealing with loans and collateral, you often hear the term intangible collateral thrown around. This form of collateral in a loan differs from traditional, movable objects that typically function as popular collateral selections for each party.

Here are some examples of intangible collateral:

  • Securities
  • Bonds
  • Intellectual property rights

These items aren’t physical, but they still possess a value worthy of collateral.

Intangible collateral is a popular option in a loan, and UCC 9-301 covers various facts and regulations surrounding the perfection of loans that work with this format. Next, let’s dive into the other form of collateral on the market in the Uniform Commercial Code.

What Is Tangible Collateral?

Tangible collateral is the opposite of intangible collateral. Rather than providing access to a value you can’t see or feel, tangible collateral is much more physical. It deals with items that can be seen and this is more evident to the human eye than intangible collateral.

Here are some examples of tangible collateral:

  • Inventory
  • Spare parts
  • Supplies
  • Goods
  • Vehicles
  • Equipment

These items are simpler to touch than intangible objects.

Again, UCC 9-301 also covers the perfection of loans as it relates to tangible collateral. This version is another valid format users can take advantage of in a commercial transaction.

What Is Necessary To Perfect A Security Interest?

We’ve talked about tangible and intangible collateral, but what about the perfection section of UCC 9-301? What is necessary to ensure a security interest receives perfection under the Uniform Commercial Code?

A loan can only be perfected if the lender registers it with the appropriate statutory authority. After this process, the loan becomes legally enforceable, and any other claim made on the collateral goes behind the lender who registered first.

Perfection is necessary for the security of the lender. UCC 9-301 goes into detail when dealing with this aspect of an enforceable code and the collateral behind it.

What Law Comes Before UCC 9-301?

UCC 9-301 is flanked by laws. It’s helpful to know what comes before UCC 9-301 to provide better context of what the overall Article is discussing for the benefit of readers.

According to Cornell Law School Legal Information Institute, here is the official definition of UCC 9-210:

(a) .Definitions..

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) .Duty to respond to requests..

Subject to subsections (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:

(1) in the case of a request for an accounting, by authenticating and sending to the debtor an accounting; and

(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) .Request regarding list of collateral; statement concerning type of collateral..

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) .Request regarding list of collateral; no interest claimed..

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:

(1) disclaiming any interest in the collateral; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the collateral.

(e) .Request for accounting or regarding statement of account; no interest in obligation claimed..

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:

(1) disclaiming any interest in the obligations; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the obligations.

(f) .Charges for responses..

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 $25 for each additional response.

What Else Is Covered In UCC Article 9?

UCC 9-301 and UCC 9-210 exist towards the end of the Uniform Commercial Code. Article 9 is in the final section of the UCC, and each plays a critical role in pulling together processes and restrictions. Article 9 is no different.

Overall, Article 9 of the Uniform Commercial Code deals with secured transactions. This section means handling secured transactions and the creation and overall enforcement of debt. It efficiently creates the procedures for titling debts, diving into types of collateralized bonds for each partner.

Reference Legal Explanations

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  • "What Is UCC 9-301?". Legal Explanations. Accessed on May 26, 2024. https://legal-explanations.com/blog/what-is-ucc-9-301/.

  • "What Is UCC 9-301?". Legal Explanations, https://legal-explanations.com/blog/what-is-ucc-9-301/. Accessed 26 May, 2024

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