Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/ucc/ucc9_1.asc

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     9-312. Priorities Among Conflicting Security Interests in
the Same Collateral.

     (1)  The rules of priority stated in other sections of this
Part and in the following sections shall govern when applicable:
Section 4-210 with respect to the security interests of
collecting banks in items being collected, accompanying documents
and proceeds; Section 9-103 on security interests related to
other jurisdictions; Section 9-114 on consignments.

     (2)  A perfected security interest in crops for new value
given to enable the debtor to produce the crops during the
production season and given not more than three months before the
crops become growing crops by planting or otherwise takes
priority over an earlier perfected security interest to the
extent that such earlier interest secures obligations due more
than six months before the crops become growing crops by planting
or otherwise, even though the person giving new value had
knowledge of the earlier security interest.

     (3)  A perfected purchase money security interest in
inventory has priority over a conflicting security interest in
the same inventory and also has priority in identifiable cash
proceeds received on or before the delivery of the inventory to a
buyer if

     (a)  the purchase money security interest is perfected at
the time the debtor receives possession of the inventory; and

     (b)  the purchase money secured party gives notification in
writing to the holder of the conflicting security interest if the
holder had filed a financing statement covering the same types of
inventory (i) before the date of the filing made by the purchase
money secured party, or (ii) before the beginning of the 21 day
period where the purchase money security interest is temporarily
perfected without filing or possession (subsection (5) of Section
9-304); and

     (c)  the holder of the conflicting security interest
receives the notification within five years before the debtor
receives possession of the inventory; and

     (d)  the notification states that the person giving the
notice has or expects to acquire a purchase money security
interest in inventory of the debtor, describing such inventory by
item or type.

     (4)  A purchase money security interest in collateral other
than inventory has priority over a conflicting security interest
in the same collateral or its proceeds if the purchase money
security interest is perfected at the time the debtor receives
possession of the collateral or within ten days thereafter.

     (5)  In all cases not governed by other rules stated in this
section (including cases of purchase money security interests
which do not qualify for the special priorities set forth in
subsections (3) and (4) of this section), priority between
conflicting security interests in the same collateral shall be
determined according to the following rules:

     (a)  Conflicting security interests rank according to
priority in time of filing or perfection. Priority dates from the
time a filing is first made covering the collateral or the time
the security interest is first perfected, whichever is earlier,
provided that there is no period thereafter when there is neither

filing nor perfection.

     (b)  So long as conflicting security interests are
unperfected, the first to attach has priority.

     (6)  For the purposes of subsection (5) a date of filing or
perfection as to collateral is also a date of filing or
perfection as to proceeds.

     (7)  If future advances are made while a security interest
is perfected by filing, the taking of possession, or under
Section 8-321 on securities, the security interest has the same
priority for the purposes of subsection (5) with respect to the
future advances as it does with respect to the first advance. If
a commitment is made before or while the security interest is so
perfected, the security interest has the same priority with
respect to advances made pursuant thereto. In other cases a
perfected security Interest has priority from the date the
advance is made.

     9-313. Priority of Security Interests in Fixtures.
     (1)  In this section and in the provisions of Part 4 of this
Article referring to fixture filing, unless the context otherwise
requires
     (a)  goods are "fixtures" when they become so related to
particular real estate that an interest in them arises under real
estate law
     (b)  a "fixture filing" is the filing in the office where a
mortgage on the real estate would be filed or recorded of a
financing statement covering goods which are or are to become
fixtures and conforming to the requirements of subsection (5) of
Section 9-402
     (c)  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 the recorded writing so indicates.
     (2)  A security interest under this Article may be created
in goods which are fixtures or may continue in goods which become
fixtures, but no security interest exists under this Article in
ordinary building materials incorporated into an improvement on
land.
     (3)  This Article does not prevent creation of an
encumbrance upon fixtures pursuant to real estate law.
     (4)  A perfected security interest in fixtures has priority
over the conflicting interest of an encumbrancer or owner of the
real estate where
     (a)  the security interest is a purchase money security
interest, the interest of the encumbrancer or owner arises before
the goods become fixtures, the security interest is perfected by
a fixture filing before the goods become fixtures or within ten
days thereafter, and the debtor has an interest of record in the
real estate or is in possession of the real estate; or
     (b)  the security interest is perfected by a fixture filing
before the interest of the encumbrancer or owner is of record,
the security interest has priority over any conflicting interest
of a predecessor in title of the encumbrancer or owner, and the
debtor has an interest of record in the real estate or is in
possession of the real estate; or
     (c)  the fixtures are readily removable factory or office
machines or readily removable replacements of domestic appliances
which are consumer goods, and before the goods become fixtures
the security interest is perfected by any method permitted by
this Article; or
     (d)  the conflicting interest is a lien on the real estate
obtained by legal or equitable proceedings after the security
interest was perfected by any method permitted by this Article.
     (5)  A security interest in fixtures, whether or not
perfected, has priority over the conflicting interest of an
encumbrancer or owner of the real estate where
     (a)  the encumbrancer or owner has consented in writing to
the security interest or has disclaimed an interest in the goods
as fixtures; or
     (b)  the debtor has a right to remove the goods as against
the encumbrancer or owner. If the debtor's right terminates, the
priority of the security interest continues for a reasonable
time.
     (6)  Notwithstanding paragraph (a) of subsection (4) but
otherwise subject to subsections (4) and (5), a security interest
in fixtures is subordinate to a construction mortgage recorded
before the goods become fixtures if the goods become fixtures
before the completion of the construction. To the extent that it
is given to refinance a construction mortgage, a mortgage has
this priority to the same extent as the construction mortgage.
     (7)  In cases not within the preceding subsections, a
security interest in fixtures is subordinate to the conflicting
Interest of an encumbrancer or Owner of the related real estate
who is not the debtor.
     (8)  When the secured party has priority over all Owners and
encumbrancers of the real estate, he may, on default, subject to
the provisions of part 5, remove his collateral from the real
estate but he must reimburse any encumbrancer or owner of the
real estate who is not the debtor and who has not otherwise
agreed for the cost of repair of any physical injury, but not for
any diminution in value of the real estate caused by the absence
of the goods removed or by any necessity of replacing them. A
person entitled to reimbursement may refuse permission to remove
until the secured party gives adequate security for the
performance of this obligation.

     9-314. Accessions.
     (1)  A security interest in goods which attaches before they
are installed in or affixed to other goods takes priority as to
the goods installed or affixed (called in this Section
"accessions") over the claims of all persons to the whole except
as stated in subsection (3) and subject to Section 9-315(1).
     (2)  A security interest which attaches to goods after they
become part of a whole is valid against all persons subsequently
acquiring interests in the whole except as stated in subsection
(3) but is invalid against any person with an interest in the
whole at the time the security interest attaches to the goods who
has not in writing consented to the security interest or
disclaimed an interest in the goods as part of the whole.
     (3)  The security interests described in subsections (1) and
(2) do not take priority over
     (a)  a subsequent purchaser for value of any interest in the
whole; or
     (b)  a creditor with a lien on the whole subsequently
obtained by judicial proceedings; or
     (c)  a creditor with a prior perfected security interest in
the whole to the extent that he makes subsequent advances
if the subsequent purchase is made, the lien by judicial
proceedings obtained or the subsequent advance under the prior
perfected security interest is made or contracted for without
knowledge of the security interest and before it is perfected. A
purchaser of the whole at a foreclosure sale other than the
holder of a perfected security interest purchasing at his own
foreclosure sale is a subsequent purchaser within this section.
     (4)  When under subsections (1) or (2) and (3) a secured
party has an interest ill accessions which has priority over the
claims of all persons who have interests in the whole, he may on
default subject to the provisions of Pan 5 remove his collateral
from the whole but he must reimburse any encumbrancer or owner of
the whole who is not the debtor and who has not otherwise agreed
for the cost of repair of any physical injury but not for any
diminution in value of the whole caused by the absence of the
goods removed or by any necessity for replacing them. A person
entitled to reimbursement may refuse permission to remove until
the secured party gives adequate security for the performance of
this obligation.

     9-35. Priority When Goods Are Commingled or Processed.
     (1)  If a security interest in goods was perfected and
subsequently the goods or a pan thereof have become pan of a
product or mass, the security interest continues in the product
or mass if
     (a)  the goods are so manufactured, processed, assembled or
commingled that their identity is lost in the product or mass; or
     (b)  a financing statement covering the original goods also
covers the product into which the goods have been manufactured,
processed or assembled.
In a case to which paragraph (b) applies, no separate security
interest in that part of the original goods which has been
manufactured, processed or assembled into the product may be
claimed under Section 9-314.
     (2)  When under subsection (1) more than one security
interest attaches to the product or mass, they rank equally
according to the ratio that the cost of the goods to which each
interest originally attached bears to the cost of the total
product or mass.

     9-316. Priority Subject to Subordination.
     Nothing in this Article prevents subordination by agreement
by any person entitled to priority.

     9-317. Secured Party Not Obligated on Contract of Debtor.
     The mere existence of a security interest or authority given
to the debtor to dispose of or use collateral does not impose
contract or tort liability upon the secured party for the
debtor's
acts or omissions.

     9-318. Defenses Against Assignee; Modification of Contract
After Notification of Assignment; Term Prohibiting Assignment
Ineffective; identification and Proof of Assignment.
     (1)  Unless an account debtor has made an enforceable
agreement not to assert defenses or claims arising out of a sale
as provided in Section 9-206 the rights of an assignee are
subject to
     (a)  all the terms of the contract between the account
debtor and assignor and any defense or claim arising therefrom;
and
     any other defense or claim of the account debtor against the
assignor which accrues before the account debtor receives
notification of the assignment.
     (2)  So far as the right to payment or a pan thereof under
an assigned contract has not been fully earned by performance,
and notwithstanding notification of the assignment, any
modification of or substitution for the contract made in good
faith and in accordance with reasonable commercial standards is
effective against an assignee unless the account debtor has
otherwise agreed but the assignee acquires corresponding rights
under the modified or substituted contract. The assignment may
provide that such modification or substitution is a breach by the
assignor.
     (3)  The account debtor is authorized to pay the assignor
until the account debtor receives notification that the amount
due or to become due has been assigned and that payment is to be
made to the assignee. A notification which does not reasonably
identify the rights assigned is ineffective. If requested by the
account debtor, the assignee must seasonably furnish reasonable
proof that the assignment has been made and unless he does so the
account debtor may pay the assignor.
     (4)  A term in any contract between an account debtor and an
assignor is ineffective if it prohibits assignment of an account
or prohibits creation of a security interest in a general
intangible for money due or to become due or requires the account
debtor's consent to such assignment or security interest.

PART 4

FILING

9-401. Place of Filing; Erroneous Filing; Removal of Collateral.
First Alternative Subsection (1)
     (1)  The proper place to file in order to perfect a
security interest is as follows:
     (a)  when the collateral is timber to be cut or is minerals
or the like (including oil and gas) or accounts subject to
subsection (5) of Section 9-103, or when the financing statement
is filed as a fixture filing (Section 9-313) and the collateral
is goods which are or are to become fixtures, then in the office
where a mortgage on the real estate would be filed or recorded;
     (b)  in all other cases, in the office of the [Secretary of
State].
Second Alternative Subsection (1)
     (1)  The proper place to file in order to perfect a security
interest is as follows:
     (a)  when the collateral is equipment used in farming
operations, or farm products, or accounts or general intangibles
arising from or relating to the sale of farm products by a
farmer, or consumer goods, then in the office of the _______ in
the county of the debtor's residence or if the debtor is not a
resident of this state then in the office of the ______ in the
county where the goods are kept, and in addition when the
collateral is crops growing or to be grown in the office of the
_______ in the county where the land is located;
     (b)  when the collateral is timber to be cut or is minerals
or the like (including oil and gas) or accounts subject to
subsection (5) of Section 9-103, or when the financing
goods statement is filed as a fixture filing (Section 9-313) and
the collateral is which are or are to become fixtures, then in
the office where a mortgage on the real estate would be filed or
recorded;
     (c)  in all other cases, in the office of the [Secretary of
State].
Third Alternative Subsection (1)
     (1)  The proper place to file in order to perfect a security
interest is as follows:
     (a)  when the collateral is equipment used in farming
operations, or farm products, or accounts or general intangibles
arising from or relating to the sale of farm products by a
farmer, or consumer goods, then in the office of the _______ in
the county of the debtor's residence or if the debtor is not a
resident of this state then in the office of the _______ in the
county where the goods are kept, and in addition when the
collateral is crops growing or to be grown in the office of the
________ in the county where the land is located;
     (b)  when the collateral is timber to be cut or is minerals
or the like (including oil and gas) or accounts subject to
subsection (5) of Section 9-103, or when the financing statement
is filed as a fixture filing (Section 9-313) and the collateral
is goods which are or are to become fixtures, then in the office
where a mortgage on the real estate would be filed or recorded;
     (c)  in all other cases, in the office of the [Secretary of
State] and in addition, if the debtor has a place of business in
only one county of this state, also in the office of _______ of
such county, or, if the debtor has no place of business in this
state, but resides in the state, also in the office of ________
of the county in which he resides.
     Note: One of the three alternatives should be selected as
subsection (1).
     (2)  A filing which is made in good faith in an improper
place or not in all of the places required by this section is
nevertheless effective with regard to any collateral as to which
the filing complied with the requirements of this Article and is
also effective with regard to collateral covered by the financing
statement against any person who has knowledge of the contents of
such financing statement.
     (3)  A filing which is made in the proper place in this
state continues effective even though the debtor's residence or
place of business or the location of the collateral or its use,
whichever controlled the original filing, is thereafter changed.
Alternative Subsection (3)
[    (3)  A filing which is made in the proper county continues
effective for four months after a change to another county of the
debtor's residence or place of business or the location of the
collateral, whichever controlled the original filing. It becomes
ineffective thereafter unless a copy of the financing statement
signed by the secured party is filed in the new county within
said period. The security interest may also be perfected in the
new county after the expiration of the four-month period; in such
case perfection dates from the time of perfection in the new
county. A change in the use of the collateral does not impair the
effectiveness of the original filing.]
     (4)  The rules stated in Section 9-103 determine whether
filing is necessary in this state.
     (5)  Notwithstanding the preceding subsections, and subject
to subsection (3) of Section 9-302, the proper place to file in
order to perfect a security interest in collateral, including
fixtures, of a transmitting utility is the office of the
[Secretary of State]. This filing constitutes a fixture filing
(Section 9-313) as to the collateral described therein which is
or is to become fixtures.
     (6)  For the purposes of this section, the residence of an
organization is its place of business if it has one or its chief
executive office if it has more than one place of business.

Note: Subsection (6) should be used only if the state chooses the
Second or Third Alternative Subsection (1).

     9-402. Formal Requisites of Financing Statement; Amendments;
Mortgage as Financing Statement.
     (1)  A financing statement is sufficient if it gives the
names of the debtor and the secured party, is signed by the
debtor, gives an address of the secured party from which
information concerning the security interest may be obtained,
gives a mailing address of the debtor and contains a statement
indicating the types, or describing the items, of collateral. A
financing statement may be filed before a security agreement is
made or a security interest otherwise attaches. When the
financing statement covers crops growing or to be grown, the
statement must also contain a description of the real estate
concerned. When the financing statement covers timber to be cut
or covers minerals or the like (including oil and gas) or
accounts subject to subsection (5) of Section 9-103, or when
the financing statement is filed as a fixture filing (Section 9-
313) and the collateral is goods which are or are to become
fixtures, the statement must also comply with subsection (5). A
copy of the security agreement is sufficient as a financing
statement if it contains the above information and is signed by
the debtor. A carbon, photographic or other reproduction of a
security agreement or a financing statement is sufficient as a
financing statement if the security agreement so provides or if
the original has been filed in this state.
     (2)  A financing statement which otherwise complies with
subsection (1) is sufficient when it is signed by the secured
party instead of the debtor if it is filed to perfect a security
interest in
     (a)  collateral already subject to a security interest in
another jurisdiction when it is brought into this state, or when
the debtor's location is changed to this state.  Such a financing
statement must state that the collateral was brought into this
state or that the debtor's location was changed to this state
under such circumstances; or
     (b)  proceeds under Section 9-306 if the security interest
in the original collateral was perfected. Such a financing
statement must describe the original collateral; or
     (c)  collateral as to which the filing has lapsed; or
     (d)  collateral acquired after a change of name, identity or
corporate structure of the debtor (subsection (7)).
     (3)  A form substantially as follows is sufficient to comply
with subsection (1):
Name of debtor (or assignor)
_____________________________________________________
Address
_____________________________________________________
Name of secured party (or assignee)
_____________________________________________________
Address
_____________________________________________________
1.   This financing statement covers the following types (or
items) of property:

(Describe)_______________________________________________________

2.   (If collateral is crops) The above described crops are
growing or are to be grown on:
     (Describe Real Estate)
________________________________________________________
3.   (If applicable) The above goods are to become fixtures on *
     * Where appropriate substitute either "The above timber is
standing on ....." or "The above minerals or the like (including
oil and gas) or accounts will be financed at the wellhead or
minehead of the well or mine located on....
(Describe Real Estate) ________________________ and this
financing statement is to be filed [for record] in the real
estate records. (If the debtor does not have an interest of
record) The name of a record owner is ________________________
4.   (If products of collateral are claimed) Products of the
collateral are also covered.  (use whichever is applicable)
     Signature of Debtor (or Assignor)

     Signature of Secured Party (or Assignee)

     (4)  A financing statement may be amended by filing a
writing signed by both the debtor and the secured party. An
amendment does not extend the period of effectiveness of a
financing statement. If any amendment adds collateral, it is
effective as to the added collateral only from the filing date of
the amendment. In this Article, unless the context otherwise
requires, the term financing statement" means the original
financing statement and any amendments.

     (5)  A financing statement covering timber to be cut or
covering minerals or the like (including oil and gas) or accounts
subject to subsection (5) of Section 9-103, or a financing
statement filed as a fixture filing (Section 9-313) where the
debtor is not a transmitting utility, must show that it covers
this type of collateral, must recite that it is to be filed [for
record] in the real estate records, and the financing statement
must contain a description of the real estate sufficient if it
were contained in a mortgage of the real estate to give
constructive notice of the mortgage under the law of this state].
if the debtor does not have an interest of record in the real
estate, the financing statement must show the name of a record
owner.

     (6)  A mortgage is effective as a financing statement filed
as a fixture filing from the date of its recording if

     (a)  the goods are described in the mortgage by item or
type; and

     (b)  the goods are or are to become fixtures related to the
real estate described in the mortgage; and

     (c)  the mortgage complies with the requirements for a
financing statement in this section other than a recital that it
is to be filed in the real estate records; and

     (d)  the mortgage is duly recorded.

     No fee with reference to the financing statement is required
other than the regular recording and satisfaction fees with
respect to the mortgage.

     (7)  A financing statement sufficiently shows the name of
the debtor if it gives the individual, partnership or corporate
name of the debtor, whether or not it adds other trade names or
names of partners. Where the debtor so changes his name or in the
case of an organization its name, identity or corporate structure
that a filed financing statement becomes seriously misleading,
the filing is not effective to perfect a security interest in
collateral acquired by the debtor more than four months after the
change, unless a new appropriate financing statement is filed
before the expiration of that time. A filed financing statement
remains effective with respect to collateral transferred by the
debtor even though the secured party knows of or consents to the
transfer.

     (8)  A financing statement substantially complying with the
requirements of this section is effective even though it contains
minor errors which are not seriously misleading.

     Note: Language in brackets is optional.
Note: Where the state has any special recording system for real
estate other than the usual grantor-grantee index (as, for
instance, a tract system or a title registration or Torrens
system) local adaptations of subsection (5) and Section 9-403(7)
may be necessary. See Mass. Gen.Laws Chapter 106, Section 9-409.

     9-403. What Constitutes Filing; Duration of Filing; Effect
of Lapsed Filing; Duties of Filing Officer.

     (1)  Presentation for filing of a financing statement and
tender of the filing fee or acceptance of the statement by the
filing officer constitutes filing under this Article.

     (2)  Except as provided in subsection (6) a filed financing
statement is effective for a period of five years from the date
of filing. The effectiveness of a filed financing statement
lapse on the expiration of the five year period unless a
continuation statement is filed prior to the lapse. If a security
interest perfected by filing exists at the time insolvency
proceedings are commenced by or against the debtor, the security
interest remains perfected until termination of the insolvency
proceedings and thereafter for a period of sixty days or until
expiration of the five year period, whichever occurs later. Upon
lapse the security interest becomes unperfected, unless it is
perfected without filing. If the security interest becomes
unperfected upon lapse, it is deemed to have been unperfected as
against a person who became a purchaser or lien creditor before
lapse.

/* Retroactive change in priorities! */

     (3)  A continuation statement may be filed by the secured
party within six months prior to the expiration of the five year
period specified in subsection (2). Any such continuation
statement must be signed by the secured party, identify the
original statement by file number and state that the original
statement is still effective. A continuation statement signed by
a person other than the secured party of record must be
accompanied by a separate written statement of assignment signed
by the secured party of record and complying with subsection (2)
of Section 9-405, including payment of the required fee. Upon
timely filing of the continuation statement, the effectiveness of
the original statement is continued for five years after the last
date to which the filing was effective whereupon it lapses in the
same manner as provided in subsection (2) unless another
continuation statement is filed prior to such lapse. Succeeding
continuation statements may be filed in the same manner to
continue the effectiveness of the original statement. Unless a
statute on disposition of public records provides otherwise, the
filing officer may remove a lapsed statement from the files and
destroy it immediately if he has retained a microfilm or other
photographic record, or in other cases after one year after the
lapse. The filing officer shall so arrange matters by physical
annexation of financing statements to continuation statements or
other related filings, or by other means, that if he physically
destroys the financing statements of a period more than five
years past, those which have been continued by a continuation
statement or which are still effective under subsection (6) shall
be retained.

     (4)  Except as provided in subsection (7) a filing officer
shall mark each statement with a file number and with the date
and hour of filing and shall hold the statement or a microfilm or
other photographic copy thereof for public inspection. In
addition the filing officer shall index the statement according
to the name of the debtor and shall note in the index the file
number and the address of the
debtor given in the statement.

     (5)  The uniform fee for filing and indexing and for
stamping a copy furnished by the secured party to show the date
and place of filing for an original financing statement or for a
continuation statement shall be $________ if the statement is in
the standard form prescribed by the (Secretary of State] and
otherwise shall be $________ plus in each case, if the financing
statement is subject to subsection (5) of Section 9-402, $______.
The uniform fee for each name more than one required to be
indexed shall be $_________. The secured party may at his option
show a trade name for any person and an extra uniform indexing
fee of $_______ shall be paid with respect thereto.

     (6)  If the debtor is a transmitting utility (subsection (5)
of Section 9-401) and a filed financing statement so states, it
is effective until a termination statement is filed.  A real
estate mortgage which is effective as a fixture filing under
subsection (6) of Section 9-402 remains effective as a fixture
filing until the mortgage is released or satisfied of record or
its effectiveness otherwise terminates as to the real estate.

     (7)  When a financing statement covers timber to be cut or
covers minerals or the like (including oil and gas) or accounts
subject to subsection (5) of Section 9-103, or is filed as a
fixture filing, (it shall be filed for record and] the filing
officer shall index it under the names of the debtor and any
owner of record shown on the financing statement in the same
fashion as if they were the mortgagors in a mortgage of the real
estate described, and, to the extent that the law of this state
provides for indexing of mortgages under the name of the
mortgagee, under the name of the secured party as if he were the
mortgagee thereunder, or where indexing is by description in the
same fashion as if the financing statement were a mortgage of the
real estate described.

Note: in states in which writings will not appear in the real
estate records and indices unless actually recorded the bracketed
language in subsection (7) should be used.

     9-404 Termination Statement.

     (1)  If a financing statement covering consumer goods is
filed on or after ________ then within one month or within ten
days following written demand by the debtor after there is no
outstanding secured obligation and no commitment to make
advances, incur obligations or otherwise give value, the secured
party must file with each filing officer with whom the financing
statement was filed, a termination statement to the effect that
he no longer claims a security interest under the financing
statement, which shall be identified by file number. In other
cases whenever there is no outstanding secured obligation and no
commitment to make advances, incur obligations or otherwise give
value, the secured party must on written demand by the debtor
send the debtor, for each filing officer with whom the financing
statement was filed, a termination statement to the effect that
he no longer claims a security interest under the financing
statement, which shall be identified by file number. A
termination statement signed by a person other than the secured
party of record must be accompanied by a separate written
statement of assignment signed by the secured party of record
complying with subsection (2) of Section 9-405, including payment
of the required fee. if the affected secured party fails to file
such a termination statement as required by this subsection, or
to send such a termination statement within ten days after proper
demand therefor, he shall be liable to the debtor for one hundred
dollars, and in addition for any loss caused to the debtor by
such failure.

     (2)  On presentation to the filing officer of such a
termination statement he must note it in the index. If he has
received the termination statement in duplicate, he shall return
one copy of the termination statement to the secured party
stamped to show the time of receipt thereof. If the filing
officer has a microfilm or other photographic record of the
financing statement, and of any related continuation statement,
statement of assignment and statement of release, he may remove
the originals from the files at any time after receipt of the
termination statement, or if he has no such record, he may remove
them from the files at any time after one year after receipt of
the termination statement.

     (3)  If the termination statement is in the standard form
prescribed by the [Secretary of State], the uniform fee for
filing and indexing the termination statement shall
be $_____________ , and otherwise shall be $________, plus in
each case an additional fee of $________ for each name more than
one against which the termination statement is required to be
indexed.

Note: The date to be inserted should be the effective date
of the revised Article 9.

     9-405. Assignment of Security Interest; Duties of Filing
Officer; Fees.

     (1)  A financing statement may disclose an assignment of a
security interest in the collateral described in the financing
statement by indication in the financing statement of the name
and address of the assignee or by an assignment itself or a copy
thereof on the face or back of the statement. On presentation to
the filing officer of such a financing statement the filing
officer shall mark the same as provided in section 9-403(4). The
uniform fee for filing, indexing and furnishing filing data for a
financing statement so indicating an assignment shall be $_______
if the statement is in the standard form prescribed by the
[Secretary of State] and otherwise shall be $_______, plus in
each case an additional fee of $_______ for each name more than
one against which the financing statement is required to be
indexed.

     (2)  A secured party may assign of record all or part of
his rights under a financing statement by filing in the place
where the original financing statement was filed of a separate
written statement of assignment signed by the secured party of
record and setting forth the name of the secured party of record
and the debtor, the file number and the date of filing of the
financing statement and the name and address of the assignee and
containing a description of the collateral assigned. A copy of
the assignment is sufficient as a separate statement if it
complies with the preceding sentence. On presentation to the
filing officer of such a separate statement, the filing officer
shall mark such separate statement with the date and hour of the
filing. He shall note the assignment on the index of the
financing statement, or in the case of a fixture filing, or a
filing covering timber to be cut, or covering minerals or the
like (including oil and gas) or accounts subject to subsection
(5) of Section 9-103, he shall index the assignment under the
name of the assignor as grantor and, to the extent that the law
of this state provides for indexing the assignment of a mortgage
under the name of the assignee, he shall index the assignment of
the financing statement under the name of the assignee. The
uniform fee for filing, indexing and furnishing filing data about
such a separate statement of assignment shall be $________ if the
statement is in the standard form prescribed by the [Secretary of
State] and otherwise shall be $_______, plus in each case an
additional fee of $________ for each name more than one against
which the statement of assignment is required to be indexed.
Notwithstanding the provisions of this subsection, an assignment
of record of a security interest in a fixture contained in a
mortgage effective as a fixture filing (subsection (6) of Section
9-402) may be made only by an assignment of the mortgage in the
manner provided by the law of this state other than this Act.
     (3)  After the disclosure or filing of an assignment under
this section, the assignee is the secured party of record.


     9-406. Release of Collateral; Duties of Filing Officer;
Fees.

     A secured party of record may by his signed statement
release all or a part of any collateral described in a filed
financing statement. The statement of release is sufficient if it
contains a description of the collateral being released, the name
and address of the debtor, the name and address of the secured
party, and the file number of the financing statement. A
statement of release signed by a person other than the secured
party of record must be accompanied by a separate written
statement of assignment signed by the secured party of record and
complying with subsection (2) of Section 9-405, including payment
of the required fee. Upon presentation of such a statement of
release to the filing officer he shall mark the statement with
the hour and date of filing and shall note the same upon the
margin of the index of the filing of the financing statement. The
uniform fee for filing and noting such a statement of release
shall be $________ if the statement is in the standard form
prescribed by the [Secretary of State] and otherwise shall be
$_______, plus in each case an additional fee of $________ for
each name more than one against which the statement of release is
required to be indexed.

     9-407. Information From Filing Officer.

     [(1) If the person filing any financing statement,
termination statement, statement of assignment, or statement of
release, furnishes the filing officer a copy thereof, the filing
officer shall upon request note upon the copy the file number and
date and hour of the filing of the original and deliver or send
the copy to such person.]

     [(2) Upon request of any person, the filing officer shall
issue his certificate showing whether there is on file on the
date and hour stated therein, any presently effective financing
statement naming a particular debtor and any statement of
assignment thereof and if there is, giving the date and hour of
filing of each such statement and the names and addresses of each
secured party therein. The uniform fee for such a certificate
shall be $________ if the request for the certificate is in the
standard form prescribed by the [Secretary of State] and
otherwise shall be $________ . Upon request the filing officer
shall furnish a copy of any filed financing statement or
statement of assignment for a uniform fee of $_______ per page.]
Note: This section is proposed as an optional provision to
require filing officers to furnish certificates. Local law and
practices should be consulted with regard to the advisability of
adoption.

9-408. Financing Statements Covering Consigned or Leased Goods.

A consignor or lessor of goods may file a financing statement
using the terms "consignor," consignee," lessor," lessee" or the
like instead of the terms specified in Section 9-402. The
provisions of this Part shall apply as appropriate to such a
financing statement but its filing shall not of itself be a
factor in determining whether or not the consignment or lease is
intended as security (Section 1-201(37)). However, if it is
determined for other reasons that the consignment or lease is so
intended, a security interest of the consignor or lessor which
attaches to the consigned or leased goods is perfected by such
filing.


PART 5
DEFAULT

     9-501. Default; Procedure When Security Agreement Covers
Both Real and Personal Property.

     (1)  When a debtor is in default under a security agreement,
a secured party has the rights and remedies provided in this Part
and except as limited by subsection (3) those provided in the
security agreement he may reduce his claim to judgment, foreclose
or otherwise enforce the security interest by any available
judicial procedure. If the collateral is documents the secured
party may proceed either as to the documents or as to the goods
covered thereby. A secured party in possession has the rights,
remedies and duties provided in Section 9-207. The rights and
remedies referred to in this subsection are cumulative.

     (2)  After default, the debtor has the rights and remedies
provided in this Part, those provided in the security agreement
and those provided in Section 9-207.

     (3)  To the extent that they give rights to the debtor and
impose duties on the secured party, the rules stated in the
subsections referred to below may not be waived or varied except
as provided with respect to compulsory disposition of collateral
(subsection (3) of Section 9-504 and Section 9-505) and with
respect to redemption of collateral (Section 9-506) but the
parties may by agreement determine the standards by which the
fulfillment of these rights and duties is to be measured if such
standards are not manifestly unreasonable:

     (a)  subsection (2) of Section 9-502 and subsection (2) of
Section 9-504 insofar as they require accounting for surplus
proceeds of collateral;

     (b)  subsection (3) of Section 9-504 and subsection (1) of
Section 9-505 which deal with disposition of collateral;

     (c)  subsection (2) of Section 9-505 which deals with
acceptance of collateral as discharge of obligation;

     (d)  Section 9-506 which deals with redemption of
collateral; and

     (e)  subsection (1) of Section 9-507 which deals with the
secured party's liability for failure to comply with this Part.

     (4)  If the security agreement covers both real and personal
property, the secured party may proceed under this part as to the
personal property or he may proceed as to both the real and the
personal property in accordance with his rights and remedies In
respect of the real property in which case the provisions of this
Part do not apply.

     (5)  When a secured party has reduced his claim to judgment
the lien of any levy which may be made upon his collateral by
virtue of any execution based upon the judgment shall relate back
to the date of the perfection of the security interest in such
collateral. A judicial sale, pursuant to such execution, is a
foreclosure of the security interest by judicial procedure within
the meaning of this section, and the secured party may purchase
at the sale and thereafter hold the collateral free of any other
requirements of this Article.

9-502. Collection Rights of Secured Party.

     (1)  When so agreed and in any event on default the secured
party is entitled to notify an account debtor or the obligor on
an instrument to make payment to him whether or not the assignor
was theretofore making collections on the collateral, and also to
take control of any proceeds to which he is entitled under
Section 9-306.

     (2)  A secured party who by agreement is entitled to charge
back uncollected collateral or otherwise to full or limited
recourse against the debtor and who undertakes to collect from
the account debtors or obligors must proceed in a commercially
reasonable manner and may deduct his reasonable expenses of
realization from the collections. If the security agreement
secures an indebtedness, the secured party must account to the
debtor for any surplus, and unless otherwise agreed, the debtor
is liable for any deficiency. But, if the underlying transaction
was a sale of accounts or chattel paper, the debtor is entitled
to any surplus or is liable for any deficiency only if the
security agreement so provides.

9-503. Secured Party's Right to Take Possession After
Default.

     Unless otherwise agreed a secured party has on default the
right to take possession of the collateral. In taking possession
a secured party may proceed without judicial process if this can
be done without breach of the peace or may proceed by action. If
the security agreement so provides the 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.  Without
removal a secured party may render equipment unusable, and may
dispose of collateral on the debtor's premises under Section 9-
504

9-504. Secured Party's Right to Dispose of Collateral After
Default; Effect of Disposition.

     (1)  A secured party after default may sell, lease or
otherwise dispose of any or all of the collateral in its then
condition or following any commercially reasonable preparation or
processing. Any sale of goods is subject to the Article on Sales
(Article 2). The proceeds of disposition shall be applied in the
order following to

     (a)  the reasonable expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and, to the
extent provided for in the agreement and not prohibited by law,
the reasonable attorneys' fees and legal expenses incurred by the
secured party;

     (b)  the satisfaction of indebtedness secured by the
security interest under which the disposition is made

     (c)  the satisfaction of indebtedness secured by any
subordinate security interest in the collateral if written
notification of demand therefor is received before distribution
of the proceeds is completed. If requested by the secured party,
the holder of a subordinate security Interest must seasonably
furnish reasonable proof of his interest, and unless he does so,
the secured party need not comply with his demand.

     (2)  If the security interest secures an indebtedness, the
secured party must account to the debtor for any surplus, and,
unless otherwise agreed, the debtor is liable for any deficiency.
But if the underlying transaction was a sale of accounts or
chattel paper, the debtor is entitled to any surplus or is liable
for any deficiency only if the security agreement so provides.

     (3)  Disposition of the collateral may be by public or
private proceedings and may be made by way of one or more
contracts. Sale or other disposition may be as a unit or In
parcels and at any time and place and on any terms but every
aspect of the disposition including the method, manner, time,
place and terms must be commercially reasonable. Unless
collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market,
reasonable notification of the time and place of any public sale
or reasonable notification of the time after which any private
sale or other intended disposition is to be made shall be sent by
the secured party to the debtor, if he has not signed after
default a statement renouncing or modifying his right to
notification of sale. In the case of consumer goods no
other notification need be sent. In other cases notification
shall be sent to any other secured party from whom the secured
party has received (before sending his notification to the debtor
or before the debtor's renunciation of his rights) written notice
of a claim of an interest in the collateral. The secured party
may buy at any public sale and if the collateral is of a type
customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations he
may buy at private sale.

     (4)  When collateral is disposed of by a secured party after
default, the disposition transfers to a purchaser for value all
of the debtor's rights therein, discharges the security interest
under which it is made and any security interest or lien
subordinate thereto. The purchaser takes free of such rights and
interests even though the secured party fails to comply with all
the requirements of this part or of any judicial proceedings

     (a)  in the case of a public sale, if the purchaser has no
knowledge of any defects in the sale and if he does not buy in
collusion with the secured party, other bidders or the person
conducting the sale; or

     (b)  in any other case, if the purchaser acts in good faith.

     (5)  A person who is liable to a secured party under a
guaranty, indorsement, repurchase agreement or the like and who
receives a transfer of collateral from the secured party or is
subrogated to his rights has thereafter the rights and duties of
the secured party. Such a transfer of collateral is not a sale or
disposition of the collateral under this Article.

9-505. Compulsory Disposition of Collateral; Acceptance of
the Collateral as Discharge of Obligation.

     (1)  If the debtor has paid sixty per cent of the cash price
in the case of a purchase money security interest in consumer
goods or sixty per cent of the loan in the case of another
security interest in consumer goods, and has not signed
after default a statement renouncing or modifying his rights
under this Part a secured party who has taken possession of
collateral must dispose of it under Section 9-504 and if he fails
to do so within ninety days after he takes possession the debtor
at his option may recover in conversion or under Section 9-507(1)
on secured party's liability.

     (2)  In any other case involving consumer goods or any other
collateral a secured party in possession may, after default,
propose to retain the collateral in satisfaction of the
obligation. Written notice of such proposal shall be sent to the
debtor if he has not signed after default a statement renouncing
or modifying his rights under this subsection. In the case of
consumer goods no other notice need be given. In other cases
notice shall be sent to any other secured party from whom the
secured party has received (before sending his notice to the
debtor or before the debtor's renunciation of his rights) written
notice of a claim of an interest in the collateral. If the
secured party receives objection in writing from a person
entitled to receive notification within twenty-one days after the
notice was sent, the secured party must dispose of the collateral
under Section 9-504. In the absence of such written objection the
secured party may retain the collateral in satisfaction of the
debtor's obligation.

9-506. Debtor's Right to Redeem Collateral.

     At any time before the secured party has disposed of
collateral or entered into a contract for its disposition under
Section 9-504 or before the obligation has been discharged under
Section 9-505(2) the debtor or any other secured party may unless
otherwise agreed in writing after default redeem the collateral
by tendering fulfillment of all obligations secured by the
collateral as well as the expenses reasonably incurred by the
secured party in retaking, holding and preparing the collateral
for disposition, in arranging for the sale, and to the extent
provided in the agreement and not prohibited 6y law, his
reasonable attorneys' fees and legal expenses.

9-507. Secured Party's Liability for Failure to Comply With
This Part.

     (1)  If it is established that the secured party is not
proceeding in accordance with the provisions of this Part
disposition may be ordered or restrained on appropriate terms and
conditions. If the disposition has occurred the debtor or any
person entitled to notification or whose security interest has
been made known to the secured party prior to the disposition has
a right to recover from the secured party any loss caused by a
failure to comply with the provisions of this Part. If the
collateral is consumer goods, the debtor has a right to recover
in any event an amount not less than the credit service charge
plus ten per cent of the principal amount of the debt or the time
price differential plus 10 per cent of the cash price.

     (2)  The fact that a better price could have been obtained
by a sale at a different time or in a different method from that
selected by the secured party is not of itself sufficient to
establish that the sale was not made in a commercially reasonable
manner. If the secured party either sells the collateral in the
usual manner in any recognized market therefor or if he sells at
the price current in such market at the time of his sale or if he
has otherwise sold in conformity with reasonable commercial
practices among dealers in the type of property sold he has sold
in a commercially reasonable manner. The principles stated in the
two preceding sentences with respect to sales also apply as may
be appropriate to other types of disposition. A disposition which
has been approved in any judicial proceeding or by any bona fide
creditors' committee or representative of creditors shall
conclusively be deemed to be commercially reasonable, but this
sentence does not indicate that any such approval must be
obtained in any case nor does it indicate that any disposition
not so approved is not commercially reasonable.