The Uniform Commercial Code (UCC) is a model code, providing the rules governing commercial transactions, including the methods of creating and filing a security interest and the way a security interest may be perfected. The UCC has been adopted by all 50 states and the District of Columbia.
In general, the state legislatures do not amend their UCC laws as often as they amend their business entity laws, nor do the filing offices revise their UCC forms as often as their business entity forms. In addition, the courts do not issue significant decisions on UCC law as often. Nevertheless, as this article demonstrates, amendments, changes and court decisions dealing with the state UCC laws do occur.
UCC amendments dealing with digital assets
In 2022 the sponsoring organizations of the UCC, the Uniform Law Commission and the American Law Institute adopted significant amendments to the UCC to deal with consensual transactions involving digital assets (the 2022 amendments). Almost every article of the UCC was revised in some way. However, most significantly, the 2022 amendments add a new Article 12, which governs transactions in a subset of digital assets called “controllable electronic records” and they revised Article 9 by clarifying how a secured party perfects a security interest in digital assets and ensures that its security interest has priority.
As of the mid-point of 2023, seven states, Alabama, Colorado, Indiana, Nevada, North Dakota, New Mexico, and Washington had enacted legislation adopting the 2022 UCC amendments. In addition, more than 20 states have introduced legislation to enact the amendments.
Revised UCC forms effective July 1
Article 9 of the UCC, and the state statutory equivalents, provide for the perfection of security interests in certain collateral by the filing of a financing statement. The International Association of Commercial Administrators (IACA) drafts forms that states may adopt, including the UCC-1 financing statement, UCC-3 financing statement amendment (used for amendments, assignments, continuations, and terminations), UCC-5 information statement, and UCC-11 information request.
Effective July 1, 2023, IACA has revised the UCC forms that it drafts. Changes to the forms include the following:
- UCC1, UCC3, UCC5, UCC11 – Requests contact information of “Submitter” rather than “Filer” in Items A and B
- UCC1, UCC3 - Adds statement “See below for secured party contact information” below Items A, B, and C. (Clarifying that interested parties must contact the secured party for the information about the financing statement rather than the party listed in Items A, B, and C)
- UCC3 - Adds instruction in Item 3 to “check ASSIGN collateral box in Item 8”; adds instruction in Item 8 to “check ASSIGN COLLATERAL only if the assignee’s power to amend the record is limited to certain collateral”; removes the check box at the beginning of Item 8 to indicate a collateral change.
- UCC3AD – Adds a checkbox in Item 14 to indicate whether additional space is being used for collateral or for other information, and, if other, to describe.
- UCC11– In Item 2 asks for “SEARCH TYPE” with check boxes for non-certified or certified, revises the definition of a search of ALL records to “Results provide all matching records, including those that have lapsed”, adds a check box to “include all available types of liens in index (if applicable)”; moves “Copy Request Only” to Item 3; moves “Additional Services” to Item 4.
There were also revisions to the instruction sheets. Although the revisions to the forms are minor, it is important to be aware of which states will permit or require the filing of the revised forms. This will be an ongoing issue of importance for those filing paper UCC forms on or after July 1.