UCC Article 9 & Lien Related Legislation 2019 Includes Tax Lien, Judgment Lien, Real Estate Lien and Fraudulent Filing Bills

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1 For further information please contact: UCC Article 9 & Lien Related Legislation 2019 Includes Tax Lien, Judgment Lien, Real Estate Lien and Fraudulent Filing Bills Paul Hodnefield Associate General Counsel Phone: (651) Toll Free: (800) , Ext paul.hodnefield@cscglobal.com Updated March 29, 2019 Arkansas H1463 2/13/19 Addresses the problem of fraudulent UCC records. Permits the filing office to review and reject those records that appear fraudulent. It includes considerations for the filing office when making the determination, including whether it cites the performance or nonperformance of a public official s duties, whether the debtor and secured party appear to be the same person, and whether it was filed by or on behalf of an incarcerated individual. The bill also provides procedures upon rejection and a process for the secured party to appeal the decision. Regulated financial institutions and persons that extend credit to agricultural producers would be exempt from the provisions of this bill. Passed House on 3/25/19. Passed Senate Insurance and Commerce Committee on 3/28/19. Arkansas S148 1/22/19 Provides for temporary lien in favor of judgment creditor against member s LLC interest upon filing of charging application. House amendment requires secretary of state to create a registry for charging applications within the UCC system and allow such records to be searched in the same manner as UCC records. Passed Senate 2/11/19. Passed House 3/19/19. Colorado H1037 1/4/19 Provides for perfection of a security interest in revenues due a utility under the Colorado Energy Impact Assistance Act by filing a financing statement. The bill also provides special content requirements for the collateral statement on such financing statements. Passed House on 3/4/19. Assigned to Senate Agriculture and Natural Resources Connecticut H7076 2/7/19 Requires recording a lien against real property acquired by a recipient of certain public aid to be recorded in the municipality land records. Passed Joint Committee on Banking 3/5/19. Page 1 of 8

2 Delaware H36 1/10/19 Authorizes a county or municipality to treat an unpaid lien as a tax lien against the real property and provides for collection in the same manner as other tax liens FAILED. Stricken from House on 3/5/19. Georgia H387 2/20/19 Creates lien in favor of private non profit volunteer fire departments for exercising fire department powers requested by property owner. Georgia S202 2/26/19 Allows title insurance to be procured on a lender's security interest in personal property taken by the lender as collateral for a commercial loan. Passed House 3/5/19. Passed Senate 3/21/19. Passed Senate 3/5/19. Passed House 3/18/19. Illinois H321 1/10/19 Repeals State Tax Lien Registration Act Assigned to House Committee on Revenue and Finance. Indiana H1055 1/3/19 Amendment removed judgment lien provisions and replaced with text that allows for extinguishing a mechanic s lien by posting a surety bond. Indiana H1487 1/16/19 Amends UCC to delete text representation of the forms and instead require the secretary of state to accept forms approved by IACA or adopted by rule. Kansas H2105 1/30/19 Amends definition of registered organization in UCC 9 102(a) to include a series of a registered organization. Kansas S198 2/15/19 Adopts the Kansas Electricity Bill Reduction Bonds Act (K EBRA), which includes provisions for security interests in certain K EBRA property rights. A UCC financing statement filed to perfect such a security interest must specifically refer to the act and the financing order creating the K EBRA property in the collateral statement. Passed House on 2/25/19. Passed House as amended on 2/19/19. Passed Senate as amended on 3/19/19. Returned to the House for concurrence. Bill is tracked on Business Organization Legislation chart. Assigned to Senate Utilities Massachusetts S1660 3/1/19 Provides that the assessment of personal property taxes by a municipal board of assessors shall have the force and effect of a signed security agreement under the UCC. The lien shall be perfected following non payment of the tax by the filing of a financing statement by the municipal collector at the office of the state secretary in accordance with the provisions of the UCC. Assigned to Joint Revenue Page 2 of 8

3 Minnesota H2262 3/7/19 Reduces statute of limitations from 6 to 4 years for bringing civil actions on contracts and other obligations unless the UCC provides otherwise. Missouri H935 2/13/19 Provides for security interest in certain property rights under the Missouri Electric Bill Reduction Assistance Act. The UCC financing statement filed to perfect such a security interest must specifically refer to the act in the collateral statement. Appears similar to SB 289. Assigned to the House Judiciary, Finance and Civil Law Division Assigned to House Utilities Missouri H1159 2/28/19 Provides for perfection of a security interest in digital assets by control and that such security interest perfected by control has priority over security interests not perfected by control. Missouri S289 1/23/19 Provides for security interest in certain property rights under the Missouri Electric Bill Reduction Assistance Act. The UCC financing statement filed to perfect such a security interest must specifically refer to the act in the collateral statement. Assigned to Senate Commerce, Consumer Protection, Energy and Environment Missouri S422 2/21/19 Amends and replaces the state s law regarding assignments for the benefit of creditors.. Montana H467 2/13/19 Adopts the Montana Energy Impact Assistance Act, which includes provisions for perfection of a security interest in Montana energy impact assistance property to secure the repayment of the principal of and interest on Montana energy impact assistance bonds, amounts payable under any ancillary agreement, and other financing costs by filing a financing statement. The bill also provides special content requirements for the collateral statement on such financing statements. Assigned to House Judiciary, Civil and Criminal Jurisprudence Passed House on 3/1/19. Assigned to Senate Energy and Telecommunications Montana S42 1/7/19 Provides that upon the filing of a warrant for distraint there is a lien against all personal property of the delinquent taxpayer located in any county in the state. Passed Senate on 1/23/19 and is pending in the House. Page 3 of 8

4 New Mexico H191 1/15/19 Makes certain amendments to the UCC. The bill would amend the state s version of UCC regarding a lost or stolen instrument; amend the state s version of UCC 9 102(a) to add the definition of public finance transaction, which was omitted when current law was enacted; and provide that certain subsections of UCC and UCC do not apply to a security interest in an ownership interest in a general partnership, limited partnership or a limited liability company. New Mexico H604 2/14/19 Adopts the Securitization Bond Act, which provides for the perfection of security interests in securitization property by filing a financing statement in compliance with UCC Article 9, except that the bill includes special rules for sufficiency of the collateral description, which must refer to the Securitization Bond Act and the financing order creating the securitization property. Once filed, any such financing statement is effective until terminated. Assigned to the House Judiciary New Mexico S93 1/15/19 Eliminates statute of limitations for actions related to municipal liens. New Mexico S489 2/7/19 Adopts the Energy Transition Act, which provides for the perfection of security interests in energy transition property by filing a financing statement in compliance with UCC Article 9, except that the bill includes special rules for sufficiency of the collateral description, which must refer to the transition property. Once filed, any such financing statement is effective until terminated. ENACTED 3/22/19. Takes effect on 6/14/19. New Mexico S492 2/8/19 Adopts the Ratepayer Relief Act, which provides for the perfection of security interests in property to secure repayment of securitization bonds by filing a financing statement with the secretary of state. Such financing statements are effective until terminated. The bill provides that its provisions govern perfection and priority of security interests in assets that secure the repayment securitization bonds and supersedes any conflicting provision of the UCC or Public Utility Act. Passed Senate Conservation Committee 3/5/19. New York A486 1/9/19 Provides for an employee s lien in favor of an employee with a wage claim against the real and personal property of the employer. A notice of the lien must be filed together with a UCC financing statement in the office designated by UCC Passed Assembly Judiciary Committee 3/19/19 and was assigned to the Assembly Codes Page 4 of 8

5 New York A512 1/9/19 Provides for an environmental lien in favor of the state upon all real property of any person from whom the state may recover costs for any or all expenditures made by the state in accordance with certain state laws. A notice of such lien must be filed with the clerk of the county where the property is situated. Assigned to Assembly Environmental Conservation New York A2593 1/24/19 Provides for a lien against the real and personal property of a commercial towing company for illegal or improper practices. The lien against personal property would be perfected by filing a notice and financing statement in the same manner as a UCC record. Assigned to Assembly Judiciary New York S2536 1/28/19 Provides for a lien against all real and personal property of a person who is responsible for the illegal disposal of waste. Notice of such lien is to be docketed with the county clerk. Assigned to Senate Environmental Conservation Committee New York S2844 1/29/19 Provides for an employee s lien in favor of an employee with a wage claim against the real and personal property of the employer. A notice of the lien must be filed together with a UCC financing statement in the office designated by UCC Appears similar to AB 486. Committee New York S3902 2/21/19 Makes it a class E felony to knowingly file a false lien or encumbrance in a public record or private record that is generally available to the public against the real or personal property of a public officer or public employee on account of the performance of such public officer's or public employee's official duties, or with the intent to harass, intimidate or otherwise attempt to affect the actions of the public official or public employee, knowing or having reason to know that such lien or encumbrance is false or contains materially false, fictitious, or fraudulent statements or representations. Assigned to Senate Codes North Carolina H46 2/12/19 Provides for employee wage lien perfected by filing with the county recorder against real property and with the secretary of state against personal property of the employer. Also increases minimum wage to $15/hour by Assigned to House Commerce North Carolina S137 2/26/19 Provides for employee wage lien perfected by filing with the county recorder against real property and with the secretary of state against personal property of the employer. Also increases minimum wage to $15/hour by Appears similar to HB 46. Page 5 of 8

6 Oklahoma H1115 2/4/19 Adopts the Oklahoma Construction Registry Act, which provides that a provider of labor, materials, services or rental equipment may register to preserve its lien. The registration takes the place of pre lien notice. Oklahoma H2289 2/4/19 Eliminates notarization requirement for certain notices of lien. Passed House on 2/21/19. Oklahoma S830 2/4/19 Requires the holder of a perfected security interest to pay any holder of a service lien prior to repossession of the collateral. Rhode Island H5197 1/25/19 Permits a property owner to release an unperfected mechanic s lien by filing an affidavit in the land records. Rhode Island S507 2/27/19 Provides for the release of an unperfected mechanic s lien by filing an affidavit. Tennessee H757 2/5/19 Amendment deleted language that would have provided that a real property owner who prevails in an action to challenge a lien and establishes, by clear and convincing evidence, that the person claiming the lien has acted with malice, may recover attorney fees, other fees, expenses and liquidated damages in the amount of $100,000. Committee Assigned to House Judiciary Assigned to Senate Labor Passed House 3/7/19 as amended. Tennessee H875 2/5/19 Provides that a real property owner who prevails in an action to challenge a lien and establishes, by clear and convincing evidence, that the person claiming the lien has acted with malice, may recover attorney fees, other fees, expenses and liquidated damages in the amount of $100,000. Tennessee H1481 2/6/19 Extends to all residents of the state the same process for challenging potentially fraudulent UCC financing statements that is currently available to public officials. Assigned to the House Commerce Tennessee S682 2/5/19 Provides that a real property owner who prevails in an action to challenge a lien and establishes, by clear and convincing evidence, that the person claiming the lien has acted with malice, may recover attorney fees, other fees, expenses and liquidated damages in the amount of $100,000. Page 6 of 8

7 Tennessee S1271 2/7/19 Extends to all residents of the state the same process for challenging potentially fraudulent UCC financing statements that is currently available to public officials. Assigned to Senate Commerce and Labor Texas H589 1/8/19 Makes significant changes to mechanics, contractors, and material suppliers lien laws. Creates Lien Website to be maintained by the secretary of state for the posting and searching of various notices required under the lien law. Assigned to House Business and Industry Texas H3498 3/6/19 Amends certain mechanics lien provisions including notice requirements. Texas H4519 3/8/19 Establishes a central filing system for the filing of Effective Financing Statements under the Food Security Act. Texas S2033 3/7/19 Establishes a central filing system for the filing of Effective Financing Statements under the Food Security Act. Texas S2037 3/7/19 Directs the secretary of state to conduct a study on the feasibility of developing and implementing a central filing system to be used for the filing of all financing statements that cover farm products being sold and purchased in the state that are subject to an agricultural lien. The legislation appears to use the term agricultural lien when it should use security interest. Assigned to House Business and Industry Assigned to House Pensions, Investments and Financial Services Assigned to Senate Business and Commerce Utah H395 2/21/19 Amends existing law to provide for additional notices to be filed with the State Construction Registry and makes other changes to the existing law. Virginia H1843 1/9/19 Provides for the issuance of limited duration driver s licenses and permits and amends VA s version of UCC 9 503(a) to include these documents as acceptable sources of an individual debtor name. ENACTED 3/25/19. Takes effect 1/1/20. FAILED 2/5/19. Left in committee (tabled). Virginia H1948 1/9/19 Provides for a priority lien for unpaid Salt Severance License Taxes. FAILED 2/5/19. Left in committee (tabled). Page 7 of 8

8 Virginia H2025 1/9/19 Provides for the issuance of limited duration driver s licenses and permits and amends VA s version of UCC 9 503(a) to include these documents as acceptable sources of an individual debtor name. Appears similar to HB FAILED 2/5/19. Left in committee (tabled). Virginia S1641 1/9/19 Provides for the issuance of limited duration driver s licenses and permits and amends VA s version of UCC 9 503(a) to include these documents as acceptable sources of an individual debtor name. Appears similar to HB 1843 and HB FAILED. See SB Virginia S1740 1/17/19 Provides for the issuance of limited duration driver s licenses and permits and amends VA s version of UCC 9 503(a) to include these documents as acceptable sources of an individual debtor name. Appears similar to HB 1843 and HB FAILED. Voted do not pass in committee. Washington H1476 1/23/19 Substitute bill adopted on 3/9/19 would provide that the grant a security interest in live dog or cat as collateral for a loan is void and unenforceable. Washington H1514 2/1/19 Establishes wage liens for unpaid wages due employees. The bill provides that wage liens against real property are perfected by recording a Claim of Wage Lien form with the applicable county and such liens against personal property are perfected by filing a Claim of Wage Lien form with the Department of Licensing. The bill also provides a Claim of Wage Lien form. Passed House on 3/9/19 as substituted. Assigned to Senate Committee on Labor and Commerce. Passed House Labor and Workplace Standards Committee on 2/18/19. Assigned to House Appropriations Wyoming S125 1/18/19 Provides that digital assets are personal property and shall be considered general intangibles for purposes of UCC Article 9; that digital securities are investment property for purposes of UCC Article 8 and Article 9; and that virtual currency is intangible personal property and shall be considered money only for purposes of UCC Article 9. ENACTED 2/26/19. Takes effect on 7/1/19. Page 8 of 8