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ACT NO. 106

(H.25)

Uniform Commercial Code, Article 9-Secured Transactions

This act amends Vermont’s Uniform Commercial Code Article 9 - Secured Transactions - by incorporating revisions prepared by the National Conference of Commissioners on Uniform State Laws and approved for enactment in all states by the American Law Institute. The present version was adopted in 1966. Article 9 provides a set of rules that governs any transaction, other than a finance lease, that involves the granting of credit coupled with a creditor’s interest in a debtor’s personal property. If the debtor defaults, the creditor may possess and sell the property (generally called collateral) to satisfy the debt. The creditor’s interest is called a security interest. Perfection of the creditor’s security interest establishes the creditor’s priority over other creditors. Article 9 describes how enforceable security interests may be created, perfected and enforced, and who has first rights in the collateral when two or more competing creditors have legally enforceable interests in the collateral. This act, Revised Article 9, expands the scope of property available for secured transactions, and both modernizes and simplifies the filing system for financial statements. Improvements to the filing system include a commitment to centralized filing in the Secretary of State’s office and a filing system that will utilize electronic filing. The act clarifies the rule applicable to the enforcement of security interests in personal property, establishes new rules to facilitate secured financing in international transactions, and adopts a more rigorous standard for the requirement of “good faith” performance. The effective date is designed to be the same for all enacting states.

Effective Date: July 1, 2001