A.R.S. tit. 47 ch. 9 — Arizona Revised Statutes Title 47 Chapter 9 — Secured Transactions

47-9101. Short title This chapter may be cited as uniform commercial code secured transactions. 47-9102. Definitions and index of definitions A. In this chapter, unless the context otherwise requires: 1. "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost. 2. "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance, for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, for services rendered or to be rendered, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit or charge card or information contained on or for use with the card or as winnings in a lottery or other game of chance operated or sponsored by a state, a governmental unit of a state or a person licensed or authorized to operate the game by a state or governmental unit of a state. Account includes health-care-insurance receivables. Account does not include rights to payment evidenced by chattel paper or an instrument, commercial tort claims, deposit accounts, investment property, letter-of-credit rights or letters of credit or rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card. 3. "Account debtor" means a person obligated on an account, chattel paper or general intangible but does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. 4. "Accounting", except as used in "accounting for", means a record: (a) Authenticated by a secured party; (b) Indicating the aggregate unpaid secured obligations as of a date not more than thirty-five days earlier or thirty-five days later than the date of the record; and (c) Identifying the components of the obligations in reasonable detail. 5. "Agricultural lien" means an interest, other than a security interest, in farm products: (a) That secures payment or performance of an obligation for: (i) Goods or services furnished in connection with a debtor's farming operation; or (ii) Rent on real property leased by a debtor in connection with its farming operation; (b) That is created by statute in favor of a person that: (i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or (ii) Leased real property to a debtor in connection with the debtor's farming operation; and (c) Whose effectiveness does not depend on the person's possession of the personal property. 6. "As-extracted collateral" means: (a) Oil, gas or other minerals that are subject to a security interest that: (i) Is created by a debtor having an interest in the minerals before extraction; and (ii) Attaches to the minerals as extracted; or (b) Accounts arising out of the sale at the wellhead or minehead of oil, gas or other minerals in which the debtor had an interest before extraction. 7. "Authenticate" means: (a) To sign; or (b) With present intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol or process. 8. "Bank" means an organization that is engaged in the business of banking. Bank includes savings banks, savings and loan associations, credit unions and trust companies. 9. "Cash proceeds" means proceeds that are money, checks, deposit accounts or the like. 10. "Certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. Certificate of title includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. 11. "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. Chattel paper does not include charters or other contracts involving the use or hire of a vessel or records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper. 12. "Collateral" means the property subject to a security interest or agricultural lien. Collateral includes: (a) Proceeds to which a security interest attaches; (b) Accounts, chattel paper, payment intangibles and promissory notes that have been sold; and (c) Goods that are the subject of a consignment. 13. "Commercial tort claim" means a claim arising in tort with respect to which: (a) The claimant is an organization; or (b) The claimant is an individual and the claim: (i) Arose in the course of the claimant's business or profession; and (ii) Does not include damages arising out of personal injury to or the death of an individual. 14. "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer. 15. "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or another contract if the contract or option is: (a) Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or (b) Traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer. 16. "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books. 17. "Commodity intermediary" means a person that: (a) Is registered as a futures commission merchant under federal commodities law; or (b) In the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law. 18. "Communicate" means: (a) To send a written or other tangible record; (b) To transmit a record by any means agreed on by the persons sending and receiving the record; or (c) In the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing office rule. 19. "Consignee" means a merchant to which goods are delivered in a consignment. 20. "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and: (a) The merchant: (i) Deals in goods of that kind under a name other than the name of the person making delivery; (ii) Is not an auctioneer; and (iii) Is not generally known by its creditors to be substantially engaged in selling the goods of others; (b) With respect to each delivery, the aggregate value of the goods is one thousand dollars or more at the time of delivery; (c) The goods are not consumer goods immediately before delivery; and (d) The transaction does not create a security interest that secures an obligation. 21. "Consignor" means a person that delivers goods to a consignee in a consignment. 22. "Consumer debtor" means a debtor in a consumer transaction. 23. "Consumer goods" means goods that are used or bought for use primarily for personal, family or household purposes. 24. "Consumer goods transaction" means a consumer transaction in which: (a) An individual incurs an obligation primarily for personal, family or household purposes; and (b) A security interest in consumer goods secures the obligation. 25. "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family or household purposes. 26. "Consumer transaction" means a transaction in which an individual incurs an obligation primarily for personal, family or household purposes, a security interest secures the obligation and the collateral is held or acquired primarily for personal, family or household purposes. Consumer transaction includes consumer goods transactions. 27. "Continuation statement" means an amendment of a financing statement that: (a) Identifies, by its file number, the initial financing statement to which it relates; and (b) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement. 28. "Debtor" means: (a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor; (b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or (c) A consignee. 29. "Deposit account" means a demand, time, savings, passbook or similar account maintained with a bank. Deposit account does not include investment property or accounts evidenced by an instrument. 30. "Document" means a document of title or a receipt of the type described in section 47-7201, subsection B. 31. "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium. 32. "Encumbrance" means a right, other than an ownership interest, in real property. Encumbrance includes mortgages and other liens on real property. 33. "Equipment" means goods other than inventory, farm products or consumer goods. 34. "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and that are: (a) Crops grown, growing or to be grown, including: (i) Crops produced on trees, vines and bushes; and (ii) Aquatic goods produced in aquacultural operations; (b) Livestock, born or unborn, including aquatic goods produced in aquacultural operations; (c) Supplies used or produced in a farming operation; or (d) Products of crops or livestock in their unmanufactured states. 35. "Farming operation" means raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operation. 36. "File number" means the number assigned to an initial financing statement pursuant to section 47-9519, subsection A. 37. "Filing office" means an office designated in section 47-9501 as the place to file a financing statement. 38. "Filing office rule" means a rule adopted pursuant to section 47-9526. 39. "Financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement. 40. "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying section 47-9502, subsections A and B. Fixture filing includes the filing of a financing statement covering goods of a transmitting utility that are or are to become fixtures. 41. "Fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law. 42. "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money and oil, gas or other minerals before extraction. General intangible includes payment intangibles and software. 43. "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing. 44. "Goods" means all things that are movable when a security interest attaches. (a) Goods includes: (i) Fixtures; (ii) Standing timber that is to be cut and removed under a conveyance or contract for sale; (iii) The unborn young of animals; (iv) Crops grown, growing or to be grown, even if the crops are produced on trees, vines or bushes; and (v) Manufactured homes. (b) Goods also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if: (i) The program is associated with the goods in such a manner that it customarily is considered part of the goods; or (ii) By becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. (c) Goods does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. (d) Goods also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas or other minerals before extraction. 45. "Governmental unit" means a subdivision, agency, department, county, parish, municipality or other unit of the government of the United States, a state or a foreign country. Governmental unit includes an organization having a separate corporate or legal existence if the organization is eligible to issue or incur obligations the interest on which is excluded from gross income for federal income tax purposes. 46. "Health-care-insurance receivable" means an interest in or claim under a policy of insurance that is a right to payment of a monetary obligation for health care goods or services provided. 47. "Instrument" means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease and is of a type that in the ordinary course of business is transferred by delivery with any necessary indorsement or assignment. Instrument does not include: (a) Investment property; (b) Letters of credit; or (c) Writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. 48. "Inventory" means goods, other than farm products, that: (a) Are leased by a person as lessor; (b) Are held by a person for sale or lease or to be furnished under a contract of service; (c) Are furnished by a person under a contract of service; or (d) Consist of raw materials, work in process or materials used or consumed in a business. 49. "Investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract or commodity account. 50. "Jurisdiction of organization", with respect to a registered organization, means the jurisdiction under whose law the organization is organized. 51. "Letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. Letter-of-credit right does not include the right of a beneficiary to demand payment or performance under a letter of credit. 52. "Lien creditor" means: (a) A creditor that has acquired a lien on the property involved by attachment, levy or the like; (b) An assignee for benefit of creditors from the time of assignment; (c) A trustee in bankruptcy from the date of the filing of the petition; or (d) A receiver in equity from the time of appointment. 53. "Manufactured home" means a structure that is transportable in one or more sections and that, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and that is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air conditioning and electrical systems contained therein. Manufactured home includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States secretary of housing and urban development and complies with the standards established under title 42 of the United States Code. 54. "Manufactured home transaction" means a secured transaction: (a) That creates a purchase money security interest in a manufactured home, other than a manufactured home held as inventory; or (b) In which a manufactured home, other than a manufactured home held as inventory, is the primary collateral. 55. "Mortgage" means a consensual interest in real property, including fixtures, that secures payment or performance of an obligation. 56. "New debtor" means a person that becomes bound as debtor under section 47-9203, subsection D by a security agreement previously entered into by another person. 57. "New value" means money, money's worth in property, services or new credit or release by a transferee of an interest in property previously transferred to the transferee. New value does not include an obligation substituted for another obligation. 58. "Noncash proceeds" means proceeds other than cash proceeds. 59. "Obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation or is otherwise accountable in whole or in part for payment or other performance of the obligation. Obligor does not include issuers or nominated persons under a letter of credit. 60. "Original debtor", except as used in section 47-9310, subsection C, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under section 47-9203, subsection D. 61. "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation. 62. "Person related to", with respect to an individual, means: (a) The spouse of the individual; (b) A brother, brother-in-law, sister or sister-in-law of the individual; (c) An ancestor or lineal descendant of the individual or the individual's spouse; or (d) Any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual. 63. "Person related to", with respect to an organization, means: (a) A person directly or indirectly controlling, controlled by or under common control with the organization; (b) An officer or director of, or a person performing similar functions with respect to, the organization; (c) An officer or director of, or a person performing similar functions with respect to, a person described in subdivision (a) of this paragraph; (d) The spouse of an individual described in subdivision (a), (b) or (c) of this paragraph; or (e) An individual who is related by blood or marriage to an individual described in subdivision (a), (b), (c) or (d) of this paragraph and who shares the same home with the individual. 64. "Proceeds", except as used in section 47-9609, subsection B, means the following property: (a) Whatever is acquired on the sale, lease, license, exchange or other disposition of collateral; (b) Whatever is collected on, or distributed on account of, collateral; (c) Rights arising out of collateral; (d) To the extent of the value of collateral, claims arising out of the loss, nonconformity or interference with the use of, defects or infringement of rights in, or damage to the collateral; or (e) To the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to the collateral. 65. "Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds. 66. "Proposal" means a record authenticated by a secured party that includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to sections 47-9620, 47-9621 and 47-9622. 67. "Public organic record" means a record that is available to the public for inspection and that is: (a) A record consisting of the record initially filed with or issued by a state or the United States to form or organize an organization and any record filed with or issued by the state or the United States that amends or restates the initial record; (b) An organic record of a business trust consisting of the record initially filed with a state and any record filed with the state that amends or restates the initial record, if a statute of the state governing business trusts requires that the record be filed with the state; or (c) A record consisting of legislation enacted by the legislature of a state or the Congress of the United States that forms or organizes an organization, any record amending the legislation and any record filed with or issued by the state or the United States that amends or restates the name of the organization. 68. "Pursuant to commitment", with respect to an advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation. 69. "Record", except as used in "for record", "of record", "record or legal title", and "record owner", means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. 70. "Registered organization" means an organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record with, the issuance of a public organic record by or the enactment of legislation by the state or the United States. Registered organization includes a business trust that is formed or organized under the law of a single state if a statute of the state governing business trusts requires that the business trust's organic record be filed with the state. 71. "Secondary obligor" means an obligor to the extent that: (a) The obligor's obligation is secondary; or (b) The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor or property of either. 72. "Secured party" means: (a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding; (b) A person that holds an agricultural lien; (c) A consignor; (d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold; (e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or (f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. 73. "Security agreement" means an agreement that creates or provides for a security interest. 74. "Send", in connection with a record or notification, means: (a) To deposit in the mail, deliver for transmission or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or (b) To cause the record or notification to be received within the time that it would have been received if properly sent under subdivision (a) of this paragraph. 75. "Software" means a computer program and any supporting information provided in connection with a transaction relating to the program. Software does not include a computer program that is included in the definition of goods. 76. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. 77. "Supporting obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument or investment property. 78. "Tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium. 79. "Termination statement" means an amendment of a financing statement that: (a) Identifies, by its file number, the initial financing statement to which it relates; and (b) Indicates either that it is a termination statement or that the identified financing statement is no longer effective. 80. "Transmitting utility" means a person primarily engaged in the business of: (a) Operating a railroad, subway, street railway or trolley bus; (b) Transmitting communications electrically, electromagnetically or by light; (c) Transmitting goods by pipeline or sewer; or (d) Transmitting or producing and transmitting electricity, steam, gas or water. B. "Control" as provided in section 47-7106 and the following definitions in other sections apply to this chapter: 1. "Applicant" Section 47-5102 2. "Beneficiary" Section 47-5102 3. "Broker" Section 47-8102 4. "Certificated security" Section 47-8102 5. "Check" Section 47-3104 6. "Clearing corporation" Section 47-8102 7. "Contract for sale" Section 47-2106 8. "Customer" Section 47-4104 9. "Entitlement holder" Section 47-8102 10. "Financial asset" Section 47-8102 11. "Holder in due course" Section 47-3302 12. "Issuer" (with respect to a letter of credit or letter-of-credit right) Section 47-5102 13. "Issuer" (with respect to a security) Section 47-8201 14. "Issuer" (with respect to documents of title) Section 47-7102 15. "Lease" Section 47-2A103 16. "Lease agreement" Section 47-2A103 17. "Lease contract" Section 47-2A103 18. "Leasehold interest" Section 47-2A103 19. "Lessee" Section 47-2A103 20. "Lessee in ordinary course of business" Section 47-2A103 21. "Lessor" Section 47-2A103 22. "Lessor's residual interest" Section 47-2A103 23. "Letter of credit" Section 47-5102 24. "Merchant" Section 47-2104 25. "Negotiable instrument" Section 47-3104 26. "Nominated person" Section 47-5102 27. "Note" Section 47-3104 28. "Proceeds of a letter of credit" Section 47-5114 29. "Prove" Section 47-3103 30. "Sale" Section 47-2106 31. "Securities account" Section 47-8501 32. "Securities intermediary" Section 47-8102 33. "Security" Section 47-8102 34. "Security certificate" Section 47-8102 35. "Security entitlement" Section 47-8102 36. "Uncertificated security" Section 47-8102 C. In addition, chapter 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this chapter. 47-9103. Purchase money security interest; application of payments; burden of establishing A. In this section: 1. "Purchase money collateral" means goods or software that secures a purchase money obligation incurred with respect to that collateral. 2. "Purchase money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used. B. A security interest in goods is a purchase money security interest: 1. To the extent that the goods are purchase money collateral with respect to that security interest; 2. If the security interest is in inventory that is or was purchase money collateral, also to the extent that the security interest secures a purchase money obligation incurred with respect to other inventory in which the secured party holds or held a purchase money security interest; and 3. Also to the extent that the security interest secures a purchase money obligation incurred with respect to software in which the secured party holds or held a purchase money security interest. C. A security interest in software is a purchase money security interest to the extent that the security interest also secures a purchase money obligation incurred with respect to goods in which the secured party holds or held a purchase money security interest if: 1. The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and 2. The debtor acquired its interest in the software for the principal purpose of using the software in the goods. D. The security interest of a consignor in goods that are the subject of a consignment is a purchase money security interest in inventory. E. In a transaction other than a consumer goods transaction, if the extent to which a security interest is a purchase money security interest depends on the application of a payment to a particular obligation, the payment must be applied: 1. In accordance with any reasonable method of application to which the parties agree; 2. In the absence of the parties' agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or 3. In the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order: (a) To obligations that are not secured; and (b) If more than one obligation is secured, to obligations secured by purchase money security interests in the order in which those obligations were incurred. F. In a transaction other than a consumer goods transaction, a purchase money security interest does not lose its status as such, even if: 1. The purchase money collateral also secures an obligation that is not a purchase money obligation; 2. Collateral that is not purchase money collateral also secures the purchase money obligation; or 3. The purchase money obligation has been renewed, refinanced, consolidated or restructured. G. In a transaction other than a consumer goods transaction, a secured party claiming a purchase money security interest has the burden of establishing the extent to which the security interest is a purchase money security interest. H. The limitation of the rules in subsections E, F and G to transactions other than consumer goods transactions is intended to leave to the court the determination of the proper rules in consumer goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer goods transactions and may continue to apply established approaches. 47-9104. Control of deposit account A. A secured party has control of a deposit account if: 1. The secured party is the bank with which the deposit account is maintained; 2. The debtor, secured party and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or 3. The secured party becomes the bank's customer with respect to the deposit account. B. A secured party that has satisfied subsection A has control, even if the debtor retains the right to direct the disposition of funds from the deposit account. 47-9105. Control of electronic chattel paper A. A secured party has control of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned. B. A system satisfies subsection A of this section if the record or records comprising the chattel paper are created, stored and assigned in such a manner that: 1. A single authoritative copy of the record or records exists that is unique, identifiable and, except as otherwise provided in paragraphs 4, 5 and 6, unalterable; 2. The authoritative copy identifies the secured party as the assignee of the record or records; 3. The authoritative copy is communicated to and maintained by the secured party or its designated custodian; 4. Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the secured party; 5. Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and 6. Any amendment of the authoritative copy is readily identifiable as an authorized or unauthorized revision. 47-9106. Control of investment property A. A person has control of a certificated security, uncertificated security or security entitlement as provided in section 47-8106. B. A secured party has control of a commodity contract if: 1. The secured party is the commodity intermediary with which the commodity contract is carried; or 2. The commodity customer, secured party and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. C. A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account. 47-9107. Control of letter-of-credit right A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under section 47-5114, subsection C or otherwise applicable law or practice. 47-9108. Sufficiency of description A. Except as otherwise provided in subsections C, D and E, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. B. Except as otherwise provided in subsection D, a description of collateral reasonably identifies the collateral if it identifies the collateral by: 1. Specific listing; 2. Category; 3. Except as otherwise provided in subsection E, a type of collateral defined in this title; 4. Quantity; 5. Computational or allocational formula or procedure; or 6. Except as otherwise provided in subsection C, any other method, if the identity of the collateral is objectively determinable. C. A description of collateral as "all the debtor's assets" or "all the debtor's personal property" or using words of similar import does not reasonably identify the collateral. D. Except as otherwise provided in subsection E, a description of a security entitlement, securities account or commodity account is sufficient if it describes: 1. The collateral by those terms or as investment property; or 2. The underlying financial asset or commodity contract. E. A description only by type of collateral defined in this title is an insufficient description of: 1. A commercial tort claim; or 2. In a consumer transaction, consumer goods, a security entitlement, a securities account or a commodity account. 47-9109. Scope A. Except as otherwise provided in subsections C and D of this section, this chapter applies to: 1. A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract; 2. An agricultural lien; 3. A sale of accounts, chattel paper, payment intangibles or promissory notes; 4. A consignment; 5. A security interest arising under section 47-2401 or 47-2505, section 47-2711, subsection C or section 47-2A508, subsection E, as provided in section 47-9110; and 6. A security interest arising under section 47-4210 or 47-5118. B. The application of this article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply. C. This chapter does not apply to the extent that: 1. A statute, regulation or treaty of the United States preempts this article; 2. A statute of a foreign country or a governmental unit of a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority or enforcement of a security interest created by that country or governmental unit; or 3. The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under section 47-5114. D. This chapter does not apply to: 1. A landlord's lien, other than an agricultural lien; 2. A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but section 47-9333 applies with respect to priority of the lien; 3. An assignment of a claim for wages, salary or other compensation of an employee; 4. A sale of accounts, chattel paper, payment intangibles or promissory notes as part of a sale of the business out of which they arose; 5. An assignment of accounts, chattel paper, payment intangibles or promissory notes that is for the purpose of collection only; 6. An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract; 7. An assignment of a single account, payment intangible or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness; 8. A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but sections 47-9315 and 47-9322 apply with respect to proceeds and priorities in proceeds; 9. An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral; 10. A right of recoupment or setoff, but: (a) Section 47-9340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and (b) Section 47-9404 applies with respect to defenses or claims of an account debtor; 11. The creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for: (a) Liens on real property in sections 47-9203 and 47-9308; (b) Fixtures in section 47-9334; (c) Fixture filings in sections 47-9501, 47-9502, 47-9512, 47-9516 and 47-9519; and (d) Security agreements covering personal and real property in section 47-9604; 12. An assignment of a claim arising in tort, other than a commercial tort claim, but sections 47-9315 and 47-9322 apply with respect to proceeds and priorities in proceeds; 13. An assignment of a deposit account in a consumer transaction, but sections 47-9315 and 47-9322 apply with respect to proceeds and priorities in proceeds; 14. A transfer, pledge, assignment, grant or similar action by this state, another state or a governmental unit of this state or another state; 15. A claim or right to receive compensation for injuries or sickness as described in 26 United States Code section 104a(1) or (2); or 16. A claim or right to receive benefits under a special needs trust as described in 42 United States Code section 1396p(d)(4); or 17. A security interest that is subject to section 30-1006 or 40-607. 47-9110. Security interests arising under sales and leases A security interest arising under section 47-2401 or 47-2505 or section 47-2711, subsection C or section 47-2A508, subsection E is subject to this chapter. However, until the debtor obtains possession of the goods: 1. The security interest is enforceable, even if section 47-9203, subsection B, paragraph 3 has not been satisfied; 2. Filing is not required to perfect the security interest; 3. The rights of the secured party after default by the debtor are governed by chapter 2 or 2A of this title; and 4. The security interest has priority over a conflicting security interest created by the debtor. 47-9201. General effectiveness of security agreement A. Except as otherwise provided in this title, a security agreement is effective according to its terms between the parties, against purchasers of the collateral and against creditors. B. A transaction subject to this chapter is subject to any applicable rule of law that establishes a different rule for consumers and any other statute or rule that regulates the rates, charges, agreements and practices for loans, credit sales or other extensions of credit and any consumer protection statute or rule. C. In case of conflict between this chapter and a rule of law, statute or other rule described in subsection B, the rule of law, statute or other rule controls. Failure to comply with a statute or rule described in subsection B has only the effect the statute or rule specifies. D. This chapter does not: 1. Validate any rate, charge, agreement or practice that violates a rule of law, statute or other rule described in subsection B; or 2. Extend the application of the rule of law, statute or other rule to a transaction not otherwise subject to it. 47-9202. Title to collateral immaterial Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles or promissory notes, the provisions of this chapter with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor. 47-9203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites A. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment. B. Except as otherwise provided in subsections C through I of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if: 1. Value has been given; 2. The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and 3. One of the following conditions is met: (a) The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned; (b) The collateral is not a certificated security and is in the possession of the secured party under section 47-9313 pursuant to the debtor's security agreement; (c) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under section 47-8301 pursuant to the debtor's security agreement; or (d) The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights or electronic documents, and the secured party has control under section 47-7106, 47-9104, 47-9105, 47-9106 or 47-9107 pursuant to the debtor's security agreement. C. Subsection B of this section is subject to section 47-4210 on the security interest of a collecting bank, section 47-5118 on the security interest of a letter-of-credit issuer or nominated person, section 47-9110 on a security interest arising under chapter 2 or 2A of this title, and section 47-9206 on security interests in investment property. D. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this chapter or by contract: 1. The security agreement becomes effective to create a security interest in the person's property; or 2. The person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person. E. If a new debtor becomes bound as debtor by a security agreement entered into by another person: 1. The agreement satisfies subsection B, paragraph 3 of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and 2. Another agreement is not necessary to make a security interest in the property enforceable. F. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by section 47-9315 and is also attachment of a security interest in a supporting obligation for the collateral. G. The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage or other lien. H. The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account. I. The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account. 47-9204. After-acquired property; future advances A. Except as otherwise provided in subsection B, a security agreement may create or provide for a security interest in after-acquired collateral. B. A security interest does not attach under a term constituting an after-acquired property clause to: 1. Consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within ten days after the secured party gives value; or 2. A commercial tort claim. C. A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to commitment. 47-9205. Use or disposition of collateral permissible A. A security interest is not invalid or fraudulent against creditors solely because: 1. The debtor has the right or ability to: (a) Use, commingle or dispose of all or part of the collateral, including returned or repossessed goods; (b) Collect, compromise, enforce or otherwise deal with collateral; (c) Accept the return of collateral or make repossessions; or (d) Use, commingle or dispose of proceeds; or 2. The secured party fails to require the debtor to account for proceeds or replace collateral. B. This section does not relax the requirements of possession if attachment, perfection or enforcement of a security interest depends on possession of the collateral by the secured party. 47-9206. Security interest arising in purchase or delivery of financial asset A. A security interest in favor of a securities intermediary attaches to a person's security entitlement if: 1. The person buys a financial asset through the securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and 2. The securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary. B. The security interest described in subsection A secures the person's obligation to pay for the financial asset. C. A security interest in favor of a person that delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if: 1. The security or other financial asset: (a) In the ordinary course of business is transferred by delivery with any necessary indorsement or assignment; and (b) Is delivered under an agreement between persons in the business of dealing with such securities or financial assets; and 2. The agreement calls for delivery against payment. D. The security interest described in subsection C secures the obligation to make payment for the delivery. 47-9207. Rights and duties of secured party having possession or control of collateral A. Except as otherwise provided in subsection D of this section, a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed. B. Except as otherwise provided in subsection D of this section, if a secured party has possession of collateral: 1. Reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral; 2. The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage; 3. The secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and 4. The secured party may use or operate the collateral: (a) For the purpose of preserving the collateral or its value; (b) As permitted by an order of a court having competent jurisdiction; or (c) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor. C. Except as otherwise provided in subsection D of this section, a secured party having possession of collateral or control of collateral under section 47-7106, 47-9104, 47-9105, 47-9106 or 47-9107: 1. May hold as additional security any proceeds, except money or funds, received from the collateral; 2. Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and 3. May create a security interest in the collateral. D. If the secured party is a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor: 1. Subsection A of this section does not apply unless the secured party is entitled under an agreement: (a) To charge back uncollected collateral; or (b) Otherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and 2. Subsections B and C of this section do not apply. 47-9208. Additional duties of secured party having control of collateral A. This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations or otherwise give value. B. Within ten days after receiving an authenticated demand by the debtor: 1. A secured party having control of a deposit account under section 47-9104, subsection A, paragraph 2 shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party; 2. A secured party having control of a deposit account under section 47-9104, subsection A, paragraph 3 shall: (a) Pay the debtor the balance on deposit in the deposit account; or (b) Transfer the balance on deposit into a deposit account in the debtor's name; 3. A secured party, other than a buyer, having control of electronic chattel paper under section 47-9105 shall: (a) Communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian; (b) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and (c) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy that add or change an identified assignee of the authoritative copy without the consent of the secured party; 4. A secured party having control of investment property under section 47-8106, subsection D, paragraph 2 or section 47-9106, subsection B shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party; 5. A secured party having control of a letter-of-credit right under section 47-9107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; and 6. A secured party having control of an electronic document shall: (a) Give control of the electronic document to the debtor or its designated custodian; (b) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and (c) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy that add or change an identified assignee of the authoritative copy without the consent of the secured party. 47-9209. Duties of secured party if account debtor has been notified of assignment A. Except as otherwise provided in subsection C of this section, this section applies if: 1. There is no outstanding secured obligation; and 2. The secured party is not committed to make advances, incur obligations or otherwise give value. B. Within ten days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under section 47-9406, subsection A an authenticated record that releases the account debtor from any further obligation to the secured party. C. This section does not apply to an assignment constituting the sale of an account, chattel paper or payment intangible. 47-9210. Request for accounting; request regarding list of collateral or statement of account A. In this section: 1. "Request" means a record of a type described in paragraph 2, 3 or 4 of this subsection. 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. 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 fourteen 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. 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 fourteen days after receipt. D. 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 fourteen 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. 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 fourteen 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. 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 twenty-five dollars for each additional response. 47-9301. Law governing perfection and priority of security interests Except as otherwise provided in sections 47-9303 through 47-9306, the following rules determine the law governing perfection, the effect of perfection or nonperfection and the priority of a security interest in collateral: 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 of this section, while tangible 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 securit