Coming Soon - Revised Article 9

by Richard A. Hills, Jr.

Womble Carlyle Sandridge & Rice PLLC

Atlanta, Georgia


Revised Article 9 of the Uniform Commercial Code has been enacted in Georgia, and becomes effective on July 1 of this year, the same effective date chosen by almost all other states that have enacted it.  When Gov. Barnes signed House Bill 191 into law on April 20, Georgia became one of 35 states (plus the District of Columbia) to enact this sweeping revision of the law covering transactions secured by personal property.


This is a summary of some of the significant provisions of Revised Article 9 that should be of interest to Georgia bankers.  It is not an exhaustive summary and is not intended to cover every item of importance.  This is the first significant revision of Article 9 since 1972, and there are numerous changes.


New Collateral Types.  Among the new types of collateral covered by Revised Article 9 are such personal property interests as health care insurance receivables, commercial tort claims, deposit accounts (more about that later), and payment intangibles.


Changes in Collateral Categories.  Some collateral items have moved from one category to another.  The “accounts” category has expanded and the “general intangibles” category has contracted.


Expanded Coverage.  Revised Article 9 covers the new concept of agricultural liens, basically non-possessory statutory liens against farm products for rent or supplies.  They are not collateral and not security interests, but must be perfected by filing financing statements.  Among other things, agricultural landlords will now need to file to perfect their lien claims, and agricultural liens will be enforced just like security interests.


New Terms for Parties.  In addition to the time-honored terms “debtor” and “secured party,” Revised Article 9 gives us some new related terms, “obligor,” “secondary obligor,” and “new debtor.”


Deposit Accounts.  Deposit accounts will now be eligible original collateral under Revised Article 9, except in consumer transactions.  Security interests in deposit-account collateral may be perfected only by “control,” not by filing.  Certificates of deposit (unless they are negotiable) are deposit accounts under Revised Article 9.


Changes in the Filing System.  New national financing statement and amendment forms will be required.  Existing UCC-1, UCC-2, and UCC-3 forms will no longer be used, although they may continue to be used in Georgia through the end of 2001.  Electronic filing will be permitted.  Signatures (including debtors’ signatures) will no longer be required on financing statements.  A premium is placed on using the debtor’s correct name in financing statements, and the system is unforgiving of mistakes.


New Filing Locations.  Perhaps most importantly, the location in which many filings will occur has changed.  For all security interests perfected by filing, the filing must occur where the debtor is located.  A debtor that is an individual is located at his residence.  An debtor that is an organization (for example, a general partnership or an unincorporated church) is located at its place of business if it has only one place of business, and at its chief executive office if it has more than one place of business.  A debtor that is a “registered organization” (for example, a corporation or limited liability company) is located in the state under whose law it is organized. 


Default and Enforcement.  Replacing old Article 9’s rather sketchy treatment of default and enforcement, Revised Article 9 provides detailed guidance.  There are new required notice forms for dispositions of collateral in both consumer goods and non-consumer goods transactions, and notices of disposition must be sent to a number of new parties.


Transition Provisions.  Revised Article 9 contains detailed transition provisions that explain how to get from “old” Article 9 to “new” Article 9, and maintain the perfection and priority of existing security interests.  These provisions last for five years from the effective date, matching the effectiveness period of a filed financing statement.  While many, if not most, existing security interests will be unaffected by Revised Article 9, existing transactions should be examined to determine if special treatment is required under the transition provisions. 


Neighboring States.  Among the states that have enacted Revised Article 9 so far are two of Georgia’s neighbors, North Carolina and Tennessee.  It has been introduced and is pending in the legislatures of Florida, South Carolina, and Alabama, but it is not known if any of those states will enact the legislation during their current legislative sessions.


Non-enacting States.  Until all states enact Revised Article 9, so that its uniform provisions are the law throughout the United States, secured parties should proceed with caution.  Perfection of security interests under both old Article 9 and Revised Article 9 may be appropriate under certain circumstances.


The complete text of the new law is available from the Georgia General Assembly’s website.  Go to, click on “Legislation,” enter 191 in the box under “Search,” then click on “Retrieve the Bill.”


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