O.C.G.A. § 11-8-603 (2019)

Annotations

RESEARCH REFERENCES U.L.A. Uniform Commercial Code (U.L.A.) § 8603.

ARTICLE 9 SECURED TRANSACTIONS Sec.

Part 1 General Provisions Subpart 1

Short Title, Definitions, and General Concepts

Sec.

Short title. Definitions and index of definitions. Purchase money security interest; application of payments; burden of establishing. Control of deposit account. Control of electronic chattel paper. Control of investment property. Control of letter of credit right. Sufficiency of description.

Subpart 2 Rights and Duties

Subpart 2 Applicability of Article

Effectiveness of Security Agreement; Attachment of Security Interest; Rights of Parties to Security Agreement

Perfection and Priority Subpart 1 Law Governing Perfection and Priority

Subpart 1 Effectiveness and Attachment

Rights and duties of secured party having possession or control of collateral. Additional duties of secured party having control of collateral. Duties of secured party if account debtor has been notified of assignment. Request for accounting; request regarding list of collateral or statement of account. Part 3

Scope. Security interests arising under Article 2 or 2A of this title. Applicability of bulk transfer laws [Repealed]. Part 2

proceeds; supporting obligations; formal requisites. After acquired property; future advances. Use or disposition of collateral permissible. Security interest arising in purchase or delivery of financial asset.

General effectiveness of security agreement. Title to collateral immaterial. Attachment and enforceability of security interest;

Law governing perfection and priority of security interests. Law governing perfection and priority of agricultural liens. Law governing perfection and priority of security interests in goods covered by a certificate of title. Law governing perfection and priority of security interests in deposit accounts. Law governing perfection and priority of security interests in investment property.

Sec.

COMMERCIAL CODE Sec. Law governing perfection and priority of security interests in letter of credit rights. Location of debtor.

Subpart 2

Perfection

When security interest or agricultural lien is perfected; continuity of perfection. Security interest perfected upon attachment. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply. Perfection of security interests in property subject to certain statutes, regulations, and treaties. Perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter of credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession. When possession by or delivery to secured party perfects security interest without filing. Perfection by control. Secured party’s rights on disposition of collateral and in proceeds. Effect of change in governing law. Subpart 3

Priority

Interests that take priority over or take free of security interest or agricultural lien. No interest retained in right to payment that is sold;

rights and title of seller of account or chattel paper with respect to creditors and purchasers. Rights and title of consignee with respect to creditors and purchasers. Buyer of goods. Licensee of general intangible and lessee of goods in ordinary course of business. Priorities among conflicting security interests in and agricultural liens on same collateral. Crops produced with new value. Future advances. Priority of purchase money security interests. Priority of security interests in transferred collateral. Priority of security interests created by new debtor. Priority of security interests in deposit account. Priority of security interests in investment property. Priority of security interests in letter of credit right. Priority of purchaser of chattel paper or instrument. Priority of rights of purchasers of instruments, documents, and securities under other articles; priority of interests in financial assets and security entitlements under Article 8 of this title. Transfer of money; transfer of funds from deposit account. Priority of certain liens. Priority of security interests in fixtures and crops. Accessions. Commingled goods. Priority of security interests in goods covered by certificate of title. Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information.

Sec.

SECURED TRANSACTIONS Part 5 Priority subject to subordination.

Filing Subpart 1

Subpart 4

Filing Office; Contents and Effectiveness of Financing Statement

Rights of Bank

Effectiveness of right of recoupment or set-off against deposit account. Bank’s rights and duties with respect to deposit account. Bank’s right to refuse to enter into or disclose existence of control agreement.

Sec.

Part 4 Rights of Third Parties

Alienability of debtor’s rights. Secured party not obligated on contract of debtor or in tort. Agreement not to assert defenses against assignee. Rights acquired by assignee; claims and defenses against assignee. Modification of assigned contract. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes ineffective. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor’s residual interest. Restrictions on assignment of promissory notes, health care insurance receivables, and certain general intangibles ineffective. Restrictions on assignment of letter of credit rights ineffective.

Filing office. Contents of financing statement; record of mortgage as fixture filing or financing statement; time of filing financing statement. Name of debtor and secured party. Indication of collateral. Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions. Effect of errors or omissions. Effect of certain events on effectiveness of financing statement. Effectiveness of financing statement if new debtor becomes bound by security agreement. Persons entitled to file a record. Effectiveness of filed record. Secured party of record. Amendment of financing statement. Termination statement. Assignment of powers of secured party of record. Duration and effectiveness of financing statement; effect of lapsed financing statement; record of mortgage as financing statement. What constitutes filing; effectiveness of filing. Effect of indexing errors. Inaccurate or wrongfully filed record. Subpart 2

Duties and Operation of Filing Office and Central Indexing System

Numbering,

maintaining,

Sec.

and indexing records; communicating information provided in records. Acceptance and refusal to accept record. Uniform form of written financing statement and amendment; authority may prescribe forms. Maintenance and destruction of records. Information from filing office and central indexing system; sale or license of records. Delay by filing office or authority. Fees. Rules.

Sec.

Part 6

Default

Subpart 1 Default and Enforcement of Security Interest

Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes. Waiver and variance of rights and duties. Agreement on standards concerning rights and duties. Procedure if security agreement covers real property or fixtures. Unknown debtor or secondary obligor. Time of default for agricultural lien. Collection and enforcement by secured party. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus. Secured party’s right to take possession after default. Disposition of collateral after default.

Notification before disposition of collateral. Timeliness of notification before disposition of collateral. Contents and form of notification before disposition of collateral; general. Contents and form of notification before disposition of collateral; consumer goods transaction. Application of proceeds of disposition; liability for deficiency and right to surplus. Explanation of calculation of surplus or deficiency. Rights of transferee of collateral. Rights and duties of certain secondary obligors. Transfer of record or legal title. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral. Notification of proposal to accept collateral. Effect of acceptance of collateral. Right to redeem collateral. Waiver. Subpart 2

Noncompliance with Article

Remedies for secured party’s failure to comply with article. Action in which deficiency or surplus is in issue. Determination of whether conduct was commercially reasonable. Nonliability and limitation on liability of secured party; liability of secondary obligor. Part 7 2001 Transition

Effective date. Savings clause.

Sec.

Security interest perfected before effective date. Security interest unperfected before effective date. Effectiveness of action taken before effective date. When initial financing statement suffices to continue effectiveness of financing statement. Amendment of pre-effective date financing statement. Persons entitled to file initial financing statement or continuation statement. Priority. Exculpation.

Sec.

Part 8

Savings clause. Security interest perfected before effective date. Security interest unperfected before effective date. Effectiveness of action taken before effective date. When initial financing statement suffices to continue effectiveness of financing statement. Amendment of pre-effective date financing statement. Person entitled to file initial financing statement or continuation statement. Priority.

2013 Transition

Reserved.

Cross references. Effect of transfer of note secured by mortgage, etc., § 10-3-1. Making of secured transactions and other dispositions of corporate property and assets not requiring shareholder approval, § 14-2-1201. Criminal penalty for destruction, removal, concealment, encumbrance, or transfer of property subject to security interests, § 16-9-51. Perfection and validity of security interests in motor vehicles, § 40-3-50 et seq. Mortgages, conveyances to secure debt, etc., § 44-14-1 et seq. Editor’s notes. Ga. L. 2001, p. 362, § 1, effective July 1, 2001, repealed the Code sections formerly codified as this article and enacted the current article. The former article consisted of Code Sections 11-9-101 through 11-9-116 (Part 1), 11-9-201 through 11-9208 (Part 2), 11-9-301 through 11-9-318 (Part 3), 11-9-401 through 11-9-409 (Part 4), and 11-9-501 through 11-9-507 (Part 5), relating to secured transactions, sales of accounts and chattel paper, and was

based on Code 1933, §§ 109A-9-101 through 109A-9-114; Code 1933 §§ 109A9-201 through 109A-9-208; Code 1933 §§ 109A-9-301 through 109A-9-318; Code 1933, §§ 109A-9-401 through 109A-9-409; Code 1933, §§ 109A-9-501 through 109A9-507; Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, §§ 23 through 36; Ga. L. 1964, p. 70, §§ 1, 3 through 7; Ga. L. 1968, p. 1151, § 1; Ga. L. 1969, p. 149, § 1; Ga. L. 1970, p. 604, § 1; Ga. L. 1978, p. 1081, § 1; Ga. L. 1979, p. 626, § 1; Ga. L. 1980, p. 443, §§ 2 through 6; Ga. L. 1980, p. 1134, §§ 1 through 3; Ga. L. 1981, p. 1396, §§ 9 through 14; Ga. L. 1982, p. 3, § 11; Ga. L. 1985, p. 1107, § 1; Ga. L. 1985, p. 1517, §§ 1 through 4; Ga. L. 1986, p. 357, §§ 1 through 2; Ga. L. 1986, p. 1002, §§ 5 through 8; Ga. L. 1988, p. 13, § 11; Ga. L. 1991, p. 94, § 11; Ga. L. 1992, p. 1028, § 1; Ga. L. 1992, p. 2626, §§ 4 through 11; Ga. L. 1993, p. 576, § 1; Ga. L. 1993, p. 633, § 4; Ga. L. 1993, p. 1550, §§ 1 through 6; Ga. L. 1994, p. 1693, §§ 1 through 12; Ga. L. 1997, p. 143, § 11; Ga. L. 1997, p. 970, § 3; Ga. L. 1998, p. 128, § 11; Ga. L. 1998, p. 1323, § 2 through 14.

Table of Comparable Provisions for Title 11, Article 9 Former Code Sections to Revised Code Sections This table lists each section in the version of Article 9 of the Uniform Commercial Code in effect prior to July 1, 2001, and provides the comparable provisions for Article 9 in effect on and after July 1, 2001. It is intended to assist the user who is familiar with the former title to find comparable new provisions. FORMER CODE Part One

11-9-301, 11-9-303, repealed repealed 11-9-102, 11-9-106,

Part Two

Part Three

11-9-102, 11-9-317

FORMER CODE Part One

11-9-301, 11-9-303, repealed repealed 11-9-102, 11-9-106,

Part Two

Part Three

11-9-102, 11-9-315 11-9-322, 11-9-322.1,

11-9-404, 11-9-405

Part Four

11-9-502, 11-9-503, 11-9-504, 11-9-506 11-9-510, 11-9-511, 11-9-515, 11-9-516 11-9-514, 11-9-525 11-9-519, 11-9-523,

repealed

Part Five

11-9-601, 11-9-602 11-9-610 - 11-9-614 11-9-620, 11-9-622

Revised Code Sections to Former Code Sections This table lists each section in the version of Article 9 of the Uniform Commercial Code in effect on and after July 1, 2001, and provides the comparable provisions for Article 9 in effect prior to July 1, 2001. It is intended to assist the user who is familiar with the new title to find comparable former provisions. REVISED CODE

Part Two, Subpart One 11-9-105, 11-9-106, 11-9-109, 11-9-115, 11-9-301, 11-9-306 none

Part Two, Subpart One 11-9-105, 11-9-106, 11-9-109, 11-9-115, 11-9-301, 11-9-306 none none none Subpart Two

Subpart Two

Part Three, Subpart One 11-9-103, none none none none Subpart Two

Part Two, Subpart One

none none

none none none

Part Two, Subpart One 11-9-105, 11-9-106, 11-9-109, 11-9-115, 11-9-301, 11-9-306 none none Subpart Three

none none none none none none none none none none none

Part Two, Subpart One 11-9-105, 11-9-106, 11-9-109, 11-9-115, 11-9-301, 11-9-306 none none none none none none none Subpart Two

Subpart Four

none none none

Part Four

none none none none

none none none none 11-9-405,

Part Six, Subpart One none none none none none none none

Part Five, Subpart One

SECURED TRANSACTIONS FORMER CODE

Part Two, Subpart One 11-9-105, 11-9-106, 11-9-109, 11-9-115, 11-9-301, 11-9-306 none none none none none none Subpart Two

none

Part Seven

none none none none none none none none none none

Law reviews. For comment on Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966), see 3 Ga. St. B.J. 248 (1966). For article discussing the effect of the Uniform Commercial Code upon the statutory lien provision of section 67(c) of the Bankruptcy Act, see 1 Ga. L. Rev. 149 (1967).

For article discussing federal truth in lending provisions and their relation to state laws, see 6 Ga. St. B.J. 19 (1969). For article discussing secured lending, and offering some practical guidelines, see 28 Mercer L. Rev. 699 (1977). For article discussing fifth circuit bankruptcy cases in 1977, see 29 Mercer L. Rev. 937 (1978). For article surveying Georgia cases dealing with commercial law from June 1977 through May 1978, see 30 Mercer L. Rev. 15 (1978). For article discussing possible impact of new Bankruptcy Code on Article 9 of the Uniform Commercial Code, see 14 Ga. L. Rev. 153 (1980). For article, “The Good Faith Purchase Idea and the Uniform Commercial Code,” see 15 Ga. L. Rev. 605 (1981). For case note, “Midlantic National Bank v. New Jersey Department of Environmental Protection: The Problem of Hazardous Wastes and the Bankrupt Firm,” see 38 Mercer L. Rev. 693 (1987). For article, “State Administrative Agency Contested Case Hearings,” see 24 Ga. St. B.J. 193 (1988). For article, “Contribution Arguments in Commercial Law,” see 42 Emory L.J. 897 (1993). For annual survey article discussing developments in commercial law, see 51 Mercer L. Rev. 165 (1999). For comment, “ ‘The Twain Shall Meet’: A Real Property Approach to Article 9 Perfection,” see 64 Emory L.J. 1103 (2015). For article, “Perfecting Bitcoin,” see 52 Ga. L. Rev. 505 (2018). For note, “Pay Toll with Coins: Looking Back on FBAR Penalties and Prosecutions to Inform the Future of Cryptocurrency Taxation,” see 55 Ga. L. Rev. 359 (2020).

JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article. Purpose. - Concept and intention of this article is to provide method whereby

all security interests can be perfected. In some instances, filing is required, and in others, possession of collateral is only means available or permitted whereby creditor can perfect security interest. In re Atlanta Times, Inc., 259 F. Supp. 820, 1966 U.S. Dist. LEXIS 10458 (N.D. Ga. 1966), aff’d, 383 F.2d 606, 1967 U.S. App.

LEXIS 4987 (5th Cir. 1967) (decided under former Article 9). Applicability. - This article applies to security transactions in broad spectrum of tangible and intangible personal property. Williams v. Western Pac. Fin. Corp., 643 F.2d 331, 1981 U.S. App. LEXIS 13963 (5th Cir. 1981) (decided under former Article 9). Conflicts with former Installment Sales Act. - Parties may contract to create security interest which will then be governed by provisions of Uniform Commercial Code unless those provisions conflict with specific terms in former Installment Sales Act. Brown v. Jenkins, 135 Ga. App. 694, 218 S.E.2d 690, 1975 Ga. App. LEXIS 1787 (1975) (decided under former Article 9). Priorities between secured interests and setoff rights. - This article applies to resolving priority disputes between Article 9 secured interests and contractual setoff rights, as distinguished from the creation of the right of setoff. Credit Alliance Corp. v. National Bank, 718 F. Supp. 954, 1989 U.S. Dist. LEXIS 10058 (N.D. Ga. 1989) (decided under former Article 9). A valid maritime lien is superior to a perfected nonmaritime UCC security interest in the same collateral. Ambassador Factors v. First Am. Bulk Carrier Corp. (In re Topgallant Lines), 125 B.R. 682, 1991 Bankr. LEXIS 1074 (Bankr. S.D. Ga. 1991) (decided under former Article 9). Perfection gives notice. - Perfection of security interests under the Motor Vehicle Certificate of Title Act, as under the Uniform Commercial Code, serves purpose of giving notice to subsequent creditors. In re Firth, 363 F. Supp. 369, 1973 U.S. Dist. LEXIS 12015 (M.D. Ga. 1973) (decided under former Article 9). Conversion of property subject to security interest. - Where property is subject to security interest, exercise of dominion or control over property which is inconsistent with rights of secured party, constitutes, as to the secured party, conversion of the property; and there may be conversion by secured party where the party acts are in defiance of rights of others in the property. Trust Co. v. Associated Grocers Coop., 152 Ga. App. 701, 263 S.E.2d 676, 1979 Ga. App. LEXIS 3012 (1979) (decided under former Article 9). Where a sale of collateral is, with respect to the secured party, a conversion of

the collateral, there is a conversion on the part of the one who sells, as well as on the part of the one who purchases, and the purchaser may be liable regardless of intent, and regardless of the purchaser’s lack of actual knowledge of the rights of the secured party. Trust Co. v. Associated Grocers Coop., 152 Ga. App. 701, 263 S.E.2d 676, 1979 Ga. App. LEXIS 3012 (1979) (decided under former Article 9). Where lease provisions retained title in the lessor and the leased machine was to be returned to the lessor at the termination of the lease with no residual interest therein to the lessee, the lease was not a security instrument and this article does not apply. Capital Assocs. v. Zabel, 172 Ga. App. 19, 322 S.E.2d 67, 1984 Ga. App. LEXIS 2378 (1984) (decided under former Article 9). Where there was no agreement or intent by either party that the lessee would purchase leased equipment, the fact that the contract obligated the lessee to pay taxes, insurance, and expenses of repairs, and allowed the lessor to retain the equipment after it was returned, did not make the contract a security agreement rather than a lease. City Food Mart, Inc. v. Bell Atl. Tricon Leasing Corp., 218 Ga. App. 57, 460 S.E.2d 525, 1995 Ga. App. LEXIS 654 (1995), cert. denied, No. S95C1813, 1995 Ga. LEXIS 1215 (Ga. Nov. 3, 1995) (decided under former Article 9). Transfer of part of security interest. - There is no Georgia law that requires the simultaneous transfer of an underlying promissory note with the transfer of the security interest. Instead, the Georgia Commercial Code anticipates and allows a secured party’s assignment of all or part of its security interest. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 B.R. 903, 1987 Bankr. LEXIS 428 (Bankr. M.D. Ga. 1987) (decided under former Article 9). Retention of certificate of origin for mobile home. - Where manufacturer retained certificate of origin for mobile home which was “on consignment” and not yet included in a retailer’s floor-plan arrangement, it was nonetheless in the retailer’s inventory and available for sale to its retail customers, and the rights of the parties were determined under the

Uniform Commercial Code rather than the Motor Vehicle Certificate of Title Act, O.C.G.A. § 40-3-1 et seq. GECC v. Catalina Homes, Inc., 178 Ga. App. 319, 342 S.E.2d 734, 1986 Ga. App. LEXIS 1646 (1986) (decided under former Article 9). Perfection of security interest in automobile. - When bank financed purchase of car by car leasing business, the correct avenue for perfecting of its security interest in the car was through procedure set forth in the Motor Vehicle Certificate of Title Act (O.C.G.A. § 40-3-1 et seq.) as opposed to filing of its financial statement under procedures established by the U.C.C. United Carolina Bank v. Capital Auto. Co., 163 Ga. App. 796, 294 S.E.2d

661, 1982 Ga. App. LEXIS 2653 (1982) (decided under former Article 9). Limited partnership agreement. - Where limited partners acquired their interest in a partnership by paying cash and giving a promissory note, and the limited partnership agreement provided that if the note were not paid by a date certain the limited partners’ interest in the partnership would be automatically reduced by the fraction of the principal remaining unpaid, the agreement did not constitute a security agreement governed by Article 9. Consolidated Equities Corp. v. Bird, 195 Ga. App. 45, 392 S.E.2d 276, 1990 Ga. App. LEXIS 385 (1990) (decided under former Article 9).

OPINIONS OF THE ATTORNEY GENERAL Editor’s notes. - In light of the similarity of the statutory provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article. Definition of “security interest.” - “Security interest” means an interest in personal property or fixtures which se-

cures payment or performance of an obligation; retention or reservation of title by seller of goods notwithstanding shipment or delivery to buyer is limited in effect to reservation of “security interest”; this term also includes any interest of a buyer of accounts, chattel paper or contract rights. 1963-65 Ga. Op. Att’y Gen. 162 (decided under former Article 9).

RESEARCH REFERENCES Am. Jur. 2d. 68A Am. Jur. 2d, Secured Transactions, § 1 et seq. C.J.S. 79 C.J.S., Secured Transactions, § 1 et seq. ALR. Liability for assault or trespass in forcibly retaking property sold conditionally, 9 A.L.R. 1180; 105 A.L.R. 926; 99 A.L.R.2d 358. Bankruptcy: effect of filing secured debt as an unsecured claim, 46 A.L.R. 922. Rights of parties to conditional sale as affected by breach of warranty, 48 A.L.R. 969, 130 A.L.R. 753. Construction and effect of UCC Article 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 A.L.R.3d 9; 67 A.L.R.3d 308; 69 A.L.R.3d 1162; 76 A.L.R.3d 11; 99 A.L.R.3d 807; 99 A.L.R.3d 1080; 100

A.L.R.3d 10; 100 A.L.R.3d 940; 7 A.L.R.4th 308; 11 A.L.R.4th 241; 25 A.L.R.5th 696. Effect of UCC article 9 upon conflict, as to funds in debtor’s bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998. Security interests in liquor licenses, 56 A.L.R.4th 1131. Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real-estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 A.L.R.4th 765. Construction and effect of “future advances” clauses under UCC Article 9, 90 A.L.R.4th 859. Equitable estoppel of secured party’s right to assert prior, perfected security interest against other secured creditor or subsequent purchaser under Article 9 of Uniform Commercial Code, 9 A.L.R.5th 708.

Liability of secured creditor under Uniform Commercial Code to third party on

ground of unjust enrichment, 27 A.L.R.5th 719.

PART 1 GENERAL PROVISIONS Law reviews. For article, “Revised Article 9 of Uni-

form Commercial Code Adopted,” see 6 Ga. St. B.J. 22 (2001).

RESEARCH REFERENCES C.J.S. 79 C.J.S., Secured Transactions, § 1 et seq.

Subpart 1 Short Title, Definitions, and General Concepts