Substitute Senate Bill No. 1226

Public Act No. 01-132

AN ACT ADOPTING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE CONCERNING SECURED TRANSACTIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 42a-9-101 of the general statutes is repealed and the following is substituted in lieu thereof:

This article [shall be known and] may be cited as "Uniform Commercial Code-Secured Transactions".

Sec. 2. Section 42a-9-102 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Except as otherwise provided in section 42a-9-104 on excluded transactions, this article applies (a) to any transaction, regardless of its form, which is intended to create a security interest in personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper or accounts; and also (b) to any sale of accounts or chattel paper.

(2) This article applies to security created by contract including pledge, assignment, chattel mortgage, chattel trust, trust deed, factor's lien, equipment trust, conditional sale, trust receipt, other lien or title retention contract and lease or consignment intended as security. This article does not apply to statutory liens except as provided in section 42a-9-310.

(3) 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 article does not apply.]

(a) In this article:

(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, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state or person licensed or authorized to operate the game by a state or governmental unit of a state. The term includes health-care-insurance receivables. The term does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) 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. The term 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) Which 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) Which 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) To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record.

(8) "Bank" means an organization that is engaged in the business of banking. The term 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.

(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 subdivision, "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. The term does not include (i) charters or other contracts involving the use or hire of a vessel, or (ii) 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. The term 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 upon 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 regulation.

(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 (i) an individual incurs an obligation primarily for personal, family or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family or household purposes. The term includes consumer-goods transactions.

(27) "Continuation statement" means an amendment of a financing statement which:

(A) Identifies, by its file number or, in the case of a recording with a filing office described in subdivision (1) of subsection (a) of section 42a-9-501, as amended by this act, by book and page 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. The term 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 subsection (2) of section 42a-7-201.

(31) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.

(32) "Encumbrance" includes real property mortgages and other liens on real property and all other rights in real property that are not ownership interests.

(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 which 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 subsection (a) of section 90 of this act.

(37) "Filing office" means an office designated in section 42a-9-501, as amended by this act, as the place to file a financing statement.

(38) "Filing-office regulation" means a regulation adopted pursuant to section 97 of this act.

(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 subsections (a) and (b) of section 42a-9-502, as amended by this act. The term includes the filing of a financing statement covering goods of a transmitting utility which 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. The term 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. The term 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. The term 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. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term 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. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States.

(46) "Health-care-insurance receivable" means an interest in or claim under a policy of insurance which 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 ordinary course of business is transferred by delivery with any necessary endorsement or assignment. The term does not include (i) investment property, (ii) letters of credit, or (iii) 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, which:

(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. The term 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 "mobile manufactured home" as defined in section 21-64.

(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, which secures payment or performance of an obligation.

(56) "New debtor" means a person that becomes bound as debtor under subsection (d) of section 42a-9-203, as amended by this act, by a security agreement previously entered into by another person.

(57) "New value" means (i) money, (ii) money's worth in property, services or new credit, or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term 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, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit.

(60) "Original debtor", except as used in subsection (c) of section 42a-9-310, as amended by this act, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subsection (d) of section 42a-9-203, as amended by this act.

(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 subparagraph (A);

(D) The spouse of an individual described in subparagraph (A), (B) or (C); or

(E) An individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C) or (D) and shares the same home with the individual.

(64) "Proceeds", except as used in subsection (b) of section 106 of this act, means the following property:

(A) Whatever is acquired upon 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 which 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 117, 118 and 119 of this act.

(67) "Public-finance transaction" means a secured transaction in connection with which:

(A) Debt securities are issued;

(B) All or a portion of the securities issued have an initial stated maturity of at least twenty years; and

(C) The debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation or assignor or assignee of a security interest is a state or a governmental unit of a state.

(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 which is stored in an electronic or other medium and is retrievable in perceivable form.

(70) "Registered organization" means an organization organized solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized.

(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 42a-2-401, section 42a-2-505, subsection (3) of section 42a-2-711, section 42a-4-210 or section 42a-5-118, as amended by this act.

(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 subparagraph (A).

(75) "Software" means a computer program and any supporting information provided in connection with a transaction relating to the program. The term 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 which:

(A) Identifies, by its file number or, in the case of a recording with a filing office described in subdivision (1) of subsection (a) of section 42a-9-501, as amended by this act, by book and page 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) The following definitions in other articles apply to this article:

"Applicant". Section 42a-5-102.

"Beneficiary". Section 42a-5-102.

"Broker". Section 42a-8-102.

"Certificated security". Section 42a-8-102.

"Check". Section 42a-3-104.

"Clearing corporation". Section 42a-8-102.

"Contract for sale". Section 42a-2-106.

"Customer". Section 42a-4-104.

"Entitlement holder". Section 42a-8-102.

"Financial asset". Section 42a-8-102.

"Holder in due course". Section 42a-3-302.

"Issuer" (with respect to a letter of credit or letter-of-credit right). Section 42a-5-102.

"Issuer" (with respect to a security). Section 42a-8-201.

"Letter of credit". Section 42a-5-102.

"Merchant". Section 42a-2-104.

"Negotiable instrument". Section 42a-3-104.

"Nominated person". Section 42a-5-102.

"Note". Section 42a-3-104.

"Proceeds of a letter of credit". Section 42a-5-114.

"Prove". Section 42a-3-103.

"Sale". Section 42a-2-106.

"Securities account". Section 42a-8-501.

"Securities intermediary". Section 42a-8-102.

"Security". Section 42a-8-102.

"Security certificate". Section 42a-8-102.

"Security entitlement". Section 42a-8-102.

"Uncertificated security". Section 42a-8-102.

(c) Article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

Sec. 3. Section 42a-9-103a of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) (a) This subsection applies to documents, instruments, rights to proceeds of written letters of credit and goods other than those covered by a certificate of title described in subsection (2), mobile goods described in subsection (3), and minerals described in subsection (5); (b) except as otherwise provided in this subsection, perfection and the effect of perfection or nonperfection of a security interest in collateral are governed by the law of the jurisdiction where the collateral is when the last event occurs on which is based the assertion that the security interest is perfected or unperfected; (c) if the parties to a transaction creating a purchase money security interest in goods in one jurisdiction understand at the time that the security interest attaches that the goods will be kept in another jurisdiction, then the law of the other jurisdiction governs the perfection and the effect of perfection or nonperfection of the security interest from the time it attaches until thirty days after the debtor receives possession of the goods and thereafter if the goods are taken to the other jurisdiction before the end of the thirty-day period; (d) when collateral is brought into and kept in this state while subject to a security interest perfected under the law of the jurisdiction from which the collateral was removed, the security interest remains perfected, but if action is required by part 3 of this article to perfect the security interest, (i) if such action is not taken before the expiration of the period of perfection in the other jurisdiction or the end of four months after the collateral is brought into this state, whichever period first expires, the security interest becomes unperfected at the end of that period and is thereafter deemed to have been unperfected as against a person who became a purchaser after removal; (ii) if such action is taken before the expiration of the period specified in subparagraph (i), the security interest continues perfected thereafter; (iii) for the purpose of priority over a buyer of consumer goods as provided in subsection (2) of section 42a-9-307, the period of the effectiveness of a filing in the jurisdiction from which the collateral is removed is governed by the rules with respect to perfection in subparagraphs (i) and (ii) of this subsection.

(2) (a) Subsection (2) applies to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection; (b) except as otherwise provided in this subsection, perfection and the effect of perfection or nonperfection of the security interest are governed by the law, including the conflict of laws rules, of the jurisdiction issuing the certificate until four months after the goods are removed from that jurisdiction and thereafter until the goods are registered in another jurisdiction, but in any event not beyond surrender of the certificate. After the expiration of such period, the goods are not covered by the certificate of title within the meaning of this section; (c) except with respect to the rights of a buyer described in subdivision (d), a security interest, perfected in another jurisdiction otherwise than by notation on a certificate of title, in goods brought into this state and thereafter covered by a certificate of title issued by this state is subject to the rules stated in subdivision (d) of subsection (1) of this section; (d) if goods are brought into this state while a security interest therein is perfected in any manner under the law of the jurisdiction from which the goods are removed and a certificate of title is issued by this state and the certificate does not show that the goods are subject to the security interest or that they may be subject to security interests not shown on the certificate, the security interest is subordinate to the rights of a buyer of the goods who is not in the business of selling goods of that kind to the extent that he gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest.

(3) (a) Subsection (3) applies to accounts, other than an account described in subsection (5) of this section on minerals, and general intangibles, other than certificated securities and to goods which are mobile and which are of a type normally used in more than one jurisdiction, such as motor vehicles, trailers, rolling stock, airplanes, shipping containers, road building and construction machinery and commercial harvesting machinery and the like, if the goods are equipment or are inventory leased or held for lease by the debtor to others, and are not covered by a certificate of title described in subsection (2) of this section; (b) the law, including the conflict of laws rules, of the jurisdiction in which the debtor is located governs the perfection and the effect of perfection or nonperfection of the security interest; (c) if, however, the debtor is located in a jurisdiction which is not a part of the United States, and which does not provide for perfection of the security interest by filing or recording in that jurisdiction, the law of the jurisdiction in the United States in which the debtor has its major executive office in the United States governs the perfection and the effect of perfection or nonperfection of the security interest through filing. In the alternative, if the debtor is located in a jurisdiction which is not a part of the United States or Canada and the collateral is accounts or general intangibles for money due or to become due, the security interest may be perfected by notification to the account debtor. As used in this subdivision, "United States" includes its territories and possessions and the Commonwealth of Puerto Rico; (d) a debtor shall be deemed located at his place of business if he has one, at his chief executive office if he has more than one place of business, otherwise at his residence. If, however, the debtor is a foreign air carrier under the Federal Aviation Act of 1958, as amended, it shall be deemed located at the designated office of the agent upon whom service of process may be made on behalf of the foreign air carrier; (e) a security interest perfected under the law of the jurisdiction of the location of the debtor is perfected until the expiration of four months after a change of the debtor's location to another jurisdiction, or until perfection would have ceased by the law of the first jurisdiction, whichever period first expires. Unless perfected in the new jurisdiction before the end of that period, it becomes unperfected thereafter and is deemed to have been unperfected as against a person who became a purchaser after the change.

(4) The rules stated for goods in subsection (1) of this section apply to a possessory security interest in chattel paper. The rules stated for accounts in subsection (3) of this section apply to a nonpossessory security interest in chattel paper, but the security interest may not be perfected by notification to the account debtor.

(5) Perfection and the effect of perfection or nonperfection of a security interest which is created by a debtor who has an interest in minerals or the like, including oil and gas, before extraction and which attaches thereto as extracted, or which attaches to an account resulting from the sale thereof at the wellhead or minehead are governed by the law, including the conflict of laws rules, of the jurisdiction wherein the wellhead or minehead is located.

(6) (a) This subsection applies to investment property.

(b) Except as otherwise provided in subdivision (f) of this subsection, during the time that a security certificate is located in a jurisdiction, perfection of a security interest, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby are governed by the local law of that jurisdiction.

(c) Except as otherwise provided in subdivision (f) of this subsection, perfection of a security interest, the effect of perfection or nonperfection and the priority of a security interest in an uncertificated security are governed by the local law of the issuer's jurisdiction as specified in subsection (d) of section 42a-8-110.

(d) Except as otherwise provided in subdivision (f) of this subsection, perfection of a security interest, the effect of perfection or nonperfection and the priority of a security interest in a security entitlement or securities account are governed by the local law of the securities intermediary's jurisdiction as specified in subsection (e) of section 42a-8-110.

(e) Except as otherwise provided in subdivision (f) of this subsection, perfection of a security interest, the effect of perfection or nonperfection and the priority of a security interest in a commodity contract or commodity account are governed by the local law of the commodity intermediary's jurisdiction. The following rules determine a "commodity intermediary's jurisdiction" for purposes of this subdivision:

(i) If an agreement between the commodity intermediary and commodity customer specifies that it is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(ii) If an agreement between the commodity intermediary and commodity customer does not specify the governing law as provided in subparagraph (i) of this subdivision, but expressly specifies that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(iii) If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraph (i) or (ii) of this subdivision, the commodity intermediary's jurisdiction is the jurisdiction in which is located the office identified in an account statement as the office serving the commodity customer's account.

(iv) If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraph (i) or (ii) of this subdivision and an account statement does not identify an office serving the commodity customer's account as provided in subparagraph (iii) of this subdivision, the commodity intermediary's jurisdiction is the jurisdiction in which is located the chief executive office of the commodity intermediary.

(f) Perfection of a security interest by filing, automatic perfection of a security interest in investment property granted by a broker or securities intermediary and automatic perfection of a security interest in a commodity contract or commodity account granted by a commodity intermediary are governed by the local law of the jurisdiction in which the debtor is located.]

(a) In this section:

(1) "Purchase-money collateral" means goods or software that secures a purchase-money obligation incurred with respect to that collateral; and

(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) (1) 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:

(A) In accordance with any reasonable method of application to which the parties agree;

(B) 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

(C) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order:

(i) To obligations that are not secured; and

(ii) If more than one obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.

(2) In 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:

(A) The payment must be applied so that the secured party retains no purchase money security interest in any property as to which the secured party has recovered payments aggregating the amount of the sale price including any finance charges attributable thereto; and

(B) For the purposes of this subsection only, in the case of items purchased on different dates, the first item purchased shall be deemed the first paid for and, in the case of items purchased on the same date, the lowest priced item shall be deemed the first paid for.

(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 (f) and (g) of this section 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. Those approaches may apply principles of existing statutory and case law that apply to analogous consumer transactions in similar goods under part XI of chapter 669 and under other law of this state.

Sec. 4. Section 42a-9-104 of the general statutes is repealed and the following is substituted in lieu thereof:

[This article does not apply (a) to a security interest subject to any statute of the United States to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property; or (b) to a landlord's lien; or (c) to a lien given by statute or other rule of law for services or materials except as provided in section 42a-9-310 on priority of such liens; or (d) to a transfer of a claim for wages, salary or other compensation of an employee; or (e) to a transfer by a government or governmental subdivision or agency; or (f) to a sale of accounts or chattel paper as part of a sale of the business out of which they arose, or an assignment of accounts or chattel paper which is for the purpose of collection only, or a transfer of a right to payment under a contract to an assignee who is also to do the performance under the contract or a transfer of a single account to an assignee in whole or partial satisfaction of a preexisting indebtedness; or (g) to a transfer of an interest or claim in or under any policy of insurance, except as provided with respect to proceeds and priorities in proceeds; or (h) to a right represented by a judgment, other than a judgment taken on a right to payment which was collateral; or (i) to any right of set-off; or (j) except to the extent that provision is made for fixtures in section 42a-9-313, to the creation or transfer of an interest in or lien on real estate, including a lease or rents thereunder; or (k) to a transfer in whole or in part of any claim arising out of tort; or (l) to a transfer of an interest in any deposit account, except as provided with respect to proceeds and priorities in proceeds; or (m) to a transfer of an interest in a letter of credit other than the rights to proceeds of a written letter of credit. ]

(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) of this section has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

Sec. 5. Section 42a-9-105 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) In this article unless the context otherwise requires: (a) "Account debtor" means the person who is obligated on an account, chattel paper or general intangible; (b) "chattel paper" means a writing or writings which evidence both a monetary obligation and a security interest in or a lease of specific goods, but a charter or other contract involving the use or hire of a vessel is not chattel paper. When a transaction is evidenced both by such a security agreement or a lease and by an instrument or a series of instruments, the group of writings taken together constitutes chattel paper; (c) "collateral" means the property subject to a security interest, and includes accounts and chattel paper which have been sold; (d) "debtor" means the person who owes a payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, and includes the seller of accounts or chattel paper. Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires; (e) "deposit account" means a demand, time, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a certificate of deposit; (f) "document" means document of title as defined in the general definitions of section 42a-1-201, and a receipt of the kind described in subsection (2) of section 42a-7-201; (g) "encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interest; (h) "goods" includes all things which are movable at the time the security interest attaches or which are fixtures, as provided in section 42a-9-313, but does not include money, documents, instruments, investment property, accounts, chattel paper, general intangibles or minerals or the like, including oil and gas, before extraction. "Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals and growing crops; (i) "instrument" means a negotiable instrument, as defined in section 42a-3-104, or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment. The term does not include investment property; (j) "mortgage" means a consensual interest created by a real estate mortgage, a trust deed on real estate or the like; (k) an advance is made "pursuant to commitment" if the secured party has bound himself to make it, whether or not a subsequent event of default or other event not within his control has relieved or may relieve him from his obligation; (l) "security agreement" means an agreement which creates or provides for a security interest; (m) "secured party" means a lender, seller or other person in whose favor there is a security interest, including a person to whom accounts or chattel paper have been sold. When the holders of obligations issued under an indenture of trust, equipment trust agreement or the like are represented by a trustee or other person, the representative is the secured party; (n) "transmitting utility" means any person primarily engaged in the railroad business, the electric or electronics communications transmission business, the transmission of goods by pipeline, or the transmission or the production and transmission of electricity, steam, gas or water, or the provision of sewer service.

(2) Other definitions applying to this article and the sections in which they appear are:

"Account". Section 42a-9-106.

"Attach". Section 42a-9-203.

"Commodity contract". Section 42a-9-115.

"Commodity customer". Section 42a-9-115.

"Commodity intermediary". Section 42a-9-115.

"Construction mortgage". Section 42a-9-313(1).

"Consumer goods". Section 42a-9-109(1).

"Control". Section 42a-9-115.

"Equipment". Section 42a-9-109(2).

Farm products". Section 42a-9-109(3).

"Fixture". Section 42a-9-313.

"Fixture filing". Section 42a-9-313.

"General intangibles". Section 42a-9-106.

"Inventory". Section 42a-9-109(4).

"Investment property". Section 42a-9-115.

"Lien creditor". Section 42a-9-301(3).

"Proceeds". Section 42a-9-306(1).

"Purchase money security interest". Section 42a-9-107.

"United States". Section 42a-9-103a.

(3) The following definitions in other articles apply to this article:

"Broker". Section 42a-8-102.

"Certificated security". Section 42a-8-102.

"Check". Section 42a-3-104.

"Clearing corporation". Section 42a-8-102.

"Contract for sale". Section 42a-2-106.

"Control". Section 42a-8-106.

"Delivery". Section 42a-8-301.

"Entitlement holder". Section 42a-8-102.

"Financial asset". Section 42a-8-102

"Holder in due course". Section 42a-3-302.

"Letter of credit". Section 42a-5-102.

"Note". Section 42a-3-104.

"Proceeds of a letter of credit". Section 42a-5-114(a).

"Sale". Section 42a-2-106.

"Securities intermediary". Section 42a-8-102.

"Security". Section 42a-8-102.

"Security certificate". Section 42a-8-102.

"Security entitlement". Section 42a-8-102.

"Uncertificated security". Section 42a-8-102.

(4) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.]

A secured party has control of electronic chattel paper 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 which is unique, identifiable and, except as otherwise provided in subdivisions (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 revisions that add or change an identified assignee of the authoritative copy can be made only with the participation 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 revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

Sec. 6. Section 42a-9-106 of the general statutes is repealed and the following is substituted in lieu thereof:

["Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. "General intangibles" means any personal property, including things in action, other than goods, accounts, chattel paper, documents, instruments, investment property, rights to proceeds of written letters of credit and money. All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.]

(a) A person has control of a certificated security, uncertificated security or security entitlement as provided in section 42a-8-106.

(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.

Sec. 7. Section 42a-9-107 of the general statutes is repealed and the following is substituted in lieu thereof:

[A security interest is a "purchase money security interest" to the extent that it is (a) taken or retained by the seller of the collateral to secure all or part of its price; or (b) taken by a person who by making advances or incurring an obligation gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact so used. ]

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 subsection (c) of section 42a-5-114 or otherwise applicable law or practice.

Sec. 8. Section 42a-9-108 of the general statutes is repealed and the following is substituted in lieu thereof:

[Where a secured party makes an advance, incurs an obligation, releases a perfected security interest, or otherwise gives new value which is to be secured in whole or in part by after-acquired property his security interest in the after-acquired collateral shall be deemed to be taken for new value and not as security for an antecedent debt if the debtor acquires his rights in such collateral either in the ordinary course of his business or under a contract of purchase made pursuant to the security agreement within a reasonable time after new value is given.]

(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.

Sec. 9. Section 42a-9-109 of the general statutes is repealed and the following is substituted in lieu thereof:

[Goods are (1) "consumer goods" if they are used or bought for use primarily for personal, family or household purposes; (2) "equipment" if they are used or bought for use primarily in business, including farming or a profession, or by a debtor who is a nonprofit organization or a governmental subdivision or agency or if the goods are not included in the definitions of inventory, farm products or consumer goods; (3) "farm products" if they are crops or livestock or supplies used or produced in farming operations or if they are products of crops or livestock in their unmanufactured states, such as ginned cotton, woolclip, maple syrup, milk and eggs, and if they are in the possession of a debtor engaged in raising, fattening, grazing or other farming operations. If goods are farm products they are neither equipment nor inventory; (4) "inventory" if they are held by a person who holds them for sale or lease or to be furnished under contracts of service or if he has so furnished them, or if they are raw materials, work in process or materials used or consumed in a business. Inventory of a person is not to be classified as his equipment.]

(a) Except as otherwise provided in subsections (c) and (d), this article 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 42a-2-401, section 42a-2-505 or subsection (3) of section 42a-2-711, as provided in section 42a-9-110, as amended by this act; and

(6) A security interest arising under section 42a-4-210 or section 42a-5-118, as amended by this act.

(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 article does not apply.

(c) This article does not apply to the extent that:

(1) A statute, regulation or treaty of the United States preempts this article;

(2) A statute of another state, a foreign country or a governmental unit of another state or 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 the state, 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 42a-5-114.

(d) This article 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 53 of this act 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 which 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 section 42a-9-315, as amended by this act, and section 42 of this act, 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 set-off, but:

(A) Section 60 of this act applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B) Section 42a-9-404, as amended by this act, 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 42a-9-203 and 42a-9-308, as amended by this act;

(B) Fixtures in section 54 of this act;

(C) Fixture filings in sections 42a-9-501 and 42a-9-502, as amended by this act, and sections 83, 87 and 90 of this act; and

(D) Security agreements covering personal and real property in section 101 of this act;

(12) An assignment of a claim arising in tort, other than a commercial tort claim, but section 42a-9-315, as amended by this act, and section 42 of this act, apply with respect to proceeds and priorities in proceeds;

(13) An assignment of a deposit account in a consumer transaction, but section 42a-9-315, as amended by this act, and section 42 of this act, apply with respect to proceeds and priorities in proceeds;

(14) A transfer by a government or government subdivision or agency of this state;

(15) An assignment of workers' compensation benefits governed by section 31-320; or

(16) A security interest in a deposit account that is a payroll account or a trust account and which is titled or otherwise clearly identifiable as such an account.

Sec. 10. Section 42a-9-110 of the general statutes is repealed and the following is substituted in lieu thereof:

[For the purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described.]

A security interest arising under section 42a-2-401, section 42a-2-505 or subsection (3) of section 42a-2-711 is subject to this article. However, until the debtor obtains possession of the goods:

(1) The security interest is enforceable, even if subdivision (3) of subsection (b) of section 42a-9-203, as amended by this act, 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 article 2; and

(4) The security interest has priority over a conflicting security interest created by the debtor.

Sec. 11. Section 42a-9-201 of the general statutes is repealed and the following is substituted in lieu thereof:

[Except as otherwise provided by this title a security agreement is effective according to its terms between the parties, against purchasers of the collateral and against creditors. Nothing in this article validates any charge or practice illegal under any statute or regulation thereunder governing usury, small loans, retail instalment sales, or the like, or extends the application of any such statute or regulation to any transaction not otherwise subject thereto.]

(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 article is subject to any applicable rule of law which establishes a different rule for consumers and sections 36a-555 to 36a-573, inclusive, and sections 36a-770 to 36a-786, inclusive.

(c) In case of conflict between this article and a rule of law, statute or regulation described in subsection (b), the rule of law, statute or regulation controls. Failure to comply with a statute or regulation described in subsection (b) has only the effect the statute or regulation specifies.

(d) This article does not:

(1) Validate any rate, charge, agreement or practice that violates a rule of law, statute or regulation described in subsection (b); or

(2) Extend the application of the rule of law, statute or regulation to a transaction not otherwise subject to it.

Sec. 12. Section 42a-9-202 of the general statutes is repealed and the following is substituted in lieu thereof:

[Each provision of this article with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor.]

Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.

Sec. 13. Section 42a-9-203 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Subject to the provisions of section 42a-4-210 on the security interest of a collecting bank, sections 42a-9-115 and 42a-9-116 on security interests in investment property and section 42a-9-113 on a security interest arising under article 2, a security interest is not enforceable against the debtor or third parties with respect to the collateral and does not attach unless: (a) The collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops growing or to be grown or timber to be cut, a description of the land concerned; (b) value has been given; and (c) the debtor has rights in the collateral.

(2) A security interest attaches when it becomes enforceable against the debtor with respect to the collateral. Attachment occurs as soon as all of the events specified in subsection (1) have taken place unless explicit agreement postpones the time of attaching.

(3) Unless otherwise agreed a security agreement gives the secured party the rights to proceeds provided by section 42a-9-306.

(4) A transaction, although subject to this article, is also subject to sections 36a-555 to 36a-573, inclusive, 36a-770 to 36a-786, inclusive, and section 42a-9-209, and in the case of conflict between the provisions of this article and any such statute, the provisions of such statute control. Failure to comply with any applicable statute has only the effect which is specified therein.]

(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) to (i), inclusive, 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 42a-9-313, as amended by this act, 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 42a-8-301 pursuant to the debtor's security agreement; or

(D) The collateral is deposit accounts, electronic chattel paper, investment property or letter-of-credit rights, and the secured party has control under section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107, as amended by this act, pursuant to the debtor's security agreement.

(c) Subsection (b) is subject to section 42a-4-210 on the security interest of a collecting bank, section 42a-5-118 on the security interest of a letter-of-credit issuer or nominated person, section 42a-9-110, as amended by this act, on a security interest arising under article 2, and section 42a-9-206, as amended by this act, 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 article 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 subdivision (3) of subsection (b) 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 42a-9-315, as amended by this act, 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.

Sec. 14. Section 42a-9-204 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Except as provided in subsection (2) of this section, a security agreement may provide that any or all obligations covered by the security agreement are to be secured by after-acquired collateral.

(2) No security interest attaches under an after-acquired property clause to consumer goods other than accessions as defined in section 42a-9-314 when given as additional security unless the debtor acquires rights in them within ten days after the secured party gives value.

(3) Obligations covered by a security agreement may include future advances or other value whether or not the advances or value are given pursuant to commitment.]

(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.

Sec. 15. Section 42a-9-205 of the general statutes is repealed and the following is substituted in lieu thereof:

[A security interest is not invalid or fraudulent against creditors by reason of liberty in the debtor to use, commingle or dispose of all or part of the collateral, including returned or repossessed goods, or to collect or compromise accounts or chattel paper, or to accept the return of goods or make repossessions, or to use, commingle or dispose of proceeds, or by reason of the failure of the secured party to require the debtor to account for proceeds or replace collateral. This section does not relax the requirements of possession where perfection of a security interest depends upon possession of the collateral by the secured party or by a bailee.]

(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 upon possession of the collateral by the secured party.

Sec. 16. Section 42a-9-206 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Subject to any statute or decision which establishes a different rule for buyers or lessees of consumer goods, an agreement by a buyer or lessee that he will not assert against an assignee any claim or defense which he may have against the seller or lessor is enforceable by an assignee who takes his assignment for value, in good faith and without notice of a claim or defense, except as to defenses of a type which may be asserted against a holder in due course of a negotiable instrument under article 3. A buyer who as part of one transaction signs both a negotiable instrument and a security agreement makes such an agreement.

(2) When a seller retains a purchase money security interest in goods, article 2 governs the sale and any disclaimer, limitation or modification of the seller's warranties.]

(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 endorsement 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.

Sec. 17. Section 42a-9-207 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A secured party must use reasonable care in the custody and preservation of collateral in his possession. In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

(2) Unless otherwise agreed, when collateral is in the secured party's possession (a) reasonable expenses, including the cost of any 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; (b) the risk of accidental loss or damage is on the debtor to the extent of any deficiency in any effective insurance coverage; (c) the secured party may hold as additional security any increase or profits, except money, received from the collateral, but money so received, unless remitted to the debtor, shall be applied in reduction of the secured obligation; (d) the secured party must keep the collateral identifiable but fungible collateral may be commingled; (e) the secured party may repledge the collateral upon terms which do not impair the debtor's right to redeem it.

(3) A secured party is liable for any loss caused by his failure to meet any obligation imposed by the preceding subsections but does not lose his security interest.

(4) A secured party may use or operate the collateral for the purpose of preserving the collateral or its value or pursuant to the order of a court of appropriate jurisdiction or, except in the case of consumer goods, in the manner and to the extent provided in the security agreement.]

(a) Except as otherwise provided in subsection (d), 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), 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 secured party 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 agreed by a debtor other than a consumer debtor or as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107, as amended by this act:

(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) 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) do not apply.

Sec. 18. Section 42a-9-208 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A debtor may sign a statement indicating what he believes to be the aggregate amount of unpaid indebtedness as of a specified date and may send it to the secured party with a request that the statement be approved or corrected and returned to the debtor. When the security agreement or any other record kept by the secured party identifies the collateral a debtor may similarly request the secured party to approve or correct a list of the collateral.

(2) The secured party must comply with such a request within two weeks after receipt by sending a written correction or approval. If the secured party claims a security interest in all of a particular type of collateral owned by the debtor he may indicate that fact in his reply and need not approve or correct an itemized list of such collateral. If the secured party without reasonable excuse fails to comply he is liable for any loss caused to the debtor thereby; and if the debtor has properly included in his request a good faith statement of the obligation or a list of the collateral or both the secured party may claim a security interest only as shown in the statement against persons misled by his failure to comply. If he no longer has an interest in the obligation or collateral at the time the request is received he must disclose the name and address of any successor in interest known to him and he is liable for any loss caused to the debtor as a result of failure to disclose. A successor in interest is not subject to this section until a request is received by him.

(3) A debtor is entitled to such a statement once every six months without charge. The secured party may require payment of a charge not exceeding ten dollars for each additional statement furnished.]

(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 subdivision (2) of subsection (a) of section 42a-9-104, as amended by this act, 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 subdivision (3) of subsection (a) of section 42a-9-104, as amended by this act, 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 42a-9-105, as amended by this act, 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 which 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 subdivision (2) of subsection (d) of section 42a-8-106 or subsection (b) of section 42a-9-106, as amended by this act, 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; and

(5) A secured party having control of a letter-of-credit right under section 42a-9-107, as amended by this act, 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.

Sec. 19. Section 42a-9-209 of the general statutes is repealed and the following is substituted in lieu thereof:

[Any agreement for security in household furniture owned and in the possession of an individual or family and used primarily for housekeeping purposes shall be effective only to the extent that the agreement involves a purchase money security interest as defined in section 42a-9-107.]

(a) Except as otherwise provided in subsection (c), 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 subsection (a) of section 42a-9-406, as amended by this act, 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.

Sec. 20. (NEW) (a) In this section:

(1) "Request" means a record of a type described in subdivision (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.

Sec. 21. Section 42a-9-301 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Except as otherwise provided in subsection (2) of this section, an unperfected security interest is subordinate to the rights of (a) persons entitled to priority under section 42a-9-312; (b) a person who becomes a lien creditor before the security interest is perfected; (c) in the case of goods, instruments, documents, and chattel paper, a person who is not a secured party and who is a transferee in bulk or other buyer not in ordinary course of business, or is a buyer of farm products in ordinary course of business, to the extent that he gives value and receives delivery of the collateral without knowledge of the security interest and before it is perfected; (d) in the case of accounts, general intangibles and investment property, a person who is not a secured party and who is a transferee to the extent that he gives value without knowledge of the security interest and before it is perfected.

(2) If the secured party files with respect to a purchase money security interest before or within twenty days after the debtor receives possession of the collateral, he takes priority over the rights of a transferee in bulk or of a lien creditor which arise between the time the security interest attaches and the time of filing.

(3) A "lien creditor" means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for benefit of creditors from the time of assignment, and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.

(4) A person who becomes a lien creditor while a security interest is perfected takes subject to the security interest only to the extent that it secures advances made before he becomes a lien creditor or within forty-five days thereafter or made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien.]

Except as otherwise provided in sections 42a-9-303 to 42a-9-306, inclusive, as amended by this act, 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 subdivision (4), while 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 security interest in the collateral.

(4) The local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect of perfection or nonperfection and the priority of a security interest in as-extracted collateral.

Sec. 22. Section 42a-9-302 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A financing statement must be filed to perfect all security interests except the following: (a) A security interest in collateral in possession of the secured party under section 42a-9-305; (b) a security interest temporarily perfected in instruments, certificated securities or documents without delivery under section 42a-9-304 or in proceeds for a ten-day period under section 42a-9-306; (c) a security interest created by an assignment of a beneficial interest in a trust or a decedent's estate; (d) a purchase money security interest in consumer goods; but filing is required for a motor vehicle required to be registered, and fixture filing is required for priority over conflicting interests in fixtures to the extent provided in section 42a-9-313; (e) an assignment of accounts which does not alone or in conjunction with other assignments to the same assignee transfer a significant part of the outstanding accounts of the assignor; (f) a security interest of a collecting bank as provided in section 42a-4-210 or arising under article 3 of this title or covered in subsection (3) of this section; (g) an assignment for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee thereunder; (h) a security interest in investment property which is perfected without filing under section 42a-9-115 or 42a-9-116.

(2) If a secured party assigns a perfected security interest, no filing under this article is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

(3) The filing of a financing statement otherwise required by this article is not necessary or effective to perfect a security interest in property subject to (a) a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title or which specifies a place of filing different from that specified in this article for filing of the security interest; or (b) chapter 247, but during any period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of part 4 of this article apply to a security interest in that collateral created by him as debtor; or (c) a certificate of title statute of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection.

(4) Compliance with a statute or treaty described in subsection (3) of this section is equivalent to the filing of a financing statement under this article, and a security interest in property subject to the statute or treaty can be perfected only by compliance therewith except as provided in section 42a-9-103a on multiple state transactions. Duration and renewal of perfection of a security interest perfected by compliance with the statute or treaty are governed by the provisions of the statute or treaty; in other respects the security interest is subject to this article.

(5) A financing statement need not be filed to perfect, and the filing provisions of this article do not apply to: (a) A security interest in the plant, equipment, apparatus, transmission or pipe lines, distribution systems or other property of a corporation which does a light, heat, gas, power, water, telephone or natural gas transmission business in, or owning property in, more than one town, if such security interest is perfected by recording under section 49-5; or (b) a security interest in the property of a railroad company if such security interest is perfected by recording under chapter 282; or (c) a security interest in the property of a telegraph company, if such security interest is perfected by recording under chapter 283.]

While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of an agricultural lien on the farm products.

Sec. 23. Section 42a-9-303 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken. Such steps are specified in sections 42a-9-302, 42a-9-304, 42a-9-305 and 42a-9-306. If such steps are taken before the security interest attaches, it is perfected at the time when it attaches.

(2) If a security interest is originally perfected in any way permitted under this article and is subsequently perfected in some other way under this article, without an intermediate period when it was unperfected, the security interest shall be deemed to be perfected continuously for the purposes of this article.]

(a) This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.

(b) Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.

(c) The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title.

Sec. 24. Section 42a-9-304 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A security interest in chattel paper or negotiable documents may be perfected by filing. A security interest in the rights to proceeds of a written letter of credit can be perfected only by the secured party's taking possession of the letter of credit. A security interest in money or instruments, other than instruments which constitute part of chattel paper, can be perfected only by the secured party's taking possession, except as provided in subsections (4) and (5) of this section and subsections (2) and (3) of section 42a-9-306, on proceeds.

(2) During the period that goods are in the possession of the issuer of a negotiable document therefor, a security interest in the goods is perfected by perfecting a security interest in the document, and any security interest in the goods otherwise perfected during such period is subject thereto.

(3) A security interest in goods in the possession of a bailee other than one who has issued a negotiable document therefor is perfected by issuance of a document in the name of the secured party or by the bailee's receipt of notification of the secured party's interest or by filing as to the goods.

(4) A security interest in instruments, certificated securities or negotiable documents is perfected without filing or the taking of possession for a period of twenty-one days from the time it attaches to the extent that it arises for new value given under a written security agreement.

(5) A security interest remains perfected for a period of twenty-one days without filing where a secured party having a perfected security interest in an instrument, a certificated security, a negotiable document or goods in possession of a bailee other than one who has issued a negotiable document therefor: (a) Makes available to the debtor the goods or documents representing the goods for the purpose of ultimate sale or exchange or for the purpose of loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with them in a manner preliminary to their sale or exchange, but priority between conflicting security interests in the goods is subject to subsection (3) of section 42a-9-312; or (b) delivers the instrument or certificated security to the debtor for the purpose of ultimate sale or exchange or of presentation, collection, renewal or registration of transfer.

(6) After the twenty-one-day period in subsections (4) and (5) perfection depends upon compliance with applicable provisions of this article.]

(a) The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a deposit account maintained with that bank.

(b) The following rules determine a bank's jurisdiction for purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act:

(1) If an agreement between the bank and the debtor governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act, this article or this title, that jurisdiction is the bank's jurisdiction.

(2) If subdivision (1) does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction.

(3) If neither subdivision (1) nor subdivision (2) applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction.

(4) If none of the preceding subdivisions applies, the bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located.

(5) If none of the preceding subdivisions applies, the bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.

Sec. 25. Section 42a-9-305 of the general statutes is repealed and the following is substituted in lieu thereof:

[A security interest in goods, instruments, money, negotiable documents or chattel paper may be perfected by the secured party's taking possession of the collateral. A security interest in the right to proceeds of a written letter of credit may be perfected by the secured party's taking possession of the letter of credit. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this article. The security interest may be otherwise perfected as provided in this article before or after the period of possession by the secured party.]

(a) Except as otherwise provided in subsection (c), the following rules apply:

(1) While a security certificate 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 the certificated security represented thereby.

(2) The local law of the issuer's jurisdiction as specified in subsection (d) of section 42a-8-110 governs perfection, the effect of perfection or nonperfection and the priority of a security interest in an uncertificated security.

(3) The local law of the securities intermediary's jurisdiction as specified in subsection (e) of section 42a-8-110, as amended by this act, governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a security entitlement or securities account.

(4) The local law of the commodity intermediary's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a commodity contract or commodity account.

(b) The following rules determine a commodity intermediary's jurisdiction for purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act:

(1) If an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act, this article or this title, that jurisdiction is the commodity intermediary's jurisdiction.

(2) If subdivision (1) does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(3) If neither subdivision (1) nor subdivision (2) applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(4) If none of the preceding subdivisions applies, the commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located.

(5) If none of the preceding subdivisions applies, the commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.

(c) The local law of the jurisdiction in which the debtor is located governs:

(1) Perfection of a security interest in investment property by filing;

(2) Automatic perfection of a security interest in investment property created by a broker or securities intermediary; and

(3) Automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.

Sec. 26. Section 42a-9-306 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Money, checks, deposit accounts and the like are "cash proceeds". All other proceeds are "noncash proceeds".

(2) Except where this article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.

(3) The security interest in proceeds is a continuously perfected security interest if the interest in the original collateral was perfected but it ceases to be a perfected security interest and becomes unperfected ten days after receipt of the proceeds by the debtor unless (a) a filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office or offices where the financing statement has been filed and, if the proceeds are acquired with cash proceeds, the description of collateral in the financing statement indicates the types of property constituting the proceeds; or (b) a filed financing statement covers the original collateral and the proceeds are identifiable cash proceeds; or (c) the original collateral was investment property and the proceeds are identifiable cash proceeds; or (d) the security interest in the proceeds is perfected before the expiration of the ten-day period. Except as provided in this section, a security interest in proceeds can be perfected only by the methods or under the circumstances permitted in this article for original collateral of the same type.

(4) In the event of insolvency proceedings instituted by or against a debtor, a secured party with a perfected security interest in proceeds has a perfected security interest only in the following proceeds: (a) In identifiable noncash proceeds and in separate deposit accounts containing only proceeds; (b) in identifiable cash proceeds in the form of money which is neither commingled with other money nor deposited in a deposit account prior to the insolvency proceedings; (c) in identifiable cash proceeds in the form of checks and the like which are not deposited in a deposit account prior to the insolvency proceedings; and (d) in all cash and deposit accounts of the debtor, in which proceeds have been commingled with other funds, but the perfected security interest under this subdivision (d) is (i) subject to any right of set-off; and (ii) limited to an amount not greater than the amount of any cash proceeds received by the debtor within ten days before the institution of the insolvency proceedings less the sum of (A) the payments to the secured party on account of cash proceeds received by the debtor during such period and (B) the cash proceeds received by the debtor during such period to which the secured party is entitled under subdivisions (a) to (c), inclusive, of this subsection.

(5) If a sale of goods results in an account or chattel paper which is transferred by the seller to a secured party, and if the goods are returned to or are repossessed by the seller or the secured party, the following rules determine priorities: (a) If the goods were collateral at the time of sale for an indebtedness of the seller which is still unpaid, the original security interest attaches again to the goods and continues as a perfected security interest if it was perfected at the time when the goods were sold. If the security interest was originally perfected by a filing which is still effective, nothing further is required to continue the perfected status; in any other case, the secured party must take possession of the returned or repossessed goods or must file. (b) An unpaid transferee of the chattel paper has a security interest in the goods against the transferor. Such security interest is prior to a security interest asserted under paragraph (a) to the extent that the transferee of the chattel paper was entitled to priority under section 42a-9-308. (c) An unpaid transferee of the account has a security interest in the goods against the transferor. Such security interest is subordinate to a security interest asserted under subdivision (a) of this subsection. (d) A security interest of an unpaid transferee asserted under subdivision (b) or (c) of this subsection has to be perfected for protection against creditors of the transferor and purchasers of the returned or repossessed goods.]

(a) Subject to subsection (c), the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state.

(b) For purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in section 42a-5-116.

(c) This section does not apply to a security interest that is perfected only under subsection (d) of section 42a-9-308, as amended by this act.

Sec. 27. Section 42a-9-307 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A buyer in ordinary course of business as defined by subsection (9) of section 42a-1-201 other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.

(2) In the case of consumer goods a buyer takes free of a security interest even though perfected if he buys without knowledge of the security interest, for value and for his own personal, family or household purposes unless prior to the purchase the secured party has filed a financing statement covering such goods.

(3) A buyer, other than a buyer in ordinary course of business, takes free of a security interest to the extent that it secures future advances made after the secured party acquires knowledge of the purchase, or more than forty-five days after the purchase, whichever first occurs, unless made pursuant to a commitment entered into without knowledge of the purchase and before the expiration of the forty-five-day period.]

(a) In this section, "place of business" means a place where a debtor conducts its affairs.

(b) Except as otherwise provided in this section, the following rules determine a debtor's location:

(1) A debtor who is an individual is located at the individual's principal residence.

(2) A debtor that is an organization and has only one place of business is located at its place of business.

(3) A debtor that is an organization and has more than one place of business is located at its chief executive office.

(c) Subsection (b) applies only if a debtor's residence, place of business or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording or registration system as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. If subsection (b) does not apply, the debtor is located in the District of Columbia.

(d) A person that ceases to exist, have a residence or have a place of business continues to be located in the jurisdiction specified by subsections (b) and (c).

(e) A registered organization that is organized under the law of a state is located in that state.

(f) Except as otherwise provided in subsection (i), a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located:

(1) In the state that the law of the United States designates, if the law designates a state of location;

(2) In the state that the registered organization, branch or agency designates, if the law of the United States authorizes the registered organization, branch or agency to designate its state of location; or

(3) In the District of Columbia, if neither subdivision (1) nor subdivision (2) applies.

(g) A registered organization continues to be located in the jurisdiction specified by subsection (e) or (f) notwithstanding:

(1) The suspension, revocation, forfeiture or lapse of the registered organization's status as such in its jurisdiction of organization; or

(2) The dissolution, winding up or cancellation of the existence of the registered organization.

(h) The United States is located in the District of Columbia.

(i) A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed, if all branches and agencies of the bank are licensed in only one state.

(j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.

(k) This section applies only for purposes of sections 42a-9-301 to 42a-9-318, inclusive, as amended by this act, and sections 39 to 62, inclusive, of this act.

Sec. 28. Section 42a-9-308 of the general statutes is repealed and the following is substituted in lieu thereof:

[A purchaser of chattel paper or an instrument, who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in the chattel paper or instrument (a) which is perfected under section 42a-9-304 or under section 42a-9-306 if he acts without knowledge that the specific paper or instrument is subject to a security interest; or (b) which is claimed merely as proceeds of inventory subject to a security interest as provided in section 42a-9-306 even though he knows that the specific paper is subject to the security interest.]

(a) Except as otherwise provided in this section and section 42a-9-309, as amended by this act, a security interest is perfected if it has attached and all of the applicable requirements for perfection in sections 42a-9-310 to 42a-9-316, inclusive, as amended by this act, have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.

(b) An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in section 42a-9-310, as amended by this act, have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.

(c) A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.

(d) Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

(e) Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage or other lien on personal or real property securing the right.

(f) Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.

(g) Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.

Sec. 29. Section 42a-9-309 of the general statutes is repealed and the following is substituted in lieu thereof:

[Nothing in this article limits the rights of a holder in due course of a negotiable instrument, as defined in section 42a-3-302, or a holder to whom a negotiable document of title has been duly negotiated as provided in section 42a-7-501 or a protected purchaser of a security as provided in section 42a-8-303 and such holders or purchasers take priority over an earlier security interest even though perfected. Filing under this article does not constitute notice of the security interest to such holders or purchasers.]

The following security interests are perfected when they attach:

(1) A purchase-money security interest in consumer goods, except as otherwise provided in subsection (b) of section 42a-9-311, as amended by this act, with respect to consumer goods that are subject to a statute or treaty described in subsection (a) of section 42a-9-311, as amended by this act;

(2) An assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles;

(3) A sale of a payment intangible;

(4) A sale of a promissory note;

(5) A security interest created by the assignment of a health-care-insurance receivable to the provider of the health-care goods or services;

(6) A security interest arising under section 42a-2-401, section 42a-2-505 or subsection (3) of section 42a-2-711, until the debtor obtains possession of the collateral;

(7) A security interest of a collecting bank arising under section 42a-4-210;

(8) A security interest of an issuer or nominated person arising under section 42a-5-118, as amended by this act;

(9) A security interest arising in the delivery of a financial asset under subsection (c) of section 42a-9-206, as amended by this act;

(10) A security interest in investment property created by a broker or securities intermediary;

(11) A security interest in a commodity contract or a commodity account created by a commodity intermediary;

(12) An assignment for the benefit of all creditors of the transferor and subsequent transfers by the assignee thereunder; and

(13) A security interest created by an assignment of a beneficial interest in a decedent's estate.

Sec. 30. Section 42a-9-310 of the general statutes is repealed and the following is substituted in lieu thereof:

[When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.]

(a) Except as otherwise provided in subsection (b) of this section and subsection (b) of section 42a-9-312, as amended by this act, a financing statement must be filed to perfect all security interests and agricultural liens.

(b) The filing of a financing statement is not necessary to perfect a security interest:

(1) That is perfected under subsection (d), (e), (f) or (g) of section 42a-9-308, as amended by this act;

(2) That is perfected under section 42a-9-309, as amended by this act, when it attaches;

(3) In property subject to a statute, regulation or treaty described in subsection (a) of section 42a-9-311, as amended by this act;

(4) In goods in possession of a bailee which is perfected under subdivision (1) or (2) of subsection (d) of section 42a-9-312, as amended by this act;

(5) In certificated securities, documents, goods or instruments which is perfected without filing or possession under subsection (e), (f) or (g) of section 42a-9-312, as amended by this act;

(6) In collateral in the secured party's possession under section 42a-9-313, as amended by this act;

(7) In a certificated security which is perfected by delivery of the security certificate to the secured party under section 42a-9-313, as amended by this act;

(8) In deposit accounts, electronic chattel paper, investment property or letter-of-credit rights which is perfected by control under section 42a-9-314, as amended by this act;

(9) In proceeds which is perfected under section 42a-9-315, as amended by this act; or

(10) That is perfected under section 42a-9-316, as amended by this act.

(c) If a secured party assigns a perfected security interest or agricultural lien, a filing under this article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

Sec. 31. Section 42a-9-311 of the general statutes is repealed and the following is substituted in lieu thereof:

[The debtor's rights in collateral may be voluntarily or involuntarily transferred, by way of sale, creation of a security interest, attachment, levy, garnishment or other judicial process, notwithstanding a provision in the security agreement prohibiting any transfer or making the transfer constitute a default.]

(a) Except as otherwise provided in subsection (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

(1) A statute, regulation or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt subsection (a) of section 42a-9-310, as amended by this act;

(2) Any certificate-of-title statute covering automobiles, trailers, mobile homes, boats, farm tractors or the like, which provides for a security interest to be indicated on the certificate as a condition or result of perfection, and any non-Uniform Commercial Code central filing statute, including chapter 247, section 21-67a, section 49-5, chapter 282 and chapter 283; or

(3) A certificate-of-title statute of another jurisdiction which provides for a security interest 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 property.

(b) Compliance with the requirements of a statute, regulation or treaty described in subsection (a) of this section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article. Except as otherwise provided in subsection (d) of this section, section 42a-9-313, as amended by this act, and subsections (d) and (e) of section 42a-9-316, as amended by this act, for goods covered by a certificate of title, a security interest in property subject to a statute, regulation or treaty described in subsection (a) of this section may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.

(c) Except as otherwise provided in subsection (d) of this section and subsections (d) and (e) of section 42a-9-316, as amended by this act, duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation or treaty described in subsection (a) of this section are governed by the statute, regulation or treaty. In other respects, the security interest is subject to this article.

(d) During any period in which collateral subject to a statute specified in subdivision (2) of subsection (a) of this section is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person.

Sec. 32. Section 42a-9-312 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) The rules of priority stated in other sections of this part and in the following sections shall govern when applicable: Section 42a-4-210 with respect to the security interest of collecting banks in items being collected, accompanying documents and proceeds; section 42a-9-103a on security interests related to other jurisdictions; section 42a-9-114 on consignments; section 42a-9-115 on security interests in investment property.

(2) A perfected security interest in crops for new value given to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise takes priority over an earlier perfected security interest to the extent that such earlier interest secures obligations due more than six months before the crops become growing crops by planting or otherwise, even though the person giving new value had knowledge of the earlier security interest.

(3) A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds received on or before the delivery of the inventory to a buyer if (a) the purchase money security interest is perfected at the time the debtor receives possession of the inventory; and (b) the purchase money secured party gives notification in writing to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory (i) before the date of the filing made by the purchase money secured party, or (ii) before the beginning of the twenty-one-day period where the purchase money security interest is temporarily perfected without filing or possession; and (c) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and (d) the notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.

(4) A purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral or its proceeds if the purchase money security interest is perfected at the time the debtor receives possession of the collateral or within twenty days thereafter.

(5) In all cases not governed by other rules stated in this section, including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (3) and (4) of this section, priority between conflicting security interests in the same collateral shall be determined according to the following rules: (a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided there is no period thereafter when there is neither filing nor perfection; (b) so long as conflicting security interests are unperfected, the first to attach has priority.

(6) For the purposes of subsection (5) of this section, a date of filing or perfection as to collateral is also a date of filing or perfection as to proceeds.

(7) If future advances are made while a security interest is perfected by filing, the taking of possession, or under section 42a-9-115 or 42a-9-116 on investment property, the security interest has the same priority for the purposes of subsection (5) of this section with respect to the future advances as it does with respect to the first advance. If a commitment is made before or while the security interest is so perfected, the security interest has the same priority with respect to advances made pursuant thereto. In other cases a perfected security interest has priority from the date the advance is made.]

(a) A security interest in chattel paper, negotiable documents, instruments or investment property may be perfected by filing.

(b) Except as otherwise provided in subsections (c) and (d) of section 42a-9-315, as amended by this act, for proceeds:

(1) A security interest in a deposit account may be perfected only by control under section 42a-9-314, as amended by this act;

(2) And except as otherwise provided in subsection (d) of section 42a-9-308, as amended by this act, a security interest in a letter-of-credit right may be perfected only by control under section 42a-9-314, as amended by this act; and

(3) A security interest in money may be perfected only by the secured party's taking possession under section 42a-9-313, as amended by this act.

(c) While goods are in the possession of a bailee that has issued a negotiable document covering the goods:

(1) A security interest in the goods may be perfected by perfecting a security interest in the document; and

(2) A security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time.

(d) While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:

(1) Issuance of a document in the name of the secured party;

(2) The bailee's receipt of notification of the secured party's interest; or

(3) Filing as to the goods.

(e) A security interest in certificated securities, negotiable documents or instruments is perfected without filing or the taking of possession for a period of twenty days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.

(f) A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for twenty days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:

(1) Ultimate sale or exchange; or

(2) Loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with them in a manner preliminary to their sale or exchange.

(g) A perfected security interest in a certificated security or instrument remains perfected for twenty days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

(1) Ultimate sale or exchange; or

(2) Presentation, collection, enforcement, renewal or registration of transfer.

(h) After the twenty-day period specified in subsection (e), (f) or (g) expires, perfection depends upon compliance with this article.

Sec. 33. Section 42a-9-313 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) In this section and in the provisions of part 4 of this article referring to fixture filing, unless the context otherwise requires (a) goods are "fixtures" when they become so related to particular real estate that an interest in them arises under real estate law; (b) a "fixture filing" is the filing in the office where a mortgage on the real estate would be filed or recorded of a financing statement covering goods which are or are to become fixtures and conforming to the requirements of subsection (5) of section 42a-9-402; (c) a mortgage is a "construction mortgage" to the extent that it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates.

(2) A security interest under this article may be created in goods which are fixtures or may continue in goods which become fixtures, but no security interest exists under this article in ordinary building materials incorporated into an improvement on land.

(3) This article does not prevent creation of an encumbrance upon fixtures pursuant to real estate law.

(4) A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real estate where (a) the security interest is a purchase money security interest, the interest of the encumbrancer or owner arises before the goods become fixtures, the security interest is perfected by a fixture filing before the goods become fixtures or within ten days thereafter, and the debtor has an interest of record in the real estate or is in possession of the real estate; or (b) the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the debtor has an interest of record in the real estate or is in possession of the real estate; or (c) the fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances which are consumer goods, and before the goods become fixtures the security interest is perfected by any method permitted by this article; or (d) the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article.

(5) A security interest in fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate where (a) the encumbrancer or owner has consented in writing to the security interest or has disclaimed an interest in the goods as fixtures; or (b) the debtor has a right to remove the goods as against the encumbrancer or owner. If the debtor's right terminates, the priority of the security interest continues for a reasonable time.

(6) Notwithstanding subdivision (a) of subsection (4) of this section but otherwise subject to subsections (4) and (5) of this section, a security interest in fixtures is subordinate to a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent that it is given to refinance a construction mortgage, a mortgage has this priority to the same extent as the construction mortgage.

(7) In cases not within subsections (1) to (6), inclusive, of this section, a security interest in fixtures is subordinate to the conflicting interest of an encumbrancer or owner of the related real estate who is not the debtor.

(8) When the secured party has priority over all owners and encumbrancers of the real estate, he may, on default, subject to the provisions of part 5 of this article, remove his collateral from the real estate but he must reimburse any encumbrancer or owner of the real estate who is not the debtor and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate caused by the absence of the goods removed or by any necessity for replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate security for the performance of this obligation.]

(a) Except as otherwise provided in subsection (b) of this section, a secured party may perfect a security interest in negotiable documents, goods, instruments, money or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under section 42a-8-301, as amended by this act.

(b) With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in subsection (d) of section 42a-9-316, as amended by this act.

(c) With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party or a lessee of the collateral from the debtor in the ordinary course of the debtor's business, when:

(1) The person in possession authenticates a record acknowledging that it holds possession of the collateral for the secured party's benefit; or

(2) The person takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit.

(d) If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.

(e) A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under section 42a-8-301, as amended by this act, and remains perfected by delivery until the debtor obtains possession of the security certificate.

(f) A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.

(g) If a person acknowledges that it holds possession for the secured party's benefit:

(1) The acknowledgment is effective under subsection (c) of this section or subsection (a) of section 42a-8-301, as amended by this act, even if the acknowledgment violates the rights of a debtor; and

(2) Unless the person otherwise agrees or law other than this article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.

(h) A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:

(1) To hold possession of the collateral for the secured party's benefit; or

(2) To redeliver the collateral to the secured party.

(i) A secured party does not relinquish possession, even if a delivery under subsection (h) violates the rights of a debtor. A person to which collateral is delivered under subsection (h) does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this article otherwise provides.

Sec. 34. Section 42a-9-314 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A security interest in goods which attaches before they are installed in or affixed to other goods takes priority as to the goods installed or affixed, called in this section "accessions", over the claims of all persons to the whole except as stated in subsection (3) and subject to section 42a-9-315(1).

(2) A security interest which attaches to goods after they become part of a whole is valid against all persons subsequently acquiring interests in the whole except as stated in subsection (3) but is invalid against any person with an interest in the whole at the time the security interest attaches to the goods who has not in writing consented to the security interest or disclaimed an interest in the goods as part of the whole.

(3) The security interests described in subsections (1) and (2) do not take priority over (a) a subsequent purchaser for value of any interest in the whole; or (b) a creditor with a lien on the whole subsequently obtained by judicial proceedings; or (c) a creditor with a prior perfected security interest in the whole to the extent that he makes subsequent advances if the subsequent purchase is made, the lien by judicial proceedings obtained or the subsequent advance under the prior perfected security interest is made or contracted for without knowledge of the security interest and before it is perfected. A purchaser of the whole at a foreclosure sale other than the holder of a perfected security interest purchasing at his own foreclosure sale is a subsequent purchaser within this section.

(4) When under subsections (1) or (2) and (3) a secured party has an interest in accessions which has priority over the claims of all persons who have interests in the whole, he may on default subject to the provisions of part 5 remove his collateral from the whole but he must reimburse any encumbrancer or owner of the whole who is not the debtor and who has not otherwise agreed for the cost of repair of any physical injury but not for any diminution in value of the whole caused by the absence of the goods removed or by any necessity for replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate security for the performance of this obligation.]

(a) A security interest in investment property, deposit accounts, letter-of-credit rights or electronic chattel paper may be perfected by control of the collateral under section 42a-9-104, as amended by this act, 42a-9-105, as amended by this act, 42a-9-106, as amended by this act, or 42a-9-107, as amended by this act.

(b) A security interest in deposit accounts, electronic chattel paper or letter-of-credit rights is perfected by control under section 42a-9-104, as amended by this act, 42a-9-105, as amended by this act, or 42a-9-107, as amended by this act, when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c) A security interest in investment property is perfected by control under section 42a-9-106, as amended by this act, from the time the secured party obtains control and remains perfected by control until:

(1) The secured party does not have control; and

(2) One of the following occurs:

(A) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate;

(B) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or

(C) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

Sec. 35. Section 42a-9-315 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) If a security interest in goods was perfected and subsequently the goods or a part thereof have become part of a product or mass, the security interest continues in the product or mass if (a) the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product or mass; or (b) a financing statement covering the original goods also covers the product into which the goods have been manufactured, processed or assembled. In a case to which paragraph (b) applies, no separate security interest in that part of the original goods which has been manufactured, processed or assembled into the product may be claimed under section 42a-9-314.

(2) When under subsection (1) more than one security interest attaches to the product or mass, they rank equally according to the ratio that the cost of the goods to which each interest originally attached bears to the cost of the total product or mass.]

(a) Except as otherwise provided in this article and in subsection (2) of section 42a-2-403:

(1) A security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

(2) A security interest attaches to any identifiable proceeds of collateral.

(b) Proceeds that are commingled with other property are identifiable proceeds:

(1) If the proceeds are goods, to the extent provided by section 56 of this act; and

(2) If the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved.

(c) A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

(d) A perfected security interest in proceeds becomes unperfected on the twenty-first day after the security interest attaches to the proceeds unless:

(1) The following conditions are satisfied:

(A) A filed financing statement covers the original collateral;

(B) The proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and

(C) The proceeds are not acquired with cash proceeds;

(2) The proceeds are identifiable cash proceeds; or

(3) The security interest in the proceeds is perfected other than under subsection (c) of this section when the security interest attaches to the proceeds or within twenty days thereafter.

(e) If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under subdivision (1) of subsection (d) of this section becomes unperfected at the later of:

(1) When the effectiveness of the filed financing statement lapses under section 86 of this act, or is terminated under section 84 of this act; or

(2) The twenty-first day after the security interest attaches to the proceeds.

Sec. 36. Section 42a-9-316 of the general statutes is repealed and the following is substituted in lieu thereof:

[Nothing in this article prevents subordination by agreement by any person entitled to priority.]

(a) A security interest perfected pursuant to the law of the jurisdiction designated in subdivision (1) of section 42a-9-301, as amended by this act, or subsection (c) of section 42a-9-305, as amended by this act, remains perfected until the earliest of:

(1) The time perfection would have ceased under the law of that jurisdiction;

(2) The expiration of four months after a change of the debtor's location to another jurisdiction;

(3) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction; or

(4) The expiration of one year after a new debtor located in another jurisdiction becomes bound under subsection (d) of section 42a-9-203, as amended by this act.

(b) If a security interest described in subsection (a) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

(c) A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

(1) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

(2) Thereafter the collateral is brought into another jurisdiction; and

(3) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.

(d) Except as otherwise provided in subsection (e), a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

(e) A security interest described in subsection (d) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under subsection (b) of section 42a-9-311, as amended by this act, or section 42a-9-313, as amended by this act, are not satisfied before the earlier of:

(1) The time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

(2) The expiration of four months after the goods had become so covered.

(f) A security interest in deposit accounts, letter-of-credit rights or investment property which is perfected under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of:

(1) The time the security interest would have become unperfected under the law of that jurisdiction; or

(2) The expiration of four months after a change of the applicable jurisdiction to another jurisdiction.

(g) If a security interest described in subsection (f) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

Sec. 37. Section 42a-9-317 of the general statutes is repealed and the following is substituted in lieu thereof:

[The mere existence of a security interest or authority given to the debtor to dispose of or use collateral does not impose contract or tort liability upon the secured party for the debtor's acts or omissions.]

(a) A security interest or agricultural lien is subordinate to the rights of:

(1) A person entitled to priority under section 42 of this act; and

(2) Except as otherwise provided in subsection (e), a person that becomes a lien creditor before the earlier of the time:

(A) The security interest or agricultural lien is perfected; or

(B) One of the conditions specified in subdivision (3) of subsection (b) of section 42a-9-203, as amended by this act, is met and a financing statement covering the collateral is filed.

(b) Except as otherwise provided in subsection (e), a buyer, other than a secured party, of tangible chattel paper, documents, goods, instruments or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(c) Except as otherwise provided in subsection (e), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(d) A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, general intangibles or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

(e) Except as otherwise provided in sections 40 and 41 of this act, if a person files a financing statement with respect to a purchase-money security interest before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee or lien creditor which arise between the time the security interest attaches and the time of filing.

Sec. 38. Section 42a-9-318 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a sale as provided in section 42a-9-206 the rights of an assignee are subject to (a) all the terms of the contract between the account debtor and assignor and any defense or claim arising therefrom; and (b) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment.

(2) So far as the right to payment or a part thereof under an assigned contract right has not been fully earned by performance and notwithstanding notification of the assignment, any modification of or substitution for the contract made in good faith and in accordance with reasonable commercial standards is effective against an assignee unless the account debtor has otherwise agreed but the assignee acquires corresponding rights under the modified or substituted contract. The assignment may provide that such modification or substitution is a breach by the assignor.

(3) The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor.

(4) A term in any contract between an account debtor and an assignor is ineffective if it prohibits assignment of an account or prohibits creation of a security interest in a general intangible for money due or to become due or requires the account debtor's consent to such assignment or security interest.]

(a) A debtor that has sold an account, chattel paper, payment intangible or promissory note does not retain a legal or equitable interest in the collateral sold.

(b) For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.

Sec. 39. (NEW) (a) Except as otherwise provided in subsection (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

(b) For purposes of determining the rights of a creditor of a consignee, law other than this article determines the rights and title of a consignee while goods are in the consignee's possession if, under sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act, a perfected security interest held by the consignor would have priority over the rights of the creditor.

Sec. 40. (NEW) (a) Except as otherwise provided in subsection (e) of this section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

(b) Except as otherwise provided in subsection (e) of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(1) Without knowledge of the security interest;

(2) For value;

(3) Primarily for the buyer's personal, family or household purposes; and

(4) Before the filing of a financing statement covering the goods, except for consumer goods having an original purchase price not in excess of three thousand five hundred dollars.

(c) To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b) of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subsections (a) and (b) of section 42a-9-316 of the general statutes, as amended by this act.

(d) A buyer in ordinary course of business buying oil, gas or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

(e) Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under section 42a-9-313 of the general statutes, as amended by this act.

Sec. 41. (NEW) (a) In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.

(b) A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

(c) A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence.

Sec. 42. (NEW) (a) Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

(1) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection.

(2) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien.

(3) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.

(b) For the purposes of subdivision (1) of subsection (a) of this section:

(1) The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and

(2) The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.

(c) Except as otherwise provided in subsection (f) of this section, a security interest in collateral which qualifies for priority over a conflicting security interest under section 47, 48, 49, 50 or 51 of this act also has priority over a conflicting security interest in:

(1) Any supporting obligation for the collateral; and

(2) Proceeds of the collateral if:

(A) The security interest in proceeds is perfected;

(B) The proceeds are cash proceeds or of the same type as the collateral; and

(C) In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral or an account relating to the collateral.

(d) Subject to subsection (e) of this section and except as otherwise provided in subsection (f) of this section, if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

(e) Subsection (d) of this section applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property or letter-of-credit rights.

(f) Subsections (a) to (e), inclusive, of this section are subject to:

(1) Subsection (g) of this section and the other provisions of sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act;

(2) Section 42a-4-210 of the general statutes with respect to a security interest of a collecting bank;

(3) Section 42a-5-118 of the general statutes, as amended by this act, with respect to a security interest of an issuer or nominated person; and

(4) Section 42a-9-110 of the general statutes, as amended by this act, with respect to a security interest arising under article 2.

(g) A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

Sec. 43. (NEW) (a) Except as otherwise provided in subsection (c) of this section, for purposes of determining the priority of a perfected security interest under subdivision (1) of subsection (a) of section 42 of this act, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

(1) Is made while the security interest is perfected only:

(A) Under section 42a-9-309 of the general statutes, as amended by this act, when it attaches; or

(B) Temporarily under subsection (e), (f) or (g) of section 42a-9-312 of the general statutes, as amended by this act; and

(2) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under section 42a-9-309 of the general statutes, as amended by this act, or subsection (e), (f) or (g) of section 42a-9-312 of the general statutes, as amended by this act.

(b) Except as otherwise provided in subsection (c) of this section, a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than forty-five days after the person becomes a lien creditor unless the advance is made:

(1) Without knowledge of the lien; or

(2) Pursuant to a commitment entered into without knowledge of the lien.

(c) Subsections (a) and (b) of this section do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor.

(d) Except as otherwise provided in subsection (e) of this section, a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

(1) The time the secured party acquires knowledge of the buyer's purchase; or

(2) Forty-five days after the purchase.

(e) Subsection (d) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the forty-five-day period.

(f) Except as otherwise provided in subsection (g) of this section, a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

(1) The time the secured party acquires knowledge of the lease; or

(2) Forty-five days after the lease contract becomes enforceable.

(g) Subsection (f) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the forty-five-day period.

Sec. 44. (NEW) (a) Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in section 47 of this act, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within twenty days thereafter.

(b) Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in section 50 of this act, and, except as otherwise provided in section 47 of this act, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

(1) The purchase-money security interest is perfected when the debtor receives possession of the inventory;

(2) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

(3) The holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and

(4) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.

(c) Subdivisions (2) to (4), inclusive, of subsection (b) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

(1) If the purchase-money security interest is perfected by filing, before the date of the filing; or

(2) If the purchase-money security interest is temporarily perfected without filing or possession under subsection (f) of section 42a-9-312 of the general statutes, as amended by this act, before the beginning of the twenty-day period thereunder.

(d) Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in section 47 of this act, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

(1) The purchase-money security interest is perfected when the debtor receives possession of the livestock;

(2) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

(3) The holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock; and

(4) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.

(e) Subdivisions (2) to (4), inclusive, of subsection (d) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

(1) If the purchase-money security interest is perfected by filing, before the date of the filing; or

(2) If the purchase-money security interest is temporarily perfected without filing or possession under subsection (f) of section 42a-9-312 of the general statutes, as amended by this act, before the beginning of the twenty-day period thereunder.

(f) Except as otherwise provided in subsection (g), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in section 47 of this act, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

(g) If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d) or (f):

(1) A security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and

(2) In all other cases, subsection (a) of section 42 of this act applies to the qualifying security interests.

Sec. 45. (NEW) (a) Except as otherwise provided in subsection (b), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

(1) The debtor acquired the collateral subject to the security interest created by the other person;

(2) The security interest created by the other person was perfected when the debtor acquired the collateral; and

(3) There is no period thereafter when the security interest is unperfected.

(b) Subsection (a) subordinates a security interest only if the security interest:

(1) Otherwise would have priority solely under subsection (a) of section 42 of this act or section 44 of this act; or

(2) Arose solely under subdivision (3) of section 42a-2-711 of the general statutes.

Sec. 46. (NEW) (a) Subject to subsection (b), a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under section 79 of this act in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under section 79 of this act.

(b) The other provisions of sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act, determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under section 79 of this act. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.

Sec. 47. (NEW) The following rules govern priority among conflicting security interests in the same deposit account:

(1) A security interest held by a secured party having control of the deposit account under section 42a-9-104 of the general statutes, as amended by this act, has priority over a conflicting security interest held by a secured party that does not have control.

(2) Except as otherwise provided in subdivisions (3) and (4), security interests perfected by control under section 42a-9-314 of the general statutes, as amended by this act, rank according to priority in time of obtaining control.

(3) Except as otherwise provided in subdivision (4), a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

(4) A security interest perfected by control under subdivision (3) of subsection (a) of section 42a-9-104 of the general statutes, as amended by this act, has priority over a security interest held by the bank with which the deposit account is maintained.

Sec. 48. (NEW) The following rules govern priority among conflicting security interests in the same investment property:

(1) A security interest held by a secured party having control of investment property under section 42a-9-106 of the general statutes, as amended by this act, has priority over a security interest held by a secured party that does not have control of the investment property.

(2) Except as otherwise provided in subdivisions (3) and (4), conflicting security interests held by secured parties each of which has control under section 42a-9-106 of the general statutes, as amended by this act, rank according to priority in time of:

(A) If the collateral is a security, obtaining control;

(B) If the collateral is a security entitlement carried in a securities account; and:

(i) If the secured party obtained control under subdivision (1) of subsection (d) of section 42a-8-106 of the general statutes, as amended by this act, the secured party's becoming the person for which the securities account is maintained;

(ii) If the secured party obtained control under subdivision (2) of subsection (d) of section 42a-8-106 of the general statutes, as amended by this act, the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

(iii) If the secured party obtained control through another person under subdivision (3) of subsection (d) of section 42a-8-106 of the general statutes, as amended by this act, the time on which priority would be based under this subdivision if the other person were the secured party; or

(C) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in subdivision (2) of subsection (b) of section 42a-9-106 of the general statutes, as amended by this act, with respect to commodity contracts carried or to be carried with the commodity intermediary.

(3) A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

(4) A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

(5) A security interest in a certificated security in registered form which is perfected by taking delivery under subsection (a) of section 42a-9-313 of the general statutes, as amended by this act, and not by control under section 42a-9-314 of the general statutes, as amended by this act, has priority over a conflicting security interest perfected by a method other than control.

(6) Conflicting security interests created by a broker, securities intermediary or commodity intermediary which are perfected without control under section 42a-9-106 of the general statutes, as amended by this act, rank equally.

(7) In all other cases, priority among conflicting security interests in investment property is governed by sections 42 and 43 of this act.

Sec. 49. (NEW) The following rules govern priority among conflicting security interests in the same letter-of-credit right:

(1) A security interest held by a secured party having control of the letter-of-credit right under section 42a-9-107 of the general statutes, as amended by this act, has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.

(2) Security interests perfected by control under section 42a-9-314 of the general statutes, as amended by this act, rank according to priority in time of obtaining control.

Sec. 50. (NEW) (a) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:

(1) In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 42a-9-105 of the general statutes, as amended by this act; and

(2) The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.

(b) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 42a-9-105 of the general statutes, as amended by this act, in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party.

(c) Except as otherwise provided in section 47 of this act, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in proceeds of the chattel paper to the extent that:

(1) Section 42 of this act provides for priority in the proceeds; or

(2) The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.

(d) Except as otherwise provided in subsection (a) of section 51 of this act, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

(e) For purposes of subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

(f) For purposes of subsections (b) and (d), if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.

Sec. 51. (NEW) (a) This article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in articles 3, 7 and 8.

(b) This article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under article 8.

(c) Filing under this article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b).

Sec. 52. (NEW) (a) A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

(b) A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

Sec. 53. (NEW) (a) In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien:

(1) Which secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business;

(2) Which is created by statute or rule of law in favor of the person; and

(3) Whose effectiveness depends on the person's possession of the goods.

(b) A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.

Sec. 54. (NEW) (a) A security interest under this article may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this article in ordinary building materials incorporated into an improvement on land.

(b) This article does not prevent creation of an encumbrance upon fixtures under real property law.

(c) In cases not governed by subsections (d) to (h), inclusive, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.

(d) Except as otherwise provided in subsection (h), a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:

(1) The security interest is a purchase-money security interest;

(2) The interest of the encumbrancer or owner arises before the goods become fixtures; and

(3) The security interest is perfected by a fixture filing before the goods become fixtures or within twenty days thereafter.

(e) A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1) The debtor has an interest of record in the real property or is in possession of the real property and the security interest:

(A) Is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and

(B) Has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner;

(2) Before the goods become fixtures, the security interest is perfected by any method permitted by this article and the fixtures are readily removable:

(A) Factory or office machines;

(B) Equipment that is not primarily used or leased for use in the operation of the real property; or

(C) Replacements of domestic appliances that are consumer goods;

(3) The conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article; or

(4) The security interest is:

(A) Created in a manufactured home in a manufactured-home transaction; and

(B) Perfected pursuant to a statute described in subdivision (2) of subsection (a) of section 42a-9-311 of the general statutes, as amended by this act.

(f) A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1) The encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or

(2) The debtor has a right to remove the goods as against the encumbrancer or owner.

(g) The priority of the security interest under subdivision (2) of subsection (f) continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.

(h) A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.

(i) A perfected security interest in crops growing on real property has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property.

Sec. 55. (NEW) (a) A security interest may be created in an accession and continues in collateral that becomes an accession.

(b) If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.

(c) Except as otherwise provided in subsection (d), the other provisions of sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act determine the priority of a security interest in an accession.

(d) A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate-of-title statute under subsection (b) of section 42a-9-311 of the general statutes, as amended by this act.

(e) After default, subject to sections 98 to 125, inclusive, of this act, a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.

(f) A secured party that removes an accession from other goods under subsection (e) shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, for the cost of repair of any physical injury to the whole or the other goods. The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it. A person entitled to reimbursement, other than the debtor, may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

Sec. 56. (NEW) (a) In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass.

(b) A security interest does not exist in commingled goods as such. However, a security interest may attach to a product or mass that results when goods become commingled goods.

(c) If collateral becomes commingled goods, a security interest attaches to the product or mass.

(d) If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under subsection (c) is perfected.

(e) Except as otherwise provided in subsection (f), the other provisions of sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act, determine the priority of a security interest that attaches to the product or mass under subsection (c).

(f) If more than one security interest attaches to the product or mass under subsection (c), the following rules determine priority:

(1) A security interest that is perfected under subsection (d) has priority over a security interest that is unperfected at the time the collateral becomes commingled goods.

(2) If more than one security interest is perfected under subsection (d), the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods.

Sec. 57. (NEW) If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:

(1) A buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and

(2) The security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under subsection (b) of section 42a-9-311 of the general statutes, as amended by this act, after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.

Sec. 58. (NEW) If a security interest or agricultural lien is perfected by a filed financing statement providing information described in subdivision (5) of subsection (b) of section 87 of this act which is incorrect at the time the financing statement is filed:

(1) The security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and

(2) A purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of chattel paper, documents, goods, instruments or a security certificate, receives delivery of the collateral.

Sec. 59. (NEW) This article does not preclude subordination by agreement by a person entitled to priority.

Sec. 60. (NEW) (a) Except as otherwise provided in subsection (c), a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.

(b) Except as otherwise provided in subsection (c), the application of this article to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.

(c) The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under subdivision (3) of subsection (a) of section 42a-9-104 of the general statutes, as amended by this act, if the set-off is based on a claim against the debtor.

Sec. 61. (NEW) Except as otherwise provided in subsection (c) of section 60 of this act, and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by:

(1) The creation, attachment or perfection of a security interest in the deposit account;

(2) The bank's knowledge of the security interest; or

(3) The bank's receipt of instructions from the secured party.

Sec. 62. (NEW) This article does not require a bank to enter into an agreement of the kind described in subdivision (2) of subsection (a) of section 42a-9-104 of the general statutes, as amended by this act, even if its customer so requests or directs. A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer.

Sec. 63. Section 42a-9-401 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) The proper place to file in order to perfect a security interest is as follows: (a) When the collateral is timber to be cut or is minerals or the like, including oil and gas, or accounts subject to subsection (5) of section 42a-9-103a, or when the financing statement is filed as a fixture filing and the collateral is goods which are or are to become fixtures, then in the office where a mortgage on the real estate would be filed or recorded; (b) in all other cases, in the office of the Secretary of the State.

(2) A filing which is made in good faith in an improper place or not in all of the places required by this section is nevertheless effective with regard to any collateral as to which the filing complied with the requirements of this article and is also effective with regard to collateral covered by the financing statement against any person who has knowledge of the contents of such financing statement.

(3) A filing which is made in the proper place in this state continues effective even though the debtor's residence or place of business or the location of the collateral or its use, whichever controlled the original filing, is thereafter changed.

(4) The rules stated in section 42a-9-103a determine whether filing is necessary in this state.

(5) Notwithstanding subsections (1) to (4) inclusive, of this section, and subject to subsection (3) of section 42a-9-302, the proper place to file in order to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of the State. This filing constitutes a fixture filing as to the collateral described therein which is or is to become fixtures.]

(a) Except as otherwise provided in subsection (b) and sections 42a-9-406 to 42a-9-409, inclusive, as amended by this act, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.

(b) An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

Sec. 64. Section 42a-9-402 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A financing statement is sufficient if it gives the names of the debtor and the secured party, is signed by the debtor, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches. When the financing statement covers crops growing or to be grown, the statement must also contain a general description of the real estate concerned. When the financing statement covers timber to be cut or covers minerals or the like, including oil and gas, or accounts subject to subsection (5) of section 42a-9-103a, or when the financing statement is filed as a fixture filing and the collateral is goods which are or are to become fixtures, the statement must also comply with subsection (5) of this section. A copy of the security agreement is sufficient as a financing statement if it contains the above information and is signed by the debtor. A carbon, photographic or other reproduction of a security agreement or a financing statement is sufficient as a financing statement if the security agreement so provides or if the original has been filed in this state.

(2) A financing statement which otherwise complies with subsection (1) of this section is sufficient when it is signed by the secured party instead of the debtor if it is filed to perfect a security interest in (a) collateral already subject to a security interest in another jurisdiction when it is brought into this state, or when the debtor's location is changed to this state. Such a financing statement must state that the collateral was brought into this state or that the debtor's location was changed to this state under such circumstances; or (b) proceeds under section 42a-9-306 if the security interest in the original collateral was perfected. Such a financing statement must describe the original collateral; or (c) collateral as to which the filing has lapsed; or (d) collateral acquired after a change of name, identity or corporate structure of the debtor.

(3) A form substantially as follows is sufficient to comply with subsection (1) of this section.

Name of debtor (or assignor) ....

Address ....

Name of secured party (or assignee) ....

Address ....

1. This financing statement covers the following types (or items) of property: (Describe) ....

2. (If collateral is crops) The above described crops are growing or are to be grown on: (Describe real estate) ....

3. (If applicable) The above goods are to become fixtures on (Describe real estate) .... and this financing statement is to be filed for record in the real estate records. (If the debtor does not have an interest of record) The name of a record owner is ....

4. (If products of collateral are claimed) Products of the collateral are also covered.

USE WHICHEVER IS APPLICABLE

.... Signature of Debtor (or Assignor)

.... Signature of Secured Party (or Assignee)

(4) A financing statement may be amended by filing a writing signed by both the debtor and the secured party. An amendment does not extend the period of effectiveness of a financing statement. If any amendment adds collateral, it is effective as to the added collateral only from the filing date of the amendment. In this article, unless the context otherwise requires, the term "financing statement" means the original financing statement and any amendments.

(5) A financing statement covering timber to be cut or covering minerals or the like, including oil and gas, or accounts subject to subsection (5) of section 42a-9-103a, or a financing statement filed as a fixture filing where the debtor is not a transmitting utility, shall show that it covers this type of collateral, shall recite that it is to be filed for record in the real estate records, and the financing statement shall contain a description of the real estate sufficient if it were contained in a mortgage of the real estate under the law of this state. If the debtor does not have an interest of record in the real estate, the financing statement shall show the name of a record owner.

(6) A mortgage is effective as a financing statement filed as a fixture filing from the date of its recording if (a) the goods are described in the mortgage by item or type, (b) the goods are or are to become fixtures related to the real estate described in the mortgage, (c) the mortgage complies with the requirements for a financing statement in this section other than a recital that it is to be filed in the real estate records, and (d) the mortgage is duly recorded. No fee with reference to the financing statement is required other than the regular recording and satisfaction fees with respect to the mortgage.

(7) A financing statement sufficiently shows the name of the debtor if it gives the individual, partnership or corporate name of the debtor, whether or not it adds other trade names or the names of partners. Where the debtor so changes his name or in the case of an organization, its name, identity or corporate structure that a filed financing statement becomes seriously misleading, the filing is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless a new appropriate financing statement is filed before the expiration of that time. A filed financing statement remains effective with respect to collateral transferred by the debtor even though the secured party knows of or consents to the transfer.

(8) A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.]

The existence of a security interest, agricultural lien or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions.

Sec. 65. Section 42a-9-403 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Presentation for filing of a financing statement and tender of the filing fee, or where use by a filing party of a system for the electronic receipt, indexing and storage of information required for the filing of financing statements or notices of federal, state or municipal tax liens has been approved in writing by the Secretary of the State, the electronic transmission by such filing party of such information to, and its receipt by, the filing officer, or acceptance of the statement by the filing officer, or by the town clerk if the financing statement covers fixtures, constitutes filing under this article. As used in this part, "filing officer" means a filing officer in the office of the Secretary of the State and excludes a town clerk.

(2) Except as provided in subsection (6) of this section, a filed financing statement is effective for a period of five years from the date of filing. The effectiveness of a filed financing statement lapses on the expiration of the five-year period unless a continuation statement is filed prior to the lapse. If a security interest perfected by filing exists at the time insolvency proceedings are commenced by or against the debtor, the security interest remains perfected until termination of the insolvency proceedings and thereafter for a period of sixty days or until expiration of the five-year period, whichever occurs later. Upon lapse the security interest becomes unperfected, unless it is perfected without filing. If the security interest becomes unperfected upon lapse, it is deemed to have been unperfected as against a person who became a purchaser or lien creditor before lapse.

(3) A continuation statement may be filed by the secured party within six months prior to the expiration of the five-year period specified in subsection (2) of this section. Any such continuation statement must be signed by the secured party, identify the original statement by file number and state that the original statement is still effective. A continuation statement signed by a person other than the secured party of record must be accompanied by a separate written statement of assignment signed by the secured party of record and complying with subsection (2) of section 42a-9-405, including payment of the required fee. Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in subsection (2) of this section unless another continuation statement is filed prior to such lapse. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement.

(4) Except as provided in subsection (7) a filing officer shall mark each statement with a file number and with the date and hour of filing, or where the information that would otherwise be required in a financing statement is stored in an electronic system approved by the Secretary of the State, such system shall incorporate in the electronic record of each such statement, a file number and the date and hour of the receipt of the electronic record of each such statement. The filing officer shall hold the statement or a microfilm or other photographic or electronic reproduction thereof for public inspection. The secretary shall charge a fee for inspection of such statements as follows: For inspection of statements filed in the alphabetical index, regardless of the number of statements, ten dollars for each debtor; for inspection of each fifteen statements or less filed in the numerical index, ten dollars. The filing officer shall index the statements according to the name of the debtor and shall note in the index the file number and the address of the debtor given in the statement. The index may be made up of the statements themselves, copies thereof, separate cards or otherwise.

(5) The Secretary of the State shall charge and collect the following fees: (a) The uniform fee for filing and indexing an original financing statement shall be twenty-five dollars. The secured party shall set forth on such financing statement each debtor name to be indexed. The secured party may at his option show a trade name for any person; (b) for filing and indexing a termination statement, twenty-five dollars; (c) for filing and indexing a separate written statement of assignment, twenty-five dollars; (d) for filing and indexing an amendment, twenty-five dollars; (e) for filing and noting a statement of release, twenty-five dollars; (f) for filing and indexing a continuation statement, twenty-five dollars. No fee shall be charged (A) to the state when the original statement, continuation statement, amendment, statement of assignment, statement of release or termination statement is filed by or at the request of the Attorney General or an assistant attorney general or by a duly authorized official of the state or any of its agencies, boards or commissions acting in his official capacity, or (B) to a municipality when the original statement, continuation statement, amendment, statement of assignment, statement of release or termination statement is filed by the tax collector or other municipal officer of such municipality pursuant to the provisions of sections 12-195a to 12-195g, inclusive, or (C) for any filing accomplished solely by electronic means, and without the physical submission of any document, instrument, or paper, in accordance with a plan approved by the Secretary of the State.

(6) If the debtor is a transmitting utility and a filed financing statement so states, it is effective until a termination statement is filed. A real estate mortgage which is effective as a fixture filing under subsection (6) of section 42a-9-402 remains effective as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real estate.

(7) When a financing statement covers timber to be cut or covers minerals or the like, including oil and gas, or accounts subject to subsection (5) of section 42a-9-103a or is filed as a fixture filing, it shall be filed for record and the filing officer shall index it under the names of the debtor and any owner of record shown on the financing statement in the same fashion as if they were the mortgagors in a mortgage of the real estate described, and under the name of the secured party as if he were the mortgagee thereunder.]

(a) In this section, "value" has the meaning provided in subsection (a) of section 42a-3-303.

(b) Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1) For value;

(2) In good faith;

(3) Without notice of a claim of a property or possessory right to the property assigned; and

(4) Without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under subsection (a) of section 42a-3-305.

(c) Subsection (b) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subsection (b) of section 42a-3-305.

(d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and the record does not include such a statement:

(1) The record has the same effect as if the record included such a statement; and

(2) The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.

(e) This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

(f) Except as otherwise provided in subsection (d), this section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.

Sec. 66. Section 42a-9-404 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) If a financing statement covering consumer goods is filed on or after October 1, 1976, then within one month or within ten days following written demand by the debtor after there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the secured party must file, with each filing officer with whom the financing statement was filed, a termination statement to the effect that he no longer claims a security interest under the financing statement, which shall be identified by file number. In other cases whenever there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the secured party must on written demand by the debtor send the debtor, for each filing officer with whom the financing statement was filed, a termination statement to the effect that he no longer claims a security interest under the financing statement, which shall be identified by file number. A termination statement signed by a person other than the secured party of record must be accompanied by a separate written statement of assignment signed by the secured party of record complying with subsection (2) of section 42a-9-405, including payment of the required fee. If the affected secured party fails to file such a termination statement as required by this subsection, or to send such a termination statement within ten days after proper demand therefor he shall be liable to the debtor for one hundred dollars, and in addition for any loss caused to the debtor by such failure.

(2) On presentation to the filing officer of such a termination statement he must note it in the index. If he has received the termination statement in duplicate, he shall return one copy of the termination statement to the secured party stamped to show the time of receipt thereof. If the filing officer has a microfilm or other photographic record of the financing statement, and of any related continuation statement, statement of assignment and statement of release, he may remove the originals from the files at any time after receipt of the termination statement, or if he has no such record, he may remove them from the files at any time after one year after receipt of the termination statement. The secured party shall set forth on such termination statement each debtor name to be indexed.]

(a) Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) to (e), inclusive, the rights of an assignee are subject to:

(1) All terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and

(2) Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.

(b) Subject to subsection (c) and except as otherwise provided in subsection (d), the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) only to reduce the amount the account debtor owes.

(c) This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

(d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.

(e) This section does not apply to an assignment of a health-care-insurance receivable.

Sec. 67. Section 42a-9-405 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A financing statement may disclose an assignment of a security interest in the collateral described in the financing statement by indication in the financing statement of the name and address of the assignee or by an assignment itself or a copy thereof on the face or back of the statement. On presentation to the filing officer of such a financing statement and the required fee, the filing officer shall mark the same as provided in subsection (4) of section 42a-9-403.

(2) A secured party may assign of record all or a part of his rights under a financing statement by the filing in the place where the original financing statement was filed of a separate written statement of assignment signed by the secured party of record and setting forth the name of the secured party of record and the debtor, the file number and the date of filing of the financing statement and the name and address of the assignee and containing a description of the collateral assigned. A copy of the assignment is sufficient as a separate statement if it complies with the preceding sentence. On presentation to the filing officer of such a separate statement and the required fee, the filing officer shall mark such separate statement with the date and hour of the filing. He shall note the assignment on the index of the financing statement, or in the case of a fixture filing, or a filing covering timber to be cut, or covering minerals or the like, including oil and gas, or accounts subject to subsection (5) of section 42a-9-103a, he shall index the assignment under the name of the assignor as grantor and under the name of the assignee. The secured party shall set forth each debtor name against which said separate written statement of assignment is to be indexed. Notwithstanding the provisions of this subsection, an assignment of record of a security interest in a fixture contained in a mortgage effective as a fixture filing may be made only by an assignment of the mortgage in the manner provided by the law of this state other than this article.

(3) After the disclosure or filing of an assignment under this section, the assignee is the secured party of record.]

(a) A modification of or substitution for an assigned contract is effective against an assignee if made in good faith. The assignee acquires corresponding rights under the modified or substituted contract. The assignment may provide that the modification or substitution is a breach of contract by the assignor. This subsection is subject to subsections (b) to (d), inclusive.

(b) Subsection (a) applies to the extent that:

(1) The right to payment or a part thereof under an assigned contract has not been fully earned by performance; or

(2) The right to payment or a part thereof has been fully earned by performance and the account debtor has not received notification of the assignment under subsection (a) of section 42a-9-406, as amended by this act.

(c) This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

(d) This section does not apply to an assignment of a health-care-insurance receivable.

Sec. 68. Section 42a-9-406 of the general statutes is repealed and the following is substituted in lieu thereof:

[A secured party of record may by his signed statement release all or a part of any collateral described in a filed financing statement. The statement of release is sufficient if it contains a description of the collateral being released, the name and address of the debtor, the name and address of the secured party, and the file number of the financing statement. A statement of release signed by a person other than the secured party of record shall be accompanied by a separate written statement of assignment signed by the secured party of record and complying with subsection (2) of section 42a-9-405, including payment of the required fee. Upon presentation of such a statement of release and required fee to the filing officer he shall mark the statement with the hour and date of filing and shall note the same upon the margin of the index of the filing of the financing statement. The secured party shall set forth on such statement of release each debtor name to be indexed.]

(a) Subject to subsections (b) to (i), inclusive, an account debtor on an account, chattel paper or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor. An assignor who receives payment after notification is given must return the payment to the account debtor or forward the payment to the assignee.

(b) Subject to subsection (h), notification is ineffective under subsection (a):

(1) If it does not reasonably identify the rights assigned;

(2) To the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this article; or

(3) At the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:

(A) Only a portion of the account, chattel paper or payment intangible has been assigned to that assignee;

(B) A portion has been assigned to another assignee; or

(C) The account debtor knows that the assignment to that assignee is limited.

(c) Subject to subsection (h), if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection (a).

(d) Except as otherwise provided in subsection (e) and section 42a-9-407, as amended by this act, and subject to subsection (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

(1) Prohibits, restricts or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, the account, chattel paper, payment intangible or promissory note; or

(2) Provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the account, chattel paper, payment intangible or promissory note.

(e) Subsection (d) does not apply to the sale of a payment intangible or promissory note.

(f) Except as otherwise provided in section 42a-9-407, as amended by this act, and subject to subsections (h) and (i), a rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute or regulation:

(1) Prohibits, restricts or requires the consent of the government, governmental body or official or account debtor to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in the account or chattel paper; or

(2) Provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the account or chattel paper.

(g) Subject to subsection (h), an account debtor may not waive or vary its option under subdivision (3) of subsection (b).

(h) This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

(i) (1) This section does not apply to:

(A) An assignment of a health-care-insurance receivable;

(B) An assignment or transfer of or creation of a security interest in:

(i) A claim or right to receive compensation for injuries or sickness as described in 26 USC 104(a)(1) or (2), as amended from time to time, or

(ii) A claim or right to receive benefits under a special needs trust as described in 42 USC 1396p(d)(4), as amended from time to time.

(2) Subsection (f) of this section does not apply to an assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, a right the transfer of which is prohibited or restricted by any of the following statutes to the extent that the statute is inconsistent with said subsection: Section 12-831, 31-320 or 52-225f.

Sec. 69. Section 42a-9-407 of the general statutes is repealed and the following is substituted in lieu thereof:

[Upon request of any person, the filing officer shall issue his certificate showing whether there is on file on the date and hour stated therein, any presently effective financing statement naming a particular debtor and any statement of assignment thereof and if there is, giving the date and hour of filing of each such statement and the names and addresses of each secured party named therein. The uniform fee for such a certificate shall be twenty-five dollars. Upon request the filing officer shall furnish a photographic or electronic copy of any filed financing statement, continuation statement, termination statement, statement of assignment or statement of release for a uniform fee of five dollars and, if such statement consists of more than three pages, an additional uniform fee of five dollars for the fourth and each succeeding page. No fee shall be charged to the state when a certificate showing whether there is on file, on the date and hour stated therein, any presently effective financing statement, naming a particular debtor and any assignment or amendment thereof, is requested by the Attorney General or an assistant attorney general or by an authorized official of the state or any of its agencies, boards or commissions acting in his official capacity, and no fee shall be charged to a municipality when such certificate is requested by the tax collector or other municipal officer of such municipality, pursuant to the provisions of sections 12-195a to 12-195g, inclusive.]

(a) Except as otherwise provided in subsection (b), a term in a lease agreement is ineffective to the extent that it:

(1) Prohibits, restricts or requires the consent of a party to the lease to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor's residual interest in the goods; or

(2) Provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the lease.

(b) A term described in subdivision (2) of subsection (a) is effective to the extent that there is:

(1) A transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or

(2) A delegation of a material performance of either party to the lease contract in violation of the term.

(c) The creation, attachment, perfection or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.

Sec. 70. Section 42a-9-408 of the general statutes is repealed and the following is substituted in lieu thereof:

[Unless a filing officer has notice of an action pending relative thereto, he may remove from the files and destroy (a) a lapsed financing statement, a lapsed continuation statement, a statement of assignment or release relating to either, and any index of any of them, one year or more after lapse; and (b) a termination statement and the index on which it is noted, one year or more after the filing of the termination statement.]

(a) Except as otherwise provided in subsection (b), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license or franchise, and which term prohibits, restricts or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment or perfection of a security interest in, the promissory note, health-care-insurance receivable or general intangible, is ineffective to the extent that the term:

(1) Would impair the creation, attachment or perfection of a security interest; or

(2) Provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.

(b) Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note.

(c) Except as provided in subsection (f), a rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, person obligated on a promissory note or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable or general intangible, including a contract, permit, license or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute or regulation:

(1) Would impair the creation, attachment or perfection of a security interest; or

(2) Provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.

(d) To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute or regulation described in subsection (c) would be effective under law other than this article but is ineffective under subsection (a) or (c), the creation, attachment or perfection of a security interest in the promissory note, health-care-insurance receivable or general intangible:

(1) Is not enforceable against the person obligated on the promissory note or the account debtor;

(2) Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;

(3) Does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;

(4) Does not entitle the secured party to use or assign the debtor's rights under the promissory note, health-care-insurance receivable or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable or general intangible;

(5) Does not entitle the secured party to use, assign, possess or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and

(6) Does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable or general intangible.

(e) Except as provided in subsection (f) of this section, this section prevails over any inconsistent provision of any statute or regulation of this state unless the provision is contained in a statute of this state, refers expressly to this section and states that the provision prevails over this section.

(f) (1) This section does not apply to an assignment or transfer of or creation of a security interest in:

(i) A claim or right to receive compensation for injuries or sickness as described in 26 USC 104(a)(1) or (2), as amended from time to time, or

(ii) A claim or right to receive benefits under a special needs trust as described in 42 USC 1396p(d)(4), as amended from time to time.

(2) Subsection (c) of this section does not apply to an assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, a right the transfer of which is prohibited or restricted by any of the following statutes to the extent that the statute is inconsistent with said subsection: Section 12-831, 31-320 or 52-225f.

Sec. 71. Section 42a-9-409 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) Financing statements, security agreements, continuation statements, amendments, termination statements, statements of assignment and statements of release which are filed in the office of the town clerk pursuant to section 42a-9-401 (1) (a) and which comply with the requirements of this part shall be recorded, indexed and handled as would be similar instruments relating to a mortgage upon the real estate concerned. In particular, each financing statement, security agreement, continuation statement and amendment shall be indexed in the grantor index according to the name of the debtor and if it shows the name of a record owner of the real estate which is other than that of the debtor, it shall also be indexed according to the name of such owner; all such items shall also be indexed in the grantee index according to the name of the secured party. The fees for recording and indexing shall be as provided in subsection (a) of section 7-34a.

(2) In addition to other requirements of this part, a continuation statement, amendment, termination statement, statement of assignment or statement of release which is filed in the office of a town clerk must refer to the record of the original financing statement by book and page. The town clerk shall enter upon the margin of the record of the original financing statement a notation of the record of the subsequent statement or amendment.

(3) Provision for a security interest in goods which are or are to become fixtures may be included in a mortgage or other like instrument transferring an interest in the real estate concerned. If such instrument complies with the requirements for a financing statement of section 42a-9-402, except the signature of the secured party, is recorded as an instrument affecting real estate, and has the appropriate recording fee paid therefor, such recording or registering and payment of fee shall be an effective filing under this part in the office of the town clerk without the necessity of any separate filing or payment of any separate fee to the town clerk under this part.

(4) If a person filing any financing statement, continuation statement, amendment, termination statement, statement of assignment or statement of release furnishes the town clerk a copy thereof at the time of filing, the town clerk shall upon request note upon such copy the date and hour of the filing of the original and promptly deliver or send the copy to such person.]

(a) A term in a letter of credit or a rule of law, statute, regulation, custom or practice applicable to the letter of credit which prohibits, restricts or requires the consent of an applicant, issuer or nominated person to a beneficiary's assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom or practice:

(1) Would impair the creation, attachment or perfection of a security interest in the letter-of-credit right; or

(2) Provides that the assignment or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the letter-of-credit right.

(b) To the extent that a term in a letter of credit is ineffective under subsection (a) but would be effective under law other than this article or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit or to the assignment of a right to proceeds of the letter of credit, the creation, attachment or perfection of a security interest in the letter-of-credit right:

(1) Is not enforceable against the applicant, issuer, nominated person or transferee beneficiary;

(2) Imposes no duties or obligations on the applicant, issuer, nominated person or transferee beneficiary; and

(3) Does not require the applicant, issuer, nominated person or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.

Sec. 72. Section 42a-9-501 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this part and except as limited by subsection (3) those provided in the security agreement. He may reduce his claim to judgment, foreclose or otherwise enforce the security interest by any available judicial procedure. If the collateral is documents the secured party may proceed either as to the documents or as to the goods covered thereby. A secured party in possession has the rights, remedies and duties provided in section 42a-9-207. The rights and remedies referred to in this subsection are cumulative.

(2) After default, the debtor has the rights and remedies provided in this part, those provided in the security agreement and those provided in section 42a-9-207.

(3) To the extent that they give rights to the debtor and impose duties on the secured party, the rules stated in the subsections referred to below may not be waived or varied except as provided with respect to compulsory disposition of collateral by subsection (3) of section 42a-9-504 and section 42a-9-505 and with respect to redemption of collateral by section 42a-9-506 but the parties may by agreement determine the standards by which the fulfillment of these rights and duties is to be measured if such standards are not manifestly unreasonable: (a) Subsection (2) of section 42a-9-502 and subsection (2) of section 42a-9-504 insofar as they require accounting for surplus proceeds of collateral; (b) subsection (3) of section 42a-9-504 and subsection (1) of section 42a-9-505 which deal with disposition of collateral; (c) subsection (2) of section 42a-9-505 which deals with acceptance of collateral as discharge of obligation; (d) section 42a-9-506 which deals with redemption of collateral; and (e) subsection (1) of section 42a-9-507 which deals with the secured party's liability for failure to comply with this part.

(4) If the security agreement covers both real and personal property, the secured party may proceed under this part as to the personal property or he may proceed as to both the real and the personal property in accordance with his rights and remedies in respect of the real property in which case the provisions of this part do not apply.

(5) When a secured party has reduced his claim to judgment the lien of any levy which may be made upon his collateral by virtue of any execution based upon the judgment shall relate back to the date of the perfection of the security interest in such collateral. A judicial sale, pursuant to such execution, is a foreclosure of the security interest by judicial procedure within the meaning of this section, and the secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.]

(a) Except as otherwise provided in subsection (b), if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

(1) The office designated for the filing or recording of a record of a mortgage on the related real property, if:

(A) The collateral is as-extracted collateral or timber to be cut; or

(B) The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

(2) The Office of the Secretary of the State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the Office of the Secretary of the State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

Sec. 73. Section 42a-9-502 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) When so agreed and in any event on default the secured party is entitled to notify an account debtor or the obligor on an instrument to make payment to him whether or not the assignor was theretofore making collections on the collateral, and also to take control of any proceeds to which he is entitled under section 42a-9-306.

(2) A secured party who by agreement is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor and who undertakes to collect from the account debtors or obligors must proceed in a commercially reasonable manner and may deduct his reasonable expenses of realization from the collections. If the security agreement secures an indebtedness, the secured party must account to the debtor for any surplus and, unless otherwise agreed, the debtor is liable for any deficiency; but, if the underlying transaction was a sale of accounts or chattel paper, the debtor is entitled to any surplus or is liable for any deficiency only if the security agreement so provides.]

(a) Subject to subsection (b), a financing statement is sufficient only if it:

(1) Provides the name of the debtor;

(2) Provides the name of the secured party or a representative of the secured party; and

(3) Indicates the collateral covered by the financing statement.

(b) Except as otherwise provided in subsection (b) of section 42a-9-501, as amended by this act, to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) and also:

(1) Indicate that it covers this type of collateral;

(2) Indicate that it is to be filed in the real property records;

(3) Provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in a record of the mortgage of the real property; and

(4) If the debtor does not have an interest of record in the real property, provide the name of a record owner.

(c) A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

(1) The record indicates the goods or accounts that it covers;

(2) The goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

(3) The record satisfies the requirements for a financing statement in this section other than an indication that it is to be recorded in the real property records; and

(4) The record is recorded.

(d) A financing statement may be filed or recorded before a security agreement is made or a security interest otherwise attaches.

Sec. 74. Section 42a-9-503 of the general statutes is repealed and the following is substituted in lieu thereof:

[Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action. If the security agreement so provides the secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties. Without removal a secured party may render equipment unusable, and may dispose of collateral on the debtor's premises under section 42a-9-504.]

(a) A financing statement sufficiently provides the name of the debtor:

(1) If the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized;

(2) If the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;

(3) If the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:

(A) Provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and

(B) Indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and

(4) In other cases:

(A) If the debtor has a name, only if it provides the individual or organizational name of the debtor; and

(B) If the debtor does not have a name, only if it provides the names of the partners, members, associates or other persons comprising the debtor.

(b) A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered ineffective by the absence of:

(1) A trade name or other name of the debtor; or

(2) Unless required under subparagraph (B) of subdivision (4) of subsection (a) of this section, names of partners, members, associates or other persons comprising the debtor.

(c) A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

(d) Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

(e) A financing statement may provide the name of more than one debtor and the name of more than one secured party.

Sec. 75. Section 42a-9-504 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing. Any sale of goods is subject to article 2. The proceeds of disposition shall be applied in the order following to (a) the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and, to the extent provided for in the agreement and not prohibited by law, the reasonable attorneys' fees and legal expenses incurred by the secured party; (b) the satisfaction of indebtedness secured by the security interest under which the disposition is made; (c) the satisfaction of indebtedness secured by any subordinate security interest in the collateral if written notification of demand therefor is received before distribution of the proceeds is completed. If requested by the secured party, the holder of a subordinate security interest must seasonably furnish reasonable proof of his interest, and unless he does so, the secured party need not comply with his demand.

(2) If the security interest secures an indebtedness, the secured party must account to the debtor for any surplus and, unless otherwise agreed, the debtor is liable for any deficiency; but if the underlying transaction was a sale of accounts or chattel paper, the debtor is entitled to any surplus or is liable for any deficiency only if the security agreement so provides.

(3) Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable. Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor, if he has not signed after default a statement renouncing or modifying his right to notification of sale. In the case of consumer goods no other notification need be sent. In other cases notification shall be sent to any other secured party from whom the secured party has received, before sending his notification to the debtor or before the debtor's renunciation of his rights, written notice of a claim of an interest in the collateral. The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations he may buy at private sale.

(4) When collateral is disposed of by a secured party after default, the disposition transfers to a purchaser for value all of the debtor's rights therein, discharges the security interest under which it is made and any security interest or lien subordinate thereto. The purchaser takes free of all such rights and interests even though the secured party fails to comply with the requirements of this part or of any judicial proceedings (a) in the case of a public sale, if the purchaser has no knowledge of any defects in the sale and if he does not buy in collusion with the secured party, other bidders or the person conducting the sale; or (b) in any other case, if the purchaser acts in good faith.

(5) A person who is liable to a secured party under a guaranty, endorsement, repurchase agreement or the like and who receives a transfer of collateral from the secured party or is subrogated to his rights has thereafter the rights and duties of the secured party. Such a transfer of collateral is not a sale or disposition of the collateral under this article.]

A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

(1) A description of the collateral pursuant to section 42a-9-108, as amended by this act; or

(2) An indication that the financing statement covers all assets or all personal property.

Sec. 76. Section 42a-9-505 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) If the debtor has paid sixty per cent of the cash price in the case of a purchase money security interest in consumer goods or sixty per cent of the loan in the case of another security interest in consumer goods, and has not signed after default a statement renouncing or modifying his rights under this part a secured party who has taken possession of collateral must dispose of it under section 42a-9-504 and if he fails to do so within ninety days after he takes possession the debtor at his option may recover in conversion or under section 42a-9-507 (1) on secured party's liability.

(2) In any other case involving consumer goods or any other collateral a secured party in possession may, after default, propose to retain the collateral in satisfaction of the obligation. Written notice of such proposal shall be sent to the debtor if he has not signed after default a statement renouncing or modifying his rights under this subsection. In the case of consumer goods no other notice need be given. In other cases notice shall be sent to any other secured party from whom the secured party has received, before sending his notice to the debtor or before the debtor's renunciation of his rights, written notice of a claim of an interest in the collateral. If the secured party receives objection in writing from a person entitled to receive notification within twenty-one days after the notice was sent, the secured party must dispose of the collateral under section 42a-9-504. In the absence of such written objection the secured party may retain the collateral in satisfaction of the debtor's obligation.]

(a) A consignor, lessor or other bailor of goods, a licensor or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in subsection (a) of section 42a-9-311, as amended by this act, using the terms "consignor", "consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee", "owner", "registered owner", "buyer", "seller" or words of similar import, instead of the terms "secured party" and "debtor".

(b) Sections 42a-9-501 to 42a-9-507, inclusive, as amended by this act, and sections 79 to 97, inclusive, of this act apply to the filing of a financing statement under subsection (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under subsection (b) of section 42a-9-311, as amended by this act, but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner or buyer which attaches to the collateral is perfected by the filing or compliance.

Sec. 77. Section 42a-9-506 of the general statutes is repealed and the following is substituted in lieu thereof:

[At any time before the secured party has disposed of collateral or entered into a contract for its disposition under section 42a-9-504 or before the obligation has been discharged under section 42a-9-505(2) the debtor or any other secured party may unless otherwise agreed in writing after default redeem the collateral by tendering fulfillment of all obligations secured by the collateral as well as the expenses reasonably incurred by the secured party in retaking, holding and preparing the collateral for disposition, in arranging for the sale, and to the extent provided in the agreement and not prohibited by law, his reasonable attorney's fees and legal expenses.]

(a) A financing statement substantially satisfying the requirements of sections 42a-9-501 to 42a-9-507, inclusive, as amended by this act, and sections 79 to 97, inclusive, of this act is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b) Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection (a) of section 42a-9-503, as amended by this act, is seriously misleading.

(c) If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection (a) of section 42a-9-503, as amended by this act, the name provided does not make the financing statement seriously misleading.

(d) For purposes of subsection (b) of section 79 of this act, the "debtor's correct name" in subsection (c) means the correct name of the new debtor.

Sec. 78. Section 42a-9-507 of the general statutes is repealed and the following is substituted in lieu thereof:

[(1) If it is established that the secured party is not proceeding in accordance with the provisions of this part disposition may be ordered or restrained on appropriate terms and conditions. If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this part. If the collateral is consumer goods, the debtor has a right to recover in any event an amount not less than the credit service charge plus ten per cent of the principal amount of the debt or the time price differential plus ten per cent of the cash price.

(2) The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the secured party is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the secured party either sells the collateral in the usual manner in any recognized market therefor or if he sells at the price current in such market at the time of his sale or if he has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold he has sold in a commercially reasonable manner. The principles stated in the two preceding sentences with respect to sales also apply as may be appropriate to other types of disposition. A disposition which has been approved in any judicial proceeding or by any bona fide creditors' committee or representative of creditors shall conclusively be deemed to be commercially reasonable, but this sentence does not indicate that any such approval must be obtained in any case nor does it indicate that any disposition not so approved is not commercially reasonable.]

(a) A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

(b) Except as otherwise provided in subsection (c) and section 79 of this act, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under section 42a-9-506, as amended by this act.

(c) If a debtor so changes its name that a filed financing statement becomes seriously misleading under section 42a-9-506, as amended by this act:

(1) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change; and

(2) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.

Sec. 79. (NEW) (a) Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

(b) If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subsection (a) to be seriously misleading under section 42a-9-506 of the general statutes, as amended by this act:

(1) The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under subsection (d) of section 42a-9-203 of the general statutes, as amended by this act; and

(2) The financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under subsection (d) of section 42a-9-203 of the general statutes, as amended by this act, unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

(c) This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under subsection (a) of section 42a-9-507 of the general statutes, as amended by this act.

Sec. 80. (NEW) (a) A person may file an initial financing statement, amendment that adds collateral covered by a financing statement or amendment that adds a debtor to a financing statement only if:

(1) The debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c); or

(2) The person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

(b) By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

(1) The collateral described in the security agreement; and

(2) Property that becomes collateral under subdivision (2) of subsection (a) of section 42a-9-315 of the general statutes, as amended by this act, whether or not the security agreement expressly covers proceeds.

(c) By acquiring collateral in which a security interest or agricultural lien continues under subdivision (1) of subsection (a) of section 42a-9-315 of the general statutes, as amended by this act, a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under subdivision (2) of subsection (a) of section 42-9-315 of the general statutes, as amended by this act.

(d) A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

(1) The secured party of record authorizes the filing; or

(2) The amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by subsection (a) or (c) of section 84 of this act, the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

(e) If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (d).

Sec. 81. (NEW) (a) A filed record is effective only to the extent that it was filed by a person that may file it under section 80 of this act.

(b) A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

(c) A continuation statement that is not filed within the six-month period prescribed by subsection (d) of section 86 of this act is ineffective.

Sec. 82. (NEW) (a) A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed. If an initial financing statement is filed under subsection (a) of section 85 of this act, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

(b) If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record. If an amendment is filed under subsection (b) of section 85 of this act, the assignee named in the amendment is a secured party of record.

(c) A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.

Sec. 83. (NEW) (a) Subject to section 80 of this act, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing statement by filing an amendment that:

(1) Identifies, by its file number, the initial financing statement to which the amendment relates; or

(2) If the amendment relates to an initial financing statement recorded in a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, identifies the initial financing statement to which the amendment relates by book and page or the date that the initial financing statement was recorded.

(b) Except as otherwise provided in section 86 of this act, the filing of an amendment does not extend the period of effectiveness of the financing statement.

(c) A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(d) A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(e) An amendment is ineffective to the extent it:

(1) Purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

(2) Purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

Sec. 84. (NEW) (a) A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:

(1) There is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value; or

(2) The debtor did not authorize the filing of the initial financing statement.

(b) To comply with subsection (a), a secured party shall cause the secured party of record to file the termination statement:

(1) Within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value; or

(2) If earlier, within twenty days after the secured party receives an authenticated demand from a debtor.

(c) In cases not governed by subsection (a), within twenty days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:

(1) Except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value;

(2) The financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;

(3) The financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor's possession; or

(4) The debtor did not authorize the filing of the initial financing statement.

(d) Except as otherwise provided in section 81 of this act, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in section 81 of this act, for purposes of subsection (f) of section 90 of this act, subsection (a) of section 93 of this act and subsection (c) of section 94 of this act, the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.

Sec. 85. (NEW) (a) Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all of the secured party's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b) Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1) Identifies, by its file number, the initial financing statement to which it relates;

(2) Provides the name of the assignor; and

(3) Provides the name and mailing address of the assignee.

(c) An assignment of record of a security interest in a fixture covered by a fixture filing or record of a mortgage which is effective as a financing statement filed as a fixture filing under subsection (c) of section 42a-9-502 of the general statutes, as amended by this act, may be made only by an assignment of record of the fixture filing or mortgage in the manner provided by law of this state other than title 42a of the general statutes.

Sec. 86. (NEW) (a) Except as otherwise provided in subsections (b), (e), (f) and (g), a filed financing statement is effective for a period of five years after the date of filing.

(b) Except as otherwise provided in subsections (e), (f) and (g), an initial financing statement filed in connection with a manufactured-home transaction is effective for a period of thirty years after the date of filing if it indicates that it is filed in connection with a manufactured-home transaction.

(c) The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d). Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

(d) A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) or the thirty-year period specified in subsection (b), whichever is applicable.

(e) Except as otherwise provided in section 81 of this act, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the lapse, another continuation statement is filed pursuant to subsection (d). Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

(f) If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed.

(g) A record of a mortgage that is effective as a financing statement filed as a fixture filing under subsection (c) of section 42a-9-502 of the general statutes, as amended by this act, remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

Sec. 87. (NEW) (a) Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing. In the case of the recording of a record in a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, tender of the filing fee means tender of the fee specified in section 7-34a of the general statutes.

(b) Filing does not occur with respect to a record that a filing office refuses to accept because:

(1) The record is not communicated by a method or medium of communication authorized by the filing office;

(2) An amount equal to or greater than the applicable filing fee is not tendered;

(3) The filing office is unable to index the record because:

(A) In the case of an initial financing statement, the record does not provide a name for the debtor;

(B) In the case of an amendment or correction statement, the record:

(i) Does not identify the initial financing statement as required by section 83 or 89 of this act, as applicable; or

(ii) Identifies an initial financing statement whose effectiveness has lapsed under section 86 of this act; or

(C) In the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor's last name;

(4) In the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

(5) In the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

(A) Provide a mailing address for the debtor;

(B) Indicate whether the debtor is an individual or an organization; or

(C) If the financing statement indicates that the debtor is an organization, provide:

(i) A type of organization for the debtor; and

(ii) A jurisdiction of organization for the debtor;

(6) In the case of an assignment reflected in an initial financing statement under subsection (a) of section 85 of this act, or an amendment filed under subsection (b) of section 85 of this act, the record does not provide a name and mailing address for the assignee; or

(7) In the case of a continuation statement, the record is not filed within the six-month period prescribed by subsection (d) of section 86 of this act.

(c) For purposes of subsection (b):

(1) A record does not provide information if the filing office is unable to read or decipher the information; and

(2) A record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by section 83, 85 or 89 of this act, is an initial financing statement.

(d) A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

Sec. 88. (NEW) The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

Sec. 89. (NEW) (a) A person may file in the filing office a correction statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed.

(b) A correction statement must:

(1) Identify the record to which it relates by:

(A) The file number assigned to the initial financing statement to which the record relates; or

(B) If the correction statement relates to a record recorded in a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, the book and page on which or the date and time that the initial financing statement was recorded;

(2) Indicate that it is a correction statement; and

(3) Provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed.

(c) The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

Sec. 90. (NEW) (a) For each record filed in a filing office, the filing office shall:

(1) In the case of a record filed in the filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, assign a unique number to the filed record;

(2) In the case of a record filed in the filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, create a record that bears the number assigned to the filed record and the date and time of filing;

(3) Maintain the filed record for public inspection; and

(4) Index the filed record in accordance with subsections (b), (c) and (d).

(b) Except as otherwise provided in subsections (c) and (d), the filing office shall:

(1) Index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and

(2) Index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.

(c) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, it must be filed for record and the filing office shall index it:

(1) In the grantor index under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and

(2) In the grantee index under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.

(d) If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under subsection (a) of section 85 of this act or an amendment filed under subsection (b) of section 85 of this act:

(1) In the grantor index under the name of the assignor as grantor; and

(2) In the grantee index under the name of the assignee as grantee. The filing officer shall also enter upon the margin of the record of such initial financing statement a notation of the record of the subsequent assignment or amendment and of any continuation statement, termination statement or correction statement.

(e) The filing office shall maintain a capability:

(1) To retrieve a record by the name of the debtor and:

(A) If the filing office is described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, by the book and page number assigned to the initial financing statement to which the record relates; or

(B) If the filing office is described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, by the file number assigned to the initial financing statement to which the record relates; and

(2) To associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

(f) The filing office may not remove a debtor's name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under section 86 of this act with respect to all secured parties of record.

(g) The filing office shall perform the acts required by subsections (a) to (d), inclusive, at the time and in the manner prescribed by filing-office regulation, but not later than five business days after the filing office receives the record in question.

(h) Subsection (g) does not apply to a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act.

Sec. 91. (NEW) (a) A filing office shall refuse to accept a record for filing for a reason set forth in subsection (b) of section 87 of this act and may refuse to accept a record for filing only for a reason set forth in subsection (b) of section 87 of this act.

(b) If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it. The communication must be made at the time and in the manner prescribed by filing-office regulation but, in the case of a filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, in no event more than five business days after the filing office receives the record.

(c) A filed financing statement satisfying subsections (a) and (b) of section 42a-9-502 of the general statutes, as amended by this act, is effective, even if the filing office is required to refuse to accept it for filing under subsection (a). However, section 58 of this act applies to a filed financing statement providing information described in subdivision (5) of subsection (b) of section 87 of this act which is incorrect at the time the financing statement is filed.

(d) If a record communicated to a filing office provides information that relates to more than one debtor, sections 42a-9-501 to 42a-9-507, inclusive, of the general statutes, as amended by this act, and sections 79 to 97, inclusive, of this act, apply as to each debtor separately.

Sec. 92. (NEW) A filing office that accepts written records may not refuse to accept a written initial financing statement, an amendment to a financing statement or other written record in a form and format prescribed by the Secretary of the State except for a reason set forth in subsection (b) of section 87 of this act.

Sec. 93. (NEW) (a) The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under section 86 of this act with respect to all secured parties of record. The record must be retrievable by using the name of the debtor and:

(1) If the record was recorded in the filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, by using the book and page number assigned to the initial financing statement to which the record relates or the date and time that the record was recorded; or

(2) If the record was filed in the filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, by using the file number assigned to the initial financing statement to which the record relates.

(b) Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement. However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a).

Sec. 94. (NEW) (a) If a person that files a written record requests an acknowledgment of the filing, the filing office, in the case of a filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, shall send to the person an acknowledgment of the filing of the record showing the number assigned to the record pursuant to subdivision (1) of subsection (a) of section 90 of this act and the date and time of the filing of the record and, in the case of a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, shall send to the person an acknowledgment of the filing of the record showing the book and page number and the date and time of the filing of the record.

(b) If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:

(1) The information in the record;

(2) In the case of a filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, the number assigned to the record pursuant to subdivision (1) of subsection (a) of section 90 of this act or, in the case of a filing office described in subdivision (1) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, the book and page number assigned to the record; and

(3) The date and time of the filing of the record.

(c) The filing office shall communicate or otherwise make available in a record the following information to any person that requests it:

(1) Whether there is on file on a date and time specified by the filing office, but not a date earlier than six business days before the filing office receives the request, any financing statement that:

(A) Designates a particular debtor;

(B) Has not lapsed under section 86 of this act with respect to all secured parties of record; and

(C) If the request so states, has lapsed under section 86 of this act and a record of which is maintained by the filing office under subsection (a) of section 93 of this act;

(2) The date and time of filing of each financing statement; and

(3) The information provided in each financing statement, except that the filing office is not required to transcribe information that is otherwise available concerning collateral.

(d) In complying with its duty under subsection (c), the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing its written certificate.

(e) The filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act, shall perform the acts required by subsections (a) to (d), inclusive, at the time and in the manner prescribed by filing-office regulation, but not later than five business days after the filing office receives the request.

(f) At least monthly, the Secretary of the State shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under sections 42a-9-501 to 42a-9-507, inclusive, of the general statutes, as amended by this act, and sections 79 to 97, inclusive, of this act, in every medium from time to time available to the filing office described in subdivision (2) of subsection (a) of section 42a-9-501 of the general statutes, as amended by this act.

Sec. 95. (NEW) Delay by the filing office beyond a time limit prescribed by sections 42a-9-501 to 42a-9-507, inclusive, of the general statutes, as amended by this act, and sections 79 to 97, inclusive, of this act, is excused if:

(1) The delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment or other circumstances beyond control of the filing office; and

(2) The filing office exercises reasonable diligence under the circumstances.

Sec. 96. (NEW) (a) The Secretary of the State shall charge and collect the following uniform fee: For filing and indexing an initial financing statement, a correction statement or an amendment, twenty-five dollars. No fee shall be charged (1) to the state when the initial financing statement, correction statement or amendment is filed by or at the request of the Attorney General or an assistant attorney general or by a duly authorized official of the state or any of its agencies, boards or commissions acting in an official capacity, or (2) to a municipality when the initial financing statement, correction statement or amendment is filed by a tax collector or other municipal officer of such municipality pursuant to the provisions of sections 12-195a to 12-195g, inclusive, of the general statutes, as amended by this act, or (3) for any filing accomplished solely by electronic means and without the physical submission of any document, instrument or paper, in accordance with a plan approved by the Secretary of the State.

(b) The uniform fee for responding to a request for information from the filing office, including issuing a certificate showing whether there is on file, on the date and hour stated therein, any financing statement naming a particular debtor and any amendment thereof and, if there is, giving the date and hour of filing such amendment and the name and address of each secured party named therein, is twenty-five dollars. Upon request, the filing officer shall furnish a photographic or electronic copy of any filed financing statement or amendment for a uniform fee of twenty dollars regardless of the number of pages and affix such filing officer's certification and official seal thereto for a fee of five dollars. No fee shall be charged to the state when a certificate showing whether there is on file, on the date and hour stated therein, any presently effective financing statement naming a particular debtor and any amendment thereof, is requested by the Attorney General or an assistant attorney general or by an authorized official of the state or any of its agencies, boards or commissions acting in an official capacity, and no fee shall be charged to a municipality when such certificate is requested by the tax collector or other municipal officer of such municipality pursuant to the provisions of sections 12-195a to 12-195g, inclusive, of the general statutes, as amended by this act.

(c) This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under subsection (c) of section 42a-9-502 of the general statutes, as amended by this act. However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply.

Sec. 97. (NEW) The Secretary of the State shall adopt regulations in accordance with the provisions of chapter 54 of the general statutes to implement this article.

Sec. 98. (NEW) (a) After default, a secured party has the rights provided in sections 98 to 125, inclusive, of this act and, except as otherwise provided in section 99 of this act, those provided by agreement of the parties. A secured party:

(1) May reduce a claim to judgment, foreclose or otherwise enforce the claim, security interest or agricultural lien by any available judicial procedure; and

(2) If the collateral is documents, may proceed either as to the documents or as to the goods they cover.

(b) A secured party in possession of collateral or control of collateral under section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107 of the general statutes, as amended by this act, has the rights and duties provided in section 42a-9-207 of the general statutes, as amended by this act.

(c) The rights under subsections (a) and (b) are cumulative and, except as may otherwise be prohibited under other law in a consumer transaction, may be exercised simultaneously.

(d) Except as otherwise provided in subsection (g) and section 102 of this act, after default, a debtor and an obligor have the rights provided in sections 98 to 125, inclusive, of this act and by agreement of the parties.

(e) If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:

(1) The date of perfection of the security interest or agricultural lien in the collateral;

(2) The date of filing a financing statement covering the collateral; or

(3) Any date specified in a statute under which the agricultural lien was created.

(f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.

(g) Except as otherwise provided in subsection (c) of section 104 of this act, sections 98 to 125, inclusive, of this act, impose no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles or promissory notes.

Sec. 99. (NEW) Except as otherwise provided in section 121 of this act, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections:

(1) Subparagraph (C) of subdivision (4) of subsection (b) of section 42a-9-207 of the general statutes, as amended by this act, which deals with use and operation of the collateral by the secured party;

(2) Section 20 of this act, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;

(3) Subsection (c) of section 104 of this act, which deals with collection and enforcement of collateral;

(4) Subsection (a) of section 105 of this act and subsection (c) of section 112 of this act to the extent that they deal with application or payment of noncash proceeds of collection, enforcement or disposition;

(5) Subsection (a) of section 105 of this act and subsection (d) of section 112 of this act to the extent that they require accounting for or payment of surplus proceeds of collateral;

(6) Section 106 of this act to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;

(7) Subsection (b) of section 107 of this act and sections 108, 110 and 111 of this act, which deal with disposition of collateral;

(8) Subsection (f) of section 112 of this act, which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor;

(9) Section 113 of this act, which deals with explanation of the calculation of a surplus or deficiency;

(10) Sections 117, 118 and 119 of this act, which deal with acceptance of collateral in satisfaction of obligation;

(11) Section 120 of this act, which deals with redemption of collateral;

(12) Section 121 of this act, which deals with permissible waivers; and

(13) Sections 122 and 123 of this act, which deal with the secured party's liability for failure to comply with this article.

Sec. 100. (NEW) (a) The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in section 99 of this act if the standards are not manifestly unreasonable or, in the case of a consumer transaction, if the standards are not unreasonable.

(b) Subsection (a) does not apply to the duty under section 106 of this act to refrain from breaching the peace.

Sec. 101. (NEW) (a) If a security agreement covers both personal and real property, a secured party may proceed:

(1) Under sections 98 to 125, inclusive, of this act, as to the personal property without prejudicing any rights with respect to the real property; or

(2) As to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of sections 98 to 125, inclusive, of this act, do not apply.

(b) Subject to subsection (c), if a security agreement covers goods that are or become fixtures, a secured party may proceed:

(1) Under sections 98 to 125, inclusive, of this act, or

(2) In accordance with the rights with respect to real property, in which case the other provisions of sections 98 to 125, inclusive, of this act, do not apply.

(c) Subject to the other provisions of sections 98 to 125, inclusive, of this act, if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property.

(d) A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property for the cost of repair of any physical injury caused by the removal. The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement, other than the debtor, may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

Sec. 102. (NEW) (a) A secured party does not owe a duty based on its status as secured party:

(1) To a person that is a debtor or obligor, unless the secured party knows:

(A) That the person is a debtor or obligor;

(B) The identity of the person; and

(C) How to communicate with the person; or

(2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A) That the person is a debtor; and

(B) The identity of the person.

(b) What the secured party knows is to be determined in the light of the good faith obligations of the secured party.

Sec. 103. (NEW) For purposes of sections 98 to 125, inclusive, of this act, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

Sec. 104. (NEW) (a) If so agreed, and in any event after default, a secured party:

(1) May notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;

(2) May take any proceeds to which the secured party is entitled under section 42a-9-315 of the general statutes, as amended by this act;

(3) May enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;

(4) If it holds a security interest in a deposit account perfected by control under subdivision (1) of subsection (a) of section 42a-9-104 of the general statutes, as amended by this act, may apply the balance of the deposit account to the obligation secured by the deposit account; and

(5) If it holds a security interest in a deposit account perfected by control under subdivision (2) or (3) of subsection (a) of section 42a-9-104 of the general statutes, as amended by this act, may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

(b) If necessary to enable a secured party to exercise under subdivision (3) of subsection (a) of this section the right, if any, of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

(1) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

(2) The secured party's sworn affidavit in recordable form stating that:

(A) A default has occurred; and

(B) The secured party is entitled to enforce the mortgage nonjudicially.

(c) A secured party shall proceed in a commercially reasonable manner if the secured party:

(1) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

(2) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

(d) A secured party may deduct from the collections made pursuant to subsection (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.

(e) This section does not determine whether an account debtor, bank or other person obligated on collateral owes a duty to a secured party.

Sec. 105. (NEW) (a) If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under section 104 of this act in the following order to:

(A) The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;

(B) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and

(C) The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.

(2) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under subparagraph (C) of subdivision (1) of this subsection.

(3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under section 104 of this act unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(4) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

(b) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.

Sec. 106. (NEW) (a) After default, a secured party:

(1) May take possession of the collateral;

(2) Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under section 107 of this act.

(b) A secured party may proceed under subsection (a):

(1) Pursuant to judicial process; or

(2) Without judicial process, if it proceeds without breach of the peace.

(c) If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

(d) (1) In this subsection, "electronic self-help" means the use of electronic means to exercise a secured party's rights pursuant to subsection (a) of this section with respect to the security agreement, and "electronic" means relating to technology that has electrical, digital, magnetic or wireless optical electromagnetic properties or similar capabilities. "Electronic self-help" includes the use of electronic means to locate the collateral.

(2) Electronic self-help is permitted only if the debtor separately agrees to a term of the security agreement authorizing electronic self-help that requires notice of exercise as provided in subdivision (3) of this subsection.

(3) Before resorting to electronic self-help authorized by a term of the security agreement, the secured party shall give notice to the debtor stating:

(i) That the secured party intends to resort to electronic self-help as a remedy on or after fifteen days following communication of the notice to the debtor;

(ii) The nature of the claimed breach which entitled the secured party to resort to self-help; and

(iii) The name, title, address and telephone number of a person representing the secured party with whom the debtor may communicate concerning the security interest.

(4) A debtor may recover direct and incidental damages caused by wrongful use of electronic self-help. The debtor may also recover consequential damages for wrongful use of electronic self-help even if such damages are excluded by the terms of the security agreement.

(5) Even if the secured party complies with subdivisions (2) and (3) of this subsection, electronic self-help may not be used if the secured party has reason to know that its use will result in substantial injury or harm to the public health or safety or grave harm to the public interest substantially affecting third parties not involved in the dispute.

Sec. 107. (NEW) (a) After default, a secured party may sell, lease, license or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

(b) Every aspect of a disposition of collateral, including the method, manner, time, place and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

(c) A secured party may purchase collateral:

(1) At a public disposition; or

(2) At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

(d) A contract for sale, lease, license or other disposition includes the warranties relating to title, possession, quiet enjoyment and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

(e) A secured party may disclaim or modify warranties under subsection (d):

(1) In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

(2) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

(f) A record is sufficient to disclaim warranties under subsection (e) if it indicates "There is no warranty relating to title, possession, quiet enjoyment or the like in this disposition" or uses words of similar import.

Sec. 108. (NEW) (a) In this section, "notification date" means the earlier of the date on which:

(1) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or

(2) The debtor and any secondary obligor waive the right to notification.

(b) Except as otherwise provided in subsection (d), a secured party that disposes of collateral under section 107 of this act shall send to the persons specified in subsection (c) a reasonable authenticated notification of disposition.

(c) To comply with subsection (b), the secured party shall send an authenticated notification of disposition to:

(1) The debtor;

(2) Any secondary obligor; and

(3) If the collateral is other than consumer goods:

(A) Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;

(B) Any other secured party or lienholder that, ten days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

(i) Identified the collateral;

(ii) Was indexed under the debtor's name as of that date; and

(iii) Was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and

(C) Any other secured party that, ten days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in subsection (a) of section 42a-9-311 of the general statutes, as amended by this act.

(d) Subsection (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

(e) A secured party complies with the requirement for notification prescribed by subparagraph (B) of subdivision (3) of subsection (c) of this section if:

(1) Not later than twenty days or earlier than thirty days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subparagraph (B) of subdivision (3) of subsection (c) of this section; and

(2) Before the notification date, the secured party:

(A) Did not receive a response to the request for information; or

(B) Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.

Sec. 109. (NEW) (a) Except as otherwise provided in subsection (b), whether a notification is sent within a reasonable time is a question of fact.

(b) In a transaction other than a consumer transaction, a notification of disposition sent after default and ten days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

Sec. 110. (NEW) Except in a consumer-goods transaction, the following rules apply:

(1) The contents of a notification of disposition are sufficient if the notification:

(A) Describes the debtor and the secured party;

(B) Describes the collateral that is the subject of the intended disposition;

(C) States the method of intended disposition;

(D) States that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and

(E) States the time and place of a public disposition or the time after which any other disposition is to be made.

(2) Whether the contents of a notification that lacks any of the information specified in subdivision (1) are nevertheless sufficient is a question of fact.

(3) The contents of a notification providing substantially the information specified in subdivision (1) are sufficient, even if the notification includes:

(A) Information not specified by that subdivision; or

(B) Minor errors that are not seriously misleading.

(4) A particular phrasing of the notification is not required.

(5) The following form of notification and the form appearing in subdivision (3) of section 111 of this act, when completed, each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

To: .... (Name of debtor, obligor or other person to which the notification is sent)

From: ... (Name, address and telephone number of secured party)

Name of Debtor(s): .... (Include only if debtor(s) are not an addressee)

(For a public disposition:)

We will sell (or lease or license, as applicable) the .... (describe collateral) (to the highest qualified bidder) in public as follows:

Day and Date: ....

Time: ....

Place: ....

(For a private disposition:)

We will sell (or lease or license, as applicable) the .... (describe collateral) privately sometime after .... (day and date).

You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $ ..... ) You may request an accounting by calling us at .... (telephone number).

Sec. 111. (NEW) In a consumer-goods transaction, the following rules apply:

(1) A notification of disposition must provide the following information:

(A) The information specified in subdivision (1) of section 110 of this act;

(B) A description of any liability for a deficiency of the person to which the notification is sent;

(C) A telephone number from which the amount that must be paid to the secured party to redeem the collateral under section 120 of this act is available; and

(D) A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.

(2) A particular phrasing of the notification is not required.

(3) The following form of notification, when completed, provides sufficient information:

(Name and address of secured party.)

(Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

.... (Name and address of any obligor who is also a debtor.)

Subject: .... (Identification of transaction)

We have your .... (describe collateral), because you broke promises in our agreement.

(For a public disposition:)

We will sell .... (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:

Date: ....

Time: ....

Place: ....

You may attend the sale and bring bidders if you want.

(For a private disposition:)

We will sell .... (describe collateral) at private sale sometime after .... (date). A sale could include a lease or license.

The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.

You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at .... (telephone number).

If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at .... (telephone number) or write us at .... (secured party's address) and request a written explanation. (We will charge you $.... for the explanation if we sent you another written explanation of the amount you owe us within the last six months.)

If you need more information about the sale call us at .... (telephone number) or write us at .... (secured party's address).

We are sending this notice to the following other people who have an interest in .... (describe collateral) or who owe money under your agreement:

.... (Names of all other debtors and obligors, if any.)

(4) A notification in the form of subdivision (3) is sufficient, even if additional information appears at the end of the form.

(5) A notification in the form of subdivision (3) is sufficient, even if it includes errors in information not required by subdivision (1), unless the error is misleading with respect to rights arising under this article.

(6) If a notification under this section is not in the form of subdivision (3), law other than this article determines the effect of including information not required by subdivision (1).

Sec. 112. (NEW) (a) A secured party shall apply or pay over for application the cash proceeds of disposition under section 107 of this act in the following order to:

(1) The reasonable expenses of retaking, holding, preparing for disposition, processing and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;

(2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;

(3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

(A) The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and

(B) In a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and

(4) A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.

(b) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under subdivision (3) of subsection (a) of this section.

(c) A secured party need not apply or pay over for application noncash proceeds of disposition under section 107 of this act unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(d) If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c):

(1) Unless subdivision (4) of subsection (a) of this section requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and

(2) The obligor is liable for any deficiency.

(e) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes:

(1) The debtor is not entitled to any surplus; and

(2) The obligor is not liable for any deficiency.

(f) The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with sections 98 to 125, inclusive, of this act, to a transferee other than the secured party, a person related to the secured party or a secondary obligor if:

(1) The transferee in the disposition is the secured party, a person related to the secured party or a secondary obligor; and

(2) The amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought.

(g) A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

(1) Takes the cash proceeds free of the security interest or other lien;

(2) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

(3) Is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

Sec. 113. (NEW) (a) In this section:

(1) "Explanation" means a writing that:

(A) States the amount of the surplus or deficiency;

(B) Provides an explanation in accordance with subsection (c) of how the secured party calculated the surplus or deficiency;

(C) States, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates and expenses may affect the amount of the surplus or deficiency; and

(D) Provides a telephone number or mailing address from which additional information concerning the transaction is available.

(2) "Request" means a record:

(A) Authenticated by a debtor or consumer obligor;

(B) Requesting that the recipient provide an explanation; and

(C) Sent after disposition of the collateral under section 107 of this act.

(b) In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under section 112 of this act, the secured party shall:

(1) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:

(A) Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and

(B) Within fourteen days after receipt of a request; or

(2) In the case of a consumer obligor who is liable for a deficiency, within fourteen days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.

(c) To comply with subparagraph (B) of subdivision (1) of subsection (a) of this section, a writing must provide the following information in the following order:

(1) The aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:

(A) If the secured party takes or receives possession of the collateral after default, not more than thirty-five days before the secured party takes or receives possession; or

(B) If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than thirty-five days before the disposition;

(2) The amount of proceeds of the disposition;

(3) The aggregate amount of the obligations after deducting the amount of proceeds;

(4) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition;

(5) The amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in subdivision (1); and

(6) The amount of the surplus or deficiency.

(d) A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of subsection (a) is sufficient, even if it includes minor errors that are not seriously misleading.

(e) A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to subdivision (1) of subsection (b) of this section. The secured party may require payment of a charge not exceeding twenty-five dollars for each additional response.

Sec. 114. (NEW) (a) A secured party's disposition of collateral after default:

(1) Transfers to a transferee for value all of the debtor's rights in the collateral;

(2) Discharges the security interest under which the disposition is made; and

(3) Discharges any subordinate security interest or other subordinate lien.

(b) A transferee that acts in good faith takes free of the rights and interests described in subsection (a), even if the secured party fails to comply with this article or the requirements of any judicial proceeding.

(c) If a transferee does not take free of the rights and interests described in subsection (a), the transferee takes the collateral subject to:

(1) The debtor's rights in the collateral;

(2) The security interest or agricultural lien under which the disposition is made; and

(3) Any other security interest or other lien.

Sec. 115. (NEW) (a) A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

(1) Receives an assignment of a secured obligation from the secured party;

(2) Receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

(3) Is subrogated to the rights of a secured party with respect to collateral.

(b) An assignment, transfer or subrogation described in subsection (a):

(1) Is not a disposition of collateral under section 107 of this act; and

(2) Relieves the secured party of further duties under this article.

Sec. 116. (NEW) (a) In this section, "transfer statement" means a record authenticated by a secured party stating:

(1) That the debtor has defaulted in connection with an obligation secured by specified collateral;

(2) That the secured party has exercised its post-default remedies with respect to the collateral;

(3) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and

(4) The name and mailing address of the secured party, debtor and transferee.

(b) A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:

(1) Accept the transfer statement;

(2) Promptly amend its records to reflect the transfer; and

(3) If applicable, issue a new appropriate certificate of title in the name of the transferee.

(c) A transfer of the record or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a disposition of collateral under this article and does not of itself relieve the secured party of its duties under this article.

Sec. 117. (NEW) (a) Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(1) The debtor consents to the acceptance under subsection (c);

(2) The secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal authenticated by:

(A) A person to which the secured party was required to send a proposal under section 118 of this act; or

(B) Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

(3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

(4) Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 121 of this act.

(b) A purported or apparent acceptance of collateral under this section is ineffective unless:

(1) The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

(2) The conditions of subsection (a) are met.

(c) For purposes of this section:

(1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

(2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

(A) Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(B) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(C) Does not receive a notification of objection authenticated by the debtor within twenty days after the proposal is sent.

(d) To be effective under subdivision (2) of subsection (a) of this section, a notification of objection must be received by the secured party:

(1) In the case of a person to which the proposal was sent pursuant to section 118 of this act, within twenty days after notification was sent to that person; and

(2) In other cases:

(A) Within twenty days after the last notification was sent pursuant to section 118 of this act; or

(B) If a notification was not sent, before the debtor consents to the acceptance under subsection (c).

(e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 107 of this act within the time specified in subsection (f) if:

(1) Sixty per cent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(2) Sixty per cent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(f) To comply with subsection (e), the secured party shall dispose of the collateral:

(1) Within ninety days after taking possession; or

(2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

(g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

(h) Nothing in subsection (b) shall prohibit a consumer in a consumer goods transaction from proving that the secured party has agreed to accept the collateral in full satisfaction of the obligation by means other than an authenticated record.

Sec. 118. (NEW) (a) A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

(1) Any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;

(2) Any other secured party or lienholder that, ten days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

(A) Identified the collateral;

(B) Was indexed under the debtor's name as of that date; and

(C) Was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date; and

(3) Any other secured party that, ten days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in subsection (a) of section 42a-9-311 of the general statutes, as amended by this act.

(b) A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subsection (a).

Sec. 119. (NEW) (a) A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures:

(1) Discharges the obligation to the extent consented to by the debtor;

(2) Transfers to the secured party all of a debtor's rights in the collateral;

(3) Discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and

(4) Terminates any other subordinate interest.

(b) A subordinate interest is discharged or terminated under subsection (a), even if the secured party fails to comply with this article.

Sec. 120. (NEW) (a) A debtor, any secondary obligor or any other secured party or lienholder may redeem collateral.

(b) To redeem collateral, a person shall tender:

(1) Fulfillment of all obligations secured by the collateral; and

(2) The reasonable expenses and attorney's fees described in subdivision (1) of subsection (a) of section 112 of this act.

(c) A redemption may occur at any time before a secured party:

(1) Has collected collateral under section 104 of this act;

(2) Has disposed of collateral or entered into a contract for its disposition under section 107 of this act; or

(3) Has accepted collateral in full or partial satisfaction of the obligation it secures under section 119 of this act.

Sec. 121. (NEW) (a) A debtor or secondary obligor may waive the right to notification of disposition of collateral under section 108 of this act only by an agreement to that effect entered into and authenticated after default.

(b) A debtor may waive the right to require disposition of collateral under subsection (e) of section 117 of this act only by an agreement to that effect entered into and authenticated after default.

(c) Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under section 120 of this act only by an agreement to that effect entered into and authenticated after default.

Sec. 122. (NEW) (a) If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement or disposition of collateral on appropriate terms and conditions.

(b) Subject to subsections (c), (d) and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this article. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

(c) Except as otherwise provided in section 125 of this act:

(1) A person that, at the time of the failure, was a debtor, was an obligor or held a security interest in or other lien on the collateral may recover damages under subsection (b) for its loss; and

(2) If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with sections 98 to 125, inclusive, of this act, may recover for that failure in any event an amount not less than the credit service charge plus ten per cent of the principal amount of the obligation or the time-price differential plus ten per cent of the cash price.

(d) A debtor whose deficiency is eliminated under section 123 of this act may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under section 123 of this act may not otherwise recover under subsection (b) for noncompliance with the provisions of sections 98 to 125, inclusive, of this act relating to collection, enforcement, disposition or acceptance.

(e) In addition to any damages recoverable under subsection (b), the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars in each case from a person that:

(1) Fails to comply with section 42a-9-208 of the general statutes, as amended by this act;

(2) Fails to comply with section 42a-9-209 of the general statutes, as amended by this act;

(3) Files a record that the person is not entitled to file under subsection (a) of section 80 of this act;

(4) Fails to cause the secured party of record to file or send a termination statement as required by subsection (a) or (c) of section 84 of this act; or

(5) Fails to comply with subsection (b) of section 113 of this act.

(f) A debtor or consumer obligor may recover damages under subsection (b) and, in addition, five hundred dollars in each case from a person that, without reasonable cause, fails to comply with a request under section 20 of this act. A recipient of a request under section 20 of this act which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.

(g) If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 20 of this act, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

Sec. 123. (NEW) (a) In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

(1) A secured party need not prove compliance with the provisions of sections 98 to 125, inclusive, of this act, relating to collection, enforcement, disposition or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.

(2) If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition or acceptance was conducted in accordance with sections 98 to 125, inclusive, of this act.

(3) Except as otherwise provided in section 125 of this act, if a secured party fails to prove that the collection, enforcement, disposition or acceptance was conducted in accordance with the provisions of sections 98 to 125, inclusive, of this act, relating to collection, enforcement, disposition or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses and attorney's fees exceeds the greater of:

(A) The proceeds of the collection, enforcement, disposition or acceptance; or

(B) The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of sections 98 to 125, inclusive, of this act, relating to collection, enforcement, disposition or acceptance.

(4) For purposes of subparagraph (B) of subdivision (3) of this subsection, the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses and attorney's fees unless the secured party proves that the amount is less than that sum.

(5) If a deficiency or surplus is calculated under subsection (f) of section 112 of this act, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought.

(b) The limitation of the rules in subsection (a) to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches. Notwithstanding subsection (b) of section 124 of this act, those approaches may apply principles of existing statutory and case law, including laws concerning the determination of a deficiency or surplus, that apply to analogous consumer transactions in similar goods under part XI of chapter 669 of the general statutes and under other law of this state.

Sec. 124. (NEW) (a) The fact that a greater amount could have been obtained by a collection, enforcement, disposition or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition or acceptance was made in a commercially reasonable manner.

(b) A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

(1) In the usual manner on any recognized market;

(2) At the price current in any recognized market at the time of the disposition; or

(3) Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

(c) A collection, enforcement, disposition or acceptance is commercially reasonable if it has been approved:

(1) In a judicial proceeding;

(2) By a bona fide creditors' committee;

(3) By a representative of creditors; or

(4) By an assignee for the benefit of creditors.

(d) Approval under subsection (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition or acceptance is not commercially reasonable.

(e) Notwithstanding the provisions of subsection (b), in a consumer transaction the determination of a deficiency or surplus is subject to the court determination of the proper rule that applies to a consumer transaction under subsection (b) of section 123 of this act.

Sec. 125. (NEW) (a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person and knows how to communicate with the person:

(1) The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this article; and

(2) The secured party's failure to comply with this article does not affect the liability of the person for a deficiency.

(b) A secured party is not liable because of its status as secured party:

(1) To a person that is a debtor or obligor, unless the secured party knows:

(A) That the person is a debtor or obligor;

(B) The identity of the person; and

(C) How to communicate with the person; or

(2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A) That the person is a debtor; and

(B) The identity of the person.

(c) A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:

(1) A debtor's representation concerning the purpose for which collateral was to be used, acquired or held; or

(2) An obligor's representation concerning the purpose for which a secured obligation was incurred.

(d) A secured party is not liable to any person under subdivision (2) of subsection (c) of section 122 of this act for its failure to comply with section 113 of this act.

(e) A secured party is not liable under subdivision (2) of subsection (c) of section 122 of this act more than once with respect to any one secured obligation.

Sec. 126. (NEW) (a) Except as otherwise provided in sections 126 to 133, inclusive, of this act, this act applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before the effective date of this act.

(b) Except as otherwise provided in subsection (c) and sections 127 to 133, inclusive, of this act:

(1) Transactions and liens that were not governed by sections 42a-9-101 to 42a-9-507, inclusive, of the general statutes, revision of 1958, revised to January 1, 2001, were validly entered into or created before the effective date of this act, and would be subject to this act if they had been entered into or created after the effective date of this act, and the rights, duties and interests flowing from those transactions and liens remain valid after the effective date of this act; and

(2) The transactions and liens may be terminated, completed, consummated and enforced as required or permitted by this act or by the law that otherwise would apply if this act had not taken effect.

(c) This act does not affect an action, case or proceeding commenced before the effective date of this act.

Sec. 127. (NEW) (a) A security interest that is enforceable immediately before the effective date of this act and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this act if, on the effective date of this act, the applicable requirements for enforceability and perfection under this act are satisfied without further action.

(b) Except as otherwise provided in section 129 of this act, if, immediately before the effective date of this act, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this act are not satisfied on the effective date of this act, the security interest:

(1) Is a perfected security interest for one year after the effective date of this act;

(2) Remains enforceable thereafter only if the security interest becomes enforceable under section 42a-9-203 of the general statutes, as amended by this act, before the year expires; and

(3) Remains perfected thereafter only if the applicable requirements for perfection under this act are satisfied before the year expires.

Sec. 128. (NEW) A security interest that is enforceable immediately before the effective date of this act but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

(1) Remains an enforceable security interest for one year after the effective date of this act;

(2) Remains enforceable thereafter if the security interest becomes enforceable under section 42a-9-203 of the general statutes, as amended by this act, on the effective date of this act or within one year thereafter; and

(3) Becomes perfected:

(A) Without further action, on the effective date of this act if the applicable requirements for perfection under this act are satisfied before or at that time; or

(B) When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.

Sec. 129. (NEW) (a) If action, other than the filing of a financing statement, is taken before the effective date of this act and the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before the effective date of this act, the action is effective to perfect a security interest that attaches under this act within one year after the effective date of this act. An attached security interest becomes unperfected one year after the effective date of this act unless the security interest becomes a perfected security interest under this act before the expiration of that period.

(b) The filing of a financing statement before the effective date of this act is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this act.

(c) This act does not render ineffective an effective financing statement that, before the effective date of this act, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in section 42a-9-103a of the general statutes, revision of 1958, revised to January 1, 2001. However, except as otherwise provided in subsections (d) and (e) and section 130 of this act, the financing statement ceases to be effective at the earlier of:

(1) The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

(2) June 30, 2006.

(d) The filing of a continuation statement after the effective date of this act does not continue the effectiveness of the financing statement filed before the effective date of this act. However, upon the timely filing of a continuation statement after the effective date of this act and in accordance with the law of the jurisdiction governing perfection as provided in sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act, the effectiveness of a financing statement filed in the same office in that jurisdiction before the effective date of this act, continues for the period provided by the law of that jurisdiction.

(e) Subdivision (2) of subsection (c) applies to a financing statement that, before the effective date of this act, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in section 42a-9-103a of the general statutes, revision of 1958, revised to January 1, 2001, only to the extent that sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act, provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f) A financing statement that includes a financing statement filed before the effective date of this act and a continuation statement filed after the effective date of this act is effective only to the extent that it satisfies the requirements of sections 42a-9-501 to 42a-9-507, inclusive, of the general statutes, as amended by this act, and sections 79 to 97, inclusive, of this act, for an initial financing statement.

Sec. 130. (NEW) (a) The filing of an initial financing statement in the office specified in section 42a-9-501 of the general statutes, as amended by this act, continues the effectiveness of a financing statement filed before the effective date of this act if:

(1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this act;

(2) The pre-effective-date financing statement was filed in an office in another state or another office in this state; and

(3) The initial financing statement satisfies subsection (c).

(b) The filing of an initial financing statement under subsection (a) continues the effectiveness of the pre-effective-date financing statement:

(1) If the initial financing statement is filed before the effective date of this act, for the period provided in section 42a-9-403 of the general statutes, revision of 1958, revised to January 1, 2001, with respect to a financing statement; and

(2) If the initial financing statement is filed after the effective date of this act, for the period provided in section 86 of this act with respect to an initial financing statement.

(c) To be effective for purposes of subsection (a), an initial financing statement must:

(1) Satisfy the requirements of sections 42a-9-501 to 42a-9-507, inclusive, of the general statutes, as amended by this act, and sections 79 to 97, inclusive, of this act for an initial financing statement;

(2) Identify the pre-effective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

(3) Indicate that the pre-effective-date financing statement remains effective.

Sec. 131. (NEW) (a) In this section, "pre-effective-date financing statement" means a financing statement filed before the effective date of this act.

(b) After the effective date of this act, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act. However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

(c) Except as otherwise provided in subsection (d), if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after the effective date of this act only if:

(1) The pre-effective-date financing statement and an amendment are filed in the office specified in section 42a-9-501 of the general statutes, as amended by this act;

(2) An amendment is filed in the office specified in section 42a-9-501 of the general statutes, as amended by this act, concurrently with, or after the filing in that office of, an initial financing statement that satisfies subsection (c) of section 130 of this act; or

(3) An initial financing statement that provides the information as amended and satisfies subsection (c) of section 130 of this act is filed in the office specified in section 42a-9-501 of the general statutes, as amended by this act.

(d) If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under subsections (d) and (f) of section 129 of this act or section 130 of this act.

(e) Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after the effective date of this act by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies subsection (c) of section 130 of this act has been filed in the office specified by the law of the jurisdiction governing perfection as provided in sections 42a-9-301 to 42a-9-318, inclusive, of the general statutes, as amended by this act, and sections 39 to 62, inclusive, of this act as the office in which to file a financing statement.

Sec. 132. (NEW) A person may file an initial financing statement or a continuation statement under sections 126 to 133, inclusive, of this act if:

(1) The secured party of record authorizes the filing; and

(2) The filing is necessary under sections 126 to 133, inclusive, of this act:

(A) To continue the effectiveness of a financing statement filed before the effective date of this act; or

(B) To perfect or continue the perfection of a security interest.

Sec. 133. (NEW) (a) This act determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before the effective date of this act, sections 42a-9-101 to 42a-9-507, inclusive, of the general statutes, revision of 1958, revised to January 1, 2001, determine priority.

(b) For purposes of subsection (a) of section 42 of this act, the priority of a security interest that becomes enforceable under section 42a-9-203 of the general statutes, as amended by this act, dates from the effective date of this act if the security interest is perfected under this act by the filing of a financing statement before the effective date of this act which would not have been effective to perfect the security interest under sections 42a-9-101 to 42a-9-507, inclusive, of the general statutes, revision of 1958, revised to January 1, 2001. This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.

Sec. 134. Section 42a-1-105 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. Failing such agreement this title applies to transactions bearing an appropriate relation to this state.

(2) Where one of the following provisions of this title specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law, including the conflict of laws rules, so specified:

Rights of creditors against sold goods. Section 42a-2-402.

Applicability of the article on bank deposits and collections. Section 42a-4-102.

Governing law in the article on funds transfers. Section 42a-4a-507.

Letters of credit. Section 42a-5-116.

Applicability of the article on investment securities. Section 42a-8-110.

[Perfection provisions of the article on secured transactions. Section 42a-9-103a.]

Law governing perfection, the effect of perfection or nonperfection and the priority of security interests and agricultural liens. Sections 42a-9-301 to 42a-9-307, inclusive, as amended by this act.

Sec. 135. Subdivision (9) of section 42a-1-201 of the general statutes is repealed and the following is substituted in lieu thereof:

(9) "Buyer in ordinary course of business" means a person [who] that buys goods in good faith, [and] without knowledge that the sale [to him is in violation of the ownership rights or security interest of a third party] violates the rights of another person in the goods, [buys] and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. [but does not include a pawnbroker. All persons who sell minerals or the like, including oil and gas, at wellhead or minehead shall be deemed to be persons] A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. ["Buying"] A buyer in the ordinary course of business may [be] buy for cash, [or] by exchange of other property or on secured or unsecured credit, and [includes receiving] may acquire goods or documents of title under a preexisting contract for sale. [but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.] Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under article 2 may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt is not a buyer in ordinary course of business.

Sec. 136. Subdivision (32) of section 42a-1-201 of the general statutes is repealed and the following is substituted in lieu thereof:

(32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift or any other voluntary transaction creating an interest in property.

Sec. 137. Subdivision (37) of section 42a-1-201 of the general statutes is repealed and the following is substituted in lieu thereof:

(37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. [The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer is limited in effect to a reservation of a "security interest".] The term also includes any interest of a consignor and a buyer of accounts, [or] chattel paper, [which] a payment intangible or a promissory note in a transaction that is subject to article 9. The special property interest of a buyer of goods on identification of such goods to a contract for sale under section 42a-2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with article 9. [Unless a lease or consignment is intended as security, reservation of title thereunder is not a "security interest" but a consignment is in any event subject to the provisions of section 42a-2-326 concerning consignment sales.] Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security. Except as otherwise provided in section 42a-5-505, the right of a seller or lessor of goods under article 2 to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with article 9. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer, as provided by section 42a-2-401, is limited in effect to a reservation of a "security interest". For purposes of this section, "security interest" does not include a rent-to-own agreement, as defined in section 42-240.

Sec. 138. Subdivision (3) of section 42a-2-103 of the general statutes is repealed and the following is substituted in lieu thereof:

(3) The following definitions in other articles apply to this article:

"Check". Section 42a-3-104.

"Consignee". Section 42a-7-102.

"Consignor". Section 42a-7-102.

"Consumer goods". Section [42a-9-109] 42a-9-102, as amended by this act.

"Dishonor". Section 42a-3-502.

"Draft". Section 42a-3-104.

Sec. 139. Section 42a-2-210 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) [Unless] Except as otherwise provided in section 42a-9-406, as amended by this act, unless otherwise agreed, all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3) The creation, attachment, perfection or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of subsection (2) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

[(3)] (4) Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

[(4)] (5) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances, as in an assignment for security, indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

[(5)] (6) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee as provided by section 42a-2-609.

Sec. 140. Section 42a-2-326 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is (a) a "sale on approval" if the goods are delivered primarily for use, and (b) a "sale or return" if the goods are delivered primarily for resale.

(2) [Except as provided in subsection (3), goods] Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

[(3) Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as "on consignment" or "on memorandum". However, this subsection is not applicable if the person making delivery (a) complies with an applicable law providing for a consignor's interest or the like to be evidenced by a sign, or (b) establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others, or (c) complies with the filing provisions of article 9.]

[(4)] (3) Any "or return" term of a contract for sale is to be treated as a separate contract for sale within section 42a-2-201 and as contradicting the sale aspect of the contract within the provisions of section 42a-2-202.

Sec. 141. Section 42a-2-502 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) Subject to [subsection (2)] subsections (2) and (3) and even though the goods have not been shipped a buyer who has paid a part or all of the price of goods in which he has a special property under the provisions of the immediately preceding section may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if: (a) In the case of goods bought for personal, family or household purposes, the seller repudiates or fails to deliver as required by the contract; or (b) in all cases, the seller becomes insolvent within ten days after receipt of the first installment on their price.

(2) The buyer's right to recover the goods under subsection (1)(a) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

[(2)] (3) If the identification creating his special property has been made by the buyer he acquires the right to recover the goods only if they conform to the contract for sale.

Sec. 142. Section 42a-2-716 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) Specific performance may be decreed where the goods are unique or in other proper circumstances.

(2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.

(3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

Sec. 143. Subsection (c) of section 42a-4-210 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to article 9, but: (1) No security agreement is necessary to make the security interest enforceable, as provided in subsection [(1) (a)] (b)(3)(A) of section 42a-9-203, as amended by this act; (2) no filing is required to perfect the security interest; and (3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds.

Sec. 144. Section 42a-5-118 of the general statutes is repealed and the following is substituted in lieu thereof:

[Public act 96-198 applies to a letter of credit that is issued on or after October 1, 1996. Public act 96-198 does not apply to a transaction, event, obligation or duty arising out of or associated with a letter of credit that was issued before October 1, 1996.]

(a) An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.

(b) So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under subsection (a), the security interest continues and is subject to article 9, but:

(1) A security agreement is not necessary to make the security interest enforceable under section 42a-9-203(b)(3), as amended by this act;

(2) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and

(3) If the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.

Sec. 145. Subsection (1) of section 42a-7-503 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) A document of title confers no right in goods against a person who before issuance of the document had a legal interest or a perfected security interest in them and who neither (a) delivered or entrusted them or any document of title covering them to the bailor or his nominee with actual or apparent authority to ship, store or sell or with power to obtain delivery under section 42a-7-403 or with power of disposition under sections 42a-2-403 and [42a-9-307] 40 of this act or other statute or rule of law; nor (b) acquiesced in the procurement by the bailor or his nominee of any document of title.

Sec. 146. Subsection (f) of section 42a-8-103 of the general statutes is repealed and the following is substituted in lieu thereof:

(f) A commodity contract, as defined in section [42a-9-115] 42a-9-102(a)(15), as amended by this act, is not a security or a financial asset.

Sec. 147. Section 42a-8-106 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.

(b) A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser, and:

(1) The certificate is endorsed to the purchaser or in blank by an effective endorsement; or

(2) The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.

(c) A purchaser has "control" of an uncertificated security if:

(1) The uncertificated security is delivered to the purchaser; or

(2) The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.

(d) A purchaser has "control" of a security entitlement if:

(1) The purchaser becomes the entitlement holder; [or]

(2) The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or

(3) Another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.

(e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.

(f) A purchaser who has satisfied the requirements of subsection [(c)(2) or (d)(2)] (c) or (d) of this section has control, even if the registered owner in the case of subsection [(c)(2)] (c) of this section or the entitlement holder in the case of subsection [(d)(2)] (d) of this section retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.

(g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) of this section without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.

Sec. 148. Subsection (e) of section 42a-8-110 of the general statutes is repealed and the following is substituted in lieu thereof:

(e) The following rules determine a "securities intermediary's jurisdiction" for purposes of this section:

(1) If an agreement between the securities intermediary and its entitlement holder [specifies that it is governed by the law of a particular jurisdiction] governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this part, this article or article 9, that jurisdiction is the securities intermediary's jurisdiction.

(2) If subdivision (1) of this subsection does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.

[(2)] (3) If neither subdivision (1) nor subdivision (2) of this subsection applies and an agreement between the securities intermediary and its entitlement holder [does not specify the governing law as provided in subdivision (1) of this subsection, but expressly specifies] governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.

[(3)] (4) If [an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in subdivision (1) or (2) of this subsection] none of the preceding subdivisions of this subsection applies, the securities intermediary's jurisdiction is the jurisdiction in which [is located] the office identified in an account statement as the office serving the entitlement holder's account is located.

[(4)] (5) If [an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in subdivision (1) or (2) of this subsection and an account statement does not identify an office serving the entitlement holder's account as provided in subdivision (3) of this subsection] none of the preceding subdivisions of this subsection applies, the securities intermediary's jurisdiction is the jurisdiction in which [is located] the chief executive office of the securities intermediary is located.

Sec. 149. Subsection (a) of section 42a-8-301 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Delivery of a certificated security to a purchaser occurs when:

(1) The purchaser acquires possession of the security certificate;

(2) Another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or

(3) A securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and [has been] is (i) registered in the name of the purchaser, (ii) payable to the order of the purchaser, or (iii) specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank.

Sec. 150. Subsection (a) of section 42a-8-302 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except as otherwise provided in subsections (b) and (c) of this section, [upon delivery] a purchaser of a certificated or uncertificated security [to a purchaser, the purchaser] acquires all rights in the security that the transferor had or had power to transfer.

Sec. 151. Section 42a-8-510 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) [An] In a case not covered by the priority rules in article 9 or the rules stated in subsection (c) of this section, an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim and obtains control.

(b) If an adverse claim could not have been asserted against an entitlement holder under section 42a-8-502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.

(c) In a case not covered by the priority rules in article 9, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. [Purchasers] Except as otherwise provided in subsection (d) of this section, purchasers who have control rank [equally, except that a] according to priority in time of:

(1) The purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under subsection (d)(1) of section 42a-8-106, as amended by this act;

(2) The securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under subsection (d)(2) of section 42a-8-106, as amended by this act; or

(3) If the purchaser obtained control through another person under subsection (d)(3) of section 42a-8-106, as amended by this act, the time on which priority would be based under this subsection if the other person were the secured party.

(d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

Sec. 152. Section 1-1a of the general statutes is repealed and the following is substituted in lieu thereof:

Unless the context of any statute requires a different interpretation, all words and terms appearing in any statute and relating to security in personal property shall be construed to mean their counterparts in subsection (37) of section 42a-1-201 and chapter 748. In particular "chattel mortgage", "conditional sale contract" or "lien" on personal property, except a lien of the type to which chapter 748 does not apply under [subsection (c) of section 42a-9-104] subdivision (2) of subsection (d) of section 42a-9-109, as amended by this act, shall be construed to mean "security interest"; "mortgagor" and "conditional vendee" shall be construed to mean "debtor"; "mortgagee" and "conditional vendor" shall be construed to mean "secured party".

Sec. 153. Subsection (a) of section 10a-109h of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any pledge made by the university pursuant to section 10a-109g is and shall be deemed a statutory lien [as provided in subsection (2) of section 42a-9-102] and, except as expressly provided in this section, is governed by article 9 of title 42a, as amended by this act. Such lien shall be valid and binding from the time when the pledge is made. The lien of any pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the university, irrespective of whether the parties have notice of the claims. Notwithstanding any provision of the Uniform Commercial Code to the contrary, neither sections 10a-109a to 10a-109y, inclusive, the indenture or resolution, nor any other instrument by which a pledge is created need be recorded. Any revenues or other receipts, funds, moneys, personal property of fixtures so pledged and thereafter received by the university shall be subject immediately to the lien of the pledge without any physical delivery thereof or further act and such lien shall have priority over all other liens, including without limitation the liens of persons who, in the ordinary course of business, furnish services or materials in respect of such assets.

Sec. 154. Section 10a-233 of the general statutes is repealed and the following is substituted in lieu thereof:

The authority shall fix, revise, charge and collect fees and is empowered to contract with any person, partnership, association or corporation, or other body, public or private, in respect thereof. Each agreement entered into by the authority with a participating institution or institutions for higher education shall provide that the fees and other amounts payable by said institution or institutions with respect to any program or programs of the authority shall be sufficient at all times, (1) to pay its or their share of the administrative costs and expenses of such program, (2) to pay the principal of, the premium, if any, and the interest on outstanding bonds or notes of the authority issued with respect to such program to the extent that other revenues of the authority pledged for the payment of the bonds or notes are insufficient to pay the bonds or notes as they become due and payable, (3) to create and maintain reserves which may but need not be required or provided for in the bond resolution relating to such bonds or notes of the authority, and (4) to establish and maintain whatever education loan servicing, control, or audit procedures are deemed to be necessary to the operations of the authority. The authority shall pledge the revenues from each program, as described in subsection (b) of section 10a-230, as security for the issue of bonds or notes relating to such program. Such pledge shall be valid and binding from the time when the pledge is made; the revenues so pledged by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the authority or any participating institution for higher education, irrespective of whether such parties have notice thereof. Neither the bond resolution nor any financing statement, continuation statement or other instrument by which a pledge or security interest is created or by which the authority's interest in revenues is assigned need be filed in any public records in order to perfect the security interest or lien thereof as against third parties except in the records of the authority. The authority may elect, notwithstanding the exclusions provided in [subsection (d) of section 42a-9-104] subdivision (14) of subsection (d) of section 42a-9-109, as amended by this act, to have the provisions of the Connecticut Uniform Commercial Code apply to any pledge made by or to the authority to secure its bonds or notes by filing a financing statement with respect to the security interest created by the pledge. The use and disposition of moneys to the credit of such sinking or other similar fund shall be subject to the provisions of the resolution authorizing the issuance of such bonds or notes or of such trust agreement. Except as may otherwise be provided in such resolution, or such trust agreement, such sinking or other similar fund shall be a fund for all such revenue bonds or notes issued to finance an educational program or programs at one or more participating institutions for higher education, without distinction or priority of one over another; provided, the authority in any such resolution or trust agreement may provide that such sinking or other similar fund shall be the fund for a particular educational program or programs at a participating institution or institutions for higher education and for the revenue bonds or notes issued to finance a particular education program or programs and may, additionally, permit and provide for the issuance of revenue bonds or notes having a subordinate lien in respect of the security herein authorized to other revenue bonds or notes of the authority and, in such case, the authority may create separate or other similar funds in respect of such subordinate lien bonds or notes.

Sec. 155. Section 12-35a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Whenever used in this section, unless the context otherwise requires: (1) "Goods" means goods as defined in [subdivision (h) of subsection (1) of section 42a-9-105] subdivision (44) of subsection (a) of section 42a-9-102, as amended by this act; (2) "proceeds" means proceeds as defined in [subsection (1) of section 42a-9-306] subdivision (64) of subsection (a) of section 42a-9-102, as amended by this act; (3) "debtor" means the taxpayer; (4) "secured party" means the state of Connecticut; (5) "collateral" means property which is the subject of the tax lien; (6) "obligations" means amount of tax and accrued penalties and interest claimed to be due the state in relation to the tax lien; (7) "person" means any individual, trust, partnership, association, company, limited liability company or corporation; (8) "purchase money security interest" means purchase money security interest as defined in section [42a-9-107] 42a-9-103a, as amended by this act; (9) "commercial transactions financing agreement" means an agreement entered into by a person in the course of his trade or business to make loans to the taxpayer, part or all of the security for repayment of any such loan being inventory acquired by the taxpayer in the ordinary course of trade or business; (10) "qualified property" when used with respect to a commercial transactions financing agreement, means inventory; (11) "obligatory disbursement agreement" means an agreement, entered into by a person in the course of trade or business, to make disbursements but such an agreement shall be considered within this term only to the extent of disbursements which are required to be made by reason of the intervention of the rights of a person other than the taxpayer; (12) "qualified property" when used with respect to obligatory disbursement agreement, means property subject to the lien imposed in accordance with this section, at the time of tax lien filing and, to the extent that the acquisition is directly traceable to the disbursements under an obligatory disbursement agreement, property acquired by the taxpayer after the time of tax lien filing; (13) "inventory" means inventory as defined in [subsection (4) of section 42a-9-109] subdivision (48) of subsection (a) of section 42a-9-102, as amended by this act; (14) "lien creditor" means lien creditor as that term is defined in [subsection (3) of section 42a-9-301] subdivision (52) of subsection (a) of section 42a-9-102, as amended by this act.

(b) Upon failure of any person to pay any tax, except taxes under chapter 216, due the state within thirty days from its due date, or if before the due date of any tax, except taxes under said chapter 216, the Commissioner of Revenue Services believes that the collection of such tax will be jeopardized by delay, the state shall have a lien, upon perfection as hereinafter provided, upon the goods situated in this state and owned by the taxpayer upon the date of perfection, or upon the goods thereafter acquired by the taxpayer. Such lien shall attach and become perfected at the time when notice of such lien is filed pursuant to the filing provisions of part [4] 5 of article 9 of title 42a, as amended by this act, and sections 79 to 97, inclusive, of this act, except that the signature of the taxpayer against whose property the lien is claimed shall not be required on said notice of lien and, in each case, the lien shall be filed as if the debtor were located in this state. Except as hereinafter provided, upon perfection, such lien shall have priority over all subsequently perfected liens and security interests.

(c) Each such notice of lien shall contain such information as will identify (1) the owner of the property upon which the lien is claimed, (2) the residence or business address of such owner, (3) the specific property claimed to be subject to such lien, (4) the location of such property, (5) the type of tax, (6) the amount of tax and accrued penalties and interest claimed to be due the state in relation to the lien and (7) the tax period or periods for which such lien is claimed.

(d) The lien shall be effective for a period of ten years from the date of filing unless discharged as hereinafter provided.

(e) A notice of tax lien having been filed, the state shall have the rights and remedies of a secured party, as provided in sections [42a-9-501 to 42a-9-507, inclusive,] 98 to 125, inclusive, of this act and the taxpayer against whom said lien has been filed shall have the rights and remedies of a debtor, as provided in [said sections 42a-9-501 to 42a-9-507, inclusive] sections 98 to 125, inclusive, of this act. In proceeding to enforce such lien, the state shall observe the procedures applicable to a secured party under [said sections 42a-9-501 to 42a-9-507, inclusive] sections 98 to 125, inclusive, of this act.

(f) Even though notice of tax lien has been filed, such lien shall not be valid with respect to: (1) A security interest which came into existence after tax lien filing but which (A) is in qualified property covered by the terms of a written agreement entered into before tax lien filing and constituting a commercial transactions financing agreement or an obligatory disbursement agreement and (B) is protected under the laws of this state against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation; (2) a security interest which came into existence after tax lien filing by reason of disbursements made before the forty-sixth day after the date of tax lien filing, or before the person making such disbursements had actual notice or knowledge of tax lien filing, whichever is earlier, but only if such security interest (A) is in property subject at the time of tax lien filing, to the lien imposed by this section and covered by the terms of a written agreement entered into before tax lien filing and (B) is protected under the laws of this state against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation; (3) tangible personal property purchased at retail, as against a purchaser in the ordinary course of the seller's trade or business, unless at the time of such purchase such purchaser intends such purchase to, or knows such purchase will, hinder, evade, or defeat the collection of any tax; or (4) a purchase money security interest, if said purchase money security interest would be prior to a conflicting security interest in the same collateral under section [42a-9-312] 44 of this act.

(g) When the amount of tax, penalty or interest with respect to which a lien has been created under this section has been satisfied, the Commissioner of Revenue Services, upon request of any interested party, shall issue a certificate discharging such lien, which certificate shall be filed with the Uniform Commercial Code Division of the office of the Secretary of the State in the same manner as termination statements are filed under section [42a-9-404] 84 of this act.

Sec. 156. Subdivision (70) of section 12-81 of the general statutes is repealed and the following is substituted in lieu thereof:

(70) New machinery and equipment used directly in the manufacturing of goods or products and acquired through purchase by any business organization or any affiliate of such business organization as part of a technological upgrading of the manufacturing process at a location in a distressed municipality, targeted investment community, as defined in section 32-222, or enterprise zone designated pursuant to section 32-70, and for which an eligibility certificate has been issued by the Department of Economic and Community Development, which business organization (A) is engaged in the manufacturing, processing or assembling of raw materials, parts or manufactured products, (B) has been in continuous operation in the state for a period not less than five years prior to claiming the exemption provided in this subdivision, (C) had gross receipts in an amount less than twenty million dollars in the year prior to claiming the exemption provided in this subdivision, including receipts of any affiliates of the business organization, and (D) has incurred costs in acquiring such machinery and equipment not less than the greater of (i) two hundred thousand dollars, or (ii) two hundred per cent of the business organization's and affiliate's average expenditure for the acquisition of machinery and equipment used directly in the manufacturing of goods or products at the location in the distressed municipality, targeted investment community or enterprise zone designated pursuant to section 32-70 during the three years prior to claiming the exemption provided in this subdivision, as follows: To the extent of fifty per cent of its valuation for purposes of assessment in each of the five full assessment years following the assessment year in which such machinery and equipment is acquired. Any person who desires to claim the exemption provided in this subdivision shall file annually with the assessor or board of assessors in the distressed municipality, targeted investment community or enterprise zone designated pursuant to section 32-70 in which the business organization is located, on or before the first day of November, written application claiming such exemption on a form prescribed by the Secretary of the Office of Policy and Management. Failure to file such application in this manner and form within the time limit prescribed shall constitute a waiver of the right to such exemption for such assessment year, unless an extension of time is allowed pursuant to section 12-81k, and upon payment of the required fee for late filing. No person shall be eligible to receive the exemption provided in this subdivision if such exemption is sought for machinery and equipment located in a manufacturing facility as defined in subsection (d) of section 32-9p, currently receiving assistance under subdivisions (59) and (60) of section 12-81, and no person shall receive such exemption for eligible machinery or equipment at each location in a distressed municipality, targeted investment community or enterprise zone designated pursuant to section 32-70 more than once in any continuous five-year period. The state and the municipality and district shall hold a security interest, as defined in subdivision (37) of section 42a-1-201, as amended by this act, in any machinery or equipment which is exempt from taxation pursuant to this subsection, in an amount equal to the tax revenue reimbursed or lost, as the case may be, which shall be subordinate to any purchase money security interest, as defined in section [42a-9-107] 42a-9-103a, as amended by this act. Such security interest shall be enforceable against the taxpayer for a period of five years after the last assessment year in which such exemption was received in any case in which the business organization ceases all business operations or moves its business operations entirely out of this state.

Sec. 157. Subdivision (72) of section 12-81 of the general statutes is repealed and the following is substituted in lieu thereof:

(72) (A) New machinery and equipment, as defined herein, acquired after October 1, 1990, and newly-acquired machinery and equipment, as defined herein, acquired on or after July 1, 1992, by the person claiming exemption under this subdivision, provided this exemption shall only be applicable in the five full assessment years following the assessment year in which such machinery or equipment is acquired, subject to the provisions of subparagraph (B) of this subdivision. Machinery and equipment acquired on or after July 1, 1996, and used in connection with biotechnology shall qualify for the exemption under this subsection. For the purposes of this subdivision: (i) "Machinery" and "equipment" mean tangible personal property which is installed in a manufacturing facility, either five-year property or seven-year property, as those terms are defined in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and the predominant use of which is for manufacturing, processing or fabricating; for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing; for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis; for measuring or testing or for metal finishing; or used in the production of motion pictures, video and sound recordings. "Machinery" means the basic machine itself, including all of its component parts and contrivances such as belts, pulleys, shafts, moving parts, operating structures and all equipment or devices used or required to control, regulate or operate the machinery, including, without limitation, computers and data processing equipment, together with all replacement and repair parts therefor, whether purchased separately or in conjunction with a complete machine, and regardless of whether the machine or component parts thereof are assembled by the taxpayer or another party. "Equipment" means any device separate from machinery but essential to a manufacturing, processing or fabricating process. (ii) "Manufacturing facility" means that portion of a plant, building or other real property improvement used for manufacturing, processing or fabricating, for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing, for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis, for measuring or testing or for metal finishing. (iii) "Manufacturing" means the activity of converting or conditioning tangible personal property by changing the form, composition, quality or character of the property for ultimate sale at retail or use in the manufacturing of a product to be ultimately sold at retail. Changing the quality of property shall include any substantial overhaul of the property that results in a significantly greater service life than such property would have had in the absence of such overhaul or with significantly greater functionality within the original service life of the property, beyond merely restoring the original functionality for the balance of the original service life. (iv) "Fabricating" means to make, build, create, produce or assemble components or tangible personal property work in a new or different manner. (v) "Processing" means the physical application of the materials and labor necessary to modify or change the characteristics of tangible personal property. (vi) "Measuring or testing" includes both nondestructive and destructive measuring or testing, and the alignment and calibration of machinery, equipment and tools, in the furtherance of the manufacturing, processing or fabricating of tangible personal property. (vii) "Biotechnology" means the application of technologies, including recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, to transform biological systems into useful processes and products or to develop microorganisms for specific uses;

(B) Any person who on October first in any year holds title to machinery and equipment for which [he] such person desires to claim the exemption provided in this subdivision shall file with the assessor or board of assessors in the municipality in which the machinery or equipment is located, on or before the first day of November in such year, a list of such machinery or equipment together with written application claiming such exemption on a form prescribed by the Secretary of the Office of Policy and Management. Such application shall include the taxpayer identification number assigned to the claimant by the Commissioner of Revenue Services and the federal employer identification number assigned to the claimant by the Secretary of the Treasury. If title to such equipment is held by a person other than the person claiming the exemption, the claimant shall include on [his] the application information as to the portion of the total acquisition cost incurred by [him] the claimant, and on or before the first day of November in such year, the person holding title to such machinery and equipment shall file a list of such machinery with the assessor of the municipality in which the manufacturing facility of the claimant is located. Such person shall include on the list information as to the portion of the total acquisition cost incurred by [him] such person. Commercial or financial information in any application or list filed under this section shall not be open for public inspection, provided such information is given in confidence and is not available to the public from any other source. The provisions of this subdivision regarding the filing of lists and information shall not supersede the requirements to file tax lists under sections 12-42, 12-43, 12-57a and 12-59. In substantiation of such claim, the claimant and the person holding title to machinery and equipment for which exemption is claimed shall present to the assessor or board of assessors such supporting documentation as said secretary may require, including, but not limited to, invoices, bills of sale, contracts for lease and bills of lading. Failure to file such application in this manner and form within the time limit prescribed shall constitute a waiver of the right to such exemption for such assessment year, unless an extension of time is allowed pursuant to section 12-81k. If title to exempt machinery is conveyed subsequent to October first in any assessment year, entitlement to such exemption shall terminate for the next assessment year and there shall be no pro rata application of the exemption unless such machinery or equipment continues to be leased by the manufacturer who claimed and was approved for the exemption in the previous assessment year. Machinery or equipment shall not be eligible for exemption upon transfer to a business organization related to or affiliated with the seller or from a lessor to a lessee except to the extent it would have been eligible for exemption by the seller or the lessor, as the case may be;

(C) Any person claiming the exemption provided under this subdivision for machinery or equipment shall not be eligible to claim the exemption provided under subdivision (60) of this section or subdivision (70) of this section for the same machinery or equipment. The state and the municipality and district shall hold a security interest, as defined in subdivision (37) of section 42a-1-201, as amended by this act, in any machinery or equipment which is exempt from taxation pursuant to this subdivision, in an amount equal to the tax revenue reimbursed or lost, as the case may be, which shall be subordinate to any purchase money security interest, as defined in section [42a-9-107] 42a-9-103a, as amended by this act. Such security interest shall be enforceable against the claimant for a period of five years after the last assessment year in which such exemption was received in any case in which said manufacturer ceases all manufacturing operations or moves its manufacturing operations entirely out of this state. The following shall not be eligible for the exemption provided under this subdivision: (i) A public service company, as defined in section 16-1; and (ii) any provider, directly or indirectly, of electricity, oil, water or gas;

(D) A claim for property tax exemption under this subdivision may be denied by the assessor or board of assessors of a town, consolidated town and city or consolidated town and borough, with the consent of the chief executive officer thereof, if the claimant is delinquent in a property tax payment to such town, consolidated town and city or consolidated town and borough, pursuant to section 12-146, for property owned by such claimant. Before any such claim is denied, the assessor or board of assessors shall send written notice to the claimant, stating that [he] the claimant may pay the amount of such delinquent tax or enter into an agreement with such town, consolidated town and city or consolidated town and borough for the payment thereof, by the date set forth in [said] such notice, provided, such date shall not be less than thirty days after the date of such notice. Failure on the part of the claimant to pay the amount of the delinquent tax or enter into an agreement to pay the amount thereof by said date shall result in a disallowance of the exemption being claimed; [.]

(E) The secretary, in [his] the secretary's discretion, may deny any claim for exemption under the provisions of this subdivision for new machinery and equipment by a claimant who is delinquent in the payment of corporation business tax imposed under chapter 208, as reported on the list provided by the Commissioner of Revenue Services pursuant to subsection (b) of section 12-7a and who qualified for exemption under this subdivision in the preceding year. On or before September first annually, commencing September 1, 1998, the secretary shall send a written notice to any claimant identified on said list and to the assessor of the town in which the property is subject to taxation, stating that the property tax exemption allowed by this subdivision for the assessment date following the date on which such notice is sent, shall be denied by the assessor of the town in which the property of the taxpayer is subject to taxation unless the taxpayer provides written documentation from the Department of Revenue Services that the delinquency has been cleared. Such written documentation shall substantiate that the delinquency was cleared on or before the statutory date for the filing of an application for exemption under this subdivision, provided, if a taxpayer receives an extension of the filing date pursuant to section 12-81k, the date by which [he] the taxpayer shall be required to clear such tax delinquency shall be extended for a like period of time. No assessor shall approve an application for the exemption under this subdivision that is not accompanied by the written documentation required from a claimant who was sent a notification by the secretary of the Office of Policy and Management.

Sec. 158. Section 12-195a of the general statutes is repealed and the following is substituted in lieu thereof:

As used in sections 12-195a to 12-195g, as amended by this act, inclusive, unless the context requires otherwise:

(a) "Goods" means goods as defined in [subdivision (h) of subsection (1) of section 42a-9-105] subdivision (44) of subsection (a) of section 42a-9-102, as amended by this act;

(b) "Proceeds" means proceeds as defined in [subsection (1) of section 42a-9-306] subdivision (64) of subsection (a) of section 42a-9-102, as amended by this act;

(c) "Debtor" means taxpayer;

(d) "Secured party" means municipality;

(e) "Collateral" means property which is the subject of the lien;

(f) "Obligations" means amount of tax and accrued interest claimed to be due by the municipality by the lien;

(g) "Default" means the date of filing of notice of a tax lien;

(h) "Person" means any individual, trust, partnership, association, company, limited liability company or corporation;

(i) "Purchase money security interest" means purchase money security interest as defined in section [42a-9-107] 42a-9-103a, as amended by this act.

Sec. 159. Section 12-195b of the general statutes is repealed and the following is substituted in lieu thereof:

(a) If any personal property tax, other than a tax on a motor vehicle, due any municipality is not paid within the time limited by any local charter or ordinance, or in the event that the municipality, following the assessment date for such tax, has reason to believe that such tax will not be paid when due, the municipality shall have a lien, upon perfection as hereinafter provided, upon the goods situated in this state and owned by the taxpayer upon the date of perfection, or upon the goods thereafter acquired by the taxpayer. Such lien shall attach and become perfected at the time when notice of such lien is filed pursuant to the filing provisions of part [4] 5 of article 9 of title 42a, as amended by this act, and sections 79 to 97, inclusive, of this act, except that the signature of the taxpayer against whose property the lien is claimed shall not be required on said notice of lien and, in each case, the notice of lien shall be filed as if the debtor were located in this state. Except as hereinafter provided, upon perfection, such lien shall have priority over all subsequently perfected liens and security interests. Such lien shall not attach to or be applicable to proceeds.

(b) On and after July 1, 1999, and except as otherwise provided by law, a notice of lien upon personal property for taxes payable to a municipality shall, once perfected under part [4] 5 of article 9 of title 42a, as amended by this act, and sections 79 to 97, inclusive, of this act, have priority over all previously perfected liens and security interests and other encumbrances of record under the Connecticut Uniform Commercial Code. If more than one municipality perfects such a notice of lien on the same day, the priority of such liens shall be determined by the time of day such liens were perfected, and if perfected at the same time, the lien for the highest tax amount shall take precedence. As used in this section, "municipality" means any town, consolidated town and city, consolidated town and borough, borough, district, as defined in section 7-324, and any city not consolidated with a town.

(c) The provisions of this section shall not be construed to create any implication related to the priority of a lien perfected on or before June 30, 1999.

Sec. 160. Section 12-195e of the general statutes is repealed and the following is substituted in lieu thereof:

A municipality which has filed a notice of tax lien and the taxpayer against whom said lien has been filed, shall have the rights and remedies of a secured party and debtor, respectively, as provided for in sections [42a-9-501 to 42a-9-507, inclusive,] 98 to 125, inclusive, of this act, except that the municipality shall not have the right to propose to retain any property in satisfaction of the obligation as provided in section [42a-9-505] 117 of this act. In proceeding to enforce said lien, the municipality shall observe the procedures applicable to a secured party under [said sections 42a-9-501 to 42a-9-507, inclusive] sections 98 to 125, inclusive, of this act.

Sec. 161. Section 12-195f of the general statutes is repealed and the following is substituted in lieu thereof:

Even though notice of a lien has been filed by a municipality, such lien shall not be valid:

(1) With respect to a security interest which came into existence after tax lien filing but which (A) is in qualified property covered by the terms of a written agreement entered into before tax lien filing and constituting (i) a commercial transactions financing agreement, or (ii) an obligatory disbursement agreement, and (B) is protected under the laws of the state of Connecticut against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation. (C) For purposes of this section, (i) the term "commercial transactions financing agreement" means an agreement, entered into by a person in the course of [his] such person's trade or business, to make loans to the taxpayer, part or all of the security for repayment of said loans being inventory acquired by the taxpayer in the ordinary course of [his] such taxpayer's trade or business, but such an agreement shall be treated as coming within the term only to the extent that such loan is made before the forty-sixth day after the date of tax lien filing or before the lender had actual notice or knowledge of such tax lien filing, whichever is earlier. (ii) The term "qualified property", when used with respect to a commercial transactions financing agreement, means inventory acquired by the taxpayer before the forty-sixth day after the date of tax lien filing. (iii) The term "obligatory disbursement agreement" means an agreement, entered into by a person in the course of [his] such person's trade or business, to make disbursements, but such an agreement shall be treated as coming within the term only to the extent of disbursements which are required to be made by reason of the intervention of the rights of a person other than the taxpayer. (iv) The term "qualified property", when used with respect to an obligatory disbursement agreement, means property subject to the lien imposed by sections 12-195a to 12-195g, inclusive, as amended by this act, at the time of tax lien filing and, to the extent that the acquisition is directly traceable to the disbursements referred to in subparagraph (iii), property acquired by the taxpayer after tax lien filing. (v) The term "inventory" when used in this section means inventory as defined in [subsection (4) of section 42a-9-109] subdivision (48) of subsection (a) of section 42a-9-102, as amended by this act;

(2) With respect to a security interest which came into existence after tax lien filing by reason of disbursements made before the forty-sixth day after the date of tax lien filing, or before the person making such disbursements had actual notice or knowledge of tax lien filing, whichever is earlier, but only if such security interest (A) is in property (i) subject, at the time of tax lien filing, to the lien imposed by sections 12-195a to 12-195g, inclusive, as amended by this act, and (ii) covered by the terms of a written agreement entered into before tax lien filing, and (B) is protected under the laws of the state of Connecticut against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation;

(3) With respect to tangible personal property purchased at retail, as against a purchaser in the ordinary course of the seller's trade or business, unless at the time of such purchase such purchaser intends such purchase to, or knows such purchase will, hinder, evade, or defeat the collection of any tax under said sections;

(4) With respect to a purchase money security interest, if said purchase money security interest would be prior to a conflicting security interest in the same collateral under [section 42a-9-312] sections 42 and 44 of this act.

Sec. 162. Section 12-195g of the general statutes is repealed and the following is substituted in lieu thereof:

If any lien created under sections 12-195a to 12-195g, inclusive, as amended by this act, shall be discharged, then a certificate of discharge shall promptly be filed by the tax collector of the municipality which originally filed the notice of lien, or by [his] the tax collector's successor with the Uniform Commercial Code Division of the office of the Secretary of the State in the same manner as termination statements are filed under section [42a-9-404] 84 of this act. The municipal officer who has filed the notice of lien shall file a notice of discharge of the lien in the manner provided in this section if: A. The taxes for which the lien has been filed are fully paid together with all interest due thereon or; B. a cash bond or surety company bond is furnished to the municipality conditioned upon the payment of the amount liened together with interest due thereon within the effective period of the lien as hereinbefore provided or; C. a final judgment shall be rendered in favor of the taxpayer or others claiming an interest in the personal property liened determining that the tax is not owed, or that the lien is not valid. If the judgment shall determine that the tax is partially owed, then the officer who filed the notice of lien or [his] the officer's successor shall within ten days of the rendition of the final judgment of the court file an amended tax lien for the actual amount of tax found to be due by the court, which amended lien shall be effective as to the revised amount of the lien as of the date of the filing of the original notice of tax lien, and said officer or [his] said officer's successor at the time of the filing of the amended tax lien shall also file a discharge of the original tax lien.

Sec. 163. Section 14-165 of the general statutes is repealed and the following is substituted in lieu thereof:

Except when the context otherwise requires, as used in this chapter:

(a) "Dealer" means a person engaged in the business of buying, selling or exchanging vehicles who is licensed under the provisions of chapter 246.

(b) "Commissioner" means the Commissioner of Motor Vehicles.

(c) "Identification number" means the numbers and letters, if any, on a vehicle designated by the commissioner for the purpose of identifying the vehicle.

(d) "Implement of husbandry" means a vehicle registered as a farm vehicle or a vehicle designated and adapted exclusively for agricultural, horticultural or livestock-raising operations or for lifting or carrying an implement of husbandry.

(e) "Lienholder" means a person holding a security interest in a vehicle.

(f) "Owner" means a person, other than a lienholder, having the property in or title to a vehicle. The term includes a person entitled to the use and possession of a vehicle subject to a security interest in another person, but excludes a lessee under a lease not intended as security.

(g) "Security agreement" means a "security agreement" as defined in [section 42a-9-105(1)(l)] subdivision (78) of subsection (a) of section 42a-9-102, as amended by this act.

(h) "Security interest" means a "security interest" as defined in [section 42a-1-201(37)] subdivision (37) of section 42a-1-201, as amended by this act.

(i) "Special mobile equipment" means a vehicle not designed for the transportation of persons or property upon a highway and only incidentally operated or moved over a highway, including but not limited to, ditch-digging apparatus, well-boring apparatus and road construction and maintenance machinery such as asphalt spreaders, bituminous mixers, bucket loaders, street sweepers, tractors other than truck tractors, ditchers, leveling graders, finishing machines, motor graders, road rollers, scarifiers, earth moving carry-alls and scrapers, power shovels and drag lines, and self-propelled cranes and earth moving equipment. The term does not include house trailers, dump trucks, truck-mounted transit mixers, cranes or shovels, or other vehicles designed for the transportation of persons or property to which machinery has been attached.

(j) "State" means a state, territory or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico or a province of the Dominion of Canada.

(k) "Vehicle" means a motor vehicle as defined by section 14-1.

(l) "Manufacturer's or importer's certificate of origin" means the original written instrument or document required to be executed and delivered by the manufacturer to [his] the manufacturer's agent or dealer, or a person purchasing direct from the manufacturer, certifying the origin of the vehicle.

Sec. 164. Section 14-167 of the general statutes is repealed and the following is substituted in lieu thereof:

This chapter does not apply to or affect: (a) A lien given by statute or rule of law to a supplier of services or materials for the vehicle; (b) a lien given by statute to the United States, this state or any political subdivision of this state; (c) a security interest in a vehicle created by a manufacturer or dealer who holds the vehicle for sale, but a buyer in the ordinary course of business, as defined in [section 42a-1-201(9)] subdivision (9) of section 42a-1-201, as amended by this act, takes free of the security interest, as stated in section [42a-9-307(1)] 40 of this act.

Sec. 165. Section 14-185 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Unless excepted by section 14-167, as amended by this act, a security interest in a vehicle of a type for which a certificate of title is required is perfected by the delivery to the commissioner of the existing certificate of title, if any, an application for a certificate of title containing the name and address of the lienholder and the date of [his] the security agreement and the required fee. It is perfected as of the time when it attached if such delivery is completed within twenty days thereafter, and without regard to the limitations expressed in section [42a-9-301 (2)] 42a-9-317, as amended by this act; otherwise it is perfected as of the time of such delivery.

(b) An unperfected security interest is subordinate to the rights of the persons described in section [42a-9-301] 42a-9-317, as amended by this act, and section 43 of this act.

(c) The rules of priority stated in [section 42a-9-312] sections 42 to 44, inclusive, of this act, and the other sections therein referred to, shall, to the extent appropriate, apply to conflicting security interests in a vehicle of a type for which a certificate of title is required or in a "previously registered vehicle", as defined in section 14-201. A security interest perfected under this section or under section 14-201 is a security interest perfected otherwise than by filing for the purposes of [section 42a-9-312] sections 42 to 44, inclusive, of this act.

(d) If a vehicle is subject to a security interest when brought into this state, [subsections (1), (2) and (3) of section 42a-9-103a state] section 42a-9-316, as amended by this act, states the rules which apply to determine the validity and perfection of the security interest in this state.

Sec. 166. Subsection (b) of section 16-245k of the general statutes is repealed and the following is substituted in lieu thereof:

(b) A valid and enforceable security interest in transition property is perfected when it has attached and when a financing statement has been filed in accordance with part [4] 5 of article 9 of title 42a, as amended by this act, and sections 79 to 97, inclusive, of this act, naming the pledgor of the transition property as "debtor" and identifying the transition property. Any description of the transition property shall be sufficient if it refers to the financing order creating the transition property. In each case, the financing statement shall be filed as if the debtor were located in this state. A copy of the financing statement shall be filed with the department by the electric company or electric distribution company that is the pledgor or transferor of the transition property, and the department may require the electric company or electric distribution company to make other filings with respect to the security interest in accordance with procedures it may establish, provided that the filings shall not affect the perfection of the security interest.

Sec. 167. Subsection (j) of section 16-245k of the general statutes is repealed and the following is substituted in lieu thereof:

(j) As between bona fide assignees of the same right for value without notice, the assignee first filing a financing statement in accordance with part [4] 5 of article 9 of title 42a, as amended by this act, and sections 79 to 97, inclusive, of this act, naming the assignor of the transition property as debtor and identifying the transition property has priority. In each such case, the financing statement shall be filed as if the debtor were located in this state. Any description of the transition property shall be sufficient if it refers to the financing order creating the transition property. A copy of the financing statement shall be filed by the assignee with the department, and the department may require the assignor or the assignee to make other filings with respect to the transfer in accordance with procedures it may establish, but these filings shall not affect the perfection of the transfer.

Sec. 168. Subsection (b) of section 22a-452a of the general statutes is repealed and the following is substituted in lieu thereof:

(b) A lien pursuant to this section shall not be effective unless (1) a certificate of lien is filed in the land records of each town in which the real estate is located, describing the real estate, the amount of the lien, the name of the owner as grantor, and (2) the commissioner mails a copy of the certificate to the owner of record and to all other persons of record holding an interest in such real estate over which the commissioner's lien is entitled to priority. Upon presentation of a certificate of lien, the town clerk shall endorse thereon his identification and the date and time of receipt and forthwith record it in accordance with section [42a-9-409] 90 of this act.

Sec. 169. Subsection (f) of section 32-23f of the general statutes is repealed and the following is substituted in lieu thereof:

(f) The principal of and interest on bonds or notes issued by the authority may be secured by a pledge of any revenues and receipts of the authority derived from any project and may be additionally secured by a mortgage or deed of trust covering all or any part of a project, including any additions, improvements, extensions to or enlargements of any projects thereafter made. Such bonds or notes may also be secured by a pledge or assignment of a loan agreement, conditional sale agreement or agreement of sale or by an assignment of the lease of any project for the construction and acquisition of which said bonds or notes are issued and by an assignment of the revenues and receipts derived by the authority from such project. The payments of principal and interest on such bonds or notes may be additionally secured by a pledge of any other property, revenues, moneys, or funds available to the authority for such purpose. The resolution authorizing the issuance of any such bonds or notes and any such mortgage or deed of trust or lease or loan agreement, conditional sale agreement or agreement of sale or credit agreement may contain agreements and provisions respecting the establishment of reserves to secure such bonds or notes, the maintenance and insurance of the projects covered thereby, the fixing and collection of rents for any portion thereof leased by the authority to others or the sums to be paid under any conditional sale agreement or agreement of sale entered into by the authority with others, the creation and maintenance of special funds from such revenues and the rights and remedies available in the event of default, the vesting in a trustee or trustees of such property, rights, powers and duties in trust as the authority may determine, which may include any or all of the rights, powers and duties of any trustee appointed by the holders of any bonds and notes and limiting or abrogating the right of the holders of any bonds and notes of the authority to appoint a trustee under this chapter, chapter 578 and subsection (a) of section 10-320b, or limiting the rights, powers and duties of such trustee; provision for a trust agreement by and between the authority and a corporate trust which may be any trust company or bank having the powers of a trust company within or without the state, which agreement may provide for the pledging or assigning of any revenues or assets or income from assets to which or in which the authority has any rights or interest, and may further provide for such other rights and remedies exercisable by the trustee as may be proper for the protection of the holders of any bonds or notes and not otherwise in violation of law, and such agreement may provide for the restriction of the rights of any individual holder of bonds or notes of the authority and may contain any further provisions which are reasonable to delineate further the respective rights, duties, safeguards, responsibilities and liabilities of the authority; persons and collective holders of bonds or notes of the authority and the trustee; and covenants to do or refrain from doing such acts and things as may be necessary or convenient or desirable in order to better secure any bonds or notes of the authority, or which, in the discretion of the authority, will tend to make any bonds or notes to be issued more marketable notwithstanding that such covenants, acts or things may not be enumerated herein; and any other matters of like or different character, which in any way affect the security or protection of the bonds or notes, all as the authority shall deem advisable and not in conflict with the provisions hereof. Each pledge, agreement, mortgage and deed of trust made for the benefit or security of any of the bonds or notes of the authority shall be in effect until the principal of and interest on the bonds or notes for the benefit of which the same were made have been fully paid, or until provision has been made for payment in the manner provided in the resolution or resolutions authorizing their issuance. Any pledge made in respect of such bonds or notes shall be valid and binding from the time when the pledge is made; the revenues, money or property so pledged and thereafter received by the authority shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act; and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the authority irrespective of whether such parties have notice thereof. Neither the resolution, trust indenture nor any other instrument by which a pledge is created need be recorded. The resolution authorizing the issuance of such bonds or notes may provide for the enforcement of any such pledge or security in any lawful manner. The authority may elect, notwithstanding the exclusions provided in [section 42a-9-104(e)] subdivision (14) of subsection (d) of section 42a-9-109, as amended by this act, to have the provisions of the Connecticut uniform commercial code apply to any pledge made by or to the authority to secure its bonds or notes by filing a financing statement with respect to the security interest created by the pledge. In each such case, the financing statement shall be filed as if the debtor were located in this state.

Sec. 170. Section 36a-770 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The Uniform Commercial Code. A transaction subject to sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c is also subject to the Uniform Commercial Code, title 42a, but in case of any conflict the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall control.

(b) Filing and recording. Section [42a-9-302] 42a-9-310, as amended by this act, determines the need for filing or recording to perfect a security interest, section [42a-9-301] 42a-9-317, as amended by this act, the persons who take subject to an unperfected security interest, and [sections 42a-9-302(3)(b) and 42a-9-401 to 42a-9-409, inclusive] section 42a-9-311, as amended by this act, sections 42a-9-501 to 42a-9-507, inclusive, as amended by this act, and sections 79 to 89, inclusive, of this act, the place for such filing or recording.

(c) Definitions. As used in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:

(1) "Boat" means any watercraft, as defined in section 22a-248, other than a seaplane, used or capable of being used as a means of transportation on water, by any power including muscular.

(2) "Cash price" means the total amount in dollars at which the seller and buyer agreed the seller would transfer unqualified title to the goods, if the transaction were a cash sale instead of a sale under a retail installment contract.

(3) "Commercial vehicle" means any domestic or foreign truck or truck tractor of ten thousand or more pounds gross vehicular weight or any trailer or semitrailer designed for use in connection with any truck or truck tractor of ten thousand or more pounds gross vehicular weight and which is not used primarily for personal, family or household use.

(4) "Filing fee" means the fee prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a security interest, as defined in [section 42a-1-201(37)] subdivision (37) of section 42a-1-201, as amended by this act, retained or created by a retail installment contract or installment loan contract.

(5) "Finance charge" means the amount in excess of the cash price of the goods agreed upon by the retail seller and the retail buyer, to be paid by the retail buyer for the privilege of purchasing the goods under the retail installment contract or installment loan contract.

(6) "Goods" means (A) "consumer goods", as defined in [sections 42a-9-105(1)(h) and 42a-9-109(1)] subdivision (23) of subsection (a) of section 42a-9-102, as amended by this act, and motor vehicles included under such [definitions] definition, having an aggregate cash price of fifty thousand dollars or less, and (B) equipment, as defined in [section 42a-9-109(2)] subdivision (33) of subsection (a) of section 42a-9-102, as amended by this act, having an aggregate cash price of sixteen thousand dollars or less, provided such consumer goods or such equipment is included in one retail installment contract or installment loan contract.

(7) "Installment loan contract" means any agreement made in this state to repay in installments the amount loaned or advanced to a retail buyer for the purpose of paying the retail purchase price of goods and by virtue of which a security interest, as defined in [section 42a-1-201(37)] subdivision (37) of section 42a-1-201, as amended by this act, is taken in the goods for the payment of the amount loaned or advanced. For purposes of this subdivision, "installment loan contract" does not include agreements to repay in installments loans made by the United States or any department, agency or instrumentality thereof.

(8) "Lender" means a person who extends or offers to extend credit to a retail buyer under an installment loan contract.

(9) A retail installment contract or installment loan contract is "made in this state" if: (A) An offer or agreement is made in Connecticut by a retail seller or a lender to sell or extend credit to a resident retail buyer, including, but not limited to, any verbal or written solicitation or communication to sell or extend credit originating outside the state of Connecticut but forwarded to and received in Connecticut by a resident retail buyer; or (B) an offer to buy or an application for extension of credit, or an acceptance of an offer to buy or to extend credit, is made in Connecticut by a resident retail buyer, regardless of the situs of the contract which may be specified therein, including, but not limited to, any verbal or written solicitation or communication to buy or to have credit extended, originating within the state of Connecticut but forwarded to and received by a retail seller or a lender outside the state of Connecticut. For purposes of this subdivision, a "resident retail buyer" means a retail buyer who is a resident of the state of Connecticut.

(10) "Motor vehicle" means any device in, upon or by which any person or property is or may be transported or drawn upon a highway by any power other than muscular. For purposes of this subdivision, "motor vehicle" does not include self-propelled wheelchairs and invalid tricycles, tractors, power shovels, road machinery, implements of husbandry and other agricultural machinery, or other machinery not designed primarily for highway transportation but which may incidentally transport persons or property on a highway, or devices which move upon or are guided by a track or travel through the air.

(11) "Retail buyer" means a person who buys or agrees to buy one or more articles of goods from a retail seller not for the purpose of resale or lease to others in the course of business and who executes a retail installment contract or an installment loan contract in connection therewith.

(12) "Retail installment contract" means any security agreement, as defined in [section 42a-9-105(1)(l)] subdivision (73) of subsection (a) of section 42a-9-102, as amended by this act, made in this state, including one in the form of a mortgage, conditional sale contract or other instrument evidencing an agreement to pay the retail purchase price of goods, or any part thereof, in installments over a period of time and pursuant to which a security interest, as defined in [section 42a-1-201(37)] subdivision (37) of section 42a-1-201, as amended by this act, is retained or taken by the retail seller for the payment of the amount of such retail installment contract. For purposes of this subdivision, "retail installment contract" does not include a rent-to-own agreement, as defined in section 42-240.

(13) "Retail installment sale" means any sale evidenced by a retail installment contract or installment loan contract wherein a retail buyer buys goods from a retail seller at a time sale price payable in two or more installments. The cash price of the goods, the amount, if any, included for other itemized charges which are included in the amount of the credit extended but which are not part of the finance charge under sections 36a-675 to 36a-685, inclusive, and the finance charge shall together constitute the time sale price. For purposes of this subdivision, "retail installment sale" does not include a rent-to-own agreement, as defined in section 42-240.

(14) "Retail seller" means a person who sells or agrees to sell one or more articles of goods under a retail installment contract to a retail buyer.

(15) "Sales finance company" means any person engaging in this state in the business, in whole or in part, of acquiring retail installment contracts from retail sellers or installment loan contracts from holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise.

Sec. 171. Section 36a-779 of the general statutes is repealed and the following is substituted in lieu thereof:

Any sales finance company may purchase or acquire from the original holder thereof or from any other sales finance company any retail installment contract or any installment loan contract on such terms and conditions as may be mutually agreed upon not inconsistent with the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c. Such contracts constitute chattel paper, as defined in [section 42a-9-105 (1) (b)] subdivision (11) of subsection (a) of section 42a-9-102, as amended by this act, and are governed by article 9 of title 42a, as amended by this act, except as otherwise provided in said sections.

Sec. 172. Section 42-160 of the general statutes is repealed and the following is substituted in lieu thereof:

The owner of a self-service storage facility shall have a lien upon all personal property located at such facility for the amounts of any rent, labor or other valid charges incurred in relation to such personal property, for any valid expenses incurred in the necessary preservation of such personal property and for any expenses reasonably incurred in the sale or other disposition of such personal property pursuant to law. Such lien attaches on the date of default by the occupant. Notwithstanding the provisions of section [42a-9-310] 53 of this act, such lien shall not have priority over a lien or security interest which has attached or been perfected prior to such default.

Sec. 173. Section 49-32a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) Notices of liens upon real property for taxes payable to the United States and notices of liens upon real property for costs and damages payable to the United States, and certificates and notices affecting such liens shall be filed in the office of the clerk of the town in which the real property subject to a federal tax lien or other federal lien is situated. (2) Notices of liens upon personal property, whether tangible or intangible, for taxes payable to the United States and for costs and damages payable to the United States and certificates and notices affecting such liens shall be filed in the office of the Secretary of the State in accordance with subsection [(1) of section 42a-9-403] (a) of section 87 of this act.

(b) Certification by the Secretary of the Treasury of the United States or [his] said secretary's delegate of notices of liens, certificates or other notices affecting tax liens or other federal liens entitles them to be filed and no other attestation, certification or acknowledgment is necessary.

(c) (1) If a notice of federal tax lien or other federal lien, a refiling of a notice of tax lien or other federal lien or a notice of revocation of any certificate described in subdivision (2) is presented to the filing officer and (A) [he] the filing officer is the Secretary of the State, [he] said secretary shall cause the notice to be marked, held and indexed in accordance with the provisions of [subsection (4) of section 42a-9-403] section 90 of this act, as if the notice were a financing statement within the meaning of that section; or (B) [he] the filing officer is a town clerk, [he] such town clerk shall endorse thereon [his] such town clerk's identification and the date and time of receipt and forthwith record it in accordance with section [42a-9-409] 90 of this act. (2) If a certificate of release, nonattachment, discharge or subordination of any tax lien or other federal lien is presented to the Secretary of the State for filing, [he] said secretary shall (A) cause a certificate of release or nonattachment to be marked, held and indexed as if the certificate were a termination statement within the meaning of the Uniform Commercial Code, and (B) cause a certificate of discharge or subordination to be held, marked and indexed as if the certificate were a release of collateral within the meaning of the Uniform Commercial Code. (3) If a refiled notice of federal tax lien or other federal lien referred to in subdivision (1) or any of the certificates or notices referred to in subsection (b) is presented for filing with any other filing officer specified in subsection (a), [he] such filing officer shall record it in accordance with [subsection (2) of section 42a-9-409] section 90 of this act if the original was recorded or, if the original was filed, permanently attach the refiled notice or the certificate to the original notice of lien and enter the refiled notice or the certificate with the date of filing in any alphabetical federal tax lien index or other federal lien index on the line where the original notice of lien is entered. (4) Upon request of any person, the filing officer shall issue [his] a certificate showing whether there is on file, on the date and hour stated therein, any notice of federal tax lien or other federal lien or certificate or notice affecting the lien, filed on or after July 1, 1967, naming a particular person, and if a notice or certificate is on file, giving the date and hour of filing of each notice or certificate. The fee for such a certificate and for a copy of any notice of federal tax lien or other federal lien or notice or certificate affecting a federal tax lien or other federal lien shall be computed in accordance with [subsection (2) of section 42a-9-407] section 96 of this act.

(d) Except as provided by subsection [(5) of section 42a-9-403] (a) of section 96 of this act, the fee for filing and indexing each notice of lien or certificate or notice affecting the tax lien or other federal lien is: (1) For a tax lien or other federal lien on real estate, as provided in section 7-34a; (2) for a tax lien on tangible and intangible personal property, three dollars; (3) for all other notices, including a certificate of release, discharge, subordination or nonattachment, one dollar.

Sec. 174. Subsection (a) of section 52-355a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except in the case of a consumer judgment, a judgment lien, securing the unpaid amount of any money judgment, including interest and costs, may be placed on any nonexempt personal property in which, by a filing in the office of the Secretary of the State, a security interest could be perfected under title 42a, as amended by this act. The judgment lien shall be created by filing a judgment lien certificate in the office of the Secretary of the State. For purposes of this section, the judgment lien shall be filed as if the debtor were located in this state. However, in the case of a debtor who is not located in this state, the judgment lien shall be effective only as to the debtor's tangible personal property that is located in this state.

Sec. 175. Subsection (c) of section 52-380d of the general statutes is repealed and the following is substituted in lieu thereof:

(c) A release of a judgment lien filed on personal property pursuant to section 52-355a, as amended by this act, is sufficient if it contains a description of the property released, the name and address of the judgment creditor and judgment debtor, and the file number of the judgment lien certificate in the office of the Secretary of the State. On presentation of such a statement of release to the filing officer in the office of the Secretary of the State, the filing officer shall mark the statement with the hour and date of filing and shall note the same on the index. The release shall be on a form prescribed by the Secretary of the State. On filing, the Secretary of the State may charge the fee prescribed by section [42a-9-403] 96 of this act for filing and indexing a termination statement.

Sec. 176. Subsection (a) of section 52-572g of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any holder in due course of a promissory note, contract or other instrument, other than an instrument issued in connection with a credit card transaction, evidencing an indebtedness, signed or executed by a buyer in connection with a credit transaction covering consumer goods, as defined in section [42a-9-109] 42a-9-102, as amended by this act, or for consumer services rendered, shall be subject to all of the claims and defenses which the buyer has against the seller arising out of the transaction or against the person or persons providing the services, limited to the amount of indebtedness then outstanding in connection with the credit transaction, provided the buyer shall have made a prior written demand on the seller with respect to the transaction.

Sec. 177. Subsection (a) of section 53-129a of the general statutes is repealed and the following is substituted in lieu thereof:

[(a) As used in this section, the words "debtor", "security agreement", "security interest", "collateral", "secured party" and "proceeds" shall have the meanings provided in sections 42a-9-105(1)(d), 42a-9-105(1)(l), 42a-1-201(37), 42a-9-105(1)(c), 42a-9-105(1)(m) and 42a-9-306(1), respectively.]

(a) As used in this section:

(1) "Collateral" has the same meaning as specified in subdivision (12) of subsection (a) of section 42a-9-102, as amended by this act;

(2) "Debtor" has the same meaning as specified in subdivision (28) of subsection (a) of section 42a-9-102, as amended by this act;

(3) "Proceeds" has the same meaning as specified in subdivision (64) of subsection (a) of section 42a-9-102, as amended by this act;

(4) "Security agreement" has the same meaning as specified in subdivision (73) of subsection (a) of section 42a-9-102, as amended by this act;

(5) "Security interest" has the same meaning as specified in subdivision (37) of section 42a-1-201, as amended by this act; and

(6) "Secured party" has the same meaning as specified in subdivision (72) of subsection (a) of section 42a-9-102, as amended by this act.

Sec. 178. Subdivision (6) of section 42a-10-102 of the general statutes is repealed and the following is substituted in lieu thereof:

(6) A financing statement which contains the information required in section 42a-9-402 of the general statutes, revised to January 1, 2001, may be filed on or after October 1, 1961, in the place specified for filing in section 42a-9-401, of the general statutes, revised to January 1, 2001, with respect to transactions taking place before October 1, 1961. If a security interest arising from any such transaction was perfected under the law applicable thereto, filing under this title continues the perfected status of the interest. If any such interest was not perfected under applicable law, filing under this title perfects the interest from the time of filing. With respect to a chattel mortgage filed before October 1, 1961, as provided in section 49-96, or a contract of conditional sale filed before October 1, 1961, as provided in section 42-77, the financing statement need be signed only by the chattel mortgagee or conditional sale vendor as secured party and need not be signed by the chattel mortgagor or conditional vendee.

Sec. 179. Section 42a-10-105 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) Transactions validly entered into after October 1, 1961, and before October 1, 1976, and which were subject to the provisions of title 42a of the general statutes, revised to 1975, and which would be subject to subsection (2) of section 42a-1-105, subsections (9) and (37) of section 42a-1-201 of the general statutes, revised to January 1, 2001, subsections (1) and (2) of section 42a-2-107, subsection (2) of section 42a-5-116, subsection (1) of section 42a-9-102 of the general statutes, revised to January 1, 2001, sections 42a-9-103a to 42a-9-106, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-114 of the general statutes, revised to January 1, 2001, 42a-9-203 to 42a-9-205, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-301 of the general statutes, revised to January 1, 2001, 42a-9-302 of the general statutes, revised to January 1, 2001, subsections (1) and (5) of section 42a-9-304 of the general statutes, revised to January 1, 2001, sections 42a-9-305 to 42a-9-308, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-312 of the general statutes, revised to January 1, 2001, 42a-9-313 of the general statutes, revised to January 1, 2001, 42a-9-318 of the general statutes, revised to January 1, 2001, 42a-9-401 to 42a-9-407, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-408a of the general statutes, revised to January 1, 2001, subsection (3) of section 42a-9-501 of the general statutes, revised to January 1, 2001, subsection (2) of section 42a-9-502 of the general statutes, revised to January 1, 2001, section 42a-9-504 of the general statutes, revised to January 1, 2001, subsection (2) of section 42a-9-505 of the general statutes, revised to January 1, 2001, and sections 42a-10-105 to 42a-10-109, inclusive if they had been entered into after October 1, 1976, and the rights, duties and interests flowing from such transactions remain valid after the latter date and may be terminated, completed, consummated or enforced as required or permitted by this title, as amended. Security interests arising out of such transactions which are perfected on October 1, 1976, shall remain perfected until they lapse as provided in this title, as amended, and may be continued as permitted by this title, as amended, except as stated in section 42-10-106.

(2) A security interest for the perfection of which filing or the taking of possession was required under title 42a of the general statutes, revised to 1975, prior to October 1, 1976, and which attached prior to October 1, 1976, but was not perfected shall be deemed perfected on October 1, 1976, if this title, as amended, permits perfection without filing or authorizes filing in the office or offices where a prior ineffective filing was made.

Sec. 180. Section 42a-10-106 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) A financing statement or continuation statement filed prior to October 1, 1976, which shall not have lapsed prior to said date shall remain effective for the period provided in title 42a prior to said date, but not less than five years after the filing.

(2) With respect to any collateral acquired by the debtor subsequent to October 1, 1976, any effective financing statement or continuation statement described in this section shall apply only if the filing or filings are in the office or offices that would be appropriate to perfect the security interests in the new collateral under this title, as amended.

(3) The effectiveness of any financing statement or continuation statement filed prior to October 1, 1976, that remains effective on the effective date of this act, may be continued by a continuation statement [as permitted by subsection (2) of section 42a-1-105, subsections (9) and (37) of section 42a-1-201, subsections (1) and (2) of section 42a-2-107, subsection (2) of section 42a-5-116, subsection (1) of section 42a-9-102, sections 42a-9-103a to 42a-9-106, inclusive, 42a-9-114, 42a-9-203 to 42a-9-205, inclusive, 42a-9-301, 42a-9-302, subsections (1) and (5) of section 42a-9-304, sections 42a-9-305 to 42a-9-308, inclusive, 42a-9-312, 42a-9-313, 42a-9-318, 42a-9-401 to 42a-9-407, inclusive, 42a-9-408a, subsection (3) of section 42a-9-501, subsection (2) of section 42a-9-502, section 42a-9-504, subsection (2) of section 42a-9-505 and sections 42a-10-105 to 42a-10-109, inclusive, except that if said sections and subsections require a filing in an office where there was no previous financing statement, a new financing statement conforming to section 42a-10-107 shall be filed in that office] in the same manner that a financing statement or continuation statement filed under article 9 of title 42a of the general statutes, revised to January 1, 2001, may be continued under article 9 of title 42a in effect on and after the effective date of this act.

(4) If the record of a mortgage of real estate would have been effective as a fixture filing of goods described therein if subsection (2) of section 42a-1-105, subsections (9) and (37) of section 42a-1-201 of the general statutes, revised to January 1, 2001, subsections (1) and (2) of section 42a-2-107, subsection (2) of section 42a-5-116, subsection (1) of section 42a-9-102 of the general statutes, revised to January 1, 2001, sections 42a-9-103a to 42a-9-106, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-114 of the general statutes, revised to January 1, 2001, 42a-9-203 to 42a-9-205, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-301 of the general statutes, revised to January 1, 2001, 42a-9-302 of the general statutes, revised to January 1, 2001, subsections (1) and (5) of section 42a-9-304 of the general statutes, revised to January 1, 2001, sections 42a-9-305 to 42a-9-308, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-312 of the general statutes, revised to January 1, 2001, 42a-9-313 of the general statutes, revised to January 1, 2001, 42a-9-318 of the general statutes, revised to January 1, 2001, 42a-9-401 to 42a-9-407, inclusive, of the general statutes, revised to January 1, 2001, 42a-9-408a of the general statutes, revised to January 1, 2001, subsection (3) of section 42a-9-501 of the general statutes, revised to January 1, 2001, subsection (2) of section 42a-9-502 of the general statutes, revised to January 1, 2001, section 42a-9-504 of the general statutes, revised to January 1, 2001, subsection (2) of section 42a-9-505 of the general statutes, revised to January 1, 2001, and sections 42a-10-105 to 42a-10-109, inclusive, of the general statutes, revised to January 1, 2001, had been in effect on the date of recording the mortgage, the mortgage shall be deemed effective as a fixture filing as to such goods under subsection (6) of section 42a-9-402 on October 1, 1976.

Sec. 181. (NEW) Public act 96-198 applies to a letter of credit that is issued on or after October 1, 1996. Public act 96-198 does not apply to a transaction, event, obligation or duty arising out of or associated with a letter of credit that was issued before October 1, 1996.

Sec. 182. (NEW) Any agreement for security in household furniture owned and in the possession of an individual and used primarily for housekeeping purposes shall be effective only to the extent that the agreement involves a purchase-money security interest as provided in section 42a-9-103a of the general statutes, as amended by this act.

Sec. 183. Sections 42a-9-112 to 42a-9-116, inclusive, 42a-9-408a and 42a-10-107 of the general statutes are repealed.

Approved June 28, 2001