Link to Page 274

 

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ê1999 Statutes of Nevada, Page 275ê

 

CHAPTER 101, AB 299

Assembly Bill No. 299–Committee on Government Affairs

 

CHAPTER 101

 

AN ACT relating to municipal obligations; requiring the governing body of a local government that authorizes a medium-term obligation to include certain information in the resolution authorizing the obligation and to amend its plan for capital improvement under certain circumstances; eliminating the exception for medium-term obligations from the limitation on the amount that certain local governments may receive from taxes ad valorem; ratifying the approval of the issuance of certain medium-term obligations by the board of trustees of the Pahrump Community Library District; and providing other matters properly relating thereto.

 

[Approved May 11, 1999]

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

    Section 1.  NRS 350.001 is hereby amended to read as follows:

    350.001  As used in NRS 350.001 to 350.006, inclusive, unless the context otherwise requires:

    1.  “Commission” means a debt management commission created pursuant to NRS 350.002.

    2.  “General obligation debt” means debt which is legally payable from general revenues, as a primary or secondary source of repayment, and is backed by the full faith and credit of a governmental entity. The term includes debt represented by local government securities issued pursuant to this chapter except debt created for medium-term obligations pursuant to NRS [350.089] 350.085 to 350.095, inclusive.

    3.  “Special elective tax” means a tax imposed pursuant to NRS 354.59817, 354.5982, 387.197, 387.3285 or 387.3287.

    Sec. 2.  NRS 350.087 is hereby amended to read as follows:

    350.087  1.  If the public interest requires a medium-term obligation, the governing body of any local government, by a resolution adopted by two-thirds of its members, may authorize a medium-term obligation. For the purposes of the issuance of a medium‑term obligation pursuant to NRS 280.266, a metropolitan police committee on fiscal affairs shall be deemed the governing body of a local government.

    2.  The resolution must contain:

    (a) A finding by the governing body that the public interest requires the medium-term obligation; [and]

    (b) A statement of the facts upon which the finding required pursuant to paragraph (a) is based [.] ; and

    (c) A statement that identifies:

         (1) Each source of revenue of the local government that is anticipated to be used to repay the medium-term obligation; and

         (2) The dollar amount that is anticipated to be available to repay the medium-term obligation from each such source.

    3.  Except as otherwise provided in subsection 4, before the adoption of any such resolution, the governing body shall publish notice of its intention to act thereon in a newspaper of general circulation for at least one publication. No vote may be taken upon the resolution until 10 days after the publication of the notice.


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of the notice. The cost of publication of the notice required of an entity is a proper charge against its general fund.

    4.  If such a resolution will be adopted by a metropolitan police committee on fiscal affairs, the sheriff of the county in which the metropolitan police department is located shall publish the notice required pursuant to subsection 3.

    Sec. 3.  NRS 350.089 is hereby amended to read as follows:

    350.089  Except as otherwise provided in NRS 280.266 and 496.155:

    1.  Upon the adoption of a resolution for a medium-term obligation, as provided in NRS 350.087, by a local government, a certified copy thereof must be forwarded to the executive director of the department of taxation. As soon as is practicable, the executive director of the department of taxation shall, after consideration of the tax structure of the local government concerned , [and] the probable ability of the local government to repay the requested medium-term obligation [,] and the compliance of the local government with the applicable provisions of law, including, without limitation, the provisions of chapter 354 of NRS, approve or disapprove the resolution in writing to the governing board. No such resolution is effective until approved by the executive director of the department of taxation. The written approval of the executive director of the department of taxation must be recorded in the minutes of the governing board.

    2.  If the executive director of the department of taxation does not approve the resolution for the medium-term obligation, the governing board of the local government may appeal the executive director’s decision to the Nevada tax commission.

    Sec. 4.  NRS 350.091 is hereby amended to read as follows:

    350.091  1.  Whenever the governing body of any local government is authorized to enter into a medium-term obligation as provided in NRS 280.266 or 350.089, the governing body [may] :

    (a) If the medium-term obligation is intended to finance a capital project, shall update its plan for capital improvement in the same manner as is required for general obligation debt pursuant to NRS 350.0035.

    (b) May issue, as evidence thereof, negotiable notes, leases, other evidence of a transaction described in NRS 350.800, or short-time negotiable bonds.

    2.  Except as otherwise provided in subsection 5 of NRS 496.155, the negotiable notes or bonds:

    (a) Must mature not later than 10 years after the date of issuance.

    (b) Must bear interest at a rate or rates which do not exceed by more than 3 percent the Index of Twenty Bonds which was most recently published before the bids are received or a negotiated offer is accepted.

    (c) May, at the option of the local government, contain a provision which allows redemption of the notes or bonds before maturity, upon such terms as the governing body determines.

    3.  If the maximum term of the financing is more than 5 years, the term may not exceed the estimated useful life of the asset to be purchased with the proceeds from the financing.


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    Sec. 5.  NRS 350.093 is hereby amended to read as follows:

    350.093  1.  After a medium-term obligation has been authorized as provided in NRS 350.089 and if, in the judgment of the governing board of the local government, the fiscal affairs of the local government can be carried on without impairment and there is sufficient money in the general fund or a surplus in any other fund, with the exception of the bond interest and redemption fund, of the local government, the governing board may transfer from the general fund or from the surplus appearing in any fund, with the exception of the bond interest and redemption fund, money sufficient to meet the purpose of the medium-term obligation.

    2.  When such a transfer is made, the governing board of the local government shall comply with the provisions of NRS 350.095, and when the special tax is thereafter collected, the amount so collected must be placed immediately in the fund from which the loan was made.

    3.  In cases where the fund from which the loan was made, at the time of the transfer of funds therefrom, contains a surplus that in the judgment of the executive director of the department of taxation is or will not be needed for the purposes of the fund in the ordinary course of events, the special tax need not be levied, collected and placed in the fund from which the loan was made, but the transfer shall be deemed refunded for all purposes of NRS [350.089] 350.085 to 350.095, inclusive.

    Sec. 6.  NRS 354.535 is hereby amended to read as follows:

    354.535  “General long-term debt” means debt which is legally payable from general revenues and is backed by the full faith and credit of a governmental unit. The term includes debt represented by local government securities issued pursuant to chapter 350 of NRS and debt created for medium-term obligations pursuant to NRS [350.089] 350.085 to 350.095, inclusive.

    Sec. 7.  NRS 354.59811 is hereby amended to read as follows:

    354.59811  1.  Except as otherwise provided in NRS [350.087,] 354.59813, 354.59815, 354.5982, 354.5987, 354.59871, 354.705, 450.425, 540A.265 and 543.600, for each fiscal year beginning on or after July 1, 1989, the maximum amount of money that a local government, except a school district, a district to provide a telephone number for emergencies, or a redevelopment agency, may receive from taxes ad valorem, other than those attributable to the net proceeds of minerals or those levied for the payment of bonded indebtedness and interest thereon incurred as [a general or medium-term obligation] general long-term debt of the issuer, or for the payment of obligations issued to pay the cost of a water project pursuant to NRS 349.950, or for the payment of obligations under a capital lease executed before April 30, 1981, must be calculated as follows:

    [1.] (a) The rate must be set so that when applied to the current fiscal year’s assessed valuation of all property which was on the preceding fiscal year’s assessment roll, together with the assessed valuation of property on the central assessment roll which was allocated to the local government, but excluding any assessed valuation attributable to the net proceeds of minerals, assessed valuation attributable to a redevelopment area and assessed valuation of a fire protection district attributable to real property which is transferred from private ownership to public ownership for the purpose of conservation, it will produce 106 percent of the maximum revenue allowable from taxes ad valorem for the preceding fiscal year, except that the rate so determined must not be less than the rate allowed for the previous fiscal year, except for any decrease attributable to the imposition of a tax pursuant to NRS 354.59813 in the previous year.


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ê1999 Statutes of Nevada, Page 278 (Chapter 101, AB 299)ê

 

conservation, it will produce 106 percent of the maximum revenue allowable from taxes ad valorem for the preceding fiscal year, except that the rate so determined must not be less than the rate allowed for the previous fiscal year, except for any decrease attributable to the imposition of a tax pursuant to NRS 354.59813 in the previous year.

    [2.] (b) This rate must then be applied to the total assessed valuation, excluding the assessed valuation attributable to the net proceeds of minerals and the assessed valuation of a fire protection district attributable to real property which is transferred from private ownership to public ownership for the purpose of conservation but including new real property, possessory interests and mobile homes, for the current fiscal year to determine the allowed revenue from taxes ad valorem for the local government.

    2.  As used in this section, “general long-term debt” does not include debt created for medium-term obligations pursuant to NRS 350.085 to 350.095, inclusive.

    Sec. 8.  NRS 555.215 is hereby amended to read as follows:

    555.215  1.  Upon the preparation and approval of a budget in the manner required by the Local Government Budget Act, the board of county commissioners of each county having lands situated in the district shall, by resolution, levy an assessment upon all real property in the county which is in the weed control district.

    2.  Every assessment so levied is a lien against the property assessed.

    3.  Amounts collected in counties other than the county having the larger or largest proportion of the area of the district must be paid over to the board of county commissioners of that county for the use of the district.

    4.  The county commissioners of that county may obtain medium-term obligations pursuant to NRS [350.089] 350.085 to 350.095, inclusive, of an amount of money not to exceed the total amount of the assessment, to pay the expenses of controlling the weeds in the weed control district. The loans may be made only after the assessments are levied.

    Sec. 9.  1.  The actions of the board of trustees of the Pahrump Community Library District in adopting Resolution No. 98-01 approving the issuance of medium-term obligations for the construction and furnishing of a new building for the District in an amount not to exceed $3,000,000 that would be repaid over a 10-year period by levying an ad valorem tax of .1046 per $100 of assessed valuation of taxable property within the District in accordance with the provisions of NRS 350.095 are hereby ratified, validated, approved and confirmed.

    2.  The amendatory provisions of sections 1 to 8, inclusive, of this act do not apply to the obligations described in subsection 1.

    Sec. 10.  This act becomes effective upon passage and approval.

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ê1999 Statutes of Nevada, Page 279ê

 

CHAPTER 102, AB 55

Assembly Bill No. 55–Assemblyman Collins

 

CHAPTER 102

 

AN ACT relating to scrap metal; prohibiting the burning of stolen metallic wire to remove insulation; requiring junk dealers to obtain certain information before purchasing or receiving certain metallic wire from another person; requiring junk dealers to retain such information for a certain period; providing penalties; and providing other matters properly relating thereto.

 

[Approved May 11, 1999]

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

    Section 1.  NRS 202.180 is hereby amended to read as follows:

    202.180  1.  Every person who:

    [1.] (a) Shall deposit, leave or keep, on or near a highway or route of public travel, on land or water, any unwholesome substance;

    [2.] (b) Shall establish, maintain or carry on, upon or near a highway or route of public travel, on land or water, any business, trade or manufacture which is detrimental to the public health; [or

    3.] (c) Shall deposit or cast into any lake, creek or river, wholly or partly in this state, the offal from or the dead body of any animal; or

    (d) Shall knowingly burn stolen metallic wire to remove insulation,

shall be guilty of a gross misdemeanor.

    2.  As used in this section, “stolen metallic wire” means metallic wire that has been taken unlawfully from or without the permission of the owner, whether or not the person who took the metallic wire is or has been prosecuted or convicted for taking the metallic wire.

    Sec. 2.  Chapter 647 of NRS is hereby amended by adding thereto a new section to read as follows:

    1.  A junk dealer shall not purchase or otherwise receive metallic wire that has been burned in whole or in part to remove insulation unless, at the time that the metallic wire is purchased or otherwise received, the junk dealer obtains:

    (a) Written evidence identifying the person who delivered the metallic wire; and

    (b) A statement signed by the person who delivered the metallic wire in which the person attests that the metallic wire was lawfully acquired and burned.

    2.  A junk dealer shall retain the written evidence and the statement obtained pursuant to subsection 1 for not less than 3 years.

    Sec. 3.  NRS 647.030 is hereby amended to read as follows:

    647.030  1.  Every junk dealer shall keep a book in which must be written in ink at the time of purchase a full and accurate description of each article purchased, together with the full name, residence, driver’s license number, vehicle license number and general description of the person selling the article.

    2.  In addition to the information required to be included in the book pursuant to subsection 1, a junk dealer must include in writing in ink in the book each time he purchases or otherwise receives metallic wire that has been burned in whole or in part to remove insulation:


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ê1999 Statutes of Nevada, Page 280 (Chapter 102, AB 55)ê

 

book each time he purchases or otherwise receives metallic wire that has been burned in whole or in part to remove insulation:

    (a) The name of the person who delivered the metallic wire; and

    (b) A description of the written evidence obtained by the junk dealer pursuant to section 2 of this act identifying the person who delivered the metallic wire.

    3.  No entry in the book may be erased, mutilated or changed.

    [2.] 4.  The book must be open at all times to inspection by the sheriff of the county or any of his deputies, any member of the police department in the city or town, and any constable or other county or municipal officer in the county in which the junk dealer does business.

    Sec. 4.  NRS 647.135 is hereby amended to read as follows:

    647.135  Any junk dealer who violates any of the provisions of NRS 647.020 to 647.070, inclusive, or section 2 of this act is guilty of a misdemeanor.

    Sec. 5.  The amendatory provisions of this act do not apply to offenses that are committed before October 1, 1999.

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CHAPTER 103, SB 277

Senate Bill No. 277–Committee on Finance

 

CHAPTER 103

 

AN ACT making supplemental appropriations to the Department of Museums, Library and Arts for the administration of the Department, to offset unanticipated shortfalls in the revenue from admissions at certain museums and for additional utility expenses; and providing other matters properly relating thereto.

 

[Approved May 11, 1999]

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

    Section 1.  1.  There is hereby appropriated from the state general fund to the Department of Museums, Library and Arts the sum of $1,550 for additional anticipated expenses for the administration of the Department. This appropriation is supplemental to that made by section 18 of chapter 244, Statutes of Nevada 1997, at page 856.

    2.  Any remaining balance of the supplemental appropriation made by subsection 1 must not be committed for expenditure after June 30, 1999, and reverts to the state general fund as soon as all payments of money committed have been made.

    Sec. 2.  1.  There is hereby appropriated from the state general fund to the Department of Museums, Library and Arts the sum of $10,000 to offset the unanticipated shortfall in the revenue from admissions at the Nevada Museum and Historical Society in Las Vegas. This appropriation is supplemental to that made by section 18 of chapter 244, Statutes of Nevada 1997, at page 856.


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ê1999 Statutes of Nevada, Page 281 (Chapter 103, SB 277)ê

 

    2.  Any remaining balance of the supplemental appropriation made by subsection 1 must not be committed for expenditure after June 30, 1999, and reverts to the state general fund as soon as all payments of money committed have been made.

    Sec. 3.  1.  There is hereby appropriated from the state general fund to the Department of Museums, Library and Arts the sum of $8,769 to offset the unanticipated shortfall in the revenue from admissions at the Nevada State Railroad Museum in Carson City and for additional utility expenses at that museum. This appropriation is supplemental to that made by section 18 of chapter 244, Statutes of Nevada 1997, at page 856.

    2.  Any remaining balance of the supplemental appropriation made by subsection 1 must not be committed for expenditure after June 30, 1999, and reverts to the state general fund as soon as all payments of money committed have been made.

    Sec. 4.  1.  There is hereby appropriated from the state general fund to the Department of Museums, Library and Arts the sum of $15,145 for additional utility expenses at the Nevada State Museum in Carson City. This appropriation is supplemental to that made by section 18 of chapter 244, Statutes of Nevada 1997, at page 856.

    2.  Any remaining balance of the supplemental appropriation made by subsection 1 must not be committed for expenditure after June 30, 1999, and reverts to the state general fund as soon as all payments of money committed have been made.

    Sec. 5.  This act becomes effective upon passage and approval.

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CHAPTER 104, SB 62

Senate Bill No. 62–Committee on Judiciary

 

CHAPTER 104

 

AN ACT relating to commercial transactions; revising Article 9 of the Uniform Commercial Code; and providing other matters properly relating thereto.

 

[Approved May 11, 1999]

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

    Section 1.  Chapter 104 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 135, inclusive, of this act.

    Sec. 2.  This article may be cited as Uniform Commercial Code–Secured Transactions.

    Sec. 3.  1.  In this article:

    (a) “Accession” means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

    (b) “Account,” except as used in “account for,” means a right to payment of a monetary obligation, whether or not earned by performance; for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of; for services rendered or to be rendered; for a policy of insurance issued or to be issued; for a secondary obligation incurred or to be incurred; for energy provided or to be provided; for the use or hire of a vessel under a charter or other contract; arising out of the use of a credit or charge card or information contained on or for use with the card; or as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by a state or governmental unit of a state.


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ê1999 Statutes of Nevada, Page 282 (Chapter 104, SB 62)ê

 

a vessel under a charter or other contract; arising out of the use of a credit or charge card or information contained on or for use with the card; or as winnings in a lottery or other game of chance operated or sponsored by a state, 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 rights to payment evidenced by chattel paper or an instrument; commercial tort claims; deposit accounts; investment property; letter-of-credit rights or letters of credit; or rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.

    (c) “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.

    (d) “Accounting,” except as used in “accounting for,” means a record:

         (1) Authenticated by a secured party;

         (2) Indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and

         (3) Identifying the components of the obligations in reasonable detail.

    (e) “Agricultural lien” means an interest, other than a security interest, in farm products:

         (1) 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;

         (2) 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 his farming operation; or

             (II) Leased real property to a debtor in connection with his farming operation; and

         (3) Whose effectiveness does not depend on the person’s possession of the personal property.

    (f) “As-extracted collateral” means:

         (1) 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

         (2) 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.

    (g) “Authenticate” means:

         (1) To sign; or

         (2) 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 himself and adopt or accept a record.


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    (h) “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.

    (i) “Cash proceeds” means proceeds that are money, checks, deposit accounts, or the like.

    (j) “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.

    (k) “Chattel paper” means a record or records that evidence both a monetary obligation and a security interest in or a lease of specific goods or of specific goods and software used in the goods. The term does not include charters or other contracts involving the use or hire of a vessel. If a transaction is evidenced both by a security agreement or lease and by an instrument or series of instruments, the group of records taken together constitutes chattel paper.

    (l) “Collateral” means the property subject to a security interest or agricultural lien. The term includes:

         (1) Proceeds to which a security interest attaches;

         (2) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and

         (3) Goods that are the subject of a consignment.

    (m) “Commercial tort claim” means a claim arising in tort with respect to which:

         (1) The claimant is an organization; or

         (2) The claimant is a natural person and the claim:

             (I) Arose in the course of his business or profession; and

             (II) Does not include damages arising out of personal injury to or the death of a natural person.

    (n) “Commodity account” means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

    (o) “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:

         (1) 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

         (2) 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.

    (p) “Commodity customer” means a person for which a commodity intermediary carries a commodity contract on its books.

    (q) “Commodity intermediary” means a person that:

         (1) Is registered as a futures commission merchant under federal commodities law; or

         (2) 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.


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    (r) “Communicate” means:

         (1) To send a written or other tangible record;

         (2) To transmit a record by any means agreed upon by the persons sending and receiving the record; or

         (3) In the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule.

    (s) “Consignee” means a merchant to which goods are delivered in a consignment.

    (t) “Consignment” means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:

         (1) 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;

         (2) With respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;

         (3) The goods are not consumer goods immediately before delivery; and

         (4) The transaction does not create a security interest that secures an obligation.

    (u) “Consignor” means a person that delivers goods to a consignee in a consignment.

    (v) “Consumer debtor” means a debtor in a consumer transaction.

    (w) “Consumer goods” means goods that are used or bought for use primarily for personal, family, or household purposes.

    (x) “Consumer-goods transaction” means a consumer transaction to the extent that:

         (1) A natural person incurs an obligation primarily for personal, family, or household purposes; and

         (2) A security interest in consumer goods or in consumer goods and software that is held or acquired primarily for personal, family, or household purposes secures the obligation.

    (y) “Consumer obligor” means an obligor who is a natural person and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes.

    (z) “Consumer transaction” means a transaction to the extent that a natural person incurs an obligation primarily for personal, family, or household purposes; a security interest secures the obligation; and the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer-goods transactions.

    (aa) “Continuation statement” means a change of a financing statement which:

         (1) Identifies, by its file number, the initial financing statement to which it relates; and

         (2) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement.

    (bb) “Debtor” means:


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         (1) A person having an interest, other than a security interest or other lien, in the collateral, whether or not he is an obligor;

         (2) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or

         (3) A consignee.

    (cc) “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.

    (dd) “Document” means a document of title or a receipt of the type described in subsection 2 of NRS 104.7201.

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

    (ff) “Encumbrance” means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property.

    (gg) “Equipment” means goods other than inventory, farm products, or consumer goods.

    (hh) “Farm products” means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are:

         (1) Crops grown, growing, or to be grown, including:

             (I) Crops produced on trees, vines, and bushes; and

             (II) Aquatic goods produced in aquacultural operations;

         (2) Livestock, born or unborn, including aquatic goods produced in aquacultural operations;

         (3) Supplies used or produced in a farming operation; or

         (4) Products of crops or livestock in their unmanufactured states.

    (ii) “Farming operation” means raising, cultivating, propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation.

    (jj) “File number” means the number assigned to an initial financing statement pursuant to subsection 1 of section 91 of this act.

    (kk) “Filing office” means an office designated in section 73 of this act as the place to file a financing statement.

    (ll) “Filing-office rule” means a rule adopted pursuant to section 98 of this act.

    (mm) “Financing statement” means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement.

    (nn) “Fixture filing” means the filing of a financing statement covering goods that are or are to become fixtures and satisfying subsections 1 and 2 of section 74 of this act. The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.

    (oo) “Fixtures” means goods that have become so related to particular real property that an interest in them arises under real property law.


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    (pp) “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.

    (qq) “Good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing.

    (rr) “Goods” means all things that are movable when a security interest attaches. The term includes fixtures; standing timber that is to be cut and removed under a conveyance or contract for sale; the unborn young of animals; crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes; and 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 the program is associated with the goods in such a manner that it customarily is considered part of the goods, or 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.

    (ss) “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.

    (tt) “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.

    (uu) “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 investment property, letters of credit, or 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.

    (vv) “Inventory” means goods, other than farm products, which:

         (1) Are leased by a person as lessor;

         (2) Are held by a person for sale or lease or to be furnished under a contract of service;

         (3) Are furnished by a person under a contract of service; or

         (4) Consist of raw materials, work in process, or materials used or consumed in a business.


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    (ww) “Investment property” means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.

    (xx) “Jurisdiction of organization,” with respect to a registered organization, means the jurisdiction under whose law the organization is organized.

    (yy) “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.

    (zz) “Lien creditor” means:

         (1) A creditor that has acquired a lien on the property involved by attachment, levy, or the like;

         (2) An assignee for benefit of creditors from the time of assignment;

         (3) A trustee in bankruptcy from the date of the filing of the petition; or

         (4) A receiver in equity from the time of appointment.

    (aaa) “Manufactured home” means a structure, transportable in one or more sections, which in the traveling mode, is 8 feet or more in body width or 40 feet or more in body length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code.

    (bbb) “Manufactured-home transaction” means a secured transaction:

         (1) That creates a purchase-money security interest in a manufactured home, other than a manufactured home held as inventory; or

         (2) In which a manufactured home, other than a manufactured home held as inventory, is the primary collateral.

    (ccc) “Mortgage” means a consensual interest in real property, including fixtures, which is created by a mortgage, deed of trust, or similar transaction.

    (ddd) “New debtor” means a person that becomes bound as debtor under subsection 4 of section 14 of this act by a security agreement previously entered into by another person.

    (eee) “New value” means money; money’s worth in property, services, or new credit; or release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation.

    (fff) “Noncash proceeds” means proceeds other than cash proceeds.

    (ggg) “Obligor” means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation, or is otherwise accountable in whole or in part for payment or other performance of the obligation.


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owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation, or is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include an issuer or a nominated person under a letter of credit.

    (hhh) “Original debtor” means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subsection 4 of section 14 of this act.

    (iii) “Payment intangible” means a general intangible under which the account debtor’s principal obligation is a monetary obligation.

    (jjj) “Person related to,” with respect to a natural person, means:

         (1) His spouse;

         (2) His brother, brother-in-law, sister, or sister-in-law;

         (3) His or his spouse’s ancestor or lineal descendant; or

         (4) Any other relative, by blood or marriage, of the person or his spouse who shares the same home with him.

    (kkk) “Person related to,” with respect to an organization, means:

         (1) A person directly or indirectly controlling, controlled by, or under common control with the organization;

         (2) An officer or director of, or a person performing similar functions with respect to, the organization;

         (3) An officer or director of, or a person performing similar functions with respect to, a person described in subparagraph (1);

         (4) The spouse of a natural person described in subparagraph (1), (2), or (3); or

         (5) A person who is related by blood or marriage to a person described in subparagraph (1), (2), (3), or (4) and shares the same home with that person.

    (lll) “Proceeds” means the following property:

         (1) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;

         (2) Whatever is collected on, or distributed on account of, collateral;

         (3) Rights arising out of collateral;

         (4) 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; and

         (5) 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.

    (mmm) “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.

    (nnn) “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 119, 120 and 121 of this act.


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    (ooo) “Public-finance transaction” means a secured transaction in connection with which:

         (1) Debt securities are issued;

         (2) All or a portion of the securities issued have an initial stated maturity of at least 20 years; and

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

    (ppp) “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.

    (qqq) “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.

    (rrr) “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.

    (sss) “Secondary obligor” means an obligor to the extent that:

         (1) The obligor’s obligation is secondary; or

         (2) The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor, or property of either.

    (ttt) “Secured party” means:

         (1) 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;

         (2) A person that holds an agricultural lien;

         (3) A consignor;

         (4) A person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;

         (5) 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

         (6) A person that holds a security interest arising under NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711, NRS 104.4210, 104.5118, or subsection 5 of NRS 104A.2508.

    (uuu) “Security agreement” means an agreement that creates or provides for a security interest.

    (vvv) “Send,” in connection with a record or notification, means:

         (1) 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


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         (2) To cause the record or notification to be received within the time that it would have been received if properly sent under subparagraph (1).

    (www) “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 contained in goods unless the goods are a computer or computer peripheral.

    (xxx) “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.

    (yyy) “Supporting obligation” means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, document, general intangible, instrument, or investment property.

    (zzz) “Tangible chattel paper” means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium.

    (aaaa) “Termination statement” means a subsequent filing which:

         (1) Identifies, by its file number, the initial financing statement to which it relates; and

         (2) Indicates either that it is a termination statement or that the identified financing statement is no longer effective.

    (bbbb) “Transmitting utility” means a person primarily engaged in the business of:

         (1) Operating a railroad, subway, street railway, or trolley bus;

         (2) Transmitting communications electrically, electromagnetically, or by light;

         (3) Transmitting goods by pipeline;

         (4) Providing sewerage; or

         (5) Transmitting or producing and transmitting electricity, steam, gas, or water.

    2.  The following definitions in other articles apply to this article:

 

“Applicant.” NRS 104.5102.

“Beneficiary.” NRS 104.5102.

“Broker.” NRS 104.8102.

“Certificated security.” NRS 104.8102.

“Check.” NRS 104.3104.

“Clearing corporation.” NRS 104.8102.

“Contract for sale.” NRS 104.2106.

“Customer.” NRS 104.4104.

“Entitlement holder.” NRS 104.8102.

“Financial asset.” NRS 104.8102.

“Holder in due course.” NRS 104.3302.

“Issuer.” NRS 104.5102.

“Lease.” NRS 104A.2103.

“Lease agreement.” NRS 104A.2103.

“Lease contract.” NRS 104A.2103.

“Leasehold interest.” NRS 104A.2103.

“Lessee.” NRS 104A.2103.


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“Lessee in ordinary course of business.” NRS 104A.2103.

“Lessor.” NRS 104A.2103.

“Lessor’s residual interest.” NRS 104A.2103.

“Letter of credit.” NRS 104.5102.

“Merchant.” NRS 104.2104.

“Negotiable instrument.” NRS 104.3104.

“Nominated person.” NRS 104.5102.

“Note.” NRS 104.3104.

“Proceeds of a letter of credit.” NRS 104.5114.

“Prove.” NRS 104.3103.

“Sale.” NRS 104.2106.

“Securities account.” NRS 104.8501.

“Securities intermediary.” NRS 104.8102.

“Security.” NRS 104.8102.

“Security certificate.” NRS 104.8102.

“Security entitlement.” NRS 104.8102.

“Uncertificated security.” NRS 104.8102.

 

    3.  Article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

    Sec. 4.  1.  In this section:

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

    (b) “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.

    2.  A security interest in goods is a purchase-money security interest:

    (a) To the extent that the goods are purchase-money collateral with respect to that security interest;

    (b) 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

    (c) 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.

    3.  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:

    (a) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and

    (b) The debtor acquired its interest in the software for the principal purpose of using the software in the goods.

    4.  The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.

    5.  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:


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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:

         (1) To obligations that are not secured; and

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

    6.  In a transaction other than a consumer-goods transaction, a purchase-money security interest does not lose its status as such, even if:

    (a) The purchase-money collateral also secures an obligation that is not a purchase-money obligation;

    (b) Collateral that is not purchase-money collateral also secures the purchase-money obligation; or

    (c) The purchase-money obligation has been renewed, refinanced, consolidated, or restructured.

    7.  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.

    8.  The limitation of the rules in subsections 5, 6 and 7 to transactions other than consumer-goods transactions leaves 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.

    Sec. 5.  1.  A secured party has control of a deposit account if:

    (a) The secured party is the bank with which the deposit account is maintained;

    (b) 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 account without further consent by the debtor; or

    (c) The secured party becomes the bank’s customer with respect to the deposit account.

    2.  A secured party that has satisfied subsection 1 has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

    Sec. 6.  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 subsections 4, 5, and 6, unalterable;


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    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. 7.  1.  A person has control of a certificated security, uncertificated security, or security entitlement as provided in NRS 104.8106.

    2.  A secured party has control of a commodity contract if:

    (a) The secured party is the commodity intermediary with which the commodity contract is carried; or

    (b) 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.

    3.  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. 8.  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 3 of NRS 104.5114 or otherwise applicable law or practice.

    Sec. 9.  1.  Except as otherwise provided in subsections 3, 4 and 5, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

    2.  Except as otherwise provided in subsection 4, a description of collateral reasonably identifies the collateral if it identifies the collateral by:

    (a) Specific listing;

    (b) Category;

    (c) Except as otherwise provided in subsection 5, a type of collateral defined in the Uniform Commercial Code;

    (d) Quantity;

    (e) Computational or allocational formula or procedure; or

    (f) Except as otherwise provided in subsection 3, any other method, if the identity of the collateral is objectively determinable.

    3.  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.

    4.  Except as otherwise provided in subsection 5, a description of a security entitlement, securities account, or commodity account is sufficient if it describes:


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    (a) The collateral by those terms or as investment property; or

    (b) The underlying financial asset or commodity contract.

    5.  A description only by type of collateral defined in the Uniform Commercial Code is an insufficient description of:

    (a) A commercial tort claim; or

    (b) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

    Sec. 10.  1.  Except as otherwise provided in subsections 3 and 4, this article applies to:

    (a) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

    (b) An agricultural lien;

    (c) A sale of accounts, chattel paper, payment intangibles, or promissory notes;

    (d) A consignment;

    (e) A security interest arising under NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711, or subsection 5 of NRS 104A.2508, as provided in section 11 of this act; and

    (f) A security interest arising under NRS 104.4210 or 104.5118.

    2.  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.

    3.  This article does not apply to the extent that:

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

    (b) Another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

    (c) 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

    (d) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under NRS 104.5114.

    4.  This article does not apply to:

    (a) A landlord’s lien, other than an agricultural lien;

    (b) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but section 54 of this act applies with respect to priority of the lien;

    (c) An assignment of a claim for wages, salary, or other compensation of an employee;

    (d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

    (e) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

    (f) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;


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    (g) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

    (h) A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but sections 36 and 43 of this act apply with respect to proceeds and priorities in proceeds;

    (i) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

    (j) A right of recoupment or set-off, but:

         (1) Section 61 of this act applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

         (2) Section 67 of this act applies with respect to defenses or claims of an account debtor;

    (k) 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:

         (1) Liens on real property in sections 14 and 29 of this act;

         (2) Fixtures in section 55 of this act;

         (3) Fixture filings in sections 73, 74, 84, 88 and 91 of this act; and

         (4) Security agreements covering personal and real property in section 103 of this act;

    (l) An assignment of a claim arising in tort, other than a commercial tort claim, but sections 36 and 43 of this act apply with respect to proceeds and priorities in proceeds; or

    (m) An assignment of a deposit account in a consumer transaction, but sections 36 and 43 of this act apply with respect to proceeds and priorities in proceeds.

    Sec. 11.  A security interest arising under NRS 104.2401, 104.2505, subsection 3 of 104.2711, or subsection 5 of NRS 104A.2508 is subject to this article. However, until the debtor obtains possession of the goods:

    1.  The security interest is enforceable, even if paragraph (c) of subsection 2 of section 14 of 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 or 2A; and

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

    Sec. 12.  1.  Except as otherwise provided in the Uniform Commercial Code, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.

    2.  A transaction subject to this article is subject to any applicable rule of law which establishes a different rule for consumers and to chapters 97 and 97A of NRS.

    3.  In case of conflict between this article and a rule of law, statute, or regulation described in subsection 2, the rule of law, statute, or regulation controls. Failure to comply with a statute or regulation described in subsection 2 has only the effect the statute or regulation specifies.


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    4.  This article does not:

    (a) Validate any rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in subsection 2; or

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

    Sec. 13.  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 or not title to collateral is in the secured party or the debtor.

    Sec. 14.  1.  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.

    2.  Except as otherwise provided in subsections 3 to 9, inclusive, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:

    (a) Value has been given;

    (b) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and

    (c) One of the following conditions is met:

         (1) 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;

         (2) The collateral is not a certificated security and is in the possession of the secured party under section 34 of this act pursuant to the debtor’s security agreement;

         (3) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under NRS 104.8301 pursuant to the debtor’s security agreement; or

         (4) The collateral is deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, and the secured party has control under section 5, 6, 7 or 8 of this act pursuant to the debtor’s security agreement.

    3.  Subsection 2 is subject to NRS 104.4210 on the security interest of a collecting bank, NRS 104.5118 on the security interest of a letter-of-credit issuer or nominated person, section 11 of this act on a security interest arising under Article 2 or 2A, and section 17 of this act on security interests in investment property.

    4.  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:

    (a) The security agreement becomes effective to create a security interest in his property; or

    (b) He 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.

    5.  If a new debtor becomes bound as debtor by a security agreement entered into by another person:


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    (a) The agreement satisfies paragraph (c) of subsection 2 with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and

    (b) Another agreement is not necessary to make a security interest in the property enforceable.

    6.  The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by section 36 of this act and is also attachment of a security interest in a supporting obligation for the collateral.

    7.  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.

    8.  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.

    9.  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. 15.  1.  Except as otherwise provided in subsection 2, a security agreement may create or provide for a security interest in after-acquired collateral.

    2.  A security interest does not attach under a term constituting an after‑acquired property clause to:

    (a) Consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value; or

    (b) A commercial tort claim.

    3.  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. 16.  1.  A security interest is not invalid or fraudulent against creditors solely because:

    (a) The debtor has the right or ability to:

         (1) Use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;

         (2) Collect, compromise, enforce, or otherwise deal with collateral;

         (3) Accept the return of collateral or make repossessions; or

         (4) Use, commingle, or dispose of proceeds; or

    (b) The secured party fails to require the debtor to account for proceeds or replace collateral.

    2.  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. 17.  1.  A security interest in favor of a securities intermediary attaches to a person’s security entitlement if:


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ê1999 Statutes of Nevada, Page 298 (Chapter 104, SB 62)ê

 

    (a) He buys a financial asset through the securities intermediary in a transaction in which he is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and

    (b) The securities intermediary credits the financial asset to his securities account before he pays the securities intermediary.

    2.  The security interest described in subsection 1 secures the buyer’s obligation to pay for the financial asset.

    3.  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:

    (a) The security or other financial asset:

         (1) In the ordinary course of business is transferred by delivery with any necessary endorsement or assignment; and

         (2) Is delivered under an agreement between persons in the business of dealing with such securities or financial assets; and

    (b) The agreement calls for delivery against payment.

    4.  The security interest described in subsection 3 secures the obligation to make payment for the delivery.

    Sec. 18.  1.  Except as otherwise provided in subsection 4, 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.

    2.  Except as otherwise provided in subsection 4, if a secured party has possession of collateral:

    (a) 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;

    (b) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;

    (c) The secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and

    (d) The secured party may use or operate the collateral:

         (1) For the purpose of preserving the collateral or its value;

         (2) As permitted by an order of a court having competent jurisdiction; or

         (3) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor.

    3.  Except as otherwise provided in subsection 4, a secured party having possession of collateral or control of collateral under section 5, 6, 7 or 8 of this act:

    (a) May hold as additional security any proceeds, except money or funds, received from the collateral;

    (b) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and

    (c) May create a security interest in the collateral.

    4.  If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:


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ê1999 Statutes of Nevada, Page 299 (Chapter 104, SB 62)ê

 

    (a) Subsection 1 does not apply unless the secured party is entitled under an agreement:

         (1) To charge back uncollected collateral; or

         (2) 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

    (b) Subsections 2 and 3 do not apply.

    Sec. 19.  If there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value, within 10 days after receiving an authenticated demand by the debtor:

    1.  A secured party having control of a deposit account under paragraph (b) of subsection 1 of section 5 of 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 paragraph (c) of subsection 1 of section 5 of 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 6 of 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 paragraph (b) of subsection 4 of NRS 104.8106 or under subsection 2 of section 7 of 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 8 of 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.


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ê1999 Statutes of Nevada, Page 300 (Chapter 104, SB 62)ê

 

    Sec. 20.  1.  Except as otherwise provided in subsection 3, this section applies if:

    (a) There is no outstanding secured obligation; and

    (b) The secured party is not committed to make advances, incur obligations, or otherwise give value.

    2.  Within 10 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 1 of section 69 of this act an authenticated record that releases the account debtor from any further obligation to the secured party.

    3.  This section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.

    Sec. 21.  1.  In this section:

    (a) “Request” means a record of a type described in paragraph (b), (c), or (d).

    (b) “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.

    (c) “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.

    (d) “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.

    2.  Subject to subsections 3, 4, 5 and 6, 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 14 days after receipt:

    (a) In the case of a request for an accounting, by authenticating and sending to the debtor an accounting; and

    (b) 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.

    3.  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 14 days after receipt.

    4.  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 14 days after receipt by sending to the debtor an authenticated record:

    (a) Disclaiming any interest in the collateral; and


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ê1999 Statutes of Nevada, Page 301 (Chapter 104, SB 62)ê

 

    (b) If known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient’s security interest in the collateral.

    5.  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 14 days after receipt by sending to the debtor an authenticated record:

    (a) Disclaiming any interest in the obligations; and

    (b) 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.

    6.  A debtor is entitled without charge to one response to a request under this section during any 6-month period. The secured party may require payment of a charge not exceeding $25 for each additional response.

    Sec. 22.  Except as otherwise provided in sections 24 to 27, inclusive, of 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 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 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 subsections 4, 5 and 6, while negotiable documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the law of that jurisdiction governs the effect of perfection or nonperfection and the priority of a nonpossessory security interest.

    4.  While goods are located in a jurisdiction, the law of that jurisdiction governs perfection of a security interest in the goods by a fixture filing.

    5.  The law of the jurisdiction in which timber to be cut is located governs perfection of a security interest in the timber.

    6.  The 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. 23.  While farm products are located in a jurisdiction, the law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

    Sec. 24.  1.  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.

    2.  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.


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ê1999 Statutes of Nevada, Page 302 (Chapter 104, SB 62)ê

 

the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.

    3.  The 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. 25.  1.  The 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.

    2.  The following rules determine a bank’s jurisdiction for purposes of this part:

    (a) 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 this part, this article, or the Uniform Commercial Code, that jurisdiction is the bank’s jurisdiction.

    (b) If paragraph (a) 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.

    (c) If neither paragraph (a) nor paragraph (b) 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.

    (d) If neither paragraph (a) nor paragraph (b) nor paragraph (c) 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.

    (e) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction in which the chief executive office of the bank is located.

    Sec. 26.  1.  Except as otherwise provided in subsection 3, the following rules apply:

    (a) While a security certificate is located in a jurisdiction, the 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.

    (b) The law of the issuer’s jurisdiction as specified in subsection 4 of NRS 104.8110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security.

    (c) The law of the securities intermediary’s jurisdiction as specified in subsection 5 of NRS 104.8110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account.

    (d) The 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.


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ê1999 Statutes of Nevada, Page 303 (Chapter 104, SB 62)ê

 

    2.  The following rules determine a commodity intermediary’s jurisdiction for purposes of this part:

    (a) 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 this part, this article, or the Uniform Commercial Code, that jurisdiction is the commodity intermediary’s jurisdiction.

    (b) If paragraph (a) 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.

    (c) If neither paragraph (a) nor paragraph (b) 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.

    (d) If neither paragraph (a) nor paragraph (b) nor paragraph (c) 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.

    (e) If none of the preceding paragraphs applies, the commodity intermediary’s jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.

    3.  The law of the jurisdiction in which the debtor is located governs:

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

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

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

    Sec. 27.  1.  Subject to subsection 3, the 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.

    2.  For purposes of this part, 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 NRS 104.5116.

    3.  This section does not apply to a security interest that is perfected only under subsection 4 of section 29 of this act.

    Sec. 28.  1.  In this section, “place of business” means a place where a debtor conducts its affairs.

    2.  Except as otherwise provided in this section, the following rules determine a debtor’s location:

    (a) A natural person is located at his residence.

    (b) Any other debtor having only one place of business is located at its place of business.


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ê1999 Statutes of Nevada, Page 304 (Chapter 104, SB 62)ê

 

    (c) Any other debtor having more than one place of business is located at its chief executive office.

    3.  Subsection 2 applies only if a debtor’s residence, place of business, or chief executive office, as applicable, is located in a jurisdiction whose law 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 2 does not apply, the debtor is deemed to be located in the District of Columbia.

    4.  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 2 and 3.

    5.  A registered organization that is organized under the law of a state is located in that state.

    6.  Except as otherwise provided in subsection 9, 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 or deemed to be located:

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

    (b) 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

    (c) In the District of Columbia, if neither paragraph (a) nor paragraph (b) applies.

    7.  A registered organization continues to be located in the jurisdiction specified by subsection 5 or 6 notwithstanding:

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

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

    8.  The United States is deemed to be located in the District of Columbia.

    9.  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.

    10.  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.

    11.  This section applies only for purposes of this part.

    Sec. 29.  1.  Except as otherwise provided in this section and section 30 of this act, a security interest is perfected if it has attached and all of the applicable requirements for perfection in sections 31 to 37, inclusive, of this act have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.


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ê1999 Statutes of Nevada, Page 305 (Chapter 104, SB 62)ê

 

    2.  An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in section 31 of 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.

    3.  A security interest or agricultural lien is perfected continuously if it is originally perfected in one manner under this article and is later perfected in another manner under this article, without an intermediate period when it was unperfected.

    4.  Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

    5.  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.

    6.  Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.

    7.  Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.

    Sec. 30.  The following security interests are perfected when they attach:

    1.  A purchase-money security interest in consumer goods, except as otherwise provided in subsection 2 of section 32 of this act with respect to consumer goods that are subject to a statute or treaty described in subsection 1 of that section;

    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 NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711, or subsection 5 of NRS 104A.2508, until the debtor obtains possession of the collateral;

    7.  A security interest of a collecting bank arising under NRS 104.4210;

    8.  A security interest of an issuer or nominated person arising under NRS 104.5118;

    9.  A security interest arising in the purchase or delivery of a financial asset under section 17 of 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


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ê1999 Statutes of Nevada, Page 306 (Chapter 104, SB 62)ê

 

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

    Sec. 31.  1.  Except as otherwise provided in subsection 2 or subsection 2 of section 33 of this act, a financing statement must be filed to perfect all security interests and agricultural liens.

    2.  The filing of a financing statement is not necessary to perfect a security interest:

    (a) That is perfected under subsection 4, 5, 6 or 7 of section 29 of this act;

    (b) That is perfected under section 30 of this act when it attaches;

    (c) In property subject to a statute, regulation, or treaty described in subsection 1 of section 32 of this act;

    (d) In goods in possession of a bailee which is perfected under paragraph (a) or (b) of subsection 4 of section 33 of this act;

    (e) In certificated securities, documents, goods, or instruments which is perfected without filing or possession under subsection 5, 6 or 7 of section 33 of this act;

    (f) In collateral in the secured party’s possession under section 34 of this act;

    (g) In a certificated security which is perfected by delivery of the security certificate to the secured party under section 34 of this act;

    (h) In deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights which is perfected by control under section 35 of this act;

    (i) In proceeds which is perfected under section 36 of this act; or

    (j) That is perfected under section 37 of this act.

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

    Sec. 32.  1.  Except as otherwise provided in subsection 4, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

    (a) 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 1 of section 31 of this act;

    (b) Chapter 105 of NRS, NRS 482.423 to 482.431, inclusive, 488.1793 to 488. 1827, inclusive, and 489.501 to 489.581, inclusive; or

    (c) 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.

    2.  Compliance with the requirements of a statute, regulation, or treaty described in subsection 1 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 4, section 34 of this act and subsections 4 and 5 of section 37 of 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 1 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.


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ê1999 Statutes of Nevada, Page 307 (Chapter 104, SB 62)ê

 

regulation, or treaty described in subsection 1 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.

    3.  Except as otherwise provided in subsection 4 and subsections 4 and 5 of section 37 of 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 1 are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this article.

    4.  During any period in which collateral 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 or leasing goods of that kind, this section does not apply to a security interest in that collateral created by that person as debtor.

    Sec. 33.  1.  A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.

    2.  Except as otherwise provided in subsections 3 and 4 of section 36 of this act for proceeds:

    (a) A security interest in a deposit account may be perfected only by control under section 35 of this act;

    (b) A security interest in a letter-of-credit right may be perfected only by control under section 35 of this act, except as otherwise provided in subsection 4 of section 29 of this act; and

    (c) A security interest in money may be perfected only by the secured party’s taking possession under section 34 of this act.

    3.  While goods are in the possession of a bailee that has issued a negotiable document covering the goods:

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

    (b) 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.

    4.  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:

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

    (b) The bailee’s receipt of notification of the secured party’s interest; or

    (c) Filing as to the goods.

    5.  A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession for a period of 20 days after the time it attaches to the extent that it arises for new value given under an authenticated security agreement.

    6.  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 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:

    (a) Ultimate sale or exchange; or


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ê1999 Statutes of Nevada, Page 308 (Chapter 104, SB 62)ê

 

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

    7.  A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

    (a) Ultimate sale or exchange; or

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

    8.  After the 20‑day period specified in subsection 5, 6 or 7 expires, perfection depends upon compliance with this article.

    Sec. 34.  1.  Except as otherwise provided in subsection 2, 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 NRS 104.8301.

    2.  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 5 of section 37 of this act.

    3.  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:

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

    (b) 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.

    4.  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 he retains possession.

    5.  A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under NRS 104.8301 and remains perfected by delivery until the debtor obtains possession of the security certificate.

    6.  A person in possession of collateral is not required to acknowledge that it holds possession for a secured party’s benefit.

    7.  If a person acknowledges that it holds possession for the secured party’s benefit:

    (a) The acknowledgment is effective under subsection 3 or subsection 1 of NRS 104.8301, even if the acknowledgment violates the rights of a debtor; and

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


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ê1999 Statutes of Nevada, Page 309 (Chapter 104, SB 62)ê

 

    8.  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 he was instructed before the delivery or is instructed contemporaneously with the delivery:

    (a) To hold possession of the collateral for the secured party’s benefit; or

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

    9.  A secured party does not relinquish possession, even if a delivery under subsection 8 violates the rights of a debtor. A person to which collateral is delivered under subsection 8 does not owe any duty to the secured party and is not required to confirm the delivery to another person unless he otherwise agrees or law other than this article otherwise provides.

    Sec. 35.  1.  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 5, 6, 7 or 8 of this act.

    2.  A security interest in deposit accounts, electronic chattel paper, or letter-of-credit rights is perfected by control under section 5, 6, 7 or 8 of this act when the secured party obtains control and remains perfected by control only while the secured party retains control.

    3.  A security interest in investment property is perfected by control under section 7 of this act from the time the secured party obtains control and remains perfected by control until:

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

    (b) One of the following occurs:

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

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

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

    Sec. 36.  1.  Except as otherwise provided in this article and in subsection 2 of NRS 104.2403:

    (a) 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

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

    2.  Proceeds that are commingled with other property are identifiable proceeds:

    (a) If the proceeds are goods, to the extent provided by section 57 of this act; and

    (b) 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.

    3.  A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.


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ê1999 Statutes of Nevada, Page 310 (Chapter 104, SB 62)ê

 

    4.  A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless:

    (a) The following conditions are satisfied:

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

         (2) 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

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

    (b) The proceeds are identifiable cash proceeds; or

    (c) The security interest in the proceeds is perfected when the security interest attaches to the proceeds or within 20 days thereafter.

    5.  If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (a) of subsection 4 becomes unperfected at the later of:

    (a) When the effectiveness of the filed financing statement lapses under section 87 of this act or is terminated under section 85 of this act; or

    (b) The 21st day after the security interest attaches to the proceeds.

    Sec. 37.  1.  A security interest perfected pursuant to the law of the jurisdiction designated in subsection 1 of section 22 of this act or subsection 3 of section 26 of this act remains perfected until the earliest of:

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

    (b) The expiration of 4 months after a change of the debtor’s location to another jurisdiction; or

    (c) The expiration of 1 year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

    2.  If a security interest described in subsection 1 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.

    3.  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:

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

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

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

    4.  Except as otherwise provided in subsection 5, 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.

    5.  A security interest described in subsection 4 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 2 of section 32 of this act or under section 34 of this act are not satisfied before the earlier of:


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ê1999 Statutes of Nevada, Page 311 (Chapter 104, SB 62)ê

 

been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under subsection 2 of section 32 of this act or under section 34 of this act are not satisfied before the earlier of:

    (a) 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

    (b) The expiration of 4 months after the goods had become so covered.

    6.  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:

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

    (b) The expiration of 4 months after a change of the applicable jurisdiction to another jurisdiction.

    7.  If a security interest described in subsection 6 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. 38.  1.  An unperfected security interest or agricultural lien is subordinate to the rights of:

    (a) A person entitled to priority under section 43 of this act; and

    (b) A person that becomes a lien creditor before the earlier of the time the security interest or agricultural lien is perfected or a financing statement covering the collateral is filed.

    2.  Except as otherwise provided in subsection 5, a buyer, other than a secured party, of 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.

    3.  Except as otherwise provided in subsection 5, a lessee of goods takes free of a security interest or agricultural lien if he gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

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

    5.  Except as otherwise provided in sections 41 and 42 of this act, if a person files a financing statement with respect to a purchase-money security interest before or within 20 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.


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ê1999 Statutes of Nevada, Page 312 (Chapter 104, SB 62)ê

 

    Sec. 39.  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 has rights and title to the account or chattel paper identical to those the debtor sold.

    Sec. 40.  1.  Except as otherwise provided in subsection 2, 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.

    2.  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 this part, a perfected security interest held by the consignor would have priority over the rights of the creditor.

    Sec. 41.  1.  Except as otherwise provided in subsection 5, a buyer in the 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.

    2.  Except as otherwise provided in subsection 5, 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 he buys:

    (a) Without knowledge of the security interest;

    (b) For value;

    (c) Primarily for his personal, family, or household purposes; and

    (d) Before the filing of a financing statement covering the goods.

    3.  To the extent that it affects the priority of a security interest over a buyer of goods under subsection 2, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subsections 1 and 2 of section 37 of this act.

    4.  A buyer in the 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.

    5.  Subsections 1 and 2 do not affect a security interest in goods in the possession of the secured party under section 34 of this act.

    Sec. 42.  1.  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 him 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.


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ê1999 Statutes of Nevada, Page 313 (Chapter 104, SB 62)ê

 

    2.  A licensee in the ordinary course of business takes his 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 he knows of its existence.

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

    Sec. 43.  1.  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:

    (a) 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.

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

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

    2.  For the purposes of paragraph (a) of subsection 1:

    (a) 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

    (b) 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.

    3.  Except as otherwise provided in subsection 6, a security interest in collateral which qualifies for priority over a conflicting security interest under section 48, 49, 50, 51 or 52 of this act also has priority over a conflicting security interest in:

    (a) Any supporting obligation for the collateral; and

    (b) Proceeds of the collateral if:

         (1) The security interest in proceeds is perfected;

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

         (3) 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.

    4.  Subject to subsection 5 and except as otherwise provided in subsection 6, 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.

    5.  Subsection 4 applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.

    6.  Subsections 1 to 5, inclusive, are subject to:


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ê1999 Statutes of Nevada, Page 314 (Chapter 104, SB 62)ê

 

    (a) Subsection 7 and the other provisions of this part;

    (b) NRS 104.4210 with respect to a security interest of a collecting bank;

    (c) NRS 104.5118 with respect to a security interest of an issuer or nominated person; and

    (d) Section 11 of this act with respect to a security interest arising under Article 2 or 2A.

    7.  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. 44.  1.  Except as otherwise provided in subsection 3, for purposes of determining the priority of a perfected security interest under subsection 1 of section 43 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:

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

         (1) Under section 30 of this act when it attaches; or

         (2) Temporarily under subsection 5, 6, or 7 of section 33 of this act; and

    (b) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under section 30 of this act or subsection 5, 6 or 7 of section 33 of this act.

    2.  Except as otherwise provided in subsection 3, a security interest is subordinate to the rights of a person that becomes a lien creditor while the security interest is perfected only to the extent that it secures advances made more than 45 days after he becomes a lien creditor unless the advance is made:

    (a) Without knowledge of the lien; or

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

    3.  Subsections 1 and 2 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.

    4.  Except as otherwise provided in subsection 5, a buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

    (a) The time the secured party acquires knowledge of the buyer’s purchase; or

    (b) Forty-five days after the purchase.

    5.  Subsection 4 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 45‑day period.

    6.  Except as otherwise provided in subsection 7, a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold free of a security interest to the extent that it secures advances made after the earlier of:

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

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


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ê1999 Statutes of Nevada, Page 315 (Chapter 104, SB 62)ê

 

    7.  Subsection 6 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 45‑day period.

    Sec. 45.  1.  Subject to subsection 2 and except as otherwise provided in subsection 7, 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 51 of this act, and, except as otherwise provided in section 48 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:

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

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

    (c) The holder of the conflicting security interest receives the notification within 5 years before the debtor receives possession of the inventory; and

    (d) 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.

    2.  Paragraphs (b), (c) and (d) of subsection 1 apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

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

    (b) If the purchase-money security interest is temporarily perfected without filing or possession under subsection 6 of section 33 of this act, before the beginning of the 20‑day period thereunder.

    3.  Subject to subsection 5 and except as otherwise provided in subsection 7, 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 48 of this act, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

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

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

    (c) The holder of the conflicting security interest receives the notification within 6 months before the debtor receives possession of the livestock; and

    (d) 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.

    4.  Paragraphs (b), (c) and (d) of subsection 3 apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:


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ê1999 Statutes of Nevada, Page 316 (Chapter 104, SB 62)ê

 

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

    (b) If the purchase-money security interest is temporarily perfected without filing or possession under subsection 6 of section 33 of this act, before the beginning of the 20‑day period thereunder.

    5.  Except as otherwise provided in subsection 7, 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 48 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 20 days thereafter.

    6.  Except as otherwise provided in subsection 7, 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 48 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.

    7.  If more than one security interest qualifies for priority in the same collateral under subsection 1, 3, 5 or 6:

    (a) 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

    (b) In all other cases, subsection 1 of section 43 of this act applies to the qualifying security interests.

    Sec. 46.  1.  Except as otherwise provided in subsection 2, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

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

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

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

    2.  Subsection 1 subordinates a security interest only if the security interest:

    (a) Otherwise would have priority solely under subsection 1 of section 43 of this act or section 45 of this act; or

    (b) Arose solely under subsection 3 of NRS 104.2711 or subsection 5 of NRS 104A.2508.

    Sec. 47.  1.  Subject to subsection 2, a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under section 80 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 that section.


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ê1999 Statutes of Nevada, Page 317 (Chapter 104, SB 62)ê

 

    2.  The other provisions of this part determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under section 80 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. 48.  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 5 of 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 subsections 3 and 4, security interests perfected by control under section 35 of this act rank according to priority in time of obtaining control.

    3.  Except as otherwise provided in subsection 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 paragraph (c) of subsection 1 of section 5 of this act has priority over a security interest held by the bank with which the deposit account is maintained.

    Sec. 49.  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 7 of this act has priority over a security interest held by a secured party that does not have control of the investment property.

    2.  A security interest in a certificated security in registered form which is perfected by taking delivery under subsection 1 of section 34 of this act and not by control under section 35 of this act has priority over a conflicting security interest perfected by a method other than control.

    3.  Except as otherwise provided in subsections 4 and 5, conflicting security interests held by secured parties each of which has control under section 7 of 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:

         (1) The secured party’s becoming the person for which the securities account is maintained, if the secured party obtained control under paragraph (a) of subsection 4 of NRS 104.8106;

         (2) 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, if the secured party obtained control under paragraph (b) of that subsection; or

         (3) If the secured party obtained control through another person under paragraph (c) of that subsection, the time on which priority would be based under this paragraph 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 paragraph (b) of subsection 2 of section 7 of this act with respect to commodity contracts carried or to be carried with the commodity intermediary.


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ê1999 Statutes of Nevada, Page 318 (Chapter 104, SB 62)ê

 

paragraph (b) of subsection 2 of section 7 of this act with respect to commodity contracts carried or to be carried with the commodity intermediary.

    4.  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.

    5.  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.

    6.  Conflicting security interests granted by a broker, securities intermediary, or commodity intermediary which are perfected without control under section 7 of this act rank equally.

    7.  In all other cases, priority among conflicting security interests in investment property is governed by sections 43 and 44 of this act.

    Sec. 50.  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 8 of 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 35 of this act rank according to priority in time of obtaining control.

    Sec. 51.  1.  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:

    (a) 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 6 of this act; and

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

    2.  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 6 of 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.

    3.  Except as otherwise provided in section 48 of this act, a purchaser having priority in chattel paper under subsection 1 or 2 also has priority in proceeds of the chattel paper to the extent that:

    (a) Section 43 of this act provides for priority in the proceeds; or

    (b) 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.

    4.  Except as otherwise provided in subsection 1 of section 52 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.


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ê1999 Statutes of Nevada, Page 319 (Chapter 104, SB 62)ê

 

gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

    5.  For purposes of subsections 1 and 2, the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

    6.  For purposes of subsections 2 and 4, 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. 52.  1.  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.

    2.  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 an adverse claim under Article 8.

    3.  Filing under this article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections 1 and 2.

    Sec. 53.  1.  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.

    2.  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. 54.  1.  In this section, “possessory lien” means an interest, other than a security interest or an agricultural lien:

    (a) 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 his business;

    (b) Which is created by statute or rule of law in his favor; and

    (c) Whose effectiveness depends on his possession of the goods.

    2.  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. 55.  1.  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.

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

    3.  In cases not governed by subsections 4 to 8, 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.


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ê1999 Statutes of Nevada, Page 320 (Chapter 104, SB 62)ê

 

    4.  Except as otherwise provided in subsection 8, 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:

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

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

    (c) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.

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

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

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

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

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

         (1) Factory or office machines;

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

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

    (c) 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

    (d) The security interest is:

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

         (2) Perfected pursuant to a statute described in paragraph (b) of subsection 1 of section 32 of this act.

    6.  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:

    (a) The encumbrancer or owner has, in an authenticated record, consented to the security interest or 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.

    7.  The priority of the security interest under subsection 6 continues for a reasonable time if the debtor’s right to remove the goods as against the encumbrancer or owner terminates.

    8.  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 record so indicates. Except as otherwise provided in subsections 5 and 6, 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.


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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.

    9.  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. 56.  1.  A security interest may be created in an accession and continues in collateral that becomes an accession.

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

    3.  Except as otherwise provided in subsection 4, the other provisions of this part determine the priority of a security interest in an accession.

    4.  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 2 of section 32 of this act.

    5.  After default, subject to part 6, 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.

    6.  A secured party that removes an accession from other goods under subsection 5 shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, 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 may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

    Sec. 57.  1.  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.

    2.  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.

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

    4.  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 3 is perfected.

    5.  Except as otherwise provided in subsection 6, the other provisions of this part determine the priority of a security interest that attaches to the product or mass under subsection 3.

    6.  If more than one security interest attaches to the product or mass under subsection 3, the following rules determine priority:

    (a) A security interest that is perfected under subsection 4 has priority over a security interest that is unperfected at the time the collateral becomes commingled goods.


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    (b) If more than one security interest is perfected under subsection 4, the security interests rank equally in proportion to value of the collateral at the time it became commingled goods.

    Sec. 58.  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 2 of section 32 of this act, after issuance of the certificate and without the conflicting secured party’s knowledge of the security interest.

    Sec. 59.  If a security interest or agricultural lien is perfected by a filed financing statement providing information described in paragraph (e) of subsection 2 of section 88 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. 60.  This article does not preclude subordination by agreement by a person entitled to priority.

    Sec. 61.  1.  Except as otherwise provided in subsection 3, 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.

    2.  Except as otherwise provided in subsection 3, 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.

    3.  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 paragraph (c) of subsection 1 of section 5 of this act, if the set-off is based on a claim against the debtor.

    Sec. 62.  Except as otherwise provided in subsection 3 of section 61 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:


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    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. 63.  This article does not require a bank to enter into an agreement of the kind described in paragraph (b) of subsection 1 of section 5 of 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. 64.  1.  Except as otherwise provided in subsection 2 and sections 7, 8, 9 and 10 of this act, whether a debtor’s rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.

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

    Sec. 66.  1.  In this section, “value” has the meaning provided in subsection 1 of NRS 104.3303.

    2.  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:

    (a) For value;

    (b) In good faith;

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

    (d) 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 1 of NRS 104.3305.

    3.  An agreement described in subsection 2 is not enforceable with respect to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subsection 2 of NRS 104.3305.

    4.  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:

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

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


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

    6.  Except as otherwise provided in subsection 4, 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. 67.  1.  Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections 2 to 5, inclusive, the rights of an assignee are subject to:

    (a) 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

    (b) 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.

    2.  Subject to subsection 3 and except as otherwise provided in subsection 4, the claim of an account debtor against an assignor may be asserted against an assignee under subsection 1 only to reduce the amount the account debtor owes.

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

    4.  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.

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

    Sec. 68.  1.  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 2, 3 and 4.

    2.  Subsection 1 applies to the extent that:

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

    (b) 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 1 of section 69 of this act.


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

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

    Sec. 69.  1.  Subject to subsections 2 to 8, 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.

    2.  Subject to subsection 8, notification is ineffective under subsection 1:

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

    (b) 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

    (c) 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:

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

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

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

    3.  Subject to subsection 8, 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 1.

    4.  Except as otherwise provided in subsection 5 and NRS 104A.2303 and section 70 of this act, and subject to subsection 8, a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

    (a) 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

    (b) Provides that 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.

    5.  Subsection 4 does not apply to the sale of a payment intangible or promissory note.


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    6.  Subject to subsections 7 and 8, 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:

    (a) 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

    (b) Provides that 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.

    7.  Subject to subsection 8, an account debtor may not waive or vary its option under paragraph (c) of subsection 2.

    8.  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.

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

    Sec. 70.  1.  Except as otherwise provided in subsection 2, a term in a lease agreement is ineffective to the extent that it:

    (a) Prohibits, restricts, or requires the consent of a party to the lease to 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

    (b) Provides that 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.

    2.  Except as otherwise provided in subsection 7 of NRS 104A.2303, a term described in paragraph (b) of subsection 1 is effective to the extent that there is:

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

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

    3.  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 within the purview of subsection 4 of NRS 104A.2303 unless, and then only to the extent that, enforcement results in a delegation of a material performance of the lessor. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective.


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    Sec. 71.  1.  Except as otherwise provided in subsection 2, 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 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:

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

    (b) Provides that 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.

    2.  Subsection 1 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.

    3.  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:

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

    (b) Provides that 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.

    4.  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 3 would be effective under law other than this article but is ineffective under subsection 1 or 3, the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:

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

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

    (c) 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;


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    (d) 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;

    (e) 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

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

    Sec. 72.  1.  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:

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

    (b) Provides that 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.

    2.  To the extent that a term in a letter of credit is ineffective under subsection 1 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:

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

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

    (c) 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. 73.  1.  Except as otherwise provided in subsection 2, if the 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:

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

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

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


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    (b) The office of the secretary of 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.

    2.  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 state or the county recorder of the appropriate county, as determined pursuant to chapter 105 of NRS. 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. 74.  1.  Subject to subsection 2, a financing statement is sufficient only if it:

    (a) Provides the name of the debtor;

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

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

    2.  Except as otherwise provided in subsection 2 of section 73 of 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 1 and also:

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

    (b) Indicate that it is to be filed for record in the real property records;

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

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

    3.  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:

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

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

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

    (d) The mortgage is recorded.

    4.  A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

    Sec. 75.  1.  A financing statement sufficiently provides the name of the debtor:

    (a) 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;


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    (b) 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;

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

         (1) 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

         (2) 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

    (d) In other cases:

         (1) If the debtor has a name, only if it provides the name of the debtor as a natural person or an organization; and

         (2) 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.

    2.  A financing statement that provides the name of the debtor in accordance with subsection 1 is not rendered ineffective by the absence of:

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

    (b) Unless required under subparagraph (2) of paragraph (d) of subsection 1, names of partners, members, associates, or other persons comprising the debtor.

    3.  A financing statement that provides only the debtor’s trade name does not sufficiently provide the name of the debtor.

    4.  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.

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

    Sec. 76.  A financing statement sufficiently indicates the collateral that it covers only if the financing statement provides:

    1.  A description of the collateral pursuant to section 9 of this act; or

    2.  An indication that the financing statement covers all assets or all personal property.

    Sec. 77.  1.  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 1 of section 32 of 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.”

    2.  This part applies to the filing of a financing statement under subsection 1 and, as appropriate, to compliance that is equivalent to filing a financing statement under subsection 2 of section 32 of 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.


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consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.

    Sec. 78.  1.  A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

    2.  Except as otherwise provided in subsection 3, a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection 1 of section 75 of this act is seriously misleading.

    3.  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 1 of section 75 of this act, the name provided does not make the financing statement seriously misleading.

    4.  For purposes of subsection 2 of section 80 of this act, the “debtor’s correct name” in subsection 3 means the correct name of the new debtor.

    Sec. 79.  1.  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.

    2.  Except as otherwise provided in subsection 3 and section 80 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 78 of this act.

    3.  If a debtor so changes its name that a filed financing statement becomes seriously misleading under section 78 of this act:

    (a) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within 4 months after, the change; and

    (b) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than 4 months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within 4 months after the change.

    Sec. 80.  1.  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.

    2.  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 1 to be seriously misleading under section 78 of this act:

    (a) The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within 4 months after, the new debtor becomes bound under subsection 4 of section 14 of this act; and


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    (b) The financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than 4 months after the new debtor becomes bound under subsection 4 of section 14 of this act unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

    3.  This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under subsection 1 of section 79 of this act.

    Sec. 81.  1.  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:

    (a) The debtor authorizes the filing in an authenticated record; or

    (b) The person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which he holds an agricultural lien.

    2.  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:

    (a) The collateral described in the security agreement; and

    (b) Property that becomes collateral under paragraph (b) of subsection 1 of section 36 of this act, whether or not the security agreement expressly covers proceeds.

    3.  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:

    (a) The secured party of record authorizes the filing; or

    (b) The change 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 1 or 3 of section 85 of this act.

    4.  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 3.

    Sec. 82.  1.  Subject to subsection 3, a filed record is effective only to the extent that it was filed by a person that may file it under section 81 of this act.

    2.  A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

    3.  If a person may file a termination statement only under paragraph (b) of subsection 3 of section 81 of this act, the filed termination statement is effective only if the debtor authorizes the filing and the termination statement indicates that the debtor authorized it to be filed.

    4.  A continuation statement that is not filed within the 6-month period prescribed by subsection 4 of section 87 of this act is ineffective.

    Sec. 83.  1.  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 1 of section 86 of this act, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.


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initial financing statement is the secured party of record with respect to the financing statement.

    2.  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 2 of section 86 of this act, the assignee named in the amendment is a secured party of record.

    3.  A person remains a secured party of record until the filing of an amendment of the financing statement which deletes him.

    Sec. 84.  1.  Subject to section 81 of this act, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection 5, otherwise amend the information provided in, a financing statement by filing an amendment that:

    (a) Identifies, by its file number, the initial financing statement to which the amendment relates; and

    (b) If the amendment relates to an initial financing statement filed or recorded in a filing office described in paragraph (a) of subsection 1 of section 73 of this act, provides the date that the initial financing statement was filed or recorded and the information specified in subsection 2 of section 74 of this act.

    2.  Except as otherwise provided in section 87 of this act, the filing of an amendment does not extend the period of effectiveness of the financing statement.

    3.  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.

    4.  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.

    5.  An amendment is ineffective to the extent it:

    (a) Purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

    (b) Purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

    Sec. 85.  1.  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:

    (a) 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

    (b) The debtor did not authorize the filing of the initial financing statement.

    2.  To comply with subsection 1, a secured party shall cause the secured party of record to file the termination statement:

    (a) Within 1 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

    (b) If earlier, within 20 days after the secured party receives an authenticated demand from a debtor.


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ê1999 Statutes of Nevada, Page 334 (Chapter 104, SB 62)ê

 

    3.  In cases not governed by subsection 1, within 20 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:

    (a) 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;

    (b) 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;

    (c) The financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor’s possession; or

    (d) The debtor did not authorize the filing of the initial financing statement.

    4.  Except as otherwise provided in section 82 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.

    Sec. 86.  1.  Except as otherwise provided in subsection 3, 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.

    2.  Except as otherwise provided in subsection 3, 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:

    (a) Identifies, by its file number, the initial financing statement to which it relates;

    (b) Provides the name of the assignor; and

    (c) Provides the name and mailing address of the assignee.

    3.  An assignment of record of a security interest in a fixture covered by a mortgage of real property which is effective as a fixture filing under section 74 of this act may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than the Uniform Commercial Code.

    Sec. 87.  1.  Except as otherwise provided in subsections 2, 5, 6 and 7, a filed financing statement is effective for a period of 5 years after the date of filing.

    2.  Except as otherwise provided in subsections 5, 6 and 7, an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of 30 years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

    3.  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 4. 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.


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ê1999 Statutes of Nevada, Page 335 (Chapter 104, SB 62)ê

 

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.

    4.  A continuation statement may be filed only within 6 months before the expiration of the 5-year period specified in subsection 1 or the 30-year period specified in subsection 2, whichever is applicable.

    5.  Except as otherwise provided in section 82 of this act, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of 5 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 5-year period, the financing statement lapses in the same manner as provided in subsection 3, unless, before the lapse, another continuation statement is filed pursuant to subsection 4. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

    6.  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.

    7.  A real property mortgage that is effective as a fixture filing under subsection 3 of section 74 of this act remains effective as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

    Sec. 88.  1.  Except as otherwise provided in subsection 2, 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.

    2.  Filing does not occur with respect to a record that a filing office refuses to accept because:

    (a) The record is not communicated by a method or medium of communication authorized by the filing office;

    (b) An amount equal to or greater than the applicable filing fee is not tendered;

    (c) The filing office is unable to index the record because:

         (1) In the case of an initial financing statement, the record does not provide a name for the debtor;

         (2) In the case of an amendment or correction statement, the record:

             (I) Does not identify the initial financing statement as required by section 84 or 90 of this act, as applicable; or

             (II) Identifies an initial financing statement whose effectiveness has lapsed under section 87 of this act;

         (3) In the case of an initial financing statement that provides the name of a debtor identified as a natural person or an amendment that provides a name of a debtor identified as a natural person which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor’s last name; or


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ê1999 Statutes of Nevada, Page 336 (Chapter 104, SB 62)ê

 

         (4) In the case of a record filed or recorded in the filing office described in paragraph (a) of subsection 1 of section 73 of this act, the record does not provide a sufficient description of the real property to which it relates;

    (d) 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;

    (e) 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:

         (1) Provide a mailing address for the debtor;

         (2) Indicate whether the debtor is a natural person or an organization; or

         (3) If the financing statement indicates that the debtor is an organization, provide:

             (I) A type of organization for the debtor;

             (II) A jurisdiction of organization for the debtor; or

             (III) An organizational identification number for the debtor or indicate that the debtor has none;

    (f) In the case of an assignment reflected in an initial financing statement under subsection 1 of section 86 of this act or an amendment filed under subsection 2 of that section, the record does not provide a name and mailing address for the assignee; or

    (g) In the case of a continuation statement, the record is not filed within the 6-month period prescribed by subsection 4 of section 87 of this act.

    3.  For purposes of subsection 2:

    (a) A record does not provide information if the filing office is unable to read or decipher the information; and

    (b) 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 84, 86 or 90 of this act, is an initial financing statement.

    4.  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 2, 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. 89.  The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

    Sec. 90.  1.  A person may file in the filing office a correction statement with respect to a record indexed there under his name if he believes that the record is inaccurate or was wrongfully filed.

    2.  A correction statement must:

    (a) Identify the record to which it relates by:

         (1) The file number assigned to the initial financing statement to which the record relates; and

         (2) If the correction statement relates to a record filed or recorded in a filing office described in paragraph (a) of subsection 1 of section 73 of this act, the date that the initial financing statement was filed or recorded and the information specified in subsection 2 of section 74 of this act;


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ê1999 Statutes of Nevada, Page 337 (Chapter 104, SB 62)ê

 

    (b) Indicate that it is a correction statement; and

    (c) Provide the basis for the person’s belief that the record is inaccurate and indicate the manner in which he believes the record should be amended to cure any inaccuracy or provide the basis for his belief that the record was wrongfully filed.

    3.  The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

    Sec. 91.  1.  For each record filed in a filing office, the filing office shall:

    (a) Assign a unique number to the filed record;

    (b) Create a record that bears the number assigned to the filed record and the date and time of filing;

    (c) Maintain the filed record for public inspection; and

    (d) Index the filed record in accordance with subsections 3, 4 and 5.

    2.  Except as otherwise provided in subsection 9, a file number assigned after January 1, 2002, may include a digit that:

    (a) Is mathematically derived from or related to the other digits of the file number; and

    (b) Enables the filing office to detect whether a number communicated as the file number includes a single-digit or transpositional error.

    3.  Except as otherwise provided in subsections 4 and 5, the filing office shall:

    (a) 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

    (b) 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.

    4.  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:

    (a) 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

    (b) To the extent that the law of this state provides for indexing of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder.

    5.  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 1 of section 86 of this act or an amendment filed under subsection 2 of that section:

    (a) Under the name of the assignor as grantor; and

    (b) To the extent that the law of this state provides for indexing the assignment of a mortgage of real property under the name of the assignee, under the name of the assignee.

    6.  The filing office shall maintain a capability:

    (a) To retrieve a record by the name of the debtor and:


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ê1999 Statutes of Nevada, Page 338 (Chapter 104, SB 62)ê

 

         (1) If the filing office is described in paragraph (a) of subsection 1 of section 73 of this act, by the file number assigned to the initial financing statement to which the record relates and the date and time that the record was filed or recorded; or

         (2) If the filing office is described in paragraph (b) of subsection 1 of section 73 of this act, by the file number assigned to the initial financing statement to which the record relates; and

    (b) To associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

    7.  The filing office may not remove a debtor’s name from the index until 1 year after the effectiveness of a financing statement naming the debtor lapses under section 87 of this act with respect to all secured parties of record.

    8.  The filing office shall perform the acts required by subsections 1 to 5, inclusive, within a reasonable time and in the manner prescribed by filing-office rule.

    9.  Subsection 2 does not apply to a filing office described in paragraph (a) of subsection 1 of section 73 of this act.

    Sec. 92.  1.  A filing office shall refuse to accept a record for filing for a reason set forth in subsection 2 of section 88 of this act and may refuse to accept a record for filing only for a reason set forth in that subsection.

    2.  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 within a reasonable time and in the manner prescribed by filing-office rule.

    3.  A filed financing statement satisfying subsections 1 and 2 of section 74 of this act is effective, even if the filing office is required to refuse to accept it for filing under subsection 1. However, section 59 of this act applies to a filed financing statement providing information described in paragraph (e) of subsection 2 of section 88 of this act which is incorrect at the time the financing statement is filed.

    4.  If a record communicated to a filing office provides information that relates to more than one debtor, this part applies to each debtor separately.

    Sec. 93.  1.  A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form except for a reason set forth in subsection 2 of section 88 of this act:

UCC FINANCING STATEMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A.  NAME AND PHONE OF CONTACT AT FILER [optional]

                                                                                                                                                                                                                          

B.  SEND ACKNOWLEDGMENT TO: (Name and Address)

                                                                                                                                                                    THE ABOVE SPACE IS FOR

                                                                                                                                                                    FILING OFFICE USE ONLY

1.  DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - Do not abbreviate or combine names


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ê1999 Statutes of Nevada, Page 339 (Chapter 104, SB 62)ê

 

         1a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   1b. INDIVIDUAL’S LAST NAME  FIRST NAME MIDDLE NAME  SUFFIX

         .................................................................................................................................................................................................................

         1c. MAILING  ADDRESS  CITY  STATE POSTAL CODE  COUNTRY

         .................................................................................................................................................................................................................

         1d. TAX ID NO.                                           ADD’L INFO. RE                                               1e. TYPE OF ORGANIZATION

         SSN OR EIN                ORGANIZATION DEBTOR

         .................................................................................................................................................................................................................

         1f. JURISDICTION OF ORGANIZATION                                                                          1g. ORGANIZATIONAL ID No.,

                                                                                                                                                                    if any

         ...............................................................................................................................................................................................  [ ] NONE

2.  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names

         2a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   2b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME  SUFFIX

         .................................................................................................................................................................................................................

         2c. MAILING ADDRESS  CITY  STATE  POSTAL CODE  COUNTRY

         .................................................................................................................................................................................................................

         2d. TAX ID NO.                                          ADD’L INFO. RE                                               2e. TYPE OF ORGANIZATION

         SSN OR EIN                                                ORGANIZATION DEBTOR

         .................................................................................................................................................................................................................

         2f. JURISDICTION OF ORGANIZATION                                                                            2g. ORGANIZATIONAL ID No.

                                                                                                                                                                    if any

         ...............................................................................................................................................................................................  [ ] NONE

3.  SECURED PARTY’S NAME (or name of total assignee of assignor S/P - insert only one secured party name (3a or 3b)

         3a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   3b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................

         3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY

         .................................................................................................................................................................................................................

4.  This FINANCING STATEMENT covers the following collateral:

         .................................................................................................................................................................................................................

5.  ALTERNATIVE DESIGNATION [if applicable]:  [ ] LESSEE/LESSOR

    [ ] CONSIGNEE/CONSIGNOR [ ] BAILEE/BAILOR [ ] SELLER/BUYER

    [ ] AG. LIEN  [ ] NON-UCC FILING

6.  [ ] This FINANCING STATEMENT is to be filed (for record) (or recorded) in the REAL ESTATE RECORDS

    Attach Addendum [if applicable]

7.  Check to REQUEST SEARCH REPORT(S) on Debtor(s)

    [ ] All Debtors   [ ] Debtor 1   [ ] Debtor 2

    [ADDITIONAL FEE]    [optional]

8.  OPTIONAL FILER REFERENCE DATA

         .................................................................................................................................................................................................................

FILING OFFICE COPY- NATIONAL UCC FINANCING STATEMENT (FORM UCC 1) (REV. 7/29/98)


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ê1999 Statutes of Nevada, Page 340 (Chapter 104, SB 62)ê

 

[BACK OF FORM]

UCC FINANCING STATEMENT ADDENDUM

Follow instructions (front and back) CAREFULLY

9.  NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT

         .................................................................................................................................................................................................................

         9a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   9b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................

10.  MISCELLANEOUS:

         .........................................................................................................................................................  THE ABOVE SPACE IS FOR

         .........................................................................................................................................................  FILING OFFICE USE ONLY

11.  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - insert only one name

         (11a or 11b) - do not abbreviate or combine names

         11a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   11b.  INDIVIDUAL’S LAST NAME  FIRST NAME MIDDLE NAME  SUFFIX

         .................................................................................................................................................................................................................

         11c. MAILING ADDRESS  CITY  STATE POSTAL CODE  COUNTRY

         .................................................................................................................................................................................................................

         11d. TAX ID NO.                                        ADD’L INFO. RE                                             11e. TYPE OF ORGANIZATION

         SSN OR EIN                                                ORGANIZATION DEBTOR

         .................................................................................................................................................................................................................

         11f. JURISDICTION OF ORGANIZATION        11g. ORGANIZATIONAL ID No.

                                                                                                            if any

         ...............................................................................................................................................................................................  [ ] NONE

12.  [ ] ADDITIONAL SECURED PARTY’S or [ ] ASSIGNOR S/P’S NAME - insert only one name (12a or 12 b)

         12a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   12b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME  SUFFIX

         .................................................................................................................................................................................................................

         12c. MAILING ADDRESS  CITY STATE  POSTAL CODE  COUNTRY

         .................................................................................................................................................................................................................

13.  This FINANCING STATEMENT covers [ ] timber to be cut or [ ] as-extracted collateral, or is filed as a [ ] fixture filing.

14.  Description of real estate:

         .................................................................................................................................................................................................................

15.  Name and address of a RECORD OWNER of the above-described real estate (if Debtor does not have record interest):

         .................................................................................................................................................................................................................

16.  Additional collateral description:

         .................................................................................................................................................................................................................

17.  Check only if applicable and check only one box:

         Debtor is a [ ] Trust or [ ] Trustee acting with respect to property held in trust

         or  [ ] Decedent’s Estate

18.  Check only if applicable and check only one box:

        [ ] Debtor is a TRANSMITTING UTILITY

        [ ] Filed in connection with a Manufactured-Home Transaction - effective 30 years


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ê1999 Statutes of Nevada, Page 341 (Chapter 104, SB 62)ê

 

        [ ] Filed in connection with a Public-Finance Transaction - effective 30 years

         FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT

         (FORM UCC 1Ad) (REV. 7/29/98)

    2.  A filing office that accepts written records may not refuse to accept a written record in the following form except for a reason set forth in subsection 2 of section 88 of this act:

 

UCC FINANCING STATEMENT AMENDMENT, CONTINUATION, ASSIGNMENT, RELEASE OR TERMINATION

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A.  NAME AND PHONE OF CONTACT AT FILER [optional]

         .................................................................................................................................................................................................................

B.  SEND ACKNOWLEDGMENT TO: (Name and Address)

         .........................................................................................................................................................  THE ABOVE SPACE IS FOR

         .........................................................................................................................................................  FILING OFFICE USE ONLY

1a.  INITIAL FINANCING STATEMENT FILE NO. 1b. [ ] This FINANCING STATEMENT AMENDMENT is to be filed (for record) (or recorded) in the REAL ESTATE RECORDS.

2.  [ ] TERMINATION: Effectiveness of the Financing Statement identified above is terminated with respect to security interest(s) of the Secured Party authorizing this Termination Statement.

3.  [ ] CONTINUATION: Effectiveness of the Financing Statement identified above with respect to security interest(s) of the Secured Party authorizing this Continuation Statement is continued for the additional period provided by applicable law.

         [ ] RELEASE

4.  [ ] ASSIGNMENT (full or partial): Give name of assignee in item 7a or 7b and address of assignee in item 7c; and also give name of assignor in item 9.

         .................................................................................................................................................................................................................

5.  [ ] AMENDMENT (PARTY INFORMATION): This Amendment affects [ ] Debtor or [ ] Secured Party of record. Check only one of these two boxes. Also check one of the following three boxes and provide appropriate information in items 6 and/or 7.

[ ] CHANGE name and/or address: Give current record name in item 6a or 6b; also give new name (if name change) in item 7a or 7b and/or new address (if address change) in item 7c.

[ ] DELETE name: give record name to be deleted in item 6a or 6b.

[ ] ADD name: Complete item 7a or 7b, and also item 7c; also complete items 7d-7g (if applicable).

6.  CURRENT RECORD INFORMATION:

         6a. ORGANIZATION’S NAME:

         .................................................................................................................................................................................................................

OR   6b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................

7.  CHANGED (NEW) OR ADDED INFORMATION:

         7a. ORGANIZATION’S NAME:

         .................................................................................................................................................................................................................

OR   7b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................


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ê1999 Statutes of Nevada, Page 342 (Chapter 104, SB 62)ê

 

         7c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY

         .................................................................................................................................................................................................................

         7d. TAX ID NO.                                          ADD’L INFO. RE                                       7e. TYPE OF ORGANIZATION

         SSN OR EIN                                                ORGANIZATION DEBTOR

         .................................................................................................................................................................................................................

         7f. JURISDICTION OF ORGANIZATION                                                                   7g. ORGANIZATONAL ID No.,

                                                                                                                                                               if any

         ...............................................................................................................................................................................................  [ ] NONE

8.  [ ] AMENDMENT (COLLATERAL CHANGE): check only one box

Describe collateral [ ] deleted or [ ] added, or give entire  [ ] restated collateral description, or describe collateral [ ] assigned.

         .................................................................................................................................................................................................................

9.  NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT (name of assignor, if this is an assignment). If this is an Amendment authorized by a Debtor which adds collateral or adds the authorizing Debtor, or if this is a Termination authorized by a Debtor, check here [ ] and enter name of Debtor authorizing this Amendment.

         9a. ORGANIZATION’S NAME:

         .................................................................................................................................................................................................................

OR   9b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................

10.  OPTIONAL FILE REFERENCE DATA

         .................................................................................................................................................................................................................

FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT

 (FORM UCC 3) (REV.7/29/98)

 

[BACK OF FORM]

UCC FINANCING STATEMENT ADDENDUM

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

11.  INITIAL FINANCING STATEMENT FILE NO. (same as item 1a on amendment form)

         .................................................................................................................................................................................................................

12.  NAME OF PARTY AUTHORIZING THIS AMENDMENT (same as item 9 on Amendment form)

         12a. ORGANIZATION’S NAME

         .................................................................................................................................................................................................................

OR   12b. INDIVIDUAL’S LAST NAME FIRST NAME MIDDLE NAME SUFFIX

         .................................................................................................................................................................................................................

13.  USE THIS SPACE FOR ADDITIONAL INFORMATION

         .......................................................................................................................................................... THE ABOVE SPACE IS FOR

         .......................................................................................................................................................... FILING OFFICE USE ONLY

FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT ADDENDUM (FORM UCC 3 Ad) (REV. 7/29/98)

 

    3.  A form that a filing office may not refuse to accept under subsection 1 or 2 must conform to the format prescribed for the form by the National Conference of Commissioners on Uniform State Laws.

    4.  A filing officer may add optional blocks for the address of the secured party or the address of the debtor to any form or record.


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    Sec. 94.  1.  The filing office shall maintain a record of the information provided in a filed financing statement for at least 1 year after the effectiveness of the financing statement has lapsed under section 87 of this act with respect to all secured parties of record. The record must be retrievable by using the name of the debtor and:

    (a) If the record was filed or recorded in the filing office described in paragraph (a) of subsection 1 of section 73 of this act, by using the file number assigned to the initial financing statement to which the record relates and the date that the record was filed or recorded; or

    (b) If the record was filed in the filing office described in paragraph (b) of subsection 1 of section 73 of this act, by using the file number assigned to the initial financing statement to which the record relates.

    2.  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 1.

    Sec. 95.  1.  If a person that files a written record requests an acknowledgment of the filing, the filing office shall send him an image of the record showing the number assigned to the record pursuant to paragraph (a) of subsection 1 of section 91 of this act and the date and time of the filing of the record. However, if he furnishes two copies of the record to the filing office, the filing office may instead:

    (a) Note upon one copy the number assigned to the record pursuant to that paragraph and the date and time of the filing of the record; and

    (b) Send that copy to him.

    2.  If a person files a record other than a written record, the filing office shall communicate to him an acknowledgment that provides:

    (a) The information in the record;

    (b) The number assigned to the record pursuant to paragraph (a) of subsection 1 of section 91 of this act; and

    (c) The date and time of the filing of the record.

    3.  The filing office shall communicate or otherwise make available in a record the following information to any person that requests it:

    (a) Whether there is on file on a date and time specified by the filing office, but not a date earlier than 3 business days before the filing office receives the request, any financing statement that:

         (1) Designates a particular debtor;

         (2) Has not lapsed under section 87 of this act with respect to all secured parties of record; and

         (3) If the request so states, has lapsed under that section and a record of which is maintained by the filing office under subsection 1 of section 94 of this act;

    (b) The date and time of filing of each financing statement; and

    (c) The information provided in each financing statement.

    4.  In complying with its duty under subsection 3, the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing its written certificate.


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    5.  The filing office described in paragraph (b) of subsection 1 of section 73 of this act shall perform the acts required by subsections 1 to 4, inclusive, within a reasonable time and in the manner prescribed by filing-office rule.

    6.  Periodically, the secretary of state shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every medium from time to time available to the filing office.

    Sec. 96.  Delay by the filing office beyond a time limit prescribed by this part 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. 97.  1.  Except as otherwise provided in subsection 5, the fee for filing and indexing a record under this part, other than an initial financing statement of the kind described in subsection 3 of section 74 of this act, is:

    (a) Twenty dollars if the record is communicated in writing and consists of one or two pages;

    (b) Forty dollars if the record is communicated in writing and consists of more than two pages, and $1 for each page over 20 pages;

    (c) Ten dollars if the record is communicated by another medium authorized by filing-office rule; and

    (d) One dollar for each additional debtor, trade name or reference to another name under which business is done.

    2.  The filing officer may charge and collect $1 for each page of copy or record of filings produced by him at the request of any person.

    3.  Except as otherwise provided in subsection 5, the fee for filing and indexing an initial financing statement of the kind described in subsection 3 of section 74 of this act is:

    (a) Forty dollars if the financing statement indicates that it is filed in connection with a public-finance transaction; and

    (b) Twenty dollars if the financing statement indicates that it is filed in connection with a manufactured-home transaction.

    4.  The fee for responding to a request for information from the filing office, including for issuing a certificate showing whether there is on file any financing statement naming a particular debtor, is:

    (a) Twenty dollars if the request is communicated in writing; and

    (b) Fifteen dollars if the request is communicated by another medium authorized by filing-office rule.

    5.  This section does not require a fee with respect to a mortgage that 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 3 of section 74 of this act. However, the fees for recording and satisfaction which otherwise would be applicable to the mortgage apply.

    Sec. 98.  1.  The secretary of state shall adopt and publish rules to effectuate this article. The filing-office rules must be:

    (a) Consistent with this article; and


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    (b) Adopted in accordance with the provisions of chapter 233B of NRS.

    2.  To keep the filing-office rules and the practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the secretary of state, so far as is consistent with the purposes, policies, and provisions of this article, in adopting, amending, and repealing filing-office rules, shall:

    (a) Consult with filing offices in other jurisdictions that enact substantially this part;

    (b) Consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and

    (c) Take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.

    Sec. 99.  The secretary of state shall report biennially on or before the first Monday of February in each odd-numbered year to the governor and legislature on the operation of the filing office. The report must contain a statement of the extent to which:

    1.  The filing-office rules are not in harmony with the rules of filing offices in other jurisdictions that enact substantially this part and the reasons for these variations; and

    2.  The filing-office rules are not in harmony with the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators, or any successor organization, and the reasons for these variations.

    Sec. 100.  1.  After default, a secured party has the rights provided in this part and, except as otherwise provided in section 101 of this act, those provided by agreement of the parties. A secured party:

    (a) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and

    (b) If the collateral is documents, may proceed either as to the documents or as to the goods they cover.

    2.  A secured party in possession of collateral or control of collateral under section 5, 6, 7, or 8 of this act has the rights and duties provided in section 18 of this act.

    3.  The rights under subsections 1 and 2 are cumulative and may be exercised simultaneously.

    4.  Except as otherwise provided in subsection 7 and section 104 of this act, after default, a debtor and an obligor have the rights provided in this part and by agreement of the parties.

    5.  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:

    (a) The date of perfection of the security interest or agricultural lien in the collateral;

    (b) The date of filing a financing statement covering the collateral; or


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    (c) Any date specified in a statute under which the agricultural lien was created.

    6.  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.

    7.  Except as otherwise provided in subsection 3 of section 106 of this act, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

    Sec. 101.  Except as otherwise provided in section 123 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 (3) of paragraph (d) of subsection 2 of section 18 of this act, which deals with use and operation of the collateral by the secured party;

    2.  Section 21 of this act, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;

    3.  Subsection 3 of section 106 of this act, which deals with collection and enforcement of collateral;

    4.  Subsection 1 of section 107 of this act and subsection 3 of section 114 of this act to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;

    5.  Subsection 1 of section 107 of this act and subsection 4 of section 114 of this act to the extent that they require accounting for or payment of surplus proceeds of collateral;

    6.  Section 108 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 2 of section 109, and sections 110, 112, and 113 of this act, which deal with disposition of collateral;

    8.  Subsection 6 of section 114 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 115 of this act, which deals with explanation of the calculation of a surplus or deficiency;

    10.  Sections 119, 120, and 121 of this act, which deal with acceptance of collateral in satisfaction of obligation;

    11.  Section 122 of this act, which deals with redemption of collateral;

    12.  Section 123 of this act, which deals with permissible waivers; and

    13.  Sections 124 and 125 of this act, which deal with the secured party’s liability for failure to comply with this article.

    Sec. 102.  1.  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 101 of this act if the standards are not manifestly unreasonable.

    2.  Subsection 1 does not apply to the duty under section 108 of this act to refrain from breaching the peace.


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    Sec. 103.  1.  If a security agreement covers both personal and real property, a secured party may proceed:

    (a) Under this part as to the personal property without prejudicing any rights with respect to the real property; or

    (b) 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 this part do not apply.

    2.  Subject to subsection 3, if a security agreement covers goods that are or become fixtures, a secured party may proceed:

    (a) Under this part; or

    (b) In accordance with the rights with respect to real property, in which case the other provisions of this part do not apply.

    3.  Subject to the other provisions of this part, 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.

    4.  A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, 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 may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

    Sec. 104.  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 he is a debtor or obligor;

    (b) His identity; and

    (c) How to communicate with him; 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) His identity.

    Sec. 105.  For purposes of this part, 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. 106.  1.  If so agreed, and in any event after default, a secured party:

    (a) 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;

    (b) May take any proceeds to which the secured party is entitled under section 36 of this act;

    (c) 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;


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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;

    (d) If it holds a security interest in a deposit account perfected by control under paragraph (a) of subsection 1 of section 5 of this act, may apply the balance of the deposit account to the obligation secured by the deposit account; and

    (e) If it holds a security interest in a deposit account perfected by control under paragraph (b) or (c) of subsection 1 of section 5 of this act, may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

    2.  If necessary to enable a secured party to exercise under paragraph (c) of subsection 1 the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which the mortgage is recorded:

    (a) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

    (b) The secured party’s sworn affidavit in recordable form stating that:

         (1) A default has occurred; and

         (2) The secured party is entitled to enforce the mortgage nonjudicially.

    3.  A secured party shall proceed in a commercially reasonable manner if the secured party:

    (a) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

    (b) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

    4.  A secured party may deduct from the collections made pursuant to subsection 3 reasonable expenses of collection and enforcement, including reasonable attorney’s fees and legal expenses incurred by the secured party.

    5.  This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

    Sec. 107.  1.  If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

    (a) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under this section in the following order to:

         (1) 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;

         (2) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and

         (3) 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.


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    (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 complies, the secured party need not comply with the holder’s demand under subparagraph (3) of paragraph (a).

    (c) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under this section 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) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

    2.  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. 108.  1.  After default, a secured party:

    (a) May take possession of the collateral;

    (b) If a debtor so agrees, 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; and

    (c) Without removal may render equipment unusable and dispose of collateral on a debtor’s premises under section 109 of this act.

    2.  A secured party may proceed under subsection 1:

    (a) Pursuant to judicial process; or

    (b) Without judicial process, if it proceeds without breach of the peace.

    Sec. 109.  1.  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.

    2.  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.

    3.  A secured party may purchase collateral:

    (a) At a public sale; or

    (b) At a private sale 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.

    4.  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.

    5.  A secured party may disclaim or modify warranties under subsection 4:

    (a) 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


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    (b) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

    6.  A record is sufficient to disclaim warranties under subsection 5 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. 110.  1.  In this section, “notification date” means the earlier of the date on which:

    (a) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or

    (b) The debtor and any secondary obligor waive the right to notification.

    2.  Except as otherwise provided in subsection 4, a secured party that disposes of collateral under section 109 of this act shall send to the persons specified in subsection 3 a reasonable authenticated notification of disposition.

    3.  To comply with subsection 2, the secured party shall send an authenticated notification of disposition to:

    (a) The debtor;

    (b) Any secondary obligor; and

    (c) If the collateral is other than consumer goods:

         (1) 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;

         (2) Any other secured party or lienholder that, 10 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

         (3) Any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subsection 1 of section 32 of this act.

    4.  Subsection 2 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.

    5.  A secured party complies with the requirement for notification prescribed by subparagraph (2) of paragraph (c) of subsection 3 if:

    (a) Not later than 20 days or earlier than 30 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 that subparagraph; and

    (b) Before the notification date, the secured party:

         (1) Did not receive a response to the request for information; or

         (2) Received a response to the request for information and sent an authenticated notification of disposition to each secured party named in that response whose financing statement covered the collateral.


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    Sec. 111.  1.  Except as otherwise provided in subsection 2, whether a notification is sent within a reasonable time is a question of fact.

    2.  In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

    Sec. 112.  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 sale 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 subsection 1 are nevertheless sufficient is a question of fact.

    3.  The contents of a notification providing substantially the information specified in subsection 1 are sufficient, even if the notification includes:

    (a) Information not specified by that subsection; 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 subsection 3 of section 113 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].


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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. 113.  In a consumer-goods transaction, the following rules apply:

    1.  A notification of disposition must provide the following information:

    (a) The information specified in subsection 1 of section 112 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 122 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].


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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 6 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 subsection 3 is sufficient, even if additional information appears at the end of the form.

    5.  A notification in the form of subsection 3 is sufficient, even if it includes errors in information not required by subsection 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 subsection 3, law other than this article determines the effect of including information not required by subsection 1.

    Sec. 114.  1.  A secured party shall apply or pay over for application the cash proceeds of disposition in the following order to:

    (a) 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;

    (b) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;

    (c) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

         (1) 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

         (2) 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

    (d) 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.

    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 does so, the secured party need not comply with the holder’s demand under paragraph (c) of subsection 1.

    3.  A secured party need not apply or pay over for application noncash proceeds of disposition under this section 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.


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    4.  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 1 and permitted by subsection 3:

    (a) Unless paragraph (d) of subsection 1 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

    (b) The obligor is liable for any deficiency.

    5.  If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:

    (a) The debtor is not entitled to any surplus; and

    (b) The obligor is not liable for any deficiency.

    6.  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 this part to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:

    (a) The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and

    (b) 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.

    7.  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:

    (a) Takes the cash proceeds free of the security interest or other lien;

    (b) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

    (c) Is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

    Sec. 115.  1.  In this section:

    (a) “Explanation” means a writing that:

         (1) States the amount of the surplus or deficiency;

         (2) Provides an explanation in accordance with subsection 3 of how the secured party calculated the surplus or deficiency;

         (3) 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

         (4) Provides a telephone number or mailing address from which additional information concerning the transaction is available.

    (b) “Request” means a record:

         (1) Authenticated by a debtor or consumer obligor;

         (2) Requesting that the recipient provide an explanation; and

         (3) Sent after disposition of the collateral under section 109 of this act.

    2.  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 114 of this act, the secured party shall:


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    (a) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:

         (1) 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

         (2) Within 14 days after receipt of a request; or

    (b) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party’s right to a deficiency.

    3.  To comply with subparagraph (2) of paragraph (a) of subsection 1, a writing must provide the following information in the following order:

    (a) 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:

         (1) If the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or

         (2) If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;

    (b) The amount of proceeds of the disposition;

    (c) The aggregate amount of the obligations after deducting the amount of proceeds;

    (d) 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;

    (e) 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 paragraph (a); and

    (f) The amount of the surplus or deficiency.

    4.  A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of paragraph (a) of subsection 1 is sufficient, even if it includes minor errors that are not seriously misleading.

    5.  A debtor or consumer obligor is entitled without charge to one response to a request under this section during any 6-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to paragraph (a) of subsection 2. The secured party may require payment of a charge not exceeding $25 for each additional response.

    Sec. 116.  1.  A secured party’s disposition of collateral after default:

    (a) Transfers to a transferee for value all of the debtor’s rights in the collateral;

    (b) Discharges the security interest under which the disposition is made; and


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    (c) Discharges any subordinate security interest or other subordinate lien.

    2.  A transferee that acts in good faith takes free of the rights and interests described in subsection 1, even if the secured party fails to comply with this article or the requirements of any judicial proceeding.

    3.  If a transferee does not take free of the rights and interests described in subsection 1, he takes the collateral subject to:

    (a) The debtor’s rights in the collateral;

    (b) The security interest or agricultural lien under which the disposition is made; and

    (c) Any other security interest or other lien.

    Sec. 117.  1.  A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

    (a) Receives an assignment of a secured obligation from the secured party;

    (b) Receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

    (c) Is subrogated to the rights of a secured party with respect to collateral.

    2.  An assignment, transfer, or subrogation described in subsection 1:

    (a) Is not a disposition of collateral under section 109 of this act; and

    (b) Relieves the secured party of further duties under this article.

    Sec. 118.  1.  In this section, “transfer statement” means a record authenticated by a secured party stating:

    (a) That the debtor has defaulted in connection with an obligation secured by specified collateral;

    (b) That the secured party has exercised its post-default remedies with respect to the collateral;

    (c) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and

    (d) The name and mailing address of the secured party, debtor, and transferee.

    2.  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:

    (a) Accept the transfer statement;

    (b) Promptly amend its records to reflect the transfer; and

    (c) If applicable, issue a new appropriate certificate of title in the name of the transferee.

    3.  A transfer of the record or legal title to collateral to a secured party under subsection 2 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.


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    Sec. 119.  1.  Except as otherwise provided in subsection 7, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

    (a) The debtor consents to the acceptance under subsection 3;

    (b) The secured party does not receive, within the time set forth in subsection 5, a notification of objection to the proposal authenticated by:

         (1) A person to which the secured party was required to send a proposal under section 120 of this act; or

         (2) 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;

    (c) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

    (d) Subsection 5 does not require the secured party to dispose of the collateral.

    2.  A purported or apparent acceptance of collateral under this section is ineffective unless:

    (a) The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

    (b) The conditions of subsection 1 are met.

    3.  For purposes of this section:

    (a) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if he agrees to the terms of the acceptance in a record authenticated after default; and

    (b) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if he agrees to the terms of the acceptance in a record authenticated after default or the secured party:

         (1) 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;

         (2) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

         (3) Does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.

    4.  To be effective under paragraph (b) of subsection 1, a notification of objection must be received by the secured party:

    (a) In the case of a person to which the proposal was sent pursuant to section 120 of this act, within 20 days after notification was sent to him; and

    (b) In other cases:

         (1) Within 20 days after the last notification was sent pursuant to section 120 of this act; or

         (2) If a notification was not sent, before the debtor consents to the acceptance under subsection 3.

    5.  A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 109 of this act within the time specified in subsection 6 if:

    (a) Sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or


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    (b) Sixty percent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

    6.  To comply with subsection 5, the secured party shall dispose of the collateral:

    (a) Within 90 days after taking possession; or

    (b) 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.

    7.  In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

    Sec. 120.  1.  A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

    (a) 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;

    (b) Any other secured party or lienholder that, 10 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:

         (1) Identified the collateral;

         (2) Was indexed under the debtor’s name as of that date; and

         (3) 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

    (c) Any other secured party that, 10 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 1 of section 32 of this act.

    2.  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 1.

    Sec. 121.  1.  A secured party’s acceptance of collateral in full or partial satisfaction of the obligation it secures:

    (a) Discharges the obligation to the extent consented to by the debtor;

    (b) Transfers to the secured party all of a debtor’s rights in the collateral;

    (c) 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

    (d) Terminates any other subordinate interest.

    2.  A subordinate interest is discharged or terminated under subsection 1 even if the secured party fails to comply with this article.

    Sec. 122.  1.  A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

    2.  To redeem collateral, a person must tender:

    (a) Fulfillment of all obligations secured by the collateral; and

    (b) The reasonable expenses and attorney’s fees described in paragraph (a) of subsection 1 of section 114 of this act.

    3.  A redemption may occur at any time before a secured party:

    (a) Has collected collateral under section 106 of this act;


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    (b) Has disposed of collateral or entered into a contract for its disposition under section 109 of this act; or

    (c) Has accepted collateral in full or partial satisfaction of the obligation it secures under section 121 of this act.

    Sec. 123.  1.  A debtor or secondary obligor may waive the right to notification of disposition of collateral under section 110 of this act only by an agreement to that effect entered into and authenticated after default.

    2.  Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under section 122 of this act only by an agreement to that effect entered into and authenticated after default.

    Sec. 124.  1.  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.

    2.  Subject to subsections 3, 4, and 6, 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 with a request under section 21 of this act may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.

    3.  Except as otherwise provided in section 127 of this act:

    (a) 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 2 for its loss; and

    (b) 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 this part may recover for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time-price differential plus 10 percent of the cash price.

    4.  A debtor whose deficiency is eliminated under section 125 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 that section may not otherwise recover under subsection 2 for noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

    5.  In addition to any damages recoverable under subsection 2, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover $500 in each case from a person that:

    (a) Fails to comply with section 19 of this act;

    (b) Fails to comply with section 20 of this act;

    (c) Files a record that he is not entitled to file under subsection 1 of section 81 of this act;

    (d) Fails to cause the secured party of record to file or send a termination statement as required by subsection 1 or 3 of section 85 of this act;

    (e) Fails to comply with paragraph (a) of subsection 2 of section 115 of this act and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or


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    (f) Fails to comply with paragraph (b) of subsection 2 of section 115 of this act.

    6.  A debtor or consumer obligor may recover damages under subsection 2 and, in addition, $500 in each case from a person that, without reasonable cause, fails to comply with a request under section 21 of this act. A recipient of a request under that section 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.

    7.  If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 21 of this act, the secured party may claim a security interest only as shown in the statement included in the request as against a person that is reasonably misled by the failure.

    Sec. 125.  1.  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:

    (a) A secured party need not prove compliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party’s compliance in issue.

    (b) 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 this part.

    (c) Except as otherwise provided in section 127 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 this part 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:

         (1) The proceeds of the collection, enforcement, disposition, or acceptance; or

         (2) The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

    (d) For purposes of subparagraph (2) of paragraph (c), 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.

    (e) If a deficiency or surplus is calculated under subsection 6 of section 114 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.

    2.  The limitation of the rules in subsection 1 to transactions other than consumer transactions leaves 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.


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limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

    Sec. 126.  1.  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.

    2.  A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

    (a) In the usual manner on any recognized market;

    (b) At the price current in any recognized market at the time of the disposition; or

    (c) Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

    3.  A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:

    (a) In a judicial proceeding;

    (b) By a genuine creditors’ committee;

    (c) By a representative of creditors; or

    (d) By an assignee for the benefit of creditors.

    4.  Approval under subsection 3 need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

    Sec. 127.  1.  Unless a secured party knows that a person is a debtor or obligor, knows his identity, and knows how to communicate with him:

    (a) The secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against him, for failure to comply with this article; and

    (b) The secured party’s failure to comply with this article does not affect the liability of the person for a deficiency.

    2.  A secured party is not liable because of its status as a secured party:

    (a) To a person that is a debtor or obligor, unless the secured party knows:

         (1) That he is a debtor or obligor;

         (2) His identity; and

         (3) How to communicate with him; or

    (b) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

         (1) That he is a debtor; and

         (2) His identity.

    3.  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:


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    (a) A debtor’s representation concerning the purpose for which collateral was to be used, acquired, or held; or

    (b) An obligor’s representation concerning the purpose for which a secured obligation was incurred.

    4.  A secured party is not liable to any person under paragraph (b) of subsection 3 of section 124 of this act for its failure to comply with section 115 of this act.

    5.  A secured party is not liable under paragraph (b) of subsection 3 of section 124 of this act more than once with respect to any one secured obligation.

    Sec. 128.  1.  Except as otherwise provided in sections 128 to 134, inclusive, of this act, this article as amended applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before the amendments to this article take effect.

    2.  Except as otherwise provided in subsection 3 and sections 129 to 134, inclusive, of this act:

    (a) Transactions and liens that were not governed by this article before July 1, 2001, were validly entered into or created before that date, and would be subject to this article if they had been entered into or created after that date, and the rights, duties, and interests flowing from those transactions and liens remain valid on and after that date; and

    (b) The transactions and liens may be terminated, completed, consummated, or enforced as required or permitted by this article or by the law that otherwise would apply if this article had not taken effect.

    3.  This article as amended does not affect an action, case, or proceeding commenced before July 1, 2001.

    Sec. 129.  1.  A security interest that is enforceable immediately before July 1, 2001, 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 article if, when this article as amended takes effect, the applicable requirements for enforceability and perfection under this article as amended are satisfied without further action.

    2.  Except as otherwise provided in section 131 of this act, if, immediately before July 1, 2001, 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 article as amended are not satisfied on July 1, 2001, the security interest:

    (a) Is a perfected security interest for 1 year after July 1, 2001;

    (b) Remains enforceable thereafter only if the security interest becomes enforceable under section 14 of this act before the year expires; and

    (c) Remains perfected thereafter only if the applicable requirements for perfection under this article as amended are satisfied before the year expires.

    Sec. 130.  A security interest that is enforceable immediately before July 1, 2001, 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 1 year after July 1, 2001;


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    2.  Remains enforceable thereafter if the security interest becomes enforceable under section 14 of this act when this article as amended takes effect or within 1 year thereafter; and

    3.  Becomes perfected:

    (a) Without further action, on July 1, 2001, if the applicable requirements for perfection under this article as amended 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. 131.  1.  If action, other than the filing of a financing statement, is taken before July 1, 2001, 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 that date, the action is effective to perfect a security interest that attaches under this article as amended within 1 year after that date. An attached security interest becomes unperfected 1 year after July 1, 2001, unless the security interest becomes a perfected security interest under this article as amended before the expiration of that period.

    2.  The filing of a financing statement before July 1, 2001, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this article as amended.

    3.  This article as amended does not render ineffective an effective financing statement that was filed before July 1, 2001, and satisfied the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in section 4 of this act as that section read at the time of filing. However, except as otherwise provided in subsections 4 and 5 and section 134 of this act, the financing statement ceases to be effective at the earlier of:

    (a) The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

    (b) June 30, 2006.

    4.  The filing of a continuation statement on or after July 1, 2001, does not continue the effectiveness of the financing statement filed before that date. However, upon the timely filing of a continuation statement after that date and in accordance with the law of the jurisdiction governing perfection as provided in Part 3, the effectiveness of a financing statement filed in the same office in that jurisdiction before that date continues for the period provided by the law of that jurisdiction.

    5.  Paragraph (b) of subsection 3 applies to a financing statement that was filed against a transmitting utility before July 1, 2001, and satisfied the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in section 4 of this act as that section read at the time of filing only to the extent that Part 3 provides that the law of a jurisdiction other than jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.


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    6.  A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed after that date are effective only to the extent that the financing statement satisfies the requirements of Part 5 for an initial financing statement.

    Sec. 132.  1.  The filing of an initial financing statement in the office specified in section 73 of this act continues the effectiveness of a financing statement filed before July 1, 2001, if:

    (a) The filing of an initial financing statement in that office would be effective to perfect a security interest under this article as amended;

    (b) The pre-effective-date financing statement was filed in an office in another state or another office in this state; and

    (c) The initial financing statement satisfies subsection 3.

    2.  The filing of an initial financing statement under subsection (1) continues the effectiveness of the pre-effective-date financing statement:

    (a) If the initial financing statement is filed before July 1, 2001, for the period provided in NRS 104.9403 before that date with respect to a financing statement; and

    (b) If the initial financing statement is filed on or after July 1, 2001, for the period provided in section 87 of this act with respect to an initial financing statement.

    3.  To be effective for purposes of subsection 1, an initial financing statement must:

    (a) Satisfy the requirements of Part 5 for an initial financing statement;

    (b) 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

    (c) Indicate that the pre-effective-date financing statement remains effective.

    Sec. 133.  A person may file an initial financing statement or a continuation statement under sections 128 to 134, inclusive, of this act if:

    1.  The secured party of record authorizes the filing; and

    2.  The filing is necessary under those sections:

    (a) To continue the effectiveness of a financing statement filed before July 1, 2001; or

    (b) To perfect or continue the perfection of a security interest.

    Sec. 134.  1.  Sections 2 to 134, inclusive, of this act determine the priority of conflicting claims to collateral. However if the relative priorities of the parties were fixed before July 1, 2001, the provisions of Article 9 which were in effect before July 1, 2001, determine priority.

    2.  For purposes of subsection 1 of section 43 of this act, the priority of a security interest that becomes enforceable under section 14 of this act dates from July 1, 2001, if the security interest is perfected under this article as amended by the filing of a financing statement before July 1, 2001, which would not have been effective to perfect the security interest under the provisions of Article 9 which were in effect before that date. This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.


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    Sec. 135.  1.  An issuer or a nominated person has a security interest in a document presented under a letter of credit and any identifiable proceeds of the collateral to the extent that the issuer or nominated person honors or gives value for the presentation.

    2.  As long as and to the extent that an issuer or a 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 1, the security interest continues and is subject to Article 9, but:

    (a) A security agreement is not necessary to make the security interest enforceable under paragraph (c) of subsection 2 of section 14 of this act;

    (b) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and

    (c) 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, so long as the debtor does not have possession of the document, the security interest is perfected and has priority over a conflicting security interest in the document.

    Sec. 136.  NRS 104.1105 is hereby amended to read as follows:

    104.1105  1.  Except as otherwise provided 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 of this state or of such other state or nation governs their rights and duties. Failing such agreement, this chapter applies to transactions bearing an appropriate relation to this state.

    2.  Where one of the following provisions of this chapter 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. NRS 104.2402.

Applicability of the article on leases. NRS 104A.2105 and 104A.2106.

Applicability of the article on bank deposits and collections. NRS 104.4102.

Letters of credit. NRS 104.5116.

Applicability of the article on investment securities. NRS 104.8110.

[Perfection provisions of the article on secured transactions. NRS 104.9103.]

Law governing perfection, the effect of perfection or nonperfection, and the priority of security interests. Sections 22 to 28, inclusive, of this act.

Governing law in the article on funds transfers. NRS 104A.4507.

    Sec. 137.  NRS 104.1110 is hereby amended to read as follows:

    104.1110  1.  Transactions validly entered into before March 1, 1967, and the rights, duties and interests flowing from them remain valid thereafter and may be terminated, completed, consummated or enforced as required or permitted by any statute or other law amended or repealed by this chapter as though such repeal or amendment had not occurred.


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    2.  [Transactions validly entered into after March 1, 1967, and before July 1, 1975, which were subject to the provisions of this chapter before July 1, 1975, and which would be subject to the provisions of this chapter as amended effective July 1, 1975, if they had been entered into after July 1, 1975, and the rights, duties and interests flowing from such transactions remain valid after July 1, 1975, and may be terminated, completed, consummated or enforced as required or permitted by this chapter as amended effective July 1, 1975. Security interests arising out of such transactions which are perfected on July 1, 1975, shall remain perfected until they lapse as provided by this chapter as amended effective July 1, 1975, and may be continued as permitted by this chapter as amended effective July 1, 1975, except as stated in NRS 104.902.

    3.]  A transaction arising out of or associated with a letter of credit that was issued before October 1, 1997, and the rights, obligations and interests flowing from that transaction are governed by the former provisions of this chapter as if the amendment effective October 1, 1997, had not occurred, and may be terminated, completed, consummated or enforced under those former provisions.

    [4.] 3.  Rights and obligations that arose after March 1, 1967, and before October 1, 1991, under NRS 104.6101 to 104.6111, inclusive, Uniform Commercial Code-Bulk Transfers, remain valid and may be enforced as though those sections had not been repealed.

    [5.  If a security interest in a security governed by NRS 104.8101 to 104.8511, inclusive, is perfected before October 1, 1997, and the action by which the security interest was perfected would suffice to perfect a security interest under this chapter as amended effective on that date, no further action is required to continue perfection. If a security interest in a security is perfected before October 1, 1997, but the action by which the security interest was perfected would not suffice to perfect a security interest under this chapter as amended effective on that date, the security interest remains perfected for a period of 4 months after that date and remains perfected thereafter if appropriate action to perfect it under this chapter as so amended is taken within that period. If a security interest is perfected before October 1, 1997, and the security interest can be perfected by filing under this chapter as amended effective on that date, a financing statement signed by the secured party instead of the debtor may be filed within that period to continue perfection or thereafter to perfect.]

    Sec. 138.  NRS 104.1201 is hereby amended to read as follows:

    104.1201  Subject to additional definitions contained in the subsequent articles of this chapter which are applicable to specific articles or parts thereof, and unless the context otherwise requires, in this chapter:

    1.  “Action” in the sense of a judicial proceeding includes recoupment, counterclaim, setoff, suit in equity and any other proceedings in which rights are determined.

    2.  “Aggrieved party” means a party entitled to resort to a remedy.

    3.  “Agreement” means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this chapter (NRS 104.1205 and 104.2208). Whether an agreement has legal consequences is determined by the provisions of this chapter, if applicable; otherwise by the law of contracts (NRS 104.1103).


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consequences is determined by the provisions of this chapter, if applicable; otherwise by the law of contracts (NRS 104.1103). (Compare “contract.”)

    4.  “Bank” means any person engaged in the business of banking.

    5.  “Bearer” means the person in possession of an instrument, document of title, or security payable to bearer or endorsed in blank.

    6.  “Bill of lading” means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill. “Airbill” means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill.

    7.  “Branch” includes a separately incorporated foreign branch of a bank.

    8.  “Burden of establishing” a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its nonexistence.

    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 in] , 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 him 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 in the business of selling goods of that kind. [“Buying” may be] A buyer in ordinary course of business may 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.

    10.  A term or clause is “conspicuous” when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NONNEGOTIABLE BILL OF LADING) is “conspicuous.” Language in the body of a form is “conspicuous” if it is in larger or other contrasting type or color. But in a telegram any stated term is “conspicuous.” Whether a term or clause is “conspicuous” or not is for decision by the court.

    11.  “Contract” means the total legal obligation which results from the parties’ agreement as affected by this chapter and any other applicable rules of law. (Compare “agreement.”)


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    12.  “Creditor” includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor’s or assignor’s estate.

    13.  “Defendant” includes a person in the position of defendant in a cross-action or counterclaim.

    14.  “Delivery” with respect to instruments, documents of title, chattel paper or securities means voluntary transfer of possession.

    15.  “Document of title” includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee’s possession which are either identified or are fungible portions of an identified mass.

    16.  “Fault” means wrongful act, omission or breach.

    17.  “Fungible” with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this chapter to the extent that under a particular agreement or document unlike units are treated as equivalents.

    18.  “Genuine” means free of forgery or counterfeiting.

    19.  “Good faith” means honesty in fact in the conduct or transaction concerned.

    20.  “Holder” with respect to a negotiable instrument means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. “Holder” with respect to a document of title means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

    21.  To “honor” is to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.

    22.  “Insolvency proceedings” includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.

    23.  A person is “insolvent” who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law.

    24.  “Money” means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

    25.  A person has “notice” of a fact when:

    (a) He has actual knowledge of it;

    (b) He has received a notice or notification of it; or

    (c) From all the facts and circumstances known to him at the time in question he has reason to know that it exists.


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A person “knows” or has “knowledge” of a fact when he has actual knowledge of it. “Discover” or “learn” or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by this chapter.

    26.  A person “notifies” or “gives” a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person “receives” a notice or notification when:

    (a) It comes to his attention; or

    (b) It is delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.

    27.  Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the person conducting that transaction, and in any event from the time when it would have been brought to his attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require a person acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the transaction would be materially affected by the information.

    28.  “Organization” includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity.

    29.  “Party,” as distinct from “third party,” means a person who has engaged in a transaction or made an agreement within this chapter or chapter 104A of NRS.

    30.  “Presumption” or “presumed” means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.

    31.  “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.

    32.  “Purchaser” means a person who takes by purchase.

    33.  “Remedy” means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

    34.  “Representative” includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another.

    35.  “Rights” includes remedies.

    36.  “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 (NRS 104.2401) 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] Article 9.


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buyer of accounts , [or] chattel paper [which] , a payment intangible or a promissory note in a transaction that is subject to [article] Article 9. The special property interest of a buyer of goods on identification of such goods to a contract for sale under NRS 104.2401 is not a “security interest,” but a buyer may also acquire a “security interest” by complying with [article 9. Unless a 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 on consignment sales (NRS 104.2326).] Article 9. Except as otherwise provided in NRS 104.2505, the right of a seller or lessor of goods under Article 2 or 2A 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 (NRS 104.2401) is limited in effect to a reservation of a “security interest.” Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and:

    (a) The original term of the lease is equal to or greater than the remaining economic life of the goods;

    (b) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

    (c) The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or

    (d) The lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.

    37.  A transaction does not create a security interest merely because it provides that:

    (a) The present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;

    (b) The lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording or registration fees, or service or maintenance costs with respect to the goods;

    (c) The lessee has an option to renew the lease or to become the owner of the goods;

    (d) The lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or

    (e) The lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

    38.  For the purposes of this subsection and subsections 36 and 37:

    (a) Additional consideration is not nominal if:


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         (1) When the option to renew the lease is granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or

         (2) When the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed.

Additional consideration is nominal if it is less than the lessee’s reasonably predictable cost of performing under the lease agreement if the option is not exercised.

    (b) “Reasonably predictable” and “remaining economic life of the goods” are to be determined with reference to the facts and circumstances at the time the transaction is entered into.

    (c) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the time the transaction is entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

    39.  “Send” in connection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and in the case of an instrument to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending.

    40.  “Signed” includes any symbol executed or adopted by a party with present intention to authenticate a writing.

    41.  “Surety” includes guarantor.

    42.  “Telegram” includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.

    43.  “Term” means that portion of an agreement which relates to a particular matter.

    44.  “Unauthorized” signature means one made without actual, implied or apparent authority and includes a forgery.

    45.  Except as otherwise provided with respect to negotiable instruments and bank collections (NRS 104.3303, 104.4210 and 104.4211) a person gives “value” for rights if he acquires them:

    (a) In return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;

    (b) As security for or in total or partial satisfaction of a preexisting claim;

    (c) By accepting delivery pursuant to a preexisting contract for purchase; or

    (d) Generally, in return for any consideration sufficient to support a simple contract.


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    46.  “Warehouse receipt” means a receipt issued by a person engaged in the business of storing goods for hire.

    47.  “Written” or “writing” includes printing, typewriting or any other intentional reduction to tangible form.

    Sec. 139.  NRS 104.1206 is hereby amended to read as follows:

    104.1206  1.  Except in the cases described in subsection 2 of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond $5,000 in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.

    2.  Subsection 1 of this section does not apply to contracts for the sale of goods (NRS 104.2201) nor of securities (NRS 104.8113) nor to security agreements [(NRS 104.9203).] (section 14 of this act).

    Sec. 140.  NRS 104.2103 is hereby amended to read as follows:

    104.2103  1.  In this article unless the context otherwise requires:

    (a) “Buyer” means a person who buys or contracts to buy goods.

    (b) “Good faith” in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

    (c) “Receipt” of goods means taking physical possession of them.

    (d) “Seller” means a person who sells or contracts to sell goods.

    2.  Other definitions applying to this article or to specified parts thereof, and the sections in which they appear are:

 

“Acceptance.” NRS 104.2606.

“Banker’s credit.” NRS 104.2325.

“Between merchants.” NRS 104.2104.

“Cancellation.” Subsection 4 of NRS 104.2106.

“Commercial unit.” NRS 104.2105.

“Confirmed credit.” NRS 104.2325.

“Conforming to contract.” NRS 104.2106.

“Contract for sale.” NRS 104.2106.

“Cover.” NRS 104.2712.

“Entrusting.” NRS 104.2403.

“Financing agency.” NRS 104.2104.

“Future goods.” NRS 104.2105.

“Goods.” NRS 104.2105.

“Identification.” NRS 104.2501.

“Installment contract.” NRS 104.2612.

“Letter of credit.” NRS 104.2325.

“Lot.” NRS 104.2105.

“Merchant.” NRS 104.2104.

“Overseas.” NRS 104.2323.

“Person in position of seller.” NRS 104.2707.

“Present sale.” NRS 104.2106.

“Sale.” NRS 104.2106.


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“Sale on approval.” NRS 104.2326.

“Sale or return.” NRS 104.2326.

“Termination.” NRS 104.2106.

 

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

 

“Check.” NRS 104.3104.

“Consignee.” NRS 104.7102.

“Consignor.” NRS 104.7102.

“Consumer goods.” [NRS 104.9109.] Section 3 of this act.

“Draft.” NRS 104.3104.

 

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

    Sec. 141.  NRS 104.2210 is hereby amended to read as follows:

    104.2210  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 69 of 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.  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.  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.  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 (NRS 104.2609).

    Sec. 142.  NRS 104.2326 is hereby amended to read as follows:

    104.2326  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.


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    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 the article on secured transactions (article 9).

    4.]  Any “or return” term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (NRS 104.2201) and as contradicting the sale aspect of the contract within the provisions of this article on parol or extrinsic evidence (NRS 104.2202).

    Sec. 143.  NRS 104.2502 is hereby amended to read as follows:

    104.2502  1.  Subject to subsection 2 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 [the] :

    (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 10 days after receipt of the first installment on their price.

    2.  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. 144.  NRS 104.2716 is hereby amended to read as follows:

    104.2716  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.


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upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

    Sec. 145.  NRS 104.4210 is hereby amended to read as follows:

    104.4210  1.  A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:

    (a) In case of an item deposited in an account to the extent to which credit given for the item has been withdrawn or applied;

    (b) In case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or

    (c) If it makes an advance on or against the item.

    2.  If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.

    3.  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. To the extent and 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 and is subject to the provisions of [article] Article 9 except that:

    (a) No security agreement is necessary to make the security interest enforceable [(paragraph (a) of subsection 1 of NRS 104.9203);] subparagraph (1) of paragraph (c) of subsection 2 of section 14 of this act;

    (b) No filing is required to perfect the security interest; and

    (c) The security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.

    Sec. 146.  NRS 104.7503 is hereby amended to read as follows:

    104.7503  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 this article (NRS 104.7403) or with power of disposition under this chapter (NRS 104.2403 and [104.9307)] section 41 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.

    2.  Title to goods based upon an unaccepted delivery order is subject to the rights of anyone to whom a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. Such a title may be defeated under the next section to the same extent as the rights of the issuer or a transferee from the issuer.

    3.  Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of anyone to whom a bill issued by the freight forwarder is duly negotiated; but delivery by the carrier in accordance with part 4 of this article pursuant to its own bill of lading discharges the carrier’s obligation to deliver.


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    Sec. 147.  NRS 104.8103 is hereby amended to read as follows:

    104.8103  1.  A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.

    2.  An investment company security is a security. “Investment company security” means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered or a face-amount certificate issued by a face-amount certificate company that is so registered. The term does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

    3.  An interest in a partnership or limited-liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this article, or it is an investment company security. However, an interest in a partnership or limited-liability company is a financial asset if it is held in a securities account.

    4.  A writing that is a security certificate is governed by this article and not by article 3, even though it also meets the requirements of that article. However, a negotiable instrument governed by article 3 is a financial asset if it is held in a securities account.

    5.  An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset.

    6.  A commodity contract, as defined in [NRS 104.9115,] paragraph (o) of subsection 1 of section 3 of this act is not a security or a financial asset.

    Sec. 148.  NRS 104.8106 is hereby amended to read as follows:

    104.8106  1.  A purchaser has “control” of a certificated security in bearer form if it is delivered to him.

    2.  A purchaser has “control” of a certificated security in registered form if it is delivered to him and:

    (a) The certificate is endorsed to him or in blank by an effective endorsement; or

    (b) The certificate is registered in his name, upon original issue or registration of transfer by the issuer.

    3.  A purchaser has “control” of an uncertificated security if:

    (a) It is delivered to him; or

    (b) The issuer has agreed that it will comply with instructions originated by him without further consent by the registered owner.

    4.  A purchaser has “control” of a security entitlement if:

    (a) He becomes the entitlement holder; [or]

    (b) The securities intermediary has agreed that it will comply with entitlement orders originated by him without further consent by the entitlement holder [.] ; or

    (c) Another person has control of the security entitlement on his behalf or, having previously acquired control of the security entitlement, acknowledges that it has control on his behalf.

    5.  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.


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    6.  A purchaser who has satisfied the requirements of [paragraph (b) of] subsection 3 or [paragraph (b) of subsection] 4 has control even if the registered owner in the case of [paragraph (b) of] subsection 3 or the entitlement holder in the case of [paragraph (b) of] subsection 4 retains the right to make substitutions for the uncertificated security or security entitlement, originate instructions or entitlement orders to the issuer or securities intermediary or otherwise deal with the uncertificated security or security entitlement.

    7.  An issuer or a securities intermediary may not enter into an agreement of the kind described in paragraph (b) of subsection 3 or paragraph (b) of subsection 4 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 if 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. 149.  NRS 104.8110 is hereby amended to read as follows:

    104.8110  1.  The local law of the issuer’s jurisdiction, as specified in subsection 4, governs:

    (a) The validity of a security;

    (b) The rights and duties of the issuer with respect to registration of transfer;

    (c) The effectiveness of registration of transfer by the issuer;

    (d) Whether the issuer owes any duties to an adverse claimant to a security; and

    (e) Whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.

    2.  The local law of the securities intermediary’s jurisdiction, as specified in subsection 5, governs:

    (a) Acquisition of a security entitlement from the securities intermediary;

    (b) The rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

    (c) Whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and

    (d) Whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.

    3.  The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.

    4.  “Issuer’s jurisdiction” means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in paragraphs (b) to (e), inclusive, of subsection 1.


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    5.  The following rules determine a “securities intermediary’s jurisdiction” for purposes of this section:

    (a) If an agreement between the securities intermediary and its entitlement holder [specifies that it is governed by the law of a particular jurisdiction,] expressly provides the securities intermediary’s jurisdiction for purposes of this part, this article or the Uniform Commercial Code, that jurisdiction is the securities intermediary’s jurisdiction.

    (b) If paragraph (a) 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.

    (c) If neither paragraph (a) nor paragraph (b) applies and an agreement between the securities intermediary and its entitlement holder [does not specify the governing law as provided in paragraph (a), 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.

    [(c) If an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (a) or (b),]

    (d) If neither paragraph (a) nor paragraph (b) nor paragraph (c) 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.

    [(d) If an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (a) or (b) and an account statement does not identify an office serving the entitlement holder’s account as provided in paragraph (c),]

    (e) If none of the preceding paragraphs applies, the securities intermediary’s jurisdiction is the jurisdiction in which its chief executive office is located.

    6.  A securities intermediary’s jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement or by the location of facilities for data processing or other record keeping concerning the account.

    Sec. 150.  NRS 104.8301 is hereby amended to read as follows:

    104.8301  1.  Delivery of a certificated security to a purchaser occurs when:

    (a) The purchaser acquires possession of the security certificate;

    (b) Another person, other than a securities intermediary, 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

    (c) 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 registered in the name of the purchaser, payable to the order of the purchaser, or specially endorsed to the purchaser by an


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effective endorsement [.] and has not been endorsed to the securities intermediary or in blank.

    2.  Delivery of an uncertificated security to a purchaser occurs when:

    (a) The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

    (b) Another person, other than a securities intermediary, becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.

    Sec. 151.  NRS 104.8302 is hereby amended to read as follows:

    104.8302  1.  Except as otherwise provided in subsections 2 and 3, [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.

    2.  A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

    3.  A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

    Sec. 152.  NRS 104.8510 is hereby amended to read as follows:

    104.8510  1.  [An] In a case not covered by the rules of priority in Article 9 or the rules stated in subsection 3, 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.

    2.  If an adverse claim could not have been asserted against an entitlement holder under NRS 104.8502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.

    3.  In a case not covered by the [priority rules in article 9,] rules of priority 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 4, purchasers who have control rank [equally, except that a] according to priority in time of:

    (a) 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 paragraph (a) of subsection 4 of NRS 104.8106;

    (b) 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 paragraph (b) of that subsection; or

    (c) If the purchaser obtained control through another person under paragraph (c) of that subsection, the time on which priority would be based under this subsection if the other person were the secured party.


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    4.  A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

    Sec. 153.  NRS 104A.2103 is hereby amended to read as follows:

    104A.2103  1.  In this article unless the context otherwise requires:

    (a) “Buyer in ordinary course of business” means a person who, in good faith and without knowledge that the sale to him is in violation of the ownership, rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving 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.

    (b) “Cancellation” occurs when either party puts an end to the lease contract for default by the other party.

    (c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.

    (d) “Conforming” goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.

    (e) “Consumer lease” means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is a natural person and who takes under the lease primarily for a personal, family or household purpose.

    (f) “Fault” means wrongful act, omission, breach or default.

    (g) “Finance lease” means a lease with respect to which:

         (1) The lessor does not select, manufacture or supply the goods;

         (2) The lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and

         (3) One of the following occurs:

             (I) The lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;

             (II) The lessee’s approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;

             (III) The lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or


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             (IV) If the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, that the lessee is entitled under this article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.

    (h) “Goods” means all things that are movable at the time of identification to the lease contract, or are fixtures (NRS 104A.2309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.

    (i) “Installment lease contract” means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause “each delivery is a separate lease” or its equivalent.

    (j) “Lease” means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.

    (k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this article. Unless the context clearly indicates otherwise, the term includes a sublease agreement.

    (l) “Lease contract” means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.

    (m) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract.

    (n) “Lessee” means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.

    (o) “Lessee in ordinary course of business” means a person who in good faith and without knowledge that the lease to him is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. “Leasing” may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.


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    (p) “Lessor” means a person who transfers the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.

    (q) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, termination or cancellation of the lease contract.

    (r) “Lien” means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.

    (s) “Lot” means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.

    (t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind subject to the lease.

    (u) “Present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

    (v) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift or any other voluntary transaction creating an interest in goods.

    (w) “Sublease” means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.

    (x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under a finance lease.

    (y) “Supply contract” means a contract under which a lessor buys or leases goods to be leased.

    (z) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

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

 

“Accessions.” NRS 104A.2310.

“Construction mortgage.” NRS 104A.2309.

“Encumbrance.” NRS 104A.2309.

“Fixtures.” NRS 104A.2309.

“Fixture filing.” NRS 104A.2309.

“Purchase money lease.” NRS 104A.2309.

 

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

 

“Account.” [NRS 104.9106.] Section 3 of this act.

“Between merchants.” NRS 104.2104.

“Buyer.” NRS 104.2103.

“Chattel paper.” [NRS 104.9105.] Section 3 of this act.

“Consumer goods.” [NRS 104.9109.] Section 3 of this act.

“Document.” [NRS 104.9105.] Section 3 of this act.

“Entrusting.” NRS 104.2403.


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[“General intangibles.” NRS 104.9106.] “General intangible.” Section 3 of this act.

“Good faith.” NRS 104.2103.

“Instrument.” [NRS 104.9105.] Section 3 of this act.

“Merchant.” NRS 104.2104.

“Mortgage.” [NRS 104.9105.] Section 3 of this act.

“Pursuant to commitment.” [NRS 104.9105.] Section 3 of this act.

“Receipt.” NRS 104.2103.

“Sale.” NRS 104.2106.

“Sale on approval.” NRS 104.2326.

“Sale or return.” NRS 104.2326.

“Seller.” NRS 104.2103.

 

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

    Sec. 154.  NRS 104A.2303 is hereby amended to read as follows:

    104A.2303  1.  As used in this section, “creation of a security interest” includes the sale of a lease contract that is subject to article 9, Secured Transactions, by reason of paragraph [(b)] (c) of subsection 1 of [NRS 104.9102.] section 10 of this act.

    2.  Except as otherwise provided in [subsections 3 and 4,] subsection 3 and section 70 of this act, a provision in a lease agreement which:

    (a) Prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of an interest of a party under the lease contract or of the lessor’s residual interest in the goods; or

    (b) Makes such a transfer an event of default,

gives rise to the rights and remedies provided in subsection [5,] 4, but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

    3.  [A provision in a lease agreement which prohibits the creation 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 makes such a transfer an event of default, is not enforceable unless, and then only to the extent that, there is an actual transfer by the lessee of the lessee’s right of possession or use of the goods in violation of the provision or an actual delegation of a material performance of either party to the lease contract in violation of the provision. Neither the granting nor the enforcement of a security interest in the lessor’s interest under the lease contract or the lessor’s residual interest in the goods is a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the lessee within the purview of subsection 5 unless, and then only to the extent that, there is an actual delegation of a material performance of the lessor.

    4.]  A provision in a lease agreement which prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor’s due performance of his entire obligation, or makes such a transfer an event of default, is not enforceable, and such a transfer is not a transfer that materially impairs the prospect of


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obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of subsection [5.] 4.

    [5.] 4.  Except as otherwise provided in [subsections 3 and 4:] subsection 3 and section 70 of this act:

    (a) If a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in subsection 2 of NRS 104A.2501.

    (b) If paragraph (a) is not applicable and if a transfer is made that is prohibited under a lease agreement or materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer and a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

    [6.] 5.  A transfer of “the lease” or of “all my rights under the lease,” or a transfer in similar general terms, is a transfer of rights, and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee. Acceptance by the transferee constitutes a promise by him to perform those duties. The promise is enforceable by either the transferor or the other party to the lease contract.

    [7.] 6.  Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or of any liability for default.

    [8.] 7.  In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing, and conspicuous.

    Sec. 155.  NRS 104A.2307 is hereby amended to read as follows:

    104A.2307  1.  Except as otherwise provided in NRS 104A.2306, a creditor of a lessee takes subject to the lease contract.

    2.  Except as otherwise provided in [subsections 3 and 4 of this section] subsection 3 and in NRS 104A.2306 and 104A.2308, a creditor of a lessor takes subject to the lease contract unless [:

    (a) The] the creditor holds a lien that attached to the goods before the lease contract became enforceable . [;

    (b) The creditor holds a security interest in the goods and the lessee did not give value and receive delivery of the goods without knowledge of the security interest; or

    (c) The creditor holds a security interest in the goods which was perfected (NRS 104.9303) before the lease contract became enforceable.

    3.  A lessee in the ordinary course of business takes the leasehold interest free of a security interest in the goods created by the lessor even though the security interest is perfected (NRS 104.9303) and the lessee knows of its existence.


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security interest is perfected (NRS 104.9303) and the lessee knows of its existence.

    4.  A lessee other than a lessee in the ordinary course of business takes the leasehold interest free of a security interest to the extent that it secures future advances made after the secured party acquires knowledge of the lease or more than 45 days after the lease contract becomes enforceable, whichever first occurs, unless the future advances are made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.]

    3.  Except as otherwise provided in sections 38, 42 and 44 of this act, a lessee takes a leasehold subject to a security interest held by a creditor of the lessor.

    Sec. 156.  NRS 104A.2309 is hereby amended to read as follows:

    104A.2309  1.  In this section:

    (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 that are or are to become fixtures and conforming to the requirements of [subsection 5 of NRS 104.9402;] subsections 1 and 2 of section 74 of this act;

    (c) A lease is a “purchase money lease” unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable;

    (d) A mortgage is a “construction mortgage” to the extent 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; and

    (e) “Encumbrance” includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

    2.  Under this article a lease may be of goods that are fixtures or may continue in goods that become fixtures, but no lease exists under this article of ordinary building materials incorporated into an improvement on land.

    3.  This article does not prevent creation of a lease of fixtures pursuant to real estate law.

    4.  The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if:

    (a) The lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within ten days thereafter, and the lessee has an interest of record in the real estate or is in possession of the real estate; or

    (b) The interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the lessor’s interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.

    5.  The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if:


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    (a) The fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable;

    (b) The conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the lease contract is enforceable;

    (c) The encumbrancer or owner has consented in writing to the lease or has disclaimed an interest in the goods as fixtures; or

    (d) The lessee has a right to remove the goods as against the encumbrancer or owner. If the lessee’s right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.

    6.  Notwithstanding paragraph (a) of subsection 4 but otherwise subject to subsections 4 and 5, the interest of a lessor of fixtures, including his residual interest, is subordinate to the conflicting interest of an encumbrancer of the real estate under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent given to refinance a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a mortgage has this priority to the same extent as the encumbrancer of the real estate under the construction mortgage.

    7.  In cases not within the preceding subsections, priority between the interest of a lessor of fixtures, including his residual interest, and the conflicting interest of an encumbrancer or owner of the real estate who is not the lessee is determined by the priority rules governing conflicting interests in real estate.

    8.  If the interest of a lessor of fixtures, including his residual interest, has priority over all conflicting interests of all owners and encumbrancers of the real estate, the lessor or the lessee may:

    (a) On default, expiration, termination or cancellation of the lease agreement but subject to the lease agreement and this article; or

    (b) If necessary to enforce his other rights and remedies under this article,

remove the goods from the real estate, free and clear of all conflicting interests of all owners and encumbrancers of the real estate, but he must reimburse any encumbrancer or owner of the real estate who is not the lessee 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 of replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.

    9.  Even though the lease agreement does not create a security interest, the interest of a lessor of fixtures, including his residual interest, is perfected by filing a financing statement as a fixture filing for leased goods that are or are to become fixtures in accordance with the relevant provisions of [the article] Article 9 on secured transactions . [(article 9).]


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    Sec. 157.  NRS 105.030 is hereby amended to read as follows:

    105.030  1.  Presentation of a security instrument to the secretary of state or a county recorder for filing and tender of the statutory filing fee or acceptance of the security instrument by the secretary of state or county recorder, if the security instrument states conspicuously on its title page: “This Instrument Grants A Security Interest By A Public Utility” constitutes:

    (a) Perfection of a security interest created by the security instrument in any personal property, including goods which are, or are to become, fixtures, in which a security interest may be perfected by filing pursuant to [NRS 104.9101 to 104.9507,] sections 2 to 134, inclusive, of this act located in this state or in the county and owned by the public utility when the security instrument was executed or to be acquired by the public utility after execution of the security instrument; and

    (b) Notice to all persons of the existence of the security instrument and the interest granted therein, as security, in any real property or fixtures thereon, or to be placed thereon, located in this state or in the county and owned by the public utility when the security instrument was executed or to be acquired by the public utility after the execution of the security instrument if the security instrument is proved or acknowledged and certified as required by law for the recording of conveyances of real property.

    2.  The filed security instrument must:

    (a) Identify the property by type, character or description if it is presently owned personal property, including fixtures;

    (b) Provide a description of the property if it is presently owned real property; and

    (c) State conspicuously on its title page: “This Instrument Contains After-Acquired Property Provisions” if the property is to be acquired after the execution of the security instrument.

    3.  A description of real or personal property in a security instrument is sufficient, whether or not it is specific, if it reasonably identifies what is described.

    4.  The provisions of [NRS 104.9101 to 104.9507,] sections 2 to 134, inclusive, of this act pertaining to priorities and remedies apply to security interests in personal property, including fixtures, perfected under this section.

    Sec. 158.  NRS 107.026 is hereby amended to read as follows:

    107.026  [Notwithstanding any other provision of law,] Except as otherwise provided in section 56 of this act, a deed of trust given to secure a loan made to purchase the real property on which the deed of trust is given has priority over all other liens created against the purchaser before he acquires title to the real property.

    Sec. 159.  NRS 108.4773 is hereby amended to read as follows:

    108.4773  1.  Any person who has a security interest in the personal property perfected pursuant to [NRS 104.901 to 104.9507,] sections 2 to 134, inclusive, of this act may claim the personal property which is subject to the security interest and to the lien for storage charges by paying the amount due, as specified in the preliminary notice of the lien, for the storage of the property, if no declaration in opposition to the sale to satisfy the lien has been executed and returned by the occupant to the owner.


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    2.  Upon payment of the total amount due pursuant to this section, the owner shall deliver the personal property subject to the security interest to the person paying the amount of the owner’s lien. The owner is not liable to any person for any action taken pursuant to this section if the owner complied with the provisions of NRS 108.473 to 108.4783, inclusive.

    Sec. 160.  NRS 108.831 is hereby amended to read as follows:

    108.831  1.  If a notice of federal lien, a refiling of a notice of federal lien, or a notice of revocation of any certificate described in subsection 2 is presented to the filing officer who is:

    (a) The secretary of state, he shall cause the notice to be marked, held and indexed in accordance with the provisions of [subsection 4 of NRS 104.9403] section 91 of this act as if the notice were a financing statement within the meaning of the Uniform Commercial Code.

    (b) Any other officer described in NRS 108.827, he shall endorse thereon his identification and the date and time of receipt and forthwith file it alphabetically or enter it in an alphabetical index showing the name of the person named in the notice and the date of receipt.

    2.  If a certificate of release, nonattachment, discharge or subordination of any federal lien is presented to the secretary of state for filing he 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, except that the notice of lien to which the certificate relates must not be removed from the files; 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 lien referred to in subsection 1 or any of the certificates or notices referred to in subsection 2 is presented for filing with any other filing officer specified in NRS 108.827, he shall enter the refiled notice or the certificate with the date of filing in any alphabetical index of liens.

    4.  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 active notice of lien or certificate or notice affecting any lien filed under NRS 108.825 to 108.837, inclusive, 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 certificate must state that it reveals active liens only. The fee for a certificate is $15 if the statement is in the standard form prescribed by the secretary of state and otherwise is $20. Upon request the filing officer shall furnish a copy of any notice of federal lien or notice or certificate affecting a federal lien for the statutory fee for copies.

    Sec. 161.  NRS 108.833 is hereby amended to read as follows:

    108.833  1.  The county recorder shall charge the standard fee for filing and indexing each notice of lien, certificate or notice affecting the lien. No fee may be charged for recording the release of any federal tax lien which was filed before March 24, 1967.

    2.  The secretary of state shall:

    (a) Charge for filing and indexing each notice of federal lien, certificate or notice affecting the lien, [a fee of $20.] or a search or copy relating to the lien, any one or a combination of the fees provided in section 97 of this act with respect to a financing statement.


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lien, any one or a combination of the fees provided in section 97 of this act with respect to a financing statement. This fee includes the subsequent recording of a certificate of discharge, nonattachment, release or subordination of the lien. No fee may be charged for recording the release of any federal tax lien which was filed before March 24, 1967.

    (b) Accept, file and index all notices of federal tax liens filed on behalf of the Federal Government without requiring payment of the fee at the time of filing. He shall then submit [on] an invoice each month to the [district director of] internal revenue service for all fees accrued during the billing period.

    Sec. 162.  NRS 112.220 is hereby amended to read as follows:

    112.220  1.  A transfer or obligation is not voidable under paragraph (a) of subsection 1 of NRS 112.180 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.

    2.  Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under paragraph (a) of subsection 1 of NRS 112.210, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection 3 of this section, or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against:

    (a) The first transferee of the asset or the person for whose benefit the transfer was made; or

    (b) Any subsequent transferee other than a [good faith] transferee who took in good faith for value or from any subsequent transferee.

    3.  If the judgment under subsection 2 is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.

    4.  Notwithstanding voidability of a transfer or an obligation under this chapter, a [good faith] transferee or obligee who took in good faith is entitled, to the extent of the value given the debtor for the transfer or obligation, to:

    (a) A lien on or a right to retain any interest in the asset transferred;

    (b) Enforcement of any obligation incurred; or

    (c) A reduction in the amount of the liability on the judgment.

    5.  A transfer is not voidable under paragraph (b) of subsection 1 of NRS 112.180 or NRS 112.190 if the transfer results from:

    (a) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or

    (b) Enforcement of a security interest in compliance with [NRS 104.901 to 104.9507, inclusive.] sections 2 to 134, inclusive, of this act.

    6.  A transfer is not voidable under subsection 2 of NRS 112.190:

    (a) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made unless the new value was secured by a valid lien;

    (b) If made in the ordinary course of business or financial affairs of the debtor and the insider; or


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    (c) If made pursuant to a good faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose as well as an antecedent debt of the debtor.

    Sec. 163.  NRS 116.3116 is hereby amended to read as follows:

    116.3116  1.  The association has a lien on a unit for any assessment levied against that unit or fines imposed against the unit’s owner from the time the assessment or fine becomes due. Unless the declaration otherwise provides, fees, charges, late charges, fines and interest charged pursuant to paragraphs (j), (k) and (l) of subsection 1 of NRS 116.3102 are enforceable as assessments under this section. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment thereof becomes due.

    2.  A lien under this section is prior to all other liens and encumbrances on a unit except:

    (a) Liens and encumbrances recorded before the recordation of the declaration and, in a cooperative, liens and encumbrances which the association creates, assumes or takes subject to;

    (b) A first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent, or, in a cooperative, the first security interest encumbering only the unit’s owner’s interest and perfected before the date on which the assessment sought to be enforced became delinquent; and

    (c) Liens for real estate taxes and other governmental assessments or charges against the unit or cooperative.

The lien is also prior to all security interests described in paragraph (b) to the extent of the assessments for common expenses based on the periodic budget adopted by the association pursuant to NRS 116.3115 which would have become due in the absence of acceleration during the 6 months immediately preceding institution of an action to enforce the lien. This subsection does not affect the priority of mechanics’ or materialmen’s liens, or the priority of liens for other assessments made by the association.

    3.  Unless the declaration otherwise provides, if two or more associations have liens for assessments created at any time on the same property, those liens have equal priority.

    4.  Recording of the declaration constitutes record notice and perfection of the lien. No further recordation of any claim of lien for assessment under this section is required.

    5.  A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within 3 years after the full amount of the assessments becomes due.

    6.  This section does not prohibit actions to recover sums for which subsection 1 creates a lien or prohibit an association from taking a deed in lieu of foreclosure.

    7.  A judgment or decree in any action brought under this section must include costs and reasonable attorney’s fees for the prevailing party.

    8.  The association upon written request shall furnish to a unit’s owner a statement setting forth the amount of unpaid assessments against the unit. If the interest of the unit’s owner is real estate, the statement must be in recordable form. The statement must be furnished within 10 business days after receipt of the request and is binding on the association, the executive board and every unit’s owner.


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after receipt of the request and is binding on the association, the executive board and every unit’s owner.

    9.  In a cooperative, upon nonpayment of an assessment on a unit, the unit’s owner may be evicted in the same manner as provided by law in the case of an unlawful holdover by a commercial tenant, and the lien may be foreclosed as provided by this section or by NRS 116.31162 to 116.31168, inclusive.

    10.  In a cooperative where the owner’s interest in a unit is personal property (NRS 116.1105), the association’s lien may be foreclosed in like manner as a security interest under [NRS 104.9101 to 104.9507, inclusive.] sections 2 to 134, inclusive, of this act.

    Sec. 164.  NRS 123.230 is hereby amended to read as follows:

    123.230  A spouse may, by written power of attorney, give to the other the complete power to sell, convey or encumber any property held as community property or either spouse, acting alone, may manage and control community property, whether the community property was acquired before, on or after July 1, 1975, with the same power of disposition as the acting spouse has over his separate property, except that:

    1.  Neither spouse may devise or bequeath more than one-half of the community property.

    2.  Neither spouse may make a gift of community property without the express or implied consent of the other.

    3.  Neither spouse may sell, convey or encumber the community real property unless both join in the execution of the deed or other instrument by which the real property is sold, conveyed or encumbered, and the deed or other instrument must be acknowledged by both.

    4.  Neither spouse may purchase or contract to purchase community real property unless both join in the transaction of purchase or in the execution of the contract to purchase.

    5.  Neither spouse may create a security interest, other than a purchase money security interest as defined in [NRS 104.9107,] section 4 of this act, in, or sell, community household goods, furnishings or appliances unless both join in executing the security agreement or contract of sale, if any.

    6.  Neither spouse may acquire, purchase, sell, convey or encumber the assets, including real property and goodwill, of a business where both spouses participate in its management without the consent of the other. If only one spouse participates in management, he may, in the ordinary course of business, acquire, purchase, sell, convey or encumber the assets, including real property and goodwill, of the business without the consent of the nonparticipating spouse.

    Sec. 165.  NRS 125B.220 is hereby amended to read as follows:

    125B.220  1.  Upon deposit of any asset pursuant to NRS 125B.210 which is not money or is not readily convertible into money, the court may, not fewer than 25 days after serving the obligor-parent with written notice and providing an opportunity for hearing, order the sale of the asset and deposit the proceeds of the sale with the trustee designated by the court to receive the assets. The sale of assets must be conducted in accordance with the provisions set forth in NRS 21.130 to 21.260, inclusive, governing the sale of property under execution.


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    2.  When an asset ordered to be deposited is real property, the order must be certified in accordance with NRS 17.150 and recorded with the county recorder. The deposited real property and the rights, benefits and liabilities attached to that property continue in the possession of the legal owner until it becomes subject to a use or sale of assets pursuant to this section or NRS 125B.210. The legal owner may not transfer, encumber, hypothecate, dispose of or realize profits from the property unless approved by the court.

    3.  When an asset ordered to be deposited is personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper or accounts, the trustee shall file a financing statement in accordance with [NRS 104.9401, 104.9402 and 104.9403.] sections 73, 74 and 88 of this act.

    4.  When an asset ordered to be deposited is a vehicle registered with the department of motor vehicles and public safety, the trustee shall deliver to the department the certificate of ownership of the vehicle in accordance with NRS 482.428.

    Sec. 166.  NRS 125B.280 is hereby amended to read as follows:

    125B.280  1.  The trustee designated by the court to receive assets pursuant to NRS 125B.210, shall return any assets to the obligor-parent when:

    (a) The obligor-parent has given the trustee notice to return assets;

    (b) All payments in arrears have been paid in full; and

    (c) The obligor-parent has made, in a timely manner, all payments of support ordered for the 12 months immediately preceding the date notice was given to the trustee.

    2.  If the deposited assets include real property, upon the satisfaction of the requirements of subsection 1, the trustee shall prepare a release and record it in the office of the county recorder.

    3.  If the deposited assets include personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper or accounts, the trustee shall, upon the satisfaction of the requirements of subsection 1, prepare a [release] termination statement and file it in accordance with [NRS 104.9406.] section 85 of this act.

    4.  If the deposited assets include a vehicle registered with the department of motor vehicles and public safety, the trustee shall, upon the satisfaction of the requirements of subsection 1, deliver the certificate of ownership to the obligor-parent in accordance with NRS 482.431.

    Sec. 167.  NRS 225.105 is hereby amended to read as follows:

    225.105  The secretary of state may prescribe standards for appropriate forms to be used pursuant to [NRS 104.9403 to 104.9407, inclusive,] section 93 of this act which must be accepted by the county recorder of every county of this state at the lower rate prescribed by those sections. The secretary of state may, by regulation, establish the fees that must be paid to obtain copies of these forms.

    Sec. 168.  NRS 482.432 is hereby amended to read as follows:

    482.432  Compliance with the applicable provisions of NRS 482.423 to 482.431, inclusive, is sufficient for the perfection and release of a security interest in a vehicle and for exemption from the requirement of filing of a financing statement under the provisions of [paragraph (b) of subsection 3 of NRS 104.9302.] section 32 of this act. In all other respects the rights and duties of the debtor and secured party are governed by the Uniform Commercial Code—Secured Transactions and chapter 97 of NRS to the extent applicable.


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duties of the debtor and secured party are governed by the Uniform Commercial Code—Secured Transactions and chapter 97 of NRS to the extent applicable.

    Sec. 169.  NRS 482.433 is hereby amended to read as follows:

    482.433  NRS 482.423 to 482.432, inclusive, do not apply to a security interest in:

    1.  Any vehicle which constitutes inventory held for sale; or

    2.  Any vehicle not required to be registered under this chapter.

Security interests in all such vehicles are governed by [NRS 104.9101 to 104.9507, inclusive.] sections 2 to 134, inclusive, of this act.

    Sec. 170.  NRS 597.020 is hereby amended to read as follows:

    597.020  1.  A lease agreement with an option to purchase which complies with the provisions of NRS 597.010 to 597.110, inclusive, is exempt from the provisions of law governing:

    (a) A security interest as defined in NRS 104.1201.

    (b) A door-to-door sale is defined in NRS 597.180.

    (c) The sale of consumer goods as defined in [NRS 104.9109.] section 3 of this act.

    2.  The provisions of NRS 597.010 to 597.110, inclusive, do not apply to:

    (a) A lease agreement with an option to purchase entered into primarily for business, commercial or agricultural purposes.

    (b) A lease agreement with an option to purchase made with any governmental agency.

    (c) The lease of a safe deposit box.

    (d) A lease or bailment of personal property which is incidental to the lease of real property and which does not provide the customer with an option to purchase the leased property.

    (e) The lease of a motor vehicle.

    Sec. 171.  NRS 675.300 is hereby amended to read as follows:

    675.300  1.  A licensee may request that a borrower insure tangible property when offered as security for a loan under this chapter against any substantial risk of loss, damage or destruction for an amount not to exceed the actual value of the property and for a term and upon conditions which are reasonable and appropriate considering the nature of the property and the maturity and other circumstances of the loan.

    2.  A licensee may require that a borrower provide title insurance on real property offered as security for a loan under this chapter. The title insurance must be placed through a title insurance company authorized to do business in this state.

    3.  A licensee may provide, obtain or take as security for a loan:

    (a) Insurance on the life and on the health or disability, or both, of one or more parties obligated on the loan;

    (b) Involuntary unemployment insurance;

    (c) Insurance which protects his interest in the collateral pledged for the loan;

    (d) Single interest nonfiling insurance; or

    (e) Any other credit-related insurance approved by the commissioner,

if the insurance complies with the applicable provisions of chapter 690A of NRS.


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    4.  In accepting any insurance provided by this section as security for a loan, the licensee may include the premiums or identifiable charge as part of the principal or may deduct the premiums or identifiable charge therefor from the proceeds of the loan, which premium or identifiable charge must not exceed those filed with and approved by the commissioner of insurance, and remit those premiums to the insurance company writing the insurance, and any gain or advantage to the licensee, any employee, officer, director, agent, affiliate or associate from the insurance or its sale may not be considered as additional or further charge in connection with any loan made under this chapter. Not more than one policy of life insurance and one policy providing accident and health coverage may be written by a licensee in connection with any loan transaction under this chapter, and a licensee shall not require the borrower to be insured as a condition of any loan. If the unpaid balance of the loan is prepaid in full by cash or other thing of value, refinancing, renewal, a new loan or otherwise, the charge for any credit life insurance and any credit accident and health insurance must be refunded or credited as prescribed in chapter 690A of NRS. The insurance must be written by a company authorized to conduct business in this state, and the licensee shall not require the purchase of the insurance from any agent or broker designated by the licensee.

    5.  The amount charged to a debtor by a licensee for any type of coverage under a policy of insurance provided by this section as security for a loan must not exceed the amount of the premium. In the case of a single interest nonfiling policy of insurance, the amount charged to a debtor by a licensee must not exceed the amount charged by a county recorder for filing and releasing documents pursuant to [NRS 104.9403 and 104.9406.] section 97 of this act.

    6.  As used in this section, “single interest nonfiling insurance” means a contract of insurance for which a lender pays a predetermined fee, which affords coverage to a lender in connection with a specific loan, and which is obtained by the lender in lieu of perfecting a security interest pursuant to chapter 104 of NRS.

    Sec. 172.  NRS 104.901, 104.902, 104.903, 104.904, 104.905, 104.9101, 104.9102, 104.9103, 104.9104, 104.9105, 104.9106, 104.9107, 104.9108, 104.9109, 104.9110, 104.9112, 104.9113, 104.9114, 104.9115, 104.9116, 104.9201, 104.9202, 104.9203, 104.9204, 104.9205, 104.9206, 104.9207, 104.9208, 104.9301, 104.9302, 104.9303, 104.9304, 104.9305, 104.9306, 104.9307, 104.9308, 104.9309, 104.9310, 104.9311, 104.9312, 104.9313, 104.9314, 104.9315, 104.9316, 104.9317, 104.9318, 104.9401, 104.9402, 104.9403, 104.9404, 104.9405, 104.9406, 104.9407, 104.9408, 104.9409, 104.9501, 104.9502, 104.9503, 104.9504, 104.9505, 104.9506 and 104.9507 are hereby repealed.

    Sec. 173.  The legislative counsel shall reserve for reuse the numbers of the sections repealed by section 172 of this act and, except as otherwise provided in this section, in preparing the 1999 reprint of NRS, shall number the sections of chapter 104 of NRS that are added by sections 2 to 135, inclusive, of this act, and the internal references thereto, to correspond to the numbers assigned to those sections of the Uniform Commercial Code by the National Conference of Commissioners on Uniform State Laws. The legislative counsel shall number the sections added by sections 128 to 134, inclusive, of this act consecutively beginning with NRS 104.901.

 

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