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[Status][Bill Documents][Fiscal Note][Bills Directory]
S.B. 168
1
UNIFORM COMMERCIAL CODE - ARTICLE 9
2
- SECURED TRANSACTIONS
3
2000 GENERAL SESSION
4
STATE OF UTAH
5
Sponsor: Lyle W. Hillyard
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AN ACT RELATING TO THE UNIFORM COMMERCIAL CODE; REPEALING THE
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FORMER CHAPTER 9; ADOPTING THE NEW UNIFORM ARTICLE 9 WITH CHANGES;
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INCLUDING GENERAL PROVISIONS; ADDRESSING EFFECTIVENESS OF SECURITY
9
AGREEMENTS; ADDRESSING ATTACHMENT OF SECURITY INTERESTS; ADDRESSING
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RIGHTS OF PARTIES TO SECURITY AGREEMENTS; ADDRESSING PERFECTION AND
11
PRIORITY; ADDRESSING RIGHTS OF THIRD PARTIES; ADDRESSING FILING;
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ADDRESSING DEFAULT; ADDRESSING THE TRANSITION FROM THE OLD TO THE
13
NEW LAW; MAKING TECHNICAL CHANGES; AND PROVIDING AN EFFECTIVE DATE.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
16
15-4-6.5, as enacted by Chapter 257, Laws of Utah 1991
17
25-6-9, as enacted by Chapter 59, Laws of Utah 1988
18
31A-22-419, as last amended by Chapter 204, Laws of Utah 1986
19
38-7-2.5, as enacted by Chapter 167, Laws of Utah 1996
20
38-8-2, as last amended by Chapter 66, Laws of Utah 1984
21
38-12-102, as enacted by Chapter 323, Laws of Utah 1995
22
38-12-103, as enacted by Chapter 323, Laws of Utah 1995
23
41-1a-223, as renumbered and amended by Chapter 1, Laws of Utah 1992
24
41-1a-601, as renumbered and amended by Chapter 1, Laws of Utah 1992
25
41-1a-606, as renumbered and amended by Chapter 1, Laws of Utah 1992
26
57-3-102, as renumbered and amended by Chapter 61 and last amended by Chapter 85,
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Laws of Utah 1998
28
57-16-9, as enacted by Chapter 178, Laws of Utah 1981
29
58-37-13, as last amended by Chapters 198 and 294, Laws of Utah 1996
30
70A-1-105, as last amended by Chapter 241, Laws of Utah 1997
31
70A-1-201, as last amended by Chapter 13, Laws of Utah 1998
32
70A-1-206, as last amended by Chapter 204, Laws of Utah 1996
33
70A-2-103, as last amended by Chapter 10, Laws of Utah 1997
34
70A-2-210, as enacted by Chapter 154, Laws of Utah 1965
35
70A-2-326, as enacted by Chapter 154, Laws of Utah 1965
36
70A-2-502, as enacted by Chapter 154, Laws of Utah 1965
37
70A-2-716, as enacted by Chapter 154, Laws of Utah 1965
38
70A-2a-103, as last amended by Chapter 237, Laws of Utah 1993
39
70A-2a-303, as last amended by Chapter 237, Laws of Utah 1993
40
70A-2a-307, as last amended by Chapter 237, Laws of Utah 1993
41
70A-2a-309, as last amended by Chapter 237, Laws of Utah 1993
42
70A-3-605, as repealed and reenacted by Chapter 237, Laws of Utah 1993
43
70A-4-210, as repealed and reenacted by Chapter 237, Laws of Utah 1993
44
70A-5-114, as repealed and reenacted by Chapter 241, Laws of Utah 1997
45
70A-7-503, as enacted by Chapter 154, Laws of Utah 1965
46
70A-8-102, as repealed and reenacted by Chapter 204, Laws of Utah 1996
47
70A-8-105, as repealed and reenacted by Chapter 204, Laws of Utah 1996
48
70A-8-109, as enacted by Chapter 204, Laws of Utah 1996
49
70A-8-301, as repealed and reenacted by Chapter 204, Laws of Utah 1996
50
70A-8-302, as repealed and reenacted by Chapter 204, Laws of Utah 1996
51
70A-8-510, as enacted by Chapter 204, Laws of Utah 1996
52
ENACTS:
53
57-3-108, Utah Code Annotated 1953
54
70A-5-120, Utah Code Annotated 1953
55
70A-9a-101, Utah Code Annotated 1953
56
70A-9a-102, Utah Code Annotated 1953
57
70A-9a-102.1, Utah Code Annotated 1953
58
70A-9a-103, Utah Code Annotated 1953
59
70A-9a-104, Utah Code Annotated 1953
60
70A-9a-105, Utah Code Annotated 1953
61
70A-9a-106, Utah Code Annotated 1953
62
70A-9a-107, Utah Code Annotated 1953
63
70A-9a-108, Utah Code Annotated 1953
64
70A-9a-109, Utah Code Annotated 1953
65
70A-9a-110, Utah Code Annotated 1953
66
70A-9a-201, Utah Code Annotated 1953
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70A-9a-202, Utah Code Annotated 1953
68
70A-9a-203, Utah Code Annotated 1953
69
70A-9a-204, Utah Code Annotated 1953
70
70A-9a-205, Utah Code Annotated 1953
71
70A-9a-206, Utah Code Annotated 1953
72
70A-9a-207, Utah Code Annotated 1953
73
70A-9a-208, Utah Code Annotated 1953
74
70A-9a-209, Utah Code Annotated 1953
75
70A-9a-210, Utah Code Annotated 1953
76
70A-9a-301, Utah Code Annotated 1953
77
70A-9a-302, Utah Code Annotated 1953
78
70A-9a-303, Utah Code Annotated 1953
79
70A-9a-304, Utah Code Annotated 1953
80
70A-9a-305, Utah Code Annotated 1953
81
70A-9a-306, Utah Code Annotated 1953
82
70A-9a-307, Utah Code Annotated 1953
83
70A-9a-308, Utah Code Annotated 1953
84
70A-9a-309, Utah Code Annotated 1953
85
70A-9a-310, Utah Code Annotated 1953
86
70A-9a-311, Utah Code Annotated 1953
87
70A-9a-312, Utah Code Annotated 1953
88
70A-9a-313, Utah Code Annotated 1953
89
70A-9a-314, Utah Code Annotated 1953
90
70A-9a-315, Utah Code Annotated 1953
91
70A-9a-316, Utah Code Annotated 1953
92
70A-9a-317, Utah Code Annotated 1953
93
70A-9a-318, Utah Code Annotated 1953
94
70A-9a-319, Utah Code Annotated 1953
95
70A-9a-320, Utah Code Annotated 1953
96
70A-9a-321, Utah Code Annotated 1953
97
70A-9a-322, Utah Code Annotated 1953
98
70A-9a-323, Utah Code Annotated 1953
99
70A-9a-324, Utah Code Annotated 1953
100
70A-9a-325, Utah Code Annotated 1953
101
70A-9a-326, Utah Code Annotated 1953
102
70A-9a-327, Utah Code Annotated 1953
103
70A-9a-328, Utah Code Annotated 1953
104
70A-9a-329, Utah Code Annotated 1953
105
70A-9a-330, Utah Code Annotated 1953
106
70A-9a-331, Utah Code Annotated 1953
107
70A-9a-332, Utah Code Annotated 1953
108
70A-9a-333, Utah Code Annotated 1953
109
70A-9a-334, Utah Code Annotated 1953
110
70A-9a-335, Utah Code Annotated 1953
111
70A-9a-336, Utah Code Annotated 1953
112
70A-9a-337, Utah Code Annotated 1953
113
70A-9a-338, Utah Code Annotated 1953
114
70A-9a-339, Utah Code Annotated 1953
115
70A-9a-340, Utah Code Annotated 1953
116
70A-9a-341, Utah Code Annotated 1953
117
70A-9a-342, Utah Code Annotated 1953
118
70A-9a-401, Utah Code Annotated 1953
119
70A-9a-402, Utah Code Annotated 1953
120
70A-9a-403, Utah Code Annotated 1953
121
70A-9a-404, Utah Code Annotated 1953
122
70A-9a-405, Utah Code Annotated 1953
123
70A-9a-406, Utah Code Annotated 1953
124
70A-9a-407, Utah Code Annotated 1953
125
70A-9a-408, Utah Code Annotated 1953
126
70A-9a-409, Utah Code Annotated 1953
127
70A-9a-501, Utah Code Annotated 1953
128
70A-9a-502, Utah Code Annotated 1953
129
70A-9a-503, Utah Code Annotated 1953
130
70A-9a-504, Utah Code Annotated 1953
131
70A-9a-505, Utah Code Annotated 1953
132
70A-9a-506, Utah Code Annotated 1953
133
70A-9a-507, Utah Code Annotated 1953
134
70A-9a-508, Utah Code Annotated 1953
135
70A-9a-509, Utah Code Annotated 1953
136
70A-9a-510, Utah Code Annotated 1953
137
70A-9a-511, Utah Code Annotated 1953
138
70A-9a-512, Utah Code Annotated 1953
139
70A-9a-513, Utah Code Annotated 1953
140
70A-9a-514, Utah Code Annotated 1953
141
70A-9a-515, Utah Code Annotated 1953
142
70A-9a-516, Utah Code Annotated 1953
143
70A-9a-517, Utah Code Annotated 1953
144
70A-9a-518, Utah Code Annotated 1953
145
70A-9a-519, Utah Code Annotated 1953
146
70A-9a-520, Utah Code Annotated 1953
147
70A-9a-521, Utah Code Annotated 1953
148
70A-9a-522, Utah Code Annotated 1953
149
70A-9a-523, Utah Code Annotated 1953
150
70A-9a-524, Utah Code Annotated 1953
151
70A-9a-525, Utah Code Annotated 1953
152
70A-9a-526, Utah Code Annotated 1953
153
70A-9a-527, Utah Code Annotated 1953
154
70A-9a-601, Utah Code Annotated 1953
155
70A-9a-602, Utah Code Annotated 1953
156
70A-9a-603, Utah Code Annotated 1953
157
70A-9a-604, Utah Code Annotated 1953
158
70A-9a-605, Utah Code Annotated 1953
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70A-9a-606, Utah Code Annotated 1953
160
70A-9a-607, Utah Code Annotated 1953
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70A-9a-608, Utah Code Annotated 1953
162
70A-9a-609, Utah Code Annotated 1953
163
70A-9a-610, Utah Code Annotated 1953
164
70A-9a-611, Utah Code Annotated 1953
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70A-9a-612, Utah Code Annotated 1953
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70A-9a-613, Utah Code Annotated 1953
167
70A-9a-614, Utah Code Annotated 1953
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70A-9a-615, Utah Code Annotated 1953
169
70A-9a-616, Utah Code Annotated 1953
170
70A-9a-617, Utah Code Annotated 1953
171
70A-9a-618, Utah Code Annotated 1953
172
70A-9a-619, Utah Code Annotated 1953
173
70A-9a-620, Utah Code Annotated 1953
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70A-9a-621, Utah Code Annotated 1953
175
70A-9a-622, Utah Code Annotated 1953
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70A-9a-623, Utah Code Annotated 1953
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70A-9a-624, Utah Code Annotated 1953
178
70A-9a-625, Utah Code Annotated 1953
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70A-9a-626, Utah Code Annotated 1953
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70A-9a-627, Utah Code Annotated 1953
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70A-9a-628, Utah Code Annotated 1953
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70A-9a-701, Utah Code Annotated 1953
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70A-9a-702, Utah Code Annotated 1953
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70A-9a-703, Utah Code Annotated 1953
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70A-9a-704, Utah Code Annotated 1953
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70A-9a-705, Utah Code Annotated 1953
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70A-9a-706, Utah Code Annotated 1953
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70A-9a-707, Utah Code Annotated 1953
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70A-9a-708, Utah Code Annotated 1953
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70A-9a-709, Utah Code Annotated 1953
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REPEALS AND REENACTS:
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70A-5-118, as enacted by Chapter 241, Laws of Utah 1997
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70A-5-119, as enacted by Chapter 241, Laws of Utah 1997
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REPEALS:
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70A-9-101, as enacted by Chapter 154, Laws of Utah 1965
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70A-9-102, as last amended by Chapter 172, Laws of Utah 1996
197
70A-9-103, as last amended by Chapter 241, Laws of Utah 1997
198
70A-9-104, as last amended by Chapter 241, Laws of Utah 1997
199
70A-9-105, as last amended by Chapter 241, Laws of Utah 1997
200
70A-9-106, as last amended by Chapter 241, Laws of Utah 1997
201
70A-9-107, as enacted by Chapter 154, Laws of Utah 1965
202
70A-9-108, as enacted by Chapter 154, Laws of Utah 1965
203
70A-9-109, as enacted by Chapter 154, Laws of Utah 1965
204
70A-9-110, as enacted by Chapter 154, Laws of Utah 1965
205
70A-9-112, as enacted by Chapter 154, Laws of Utah 1965
206
70A-9-113, as last amended by Chapter 5, Laws of Utah 1991
207
70A-9-114, as enacted by Chapter 272, Laws of Utah 1977
208
70A-9-115, as enacted by Chapter 204, Laws of Utah 1996
209
70A-9-116, as enacted by Chapter 204, Laws of Utah 1996
210
70A-9-201, as enacted by Chapter 154, Laws of Utah 1965
211
70A-9-202, as enacted by Chapter 154, Laws of Utah 1965
212
70A-9-203, as last amended by Chapter 204, Laws of Utah 1996
213
70A-9-204, as enacted by Chapter 272, Laws of Utah 1977
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70A-9-205, as last amended by Chapter 272, Laws of Utah 1977
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70A-9-206, as enacted by Chapter 154, Laws of Utah 1965
216
70A-9-207, as enacted by Chapter 154, Laws of Utah 1965
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70A-9-208, as enacted by Chapter 154, Laws of Utah 1965
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70A-9-301, as last amended by Chapter 204, Laws of Utah 1996
219
70A-9-302, as last amended by Chapter 204, Laws of Utah 1996
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70A-9-303, as last amended by Chapter 204, Laws of Utah 1996
221
70A-9-304, as last amended by Chapter 241, Laws of Utah 1997
222
70A-9-305, as last amended by Chapter 241, Laws of Utah 1997
223
70A-9-306, as last amended by Chapter 204, Laws of Utah 1996
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70A-9-307, as last amended by Chapter 114, Laws of Utah 1986
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70A-9-308, as enacted by Chapter 272, Laws of Utah 1977
226
70A-9-309, as last amended by Chapter 204, Laws of Utah 1996
227
70A-9-310, as enacted by Chapter 154, Laws of Utah 1965
228
70A-9-311, as enacted by Chapter 154, Laws of Utah 1965
229
70A-9-312, as last amended by Chapter 204, Laws of Utah 1996
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70A-9-313, as last amended by Chapter 5, Laws of Utah 1991
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70A-9-314, as enacted by Chapter 154, Laws of Utah 1965
232
70A-9-315, as enacted by Chapter 154, Laws of Utah 1965
233
70A-9-316, as enacted by Chapter 154, Laws of Utah 1965
234
70A-9-317, as enacted by Chapter 154, Laws of Utah 1965
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70A-9-318, as last amended by Chapter 197, Laws of Utah 1990
236
70A-9-400, as last amended by Chapter 92, Laws of Utah 1987
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70A-9-401, as last amended by Chapter 66, Laws of Utah 1984
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70A-9-402, as last amended by Chapter 232, Laws of Utah 1999
239
70A-9-403, as last amended by Chapter 172, Laws of Utah 1996
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70A-9-404, as last amended by Chapter 147, Laws of Utah 1994
241
70A-9-405, as last amended by Chapter 313, Laws of Utah 1994
242
70A-9-406, as last amended by Chapter 313, Laws of Utah 1994
243
70A-9-407, as last amended by Chapter 313, Laws of Utah 1994
244
70A-9-408, as last amended by Chapter 272, Laws of Utah 1977
245
70A-9-409, as last amended by Chapter 178, Laws of Utah 1985
246
70A-9-501, as last amended by Chapter 272, Laws of Utah 1977
247
70A-9-502, as last amended by Chapter 272, Laws of Utah 1977
248
70A-9-503, as enacted by Chapter 154, Laws of Utah 1965
249
70A-9-504, as last amended by Chapter 272, Laws of Utah 1977
250
70A-9-505, as last amended by Chapter 272, Laws of Utah 1977
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70A-9-506, as enacted by Chapter 154, Laws of Utah 1965
252
70A-9-507, as enacted by Chapter 154, Laws of Utah 1965
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
15-4-6.5
is amended to read:
255
15-4-6.5. Divorce or separate maintenance of co-obligors.
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(1) On the entering of a decree of divorce or separate maintenance of joint debtors in
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contract, the claim of a creditor remains unchanged unless otherwise provided by the contract or
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until a new contract is entered into between the creditor and the debtors individually.
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(2) In addition to [his] the creditor's duties as a secured party under [Section
70A-9-112
]
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Title 70A, Chapter 9a, Uniform Commercial Code -- Secured Transactions, and [his] the creditor's
261
duties as a trustee or beneficiary of a trust deed under Title 57, Chapter 1, Conveyances, a creditor,
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who has been notified by service of a copy of a court order under [Sections] Section
30-3-5
or
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30-4-3
that the debtors are divorced or living separately under an order for separate maintenance,
264
and who has been expressly advised of the separate, current addresses of the debtors either by the
265
court order or by other written notice, shall provide to the debtors individually all statements,
266
notices, and other similar correspondence required by law or by the contract.
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(3) (a) Except as provided in Subsection (3)(b), a creditor may continue to make negative
268
credit reports of joint debtors under Section
70C-7-107
and may report the repayment practices or
269
credit history of joint debtors under Title 7, Chapter 14, Credit Information Exchange.
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(b) With respect to a debtor who is not ordered by the court under Sections
30-3-5
or
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30-4-3
to make payments on a joint obligation, no negative credit report under Section
70C-7-107
,
272
and no report of the debtor's repayment practices or credit history under Title 7, Chapter 14, Credit
273
Information Exchange, may be made regarding the joint obligation after the creditor is served
274
notice of the court's order as required under Subsection (2), unless the creditor has made a demand
275
on the debtor for payment because of the failure to make payments by the other debtor, who is
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ordered by the court to make the payments.
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Section 2.
Section
25-6-9
is amended to read:
278
25-6-9. Good faith transfer.
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(1) A transfer or obligation is not voidable under Subsection
25-6-5
(1)(a) against a person
280
who took in good faith and for a reasonably equivalent value or against any subsequent transferee
281
or obligee.
282
(2) Except as otherwise provided in this section, to the extent a transfer is voidable in an
283
action by a creditor under Subsection
25-6-8
(1)(a), the creditor may recover judgment for the
284
value of the asset transferred, as adjusted under Subsection (3), or the amount necessary to satisfy
285
the creditor's claim, whichever is less. The judgment may be entered against:
286
(a) the first transferee of the asset or the person for whose benefit the transfer was made;
287
or
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(b) any subsequent transferee other than a good faith transferee who took for value or from
289
any subsequent transferee.
290
(3) If the judgment under Subsection (2) is based upon the value of the asset transferred,
291
the judgment must be for an amount equal to the value of the asset at the time of the transfer,
292
subject to an adjustment as equities may require.
293
(4) Notwithstanding voidability of a transfer or an obligation under this chapter, a
294
good-faith transferee or obligee is entitled, to the extent of the value given the debtor for the
295
transfer or obligation, to:
296
(a) a lien on or a right to retain any interest in the asset transferred;
297
(b) enforcement of any obligation incurred; or
298
(c) a reduction in the amount of the liability on the judgment.
299
(5) A transfer is not voidable under Subsection
25-6-5
(1)(b) or Section
25-6-6
if the
300
transfer results from:
301
(a) termination of a lease upon default by the debtor when the termination is pursuant to
302
the lease and applicable law; or
303
(b) enforcement of a security interest in compliance with Title 70A, Chapter 9a, [the]
304
Uniform Commercial Code -- Secured Transactions.
305
(6) A transfer is not voidable under Subsection
25-6-6
(2):
306
(a) to the extent the insider gave new value to or for the benefit of the debtor after the
307
transfer was made unless the new value was secured by a valid lien;
308
(b) if made in the ordinary course of business or financial affairs of the debtor and the
309
insider; or
310
(c) if made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured
311
present value given for that purpose as well as an antecedent debt of the debtor.
312
Section 3.
Section
31A-22-419
is amended to read:
313
31A-22-419. Insurer's purchase of and loans on policies.
314
Any life insurer may purchase for its own benefit any policy of insurance or other
315
obligation of the company and any claim of its policyholders. The insurer may also lend to the
316
holders of policies of the company a sum which does not exceed the sum of the cash value of the
317
policies and the surplus or dividend additions to the policies. The policies and all additions to
318
them shall be security for payment of the loan. An insurer's security interest in a policy under this
319
section need not be filed under Title 70A, Chapter 9a, Uniform Commercial Code -- Secured
320
Transactions, to be perfected.
321
Section 4.
Section
38-7-2.5
is amended to read:
322
38-7-2.5. Failure to notify -- Effect -- Penalty.
323
(1) (a) A person who fails to meet the notice requirements of Subsections
38-7-2
(1) and
324
(2) is precluded from receiving an award of costs and attorneys' fees from the person against whom
325
a notice of lien has been filed in an action to enforce the lien if costs and attorneys' fees are
326
authorized by contract or statute.
327
(b) Subsection (1)(a) does not create a right to costs and attorneys' fees.
328
(2) In addition to the penalties provided in Subsection (1)(a), a lien claimant who, within
329
20 days from the date of receiving notice of noncompliance with the notice requirements of
330
Subsection
38-7-2
(1) or (2), willfully refuses to release the notice of lien or record the lien in
331
compliance with Section
38-7-2
is liable to the person against whom the notice of lien was filed
332
for $1,000 or for treble damages, whichever is greater.
333
(3) Failure to meet the notice requirements of Subsections
38-7-2
(1) and (2) does not:
334
(a) invalidate any lien arising at common law or in equity or by any statute of this state;
335
or
336
(b) affect the rules of priority provided in Title 70A, Chapter 9a, [Part 3] Uniform
337
Commercial Code -- Secured Transactions.
338
Section 5.
Section
38-8-2
is amended to read:
339
38-8-2. Lien against stored property -- Attachment and duration -- Search for
340
financing statement prerequisite to enforcement of lien.
341
(1) Where a rental agreement, as defined in Subsection
38-8-1
(6), is entered into between
342
the owner and the occupant, the owner of the self-service storage facility and [his] the owner's
343
heirs, executors, administrators, successors, and assigns have a lien upon all personal property
344
located at the self-service storage facility for rent, labor, or other charges, present or future, in
345
relation to the personal property and for expenses necessary for its preservation or expenses
346
reasonably incurred in its sale or other disposition under this chapter.
347
(2) The lien described in Subsection (1) attaches as of the date the personal property is
348
brought to the self-service storage facility and continues so long as the owner retains possession
349
and until any default is corrected, or a sale pursuant to a default is conducted, or the property is
350
otherwise disposed of to satisfy the lien.
351
(3) (a) Before taking enforcement action under Section
38-8-3
, the owner shall determine
352
if a financing statement filed in accordance with [Section
70A-9-401
, et seq.] Title 70A, Chapter
353
9a, Part 5, Filing, has been filed with the Division of Corporations and Commercial Code
354
concerning the property to be sold or otherwise disposed of.
355
(b) A security interest evidenced by a financing statement filed in accordance with Title
356
70A, Chapter 9a, Part 5, Filing, has priority over the lien provided by this section.
357
Section 6.
Section
38-12-102
is amended to read:
358
38-12-102. Notice requirements for lien filings -- Exceptions.
359
(1) No later than 30 days after the day on which a lien claimant or the lien claimant's
360
authorized agent files for recordation a notice of lien meeting the requirements of Subsection (2)
361
with a county recorder, county clerk, or clerk of the court, a lien claimant or the lien claimant's
362
agent shall send by certified mail a written copy of the notice of lien to the last-known address of
363
the person against whom the notice of lien is filed.
364
(2) The notice of lien shall contain the following information:
365
(a) the name and address of the person against whom the lien is filed;
366
(b) (i) a statement that certain property owned by the person against whom the lien is filed
367
is subject to a lien;
368
(ii) the amount of the judgment, settlement, or compromise if the lien is based on a charge
369
against or interest in a judgment, settlement, or compromise; or
370
(iii) the amount of state taxes owed;
371
(c) the article number contained on the certified mail receipt;
372
(d) the date the notice of lien was filed; and
373
(e) the name and address of the lien claimant.
374
(3) The notice requirements of Subsections (1) and (2) do not apply to a:
375
(a) mechanics' lien as provided in Title 38, Chapter 1, Mechanics' Liens;
376
(b) lessors' lien as provided in Title 38, Chapter 3, Lessors' Liens;
377
(c) federal tax lien as provided in Title 38, Chapter 6, Federal Tax Liens;
378
(d) hospital lien as provided in Title 38, Chapter 7, Hospital Lien Law;
379
(e) self-service storage facilities lien as provided in Title 38, Chapter 8, Self-Service
380
Storage Facilities;
381
(f) oil, gas, or mining lien as provided in Title 38, Chapter 10, Oil, Gas, and Mining Liens;
382
(g) claim against the Residence Lien Recovery Fund as provided in Title 38, Chapter 11,
383
Residence Lien Restriction and Lien Recovery Fund Act;
384
(h) trust deed;
385
(i) mortgage;
386
(j) interests subject to a security agreement as defined in [Subsection
70A-9-105
(l)]
387
Section
70A-9a-102
; or
388
(k) other liens subject to the same or stricter notice requirements than those imposed by
389
Subsections (1) and (2).
390
Section 7.
Section
38-12-103
is amended to read:
391
38-12-103. Failure to notify -- Effect -- Penalty.
392
(1) (a) A person who fails to meet the notice requirements of Subsections
38-12-102
(1)
393
and (2) is precluded from receiving an award of costs and attorneys' fees from the person against
394
whom a notice of lien has been filed in an action to enforce the lien if costs and attorneys' fees are
395
authorized by contract or statute.
396
(b) Subsection (1)(a) does not create a right to costs and attorneys' fees.
397
(2) In addition to the penalties provided in Subsection (1)(a), a lien claimant who, within
398
20 days from the date of receiving notice of noncompliance with the notice requirements of
399
Subsection
38-12-102
(1) or (2), willfully refuses to release the notice of lien or record the lien in
400
compliance with Section
38-12-102
is liable to the person against whom the notice of lien was
401
filed for $1,000 or for treble damages, whichever is greater.
402
(3) Failure to meet the notice requirements of Subsections
38-12-102
(1) and (2) does not:
403
(a) invalidate any lien arising at common law or in equity or by any statute of this state;
404
or
405
(b) affect the rules of priority provided in Title 70A, Chapter 9a, [Part 3] Uniform
406
Commercial Code -- Secured Transactions.
407
Section 8.
Section
41-1a-223
is amended to read:
408
41-1a-223. Registration without Utah title.
409
(1) (a) If the owner of a vehicle operating interstate and registered in another state desires
410
to retain registration of the vehicle in the other state, the applicant need not surrender but shall
411
submit for inspection evidences of out-of-state registration.
412
(b) The division upon a proper showing shall register the vehicle in this state.
413
(2) (a) If a person is relocating from another jurisdiction and establishing residence in this
414
state, whether temporary or permanent, and that person has a vehicle registered and titled in
415
another jurisdiction and is not able to surrender title to the vehicle being registered in Utah because
416
title is physically held by a lienholder, the division may register the vehicle without issuing a Utah
417
title.
418
(b) Notwithstanding [the provisions of] Section [
70A-9-103
]
70A-9a-316
, the registration
419
of a vehicle under this section does not alter or affect the rights or security interest of any
420
lienholder in another jurisdiction.
421
Section 9.
Section
41-1a-601
is amended to read:
422
41-1a-601. Lien validity -- Security interest.
423
(1) Except as provided under Subsection (2), a lien upon a vehicle, vessel, or outboard
424
motor, except a lien dependent upon possession, is not valid against the creditors of an owner
425
acquiring a lien by levy or attachment, or subsequent purchasers, or encumbrancers without notice
426
until Sections
41-1a-602
through
41-1a-606
have been complied with.
427
(2) Security interests in inventory consisting in part of vehicles subject to registration
428
under this chapter, that are held for sale by a person in the business of selling goods of that kind,
429
shall be perfected under Section [
70A-9-302
]
70A-9a-310
, except that buyers in the ordinary
430
course of business, as defined in Section
70A-1-201
, take free of the security interests as provided
431
in Section [
70A-9-307
]
70A-9a-320
.
432
Section 10.
Section
41-1a-606
is amended to read:
433
41-1a-606. Method of giving notice -- Exceptions.
434
The method provided in Sections
41-1a-602
through
41-1a-605
, for giving constructive
435
notice of a lien or encumbrance upon a registered vehicle is exclusive except for liens dependent
436
upon possession and any lien or encumbrance filed as provided under this chapter, which are
437
exempt from the provisions of Section [
70A-9-302
]
70A-9a-311
, and other provisions of law that
438
otherwise require or relate to the recording or filing of instruments creating or evidencing title
439
retention or other liens or encumbrances upon vehicles of a type subject to registration under this
440
chapter.
441
Section 11.
Section
57-3-102
is amended to read:
442
57-3-102. Record imparts notice -- Change in interest rate -- Validity of document
443
-- Notice of unnamed interests -- Conveyance by grantee.
444
(1) Each document executed, acknowledged, and certified, in the manner prescribed by
445
this title, each original document or certified copy of a document complying with Section
57-4a-3
,
446
whether or not acknowledged, each copy of a notice of location complying with Section
40-1-4
,
447
and each financing statement complying with Section [
70A-9-402
]
70A-9a-502
, whether or not
448
acknowledged shall, from the time of recording with the appropriate county recorder, impart notice
449
to all persons of their contents.
450
(2) If a recorded document was given as security, a change in the interest rate in
451
accordance with the terms of an agreement pertaining to the underlying secured obligation does
452
not affect the notice or alter the priority of the document provided under Subsection (1).
453
(3) This section does not affect the validity of a document with respect to the parties to the
454
document and all other persons who have notice of the document.
455
(4) The fact that a recorded document recites only a nominal consideration, names the
456
grantee as trustee, or otherwise purports to be in trust without naming beneficiaries or stating the
457
terms of the trust does not charge any third person with notice of any interest of the grantor or of
458
the interest of any other person not named in the document.
459
(5) The grantee in a recorded document may convey the interest granted to him free and
460
clear of all claims not disclosed in the document in which he appears as grantee or in any other
461
document recorded in accordance with this title that sets forth the names of the beneficiaries,
462
specifies the interest claimed, and describes the real property subject to the interest.
463
Section 12.
Section
57-3-108
is enacted to read:
464
57-3-108. Financing statements not subject to title.
465
This title does not apply to a financing statement filed or recorded in a filing office
466
described in Subsection
70A-9a-501
(1)(a) that:
467
(1) covers as-extracted collateral or timber to be cut; or
468
(2) (a) is filed as a fixture filing; and
469
(b) covers goods that are or are to become fixtures.
470
Section 13.
Section
57-16-9
is amended to read:
471
57-16-9. Lienholder's liability for rent and fees.
472
Notwithstanding [the provisions of] Section
38-3-2
and Section [
70A-9-317
]
70A-9a-402
,
473
the lienholder of record of a mobile home is primarily liable to the mobile home park owner or
474
operator for rent and service charges if a mobile home is not removed within [10] ten days after
475
receipt of written notice that a mobile home has been abandoned or that a writ of restitution has
476
been issued. The lienholder, however, is only liable for rent that accrues after receipt of such
477
notice.
478
Section 14.
Section
58-37-13
is amended to read:
479
58-37-13. Property subject to forfeiture -- Seizure -- Procedure.
480
(1) As used in this section:
481
(a) "Complaint" means a verified civil in rem complaint seeking forfeiture or any criminal
482
information or indictment which contains or is amended to include a demand for forfeiture of a
483
defendant's in personam interest in any property which is subject to forfeiture.
484
(b) "Drug distributing paraphernalia" means any property used or designed to be used in
485
the illegal transportation, storage, shipping, or circulation of a controlled substance. Property is
486
considered "designed to be used" for one or more of the above-listed purposes if the property has
487
been altered or modified to include a feature or device which would actually promote or conceal
488
a violation of this chapter.
489
(c) "Drug manufacturing equipment or supplies" includes any illegally possessed
490
controlled substance precursor, or any chemical, laboratory equipment, or laboratory supplies
491
possessed with intent to engage in clandestine laboratory operation as defined in Section
58-37d-3
.
492
(d) "Interest holder" means a secured party as defined in [Section
70A-9-105
(1)(m)]
493
Section
70A-9a-102
, a mortgagee, lien creditor, or the beneficiary of a security interest or
494
encumbrance pertaining to an interest in property, whose interest would be perfected against a
495
good faith purchaser for value. A person who holds property for the benefit of or as an agent or
496
nominee for another, or who is not in substantial compliance with any statute requiring an interest
497
in property to be recorded or reflected in public records in order to perfect the interest against a
498
good faith purchaser for value, is not an interest holder.
499
(e) "Proceeds" means property acquired directly or indirectly from, produced through,
500
realized through, or caused by an act or omission and includes any property of any kind without
501
reduction for expenses incurred in the acquisition, maintenance, or production of that property, or
502
any other purpose.
503
(f) "Resolution of criminal charges" occurs at the time a claimant who is also charged with
504
violations under Title 58, Chapters 37, 37a, 37b, 37c, or 37d enters a plea, upon return of a jury
505
verdict or court ruling in a criminal trial, or upon dismissal of the criminal charge.
506
(g) "Violation of this chapter" means any conduct prohibited by Title 58, Chapters 37, 37a,
507
37b, 37c, or 37d or any conduct occurring outside the state which would be a violation of the laws
508
of the place where the conduct occurred and which would be a violation of Title 58, Chapters 37,
509
37a, 37b, 37c, or 37d if the conduct had occurred in this state.
510
(2) The following are subject to forfeiture and no property right exists in them:
511
(a) all controlled substances which have been manufactured, distributed, dispensed, or
512
acquired in violation of this chapter;
513
(b) all raw materials, products, and equipment of any kind used, or intended for use, in
514
manufacturing, compounding, processing, delivering, importing, or exporting any controlled
515
substance in violation of this chapter;
516
(c) all property used or intended for use as a container for property described in
517
Subsections (2)(a) and (2)(b);
518
(d) all hypodermic needles, syringes, and other paraphernalia, not including capsules used
519
with health food supplements and herbs, used or intended for use to administer controlled
520
substances in violation of this chapter;
521
(e) all conveyances including aircraft, vehicles, or vessels used or intended for use, to
522
transport, or in any manner facilitate the transportation, sale, receipt, simple possession, or
523
concealment of property described in Subsections (2)(a) and (2)(b), except that:
524
(i) a conveyance used by any person as a common carrier in the transaction of business as
525
a common carrier may not be forfeited under this section unless the owner or other person in
526
charge of the conveyance was a consenting party or knew or had reason to know of the violation
527
of this chapter;
528
(ii) a conveyance may not be forfeited under this section by reason of any act or omission
529
committed or omitted without the owner's knowledge or consent; and
530
(iii) any forfeiture of a conveyance is subject to the claim of an interest holder who did not
531
know or have reason to know after the exercise of reasonable diligence that a violation would or
532
did take place in the use of the conveyance;
533
(f) all books, records, and research, including formulas, microfilm, tapes, and data used
534
or intended for use in violation of this chapter;
535
(g) everything of value furnished or intended to be furnished in exchange for a controlled
536
substance in violation of this chapter, and all moneys, negotiable instruments, and securities used
537
or intended to be used to facilitate any violation of this chapter. An interest in property may not
538
be forfeited under this subsection unless it is proven by a preponderance of the evidence that the
539
interest holder knew, had reason to know of, or consented to the conduct which made the property
540
subject to forfeiture. The burden of presenting this evidence shall be upon the state;
541
(h) all imitation controlled substances as defined in Section
58-37b-2
, Imitation Controlled
542
Substances Act;
543
(i) all warehousing, housing, and storage facilities, or interest in real property of any kind
544
used, or intended for use, in producing, cultivating, warehousing, storing, protecting, or
545
manufacturing any controlled substances in violation of this chapter, except that:
546
(i) any forfeiture of a housing, warehousing, or storage facility or interest in real property
547
is subject to the claim of an interest holder who did not know or have reason to know after the
548
exercise of reasonable diligence that a violation would take place on the property;
549
(ii) an interest in property may not be forfeited under this subsection if the interest holder
550
did not know or have reason to know of the conduct which made the property subject to forfeiture,
551
or did not willingly consent to the conduct; and
552
(iii) unless the premises are used in producing, cultivating, or manufacturing controlled
553
substances, a housing, warehousing, or storage facility or interest in real property may not be
554
forfeited under this subsection unless cumulative sales of controlled substances on the property
555
within a two-month period total or exceed $1,000, or the street value of any controlled substances
556
found on the premises at any given time totals or exceeds $1,000. A narcotics officer experienced
557
in controlled substances law enforcement may testify to establish the street value of the controlled
558
substances for purposes of this subsection;
559
(j) any firearm, weapon, or ammunition carried or used during or in relation to a violation
560
of this chapter or any firearm, weapon, or ammunition kept or located within the proximity of
561
controlled substances or other property subject to forfeiture under this section; and
562
(k) all proceeds traceable to any violation of this chapter. There is a rebuttable
563
presumption that all money, coins, and currency found in proximity to forfeitable controlled
564
substances, drug manufacturing equipment or supplies, drug distributing paraphernalia, or
565
forfeitable records of importation, manufacture, or distribution of controlled substances are
566
proceeds traceable to a violation of this chapter. The burden of proof is upon the claimant of the
567
property to rebut this presumption.
568
(3) (a) Property subject to forfeiture under this chapter may be seized by any peace officer
569
of this state upon process issued by any court having jurisdiction over the property. However,
570
seizure without process may be made when:
571
(i) the seizure is incident to an arrest or search under a search warrant or an inspection
572
under an administrative inspection warrant;
573
(ii) the property subject to seizure has been the subject of a prior judgment in favor of the
574
state in a criminal injunction or forfeiture proceeding under this chapter;
575
(iii) the peace officer has probable cause to believe that the property is directly or indirectly
576
dangerous to health or safety; or
577
(iv) the peace officer has probable cause to believe that the property has been used or
578
intended to be used in violation of this chapter and has probable cause to believe the property will
579
be damaged, intentionally diminished in value, destroyed, concealed, or removed from the state.
580
(b) Upon the filing of a complaint, the court shall immediately issue to the seizing agency
581
a warrant for seizure of any property subject to forfeiture which had been seized without a warrant
582
in a manner described in this Subsection (3).
583
(4) In the event of seizure under Subsection (3), forfeiture proceedings under Subsection
584
(9) shall be instituted within 90 days of the seizure. The time period may by extended by the court
585
having jurisdiction over the property upon notice to all claimants and interest holders and for good
586
cause shown.
587
(5) Property taken or detained under this section is not repleviable but is in custody of the
588
law enforcement agency making the seizure, subject only to the orders and decrees of the court or
589
the official having jurisdiction. When property is seized under this chapter, the appropriate person
590
or agency may:
591
(a) place the property under seal;
592
(b) remove the property to a place designated by it or the warrant under which it was
593
seized; or
594
(c) take custody of the property and remove it to an appropriate location for disposition
595
in accordance with law.
596
(6) All substances listed in Schedule I that are possessed, transferred, distributed, or
597
offered for distribution in violation of this chapter are contraband and no property right shall exist
598
in them. All substances listed in Schedule I which are seized or come into the possession of the
599
state may be retained for any evidentiary or investigative purpose, including sampling or other
600
preservation prior to disposal or destruction by the state.
601
(7) All marijuana or any species of plants from which controlled substances in Schedules
602
I and II are derived which have been planted or cultivated in violation of this chapter, or of which
603
the owners or cultivators are unknown, or are wild growths, may be seized and retained for any
604
evidentiary or investigative purpose, including sampling or other preservation prior to disposal or
605
destruction by the state. Failure, upon demand by the department or its authorized agent, of any
606
person in occupancy or in control of land or premises upon which species of plants are growing
607
or being stored, to produce an appropriate license or proof that he is the holder of a license, is
608
authority for the seizure and forfeiture of the plants.
609
(8) When any property is forfeited under this chapter by a finding of the court that no
610
person is entitled to recover the property, it shall be deposited in the custody of the Division of
611
Finance. Disposition of all property is as follows:
612
(a) The state may include in its complaint seeking forfeiture, a request that the seizing
613
agency be awarded the property. Upon a finding that the seizing agency is able to use the forfeited
614
property in the enforcement of controlled substances laws, the court having jurisdiction over the
615
case shall award the property to the seizing agency. Each agency shall use the forfeited property
616
for controlled substance law enforcement purposes only. Forfeited property or proceeds from the
617
sale of forfeited property may not be used to pay any cash incentive, award, or bonus to any peace
618
officer or individual acting as an agent for the agency, nor may it be used to supplant any ordinary
619
operating expense of the agency. The seizing agency shall pay to the prosecuting agency the legal
620
costs incurred in filing and pursuing the forfeiture action. Property forfeited under this section may
621
not be applied by the court to costs or fines assessed against any defendant in the case.
622
(b) The seizing agency, or if it makes no application, any state agency, bureau, county, or
623
municipality, which demonstrates a need for specific property or classes of property subject to
624
forfeiture shall be given the property for use in enforcement of controlled substances laws upon
625
the payment of costs to the county attorney or, if within a prosecution district, the district attorney
626
for legal costs for filing and pursuing the forfeiture and upon application for the property to the
627
director of the Division of Finance. The application shall clearly set forth the need for the property
628
and the use to which the property will be put.
629
(c) The director of the Division of Finance shall review all applications for property
630
submitted under Subsection (8)(b) and, if the seizing agency makes no application, make a
631
determination based on necessity and advisability as to final disposition and shall notify the
632
designated applicant or seizing agency, where no application is made, who may obtain the property
633
upon payment of all costs to the appropriate department. The Division of Finance shall in turn
634
reimburse the prosecuting agency or agencies for costs of filing and pursuing the forfeiture action,
635
not to exceed the amount of the net proceeds received for the sale of the property. Any proceeds
636
remaining after payment shall be returned to the seizing agency or agencies.
637
(d) If no disposition is made upon an application under Subsection (8)(a) or (b), the
638
director of the Division of Finance shall dispose of the property by public bidding or as considered
639
appropriate, by destruction. Proof of destruction shall be upon oath of two officers or employees
640
of the department having charge of the property, and verified by the director of the department or
641
his designated agent.
642
(9) Forfeiture proceedings shall be commenced as follows:
643
(a) For actions brought under Subsections (2)(a) through (2)(j), a complaint shall be
644
prepared by the county attorney, or if within a prosecution district, the district attorney, or the
645
attorney general, and filed in a court of record where the property was seized or is to be seized. In
646
cases in which the claimant of the property is also charged as a criminal defendant, the complaint
647
shall be filed in the county where the criminal charges arose, regardless of the location of the
648
property. The complaint shall include:
649
(i) a description of the property which is subject to forfeiture;
650
(ii) the date and place of seizure, if known; and
651
(iii) the allegations of conduct which gives rise to forfeiture.
652
(b) In cases where a claimant is also charged as a criminal defendant, the forfeiture shall
653
proceed as part of the criminal prosecution as an in personam action against the defendant's
654
interest in the property subject to forfeiture. A defendant need not file a written answer to the
655
complaint, but may acknowledge or deny interest in the property at the time of first appearance on
656
the criminal charges. If a criminal information or indictment is amended to include a demand for
657
forfeiture, the defendant may respond to the demand at the time of the amendment.
658
(i) Unless motion for disposition is made by the defendant, the determination of forfeiture
659
shall be stayed until resolution of the criminal charges. Hearing on the forfeiture shall be before
660
the court without a jury. The court may consider any evidence presented in the criminal case, and
661
receive any other evidence offered by the state or the defendant. The court shall determine by a
662
preponderance of the evidence the issues in the case and order forfeiture or release of the property
663
as it determines.
664
(ii) A defendant may move the court to transfer the forfeiture action, to stay all action,
665
including discovery, in the forfeiture, or for hearing on the forfeiture any time prior to trial of the
666
criminal charges. Either party may move the court to enter a finding of forfeiture as to defendant's
667
interest in part or all of the property, either by default or by stipulation. Upon entry of a finding,
668
the court shall stay the entry of judgment until resolution of the criminal charges. Any finding of
669
forfeiture entered by the court prior to resolution of the criminal charges may not constitute a
670
separate judgment, and any motion for disposition, stay, severance, or transfer of the forfeiture
671
action may not create a separate proceeding. Upon the granting of a motion by the defendant for
672
disposition, stay, severance, or transfer of the forfeiture action, the defendant shall be considered
673
to have waived any claim that the defendant has been twice put in jeopardy for the same offense.
674
(iii) Any other person claiming an interest in property subject to forfeiture under this
675
subsection may not intervene in a trial or appeal of a complaint filed under this subsection.
676
Following the entry of an in personam forfeiture order, or upon the filing of a petition for release
677
under Subsection (9)(e), the county attorney, district attorney, or attorney general may proceed with
678
a separate in rem action to resolve any other claims upon the property subject to forfeiture.
679
(c) A complaint seeking forfeiture under Subsection (2)(k) shall be prepared by the county
680
attorney, or if within a prosecution district, the district attorney, or by the attorney general, either
681
in personam as part of a criminal prosecution, or in a separate civil in rem action against the
682
property alleged to be proceeds, and filed in the county where the property is seized or
683
encumbered, if the proceeds are located outside the state. A finding that property is the proceeds
684
of a violation of this chapter does not require proof that the property is the proceeds of any
685
particular exchange or transaction. Proof that property is proceeds may be shown by evidence
686
which establishes all of the following by a preponderance of the evidence:
687
(i) that the person has engaged in conduct in violation of this chapter;
688
(ii) that the property was acquired by the person during that period when the conduct in
689
violation of this chapter occurred or within a reasonable time after that period; and
690
(iii) that there was no likely source for the property other than conduct in violation of the
691
chapter.
692
(d) Notice of the seizure and intended forfeiture shall be filed with the clerk of the court,
693
and served upon all persons known to the county attorney or district attorney to have a claim in the
694
property by:
695
(i) personal service upon a claimant who is charged in a criminal information or
696
indictment; and
697
(ii) certified mail to each claimant whose name and address is known or to each owner
698
whose right, title, or interest is of record in the Division of Motor Vehicles to the address given
699
upon the records of the division, which service is considered complete even though the mail is
700
refused or cannot be forwarded. The county attorney, district attorney, or attorney general shall
701
make one publication in a newspaper of general circulation in the county where the seizure was
702
made for all other claimants whose addresses are unknown, but who are believed to have an
703
interest in the property.
704
(e) Except under Subsection (9)(a) in personam actions, any claimant or interest holder
705
shall file with the court a verified answer to the complaint within 20 days after service. When
706
property is seized under this chapter, any interest holder or claimant of the property, prior to being
707
served with a complaint under this section, may file a petition in the court having jurisdiction for
708
release of his interest in the property. The petition shall specify the claimant's interest in the
709
property and his right to have it released. A copy shall be served upon the county attorney or, if
710
within a prosecution district, the district attorney in the county of the seizure, who shall answer the
711
petition within 20 days. A petitioner need not answer a complaint of forfeiture.
712
(f) For civil actions in rem, after 20 days following service of a complaint or petition for
713
release, the court shall examine the record and if no answer is on file, the court shall allow the
714
complainant or petitioner an opportunity to present evidence in support of his claim and order
715
forfeiture or release of the property as the court determines. If the county attorney or district
716
attorney has not filed an answer to a petition for release and the court determines from the evidence
717
that the petitioner is not entitled to recovery of the property, it shall enter an order directing the
718
county attorney or district attorney to answer the petition within ten days. If no answer is filed
719
within that period, the court shall order the release of the property to the petitioner entitled to
720
receive it.
721
(g) When an answer to a complaint or petition appears of record at the end of 20 days, the
722
court shall set the matter for hearing. At this hearing all interested parties may present evidence
723
of their rights of release of the property following the state's evidence for forfeiture. The court
724
shall determine by a preponderance of the evidence the issues in the case and order forfeiture or
725
release of the property as it determines.
726
(h) When the court determines that claimants have no right in the property in whole or in
727
part, it shall declare the property to be forfeited.
728
(i) When the court determines that property, in whole or in part, is not subject to forfeiture,
729
it shall order release of the property to the proper claimant. If the court determines that the
730
property is subject to forfeiture and release in part, it shall order partial release and partial
731
forfeiture. When the property cannot be divided for partial forfeiture and release, the court shall
732
order it sold and the proceeds distributed:
733
(i) first, proportionally among the legitimate claimants;
734
(ii) second, to defray the costs of the action, including seizure, storage of the property,
735
legal costs of filing and pursuing the forfeiture, and costs of sale; and
736
(iii) third, to the Division of Finance for the General Fund.
737
(j) In a proceeding under this section where forfeiture is declared, in whole or in part, the
738
court shall assess all costs of the forfeiture proceeding, including seizure and storage of the
739
property, against the individual or individuals whose conduct was the basis of the forfeiture, and
740
may assess costs against any other claimant or claimants to the property as appropriate.
741
Section 15.
Section
70A-1-105
is amended to read:
742
70A-1-105. Territorial application of title -- Parties' power to choose applicable law.
743
(1) Except as provided in this section, when a transaction bears a reasonable relation to
744
this state and also to another state or nation, the parties may agree that the law either of this state
745
or of such other state or nation shall govern their rights and duties. Failing such agreement, this
746
title applies to transactions bearing an appropriate relation to this state.
747
(2) Where one of the following provisions of this title specifies the applicable law, that
748
provision governs and a contrary agreement is effective only to the extent permitted by the law,
749
including the conflict of laws rules, so specified:
750
(a) rights of creditors against sold goods under Section
70A-2-402
;
751
(b) applicability of the chapter on leases under Sections
70A-2a-105
and
70A-2a-106
;
752
(c) applicability of the chapter on [Bank Deposits and Collections] bank deposits and
753
collections under Section
70A-4-102
;
754
(d) applicability of the chapter on letters of credit under Section
70A-5-116
;
755
[(d)] (e) applicability of the chapter on [Investment Securities] investment securities under
756
Section
70A-8-109
; or
757
[(e) perfection provisions of the chapter on Secured Transactions under Section
758
70A-9-103
; or]
759
(f) law governing perfection, the effect of perfection or nonperfection, and the priority of
760
security interests and agricultural liens under Sections
70A-9a-301
through
70A-9a-307
.
761
[(f) applicability of the chapter on Letters of Credit under Section
70A-5-116
.]
762
Section 16.
Section
70A-1-201
is amended to read:
763
70A-1-201. General definitions.
764
In addition to definitions contained in the subsequent chapters of this title and unless the
765
context otherwise requires, in this title:
766
(1) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim,
767
setoff, suit in equity, and any other proceedings in which rights are determined.
768
(2) "Aggrieved party" means a party entitled to resort to a remedy.
769
(3) "Agreement" means the bargain of the parties in fact as found in their language or by
770
implication from other circumstances including course of dealing or usage of trade or course of
771
performance as provided in Sections
70A-1-205
and
70A-2-208
. Whether an agreement has legal
772
consequences is determined by the provisions of this title, if applicable; otherwise by the law of
773
contracts as provided in Section
70A-1-103
. Compare the definition of "contract" in Subsection
774
(11).
775
(4) "Bank" means any person engaged in the business of banking.
776
(5) "Bearer" means the person in possession of an instrument, document of title, or
777
certificated security payable to bearer or indorsed in blank.
778
(6) "Bill of lading" means a document evidencing the receipt of goods for shipment issued
779
by a person engaged in the business of transporting or forwarding goods, and includes an airbill.
780
"Airbill" means a document serving for air transportation as a bill of lading does for marine or rail
781
transportation, and includes an air consignment note or air waybill.
782
(7) "Branch" includes a separately incorporated foreign branch of a bank.
783
(8) "Burden of establishing a fact" means the burden of persuading the triers of fact that
784
the existence of the fact is more probable than its nonexistence.
785
(9) "Buyer in ordinary course of business" means a person [who] that buys goods, in good
786
faith [and], without knowledge that the sale [to him is in violation of] violates the [ownership]
787
rights [or security interest] of [a third party] another person in the goods, [buys] and in the ordinary
788
course from a person, other than a pawnbroker, in the business of selling goods of that kind [but
789
does not include a pawnbroker. All persons who sell minerals or the like, including oil and gas,
790
at wellhead or minehead are considered to be persons]. A person buys goods in the ordinary
791
course if the sale to the person comports with the usual or customary practices in the kind of
792
business in which the seller is engaged or with the seller's own usual or customary practices. A
793
person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business
794
of selling goods of that kind. ["Buying"] A buyer in ordinary course of business may [be] buy for
795
cash [or], by exchange of other property, or on secured or unsecured credit, and [includes
796
receiving] may acquire goods or documents of title under a preexisting contract for sale [but does
797
not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt].
798
Only a buyer that takes possession of the goods or has a right to recover the goods from the seller
799
under Chapter 2 may be a buyer in ordinary course of business. A person that acquires goods in
800
a transfer in bulk or as security for or in total or partial satisfaction of a money debt is not a buyer
801
in ordinary course of business.
802
(10) "Conspicuous" means a term or clause that is so written that a reasonable person
803
against whom it is to operate ought to have noticed it. A printed heading in capitals such as:
804
NONNEGOTIABLE BILL OF LADING is conspicuous. Language in the body of a form is
805
"conspicuous" if it is in larger or other contrasting type or color. In a telegram any stated term is
806
"conspicuous." Whether a term or clause is "conspicuous" or not is for decision by the court.
807
(11) "Contract" means the total legal obligation which results from the parties' agreement
808
as affected by this title and any other applicable rules of law. Compare the definition of
809
"agreement" in Subsection (3).
810
(12) "Creditor" includes a general creditor, a secured creditor, a lien creditor, and any
811
representative of creditors, including an assignee for the benefit of creditors, a trustee in
812
bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or
813
assignor's estate.
814
(13) "Defendant" includes a person in the position of defendant in a cross-action or
815
counterclaim.
816
(14) "Delivery" with respect to instruments, documents of title, chattel paper, or
817
certificated securities means voluntary transfer of possession.
818
(15) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse
819
receipt, or order for the delivery of goods, and also any other document which in the regular course
820
of business or financing is treated as adequately representing that the person in possession of it is
821
entitled to receive, hold and dispose of the document and the goods it covers. To be a document
822
of title, a document must purport to be issued by or addressed to a bailee and purport to cover
823
goods in the bailee's possession which are either identified or are fungible portions of an identified
824
mass.
825
(16) "Fault" means wrongful act, omission, or breach.
826
(17) "Fungible" with respect to goods or securities means goods or securities of which any
827
unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not
828
fungible are considered fungible for the purposes of this title to the extent that under a particular
829
agreement or document unlike units are treated as equivalents.
830
(18) "Genuine" means free of forgery or counterfeiting.
831
(19) "Good faith" means honesty in fact in the conduct or transaction concerned.
832
(20) "Holder" with respect to a negotiable instrument, certificated security, or document
833
of title means the person in possession if:
834
(a) in the case of a negotiable instrument payable to bearer or to an identified person, the
835
identified person is in possession;
836
(b) in the case of a security, the person in possession is the registered owner, or the security
837
has been indorsed to the person in possession by the registered owner, or the security is in bearer
838
form; or
839
(c) in the case of a document of title, the goods are deliverable to bearer or to the order of
840
the person in possession.
841
(21) To "honor" is to pay or to accept and pay, or where a credit so engages to purchase
842
or discount a draft complying with the terms of the credit.
843
(22) "Insolvency proceedings" includes any assignment for the benefit of creditors or other
844
proceedings intended to liquidate or rehabilitate the estate of the person involved.
845
(23) A person is "insolvent" who either has ceased to pay his debts in the ordinary course
846
of business or cannot pay his debts as they become due or if he is insolvent within the meaning of
847
the federal bankruptcy law.
848
(24) "Money" means a medium of exchange authorized or adopted by a domestic or
849
foreign government or intergovernmental organization and includes a monetary unit of account
850
established by an intergovernmental organization or by agreement between two or more nations.
851
(25) (a) A person has "notice" of a fact when:
852
(i) he has actual knowledge of it;
853
(ii) he has received a notice or notification of it; or
854
(iii) from all the facts and circumstances known to him at the time in question he has
855
reason to know that it exists.
856
(b) A person "knows" or has "knowledge" of a fact when he has actual knowledge of it.
857
(c) "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather
858
than to reason to know.
859
(d) The time and circumstances under which a notice or notification may cease to be
860
effective are not determined by this title.
861
(26) (a) A person "notifies" or "gives" a notice or notification to another by taking such
862
steps as may be reasonably required to inform the other person in ordinary course whether or not
863
the other person actually comes to know of it.
864
(b) A person "receives" a notice or notification when:
865
(i) it comes to his attention; or
866
(ii) it is duly delivered at the place of business through which the contract was made or at
867
any other place held out by him as the place for receipt of such communications.
868
(27) Notice, knowledge of a notice, or notification received by an organization is effective
869
for a particular transaction from the time when it is brought to the attention of the individual
870
conducting that transaction, and in any event from the time when it would have been brought to
871
his attention if the organization had exercised due diligence. An organization exercises due
872
diligence if it maintains reasonable routines for communicating significant information to the
873
person conducting the transaction and there is reasonable compliance with the routines. Due
874
diligence does not require an individual acting for the organization to communicate information
875
unless such communication is part of his regular duties or unless he has reason to know of the
876
transaction and that the transaction would be materially affected by the information.
877
(28) "Organization" includes a corporation, government or governmental subdivision or
878
agency, business trust, estate, trust, partnership or association, two or more persons having a joint
879
or common interest, or any other legal or commercial entity.
880
(29) "Party," as distinct from "third party," means a person who has engaged in a
881
transaction or made an agreement within this title.
882
(30) "Person" includes an individual or an organization as provided in Section
70A-1-102
.
883
(31) "Presumption" or "presumed" means that the trier of fact must find the existence of
884
the fact presumed unless and until evidence is introduced which would support a finding of its
885
nonexistence.
886
(32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien,
887
security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in
888
property.
889
(33) "Purchaser" means a person who takes by purchase.
890
(34) "Remedy" means any remedial right to which an aggrieved party is entitled with or
891
without resort to a tribunal.
892
(35) "Representative" includes an agent, an officer of a corporation or association, and a
893
trustee, executor, or administrator of an estate, or any other person empowered to act for another.
894
(36) "Rights" includes remedies.
895
(37) (a) "Security interest" means an interest in personal property or fixtures which secures
896
payment or performance of an obligation. [The retention or reservation of title by a seller of goods,
897
notwithstanding shipment or delivery to the buyer as provided in Section
70A-2-401
, is limited in
898
effect to a reservation of a "security interest."] The term also includes any interest of a consignor
899
and a buyer of accounts [or], chattel paper [which], a payment intangible, or a promissory note in
900
a transaction that is subject to Title 70A, Chapter 9a, Uniform Commercial Code -- Secured
901
Transactions. The special property interest of a buyer of goods on identification of those goods
902
to a contract for sale under Section
70A-2-401
is not a "security interest," but a buyer may also
903
acquire a "security interest" by complying with Title 70A, Chapter 9a, Uniform Commercial Code
904
-- Secured Transactions. [Unless a consignment is intended as security, reservation of title under
905
the consignment is not a "security interest." A consignment in any event is subject to the
906
provisions on consignment sales provided in Section
70A-2-326
.] Except as otherwise provided
907
in Section
70A-2-505
, the right of a seller or lessor of goods under Chapter 2 or 2A to retain or
908
acquire possession of the goods is not a "security interest," but a seller or lessor may also acquire
909
a "security interest" by complying with Chapter 9a, Uniform Commercial Code -- Secured
910
Transactions. The retention or reservation of title by a seller of goods notwithstanding shipment
911
or delivery to the buyer (Section
70A-2-401
) is limited in effect to a reservation of a "security
912
interest." Notwithstanding anything in Title 70A to the contrary, "security interest" does not
913
include a rental purchase agreement as defined in Section
15-8-3
.
914
(b) Whether a transaction creates a lease or security interest is determined by the facts of
915
each case; however, a transaction creates a security interest if the consideration the lessee is to pay
916
the lessor for the right to possession and use of the goods is an obligation for the term of the lease
917
not subject to termination by the lessee, and:
918
(i) the original term of the lease is equal to or greater than the remaining economic life of
919
the goods;
920
(ii) the lessee is bound to renew the lease for the remaining economic life of the goods or
921
is bound to become the owner of the goods;
922
(iii) the lessee has an option to renew the lease for the remaining economic life of the
923
goods for no additional consideration or nominal additional consideration upon compliance with
924
the lease agreement; or
925
(iv) the lessee has an option to become the owner of the goods for no additional
926
consideration or nominal additional consideration upon compliance with the lease agreement.
927
(c) A transaction does not create a security interest merely because it provides that:
928
(i) the present value of the consideration the lessee is obligated to pay the lessor for the
929
right to possession and use of the goods is substantially equal to or is greater than the fair market
930
value of the goods at the time the lease is entered into;
931
(ii) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing,
932
recording, or registration fees, or service or maintenance costs with respect to the goods;
933
(iii) the lessee has an option to renew the lease or to become the owner of the goods;
934
(iv) the lessee has an option to renew the lease for a fixed rent that is equal to or greater
935
than the reasonably predictable fair market rent for the use of the goods for the term of the renewal
936
at the time the option is to be performed; or
937
(v) the lessee has an option to become the owner of the goods for a fixed price that is equal
938
to or greater than the reasonably predictable fair market value of the goods at the time the option
939
is to be performed.
940
(d) For purposes of this subsection:
941
(i) Additional consideration is not nominal if, when the option to renew the lease is granted
942
to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the
943
renewal determined at the time the option is to be performed, or when the option to become the
944
owner of the goods is granted to the lessee the price is stated to be the fair market value of the
945
goods determined at the time the option is to be performed.
946
(ii) Additional consideration is nominal if it is less than the lessee's reasonably predictable
947
cost of performing under the lease agreement if the option is not exercised.
948
(iii) "Reasonably predictable" and "remaining economic life of the goods" are to be
949
determined with reference to the facts and circumstances at the time the transaction is entered into.
950
(iv) "Present value" means the amount as of a date certain of one or more sums payable
951
in the future, discounted to the date certain. The discount is determined by the interest rate
952
specified by the parties if the rate is not manifestly unreasonable at the time the transaction is
953
entered into; otherwise, the discount is determined by a commercially reasonable rate that takes
954
into account the facts and circumstances of each case at the time the transaction was entered into.
955
(38) "Send" in connection with any writing or notice means to deposit in the mail or
956
deliver for transmission by any other usual means of communication with postage or the cost of
957
the transmission provided for and properly addressed, and, in the case of an instrument, to an
958
address specified thereon or otherwise agreed, or if there be none to any address reasonable under
959
the circumstances. The receipt of any writing or notice within the time at which it would have
960
arrived if properly sent has the effect of a proper sending.
961
(39) "Signed" includes any symbol executed or adopted by a party with present intention
962
to authenticate a writing.
963
(40) "Surety" includes guarantor.
964
(41) "Telegram" includes a message transmitted by radio, teletype, cable, any mechanical
965
method of transmission, or the like.
966
(42) "Term" means that portion of an agreement which relates to a particular matter.
967
(43) "Unauthorized signature" means one made without actual, implied, or apparent
968
authority and includes a forgery.
969
(44) "Value." Except as otherwise provided with respect to negotiable instruments and
970
bank collections as in Sections
70A-3-303
,
70A-4-210
, and
70A-4-211
, a person gives "value"
971
for rights if he acquires them:
972
(a) in return for a binding commitment to extend credit or for the extension of immediately
973
available credit whether or not drawn upon and whether or not a charge-back is provided for in the
974
event of difficulties in collection;
975
(b) as security for or in total or partial satisfaction of a preexisting claim;
976
(c) by accepting delivery pursuant to a preexisting contract for purchase; or
977
(d) generally, in return for any consideration sufficient to support a simple contract.
978
(45) "Warehouse receipt" means a receipt issued by a person engaged in the business of
979
storing goods for hire.
980
(46) "Written" or "writing" includes printing, typewriting, or any other intentional
981
reduction to tangible form.
982
Section 17.
Section
70A-1-206
is amended to read:
983
70A-1-206. Statute of frauds for kinds of personal property not otherwise covered.
984
(1) Except in the cases described in Subsection (2) of this section, a contract for the sale
985
of personal property is not enforceable by way of action or defense beyond $5,000 in amount or
986
value of remedy unless there is some writing which indicates that a contract for sale has been made
987
between the parties at a defined or stated price, reasonably identifies the subject matter, and is
988
signed by the party against whom enforcement is sought or by his authorized agent.
989
(2) Subsection (1) of this section does not apply to contracts for the sale of goods (Section
990
70A-2-201
) nor of securities (Section
70A-8-112
) nor to security agreements (Section [
70A-9-203
]
991
70A-9a-203
).
992
Section 18.
Section
70A-2-103
is amended to read:
993
70A-2-103. Definitions and index of definitions.
994
(1) In this chapter unless the context otherwise requires:
995
(a) "Buyer" means a person who buys or contracts to buy goods.
996
(b) "Good faith" in the case of a merchant means honesty in fact and the observance of
997
reasonable commercial standards of fair dealing in the trade.
998
(c) "Receipt" of goods means taking physical possession of them.
999
(d) "Seller" means a person who sells or contracts to sell goods.
1000
(2) Other definitions applying to this chapter or to specified parts thereof, and the sections
1001
in which they appear are:
1002
(a) "Acceptance." Section
70A-2-606
.
1003
(b) "Banker's credit." Section
70A-2-325
.
1004
(c)" Between merchants." Section
70A-2-104
.
1005
(d) "Cancellation." Subsection
70A-2-106
(4).
1006
(e) "Commercial unit." Section
70A-2-105
.
1007
(f) "Confirmed credit." Section
70A-2-325
.
1008
(g) "Conforming to contract." Section
70A-2-106
.
1009
(h) "Contract for sale." Section
70A-2-106
.
1010
(i) "Cover." Section
70A-2-712
.
1011
(j) "Entrusting." Section
70A-2-403
.
1012
(k) "Financing agency." Section
70A-2-104
.
1013
(l) "Future goods." Section
70A-2-105
.
1014
(m) "Goods." Section
70A-2-105
.
1015
(n) "Identification." Section
70A-2-501
.
1016
(o) "Installment contract." Section
70A-2-612
.
1017
(p) "Letter of Credit." Section
70A-2-325
.
1018
(q) "Lot." Section
70A-2-105
.
1019
(r) "Merchant." Section
70A-2-104
.
1020
(s) "Overseas." Section
70A-2-323
.
1021
(t) "Person in position of seller." Section
70A-2-707
.
1022
(u) "Present sale." Section
70A-2-106
.
1023
(v) "Sale." Section
70A-2-106
.
1024
(w) "Sale on approval." Section
70A-2-326
.
1025
(x) "Sale or return." Section
70A-2-326
.
1026
(y) "Termination." Section
70A-2-106
.
1027
(3) The following definitions in other chapters apply to this chapter:
1028
(a) "Check." Section
70A-3-104
.
1029
(b) "Consignee." Section
70A-7-102
.
1030
(c) "Consignor." Section
70A-7-102
.
1031
(d) "Consumer goods." Section [
70A-9-109
]
70A-9a-102
.
1032
(e) "Dishonor." Section
70A-3-502
.
1033
(f) "Draft." Section
70A-3-104
.
1034
(4) In addition Chapter 1 contains general definitions and principles of construction and
1035
interpretation applicable throughout this chapter.
1036
Section 19.
Section
70A-2-210
is amended to read:
1037
70A-2-210. Delegation of performance -- Assignment of rights.
1038
(1) A party may perform his duty through a delegate unless otherwise agreed or unless the
1039
other party has a substantial interest in having his original promisor perform or control the acts
1040
required by the contract. No delegation of performance relieves the party delegating of any duty
1041
to perform or any liability for breach.
1042
(2) [Unless] Except as otherwise provided in Section
70A-9a-406
, unless otherwise
1043
agreed, all rights of either seller or buyer can be assigned except where the assignment would
1044
materially change the duty of the other party, or increase materially the burden or risk imposed on
1045
him by his contract, or impair materially his chance of obtaining return performance. A right to
1046
damages for breach of the whole contract or a right arising out of the assignor's due performance
1047
of his entire obligation can be assigned despite agreement otherwise.
1048
(3) The creation, attachment, perfection, or enforcement of a security interest in the seller's
1049
interest under a contract is not a transfer that materially changes the duty of or increases materially
1050
the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining
1051
return performance within the purview of Subsection (2) unless, and then only to the extent that,
1052
enforcement actually results in a delegation of material performance of the seller. Even in that
1053
event, the creation, attachment, perfection, and enforcement of the security interest remain
1054
effective, but:
1055
(a) the seller is liable to the buyer for damages caused by the delegation to the extent that
1056
the damages could not reasonably be prevented by the buyer; and
1057
(b) a court having jurisdiction may grant other appropriate relief, including cancellation
1058
of the contract for sale or an injunction against enforcement of the security interest or
1059
consummation of the enforcement.
1060
[(3)] (4) Unless the circumstances indicate the contrary a prohibition of assignment of "the
1061
contract" is to be construed as barring only the delegation of (to) the assignee of the assignor's
1062
performance.
1063
[(4)] (5) An assignment of "the contract" or of "all my rights under the contract" or an
1064
assignment in similar general terms is an assignment of rights and unless the language or the
1065
circumstances (as in an assignment of (for) security) indicate the contrary, it is a delegation of
1066
performance of the duties of the assignor and its acceptance by the assignee constitutes a promise
1067
by him to perform those duties. This promise is enforceable by either the assignor or the other
1068
party to the original contract.
1069
[(5)] (6) The other party may treat any assignment which delegates performance as creating
1070
reasonable grounds for insecurity and may without prejudice to his rights against the assignor
1071
demand assurances from the assignee (Section
70A-2-609
).
1072
Section 20.
Section
70A-2-326
is amended to read:
1073
70A-2-326. Sale on approval and sale or return -- Rights of creditors.
1074
(1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though
1075
they conform to the contract, the transaction is:
1076
(a) a "sale on approval" if the goods are delivered primarily for use[,]; and
1077
(b) a "sale or return" if the goods are delivered primarily for resale.
1078
(2) [Except as provided in Subsection (3), goods] Goods held on approval are not subject
1079
to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to
1080
such claims while in the buyer's possession.
1081
[(3) Where goods are delivered to a person for sale and such person maintains a place of
1082
business at which he deals in goods of the kind involved, under a name other than the name of the
1083
person making delivery then with respect to claims of creditors of the person conducting the
1084
business the goods are deemed to be on sale or return. The provisions of this subsection are
1085
applicable even though an agreement purports to reserve title to the person making delivery until
1086
payment or resale or uses such words as "on consignment" or "on memorandum." However, this
1087
subsection is not applicable if the person making delivery]
1088
[(a) complies with an applicable law providing for a consignor's interest or the like to be
1089
evidenced by a sign, or]
1090
[(b) establishes that the person conducting the business is generally known by his creditors
1091
to be substantially engaged in selling the goods of others, or]
1092
[(c) complies with the filing provisions of the chapter on Secured Transactions (Chapter
1093
9).]
1094
[(4)] (3) Any "or return" term of a contract for sale is to be treated as a separate contract
1095
for sale within the statute of frauds section of this chapter (Section
70A-2-201
) and as
1096
contradicting the sale aspect of the contract within the provisions of this chapter on parol or
1097
extrinsic evidence (Section
70A-2-202
).
1098
Section 21.
Section
70A-2-502
is amended to read:
1099
70A-2-502. Buyer's right to goods on seller's repudiation, failure to deliver, or
1100
insolvency.
1101
(1) Subject to [Subsection] Subsections (2) and (3) and even though the goods have not
1102
been shipped a buyer who has paid a part or all of the price of goods in which he has a special
1103
property under the provisions of the immediately preceding section may on making and keeping
1104
good a tender of any unpaid portion of their price recover them from the seller if:
1105
(a) in the case of goods bought for personal, family, or household purposes, the seller
1106
repudiates or fails to deliver as required by the contract; or
1107
(b) in all cases, the seller becomes insolvent within ten days after receipt of the first
1108
installment on their price.
1109
(2) The buyer's right to recover the goods under Subsection (1)(a) vests upon acquisition
1110
of a special property, even if the seller had not then repudiated or failed to deliver.
1111
[(2)] (3) If the identification creating his special property has been made by the buyer he
1112
acquires the right to recover the goods only if they conform to the contract for sale.
1113
Section 22.
Section
70A-2-716
is amended to read:
1114
70A-2-716. Buyer's right to specific performance or replevin.
1115
(1) Specific performance may be decreed where the goods are unique or in other proper
1116
circumstances.
1117
(2) The decree for specific performance may include such terms and conditions as to
1118
payment of the price, damages, or other relief as the court may deem just.
1119
(3) The buyer has a right of replevin for goods identified to the contract if after reasonable
1120
effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such
1121
effort will be unavailing or if the goods have been shipped under reservation and satisfaction of
1122
the security interest in them has been made or tendered. In the case of goods bought for personal,
1123
family, or household purposes, the buyer's right of replevin vests upon acquisition of a special
1124
property, even if the seller had not then repudiated or failed to deliver.
1125
Section 23.
Section
70A-2a-103
is amended to read:
1126
70A-2a-103. Definitions -- Index of definitions.
1127
(1) In this chapter, unless the context otherwise requires:
1128
(a) "Buyer in ordinary course of business" means a person, who in good faith and without
1129
knowledge that the sale to him is in violation of the ownership rights or security interest or
1130
leasehold interest of a third party in the goods, buys in ordinary course from a person in the
1131
business of selling goods of that kind, but does not include a pawnbroker. "Buying" may be for
1132
cash or by exchange of other property or on secured or unsecured credit and includes receiving
1133
goods or documents of title under a preexisting contract for sale, but does not include a transfer
1134
in bulk, or as security for, or in total or partial satisfaction of a money debt.
1135
(b) "Cancellation" occurs when either party puts an end to the lease contract for default
1136
by the other party.
1137
(c) "Commercial unit" means a unit of goods which by commercial usage is a single whole
1138
for purposes of lease, and the division of which materially impairs its character or value on the
1139
market or in use. A commercial unit may be a single article, such as a machine, or a set of articles,
1140
such as a suite of furniture or a line of machinery, or a quantity, such as a gross or carload, or any
1141
other unit treated in use or in the relevant market as a single whole.
1142
(d) "Conforming goods or performance under a lease contract" means goods or
1143
performance that are in accordance with the obligations under the lease contract.
1144
(e) "Consumer lease" means a lease that a lessor, regularly engaged in the business of
1145
leasing or selling, makes to a lessee, who is an individual and who takes under the lease primarily
1146
for a personal, family, or household purpose.
1147
(f) "Fault" means wrongful act, omission, breach, or default.
1148
(g) "Finance lease" means a lease in which:
1149
(i) the lessor does not select, manufacture, or supply the goods;
1150
(ii) the lessor acquires the goods or the right to possession and use of the goods in
1151
connection with the lease; and
1152
(iii) one of the following occurs:
1153
(A) the lessee receives a copy of the contract by which the lessor acquired the goods or the
1154
right to possession and use of the goods before signing the lease contract;
1155
(B) the lessee's approval of the contract by which the lessor acquired the goods or the right
1156
to possession and use of the goods is a condition to effectiveness of the lease contract;
1157
(C) the lessee, before signing the lease contract, receives an accurate and complete
1158
statement designating the promises and warranties, and any disclaimers of warranties, limitations,
1159
or modifications of remedies, or liquidated damages, including those of a third party, such as the
1160
manufacturer of the goods, provided to the lessor by the person supplying the goods in connection
1161
with or as part of the contract by which the lessor acquired the goods or the right to possession and
1162
use of the goods; or
1163
(D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease
1164
contract, informs the lessee in writing:
1165
(I) of the identity of the person supplying the goods to the lessor, unless the lessee has
1166
selected that person and directed the lessor to acquire the goods or the right to possession and use
1167
of the goods from that person;
1168
(II) that the lessee is entitled under this chapter to the promises and warranties, including
1169
those of any third party, provided to the lessor by the person supplying the goods in connection
1170
with or as part of the contract by which the lessor acquired the goods or the right to possession and
1171
use of the goods; and
1172
(III) that the lessee may communicate with the person supplying the goods to the lessor
1173
and receive an accurate and complete statement of those promises and warranties, including any
1174
disclaimers and limitations of them or of remedies.
1175
(h) "Goods" means all things that are movable at the time of identification to the lease
1176
contract, or are fixtures. The term does not include money, documents, instruments, accounts,
1177
chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction.
1178
The term also includes the unborn young of animals.
1179
(i) "Installment lease contract" means a lease contract that authorizes or requires the
1180
delivery of goods in separate lots to be separately accepted, even though the lease contract contains
1181
a clause stating "each delivery is a separate lease" or its equivalent.
1182
(j) "Lease" means a transfer of the right to possession and use of goods for a term, in return
1183
for consideration. Unless the context clearly indicates otherwise, the term includes a sublease.
1184
But a sale, including a sale on approval or a sale or return, or retention or creation of a security
1185
interest is not a lease.
1186
(k) "Lease agreement" with respect to the lease, means the bargain of the lessor and the
1187
lessee in fact as found in their language or by implication from other circumstances including
1188
course of dealing or usage of trade or course of performance as provided in this chapter. Unless
1189
the context clearly indicates otherwise, the term includes a sublease agreement.
1190
(l) "Lease contract" means the total legal obligation that results from the lease agreement
1191
as affected by this chapter and any other applicable rules of law. Unless the context clearly
1192
indicates otherwise, the term includes a sublease contract.
1193
(m) "Leasehold interest" means the interest of the lessor or the lessee under a lease
1194
contract.
1195
(n) "Lessee" means a person who acquires the right to possession and use of goods under
1196
a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
1197
(o) "Lessee in ordinary course of business" means a person who in good faith and without
1198
knowledge that the lease to him is in violation of the ownership rights, security interest, or
1199
leasehold interest of a third party in the goods, leases in ordinary course from a person in the
1200
business of selling or leasing goods of that kind, but does not include a pawnbroker. "Leasing"
1201
may be for cash or by exchange of other property, or on secured or unsecured credit, and includes
1202
receiving goods or documents of title under a preexisting lease contract. "Leasing" does not
1203
include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
1204
(p) "Lessor" means a person who transfers the right to possession and use of goods under
1205
a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
1206
(q) "Lessor's residual interest" means the lessor's interest in the goods after expiration,
1207
termination, or cancellation of the lease contract.
1208
(r) "Lien" means a charge against or interest in goods to secure payment of a debt or
1209
performance of an obligation, but the term does not include a security interest.
1210
(s) "Lot" means a parcel or single article that is the subject matter of a separate lease or
1211
delivery, whether or not it is sufficient to perform the lease contract.
1212
(t) "Merchant lessee" means a lessee that is a merchant with respect to goods of the kind
1213
subject to the lease.
1214
(u) "Present value" means the amount as of a date certain of one or more sums payable in
1215
the future, discounted to the date certain. The discount is determined by the interest rate specified
1216
by the parties if the rate was not manifestly unreasonable at the time the transaction was entered
1217
into; otherwise, the discount is determined by a commercially reasonable rate that takes into
1218
account the facts and circumstances of each case at the time the transaction was entered into.
1219
(v) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift, or
1220
any other voluntary transaction creating an interest in goods.
1221
(w) "Sublease" means a lease of goods, the right to possession and use of which was
1222
acquired by the lessor as a lessee under an existing lease.
1223
(x) "Supplier" means a person from whom a lessor buys or leases goods to be leased under
1224
a finance lease.
1225
(y) "Supply contract" means a contract under which a lessor buys or leases goods to be
1226
leased.
1227
(z) "Termination" occurs when either party, pursuant to a power created by agreement or
1228
law, puts an end to the lease contract otherwise than for default.
1229
(2) Other definitions applying to this chapter and the sections in which they appear are:
1230
(a) "Accessions," Section
70A-2a-310
;
1231
(b) "Construction mortgage," Section
70A-2a-309
;
1232
(c) "Encumbrance," Section
70A-2a-309
;
1233
(d) "Fixtures," Section
70A-2a-309
;
1234
(e) "Fixture filing," Section
70A-2a-309
; and
1235
(f) "Purchase money lease," Section
70A-2a-309
.
1236
(3) The following definitions in other chapters apply to this chapter:
1237
(a) "Account," [Section
70A-9-106
] Subsection
70A-9a-102
(2);
1238
(b) "Between merchants," Section
70A-2-104
;
1239
(c) "Buyer," Section
70A-2-103
;
1240
(d) "Chattel paper," [Section
70A-9-105
] Subsection
70A-9a-102
(11);
1241
(e) "Consumer goods," [Section
70A-9-109
] Subsection
70A-9a-102
(23);
1242
(f) "Document," [Section
70A-9-105
] Subsection
70A-9a-102
(30);
1243
(g) "Entrusting," Section
70A-2-403
;
1244
(h) "General [intangibles] intangible," [Section
70A-9-106
] Subsection
70A-9a-102
(42);
1245
(i) "Good faith," Section
70A-2-103
;
1246
(j) "Instrument," [Section
70A-9-105
] Subsection
70A-9a-102
(47);
1247
(k) "Merchant," Section
70A-2-104
;
1248
(l) "Mortgage," [Section
70A-9-105
] Subsection
70A-9a-102
(55);
1249
(m) "Pursuant to commitment," [Section
70A-9-105
] Subsection
70A-9a-102
(68);
1250
(n) "Receipt," Section
70A-2-103
;
1251
(o) "Sale," Section
70A-2-106
;
1252
(p) "Sale on approval," Section
70A-2-326
;
1253
(q) "Sale or return," Section
70A-2-326
; and
1254
(r) "Seller," Section
70A-2-103
.
1255
(4) In addition, Title 70A, Chapter 1, Uniform Commercial Code -- General Provisions,
1256
contains general definitions and principles of construction and interpretation applicable throughout
1257
this chapter.
1258
Section 24.
Section
70A-2a-303
is amended to read:
1259
70A-2a-303. Transfer of party's interest under lease contract or of lessor's residual
1260
interest in goods -- Transfer as event of default -- Creation or enforcement of security
1261
interest -- Transfer of right to damages for default.
1262
(1) As used in this section, "creation of a security interest" includes the sale of a lease
1263
contract subject to Title 70A, Chapter 9a, Uniform Commercial Code -- Secured Transactions, by
1264
reason of [Section
70A-9-102
] Subsection
70A-9a-109
(1)(c).
1265
(2) Except as provided in [Subsections] Subsection (3) and [(4)] Section
70A-9a-407
, a
1266
provision in a lease agreement that prohibits the voluntary or involuntary transfer (including a
1267
transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or
1268
other judicial process) of an interest of a party under the lease contract or of the lessor's residual
1269
interest in the goods, or that makes such a transfer an event of default, gives rise to the rights and
1270
remedies provided in Subsection [(5)] (4), but a transfer that is prohibited or is an event of default
1271
under the lease agreement is otherwise effective.
1272
[(3) A provision in a lease agreement that either prohibits the creation or enforcement of
1273
a security interest in an interest of a party under the lease contract or in the lessor's residual interest
1274
in the goods, or makes such a transfer an event of default, is not enforceable unless, and then only
1275
to the extent that, there is an actual transfer by the lessee of the lessee's right of possession or use
1276
of the goods in violation of the provision, or an actual delegation of a material performance of
1277
either party to the lease contract in violation of the provision. Neither the granting nor the
1278
enforcement of a security interest in either the lessor's interest under the lease contract or the
1279
lessor's residual interest in the goods is a transfer that materially impairs the prospect of obtaining
1280
return performance by, materially changes the duty of, or materially increases the burden or risk
1281
imposed on, the lessee within the purview of Subsection (5) unless, and then only to the extent
1282
that, there is an actual delegation of a material performance of the lessor.]
1283
[(4)] (3) A provision in a lease agreement that prohibits a transfer of a right to damages
1284
for default with respect to the whole lease contract or of a right to payment arising out of the
1285
transferor's due performance of the transferor's entire obligation, or makes such a transfer an event
1286
of default, is not enforceable, and such a transfer is not a transfer that materially impairs the
1287
prospect of obtaining return performance by, materially changes the duty of, or materially increases
1288
the burden or risk imposed on, the other party to the lease contract within the purview of
1289
Subsection [(5)] (4).
1290
[(5)] (4) Subject to [Subsections] Subsection (3) and [(4)] Section
70A-9a-407
:
1291
(a) if a transfer is made that is made an event of default under a lease agreement, the party
1292
to the lease contract not making the transfer, unless that party waives the default or otherwise
1293
agrees, has the rights and remedies described in Section
70A-2a-501
; and
1294
(b) if Subsection [(5)] (4)(a) is not applicable and if a transfer is made that is prohibited
1295
under a lease agreement, or materially impairs the prospect of obtaining return performance by,
1296
materially changes the duty of, or materially increases the burden or risk imposed on, the other
1297
party to the lease contract, unless the party not making the transfer agrees at any time to the
1298
transfer in the lease contract or otherwise, then, except as limited by contract, the transferor is
1299
liable to the party not making the transfer for damages caused by the transfer to the extent that the
1300
damages could not reasonably be prevented by the party not making the transfer, and a court
1301
having jurisdiction may grant other appropriate relief, including cancellation of the lease contract
1302
or an injunction against the transfer.
1303
[(6)] (5) A transfer of "the lease" or of "all my rights under the lease" or a transfer in
1304
similar general terms, is a transfer of rights, and unless the language or the circumstances, as in a
1305
transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor
1306
to the transferee. Acceptance by the transferee constitutes a promise by the transferee to perform
1307
those duties. The promise is enforceable by either the transferor or the other party to the lease
1308
contract.
1309
[(7)] (6) Unless otherwise agreed by the lessor and the lessee, a delegation of performance
1310
does not relieve the transferor as against the other party of any duty to perform or any liability for
1311
default.
1312
[(8)] (7) In a consumer lease, to prohibit the transfer of an interest of a party under the
1313
lease contract, or to make a transfer an event of default, the language must be specific, by writing,
1314
and conspicuous.
1315
Section 25.
Section
70A-2a-307
is amended to read:
1316
70A-2a-307. Priority of liens arising by attachment or levy on, security interests in,
1317
and other claims to goods.
1318
(1) Except as otherwise provided in Section
70A-2a-306
, a creditor of a lessee takes
1319
subject to the lease contract.
1320
(2) Except as otherwise provided in [Subsections] Subsection (3) [and (4)] and in Sections
1321
70A-2a-306
and
70A-2a-308
, a creditor of a lessor takes subject to the lease contract unless[: (a)]
1322
the creditor holds a lien that attached to the goods before the lease contract became enforceable[;].
1323
[(b) the creditor holds a security interest in the goods and the lessee did not give value and
1324
receive delivery of the goods without knowledge of the security interest; or]
1325
[(c) the creditor holds a security interest in the goods that was perfected before the lease
1326
contract became enforceable.]
1327
[(3) A lessee in the ordinary course of business takes the leasehold interest free of a
1328
security interest in the goods created by the lessor even though the security interest is perfected and
1329
the lessee knows of its existence.]
1330
[(4) A lessee other than a lessee in the ordinary course of business takes the leasehold
1331
interest free of a security interest to the extent that it secures future advances made after the
1332
secured party acquires knowledge of the lease or more than 45 days after the lease contract
1333
becomes enforceable, whichever first occurs, unless the future advances are made pursuant to a
1334
commitment entered into without knowledge of the lease and before the expiration of the 45-day
1335
period.]
1336
(3) Except as otherwise provided in Sections
70A-9a-317
,
70A-9a-321
, and
70A-9a-323
,
1337
a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.
1338
Section 26.
Section
70A-2a-309
is amended to read:
1339
70A-2a-309. Lessor's and lessee's rights when goods become fixtures.
1340
(1) In this section:
1341
(a) goods are "fixtures" when they become so related to particular real estate that an
1342
interest in them arises under real estate law;
1343
(b) a "fixture filing" is the filing, in the office where a record of a mortgage on the real
1344
estate would be filed, recorded, or registered, of a financing statement covering goods that are or
1345
are to become fixtures and conforming to the requirements of [Subsection
70A-9-402
(5)]
1346
Subsections
70A-9a-502
(1) and (2);
1347
(c) a lease is a "purchase money lease" unless the lessee has possession or use of the goods
1348
or the right to possession or use of the goods before the lease agreement is enforceable;
1349
(d) a mortgage is a "construction mortgage" to the extent it secures an obligation incurred
1350
for the construction of an improvement on land including the acquisition cost of the land, if the
1351
recorded writing so indicates; and
1352
(e) "encumbrance" includes real estate mortgages and other liens on real estate and all
1353
other rights in real estate that are not ownership interests.
1354
(2) Under this chapter, a lease may be of goods that are fixtures or may continue in goods
1355
that become fixtures, but no lease exists under this chapter of ordinary building materials
1356
incorporated into an improvement on land.
1357
(3) This chapter does not prevent creation of a lease of fixtures pursuant to real estate law.
1358
(4) The perfected interest of a lessor of fixtures has priority over a conflicting interest of
1359
an encumbrancer or owner of the real estate if:
1360
(a) the lease is a purchase money lease, the conflicting interest of the encumbrancer or
1361
owner arises before the goods become fixtures, a fixture filing covering the fixtures is filed or
1362
recorded before the goods become fixtures or within ten days thereafter, and the lessee has an
1363
interest of record in the real estate or is in possession of the real estate; or
1364
(b) the interest of the lessor is perfected by a fixture filing before the interest of the
1365
encumbrancer or owner is of record, the lessor's interest has priority over any conflicting interest
1366
of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in
1367
the real estate or is in possession of the real estate.
1368
(5) The interest of a lessor of fixtures, whether or not perfected, has priority over the
1369
conflicting interest of an encumbrancer or owner of the real estate if:
1370
(a) the fixtures are readily removable factory or office machines, readily removable
1371
equipment that is not primarily used or leased for use in the operation of the real estate, or readily
1372
removable replacements of domestic appliances that are goods subject to a consumer lease, and
1373
before the goods become fixtures the lease contract is enforceable;
1374
(b) the conflicting interest is a lien on the real estate obtained by legal or equitable
1375
proceedings after the lease contract is enforceable;
1376
(c) the encumbrancer or owner has consented in writing to the lease or has disclaimed an
1377
interest in the goods as fixtures; or
1378
(d) the lessee has a right to remove the goods as against the encumbrancer or owner. If
1379
the lessee's right to remove terminates, the priority of the interest of the lessor continues for a
1380
reasonable time.
1381
(6) Notwithstanding Subsection (4)(a), but otherwise subject to Subsections (4) and (5),
1382
the interest of a lessor of fixtures is subordinate to the conflicting interest of an encumbrancer of
1383
the real estate under a construction mortgage recorded before the goods become fixtures if the
1384
goods become fixtures before the completion of the construction. To the extent given to refinance
1385
a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a
1386
mortgage has this priority to the same extent as the encumbrancer of the real estate under the
1387
construction mortgage.
1388
(7) In cases not within the preceding subsections, priority between the interest of a lessor
1389
of fixtures, including the lessor's residual interest, and the conflicting interest of an encumbrancer
1390
or owner of the real estate who is not the lessee is determined by the priority rules governing
1391
conflicting interests in real estate.
1392
(8) If the interest of a lessor of fixtures, including the lessor's residual interest, has priority
1393
over all conflicting interests of all owners and encumbrances of the real estate, the lessor or the
1394
lessee may:
1395
(a) on default, expiration, termination, or cancellation of the lease agreement but subject
1396
to the lease agreement and this chapter; or
1397
(b) if necessary to enforce other rights and remedies of the lessor or lessee under this
1398
chapter, remove the goods from the real estate, free and clear of all conflicting interests of all
1399
owners and encumbrances of the real estate, but the lessor or lessee must reimburse any
1400
encumbrancer or owner of the real estate who is not the lessee and who has not otherwise agreed
1401
for the cost of repair of any physical injury, but not for any diminution in value of the real estate
1402
caused by the absence of the goods removed or by any necessity of replacing them. A person
1403
entitled to reimbursement may refuse permission to remove the goods until the party seeking
1404
removal gives adequate security for the performance of this obligation.
1405
(9) Even though the lease agreement does not create a security interest, the interest of a
1406
lessor of fixtures, including the lessor's residual interest, is perfected by filing a financing
1407
statement as a fixture filing for leased goods that are or are to become fixtures in accordance with
1408
the relevant provisions of Title 70A, Chapter 9a, Uniform Commercial Code -- Secured
1409
Transactions.
1410
Section 27.
Section
70A-3-605
is amended to read:
1411
70A-3-605. Discharge of indorsers and accommodation parties.
1412
(1) In this section, the term "indorser" includes a drawer having the obligation described
1413
in Subsection
70A-3-414
(4).
1414
(2) Discharge, under Section
70A-3-604
, of the obligation of a party to pay an instrument
1415
does not discharge the obligation of an indorser or accommodation party having a right of recourse
1416
against the discharged party.
1417
(3) If a person entitled to enforce an instrument agrees, with or without consideration, to
1418
an extension of the due date of the obligation of a party to pay the instrument, the extension
1419
discharges an indorser or accommodation party having a right of recourse against the party whose
1420
obligation is extended to the extent the indorser or accommodation party proves that the extension
1421
caused loss to the indorser or accommodation party with respect to the right of recourse.
1422
(4) If a person entitled to enforce an instrument agrees, with or without consideration, to
1423
a material modification of the obligation of a party other than an extension of the due date, the
1424
modification discharges the obligation of an indorser or accommodation party having a right of
1425
recourse against the person whose obligation is modified to the extent the modification causes loss
1426
to the indorser or accommodation party with respect to the right of recourse. The loss suffered by
1427
the indorser or accommodation party as a result of the modification is equal to the amount of the
1428
right of recourse unless the person enforcing the instrument proves that no loss was caused by the
1429
modification or that the loss caused by the modification was an amount less than the amount of
1430
the right of recourse.
1431
(5) If the obligation of a party to pay an instrument is secured by an interest in collateral
1432
and a person entitled to enforce the instrument impairs the value of the interest in collateral, the
1433
obligation of an indorser or accommodation party having a right of recourse against the obligor is
1434
discharged to the extent of the impairment. The value of an interest in collateral is impaired to the
1435
extent the value of the interest is reduced to an amount less than the amount of the right of recourse
1436
of the party asserting discharge, or the reduction in value of the interest causes an increase in the
1437
amount by which the amount of the right of recourse exceeds the value of the interest. The burden
1438
of proving impairment is on the party asserting discharge.
1439
(6) If the obligation of a party is secured by an interest in collateral not provided by an
1440
accommodation party and a person entitled to enforce the instrument impairs the value of the
1441
interest in collateral, the obligation of any party who is jointly and severally liable with respect to
1442
the secured obligation is discharged to the extent the impairment causes the party asserting
1443
discharge to pay more than that party would have been obliged to pay, taking into account rights
1444
of contribution, if impairment had not occurred. If the party asserting discharge is an
1445
accommodation party not entitled to discharge under Subsection (5), the party is deemed to have
1446
a right to contribution based on joint and several liability rather than a right to reimbursement. The
1447
burden of proving impairment is on the party asserting discharge.
1448
(7) Under Subsection (5) or (6), impairing value of an interest in collateral includes failure
1449
to obtain or maintain perfection or recordation of the interest in collateral, release of collateral
1450
without substitution of collateral of equal value, failure to perform a duty to preserve the value of
1451
collateral owed, under Title 70A, Chapter 9a, Uniform Commercial Code -- Secured Transactions,
1452
or other law, to a debtor or surety or other person secondarily liable, or failure to comply with
1453
applicable law in disposing of collateral.
1454
(8) An accommodation party is not discharged under Subsection (3), (4), or (5) unless the
1455
person entitled to enforce the instrument knows of the accommodation or has notice under
1456
Subsection
70A-3-419
(3) that the instrument was signed for accommodation.
1457
(9) A party is not discharged under this section if the party asserting discharge consents
1458
to the event or conduct that is the basis of the discharge, or the instrument or a separate agreement
1459
of the party provides for waiver of discharge under this section either specifically or by general
1460
language indicating that parties waive defenses based on suretyship or impairment of collateral.
1461
Section 28.
Section
70A-4-210
is amended to read:
1462
70A-4-210. Security interest of collecting bank in items, accompanying documents,
1463
and proceeds.
1464
(1) A collecting bank has a security interest in an item and any accompanying documents
1465
or the proceeds of either:
1466
(a) in case of an item deposited in an account, to the extent to which credit given for the
1467
item has been withdrawn or applied;
1468
(b) in case of an item for which it has given credit available for withdrawal as of right, to
1469
the extent of the credit given, whether or not the credit is drawn upon or there is a right of
1470
charge-back; or
1471
(c) if it makes an advance on or against the item.
1472
(2) If credit given for several items received at one time or pursuant to a single agreement
1473
is withdrawn or applied in part, the security interest remains upon all the items, any accompanying
1474
documents or the proceeds of either. For the purpose of this section, credits first given are first
1475
withdrawn.
1476
(3) Receipt by a collecting bank of a final settlement for an item is a realization on its
1477
security interest in the item, accompanying documents, and proceeds. So long as the bank does
1478
not receive final settlement for the item or give up possession of the item or accompanying
1479
documents for purposes other than collection, the security interest continues to that extent and is
1480
subject to Title 70A, Chapter 9a, Uniform Commercial Code -- Secured Transactions, but:
1481
(a) no security agreement is necessary to make the security interest enforceable, Subsection
1482
[
70A-9-203
(1)(a)]
70A-9a-203
(2)(c)(i);
1483
(b) no filing is required to perfect the security interest; and
1484
(c) the security interest has priority over conflicting perfected security interests in the item,
1485
accompanying documents, or proceeds.
1486
Section 29.
Section
70A-5-114
is amended to read:
1487
70A-5-114. Assignment of proceeds.
1488
(1) In this section, "proceeds of a letter of credit" means the cash, check, accepted draft,
1489
or other item of value paid or delivered upon honor or giving of value by the issuer or any
1490
nominated person under the letter of credit. The term does not include a beneficiary's drawing
1491
rights or documents presented by the beneficiary.