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S.B. 106
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MUNICIPAL BOND SECURED TRANSACTIONS
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2001 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Lyle W. Hillyard
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This act modifies the Utah Municipal Bond Act by establishing a method for creating and
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perfecting security interests for governmental obligations.
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This act affects sections of Utah Code Annotated 1953 as follows:
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ENACTS:
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11-14-28, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
11-14-28
is enacted to read:
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11-14-28. Creation and perfection of government security interests.
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(1) As used in this section:
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(a) "Bonds" means any bond, note, lease, or other obligation of a governmental unit.
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S [
(b) "Governmental unit" has the meaning assigned in Subsection
70A-9a-102
(45).
]
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(b) "GOVERNMENTAL UNIT" MEANS:
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(i) THE STATE OF UTAH;
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(ii) ANY COUNTY, MUNICIPALITY, QUASI-MUNICIPAL CORPORATION, POLITICAL
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SUBDIVISION, SCHOOL DISTRICT, SPECIAL DISTRICT, BUILDING AUTHORITY, OR OTHER
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GOVERNMENTAL ENTITY IN UTAH; OR
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(iii) ANY SUBDIVISION, AGENCY, DEPARTMENT, AUTHORITY, INSTRUMENTALITY, OR
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INSTITUTION OF THE ENTITIES DESCRIBED IN SUBSECTIONS (1)(b)(i) OR (ii) THAT ARE
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AUTHORIZED TO ISSUE BONDS.
s
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(c) "Pledge" means the creation of a security interest of any kind.
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(d) "Property" means any property or interests in property, other than real property.
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(e) "Security agreement" means any resolution, ordinance, indenture, document, or other
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agreement or instrument under which the revenues, fees, rents, charges, taxes, or other property
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are pledged to secure the bonds.
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(2) This section expressly governs the creation, perfection, priority, and enforcement of
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a security interest created by the state or a governmental unit of the state, notwithstanding anything
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in Title 70A, Chapter 9a, Uniform Commercial Code - Secured Transactions, to the contrary.
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(3) (a) The revenues, fees, rents, charges, taxes, or other property pledged by a
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governmental unit for the purpose of securing its bonds are immediately subject to the lien of the
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pledge.
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(b) (i) The lien is a perfected lien upon the effective date of the security agreement.
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(ii) The physical delivery, filing, or recording of a security agreement or financing
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statement under the Uniform Commercial Code or otherwise, or any other similar act, is not
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necessary to perfect the lien.
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(c) The lien of any pledge is valid, binding, perfected, and enforceable from the time the
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pledge is made.
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(d) The lien of the pledge has priority:
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(i) based on the time of the creation of the pledge unless otherwise provided in the security
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agreement; and
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(ii) as against all parties having claims of any kind in tort, contract, or otherwise against
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the governmental unit, regardless of whether or not the parties have notice of the lien.
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(e) Each pledge and security agreement made for the benefit or security of any of the bonds
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shall continue to be effective until:
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(i) the principal, interest, and premium, if any, on the bonds have been fully paid;
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(ii) provision for payment has been made; or
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(iii) the lien created by the security agreement has been released by agreement of the
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parties in interest or as provided by the security agreement that created the lien.
Legislative Review Note
as of 1-9-01 1:15 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.